Downtown Hotel Feasibility Study

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Table Of Contents
Executive Summary
<https://www.scribd.com/doc/109622523/1/Executive-Summary?sh=23640e1ee5f0cc65>
Introduction and Scope
<https://www.scribd.com/doc/109622523/2/Introduction-and-Scope?sh=e6180379250b44
f2>
Area Analysis
<https://www.scribd.com/doc/109622523/3/Area-Analysis?sh=fb223c8db60f03ee>
National Hotel and Meetings Overview
<https://www.scribd.com/doc/109622523/4/National-Hotel-and-Meetings-Overview?sh=
6a3daf700e534316>
Lodging Market Analysis
<https://www.scribd.com/doc/109622523/5/Lodging-Market-Analysis?sh=4997e55585b46
284>
Evaluation of Potential Demand
<https://www.scribd.com/doc/109622523/6/Evaluation-of-Potential-Demand?sh=fb18fc
b1bab3ad70>
Hotel Facility Recommendations
<https://www.scribd.com/doc/109622523/7/Hotel-Facility-Recommendations?sh=879227
7d92ff76bd>
Market Supply and Demand Projection
<https://www.scribd.com/doc/109622523/8/Market-Supply-and-Demand-Projection?sh=f
c9ac611207aa181>
Projected Performance Subject Hotel
<https://www.scribd.com/doc/109622523/9/Projected-Performance-%E2%80%93-SubjectHotel?sh=3c6007df1fc35c8c>
Financial Projections
<https://www.scribd.com/doc/109622523/10/Financial-Projections?sh=7e948a601bb114
fb>
Development Costs
<https://www.scribd.com/doc/109622523/11/Development-Costs?sh=17f533c3aec7696d>
Site Analysis and Proposed Building Layouts
<https://www.scribd.com/doc/109622523/12/Site-Analysis-and-Proposed-Building-Lay
outs?sh=5679df532b5cf7c1>
Economic Impact
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Financial Feasibility of Development
<https://www.scribd.com/doc/109622523/14/Financial-Feasibility-of-Development?sh
=12b045043e61938b>
Assumptions and Limited Conditions
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Downtown Hotel Feasibility Study
Downtown Hotel Feasibility Study
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Market Analysis, Cash Flow Projections, and Strategic Recommendations

for aProposed Downtown Hotel and Conference CenterFrederick,
Maryland January 21, 2010Prepared forThe Downtown Hotel & Conference
Center TeamThe Frederick County Chamber of Commerce Major Employers
Group, The City ofFrederick Department of Economic Development, The
Downtown FrederickPartnership, the Frederick County Tourism Council, and
the Frederick CountyOffice of Economic Development
Pinnacle
Advisory Group
Pinnacle Advisory Group
164 Canal Street, Floor 5, Boston, MA 02114 phone 617/722-9916 fax
617/722-99173418 Norfolk Street, Pompano Beach, FL. 33062 phone
954/786-2019 fax 954/946-0867
OPX
21 Dupont Circle, NW, Washington, DC 20036 phone 202/822-9797 fax
202/785-0443
Rachel J. Roginsky, ISHCPrincipalBarbara Mullenex, RAPartner
Pinnacle
Advisory Group
January 21, 2010Mr. Ric AdamsPresident and CEOFrederick County Chamber
of Commerce8420-B Gas House PikeFrederick, MD 21701Dear Mr. Adams:In
accordance with your Request for Proposal and the terms of our
engagement letter dated June26, 2009, Pinnacle Advisory Group has
evaluated potential demand levels for hotel development onsix potential
sites within Downtown Frederick, Maryland. Our analysis included
extensive market-based research including an area review, an analysis of
the existing competitive lodging facilities,and demand-based research. A
site analysis was also prepared, which includes recommendationsfrom a
lodging market perspective (prepared by Pinnacle) and from a design
perspective (preparedby OPX). Based upon the data available, along with
our own analyses, opinions, and conclusions,we have
opined on each of the six sites
suitability for hotel development, prepared facilityrecommendations,
made projections of occupancy, average daily rate, and cash flow,
estimateddevelopment costs, produced a forecast of economic impact,
determined the financial feasibility ofthe development, and presented
examples of private/public partnerships for similar type projects.The
conclusions presented in this report are based upon our current
knowledge of the market forlodging and related ancillary facilities in
the defined market area as of the completion of ourfieldwork conducted
during the months of August and September, 2009.
As in all studies of this type, the estimated annual performance levels
for the hotel are based oncompetent and efficient management and presume
no significant changes in the competitivedynamics in the market other
than those specifically discussed in the report. Projections
containedherein are based upon estimates and assumptions that are
subject to uncertainty and variability.While we do not represent the
projected results as those which will ultimately be achieved, we
haveprepared them conscientiously based upon the most reliable forms of
information available to usand our extensive experience in the lodging
industries. We have no obligation, unless subsequentlyso engaged, to
update this study because of events occurring subsequent to the
completion of thisstudy.
We appreciate having the opportunity to present this summary of our
findings to you. Please do nothesitate to call us should you have any
questions or wish to have us elaborate on any of thematerial presented
in this report.Sincerely,Pinnacle Advisory Group and OPX
Table of Contents Hotel Market Demand Study
Frederick, MD
Pinnacle Advisory Group and OPX
Table of Contents
Executive Summary
................................................................................
..................
1
................................................................................
.............
5
Area Analysis
................................................................................
...........................
8
National Hotel and Meetings Overview

