phase i report on - independence, oregon...the independence event center was developed on the ground...

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Phase I Report on

The Market Feasibility of

A Hotel in

Independence, Oregon

Report Issue Date: July 17, 2014

K&M File #: 14-012

Prepared by

Thomas P. Kennedy, CHA

Kennedy & Mohn, P.S.

Seattle, Washington

Prepared for

Mr. Shawn Irvine

City of Independence, Oregon

Kenne

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KENNEDY, & MOHN, P.S. Hotel Brokerage, Consulting, & Appraisals

TABLE OF CONTENTS COVER LETTER SUMMARY OF MARKET FINDINGS Introduction ......................................................................................................................................2 Area Overview .................................................................................................................................2 Site .................................................................................................................................................10 Hotel Market Analysis ...................................................................................................................12 Supply Changes .............................................................................................................................17 Demand Survey/Interviews ............................................................................................................17 Projected Lodging Market ............................................................................................................19 Market Positioning .........................................................................................................................20 Conclusions & Recommendations .................................................................................................22 TABLES Major Employers .............................................................................................................................. 4 Economic Indicator Summary .......................................................................................................... 9 Competitive Lodging Market Profile .............................................................................................. 13 Historical Market Performance Summary ...................................................................................... 14 Estimated Mix of Market Rooms Demand ..................................................................................... 15 Seasonality of Market Occupancy .................................................................................................. 16 Seasonality of Market ADR ............................................................................................................ 16 Projected Market Performance ....................................................................................................... 21 ADDENDUM Assumptions Limiting Conditions Certification Copy of Lodging Demand Survey

Mr. Shawn Irvine July 17, 2014 Page 2

KENNEDY & MOHN, P.S. Hotel Brokerage, Consulting, & Appraisals

♦ Ordering a Custom Lodging Trends Report from Smith Travel Research and summarizing the performance of hotels considered most competitive with a proposed hotel if located in Independence, Oregon;

♦ Making general recommendations regarding the proposed hotel, the number and mix of guestrooms, and amenities;

♦ Projecting what an appropriately-sized hotel in Independence might realistically be able to achieve as a stabilized occupancy rate and average room rate, stated in current 2014 dollars;

♦ Documenting our findings in this letter report format with supporting tables. Introduction

Kennedy & Mohn, P.S. was engaged by the City of Independence, Oregon to study the market feasibility of developing a hotel in Independence, Oregon. The purpose of the study was to evaluate the viability of a hotel in Independence and, if supported, to possibly use the results of the study to solicit interest from prospective hotel developers. Area The City of Independence, Oregon is a quaint town located along the western banks of the Willamette River in Polk County, approximately 12 miles southwest of Salem, Oregon. OR-22 extends west from Salem intersecting with OR-51 (Independence Highway 51/Main Street), approximately five miles north of Independence. OR-51 extends north and south through Independence, and Monmouth Street extends east and west, connecting downtown Independence to its neighboring city of Monmouth, located approximately 1.5 miles west of downtown Independence. Polk County is part of the Salem Metropolitan Statistical Area (MSA) which is comprised of Marion and Polk counties.



