SBC Lodging Companyudel.edu/~blm/pdfs/Teaching/Lodging/pittsburg_project.pdfCrowne Plaza – South Side Pittsburgh ii SBC Lodging Company Hotel Project Proposal Table of Contents SECTION

Crowne Plaza – South Side Pittsburgh

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SBC Lodging Company Hotel Project Proposal

SBC Lodging Company 1223 West Carson Street Pittsburgh, Pennsylvania

Tel: 490-323-3434 Fax: 490-234-23432 E-mail: [email protected] Web page: www.sbclodging.com


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SBC Lodging Company

Hotel Project Proposal Table of Contents

SECTION 1: INTRODUCTION 1

SECTION 2: EXECUTIVE SUMMARY 2

SECTION 3: PROFILE OF TARGET MARKET 4

SECTION 4: MISSION, STRATEGIES ETC. 15

4.1 Vision 15

4.2 Mission 15

4.3 Values 15

4.4 Objectives 16

4.5 Strengths, Weaknesses, Opportunities, Threats 16

4.6 Strategies 17

4.7 Goals 17

SECTION 5: FRANCHISE COMPARISON 20

5.1 Background of Franchise Options 20

5.2 Selected Franchise 21

5.3 Projected Revenue and Occupancy 23

SECTION 6: PRODUCT/SERVICE DESCRIPTION 28

SECTION 7: OPERATIONAL PLANS 31


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SECTION 8: MARKETING STRATEGIES AND SALES PLANS 34

SECTION 9: MANAGEMENT & OPERATIONS 40

9.1 Management 40

SECTION 10: PROJECT CONSTRUCTION COSTS 42

SECTION 11: PROJECT MANAGEMENT ACTION PLAN 48

SECTION 12: FINANCIAL STATEMENTS 50

SECTION 13: CONCLUSION 57


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Crowne Plaza- South Side Pittsburgh

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Section 1: Introduction

This hotel project proposal was prepared by the SBC Lodging Company for the Remi/Meeka Hospitality Company, LLC. It is intended to present a complete view of the Pittsburgh lodging market, the strength of the potential franchise chosen, and the products/services that will be offered. The document is divided up into sections; it begins with franchise information, continues to describe the services and amenities, operational plans, management options, and conclusion is all components of the proposal. This document has been written by Sarah Garodz, Carolyn Longden and Betsy Seeger as a commercial hotel proposal; this proposal is intended to inform and persuade the Remi/Meeka Hospitality Company about the state of the market, the need for a property in this area, and the property’s potential profitability. It was created on October 20, 2005. Contact information for project members can be found in Appendix A. In preparation and researching to complete this proposal, many different professional advisors were utilized. Their names, numbers, and titles are listed in the Appendix. These professionals provide financial, legal, and marketing support.

This document is strictly confidential and has been made available to the individual to whom it is addressed strictly on the understanding that its contents will not be disclosed or discussed with any third parties except for the individual’s own professional advisors. Investment in new and small business carries high risks as well as the possibility of high rewards. It is highly speculative and potential investors should be aware that no established market exists for the trading of shares in private companies. Prospective investors are advised to verify all material facts and to take advice from a professional advisor before entering into any commitments. This plan is strictly from information only and does not constitute a prospectus or an invitation to subscribe for shares. Projections in the plan have been compiled by the promoters for illustrative purposes and do not constitute profit forecasts. The eventual outcome may be more or less favourable than that portrayed.


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Section 2: Executive Summary

The Crowne Plaza- South Side Pittsburgh is a one hundred and fifty room property located on the Monongahela River in Pittsburgh, Pennsylvania. As suggested by the property’s name, it will be located in the newly emerging and revitalized neighborhood of South Side. This property will enter into the existing lodging market offering a very unique product and a distinctive level of service quality.

Our guest rooms will feature many modern amenities that are brand standards as well as

amenities that are specific to this property. A great focus will be placed on the property’s waterfront location, the Crowne Plaza Sleep Advantage Program, and our own Blissful Bath design. Meeting and banquet space and a restaurant are also included in our proposed plan; this will allow for a greater utilization of our strengths and attract more guests to the property. A further discussion of the amenities and product offered can be found in Section 6: Product and Service Description.

Upon completion, the Crowne Plaza- South Side Pittsburgh will enter a lodging market that

contains properties from most of the major hotel brands. This creates an opportunity for the property to attract and retain our target market because of the level of product differentiation we offer. The guest who stays, dines, or entertains at the Crowne Plaza- South Side Pittsburgh is either a business or leisure traveler who is in the city of Pittsburgh for a variety of reasons. We will cater our product to the guest who seeks a different, unparalleled product in a neighborhood that has been dubbed a “little New York” because of the many cultures and ethnicities represented.

Customers will frequent the Crowne Plaza- South Side Pittsburgh because of its diverse

offerings. The product we offer is unique unto itself. We will provide the only hotel on the waterfront in Pittsburgh. Some of our guest rooms will have their own private waterfront balconies; others will provide guests with a partial water view; the restaurant and a portion of the banquet/meeting space will also enjoy such views. The modern design and amenities associated with the construction of a new hotel property will also attract guests to our property. Guests who enjoy impeccable service quality and desire a true service experience will choose to stay at the Crowne Plaza- South Side Pittsburgh.

Our products and services are different from the competition, which will be discussed and

defined in Section 3: Profile of the Target Market. This adds a greater level of value to the guest and allows them to ultimately enjoy what is intended to become a better product than currently offered.

The competitive advantage experienced by the proposed property is dependent on the

property’s location. The location directly on the river in the heart of South Side, which is in close proximity to Downtown Pittsburgh allows for a combination of three major selling points of the area. While there are other properties that enjoy the benefits of location, our property will be the only one that enjoys all of these benefits. We offer a great commitment to guest satisfaction and providing the most positive service experience.


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In 2003, 10.2 million overnight visitors traveled to Pittsburgh; this number is expected to increase in future years, following the trends of the lodging industry. These visitors are business travelers, traveling to attend conferences and meetings or the major companies in the area, or leisure travelers visiting to attend sporting events, sight-see, etc. Our expected and existing customers fall into the above categories; additionally, along with the efforts of the Pittsburgh Convention and Visitor’s Bureau, we desire to increase the number of new travelers coming to the area. The Pittsburgh area has many great offerings, which are detailed in Section 3: Profile of the Target Market, all of which can be used as selling points for the hotel and the areas of South Side and Pittsburgh.

Many of the guests who will stay at the property will be guests who have visited the

Pittsburgh area previously. For these guests who switch to our property, the associated costs will be related to the quality of their experience and their level of satisfaction. A guest must take a risk to try out a new property; a chance for our property to succeed or to fail. Additionally, a guest might be a member of a frequent traveler or loyalty program at the property at which they typically stay. These points will not continue to accrue, though similar programs are offered at our property.

The SBC Lodging Company has sent very quantitative and specific goals that address the

various aspects of our property and success. One such goal, which can be found in Section 4.7, details our desired occupancy percentage. In year one, we will institute programs and marketing efforts (see Section 8) to achieve an average percentage of 65%. We have projected that occupancy will increase approximately 2% each year to reach 75% over a five year period. These increases will be accomplished through an aggressive sales and marketing plan, retention of loyal guests, and proper product placement.

The revenues earned by the Crowne Plaza- South Side Pittsburgh will be derived from room

sales, food and beverage, meetings, banquets and catering, and nominal amounts from other contributory departments such as telecommunications and the boat that will be located on the waterfront. Projections in Section 12 illustrate that profits will be earned in the fourth year of operation; before income taxes, a projected $195,366 in profits will be earned. In the following year, year 5, profits before income increase to $474,869, or a dollar increase of $279,503 or 243%.

To develop the project as proposed in the following plans, a net sum of $29,209,814.00 is

needed. Of this amount, we seek 85% of our funding from a commercial bank and the remaining 15% from Remi/Meeka. A further breakdown of the construction costs and plans is outlined in Section 10.


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Section 3: Profile of Target Market INTRODUCTION

To fully create and market a property, the market, its economic vitality, and the

demographics of the area must be understood. This overview introduces the city of Pittsburgh, its attractions, occupancy trends, and many other sources of information to create a complete picture of the area. It is intended that knowledge of Pittsburgh will be gained and an understanding of the profitability will be achieved. There are many opportunities for growth and success in the lodging industry in the area if the market can be correctly defined, understood, and effective marketing campaigns created.

Located in the Southwest quadrant of Pennsylvania, within 500 miles of more than half the

U.S. population, Pittsburgh has, and continues to be, a flourishing city with much to offer. Pittsburgh is comprised of several major areas: the downtown area; the airport; and many neighborhoods including Shadyside, Oakland, and South Side. Situated at the intersection of three major rivers, Pittsburgh has always been a thriving port and industrial city. In fact, Pittsburgh is the nation’s largest inland port, providing access to the extensive 9,000 mile U.S. inland waterway system.

Pittsburgh attracts a wide variety of visitors. During the school term, many students live in Pittsburgh. There are 29 colleges and universities located in Southwest Pennsylvania, with many of them located in the city of Pittsburgh: University of Pittsburgh, Duquesne University, and Carnegie Mellon. This creates a need for properties around the universities for parents, prospective students, university speakers and guests, and athletic teams visiting the area. Pittsburgh is also home to many business men and women as it is the location of more FORTUNE 500 companies than cities like Boston, Denver, Seattle, and Los Angeles. Pittsburgh has seven FORTUNE 500 companies, six FORBES 2000 companies, and five Business Week Global 1,000 companies. Pittsburgh is tied for sixth place on the list of cities that have five or more FORTUNE 500 company headquarters. The top three companies in Pittsburgh are Alcoa, US Steel, and H.J. Heinz. According to the U.S. Census Bureau, in 1997 the city of Pittsburgh had $2,734,082,000 in retail sales. POPULATION GROWTH AND TRENDS

Pittsburgh is a popular place to live and the 2003 population of the city of Pittsburgh was

325,337. Appendix B shows the past trends in Pittsburgh’s population. The table shows a steady decline in the population of the city of Pittsburgh over the past seven years. This decline can be attributed to the growth in the counties outside of the city, where the population has increased over the past several years. The population trends are expected to continue to follow the same pattern declination of about .93% per year, according to the Allegheny Conference on Community Development.


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ANALYSIS OF LOCAL WORK FORCE AND PER CAPITA INCOME

Appendix C shows the per capita personal income for the Pittsburgh region residents, and Appendix D shows the breakdown of the Pittsburgh region work force. Appendix C illustrates that both the number of employees and the per capita personal income for the Pittsburgh region is increasing at a fair rate. The number of employees is growing at an average rate of 1.019% annually, where the per capita income is growing at an average rate of 4.118% annually. These numbers indicate that the economic vitality of the business market in Pittsburgh is increasing, and its employees are benefiting from such growth as seen as an increase in personal income.

Appendix D shows a sample of the work force for the city of Pittsburgh. The chart indicates that the overwhelming majority (82.6%) of the work force are private wage and salary workers. Most workers (29.9%) are in the education, health, and social services industry, and the work force consists of mainly management, professional, and related occupations (36.9%), as well as sales and office occupations (27.5%). This data indicates that most of the business conducted in Pittsburgh is related to large companies, corporations, and hospitals.

This information gives a great understanding of the lodging needs in the Pittsburgh area.

Since the majority of the work force is comprised of professional occupations, companies often have clients come to the area for meetings or conferences. Businesses usually have a large budget with which to impress their clients, so an area like Pittsburgh might need an up-scale business-friendly hotel. In addition to clients of companies coming to the Pittsburgh area, many other business people are attracted to the Pittsburgh area for general conventions and events from some of the larger corporations (Alcoa, for example,) located in the city of Pittsburgh. TOURISM TRENDS AND STATISTICS

According to the Pennsylvania Department of Tourism, the Pittsburgh region has

approximately 10.2 million overnight visitors per year. In 2003, an estimated 21% of total overnight visitors were overnight business travelers. Total overnight visitors include those who stayed in paid accommodations as well as those who stayed with family and friends. Appendix E shows a further breakdown of the business and leisure travelers for the Pittsburgh area in 2003. The Pennsylvania Department of Tourism states that 89% of the region’s overnight business travelers stayed in paid accommodations such as a hotel or motel in 2003. This number is up from 75% in 2002. Although there is a significantly larger amount of travelers who come to Pittsburgh for leisure rather than business, only 36% of those leisure travelers stay in paid hotel or motel accommodations, according to D.K. Shifflet and Associates, Ltd. Appendix F shows a breakdown of how much money a leisure traveler versus a business traveler spends on average per day in Pittsburgh. As the breakdown shows, although there are fewer business travelers to Pittsburgh, they do spend significantly more money than leisure travelers. The expenditure amount that is displayed includes expenditures for food and drink, lodging, shopping, and entertainment.

Profile of the Business Traveler. The following is a travel profile for a typical overnight business traveler from 2002, according to D.K. Shifflet and Associates, Ltd.:

- Median age is 45.5 years - Median household income is $81,050 - Length of stay is an average of 1.4 nights - Spends an average of $160.65 per person per day


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- 39% spend their free time dining. 12% spend their free time shopping - Majority (75%) stay in a paid hotel/motel room From 2002 to 2003, the average amount a business traveler spends per day increased from $160.65 to $261.63. This is obviously a very large difference and shows that the amount business travelers spend per day will most likely continue to increase.