..................................................................... 24
Lodging Market Analysis
................................................................................
.........
26
Evaluation of Potential Demand
...............................................................................
36
Hotel Facility Recommendations
..............................................................................
38
Market Supply and Demand
Projection.....................................................................
40
Projected Performance
Subject Hotel
.................................................................... 43
Financial Projections
................................................................................
..............
47
Development Costs
................................................................................
.................
62
Site Analysis and Proposed Building Layouts
............................................................ 63
Economic Impact
................................................................................
...................
74
Financial Feasibility of Development
........................................................................ 78
Assumptions and Limited Conditions
........................................................................ 80
Executive Summary Hotel Market Demand Study
Frederick, MD
1
Executive Summary
Pinnacle Advisory Group and OPX were engaged by the Downtown Hotel and
ConferenceCenter Team, which includes The Frederick County Chamber of
Commerce Major EmployersGroup, The City of Frederick Department of
Economic Development, The DowntownFrederick Partnership, the Frederick

County Tourism Council, and the Frederick CountyOffice of Economic
Development, to evaluate the demand for a proposed hotel andconference
center development in Downtown Frederick, Maryland. Six potential sites
wereanalyzed for hotel development throughout Downtown Frederick. In
addition to opining onthe most suitable sites for hotel development from
both a lodging market and designperspective, we were also tasked with
preparing facility recommendations, makingprojections of occupancy,
average daily rate, and cash flow, estimating development
costs,producing a forecast of economic impact, addressing the financial
feasibility of thedevelopment, and presenting examples of private/public
partnerships for similar typeprojects.
Evaluation of Potential Hotel Development
Significant lodging demand exists in Frederick County including
government related businessfrom overnight stays associated with Fort
Detrick and NCI/SAIC-F. Additionally, there areseveral companies with
national headquarters and regional offices in Frederick
includingBechtel, Wells Fargo Home Mortgage, CitiMortgage, United Health
Care, and Chase CardServices. These companies have historically
generated both transient and group businessfrom executives visiting
their respective offices, traveling consultants and salespeople,
andtraining business. Furthermore, the leisure related business includes
many guests visitingfriends and family in the area, guests visiting for
a special event including weddings, familyreunions, and graduations, and
heritage tourists visiting several Civil War sites in the region.There
are many existing hotels that currently service this demand; however,
they are alllimited-service and select-service hotels offering economy
to moderately priced hotel rates.Additionally, several of the hotels are
clustered near exit 31 off of Interstate 270, south ofDowntown, and
proximate to a number of corporate office parks. There are currently
nohotels that exist in the Downtown area. The Downtown location will be
a strong selling pointfor the proposed hotel given its walkability and
its convenient location close to severalrestaurants, retail, and
entertainment. Thus, our evaluation focused on the potential for
anupscale full-service hotel development on one of six potential sites
Downtown.In order to both quantify and assess the potential for an
upscale, full-service Downtownhotel, we interviewed several of the
largest employers and organizations throughout theCounty. Additionally,
we interviewed several state associations to assess the potential
forattracting regional state association business. After consolidating
all of the respondent data,we found that there was sufficient demand
that would be willing to pay between $30 and$70 more than the highest
rates currently available in Frederick for an upscale
full-serviceDowntown hotel such as Marriott, Hilton, Westin, or Hyatt.
In addition to the need for anupscale accommodation in Frederick,
several respondents reported that there was asignificant need for
upscale meeting space and that a Downtown location would be
Frederick, MD
2
preferable to any other location throughout Frederick for such an
event.Given the lack of an existing upscale full-service hotel, we
believe that there will be asignificant amount of new induced demand
that will be included into the market as a resultof a new Downtown
full-service hotel. New demand will be generated from new groups
thatpreviously did not stay in Frederick as well as individual guests