Nearby Salem, Oregon, was founded in 1841and is one of the oldest cities in the west. Salem is the capitol of Oregon and is located in the heart of the Willamette Valley. Marion County covers an area of approximately 1,175 square miles and adjacent Polk County covers an area of approximately 744 square miles. The Willamette River forms a natural boundary between Marion and Polk Counties. Salem is located along Interstate Highway 5 (I-5), approximately 57 miles east of the Oregon Coast, 92 miles west of the Cascade Mountain summit, 47 miles south of Portland, and approximately 60 miles north of Eugene-Springfield. Independence, Oregon is located approximately 54 miles southwest of Portland, Oregon, approximately 60 miles northwest of Eugene-Springfield, approximately 22 miles north of Corvallis, and approximately 50 miles southeast of the coastal town of Lincoln City. In 2013, the estimated population of the Salem MSA was approximately 399,945. Between 2000 and 2013 the population of the Salem MSA increased at an average annual rate of 1.1 percent. In comparison, in 2013 the estimated population of Polk County was 77,065, representing approximately 19.3 percent of the population of the Salem MSA. Between 2000 and 2013, the population of Polk County increased at an average annual rate of 1.6 percent. The estimated population of Independence in 2013 was 8,585 and the population of Monmouth was 9,720 for a combined population of 18,305. The combined population of these two cities increased at an average annual rate of roundly 2.2 percent between 2000 and 2013. Between 2000 and 2013, the population of Independence increased at an average annual rate of 2.7 percent, greater than any of the cities in Polk County. Between 2002 and 2008, total non-farm employment in the Salem Metropolitan Statistical Area increased at a compound average annual rate of roundly 1.5 percent. Beginning in 2009, the impact of the recession began to take its toll on the area resulting in the loss of approximately 10,800 jobs in the Salem MSA by 2012. Between 2012 and 2013 the number of jobs within the Salem MSA increased by 3,200, an increase of approximately 2.3 percent over the prior year. Prior to the recession the strongest growth sectors had been transportation, trade, and utilities, education and health services, mining, logging, and construction, professional and business services, and local government employment. In 2013, just under 28 percent of all non-agricultural jobs were in the government sector; approximately 17 percent were in trade, transportation, and utilities; roundly 16 percent were in education and health services; 9 percent were in leisure and hospitality, and slightly more than 8 percent were in manufacturing and professional and businesses services. In 2013, approximately 11,190 workers were employed in agriculture, an increase of approximately 4.0 percent over the prior year. In 2013, the unemployment rate in the Salem MSA was 8.2 percent down from a high of 10.8 percent in 2010, but still well above historical averages in the 5 to 7 percent range. The unemployment rate in Polk County in 2013 was 7.6 percent, down from a high of 9.3 percent in 2010. As economic conditions continue to improve we would expect the unemployment rate to continue to gradually decline. In Polk County, more jobs are in natural resources, mining, and construction, manufacturing, trade, transportation, and utilities, and local and state government. Salem is served by I-5, which extends north and south connecting Canada on the north, to Mexico on the south; by State Routes 99 East and West; OR-22; SR-221; and OR-213 & OR-



214. According to information provided by the Oregon Department of Transportation, almost 90,000 vehicles travel along I-5 daily. The city of Salem is served by the Salem Airport, commonly known as McNary Field. McNary Field currently serves general aviation aircraft and the Oregon Army National Guard Army Aviation Support Facility. The airport offers two jet runways, one instrument and the other visual. In June 2007, Delta Airlines began offering service to Salem, with two daily flights offered by Delta’s SkyWest, its connector service, between Salem and Salt Lake City. Delta terminated service in October 2008, citing among other things, the rising cost of fuel. In April 2011, Seaport Airlines, an Oregon based airline, began service between Newport, Salem, and Portland. This service was terminated in July 2011 due to high prices and little profitability. Most area travelers prefer to drive to Portland or Eugene which both offer regularly scheduled flights to many different locations at more affordable prices. The City of Independence is served by Independence State Airport, a public-use airport owned and operated by the Oregon Department of Aviation, which recently merged with the Oregon Department of Transportation due to budget constraints. Currently, the airport offers two runways and no regularly scheduled passenger service. Ferry service from the Salem area is available to Buena Vista, located approximately six miles south of Independence. A list of the primary employers in the Salem MSA is provided in the table at the right. Shopping in downtown Salem includes: Salem Center, an 80-store shopping mall that is anchored by Nordstrom, Macy’s, Kohl’s, J. C. Penney, and a 7-screen movie theatre; Reed Opera House, an historic building that has been renovated into unique shops, professional offices, restaurants, and bars; and various other independently operated stores. Because Salem Center is located approximately 15 minutes from Independence, this would be a convenient alternative for travelers that want to do more extensive, albeit traditional shopping. Downtown Independence offers a quaint, historic theme that provides a welcome escape from the norm. Antique stores, unique, independently operated coffee shops; restaurants; a wine, coffee, and beer shop; jewelry shops; an artisan bakery, gift and craft stores; a local ladies mercantile that offers quilting classes and goods, a nationally/internationally-known gallery (River Gallery) that is owned and operated by a group of artists that also features northwest artists work and offers workshops; a Heritage Museum with historical artifacts and information about the history of Independence and Polk County; and tours of 19th Century historic homes and buildings. Despite being bypassed in the 1960’s by OR-22 and U.S. 99W, the city of Independence has made an on-going effort to ensure the community continues to thrive. The city’s Riverview Park is located in the center of the downtown area, immediately west of the Willamette River, creating a focal point for fun and activities.