David L. Lawrence Conference Center. One of the prime reasons Pittsburgh has seen an

increase in the number of business travelers and the amount of money they spend in the city is the construction of the David L. Lawrence Convention Center. In addition to the meeting spaces available in individual hotel properties and other special venues around Pittsburgh, the David L. Lawrence Convention Center provides the following meeting facility accommodations and amenities: - 314,000 square feet of exhibition space - two 175-seat halls - 236,900 square feet of column-free exhibition - 31,610 square foot ballroom - 51 meeting rooms - over 700 parking spots - state-of-the-art teleconference and telecommunication capabilities - Internet access throughout the building - walkways to the riverfront trail and the river

Profile of Typical Leisure Traveler. Aside from business people coming to Pittsburgh for its corporate venues, Pittsburgh also attracts tourists who come to see the beautiful views of the rivers, the hundreds of picturesque bridges, and the gorgeous cityscape. The following is a travel profile for a typical overnight leisure traveler from 2002, according to D.K. Shifflet and Associates, Ltd.:

- Median age is 38.32 years - Median household income is $70,380 - Length of stay is an average of 4 nights - On average, the traveling party is 2.1 persons - Spends an average of $70.79 per day and $557 total per trip - Majority of people (55%) come to visit friends/relatives. The other purposes for

traveling to Pittsburgh is for a special event (21%), other personal (12%), getaway weekend (6%), or general vacation (6%).

- Most people spend their time sightseeing, dining, shopping, seeking entertainment, or attending a sports event

- Majority of people (47%) stay in a private home; 36% stay in a paid hotel/motel room Similar to the business travelers, leisure travelers’ expenditures also increased from 2002 to

2003. Expenditures jumped from $70.79 to $94.00 daily and from $557.00 to $674.00 per trip from 2002 to 2003. Once again, these numbers will most likely increase annually as the tourism industry continues to recover from 9/11.

According to the 2003 Pennsylvania Travel Profile, the Southwest region of Pennsylvania is

the third most popular leisure travel region of the primary tourism regions in Pennsylvania. While Pennsylvania’s total number of travelers rose 6% from 2002 to 2003, the Southwest region


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decreased its number of visitors by about 500,000, dropping from 9.9 million person-trips in 2002 to 9.4 million person-trips in 2003. The Southwest had the largest decline in total overnight leisure visitor days, decreasing by 3.3 million person-days from 2002 to 2003.

Pittsburgh, specifically, is the second most popular secondary region for leisure travelers in Pennsylvania, behind only the city of Philadelphia. From 2002 to 2003 the number of overnight leisure visitors in Pittsburgh stayed the same, but once again the length of stay decreased by .4% from 2002 to 2003. TRANSPORTATION AND RELATED TRENDS

To reach the area, travelers use means of transportation to include, cars, airplanes, boats,

and trains. The Pittsburgh International Airport facilitates the convenience and marketability of the city. Ranked consistently among the top five best airports in the world by the Official Airline Guide, the Pittsburgh International Airport is the nation’s third-largest airport in land area. Additionally, the airport has received the following accolades:

- 2004 JD Power and Associates: First in the United States and second among the world’s mid-sized airports - 2003 Conde Nast Traveler: 2003 People’s Choice Awards, top-ranked airport in the United States and third in the world in terms of Shops and Amenities and Comfort and Design - Airport Revenue News: Airport with the Best Overall Concessions Program

The Pittsburgh International Airport is one of the newest airports in the nation and features

state-of-the-art equipment and technology that allow for passenger convenience, safety, and ease for the pilots, flight crews, and related support staff. It features an Airmall with more than one hundred brand-name retail outlets. These outlets are quite profitable, generating approximately $80 million in revenues annually.

While the volume of air passengers at the Pittsburgh International Airport has shown trends

of decrease from the years 1997 to 2003, 14,266,984 travelers arrived in the PIT airport in 2003. In 2002, the airport had 18,927,165 travelers; this is a change of -20.90%. See Appendix G for a further breakdown of PIT passenger history over the years 1980 to 2003. This decrease can be attributed to a variety of economic factors as well as the nationwide trend of fewer air passengers following the tragic events of September 11, 2001. Often many travelers are opting for alternate means of transportation. Air cargo has also seen a drastic decrease during the same time period. The cargo volume was 267,985,028 pounds in 2003 and 309,072,448 pounds in 2002, or a percentage change of -13.30%. Appendix G provides more data on the cargo history over the period of 1980 to 2003.

More recent July 2005 numbers illustrate that the total passengers in the Pittsburgh International Airport, including those enplaned and deplaned, was 1,021,568 passengers. This number is 30.74% less than the 2004 volume. These numbers follow the trends discussed above; year-to-date, there have been approximately 2 million less passengers in 2005 than in 2004. Appendix H illustrates a more detailed breakdown number of the types of operations as well as the breakdowns of domestic and international air passengers.


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While this information conveys a significant decrease in the number of passengers that use the facilities of the Pittsburgh International Airport, the number of tourists and business travelers visiting the city has not changed significantly. The occupancy percentages over a similarly defined time period have not declined in such a drastic fashion.

Many visitors to Pittsburgh rely on other means of transportation to enter into the area. The Commonwealth of Pennsylvania has placed extensive efforts and funding into improving access from the airport and surrounding areas into downtown Pittsburgh. Many expressways allow visitors access to the downtown area from locations near and far.

When considering transportation trends and figures it is important to recognize the number of commuters to Pittsburgh. The data is compiled based on the commuters to Pittsburgh in a ten county area. Each day, 1,179,216 people commute into the city of Pittsburgh. Of these commuters, 77.8% arrive in a personal vehicle, a car, truck, or van, alone. Another 9.70% carpool and 5.60% use some form of public transportation. Walking, other means, and working at home comprise the means of transportation for the other commuters. See Appendix I for further detail. AREA ATTRACTIONS AND ACTIVITIES

Once a visitor has arrived in the city of Pittsburgh and its immediate surrounding area, he or

she will find many activities in which they can participate. There is something for everyone to do or see while in Pittsburgh. These attractions and activities provide yet another opportunity to enjoy this wonderful city.

The types of leisure activities available vary greatly; if a visitor has an interest in something, there is a great likelihood it is offered in Pittsburgh. Some of the most popular attractions are detailed below; a more comprehensive list can be found on Appendix J. Additional information can also be obtained from the Greater Pittsburgh Convention and Visitors Bureau (www.pittsburgh-cvb.org). Pittsburgh offers many opportunities for hiking and biking, shopping, visiting museums and other visual arts establishments, sightseeing and tours, attending performances by many different performing arts troupes, viewing a sports event, and/or enjoying a lively nightlife.

City Parks. Throughout the city of Pittsburgh, there are many city parks, with an area totaling 1700 acres; these parks offer visitors lawns, woodlands, scenic drives, and walking/biking paths. The Eliza Furnace Trail, which follows the Monongahela River, provides three and a half miles of trail through the Downtown Pittsburgh area. Both of these areas allow travelers to unwind after a long day of meetings, to run or to take a stroll, or to simply enjoy the scenic aspect of Pittsburgh.

Shopping. Many of the visitors enjoy shopping as a primary form leisure. There are many

different venues in which purchases can be made. Divided into four main districts, and then the Airmall at the Pittsburgh International Airport, shoppers can find a variety of stores and boutiques offering a great range of unique products. Each district has distinctive characteristics and products unique unto itself.

Museums and Sightseeing. Pittsburgh provides many opportunities for visitors to attend museums, zoos, and similar tourist destinations. The Carnegie Museums attract a great number of visitors, as do the Phipps Conservatory and Botanical Gardens and the National Aviary. Pittsburgh is also home to the Pittsburgh Zoo and Aquarium, which is one of the nation’s few zoo and


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aquarium combinations. The Andy Warhol Museum houses the work and pop sensibilities of one of the most famous Pittsburghers, Andy Warhol. This museum offers a great opportunity to view his work and special exhibits that are offered in limited engagement.

If a guest to Pittsburgh is interested in sightseeing and tours, there are many different companies and tours that would meet their needs. Special tours can be arranged to meet the needs of business and group travelers or for other special functions. Noted as one of the most popular excursions in Pittsburgh, the Duquesne and Monongahela Incline provides guests with one of the most perfect and picturesque views of Pittsburgh high atop Mount Washington. Just Ducky Tours provides a very enjoyable way to view Pittsburgh; guests are transported on both land and in water by a genuine World War II amphibious vehicle. This tour is a delight to both the old and young.

Theatrical Performances. Guests can also attend a wide variety of performances in venues around Pittsburgh to promote the cultural arts. The Pittsburgh Symphony Orchestra, the Pittsburgh Ballet Theatre, the Pittsburgh Opera, the Bach Choir of Pittsburgh, and the Pittsburgh Irish and Classical Theatre are just some of the many opportunities for guests to experience the culture and talents of these performers.

Sporting Events. The city of Pittsburgh is very well-known for their sports teams. Many hotels in the areas see sold out nights and increased occupancies during times that teams participate in competition. Heinz Field, home of the Pittsburgh Steelers, PNC Park, home to the Pittsburgh Pirates, and Mellon Area, home to the Pittsburgh Pirates, are all located in and around the Downtown area. Many visitors to Pittsburgh come for the sole reason to cheer on their teams. Additionally, all of the venues offer meeting space for special events. This can be an interesting and memorable area to house a group function.

Nightlife and Dining. The nightlife of Pittsburgh is extremely varied and quite lively. Visitors can attend concerts, bars, dance clubs, jazz bars, or restaurants. A recent revitalization in the nightlife in the South Side area has been seen. Also popular in Pittsburgh are the many different dining options available to guests; ranging in ethnicity, atmosphere, price, and other characteristics, there is sure to be at least one restaurant to meet the needs and satisfy the taste buds of visitors to Pittsburgh. The restaurants in the Downtown area are too numerous to mention by name, but it is important to note that many of these establishments have received numerous awards and accolades for their products and service.

The Greater Pittsburgh Area offers its guests a wide variety of leisure attractions. Every visitor can be satisfied by the numerous options for adventure and leisure. These attractions also aid in the marketability of the Pittsburgh area. Further promotion of its attractions and venues could result in an increase in the number of travelers to the area and/or the number of dollars spent by each guest. The different segments of travelers visiting the area should be targeted, and campaigns to promote appropriate activities should be made accordingly. DEFINITION AND ANALYSIS OF COMPETITIVE SET

Throughout the areas of Pittsburgh, including the Airport, Downtown, Oakland and South

Side, there are a variety of lodging facilities from which travelers can choose. From economy class to luxury, there is something for every price range and request. Presently, the main competitors of


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the proposed establishment are within the Downtown area of Pittsburgh, South Side, the potential desired location for construction, Oakland and North Shore. Due to location, as well as market place, the main competitors of the proposed hotel are the Holiday Inn Express in South Side, Wyndham Garden Hotel, Hilton Pittsburgh, Marriott Pittsburgh City Center, Omni William Penn Hotel, Renaissance Pittsburgh Hotel, Sheraton Station Square Hotel, and the SpringHill Suites Pittsburgh North Shore. These eight properties are in close proximity, or within, the Downtown area of Pittsburgh. A majority of travelers, including both the business and leisure markets, stay in the Downtown area due to its close proximity to sports arenas, convention centers, shopping, and local attractions.

The Hilton, Marriott, Omni, Renaissance and Sheraton Hotels are all located in the heart of the Downtown district of Pittsburgh. As seen on Appendix L, they all offer similar services within their establishment. From meeting rooms, banquet halls and eating establishments, these hotels are ideal for the leisure and business traveler. Similar amenities are offered at each property to satisfy the demands and demands guests; this information is contained in detail on Appendix M. As stated, similar amenities include high-speed internet and dual phones lines, which appeal greatly for the business traveler, as well as in-room movies, and exercise facilities. The locations of these properties are ideal for anyone who would like to walk the streets of Pittsburgh and visit the local attractions and eateries. Evaluations of the overall properties are shown on Appendix M, as well as their property facilities in Appendix O.

South Side is currently an emerging area outside the area defined as Downtown Pittsburgh. Its artistic appeal attracts tourists to venture out of the Downtown area and see the entertainment, shopping and eating that South Side has to offer. The main competitor within South Side is the Holiday Inn Express. Unlike the Downtown hotels, the Holiday Inn Express does not have the same amenities and business facilities offered, as seen on Appendix K and Appendix M. Although they may lack the amenities that appeal to business travelers, the Holiday Inn Express cites that a majority of their guests are visitors of Duquesne University, University of Pittsburgh and Carnegie Melon University. These visitors include prospective students, parents and student groups and teams visiting the universities; percentages of the breakdown of travelers are shown on Appendix N. The South Side area lacks lodging properties. Because of the lack of other lodging properties in the area and its close proximity to Downtown, South Side is the ideal area for construction of a hotel. The increases in the number of travelers visiting South Side and the number of dining and retail establishments create a need for a unique property in a unique area.