that were historically lookingfor an upscale full-service hotel.
Additionally, new supply should be easily absorbed into themarket due to
projected increases in core market demand. Based on a comprehensive
areaanalysis, we believe that the long-term prospects for the Frederick
area is strong and thatthe economy and local lodging market is poised
for growth due to the expansion of FortDetrick, new development of
office, retail, and residential space, as well as generalemployment and
population growth.
Hotel Development Recommendations
Based on our interviews with demand generators, conversations with those
most familiarwith the Frederick lodging market, as well as our own
expertise, we have recommended themost suitable product for a proposed
Downtown hotel. The following summarizes therecommended features and
amenities.Hotel will be professionally marketed, managed and operated as
a 200-room hotelHotel should be an upscale, full-service hotel with a
national brand affiliation suchas Hilton, Marriott, Westin, or
HyattHotel should include 14,000 square feet of total usable meeting
space. It should benoted that in addition to this space, there should be
a sufficient amount of supportspace including hallways, administrative
space, etc.
o
5,000 to 6,000 square foot ballroom
o
4,000 to 5,000 square feet of breakout meeting rooms
o
4,000 square feet of pre-function spaceHotel should include a restaurant
and lounge, preferably with frontage along CarrollCreek or Patrick
StreetPublic areas should include a small gift shop, indoor pool,
exercise room, andbusiness centerHotel should have approximately 1.25
parking space per guest room (approximately250 parking spaces) and
should offer valet parkingSuggest green design components
Site Analysis
For each of the six available sites, Pinnacle and OPX has evaluated each
of the sites andhave presented a proposed building layout for each. An
in depth analysis of each of the sitesis presented in the report below.
Frederick, MD
3
From a development perspective, site size, height restrictions, and
environmental site issueswill have a significant impact on the ability
to develop the ideal hotel facility. Additionally,monetary benefits such
as costs to acquire the land and tax credits may make certain sitesmore
or less attractive to a developer. Other site attributes such as
availability of existingparking or the ease of developing parking as
well as site topography may have an impact ondevelopment costs.From a
lodging demand perspective, the seamless integration with Downtown, such
as itswalkability and its proximity to restaurants, retail, and
entertainment, will be one of themost important factors for the site.
The appeal of a Downtown site comparative to otherhotels in the lodging
market will be lost the further from the Downtown core the site is.Other
attributes such as accessibility, visibility, Carroll Creek frontage and
views, may alsoadd to the desirability of the site.
Cash Flow Projection