State Government GovernmentLocal Government GovernmentSalem Hospital Health CareNorpac Foods Food ProductsT-Mobile CommunicationsSAIF Corporation InsuranceSilverton Hospital Health CareTruitt Brothers, Inc. Food processingWachovia Banking Call CenterKaiser Permanente Health CareWinco Foods Grocery DistributionFood Services of America Food Service

Major Employers - Salem Area MSA

Source: SEDCOR-partial list



Founded in 1845 by Elvin Thorp, the city of Independence was named after Independence, Missouri, the point of origin of its founders. Between 1900 and 1940, Independence was largely known for its cultivating, production, and harvesting of crops. In the 1930’s Independence was considered the hops capitol of the world. As foreign competition increased and new production methods were initiated for making beer, hop prices declined and the hops industry plummeted. The city was an established shipping point for agricultural and wood products by both rail and boat until the 1950’s. In the 1960’s the city was bypassed by two major highways, making it challenging for the area’s businesses to compete. Major employers in Independence with 100 or more employees now include: Marquis Spa Company, Forest River Inc. (Cargo Trailer Division), Elkay Wood Products (Medallion Cabinetry), and Robert Lloyd Sheet Metal. Collectively these firms create a modest base of commercial lodging demand, the bulk of which predominantly stays in Salem area hotels. Western Oregon University (WOU), located in neighboring Monmouth, is a leading comprehensive public liberal arts university that currently has an enrollment of more than 6,200 students, and approximately 400 graduate students. Founded in 1856, WOU is the oldest institution in the Oregon University system. The university offers Colleges of Education and Liberal Arts and Sciences, with numerous Masters Degrees, and license and certificate programs. The university generates significant demand for lodging, most of which currently stays in nearby Salem. The Independence Event Center was developed on the ground level of the new Civic Center, at 555 Main Street, approximately two blocks south of the intersection of N Main Street and the Monmouth-Independence Highway. The Event Center includes the 2,110 square foot Riverside room that total can be subdivided into three rooms (A, B, and C), the 972 square foot Heritage Room, a pre-function area, caterer’s kitchen, and public restrooms. The facility is ADA accessible and is highly appropriate for small meetings and conferences, receptions, reunions, or special events. In 2013 the Event Center hosted 20 paid events with approximately 1,000 attendees and 500 catered meals. Including non-revenue events, the total number of events is between 35 to 50. Events included educational and corporate training sessions, reunions, Town Hall meetings, awards banquets, political meetings, and anniversary parties. The Event Center provides an ideal setting that could be further leveraged to help enable a hotel to attract overnight conferences, meetings, and events. Event attendees are estimated to have generated approximately 80 to 100 room nights during this period. Noteworthy efforts or developments in Independence include:

♦ In 2001 the city rebuilt Main Street by widening sidewalks, adding street furniture and

period lighting. ♦ A new library was developed in 2003. ♦ In 2005 an amphitheater was added to Riverview Park which has focused attention on the

downtown area and created a gathering spot for community activities, festivals, and visitors. Riverview Park and amphitheater are located along the banks of the Willamette River, a



unique and highly desirable attraction for the community. During the summer months (mid-July through August), free movies and comedy entertainment (River’s Edge Summer Series) are offered in the amphitheater every Thursday night and concerts are provided by northwest bands and artists on Friday nights. As many as 1,000 people have gathered for concerts and 3,000 people per night have gathered to watch movies and comedy at the park in recent years, and attendance is climbing. More shows and events are being planned to attract visitors from nearby Corvallis, Eugene and Portland. The riverfront amphitheater and park are also the venue for car shows and other planned events.

♦ As a result of an intergovernmental agreement between the cities of Independence and Monmouth, MINET (Monmouth-Independence Network) was formed. This telecommunications company provides both cities with fiber optic broadband service that offers high-speed internet access, digital cable, and telephone service. According to a representative of the company and the city of Independence, this unique capability offered by a relatively small community located close to a larger metropolitan area, has already attracted the attention of several businesses and has the potential to attract new development and residents to the area.

♦ An eight screen theater was developed in downtown Independence in 2007 which attracts locals and area residents and provides convenient entertainment for visitors.

♦ In 2009 the Greater Independence Incubator was created to assist new businesses that are just beginning.