The North Shore area is the same distance to the Downtown area of Pittsburgh as is South

Side. Similarly, these areas are both waterfront areas just outside the Downtown area and have established themselves to be unique, developing areas. Based on this information and the similarity of the North Shore to the South Shore, SpringHill Suites Pittsburgh North Shore can be identified as one of the main competitors for this project. SpringHill Suites is an all-suite, full service hotel which offers a series of amenities, listed on Appendix K, as well as a full range of services listed in Appendix L. SpringHill Suites finds that a majority of their travelers during the week are commercial support, as seen in Appendix N. During the weekend the demographic of the guest changes and a significant increase in the number of leisure travelers staying on the property is seen. The attraction of guests to this property can be attributed to its convenient location to the Downtown area and the sports arenas, or the pleasurable accommodations that guests enjoy at the SpringHill Suites.


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Located in the Oakland section of Pittsburgh, the Wyndham Garden can be identified as another competitor of the proposed hotel. It offers many amenities listed in Appendix L, business facilities and a restaurant, seen on Appendix K. Because of its close proximity to the hospitals within the area, the Wyndham finds that a lot of their clients during the week and weekend are visiting loved ones, doctors and nurses of the local hospitals. This is shown on Appendix N. While other hotels in the area see significant fluctuations in volume of guests depending on the season, the Wyndham enjoys a steady flow of guests throughout the year because if its proximity to local hospitals. This location, however, often limits the types of travelers visiting the property; the volume of leisure travel is much lower at this property than at other locations in the Pittsburgh area.

Construction Trends. The ages, number of rooms, and construction dates of the hotels

identified as competitors of the proposed property vary greatly. The oldest property is the Renaissance Pittsburgh Hotel, which was built in 1906; the newest is the SpringHill Suites Pittsburgh North Shore, which opened in Spring of 2005. Over the about the past century, properties have been built and the total number of rooms has increased. Of the eight competitor’s properties, half were built between 1906 and 1980; a total of 1797 rooms, or 61.67% of the rooms were built in this period. The remaining four properties were built over the time between 1995 and 2005, adding a total of 1117 rooms. There are no significant trends that can be noted based on this data. A detailed breakdown of the number of rooms, the percentage change, and other related figures can be found in Appendix P.

Occupancy Percentages and Average Daily Rates. After examining the major competitors and the amenities that each facility offers, the occupancy percentages and average daily rates should be considered to understand the economic vitality of the area. These numbers provide an estimate and the actual number of guests that visited each property by season and the average rates the paid. While the figures vary from property to property, there are some important trends that should be noted. The hotels for which data was gathered identify their primary market as the business and/or convention center traveler. Thus, the occupancy of the properties is dependent on the functions that are happening in and around the city of Pittsburgh. Most hotels identified their busy season as the summer; this is reflected in occupancy percentages that reach their peak. Many hotels sell out on certain weeks during the summer because of the high volume of travelers in the area. The Holiday Inn Express Hotel Suites sells out an average of five or six nights a week during the summer months. The hotel with the highest occupancy percentage over the summer is the Marriott Pittsburgh City Center Hotel, with an occupancy of 95.38%, and the lowest is the Wyndham Garden Hotel-University Place, with an occupancy of 50.45%; the remaining six properties have occupancies in the upper eighties to low nineties, to average 86.44%. This figure is well above the industry standard average occupancy of between 65% and 70%. The detailed seasonal occupancies to which this explanation is referring can be found in Appendix Q.

There is a slight decrease in the occupancy percentages in the autumn, but the average estimated occupancy is still at the second highest point of the year, behind only summer. The number of business travelers decreases marginally, but the number of travelers in the Pittsburgh area on the weekend increases. This data can be found in Appendix R. The larger volume of visitors on the weekend can be primarily attributed to Steelers football games. A majority of hotels have perfect sells these weekends. Other festivals and events are held during this time as well; more leisure-oriented weekend travelers will be attracted to such events. Occupancy percentages during the autumn range from a high of 92.30% at the Marriott Pittsburgh City Center to a low of 58.47%


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at the Sheraton Station Square Hotel; the average estimated area occupancy for the autumn is 77.38%, which is again above the industry average.

Hotels hit their slowest season with the advent of the holiday season around Thanksgiving, and continue with decreased occupancy percentages and ADRs until February. Most businesses do not host meetings or conferences during this time. The hotels that enjoy the business of universities in this area do not have their normal volume of guests because many schools have extended winter breaks. There are no sports competitions held over these months either. The occupancy percentages range from a high of 58.29% at the Holiday Inn Express Hotel Suites to 14.24% at the Marriott Pittsburgh City Center. While these properties experience significant decreases in the volume of overnight guests, it is important to note that many of these properties have more rooms than the standard hotel. The season average was 41.76%, which is below the industry average.

Occupancy percentages begin to increase in the spring. Businesses begin hosting conferences and meetings, universities are back in session, and leisure visitors are attracted to Pittsburgh’s beautiful springs. The occupancies during the spring range from a high of 82.12% at the Marriott Pittsburgh City Center to a low of 63.33% at the Wyndham Garden Hotel-University Place; the season average is 75.45%, which again, is above the industry average occupancy percentage.

The average daily rate for Alleghany County (Appendix S) reflects the ADR, the total room nights available, and the occupancy for the Greater Pittsburgh area. Over a four year period from 2000 to 2003, the ADR reached its peak in 2000, with an average daily rate of $81.56; occupancy also peaked this year, reaching 66.30%. These numbers reflect the industry trends that the year 2000 was the height of the hospitality industry in terms of earnings and occupancies. As discussed previously, the attacks of September 11, 2001 negatively affected the occupancy and ADR for many hotels. Profits were still made, but in smaller amounts than 2000. The data for the Pittsburgh area reflects this trend. The ADR decreased by 2.31% between 2000 and 2001, and occupancy decreased by 6.10%. In 2002, the ADR decreased by another 1.08% and occupancy by 0.20%; these changes were quite minimal compared to the 2000 data. The ADR in 2003 decreased by 0.22%, or $0.03, and the occupancy by 0.10%; these numbers suggest the end of the downward trend in occupancy percentages and average daily rates.

Appendix S also contains information about the change in the total room nights available. Over the same four year period, the total room nights available increased each year. Beginning with 4.7 million in 2000, there were a total of 5.1 room nights available in 2003; this is a cumulative percentage change of 8.08%.

Appendix T shows a listing of the various room rates in among the hotels identified as

competition. These rates range from property to property but provide a good benchmark when considered with the occupancy percentages as to the success of a property based on how much guests are willing to pay. The rates offered are quite competitive and are well above the industry average of approximately $83.00 a night. INTRODUCTION OF PROPOSED PROJECT

When the new hotel is constructed on the waterfront location of South Side, the aim and

focus of the project is to be a serious competitor against the eight hotels mentioned above. The


13

proposed property will potentially steal some of the market share of existing hotels and create new excitement to visit the area. Its interesting and entertaining location will appeal to the university customers who are currently guests of the Holiday Inn Express. Also, the property will compete with the Downtown district. It is optimistically desired that meeting groups, business and leisure travelers will stay in South Side due to its convenient location to the Downtown area; its charming location on the waterfront, however, will attract a variety of travelers. With the construction of a new hotel and a successful marketing campaign of both the hotel and the area, occupancy ratings in the competing eight hotels should decrease. With increases in tourist attractions and a more defined and well-known appeal, the new hotel will be a main competitor to the more successful and well-established hotels in the Pittsburgh area.

Target Market. The target market of the proposed property will be a unique group; travelers who desire an uncommon hotel room filled with amenities and services not available at other properties. Amenities are often in a more commodious form; the proposed property will focus on the service experience. A majority of the competitors in the area are standard full-service hotels; there is little product differentiation and a great deal of room for properties that can set themselves apart from those properties that already exist. The business traveler who desires a more luxurious, stylish, and modern will be a potential customer. The business traveler who desires to impress his or her clients will be a potential customer. Leisure travelers interested receiving a top-class service experience in an emerging area of Pittsburgh will be potential customers. A younger to middle-aged clientele will be sought; the market is filled with properties that accommodate older travelers and families. The proposed project will target and be marketed to a different market segment.

The customers that will be potential customers of our products and services will select the proposed project because of the nature of what will be built. Travelers are increasingly demanding a service experience; this need will be catered to and accommodated by the property. Many of the guests attending meetings and conferences attend countless meetings and spend more nights in hotels than they desire to count. If a different type of product is provided, these travelers might realize the experiences that can be provided to them. The business traveler will receive all of the standard business amenities, but will also experience impeccable service in a unique, stylish environment. Outside of the business and commercial sector, the leisure traveler will be attracted to the property because of the distinctiveness of the property and the area. The South Side area is emerging as an area to watch in Pittsburgh. Guests have access to all the attractions of the Downtown area in a much more unique and individualist setting. Close to shopping, great nightlife, entertainment, and other attractions, guests will have their needs met.

Rates. The proposed property will be a full-service property in the upper price range of the average rates in the area. While there are many properties in the area, the Pittsburgh area is lacking a luxurious hotel with rates that are competitive. Business travelers are willing to pay, on average, $261.63 a day during their trips; this number would then be higher or lower depending on type of job the person has. The price charged would be based on information complied after research targeted at those who find themselves in the upper bracket of business travelers is completed. As implied by having higher rates, the proposed property would be of a very high quality. In order to stay competitive, and to achieve a competitive advantage, only a high-quality, guest service focused hotel would survive. In a market defined by similar products, offering something better, something more luxurious, would allow for greater ownership of the market. A greater awareness towards this factor will allow more successful marketing and advertising of the property.


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Preliminary Marketing Plans. To promote the proposed property, efforts will be focused on marketing not only the hotel, but the city of Pittsburgh and the surrounding South Side area. Trends have shown that after a decrease in the number of travelers to the area, there has been somewhat of an increase in travel. Experts predict that this trend will continue in the future. Both South Side and the Downtown area offer many attractions, business services, and other activities that can appeal to both the business and leisure traveler. More excitement needs to be created around the city of Pittsburgh. The city is often overshadowed by Philadelphia; a stronger, more focused and aggressive marketing campaign for the Pittsburgh could in turn increase the number of visitors to the area. The attractions and conference services would be mentioned; links would be drawn between staying at the proposed property and enjoying the services and attractions in Pittsburgh. Increases in number of visitors translate to higher occupancy percentages and greater profits in retail outlets around the city. If part of the campaign is focused on Pittsburgh, the commitment of the proposed hotel to the community will be illustrated. Packages and specials can be created linking the property to the city and its attractions.

Additionally, the property itself will be the focus of intensive promotional activities. Marketing directly to large companies directly in the Pittsburgh area, to companies in surrounding areas, and to large groups will help attract the type of business travel that the hotel will serve. The marketing will highlight the differences between the proposed property and its competitors. Special efforts will be made to target those groups identified as potential customers. Focusing on the strengths of the hotel, the uniqueness, the luxury, and the impeccable service that will be provided should be of utmost priority. If potential guests understand that the property is different, they will be more inclined to visit the property and have a stylishly distinctive visit. MARKET ANALYSIS CONCLUSION

The city of Pittsburgh provides a wide range of guests many services, accommodations, and

attractions. This area is quite marketable and profitable in terms of building a property in the area. Focusing on both the business and leisure traveler will allow greater maximization of profits for the hotel and surrounding retail establishments. Pittsburgh represents a prime opportunity to build a property in a city that will experience growth and a steady stream of visitors willing to time and spend money in Pittsburgh.


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Section 4: Mission, Strategies etc.

4.1 Vision

The Crowne Plaza- South Side will gain a significant portion of the Pittsburgh hotel market share within the first five years of operation and be the market leader in the South Side area. Profits and the number of satisfied guests are expected to increase on a yearly basis. The hotel will help rejuvenate and incite tourism to this unique neighborhood, which has seen great increases in business, tourism, and retail in the past twenty years. This is a potentially very profitable market for new hotel project; the Crowne Plaza will benefit from the expected growth in South Side and the already steady market in the City of Pittsburgh. The Crowne Plaza-South Side is positioned in the market to attract those guests who seek a distinctive hotel in an emerging, artistic neighborhood. Business travelers, weekend guests, visitors to the various universities in the area, sports fans, and new guests interested in the Pittsburgh area are all potential guests.

The Crowne Plaza will be joining an already competitive hotel market with most of the major hotel brands represented. The proposed project will be distinguishable from the competition in the services offered and the guest service culture utilized by all employees. The waterfront location, the improved bedding and bathroom packages, the emphasis on complete guest comfort and satisfaction, and the various services and amenities that will be offered, which will be discussed in later sections, will attract guests to the property and enable the goals and ultimate vision of the hotel to be accomplished.

4.2 Mission Our mission in developing, building, and opening the Crowne Plaza-South Side is to create

a profitable, upscale hotel property that provides guests with an unparalleled service experience at a unique lodging outlet. We will claim a significant portion of both the business and leisure markets, desiring to appeal to a traveler who seeks a hotel with amenities not provided at other hotels. While guest focus is paramount to our success, we also aim to provide substantial returns to investors and maintain a profitable financial state.