Our market research indicates that there is sufficient demand for an
upscale full-servicehotel. The capture of previously unaccommodated
demand in the market combined withcore market demand growth, will allow
for the hotel to achieve a 72 percent occupancy inthe stabilized year.
Furthermore, our market research indicated that demand generatorswould
be willing to pay between $150 and $200 for the proposed hotel. We then
analyzedthe achieved rate at each of the hotels in the competitive set
and compared them withnational averages of branded full-service hotels
versus select-service hotels. Furthermore,our average rate projection
was supported by achieved average rates of other full-servicehotels in
suburban Washington DC and Baltimore. Following our analysis, we
projected thatthe subject would achieve a base rate in 2008 dollars of
$162.71.Other revenue and expense line items were then projected by
utilizing financial statementsfor several comparable hotels as well as
industry averages from consolidated financial data.The resultant net
operating income in the stabilized year (year 3) is 18.9 percent of
totalrevenues or approximately $3,529,000.
Development Costs
Based on the attributes identified in the development recommendations,
input from severaldevelopment companies, recent examples of full-service
developments, and the expertise ofOPX, we believe that a 200-room
full-service upscale hotel with approximately 14,000square feet of
meeting space would range between $200,000 to $225,000 a key
or$40,000,000 to $45,000,000 excluding last cost considerations.
Financial Feasibility
While we have projected that a proposed upscale full-service hotel
Downtown will be asuccessful operating entity, the high costs of
construction will likely prevent the hotel frombeing feasible to a
potential hotel developer without assistance. Based on an
estimateddevelopment cost of between $40 and $45 million, we assumed for
the purposes of thisanalysis the middle of our estimated range ($42.5
million). In addition to the constructioncosts, we also assumed a
placeholder amount of $2.5 million for land costs, resulting in an
Frederick, MD
4
all in development cost estimate (inclusive of land) of $45 million.
Based on an assumedmortgage of approximately $20 million (45 percent of
total), we estimate that approximately$25 million in equity would be
necessary to complete the development. Based on the cashflow projections
and an assumption of a reasonable expected rate of return, we believe
thata developer would invest $12 to $13 million into the development. As
such, we believe thatan additional $12 to $13 million would need to be
generated in the form of deferred loans(from city, county, and/or
state), TIF, local investors, land, parking, grants, etc.
Economic Impact
Based on the development of an upscale, 200-room full-service hotel with
14,000 squarefeet of meeting space in Downtown, we calculated both the
direct and indirect/inducedeconomic impact. Direct impact can be
calculated by considering the following: 1)construction costs,
construction labor, and the associated sales and payroll taxes 2)
salesfrom operational revenues and associated state sales taxes, 3)
costs of goods sold and thestate sales taxes paid, 4) total payroll and
estimated payroll taxes, and 5) real estate taxes.In addition, one must
consider indirect and induced impact. Indirect impact relates to jobsand
income of businesses that supply the hotel with goods and services.
Induced impactincludes the economic activity generated when employees
and suppliers of the hotel re-spend their wages on local consumer
products.Direct impact from the development was estimated to be $48
million during theconstruction phase and will generate between $25 and
$31 million per year in the first fiveyears of operation. For the
indirect/induced economic impact, a multiplier of 1.25 of directimpact
was used for our estimate, resulting in a total economic impact of $56
to $70million per year in the first five years of operation.
Introduction and Scope Hotel Market Demand Study
Frederick, MD
5
Introduction
Pinnacle Advisory Group and OPX were engaged by Frederick County Chamber
of Commercetogether with the City of Frederick Department of Economic
Development (DED), DowntownFrederick Partnership (Partnership), the
Frederick County Office of Economic Development(OED), the Tourism
Council of Frederick County and the Frederick area major employers,
toevaluate the demand for a proposed hotel and conference center
development in DowntownFrederick, Maryland. Six potential sites were
analyzed for hotel development throughoutDowntown Frederick. In addition
to opining on the most suitable sites for hotel developmentfrom both a
lodging market and design perspective, we were also tasked with
preparingfacility recommendations, making projections of occupancy,
average daily rate, and cashflow, estimating development costs,
producing a forecast of economic impact, addressingthe financial
feasibility of the development, and presenting examples of
private/publicpartnerships for similar type projects.The approval
process varies from community to community. However, for the purposes
ofthis analysis, we have assumed that the approval process through
Frederick, securingfinancing, and planning and design, would occur over
the next 2 to 3 years. As such, wehave assumed that the proposed hotel
would open in a 4 year time frame. For the purposesof our analysis, we
have assumed an opening date of January 1, 2014. Thus our projectionsare
presented in calendar years.
Scope of Research and Analysis
The primary scope of work completed during our research and analysis
included:1.
Examination of the six available sites and evaluation of the surrounding
environs ofeach of the sites with respect to its suitability for hotel
operations;2.
Meetings and discussions with representatives of the City, County, and
Chamber ofCommerce in Frederick to gather relevant data and input for
the proposeddevelopment;3.
Identification of the supply of existing hotels in Frederick, which we
deemed ofrelevance to this analysis. Properties were deemed to be of
relevance if they wouldpotentially compete for demand with the proposed
hotel;4.
Research with the primary and secondary set of hotels which included a
siteinspection and, in most cases, an interview at each property.
Facilities where suchresearch was conducted included the

following:Hilton Garden Inn FrederickCourtyard FrederickResidence Inn
FrederickHoliday Inn Frederick
Frederick, MD
6
Hampton Inn & Suites Frederick
Fort DetrickHampton Inn FrederickHoliday Inn Express FrederickFairfield