♦ In 2011 the city of Independence created an Economic Development Department and appointed a Director in an effort to support and foster the local businesses and attract more businesses to town. While most cities of this size do not have such a position, the addition has yielded significant results over the last year. During this period, a new mill has opened, and two new restaurants and a retail store have been attracted, creating 30 new jobs for the area. The retail store has already expanded and moved to a new location due to its success. Additional developments are now in the works and expectations are this will continue to attract more jobs and new development.

♦ In March 2011, the city opened its three-story, $11.5 million Civic Center in downtown Independence. In addition to housing city offices and the police department, the ground level of the building accommodates the previously mentioned Event Center.

♦ The city is in the process of developing a sports complex within approximately 66-acres of land located at the north end of town, east of OR-51 and south of Hanna Road, along the Willamette River. At completion this project will include eight soccer fields that are expected to attract significant demand in the spring, summer and early fall. A boat launch has already opened. Baseball fields may be added at a later date. The planned development is likely to attract out-of town guests that might require lodging. According to a representative of the city, two of the soccer fields are expected to be ready by summer 2014. However, the city is having discussions with a developer that is building apartments which might allow all of the fields to be completed by fall 2014 making them available for the 2015 season.

♦ The city offers both an enterprise zone and an urban development area which help create financial incentives for new development in the area.



♦ Universal Seed Company, located in Independence since 1995 is expanding their storage and shipping operations by developing four new buildings totaling 31,000 square feet. Universal Seed will occupy two of the buildings and has already leased the remaining space to other businesses.

♦ The historic Cooper Building, located southwest of Riverview Park and amphitheater, at N Main and C Streets, was acquired by an investor and is currently being renovated. The renovated building will include approximately four apartments and three offices on the upper levels, and approximately 1,000 square feet of retail space and a restaurant and lounge on the main floor.

♦ Leyton House Professional and Sojourn Hair and Beauty products are opening a training center in downtown Independence. Leyton House Professional is a global brand of couture hair coloring and high end hair dressing support lines that will provide training and a link to distributors for hair care professionals. Use of the products requires training that involves hosting professional trainers that teach classes to hair care professionals from throughout North America. The company’s training facility will be located in downtown Independence and is expected to generate anywhere from eight to fifteen rooms for three nights (Sunday through Tuesday) which could yield 1,248 to 2,340 room nights of lodging demand annually.

♦ Marquis Spa has acquired a 20,000 square foot industrial building in downtown Independence and will add 15 to 20 employees to develop swim spas by January 2015.

Recreational activities and events in or near the Independence area include:

♦ Bird watching: Independence’s Riverview Park is part of the Luckiamute Loop birding region and three popular wildlife refuges are located within a 30-minute drive.

♦ Willamette Water Trail: fully mapped “blue highway” popular with boaters, and for canoeing and kayaking.

♦ Willamette Valley Scenic Bikeway: Independence is a popular cycling stop on the Willamette Valley Scenic Bikeway and is often included in Cycle Oregon events. The Willamette Valley Scenic Bikeway is the first designated scenic bikeway in the country. The132-mile biking route starts at Champoeg State Park, located on the south bank of the Willamette River five miles southeast of Newburg and ends at Armitage County Park near Eugene, Oregon. Cycling is a popular year-round activity in the area, attracting hundreds of bikers.

♦ Wineries: Dozens of wineries, many that have won national and international awards, are within less than an hour’s drive of Independence and tours are offered by companies that could be expanded to the Independence area if a good quality hotel was available. Polk County is the state’s second largest producers of wine grapes and wine production, second only to Yamhill County.

♦ Black Rock Mountain Bike Park: The Black Rock Mountain Bike Association and the Oregon Department of Forestry partnered to develop mountain bike trails in Falls City, Oregon, approximately 10 miles from Independence and Dallas that offer a variety of



skill levels for mountain bikers. The bike park now attracts mountain bikers from all over the Pacific Northwest and beyond for challenging rides, events, and competition

♦ Chatoe Rogue Farms & Micro Hopyard: Located on the Wigrich Appellation along the banks of the Willamette River south of Independence, this 42-acre facility provides a 6-room (Hop n’ Bed) that can sleep up to 16 persons, a micro-brewery tasting room and a working hop yard. The hop yard grows seven varieties of aroma hops on the farm’s 42 acres which are harvested and baled on-site. Visitors frequently travel to Chatoe Rogue to see or tour the hop yard or for weddings, concerts, special events, family outings, or simply to try the beer. Rogue Ale has earned hundreds of awards for its variety of beers and is extremely popular in Oregon and throughout the Northwest. The farm can accommodate groups of up to 200 for weddings and receptions and holds various salmon bakes and other events throughout the year.