4.3 Values The values of the Crowne Plaza- South Side reflect values of SBC Lodging and the InterContinental Hotel Group. In all endeavors, we value honest, loyal, and professional service. The best product will be offered at the most competitive price. We value the efforts of our employees and will recognize their efforts to excel and serve the guest. The guest is the core reason for our business; meeting or exceeding their needs should be our focus in every encounter. Priority Rewards Club members are also of great importance and will be recognized for their loyalty to the brand. Integrity, professionalism, a desire to succeed, and unparalleled guest service are our key principles.


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4.4 Objectives With the development of this property, there are many long-term objectives that are at the focus of our efforts. Sales growth in the areas of business and transient guests should increase each year; the level of increase will be dependent on the economic conditions of the market. While increasing profits is important, a focus will be placed on meeting the high guest satisfaction standards set by the hotel. The market that exists in the South Side neighborhood of Pittsburgh is a promising area that has seen economic growth in recent years. The addition of the property will increase the economic vitality of the environment and help develop and support the businesses in the surrounding area. A focus will be placed on retaining and developing the employees of our hotel. Support for their development, education, and ultimate success will be given; without employees, the other goals and objectives will be unattainable.

4.5 Strengths, Weaknesses, Opportunities, Threats - Strengths: The property enjoys an amazing location and offers rooms that are unlike any other rooms in the City of Pittsburgh. The amenities and room features are modern and reflect new trends in the industry. The newness of the property also distinguishes us from the competition. The property is marketed towards a guest who has not been a target of other hotels, which is reflected in the development, design, and marketing of the property. - Weaknesses: Our property does not have an established customer base. The support of our property depends upon the support of South Side or guest’s desire to stay a few miles away from the heart of the city. Dependency on group and business travelers makes forecasting difficult and the profits of the hotel to vary depending on the state of the economy. - Opportunities: We have an opportunity to gain control of an entire market and establish our property as the best in South Side as well as a main competitor among all hotels in Pittsburgh. We can support and contribute to the economic success of South Side through our efforts and help this neighborhood emerge as a unique and promising area. - Threats: The Pittsburgh hotel market is quite saturated; almost every single hotel company has at least one property within the city district and/or at the airport. Our competitive set includes the Holiday Inn Express, the Wyndham Garden Hotel, the Hilton Pittsburgh, the Marriott Pittsburgh City Center, the Renaissance Pittsburgh Hotel, and the Sheraton Station Square Hotel. Of all these hotels, the Sheraton Station Square poses the biggest threat to the proposed property’s success. The Sheraton Station Square Hotel offers a similar product; while this property is not waterfront, they are located near the water in a prime location in South Side. This creates a very competitive environment and a potential difficulty in attracting guests. The market is quite strong for about nine months of the year, but the period from Thanksgiving until February is quite slow due to the decrease in conference and meeting business. An average occupancy percentage for seven competitors during this time is 41.76%. This is quite low and about 25% below the industry average. This is a potential threat to the success of our hotel. To respond to these threats, a major focus will be placed on achieving the set goals, which address these situations. Special programs could also be offered during slower times to encourage travel.


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4.6 Strategies - Sales: Increase sales by targeting the corporate Pittsburgh market, outside companies and groups that would be satisfied by the hotel’s features and amenities, and local universities. Have strong Internet and internal reservations programs offering the most competitive rate possible. - Marketing: Market hotel to the Pittsburgh community, local businesses, sports venues, the Convention and Visitors Bureau, and other outlets. Create special promotions to increase the number of travelers during slow periods and on weekend nights. Along with the hotel, market the South Side neighborhood and all its attractions. - Products/Services: Rely on unique programs and products offered to differentiate our property from other properties in the market. The Crowne Plaza Sleep Advantage Bed, our focus on bathroom design in creating the Blissful Bath and using Kohler products, our waterfront location, etc. will all be key selling points for the hotel. Sales and marketing will present the products and services offered in the most effective way to confirmed and prospective hotel guests. - Technology: Have a continuous commitment to technology and offer technological improvements. In today’s hospitality industry, success is dependent upon distinguishing from competition; much of this product differentiation falls into the area of technology. Guest technology and technology to improve operations will be utilized and updated continuously. High-speed Internet, fully integrated property management systems, an interactive and informative website, etc. will all be key focuses of the hotel’s initial hotel strategies. - Finance: After project completion, earning profits and reducing long-term liabilities will be a focus. Maintaining and adhering to stringent department budgets will be a strategy and task to be completed by all managers. All financial decisions and purchases will be submitted to the Controller and then approved by the General Manager. - Food and Beverage: To develop and manage a successful on-property restaurant that derives its business from both hotel guests and outside visitors. Marketing and proper promotional campaigns are essential. Successful food and beverage services will be offered for all catering, banquet, special events, and meeting services.

4.7 Goals (i) Obtain an occupancy percentage of least 50% within the first six months of operation.

- To achieve this goal, a strong, effective marketing campaign will focus on increasing hotel sales to business and transient guests. The hotel will be promoted in the Pittsburgh area, to major corporations, and to other outlets to help boost sales. Reservations and listings through the InterContinental Hotel Group’s website will also supplement sales. Guest satisfaction is also essential; this will ensure that loyal relationships with guests are established.

(ii) Obtain an occupancy percentage of at least 65% within the first year of operation. This level will just eclipse the Pittsburgh area occupancy percentage of 59.90% in 2003 and the franchised Crowne Plaza average of 62.3%.

- This goal will be achieved in a similar manner as detailed as above. Reliance on word of mouth from previous guests will increase, special sales promotions will be offered, and


18

efforts will be directed at gaining the market share of many of the competitors in the area. Selling to groups and booking meetings, special events, and other functions will also assist in achieving this target occupancy percentage.

(iii) Increase occupancy over the first five years of operation to reach an occupancy level of at least 75% within this designated time; an approximate two percent increase is expected each year.

- Continue tasks as detailed above. An emphasis will be placed on maintenance and upkeep of the hotel to allow its age and property features to be a main selling point. Increasing the number of groups that book throughout the year, and especially during the slower periods between November and February. Continuing to gain the support of loyal and repeat customers will also be beneficial to maximize occupancy. Additional sales and marketing campaigns will be unveiled and new sales promotions will be offered.

(iv) Gain the lodging business of at least three major companies incorporated in Pittsburgh within the first six months of operation. Universities will also be targeted in this campaign.

- To accomplish this goal, sales and marketing efforts will be directed at targeting the meeting business and daily needs of the seven Fortune 500 companies, the Forbes 2000 Companies, and the Business Week Global 1000 companies. Alcoa, H.J. Heinz, U.S. Steel, PNC Financial Services Group, Mellon Financial Corporation, and Wesco International, Incorporated are all potential companies that will provide the hotel with regular meeting and overnight business. Additionally, efforts will also be directed toward selling rooms and meeting space to Carnegie Mellon University and the University of Pittsburgh.

(v) Achieve a Food and Beverage Department profit percentage of at least 10% in the first year. This profit percentage will increase two percent in years two and three.

- To achieve this goal, the Food and Beverage Department will be held accountable to control food costs, serve the correct portion sizes, control labor costs, and utilize all resources wisely. Increasing food and beverage sales is the other component of achieving this goal. Creating and serving innovative, high-quality dishes, providing customers with excellent service, and holding the restaurant and other food and beverage outlets to the highest standards are all essential parts to reach the desired profit percentage.

(vi) Earn a score of at least 90% on the bi-yearly Quality Assurance inspections during the first year of operation.

- Before each Quality Assurance inspection, the hotel management and designated QA team will complete a pre-inspection survey of the property. Throughout the year, maintenance will be completed at predetermined times and adherence to brand standards will be expected. Constant monitoring and commitment to high Quality Assurance scores will in turn make this goal easier to complete.

(vii) Achieve an Overall Guest Satisfaction Score of at least 84% in the first six months of operation; this score should increase to at least 86% by the end of the first year, and 88% at the end of the second.

- Overall Guest Satisfaction Scores are dependent upon the hotel’s ability to serve and satisfy the guest. This perhaps is the most important goal; without satisfied guests, the other


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goals become nearly impossible to achieve. Guest satisfaction will be the goal of every department and employee in the hotel. Employee empowerment and knowledge of the property will be key training issues; these employees are responsible for serving the guest. Whatever employees can do to satisfy the guests will be done. Tasks such as calling guests after check-in, responding immediately and following up when problems occur in-house and following up to Guest Survey Responses will all be complete. If the guest understands that they are the primary concern, and that each guest that visits the Crowne Plaza is valued, their satisfaction will increase.


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Section 5: Franchise Comparison The lodging market in the Pittsburgh poses many challenges and benefits for potential

projects. After completing an intensive market analysis, we found that market is comprised of both business and leisure travelers; the business traveler spends far more money per trip in the area than do leisure travelers. Properties enjoy high average daily rates and occupancy percentages for a majority of the year, but the period between Thanksgiving and February is especially slow during the week due to a decrease in the number of business and conference travelers. Many of the successful hotels are full-service, relatively upscale hotels targeted at serving the business traveler; each market segment, however, is represented. The market does not offer much variation from one product to another. After analyzing the statistics, SBC Lodging finds that offering an upscale, full-service hotel that is different from the competition would be the most profitable venture. We propose that a waterfront Crowne Plaza be built in the South Side neighborhood of Pittsburgh. An emerging area that is quite unique, we find that South Side will allow our product to be different; a property that serves the guest in an innovative and fashionable setting. In this comparison, Crowne Plaza, an InterContinental Hotel Group franchise, will be compared to Doubletree Hotels and Suites. Crowne Plaza is selected as one of our options because there are none of these properties in the area; in a market in which all major brands are represented, adding a brand that is not currently positioned in the city is appealing. Additionally, we feel that we could accomplish our professional goals and objectives with this brand. The Doubletree brand is used for comparison because of its design and popularity among business travelers. This property would fit the area that we have selected well.

5.1 Background of Franchise Options When selecting a franchise, there are many costs that must be weighed and benefits that

must be considered. To make our decision to build a Crowne Plaza Hotel in the South Side neighborhood of Pittsburgh, we examined both internal and external factors. From first glance, a Doubletree brand property would fit the market in South Side very well and would be profitable for investors. The Doubletree philosophy and standards are quite comparable to those our company, and the name is well-reputed within the hospitality industry and would attract travelers. Doubletree offers its Sweet Dreams Serta bed and a variety of other amenities that provide for a luxurious stay; these amenities also allow it to distinguish itself among other hotel properties. The disadvantage, however, of a Doubletree brand property is that, in many cities, Doubletrees do not carry the desired level of distinction and service. While there are many Doubletree properties that are very luxurious and provide an upscale level of service, many guests and potential guests do not associate this brand with a unique lodging outlet, which is one of our primary goals in construction of the property. Additionally, the minimum number of rooms which Doubletrees must have is two hundred and fifty rooms. The SBC Lodging Company does not desire to have a property that large. A smaller, more intimate, and distinctive property would be more appropriate.

Crowne Plaza has deemed itself, “the place to meet” and offers many amenities and services designed specifically for the business traveler. It also appeals to the leisure traveler. The


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target customer of the Crowne Plaza is a guest who seeks a hotel is “dynamic, contemporary, and distinctively upscale.” This, in a nutshell, is the type of property that will succeed in the South Side area. It will be a different, inimitable hotel that serves the guest. Crowne Plaza is comprised of 215 hotels or 61,637 rooms globally; 60% of these hotels are franchised. This represents a total of 12% of the total rooms of the InterContinental Hotel Group. The average room rate for Crowne Plazas within the Americas, which include Latin America, Canada, Mexico, and the Caribbean, was $96.24 in 2004, and the yearly average total rooms sold was 33,645. For franchised properties, the average occupancy percentage in 2004 was 62.3%, which is an increase of 1.8% from 2003. The average daily rate was $91.28, an increase of 1.5%, and the revenue per available room was $56.60, an increase of 4.5% from the previous year. These numbers are slightly lower than the company-wide average; higher ADRs, occupancy percentages, and RevPars are enjoyed by company-owned and managed properties. Entrepreneur.com has named InterContinental Hotels number 221 in their Franchise 500 rankings in 2005. In 2004 it was the 44th fastest growing franchise and 20th on the list of America’s Top Global Franchises. Crowne Plaza franchisees receive many benefits from their affiliation with the brand. These range from purchasing discounts to a dedicated sales and marketing team that launches campaigns intended to increase revenues and room nights sold. Twp of the most profitable benefits provided by the brand are its reservations system and complete property management system, both of which are critical to a hotel’s success. All of the benefits are designed to ensure that the franchise is successful. A complete description of the benefits enjoyed by Crowne Plaza franchisees can be found in the Appendix U.

5.2 Selected Franchise The Crowne Plaza brand is relatively new to the market. The InterContinental Hotels brand was launched in 1994 as an effort to move the company into the upscale market. This launch followed the 1990 acquisition of Holiday Inn by Bass; this merger allowed the Bass company to increase in size and recognition. Since 1994, Crowne Plaza has increased to its current size of 215 hotels, 94 of which are in the United States. As of December 31, 2004, there had been a net increase of 13 properties in 2004. Additionally, IHG reported formal approval of franchise applications for 587 hotels, or 59,809 rooms. Approximately 20%, or 118 of these properties are expected to be InterContinental or Crowne Plaza brands. While there are no assurances that these hotels will open in the future, these numbers suggest the growth that is expected to continue within Crowne Plaza and the entire IHG group. The increases in profitability are also seen in the increase in RevPar, ADR, and occupancy rates from one year to the next. The below table depicts the different values of the franchise costs associated with the Crowne Plaza and Doubletree.