Inn & Suites Frederick5.
Gathering of information regarding the actual performance levels of the
identifiedhotels via our interviews with on-site management, and/or via
other sources such asrepresentatives of franchise or management
companies involved at each property;6.
Review of broader-based hotel supply and demand dynamics in the subject
lodgingmarket, via discussions with our industry contacts in the area as
well as throughexamination of data available from Smith Travel Research;7.
Interviews with government officials and other individuals with regard
to the areas
lodging market in general as it would relate to the subject hotel,
including gatheringdetailed information regarding other proposed
developments. Interviews weresupplemented with research on the Internet
regarding the area economy anddevelopment patterns as well as via
collection of data from Site to do Business(STDB). Interviews were
conducted with:Frederick Chamber of CommerceCity of Frederick Economic
DevelopmentCounty of Frederick Economic DevelopmentTourism Council of
Frederick CountyDowntown Frederick Partnership8.
Interviews with existing and potential lodging demand generators in the
subjectmarket. Interviews were conducted
with:BechtelCitiMortgageFrederick County Public SchoolsFrederick
Community CollegeLonza Bioscience
Mount Saint Marys University
NCI/SAIC-FState Farm InsuranceUS Army Garrison Fort DetrickWells Fargo
Home MortgagePNC BankAircraft Owners and Pilots AssociationHood
CollegeMorgan-Keller ConstructionMaryland Airport Managers
AssociationMaryland Association of Osteopathic PhysiciansMaryland
Association of Resources for Families and YouthMaryland Association of
Secondary School PrincipalsNational Association of Oil Heating Service
ManagersMaryland Association for Environmental and Outdoor Education
Frederick, MD
7
Maryland Library AssociationIt should be noted that several other area
corporations and state associations werecontacted for interviews,
however, during the timeframe of our study, only thecompanies and
associations listed above were available for interviews. Furthermore,the
state associations contacted for interviews were selected based on their
historyof holding overnight conferences in the Frederick area,
associations that holdovernight conferences and those that have

historically held conferences in severaldifferent locations;9.
Collection and review of national and regional hotel and meetings trends;10.
Conversations with franchise representatives to determine their interest
andavailability of brands;11.
Preparation of general facility recommendations for the proposed hotel
andconference center;12.
Preparation of projections of occupancy and average rate for the subject
hotel for aperiod of 10 years of operations beginning January 1, 2014
(the estimated openingdate);13.
Collection and evaluation of financial operating data for a selection of
hotelscomparable to the proposed subject;14.
Review of data available from the 2008 Smith Travel Research Hotel
OperatingStatistics (HOST) report;15.
Preparation of projected financial operating results for the subject
hotel for 10calendar years beginning on January 1, 2014;16.
An estimate of development costs including hard and soft costs,
exclusive of landcosts for the recommended hotel;17.
A forecast of the expected impact arising from the development of a new
hotel. Thiseconomic impact includes anticipated direct and indirect
consumer and producerexpenditures in the local economy, additional tax
revenues to the County (income,sales, hotel, and real estate).18.
Research of financing/funding for other similar projects that are funded
through apublic/private partnership; and19.
Preparation of this comprehensive report detailing our findings,
conclusions andrecommendations on the basis of the above.
Area Analysis Hotel Market Demand Study
Frederick, MD
8
Area Analysis
Frederick Overview
Frederick County is located in the west/central region within the State
of Maryland. It is thelargest county in size totaling 663 total square
miles. The City of Frederick (the County seat)and a community of small
towns, make up Frederick County, a region at the crossroads ofseveral
major highways connecting to the Greater Washington DC and Baltimore
areas.Washington DC (43 miles) and Baltimore (46 miles) represent the
two largest metropolitanareas outside of Frederick County.Frederick
is a historic community settled in the 1700s. For many years the
area served as abedroom community for the Washington DC and Baltimore
regions, however, in more recentyears, Frederick has experienced
significant growth in both population and employment. Theavailability of
affordable land, a highly educated workforce, and a high quality of
life, hasmade Frederick one of the fastest job growth locations in the
state and the region. Today,Frederick County has a population over
232,000 and employs approximately 60 percent ofthe population within the