♦ Hop and Heritage Festival: In the 1930’s when Independence was the hop capital of the world, a hop festival was held. As a result of World War II and the declining hop industry, the festival was terminated. In 2001, the Hop and Heritage Festival was created to once again promote the town’s heritage. The festival is held the fourth weekend in September. This two day event builds on the heritage of the Independence area and includes a town barbeque, ghost walk tours of the historic homes and buildings, concerts, street vendors with arts and crafts, Black Smith demonstrations, V8 powered chains saw demonstrations, family lawn games, performers, lawn mower races, home brew demonstrations and a beer festival, pancake breakfasts at the airport, hot air balloon rides, square dance, pie eating contest, cookie bake off, and a fireworks show.

♦ 4th of July – Western Days: The 4th of July, Western Days celebration lasts four days and includes a parade through downtown Independence and Monmouth, a carnival, vendors, artisans, entertainers, crafts, and children’s activities. Held around the 4th of July holiday, this celebration ends with a firework display and activities centered along the river in downtown Independence at Riverview Park and amphitheater. Western Days attracts between 5,000 and 10,000 people during non- July 4th event days and as many as 20,000 people for the highly regarded fireworks show.

♦ Oregon State Airport in Independence is one of the few airports in the country that offer a residential community with homes that have their own private hangers. This is a unique attribute and the residents frequently host a series of fly-ins that attract flyers from around the region. It is not unusual to see helicopters, vintage aircraft, or even biplanes fly in to the airfield.

A table summarizing growth in population, employment, unemployment rates, and highway traffic volumes for the Salem MSA, Polk County and Independence is presented on the following page. Overall, our review of the Salem area found the economy to be generally stable, with slow but consistent growth. The recent recession has taken its toll on the area and is expected to take additional time to recover. Although the area is heavily dependent on government employment, many other sectors also play important roles in the economic diversification and well-being of



the local economy including: retail businesses, education and health, professional services, and construction. The Independence area has the advantage of being located on the Willamette River and having nearby Western Oregon University and manufacturing jobs to help stabilize local employment. Due to the presence of a variety of local area amenities and modest demand generators, combined with the lack of lodging in Independence, we consider the market to be appropriate for a small hotel.



Site

The subject site is located immediately south of Riverview Park and Amphitheater in downtown Independence, Oregon, on the western bank of the Willamette River. The site is currently occupied by Valley Concrete, a ready-mix concrete company that is relocating its business to a more appropriate site. The Valley Concrete site includes approximately 18 acres, of which approximately 10 acres are buildable. The site is currently zone for industrial use but will be re-zoned once the desired mix of uses have been determined. With the aid of a state government grant the City and representatives of the community, the current land owner, area vintners, and WOU met in the winter of 2013-2014 to develop a possible concept for the overall site. Through this team approach, a mixed-use project evolved that includes apartments/townhomes, street-front retail and commercial uses, an independent boutique hotel, and open spaces. The proposed project takes full advantage of the site’s proximity to the downtown area and the views and amenities afforded by the riverfront location.

Site & Surrounding Area Photos

K&M # 14-012

KENNEDY & MOHN, P.S. Hotel Consulting, Brokerage, & Appraisals

View of Valley Concrete site looking SW

View of Amphitheater looking N

View of Riverview Park play area

Hotel portion of mixed-use site

View of Amphitheater looking W

Valley Concrete from Riverview Park



As currently envisioned, the hotel portion of the development is currently designated for the northeast corner of the site, fronting on the river. This would locate the hotel immediately south of the parking area for the park and amphitheater, providing a convenient link to the park, amphitheater, river, and downtown Independence. The site is bounded on the north by C Street followed by the parking area for Riverview Park and Amphitheater, on the south by excess land now occupied by Valley Concrete which will be redeveloped to house apartments, townhomes and commercial and retail businesses followed by the Civic Center and Event Center, on the east by the Willamette River and on the west by an alley followed by commercial business located along Main Street/OR-51. This location for a hotel would provide easy access to travelers along the city’s Main Street/Independence Highway 51 (OR-51) and good visibility. Access to the site would require a right or left turn off of OR-51 onto C Street with the proposed hotel site located approximately one block east on the south side of the street, where the street terminates at the river. A roundabout is tentatively planned to ease traffic. A planned pathway is expected to extend along the river connecting the park, the subject site, and the nearby Civic Center and Event Center. The proposed site is surrounded by commercial businesses located in the downtown area, and nearby businesses located in the broader community. The site is approximately one block northeast of the road that connects Independence and Monmouth making it a viable location for supporting both communities. Site Advantages:

