Hampton Inn & Suites, Scottsburg, Indiana
The Hampton Inn & Suites in Scottsburg, Indiana, is a select-service hotel located strategically off Interstate 65, within proximity to major industrial, leisure, and military demand generators. The property is part of a portfolio acquisition and has been positioned for a value-add strategy with the goal of stabilizing operations and improving profitability over a five-year hold period.
Key Property Details:
Brand: Hilton
Number of Rooms: 86
Location: 1535 McClain Avenue, Scottsburg, Indiana
Year Built: 2000
Key Amenities: Complimentary breakfast, indoor pool, fitness center, business center, pet-friendly accommodations
Investment Strategy: The investment strategy involved addressing the property’s underperformance due to the lingering effects of COVID-19, completing a $600,000 property improvement plan (PIP), and repositioning the hotel to capture market share and increase RevPAR (Revenue per Available Room).
Performance Overview (Q2 2024)
Occupancy: 78.1%, exceeding the budget by 11.5 percentage points.
ADR (Average Daily Rate): $118.04, slightly below budget but outperforming the prior year.
RevPAR (Revenue per Available Room): $92.13, significantly higher than the previous year by $16.02.
Year-to-Date Revenue: $1.46M, which is 10.8% above the projected budget.
Operational Highlights:
The Hampton Inn & Suites has achieved the highest occupancy rate in its competitive set, driven by a balanced mix of leisure and extended-stay business.
Key capital projects completed include pool deck renewal, front desk upgrades, and improvements in guest amenities.
The hotel’s performance is expected to continue improving as the local economy benefits from the growing presence of key industries and the return of business travel.
Financial Analysis
Investment Metrics:
Purchase Price: $5.9M
Projected 5-Year IRR: 18.21%
Equity Multiple (5-Year): 2.27x
Projected Exit Value: $9.7M (based on a 3.5x revenue multiple)
Investor Cash Flow:
Year 1: -5.92%
Year 2: 6.25%
Year 3: 9.10%
Year 4: 11.13%
Year 5: 12.00%
Exit Strategy: The plan includes either refinancing the property after stabilization or selling it at an estimated value of $9.7M. Investors are expected to receive returns through both cash flow distributions during the hold period and proceeds from the eventual sale.
Conclusion
The Hampton Inn & Suites in Scottsburg, Indiana, has demonstrated strong recovery and growth potential. With a value-add strategy focusing on operational improvements and market repositioning, the property is poised to continue capturing market share and generating attractive returns for investors.