county. It is home to national and regional headquarters such asBechtel,
BP Solar, MedImmune, Wells Fargo Home Mortgage, and State Farm.One of
the driving forces behind employment and industry growth within
Frederick is FortDetrick. A US Army Garrison, Fort Detrick enhances
public health, conducts medicalresearch, and engages in biotechnology
development. The installation employs 8,650people and is associated with
five cabinet level departments: Defense, Agriculture, Healthand Human
Services,
Veterans Affairs,
and Homeland Security. One of the driving forcesbehind growth at Fort
Detrick is the National Interagency Biodefense Campus (NIBC), whichis
generating nearly $2 billion in construction.Given its location
proximate to Fort Detrick and the northern end of the I-270
TechnologyCorridor, Frederick is emerging as a leading national location
for the bioscience, informationtechnology, and advanced manufacturing
industries. Benefitting from federal contractprospects and collaborative
opportunities with the NCI/SAIC-F and other research conductedon Fort
Detrick, there are now over 60 bioscience companies located in
Frederick. There arealso over 120 technology companies that enjoy access
to a high quality fiberopticinfrastructure and highly skilled workforce.
Additionally, Frederick has a strong professionalservices industry
specifically in the healthcare, finance and insurance
sectors.Contributing to the highly educated workforce are the three
institutions of higher education:
Mount Saint Marys University, Hood College, and Frederick Community
College that arelocated within Frederick County.
Tourism also has a significant impact on the areas economy.
Downtown Frederick, with itsvariety of shopping, dining, and
entertainment, located within a 40 block historic district, is
the regions main destination. Furthermore, Freder
ick is centrally located to several historicCivil War sites including
Gettysburg, Harpers Ferry, Monocacy Battlefield, and Antietam.Many
visitors also come to see the Barbara Fritchie House and the National
Museum of CivilWar Medicine.
Frederick, MD
9
Due to its significant economic growth, several development projects are
either underconstruction or under consideration to be built in
Frederick. Fort Detrick alone is undergoingapproximately $1.3 billion in
new construction. Major corporations such as NCI/SAIC-F andMedimmune are
undergoing expansion projects to their existing offices. Additionally,
severaloffice and retail developments are in the planning stages
including office buildings atThomas Johnson Drive,
McCutcheons Mill, McHenrys, Monocacy Valley Canning,
Northgate, Market Square, Clemson Corner, Frederick Brickworks,
Frederick Towne Mall,One Commerce Plaza, Union Mills, and the Galleria.
Furthermore, several publically fundedprojects are either under
construction or in the planning stages including the Carroll Creek
Park, East Street Gateway, Frederick Visitors Center, and the Board of
Education
Headquarters.
Frederick, MD
10
Area Map
Frederick, MD
11
Economic and Demographic Analysis
Based on a review of economic and demographic data compiled by Site to
Do Business(STDB) we have identified certain statistics that will
influence the demand for lodging. Thefollowing paragraphs discuss the
applicable data and are for general informational purposesonly.
Population
The following table outlines historical and projected population trends
for the City ofFrederick, Frederick County, Maryland, and the United
States as a whole.
Population
City of
FrederickState of
UnitedFrederickCountyMarylandStates199042,200150,2084,781,468248,709,873200052,7
67195,2775,296,486281,421,906200963,226232,6915,733,229309,299,265
Compound Annual Growth (CAGR)
CAGR 1990 - 20002.26%2.66%1.03%1.24%CAGR 2000 - 20092.03%1.97%0.88%1.06%
Projected
201467,154249,4375,913,034328,770,749CAGR 2009 20141.21%1.40%0.62%1.23%Source: STDB
As noted in the table above, population in the City and County of
Frederick has increased atstrong rates of growth since 1990. Between
1990 and 2009, the City and County ofFrederick has grown at a compound
annual rate of just over two percent compared toapproximately a one
percent growth in Maryland and the United States as a whole.Projections
made by STDB through 2014 indicate that population is expected to
increase ata compound annual growth of 1.21 percent in the City of
Frederick, while Frederick Countywill increase at a rate of 1.4 percent.
Average Household Income
The following table details average household income and compounded
annual growth ratesfrom 1990 until 2008 and projections for 2013 for the
City of Frederick, Frederick County,the State of Maryland, and the
United States.
Frederick, MD
12
Average Household Income
City of
FrederickState of
UnitedFrederickCountyMarylandStates199039,53946,69047,90538,453200057,06469,9556
7,45456,644200971,62391,12185,71673,771
Compound Annual Growth (CAGR)
CAGR 1990 - 20003.74%4.13%3.48%3.95%CAGR 2000 - 20092.56%2.98%2.70%2.98%
Projected
201473,77593,69388,03787,814CAGR 2009 - 20140.59%0.56%0.54%3.55%Source: STDB
In the City of Frederick, average household income increased by a