Franchise Options


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Costs/ Service

Crowne Plaza

Hotels and Resorts

Annualized (over a period

of 4 years)

Doubletree Hotels and

Suites

Annualized (over a period of 4

years)

Application Fee 3,500 3,500 2,500 2,500

Initial/Start-up Fee 75,000 75,000 75,000 75,000

Royalty 355,961 1,548,010 284,769 1,238,408

Advertising/Marketing Fees

213,577 930,607 284,769 1,238,408

Reservation Fee 213,577 930,607 N/a N/a

Total $861,615 $3,487,724 $647,038 $2,554,316*

Training yes yes

Consultants yes yes

Property Support yes yes

Quality Assurance yes yes

*The total franchise fees for a Doubletree Hotel will be higher than appears in this chart;

miscellaneous charges are a component of the franchise costs, and none of the information that is available featured stringent guidelines on miscellaneous cost calculations. On a per room basis, it appears that the Crowne Plaza would in fact be less expensive.

To calculate the initial fee for Crowne Plaza Hotels and Resorts, the standard is the greater amount of either $75,000 or $500 per room. For our 150 room hotel, these two amounts are equal. The royalty fee is 5% of gross room revenue. Advertising/Marketing fees are calculated by taking 3% of gross room revenue, and the reservation fee is 3% of gross room revenue as well. The sum of these costs, divided over a per room basis is between $90,000 for a 100 room property and $153,000 for a 300 room property.

The fee structure for Doubletree Hotels and Suites is quite similar to that of Crowne Plaza.

The initial fee is a minimum of $75,000. Royalty fee is also 5% of gross room revenue, and advertising/marketing fees are 4% of gross room revenue. The reservation fee is included in other collected fees. The sum of these costs, divided over a per room basis is $112,535.

To calculate the franchise fees, average daily rates were calculated as were the projected

number of rooms sold. The average daily rate is the average of the six different types of standard rates offered at the property; these rates have been derived from the average rates of competitors in the same market. The rates were calculated based on the average rates over four different periods of the year. The target occupancies identified in Section 3 have been used here to calculate the total number of rooms sold.

This figure was then multiplied by the average daily rate to determine the gross room revenue. Appendix V provides a table listing the numbers used in the calculations of total franchise fees. An average was taken of the room revenues based on revenues by room type and by business type. This was calculated on a yearly basis for the four years over which the fees are annualized.


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0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

2008 2009 2010 2111

Royalty Fees

Marketing Fees

Reservation Fees

Revenue

5.3 Projected Revenue and Occupancy

Below are charts presenting the expected rooms revenue for the first five years based on target occupancy levels and average rates. These rates have been calculated based on the average room rates of five hotels in the Pittsburgh area; the average rate for each competing hotel is based on five different periods throughout the year. The hotels used were the Pittsburgh Hilton, the Omni, Holiday Inn Express, Sheraton Station Square, and the Renaissance Pittsburgh Hotel. There could be variations to these rates and/or occupancy levels which, in turn, would have a great effect on the revenue. Additionally, the type of business could be different, which would also affect revenue in both positive and negative ways. There would also be different rates for weekdays/weekends. Rates change each year to reflect the changes in the value of the dollar and the need to stay competitive in the market place. AAA and AARP rates are averages of the advertised prices at the competitor’s websites; this is the same for the government rate. The Rooms Matrix presents the type of room offered at the Crowne Plaza-South Side as well as the total number of each type of room. A further description of the room types can be found in Section 5. Rooms Matrix

Room Type Total Number of Room

Type King Standard 50 rooms King Deluxe 25 rooms

Queen Standard 25 rooms Queen Deluxe 25 rooms

Suites 5 suites Waterfront Balcony 20 rooms

I.) Year 1 Chart A: Room Type, Year 1


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Room Type Average Rate Occupancy Percentage

Total Rooms (yearly)

Total Projected Rooms Revenue

King Standard $ 169.00 65% 12,045 rooms $2,035,605 King Deluxe $189.00 65% 6,205 rooms $1,172,745 Queen Standard $169.00 65% 6,205 rooms $1,048,645 Queen Deluxe $189.00 65% 6,205 rooms $1,172,745 Suites $ 309.00 65% 1,095 rooms $ 338,355 Waterfront Balcony $ 289.00 65% 4,745 rooms $1,371,305 TOTAL 65% 36,500 rooms $7,129,400

Chart B: Business Type, Year 1

Business Type Average Rate

Occupancy Percentage

Percentage of Hotel

Total Number of Rooms (yearly)

Total Projected Room Revenue

Transient $219.00 65% 55 % 19,574 rooms $4,286,706 AAA $138.00 65% 5% 1,780 rooms $ 245,640 AARP $127.00 65% 5% 1,780 rooms $ 226,060 Corporate $219.00 65% 25% 8,897 rooms $1,948,443 Government $113.00 65% 10% 3,559 rooms $ 402,167 TOTAL 65% 100% 35,590 rooms $7,109,016

II.) Year 2 Chart A: Room Type, Year 2




King Standard $ 175.00 67% 12,410 rooms $2,171,750 King Deluxe $195.00 67% 6388 rooms $1,245,660 Queen Standard $175.00 67% 6388 rooms $1,117,900 Queen Deluxe $195.00 67% 6388 rooms $1,245,660 Suites $ 315.00 67% 1223 rooms $ 385,245 Waterfront Balcony $ 295.00 67% 5110 rooms $1,507,450 TOTAL 37,907 rooms $7,673,665




Percentage of Hotel



Transient $225.00 67% 55 % 20,176 rooms $4,539,600


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AAA $142.00 67% 5% 1,835 rooms $ 260,570 AARP $132.00 67% 5% 1,835 rooms $ 242,220 Corporate $225.00 67% 25% 9,171 rooms $2,063,475 Government $119.00 67% 10% 3,669 rooms $ 436,611 TOTAL 67% 100% 36,686 rooms $7,541,876

III.) Year 3 Chart A: Room Type, Year 3




King Standard $ 179.00 69% 12,775 rooms $2,286,725 King Deluxe $199.00 69% 6,570 rooms $1,307,430 Queen Standard $179.00 69% 6,570 rooms $1,176,030 Queen Deluxe $199.00 69% 6,570 rooms $1,307,430 Suites $ 329.00 69% 1,260 rooms $ 414,294 Waterfront Balcony $ 309.00 69% 5,110 rooms $1,578,990 TOTAL 38,855 rooms $8,070,899




Percentage of Hotel



Transient $225.00 69% 55 % 20,778 rooms $4,675,050 AAA $142.00 69% 5% 1,889 rooms $ 268,238 AARP $132.00 69% 5% 1,889 rooms $ 249,348 Corporate $225.00 69% 25% 9,445 rooms $2,125,125 Government $119.00 69% 10% 3,778 rooms $ 449,582 TOTAL 69% 100% 37,779 rooms $7,767,343

IV.) Year 4 Chart A: Room Type, Year 4


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Room Type Average Rate Occupancy

Percentage Total Rooms (yearly)


King Standard $185.00 72% 13,140 rooms $2,340,900 King Deluxe $205.00 72% 6,753 rooms $1,384,365 Queen Standard $185.00 72% 6,753 rooms $1,249,305 Queen Deluxe $205.00 72% 6,753 rooms $1,384,365 Suites $335.00 72% 1,314 rooms $ 440,190 Waterfront Balcony $315.00 72% 5,475 rooms $1,724,625 TOTAL 40,188 rooms $8,523,570




Percentage of Hotel



Transient $225.00 72% 55 % 21,681 rooms $4,878,225 AAA $142.00 72% 5% 1,971 rooms $ 279,882 AARP $132.00 72% 5% 1,971 rooms $ 260,172 Corporate $225.00 72% 25% 9,855 rooms $2,217,375 Government $119.00 72% 10% 3,942 rooms $ 469,098 TOTAL 72% 100% 39,420 rooms $ 8,104,572

V.) Year 5 Chart A: Room Type, Year 5




King Standard $189.00 75% 13,870 rooms $2,621,430 King Deluxe $209.00 75% 6,935 rooms $1,449,415 Queen Standard $189.00 75% 6,935 rooms $1,310,715 Queen Deluxe $209.00 75% 6,935 rooms $1,449,415 Suites $339.00 75% 1,369 rooms $ 464,007 Waterfront Balcony $319.00 75% 5,475 rooms $1,746,525 TOTAL 41,519 rooms $9,041,507




Percentage of Hotel

Total Number of Rooms



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(yearly) Transient $230.00 75% 55 % 22,585 rooms $5,194,550 AAA $149.00 75% 5% 2,054 rooms $ 305,916 AARP $140.00 75% 5% 2,054 rooms $ 287,560 Corporate $230.00 75% 25% 10,266 rooms $2,361,180 Government $125.00 75% 10% 4,107 rooms $ 513,375 TOTAL 75% 100% 41,066 rooms $ 8,662,581


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Section 6: Product/Service Description The Crowne Plaza- South Side will offer many different products and services to enable us to better serve the guest. The core product offered will be hotel rooms. These rooms will range in price depending on the amenities and room type. Our location on the riverfront of the Monongahela River allows our guests to enjoy the views of the river from their private guestrooms as well as in the restaurant area; this alone attracts guests to our property and distinguishes us from other properties.

Guest Rooms. Six main room types will be offered: standard rooms with one king-size bed, deluxe rooms with one king-size bed, standard rooms with two queen-sized beds, deluxe rooms with two queen-sized beds, suits, and waterfront rooms with balconies. Each of these rooms types are designed to exceed the expectations of the guests that will frequent them. The two standard rooms, the king and two queen room, are, as the name suggests, a standard hotel room. They offer the specified bed type, a dresser, night stand, desk, etc.; these rooms do not have any water view from their room. Many of these rooms were created in response to the needs of the first guests. A deluxe room, either a king or queen, will contain the basic components of a hotel room, but there is also a sitting area. A majority of these rooms has at least a partial water view. The suites in the Crowne-Plaza will be one of the major attractions. A great focus will be placed on these suites; proper maintenance and upkeep are essential, as is selling the suit to receive the greatest revenues. Suites provide guests with luxurious accommodations. In addition to selling this room, Priority Rewards Clubs members can be upgraded to a room in a higher price bracket so they enjoy the benefits of our nicer rooms without a price change; this rewards customer and bed companies. Our waterfront room, will be facing the water completely; one whole side of the benefit from our location. These rooms will have the same basic amenities and features as the other rooms, but a waterfront balcony will be available to the guests through a sliding door. This allows guests to enjoy the benefits and design of the hotel and the gorgeous surroundings while enjoying a private balcony with a table and two chairs. Crowne Plaza Sleep Advantage Program. In our guest rooms, we will offer the Crowne Plaza Sleep Advantage Bed. This new bedding program provides guests with new, comfortable beds with a pillow top mattress, seven pillows, a plush duvet cover, and luxurious sheets. This bed will help active the set occupancy goals. One of our prime selling points is this bedding program. Sleep amenities, guaranteed wake-up calls, and quiet-zone floors are all key components to providing the guest with the best night’s sleep possible.

Blissful Bath. One area in which we will differentiate ourselves from our competitors is through the design and focus that will be placed on the bathroom design. Kohler is a popular brand name for bathroom fixtures and appliances. Through commercials and advertising, Kohler has made a name for themselves with the public as being the “ideal bathroom”. The fixtures that would be purchased for the bathrooms will be a unique and contemporary style as well as give off the impression of a spa-like treatment. Since we are constructing the hotel, we will incorporate the plans about creating our bathrooms with Kohler faucets and fixtures in the beginning stages. The fixtures used in the bathrooms are listed and shown in Appendix Y. These fixtures have a timeless beauty and design that will keep its good character for years to come. This will alleviate any notion that the bathroom design is of “fad’ quality. The fixtures, such as the beautiful faucets and spa-like shower experience, are there to encompass a relaxing, elegant and royalty-like quality. The rest of


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the bathroom will enhance the beauty of the fixtures. Since it is our goal to market our bathrooms as the “Blissful Bathroom” everything that the bathroom has should be of the best quality. The vanity tops will be made of warm colored marble for a touch or elegance. The wooden cabinets of the vanity will be colors of biscuit (creamy white) or dark oak. These colors will compliment the tones of the marble, as well as the fixtures. The back splash and tiling of the shower will be four inch squared marble tiles that are different light, warm, golden colored tones. And the walls will range from a sand color, light sage green or light ocean blue. All of these colors will enhance the spa-like feel that will be represented. A listing of products that will complete our design can be found in Appendix Y.

The amenities and bath products offered will math the spa-like qualities of our bathrooms.

A major company such as Aveda will be chosen to be our supplier.

We are encouraging this type of bathroom because we believe that every type of traveler, whether it is a business traveler, leisure traveler, family or single, enjoys and appreciates a clean and beautifully constructed bathroom. A hot shower can make a world of difference to anyone’s day, in making that experience a step above the norm just enhances the customer’s experience. We believe that our bathrooms will be a huge selling point for our guest rooms.