compound annual growthof 3.74 between 1990 and 2000 and then increased
at a compound annual growth rate of2.56 between 2000 and 2009. In
Frederick County, average household income increasedby 4.13 between 1990
and 2000 and then increased by 2.98 percent between 2000 and2009. These
growth rates are in line with the 3.48 percent and 3.95 percent growth
rate inMaryland and the United States, respectively, between 1990 and
2000 and the 2.70percent and 2.98 percent increase between 2000 and
2009. Projections for increases inaverage household income for the City
and County of Frederick indicate that while it isprojected to grow,
increases will be significantly lower than the projected 3.55
percentannual growth rate for the United States as a whole.
Employment
Total employment in both the City and County of Frederick has increased
at a compoundrate of growth between 1990 and 2008 of between 2.2 percent
and 2.3 percent growth.Over the past 19 years, there have been
approximately 40,000 new jobs created inFrederick County, increasing
total employment from 80,000 in 1990 up to 120,000 as of2008. Both the
City and County of Frederick has experienced some job losses due to
thecurrent economic downturn. As of August of 2009, total employment is
down 2.3 percent inthe city and in the county. According to the City and
County of Frederick, there areapproximately 8,500 businesses in
Frederick County and 3,500 businesses in the City ofFrederick. In
Downtown Frederick alone, there are approximately 600 businesses
and5,000 employees.
Frederick, MD
13
Frederick City and County Employment Statistics
YearEmployment% ChangeEmployment% Change199021,293
80,342
199121,6601.7%
81,725 1.7%
199222,3223.1%
84,223 3.1%
199322,7321.8%
85,771 1.8%
199423,9115.2%
90,219 5.2%
199524,4922.4%
92,412 2.4%
199625,0052.1%
94,350 2.1%
199725,3461.4%
95,633 1.4%
199825,7391.6%
97,117 1.6%
199926,3372.3%
99,374 2.3%
200028,4167.9%
106,929 7.6%
200128,6810.9%
107,924 0.9%
200229,4132.6%
110,677 2.6%
200329,7961.3%
112,120 1.3%
200430,2531.5%
113,841 1.5%
200530,5010.8%
116,872 2.7%
200631,4813.2%
119,827 2.5%
200731,6610.6%
120,776 0.8%
200831,549-0.4%
120,348 -0.4%
CAGR 1990-20082.2%2.3%CAGR 1999-20082.0%2.2%August YTD 200831,654
120,749
August YTD 200930,930-2.3%
117,987
-2.3%
Source: Bureau of Labor Statistics
City County
As noted in the table below, significant employment growth has occurred
in the servicessector between 2001 and 2008. Specifically, the
professional and business sector hasdriven this growth increasing at a
compound annual rate of 6.3 percent, while educationand health, leisure
and hospitality, and financial activities have increased at a
compoundannual rate of 3.3 percent, 3.8 percent, and 4.4 percent,
respectively. The governmentsector has also experienced significant
growth, increasing at a compound annual rate of 3percent over the same
period.
Frederick, MD
14
Frederick County Employment Statistical Analysis
Employment by Sector
20012008Natural Resources, Mining, &
Construction9,17210,092Manufacturing7,4715,639Wholesale
Trade2,7712,536Retail Trade11,27212,209Transportation &
Utilities1,3141,754Government12,38615,296Services34,83946,612Information1,4421,4
43Financial
Activities5,5287,451Professional & Business 9,22614,162Education &
Health 8,96711,245Leisure & Hospitality7,0089,109Other
Services2,6683,202Total Employment79,22594,138
Compound Annual Growth
01- 08Natural Resources, Mining, &
Construction1.37%Manufacturing-3.94%Wholesale Trade-1.26%Retail
Trade1.15%Transportation &
Utilities4.21%Government3.06%Services4.25%Information0.01%Financial
Activities4.36%Professional & Business 6.31%Education & Health