The initial investment needed to construct a suite or club level bathroom with Kohler

products, marble, lighting and accessories will be estimated to be $10,000. But with advertising and sales for Kohler products, there will be agreements made to reduce the costs of the fixtures supplied in the bathrooms. Although these bathrooms seem costly, we believe that this will be a wise investment and will payoff in the end when guest choose our hotel over another hotel.

Services for Business Travelers and Meetings. A business center, meeting spaces, and

conference services will be offered; these functions target the business traveler, who is a large contributor to the property’s success. One of the meeting spaces will be a three section ballroom that is located on the water side of the property. Each individual section can be sold, or all three can be sold as one. These meeting spaces, with a maximum occupancy of 300, offer guests a waterfront, walk-out patio. This is intended to attract attention of people in the area. The waterfront location is ideal for special events like weddings. Party planners and guests will delight in their access to the patio; it offers more space, picturesque views, and is another distinguishing factor from other brands. Technology. A commitment to focus and advancement in technological endeavors will also be a key component of the hotel. Free in-room high speed Internet will be offered to guests. Flat screen televisions will be installed. Again, this is another area is which differentiation can be achieved. These services offer many advantages and benefits to our potential market. The unique traveler staying at the property will value our commitment to design and the building. Appropriate colors will be used throughout the property and the furniture will be ergonomically designed. This will allow for better guest room comfort. Our guests will also receive an amazing night’s stay on the new beds and the shower in the newly designed bathroom will also distinguish us from the competition. In such a full market, these steps are required; gaining the support of our target customers is the key to success after the property opens.


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Food and Beverage Outlet. The primary food and beverage outlet on property will also enable us to emerge as a leading hotel in the city. We propose that a waterfront, upscale, seafood restaurant be built on the lobby level and be situated directly on the water. Not only will hotel guests be intrigued to attend this popular, upscale restaurant, we will be able to attract local guests as well. The freshest products will be sold and a creative menu will be provided. The restaurant will also help gain the interest and business of people searching for a delicious meal that is prepared with the greatest attention to even the smallest detail. A high-quality restaurant, with a loyal customer basis, will be very profitable and allow guests comfortable areas in which to relax.


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Section 7: Operational Plans The Crowne Plaza Hotel that will be constructed in South Side Pittsburgh will be a full service hotel that offers the guests wonderful guest room arrangements, including suites and club level rooms, food and beverage service, a restaurant, fitness center and meeting/banquet accommodations. Our mission is to have the customer not only feel relaxed, comfortable and welcome, but to also feel special and important. In keeping this mission at the core of our company, we are able to design and construct not only the hotel itself to be pleasing to our guests but also to be organized for our management so that they can be more efficient and customer-centered.

Guest Rooms. As many rooms as possible will provide guests with views of the Monongahela River. One whole side of the building will face the River, others will offer partial water views. We want to incorporate the water as much as possible to give our guests a wonderfully calming and serene experience. The rooms that will have a waterfront view will have a personal balcony for our guests to enjoy. There will be a bistro set at each balcony for our guests to use so they can experience the wonderful view. A waterfront property will give our hotel a unique quality that we believe many visitors will look for and desire when looking for a hotel in Pittsburgh. As for the rooms themselves, they are somewhat standardized by the amenities required by the Crowne Plaza franchise agreement. These amenities are listed in Appendix W. The rooms include the Sleep Advantage Beds, which offer seven pillows, pillow top mattress, plush duvet and luxurious sheets. Not only does the bed evoke a good night sleep, Crowne Plaza also offers sleep amenities; such as an eye mask, ear plugs, lavender spray to enhance relaxation and a soft night light. Quiet zone floors, sleep CD and guaranteed wake-up calls set the guest’s mind at ease when staying at our Crowne Plaza. To make the rooms more personalized to the unique setting of South Side, the rooms will include paintings or photographs from local artists. Another unique feature we will incorporate into the guest rooms will be that the bathroom fixtures will be supplied by Kohler.

Investment. The initial investment needed to construct a suite or club level bathroom with

Kohler products, marble, lighting and accessories will be estimated to be $10,000. But with advertising and sales for Kohler products, there will be agreements made to reduce the costs of the fixtures supplied in the bathrooms. But although these bathrooms seem costly, we believe that this will be a wise investment and will payoff in the end when guest choose our hotel over another hotel.

Other Elements. The major elements of our hotel are proudly situated to view the Monongahela River waterfront. The elements of our hotel are described in detail in Appendix X. The business center, restaurant and banquet will all have beautiful glass window and door views of the river, as well as walk out patio that will be ideal for conference breaks, weddings, banquets and parties that the Crowne Plaza can provide. The restaurant will have a waterfront view with wide windows to see the beautiful river.

Boat Rides. Due to the beautiful location of the hotel, we would like to utilize the Monongahela River as much as possible. We are proposing to incorporate a Boat Rides service to our guests. These leisure rides will be ideal for leisure and business travelers as a way to learn more about the city of Pittsburgh and take in the great views of the river. Since it is part of the hotel services, we believe many companies who will be using our facilities for conferences and meetings


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will promote our Boat Rides to their meeting attendants as an activity to do during business breaks. We also believe that these Boat Rides are a fun and innovative idea that gives our hotel even more personality and competitive standing against other hotels in the area. We believe the initial investment in a boat will be $300,000. The hotel will first have one boat to do these tours on the river and if demand increases, we will first increase the price of the rides. If the demand still increases, then a second boat will be purchased. We believe the investment in a high quality boat, talented tour guides and crew will generate profit over time due to its unique qualities. General maintenance, cleaning, gas and rigging of the boat, will be done by the certified sailor. Extensive maintenance to the exterior or engine will be done by an outside company. Every autumn the boat will have to be stored in a boat yard for the winter months. These costs will be taken into effect when coming up with a ticket cost.

Food and Beverage. The food service offered by Crowne Plaza will be separate then the

offerings of Legal Seafood. They will offer catering for the banquets, conferences, business meetings, room service and club level. Since room service will only be offered from 6am to 12pm, there will be more concentration on their services for the club floor, meetings and banquets. By also having a majority of their business based on planned ahead menus, the food service will be able to organize their inventory and be less wasteful on foods that will not be consumed by guests. Food Service will also be able to anticipate the amount of servers and cooks that will be needed for the amount of guests anticipated. A Food and Beverage Manager will be in charge of these operations and work side by side with the Executive Chef of the kitchen to create menus and strategize ways to make the most profit out of their department.

Management. The Director of Rooms will be in charge of the guest services, including the rooms, the club level rooms, laundry services, housekeeping, front desk and health center. By enforcing the Crowne Plaza standards, it is essential that all of the employees understand how important their role is in the reputation and standard of the Crowne Plaza. All of the employees will be going through training by our Human Resources Department to make sure they know their role in the Crowne Plaza team, as well as their individual obligations. They will be tested in their individual field and will be obligated to attend meetings, in which they will be encouraged by their Department Heads to express any concerns, questions or complaints about their work. The Department Heads will give confidence and extend compliments to their employees, as well as help them achieve personal goals within their field.

The Director of Human Resources, as indicated in the previous paragraph, will be in charge of hiring the employees for the positions needed by the hotel. They will work hand and hand with the Director of Rooms to fulfill the positions that are needed and to the standard that is required by interviewing and reviewing employees. Once an employee is hired they will go through training with the Human Resources Department and then go to work with the Director of Rooms. Hopefully, by having interviews, trainings and tests, our employees will be the most productive, skilled and helpful employees we can have, as well as reduce the amount of employee turnover as much as possible. And to keep them as our employees, we encourage a “team” mentality.

Our Chief Engineer will have a lot of responsibility within our facility due to the amount of services we offer. Not only will they be in charge of the maintenance of the rooms and their amenities, but also the condition of the banquet hall, conference rooms and the club level lounge. The Chief Engineer will divide its employees into a Maintenance Crew, who will be in charge of room repairs, corridor repairs, general upkeep and be in charge of the breakdown of events, and a


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Certified Crew, who will assist in connecting guests to the internet or presentation equipment and deal with electrical and plumbing problems throughout the hotel. The Chief Engineer will also be in charge of temporarily hiring a Grounds Crew for the landscaping of the property. This Grounds Crew will not be affiliated with the Crowne Plaza as a franchise but they will have their own separate contract with management to maintain the landscape.

The Director of Human Resources, Director of Rooms, Director of Food and Beverage and the Chief Engineer will all work with their employees to encourage customer support and encompassing a can-do attitude. The employees that come in contact with the guests on a day to day basis are very important in that they create the impression that the guest has on the hotel. Even if our services or amenities are the best, if our person to person contacts with the guests are perceived as cold and uncaring, then our hotel will fail. Due to the reputation that the Crowne Plaza has, as well as its training and application process, we are positive that we will have the best technical and social employees we can find.


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Section 8: Marketing Strategies and Sales Plans INTRODUCTION:

In order to successfully launch the Crowne Plaza Hotel-South Side and accomplish the set operational goals, a concrete and aggressive marketing plan must be initiated. The following marketing plan covers the various aspects of the promotional mix, considers external factors such as our competitive set, the products and services offered at which create a competitive advantage, and outlines the various elements of our marketing initiative. Certain definitive details about costs, dates of introduction, etc. will not be discussed; these details are contingent on a number of decisions that must be made on a more operational level.

The Crowne Plaza Hotel- South Side will be a full-service, one hundred and fifty room property in the South Side neighborhood of Pittsburgh, Pennsylvania. The product and service offerings are explained below; the understanding of these products and services will lead to greater understanding of our marketing endeavors.

The initial success of the Crowne Plaza Hotel- South Side is dependent upon the recognition and clear definition of our target market. While the goal of any new hotel is to gain an increasing market presence, our primary focus is to offer a different type of hotel in a unique area to a guest who is not looking for the standard, cookie-cutter property. We are marketing our project to a more all-encompassing market; this target guest is a businessman, a sight-seer in the Pittsburgh area, a sports fan, a parent of a university student. The target market we seek has not been the focus of other properties in the area. We will capitalize on this, and focus our primary marketing efforts on this niche. Additional and subsequent efforts will focus on the major corporations in the area, gaining portions of the existing market share from other properties, and continuing to generate interest in the growing city of Pittsburgh.

MARKETING AND ADVERTISING EFFORTS

To market our many products and services to the customer, a variety of marketing and

developmental strategies will be utilized. Many of the standard hotel offerings are found on our hotel property and in our guest rooms; these basic features are necessities but do not distinguish the Crowne Plaza from the many other properties in the Pittsburgh area. Our basic advertising program will be directed at presenting our key property features and services; we will attempt to distinguish the hotel from others in the area. Mention of the general services will be made, but no significant efforts will be focused in this area.

Location. The location of the Crowne Plaza- South Side on the Monongahela River

provides the property with a considerable competitive advantage; we would enter the market as the only waterfront hotel in Pittsburgh. Our waterfront guestrooms with private balconies, ballroom with a walk-out waterfront patio, waterfront restaurant, and water views that can be enjoyed from other places in our property will provide the guest with a unique and relaxing location. We are also in close proximity to numerous restaurants, shopping areas, the historical district in South Side, and


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to Downtown Pittsburgh. All of these benefits associated with our location are key elements that can be marketed to guests.

This prime location allows us to provide what will be another service that will market to our customers. Along the exterior of the waterside of the hotel a dock will be constructed adjacent to the restaurant. From this dock, we will have a boat that will take guests on a boat trip down the river for a nominal fee. This service can be used as both an attraction to local Pittsburghers as well as the guests at the hotel; functions can be held on the boat, as well as special arrangements can be made for groups. External marketing to the community and potential guests and internal marketing inside the property will be used.

Guest Rooms. The guest rooms at the Crowne Plaza- South Side will feature both products and services that are Crowne Plaza standards and those that are unique to our South Side property. A key selling point of the Crowne Plaza brand is their Sleep Advantage Program. This program is designed to promote a “scientifically-based, holistic approach to sleep”; it includes a plush, comfortable bed, Quiet-Zone Floors, Guaranteed Wake-Up Calls, a sleep CD and relaxation tips, and sleep amenities. All of these products are designed for the guest; providing guests with a goodnight’s sleep will build a base of loyal customers as well as attract those who are enticed by such a comprehensive sleep package. The bathrooms we have designed, which are completely unique to our property, are a key feature, and will be a major part of our marketing plan. A state-of-the-art bathroom with Kohler fixtures and upscale bath products will provide a spa-like service and atmosphere in-room; the luxury and relaxation provided by this product have led us to deem our bathroom the “Blissful Bath”. These services will be a key area of distinguishing from other properties and will be strategically marketed to capitalize both on their comprehensive, accommodating nature for the guest, and the profitability that can be received by the property.

Corporate Advertising. The products and services we offer will be marketed in a variety of

different ways utilizing many different forms of marketing and advertising. We will rely on corporate advertising through the InterContinental Hotel Group (IHG) website and the Crowne Plaza website; these websites offer information about specific properties as well as the brand standards and special products or promotions. These websites can be used to entice new guests and retain loyal guests. The other corporate marketing endeavors will also help the property achieve a desired occupancy and operational goals.

Magazine and Newspaper Advertisements. Magazine and newspaper advertisements,

similar to the ones found at the end of the document, will also be used. These ads will be featured in local magazines in Pittsburgh as well as more nationally-based circulars. A large portion of the Pittsburgh of the guests who frequent the city are visiting the city with a specific purpose in mind; whether the guest is there for a business trip or a sporting event, the guest is typically in Pittsburgh for a distinct reason. This allows the magazine advertising efforts to be more specific. Including ads in business magazines would be ideal for attracting the business traveler; ads in the game day programs and media guides of the professional Pittsburgh teams will attract the traveler who visits for a sporting event. Once the material that the target market will read has been determined, ads can be placed in this literature.

Radio and Television Advertisements. Additionally, we will introduce radio and television ads. The television ads will feature picturesque, beautiful shots of the hotel, the restaurant, and the interior of guest rooms. They will include pleasant employees serving satisfied,


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happy customers. We will create different slogans, such as “The Crowne Plaza- South Side, where the definition of relaxation was invented” or “The Crowne Plaza- South Side, where service was invented”, to remind the target market of the various offerings at the property that help distinguish us from the competition. The radio advertisements will be aired principally to promote our special packages, which will be described later in this plan, promotions, and deals. These ads will be especially important during peak seasons; times when meeting planners are searching for meeting locations, before the sports seasons begin, and the various other times that efforts can have a significant affect on occupancy rate should be of primary focus. The Pittsburgh lodging industry experiences a decrease in occupancy over the holiday season from November to January. The Crowne Plaza- South Side features many services that can be offered and marketed via radio ads to promote the holiday services and increase sales. Our ballroom, meeting space, and restaurant would be perfect for company parties and family parties. The brevity of the radio advertisement can attract the customer’s interest in the property and initiate a subsequent inquiry for more information.

Advertising Plans for Targeting Corporate Business. Information about the hotel will be sent to local companies; companies with offices in the City of Pittsburgh are perfect clients of not only our guest rooms, but also our meeting and catering functions. Research will be completed and information will be determined about the companies that frequent the area for business meetings and conferences. Brochures, rate cards, and specific meeting planning information will be sent out to these companies as well. As a brand, the planning and deliverance of a successful meeting is one of the primary focuses for brand differentiation. Crowne Plaza offers a two-hour response guarantee; after a meeting inquiry is made, a response for information about a meeting will be given with two hours and a proposal will be received the following business day. If these conditions are not met, a 5% discount is applied to the master account at the conclusion of the meeting. A certified meeting planner is dedicated to each group, and at the end of each day, a daily meetings debrief is received. This document chronicles all of the day’s expenditures in an itemized format, allowing for much better tracking and management of budgets. These three components, in conjunction with the accommodating meeting space and excellent catering services offered, allow for the marketing of a completely successful meeting; from the initial planning to the attendees’ ultimate satisfaction. We will distinguish ourselves from the competition who offers a much more standard meeting and meeting planning services.

Marketing to the Local Community. Part of advertising efforts would be addressed to the local community. South Side is an increasingly vibrant and flourishing neighborhood; our hotel can use this to its advantage if the products and services are marketed correctly. In the heart of the city, along Carson Street, there are a total of eighty bars and restaurants. This creates a competitive market, but the restaurant at the Crown Plaza- South Side offers a different, waterfront property. Guests often seek something new and different; this will be provided at our property. The great number of food and beverage outlets in such a small radius indicates the profitability that can be enjoyed by a successful restaurant. We must attract the local resident into our restaurant. A successful public relations campaign, beginning with the invitation of food critics and food editors to our restaurant, will help attract this local business. If we are able to launch a product that has been recognized by the local media as enjoyable and satisfying, the subsequent and supplemental marketing efforts will support the comments made by food industry professionals. This information will be better received and a certain level of credibility will be established. PUBLIC RELATIONS AND PUBLICITY


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To expand to the plans of our public relations efforts, we will host a promotional party to which local businesses, press, and other potential customers who will increase our sales volume significantly will be invited. Press interest and support will be earned and interest in the Crowne Plaza- South Side will develop. Food and beverage will be served from our restaurant and banquet menus to provide guests with a complete picture of the property’s offerings. COMPETITIVE SET

Our property will enter into a quite saturated lodging market in the City of Pittsburgh; by

choosing to build in South Side, our property will only be the third in this area. The competition in the City of Pittsburgh poses a threat to the success of our property, but the properties in closer proximity will be our greatest competition. A majority of the hotels in the Downtown area have rates that are quite comparable to the Sheraton Station Square Hotel located in South Side. The rates for this property range from $129 to $239, depending on the season and availability; the Holiday Inn Express, which offers a different type of product, but is in closer proximity to the Crowne Plaza, has rates between $117 and $134. Our projected ADR for the first year of operation is $195; this is a mean of the six different types of rooms offered at average rates between $169, for a standard room, to $309 for a suite. The projected rate and average rates are quite competitive; our rates that are more expensive than the Sheraton can be attributed to a different type of product offered. There are no waterfront balconies or suites offered at the Sheraton. The ADR is slightly lower than is the Sheraton’s, which creates a competitive advantage for our property. PRODUCT DIFFERENTIATION AND RESPONSES TO THREATS POSED BY COMPETITION All hotels desire to have a set level of service quality that is above the competition; the satisfaction of the guest is the primary concern for each hotel, and each advertises that it is willing to do whatever it takes to satisfy these guests. The Crowne Plaza will substantiate these claims. We will focus on delivering impeccable service quality; the level of service will match or exceed the high level of product we offer. To accomplish this goal, employees will receive substantial training and will be empowered to make decisions. Developing and retaining a staff that is able to sell the hotel through their actions and responses will be a key to the success of the property. As mentioned previously, the product and services offered allow us to distinguish ourselves from the competition as well. The Blissful Bath, Sleep Advantage Program, meeting rooms, and location are unique. While the Sheraton might have water views, they do not waterfront; this difference will position the Crowne Plaza much more strategically in the market. The proposed property will also benefit from the newness of the concept and all of the products. This can be used when marketing and advertising the property in relation to the older Sheraton and Holiday Inn Express.

While we have described many elements and aspects of our property and the services

offered that are unique to the Crowne Plaza- South Side, the presence of our competitors creates a situation and a market to which we must react. Our primary goal is to enact a successful market entry strategy while satisfying guests and recruiting new business. A focus must be placed on our loyal IHG customers; the IHG offers the world’s largest hotel rewards program. We must take advantage of the current number of repeat guests in our all of service and marketing decisions. At the core of all decisions, the fact that the Crowne Plaza- South Side offers a much different product


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than our competitive set must be embraced; this can truly allow us to reach our target market and gain some of the existing market share. COMPETITOR’S RESPONSE TO CROWNE PLAZA’S MARKET ENTRANCE

In response to the completion and launch of the Crowne Plaza- South Side, the competition

in the area will respond to our offerings and attempt to retain their primary clientele. Much of the reaction of the competing brand will be dependent upon our success and the ultimate threat we pose to their property. Lowering their rates to a level at or below our rate is one option; if the Sheraton reduced their rate, they might see an influx of sales or their guests would remain loyal to the hotel instead of trying the Crowne Plaza. Increasing the service quality offered and ensuring guest satisfaction are also expected responses. Offering sales promotions and packages might also be an action taken; stay two nights get one free, a free breakfast with an overnight weekend stay, or comparable sales promotions might be presented. Finally, the property could institute a renovation or improvement plan that modernizes the services and product offered. It is important to note that most of these responses would be seen at properties like the Sheraton or other full-service hotels in the area. The Holiday Inn Express would not necessarily feel intimated by our presence in the market due to the difference in market segmentation. PROJECT FEASIBILITY: ACHIEVEMENT OF PROJECTED SALES LEVELS AND MARKET SHARE

The marketing plan described above is quite comprehensive and directed at achieving our

ultimate sales goals. The first year’s projected ADR is $195 and the projected occupancy is 65%; in subsequent years, we have projected that increases will occur in both of these numbers. In many operations, goals are set and plans are created and introduced, but there are not successful in achieving the set goals. We believe that our property will be profitable and attain our set goals. The marketing plan and strategies we have set are all encompassing; we have chosen to market the property from every angle, from the larger more substantial aspects such as the location to the minute details such as offering seven pillows instead of two. This allows for greater exposure of the total product; by illustrating that no detail, no element of the product or service is overlooked, our commitment to guest satisfaction is clearly defined.

With a market that currently includes almost all major hotel brands, it is often difficult to

determine if there is a definite need for a property. In these circumstances, the Crowne Plaza- South Side will enter into the market and offer a new and different product. There is a need for this type of product in the South Side area. The market and target guest are clearly defined and have not been noticeably identified by the properties in the area. The neighborhood of South Side has experienced tremendous growth in recent years, and the growth is expected to continue into the future. Our hotel will be joining two existing properties and will enjoy the benefits that result from growth in the area both in the present and in the future.

In reviewing the travel trends in the Pittsburgh area, the overall average occupancy

percentage is approximately 60% with an ADR of about $80; these numbers include properties not only in the Downtown area, but also in the surrounding airport area and other more rural areas, where lower rates and occupancies are experienced. Our projections are higher than these numbers, but are not unrealistic. The 65% goal occupancy level is equivalent to the current industry standard, thus is would be achievable for our property. The state of the industry is improving each year, and the City of Pittsburgh experiences growth each year in population, number of business, and the


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number of travelers. Our ADR is significantly higher than the Pittsburgh area ADR; this difference can be attributed to the types of products and services we offer. We are offering a unique property, many deluxe offerings and amenities, and a location that is unparalleled. INITIAL MARKETING STRATEGY

The initial marketing strategy of the Crowne Plaza- South Side will be complete with the

introduction of various sales promotions we have designed. Some of these promotions are brand standards that add an element of marketability and distinction to our property; others have been created specifically for our property. The options for these packages are endless; in the following pages we have included marketing materials for the Sleep Advantage Program, our Boat Tour Package, the Romance Package, the Hole-In-One Golf Package, and the Pittsburgh Fantasy Sports Package. Each of these packages is described in detail and the cost is included. These ads are examples of materials that would be used to market the packages we create. CONCLUSION

The Crowne Plaza- South Side has an excellent market entry strategy and position. There

are many set programs, ideas, and strategies that are intended to create a successful hotel in which the projected sales and occupancy levels are achieved. The success of this program is based on its comprehensiveness; the product and services must be marketed from a variety of angles to a clearly defined target market. The Crowne Plaza- South Side provides a unique type of property, impeccable service quality, and amenities and features that distinguish it from other competitors. All of these aspects of the property must be embraced and marketed in order to fully develop and achieve the potential profitability that can ultimately be enjoyed at our property.


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Section 9: Management & Operations The Crowne Plaza will be a full service hotel that offers our guests an array of services that will be managed by different department teams in the hotel. With the guidance and advisory skills of the General Manager, the Executive Department heads will work separately with guests to ensure that their specialized service is fulfilled to the best of its ability. The departments will also work with one another on certain services, such as conferences and banquets, to accomplish services to the best of our ability. With the skills learned and encouraged through trainings and the department heads, these departments will successfully achieve maximum satisfaction from our guests.

9.1 Management General Manager of the Crowne Plaza will be a well experienced, educated and

determined individual. Due to the many services offered by our hotel, the General Manager will have to have a clear understanding and background knowledge of all the services provided, including food and beverage, rooms, sales, human resources and customer relations. The General Manager will also have to have close relations with the Executive Directors of the Hotel.

Controller of the Crowne Plaza is the accountant for the operations that take place within the hotel. They will have to have a degree and background in accounting and finance to be able to control cash flows, making sure expenses are paid, cash and payments are collected, as well as set budgets for the other departments.

Director of Human Resources has a huge obligation in that they are in charge of hiring employees for the establishment. Once they hire the employees, they are also in charge of training the employees and teaching them the philosophies, strategies and techniques that the Crowne Plaza Standard provides. The Director will also work with the other Executive heads to determine the type of employees needed and the standard that should be set when hiring a new employee. The Director of Human Resources should have a background in hospitality management, to ensure that the knowledge they teach to the new employees is accurate. Also they should truly enjoy people and working with others, since their job calls for them to be around people all the time. A communications background will be very helpful under this circumstance.

Food and Beverage Director has one of the most creative and varying jobs. They are in charge of banquets, room service and catering for the business conferences and club level buffets. They will work extensively with the Executive Chef to create menus for their services, as well as plans to make their services the most innovative and appealing to our guests. The Food and Beverage Director will be in charge of all the banquet servers, rooms service servers, and along with the Executive Chef, they will be in charge of the chefs, cooks and kitchen staff. The Food and Beverage Director will also work hand and hand with the Crowne Plaza Meeting Director to help coordinate events. A Food and Beverage Director will have to be knowledgeable about hospitality management, especially any experience in restaurant management, culinary arts and/or event planning. The Director should have strong determination, energy, leadership and management desires, as well as team member qualities to succeed in this field.