3.29%Leisure & Hospitality3.82%Other Services2.64%Total Employment2.49%
Absolute/Total Change
Natural Resources, Mining, & Construction920Manufacturing-1,832Wholesale
Trade-235Retail Trade937Transportation &
Utilities440Government2,910Services11,773Information1Financial
Activities1,923Professional & Business 4,936Education & Health
2,278Leisure & Hospitality2,101Other Services534Total Employment14,913
Source: Bureau of Labor StatisticsNote: Total employment figures
provided by BLS does not equate to thetotal employment broken down by
sector. For the purposes of this analysis, we have relied on the total
employment figures, however present the data above to analyze the
breakdown of employment
Frederick, MD
15
Unemployment
The following table details unemployment rates for the City of
Frederick, Frederick County,the State of Maryland, and the United States
as a whole.
Unemployment Rate
YearCity of FrederickFrederick CountyMarylandUnited
States19992.6%2.2.%3.6%4.2%20004.3%2.7%3.6%4.0%20015.1%3.2%4.1%4.7%20025.5%3.5%4
.5%5.8%20035.5%3.5%4.5%6.0%20045.3%3.3%4.3%5.5%20053.4%3.1%4.1%5.1%20063.4%3.1%3
.8%4.6%20073.1%2.9%3.5%4.6%20083.9%3.6%4.4%5.8%Aug-096.5%5.9%7.1%9.6%
Source: Bureau of Labor and StatisticsNote: Not Seasonally Adjusted
In recent years, both the City and County of Frederick have experienced
low unemploymentrates compared to both the State of Maryland and the
United States. While still well belowthe national statistics,
unemployment rates as of August of 2009 in the City and County
ofFrederick have increased significantly since year-end 2008. In the
City of Frederick,unemployment increased from 3.9 percent up to 6.5
percent, while in Frederick County,unemployment increased from 3.6
percent up to 5.9 percent.
Transportation
The transportation infrastructure is an integral component to the
success of any real estatedevelopment. The purpose of a well-organized
transportation network is to providebusinesses and customers with good
locations, easy access, and functionalism.
Highway Transportation
Frederick is located at the convergence of several major highways
including Interstate 70 (I-70), Interstate 270 (I-270), US Route 340, US
Route 40, and US Route 15. I-70 providesaccess in a northwest/southeast
direction through Maryland with a terminus to the east nearBaltimore,
and a terminus to the west in Utah. I-270 is an auxiliary Interstate
Highwaywithin the State of Maryland that travels in a
northwest/southeast direction with a terminusto the southeast at
Interstate 495 near Bethesda, Maryland and a terminus to the northwestat
Interstate 70 in Frederick. US Route 340 travels in a
southwest/northeast direction with a
western terminus near Harpers Ferry at the West
Virginia/Maryland/Virginia border and an
eastern terminus in Frederick. US Route 40 travels in an east/west
direction with a westernterminus near Park City, Utah and an eastern
terminus in Atlantic City, New Jersey. The
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Market Analysis, Cash Flow Projections, and Strategic Recommendations

National Hotel and Meetings Overview

Economic Development, The DowntownFrederick Partnership, the Frederick

thatpreviously did not stay in Frederick as well as individual guests

Cash Flow Projection

Facilities where suchresearch was conducted included the

Fort DetrickHampton Inn FrederickHoliday Inn Express FrederickFairfield

associations that holdovernight conferences and those that have

232,000 and employs approximately 60 percent ofthe population within the

In the City of Frederick, average household income increased by a

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