Director of Rooms will be in charge of the guest services provided, as well as the employees who directly serve the guests. The front desk, housekeeping, concierge desk and laundry


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will all be under the advisement of the Director of Rooms. The Director of Rooms should have leadership qualities to help motivate and encourage employees to do their very best. They should be personable and “real” so that employees do not feel intimidated to speak with the Director if a problem or concern arises. But although the Director should be approachable, they should also be a firm leader and knowledgeable of all the activities that take place under their supervision to ensure the best quality of service. The Director should have a strong background in management and especially service management.

Director of Sales and Marketing will be in charge of advertising the Crowne Plaza, as well as work with the Event Manager to help promote and advertise the services that can be provided to businesses and parties. This Director should be very personable and enthusiastic about the hotel. A background in communications, sales and/or marketing would be greatly beneficial in this field.

Chief Engineer has a unique job in that they rarely work with the guests one-on-one. But their job is very important to the way the guest perceives the hotel. The Chief Engineer will be in charge of the room appliance functions, the general upkeep and appearance of the hotel, technical and electronic functions. Mostly known as the Handy Man of the hotel, the Chief Engineer should have a background in engineering, maintenance and/or carpentry, as well as knowledgeable about technological advancements. The Chief Engineer at the Crowne Plaza will have two different teams that they will advise:

- Certified Crew will be in charge of technology and electrical problems. - Maintenance Crew will be in charge of the upkeep of the hotel, as well as the set-up and break-down of the banquets and functions held at the hotel.

With the Executive Directors in place, the success of the hotel will be determined by the

will power and determination of our team. The techniques, knowledge and understanding of the Crowne Plaza are in place, it is up to our team to use it to meet success.


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General Manager (1)

Controller (1)

Director of Human Resources (1)

Food and Beverage Director (1)

Chief Engineer (1)

Director of Sales (1)

Director of Rooms (1)

Executive Chef (1)

Cooks (3) Room Service Servers (3) Banquet Servers (10)

Chefs (2) Kitchen Staff (2)

Maintenance Crew (3) Certified Crew (3)

Executive Housekeeper (1)

Laundry (4)

Front Office Manager (1)

Meeting Director (3)

Concierge(2)

Front Desk Clerks (8) Housekeepers (12)


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Section 10: Project Construction Costs

The Crowne Plaza – South Side Pittsburgh is a unique property that offers many distinctive

products and services in less standard fashion. The area of South Side is an up-and-coming neighborhood across the river from the heart of Pittsburgh, and has so much to offer. There are museums, shops, fantastic restaurants, and unparalleled views of the city.

Currently, there are only two properties in South Side, a Holiday Inn Express and the Sheraton Station Square. The Holiday Inn Express provides the proposed property with a certain level of competition but it is not a full-service hotel as is the Crowne Plaza. The Sheraton Station Square provides our property with an increased level of competition, but the Crowne Plaza- South Side Pittsburgh will differentiate itself in many ways. We propose construction of a waterfront 150- room hotel with a restaurant and approximately 500 seats worth of meeting/convention space.

The location of our property will be one of the distinctive characteristics of the Crowne Plaza – South Side Pittsburgh. The most desirable location for the property would be on the waterfront, overlooking the beautiful Monongahela River. Many of our hotel rooms would be facing the river and would include balconies overlooking the water, and our meeting space will be riverfront, as well. This spectacular location would bring a significant portion of business to our property. The land cost of property at this location is $1,000,000. The expensive price can be attributed to the value of the land in the fashionable neighborhood of South Side and the riverfront location. We at SBC Lodging truly believe that this is the best choice for a location, and once the guests see the view, they will be willing to spend the money to stay at our property.

The general contract costs of $15,990,000 were reached by assuming that each room in our 150 room full service hotel would cost approximately $106,600 to construct. We truly believe that having a full service hotel is the only option because the property could provide the market with a product and level of service that does not currently exist. While there are numerous restaurants in the area of South Side, some hotel guests find it a necessity to have a full service hotel for convenience and piece of mind, thus a full-service hotel with food and beverage service would be the most profitable and fitting option.

Our parking costs of $1,530,000 were reached by allowing spaces for 50% of the guest rooms and approximately 15 spaces for staff and VIP’s. Parking will be provided in the form of a parking garage, as the area of South Side has limited area and heavy influxes of traffic. Additionally, the land costs to include a paved lot would cost more than the garage. Also, the majority of staff, guests, and people for meetings would be taking public transportation to our location, since it is so easily accessible.

The above is just a brief overview of major construction costs; additional information about the other costs is available upon request. The overall cost of construction is approximately $29,209,814. The SBC Lodging Company projects that the Crowne Plaza- South Side Pittsburgh will be an extremely successful property in terms of guest satisfaction and return for investors. Partnership with the correct bank and investors would ultimately assist in achieving this goal.


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The pages below are a breakdown of the projected costs of the various components in the project: Section 1 Investigatory 1. Travel and Miscellaneous $ 2,000.00 2. Appraisals N/A 3. Environmental 3,000.00 4. Transportation Study 4,000.00 5. Legal 1,500.00 Sub Total $ 10,500.00 Section 2 Land 1. Land Cost $ 1,000,000.00 2. Closing Costs 10,000.00 3. Brokerage Fees 12,500.00 4. Legal Fees 6,000.00 5. Survey 7,000.00 Sub Total $ 1,035,500.00 Section 3 Initial Costs 1. Travel and Miscellaneous $ 4,000.00 2. Soils 12,000.00 3. Engineering Fees 47,970.00 4. Architectural Fees 319,800.00 5. Use Permit 18,000.00 6. Model / Renderings 3,000.00 Sub Total $ 404,770.00 Section 4 Intangibles


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1. Accounting $ 10,000.00 2. Permit Expediter 20,000.00 3. Franchise Fee 75,000.00 4. Consulting Fee 20,000.00 5. Liquor License 1,840.00 6. Title Insurance 12,000.00 7. Construction Financing-points 319,800.00 8. Permit Loan-points 447,720.00 9. Legal 30,000.00 Sub Total $ 936,360.00 Section 5 Construction Financing Fees 1. Interest $ 479,700.00 2. Taxes 50,000.00 3. Insurance 50,000.00 Sub Total $ 579,700.00 Section 6 Project and Supervision Costs 1. Development Fee $ 200,000.00 2. Travel, out of pocket 6,000.00 3. Payroll 50,000.00 Sub Total $ 256,000.00 Section 7 Professional Fees – Construction 1. Architect’s Fee $ 559,650.00


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2. Reimbursables 20,000.00 3. Mechanical and Electrical Eng. 279,825.00 4. Structural Engineering Fees 159,900.00 5. Civil Engineering Fees 119,925.00 6. Landscape Architect Fees 10,000.00 Sub Total $ 1,149,300.00 Section 8 Construction Costs 1. General Contract – Building $ 15,990,000.00 2. Parking 1,530,000.00 3. Demolition N/A 4. Bond 119,925.00 5. Builder’s Risk Insurance 50,000.00 6. Building Permit and Plan Review 51,434.00 7. Utility Tap Fees 5,500.00 Sub Total $ 17,746,859.00 Section 9 Land Improvements 1. Landscaping, exterior $ 3,000.00 2. Landscaping, interior 20,000.00 Sub Total $ 23,000.00 Section 10 Professional Fees 1. Interior Design $ 119,925.00 2. Kitchen Consultant 20,000.00 3. Misc. Out of Pocket 12,000.00 Sub Total $ 151,925.00


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Section 11 Other Costs 1. F,F & E $ 3,375,000.00 2. Equipment, Gen. Build. Systems 75,000.00 3. Equipment, Operating 45,000.00 4. Supplies 37,500.00 5. Pre-Opening 206,250.00 6. Working Capital 618,750.00 7. Contingency 159,900.00 8. Interest Reserve 2,398,500.00 Sub Total $ 6,915,900.00

Project Total $ 29,209,814.00


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Section 11: Project Management Action Plan Completion of the Crowne Plaza – South Side Pittsburgh is dependent on many things, including the construction team, the weather, the budget, etc. This diagram shows SBC Lodging’s planning schedule for timely completion of the project.

The total time required to complete the project, from start to finish, will be approximately

twenty-eight months. It will take approximately seven months to design the hotel; we are allowing substantial time during the design stage to allow for reflection of the uniqueness of South Side in the hotel. This will require design ideas from several interior designers, as well as researching the area to potentially find local items, such as pictures or sculptures, to display throughout the hotel.

The actual construction of the hotel will hopefully take only fifteen months. The hotel’s

size of 150 rooms is quite manageable, thus the challenges associated with building larger properties will be eliminated. We have budgeted five months for the tasks associated with installation of the furniture, fixtures, and equipment; the completion of this part of the project will coincide with the completion of the entire hotel.

Advertising of the hotel will start approximately four months before the actual grand

opening. We will place ads in magazines throughout Pittsburgh, as well as in newspapers, on the radio, and possibly on TV, if our budget allows. Hiring of staff for the hotel and restaurant will occur two months prior to the hotel’s opening.

As mentioned, earlier, one of the factors in keeping this schedule is a well-performing

construction team. The SBC Lodging Company aims to work with the most reliable, efficient construction team that will help make this project a success.


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Section 12: Financial Statements Below are the pro forma income statements for years one through five of operation. These statements provide investors with projected revenues, expenses, and profits or losses. In years one through three, losses are incurred; in the last two years for which budgets have been completed, profits are earned. The first year’s statement contains monthly projections and a yearly total; years two and three provide quarterly projections and a yearly total; in years four and five a yearly total is provided.


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Financial Statements: Year 1, Months 7-12 and Totals


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Financial Statements: Year 2


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Financial Statements: Year 3


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Financial Statements: Years 4 and 5


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Financial Statements: Depreciation Schedule


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Notes to the Financial Statements The percentages used in calculating the income statements were derived from the 2004 Trends Report in the category of full-service hotels over $100. Interest expense for each period was calculated using the website www.webmath.cm/amort.html.

These financial projections are based on a number of assumptions. It is assumed that the projected future market trends will occur; after the events surrounding September 11th, 2001, the lodging industry suffered a decrease in occupancy and ADR/RevPar. In coming years, per yearly increases since 2002, it is projected that the industry will rebound and surpass pre- September 11th rates and percentages. The state of the economy is also assumed to continue as normal; extreme recessions would affect these projections and the hotel’s ability to earn profits. Additionally, assumptions are made that no catastrophic events will occur that will affect either the state of the industry or the Pittsburgh area.


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Section 13: Conclusion The Crowne Plaza- South Side Pittsburgh has the key elements of success in the lodging

market. The waterfront views, the Blissful Bath and the South Side charm that is carried through our spectacular services gives us reason to believe that our the hotel will be successful in fulfilling the needs and expectations of business and leisure travelers.

The unique qualities that are offered by our hotel, such as the boat rides and our spa-like bathrooms will attract the attention of guests wishing to stay in the Pittsburgh area. Our convenient location to the Downtown Area of Pittsburgh will enable us to our goal of reaching a 50% occupancy rating within the first six months of operation. The guests coming to conduct business with local Pittsburgh firms will also help the hotel reach the set occupancy levels. Leisure travelers will also be attracted to the wonderful sights and local activities South Side has to offer, as well as the convenience to the Downtown Area.

We aim to achieve an occupancy percentage of 75% over a five-year period; this goal is

attainable for our property of our reputation, location and services. The services that we offer which appeal to the business traveler, including catering, a banquet hall and conference center will attract the business of at least three major companies within the Pittsburgh area. We will retain the business of at least these three major companies, as well as increase the return rate of our guests.

Our high service standards will be one of the key elements to our success. The “team”

mentality we have set for our employees, our impeccable services, and appealing comforts of our rooms and facilities will build the number of repeat guests that frequent the Crowne Plaza. It is our goal and desire to reach an 84% Overall Guest Satisfaction Score in the first six months of operation. After this first six months, our mission is to always improve our guests’ expectations and satisfaction.

Our services and amenities offered to our guests are of the best quality and standards; many

distinguish us from the other products on the market. We truly value all of our guests and their satisfaction is very important to us. To thank them

for staying with us, it is our duty to give them the best service possible. We will be able to achieve this standard of service through our enthusiasm for opening and operating the new Crowne Plaza in South Side. The investors and those who provide funding will ultimately see a substantial return on their investment and profits will be enjoyed. Profits will be earned in the fourth year of operation and will drastically increase in year five; we project that our profitability will increase in future years, assuming that market conditions do not change drastically and the projected trends actualize.

Many intensive efforts have been placed into this project. A complete picture of the

proposed property from the initial market analysis to our final construction costs and schedule have been complete. Our sales and marketing plan is aggressive and encompasses many different forms of advertising, publicity, and promotions. We fully believe that this endeavor will be profitable and will achieve our set goals and mission.

In consideration of this project, please note the level of service that will be offered, the

many levels on which our product is different from out competitive set, and the profitability that


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will be enjoyed. All of these aspects allow the Crowne Plaza- South Side Pittsburgh to be a viable option for development by the Remi/Meeka Corporation.

Documents

SBC Lodging Companyudel.edu/~blm/pdfs/Teaching/Lodging/pittsburg_project.pdfCrowne Plaza – South Side Pittsburgh ii SBC Lodging Company Hotel Project Proposal Table of Contents SECTION