♦ Proximity to Willamette River, Riverview Park and Amphitheater, downtown Independence, and Civic Center and Event Center

♦ Riverfront site with views of the Willamette River ♦ Proximity to Independence State Airport and the manufacturing businesses located in the

airport area north of downtown ♦ Visible for travelers entering or leaving Independence ♦ Located before most travelers will turn west at Monmouth Street toward WOU ♦ Developer could take as much or as little land as needed for the hotel

Site Disadvantages:

♦ Current appearance of the rear of existing downtown businesses

Movies in the Riverview Park

Fourth of July Parade in Independence

Amphitheatre plaza & downtown Independence

Amphitheatre – Riverview Park & downtown Independence

Fireworks in Riverview Park – 4th of July

Concerts in Riverview Park

New Independence Civic Center

Riverview Park – Plaza Fountain & Colum

Kayakers on the Willamette River

Fun on the Willamette River

Independence Balloon Ride



Lodging Market Evaluating the competitive lodging market for Independence, Oregon is quite challenging because, other than a bed and breakfast, the city does not offer any quality overnight lodging. As a result, most travelers doing business in or near Independence currently stay in nearby Salem, approximately a 15 to 20 minute drive away (approximately 12 miles); in nearby Monmouth, at a 35-room budget motel that offers exterior corridors; or in Dallas at a 42-room Best Western Inn & Suites, located approximately nine miles northwest of Independence. Because most of those surveyed previously indicated they stay at hotels located primarily in the Salem area and that the two properties located in Monmouth and Dallas were of marginal quality, we selected six of the better quality, three-diamond hotels located in Salem for our competitive set of hotels. These hotels were also frequently mentioned in our previous survey of the market. In addition, to gain a better understanding of where people currently stay while working for or visiting companies, organizations, and wineries located in or near Independence, we conducted a demand survey of some of these organizations. Based on responses to our survey, hotels located in Salem now accommodate most visitors doing business in and/or visiting Independence or Monmouth. The competitive hotels in our survey range in size from 80 to 144 guestrooms and are all affiliated with either a regional or national hotel chain. The hotels range in age from approximately 17 to 35 years, with the most recent hotel opening in Salem, in April 2012. Because four of the six competitive properties are between 17 and 35 years of age, we consider them vulnerable to new hotel development. According to interviews with hotel management and nearby wineries, the average quality of some of the available hotels makes it difficult for them to comfortably accommodate many of the guests that tour the areas’ wineries located in nearby by Monmouth, Rickreal, and Dallas, many of which are looking for a slightly more upscale lodging experience. The table on the following page summarizes primary characteristics of the hotels included with our competitive market as defined.

DeLorme Street Atlas USA® 2011

Competitive Hotel & Subject Site

Data use subject to license.

© DeLorme. DeLorme Street Atlas USA® 2011.

www.delorme.com

TN

MN (15.7°E)0 1 2 3

0 1 2 3 4 5

mikm

Scale 1 : 125,000

1" = 1.97 mi Data Zoom 10-6

Competitive Hotels

K&M 14-012


Best Western Plus Mill Creek Inn

Comfort Suites Airport

DoubleTree Salem

Hampton Inn & Suites

Red Lion Hotel Salem

Residence Inn Salem



Properties excluded from the competitive set include larger hotels located in Salem and considered non-competitive due to size, location, pricing, quality, and/or amenities, or lack of participation in Smith Travel Research’s trends program. The excluded hotels include the Grand Hotel and the Shilo Suites, as well as properties located in McMinnville such as the Comfort Inn & Suites, Best Western Vineyard Inn, and Red Lion, due to their distance from Independence, and McMinnville’s proximity to Portland and its more direct access to the coast. Although the aggregate performance of the Salem area hotels provides a good historical perspective of how the competitive market has performed since 2008, some of the sources of demand at these hotels are applicable only to Salem and would not be expected to be captured by a new hotel in Independence. For this reason, although we consider an evaluation of the competitive lodging market for Salem to be appropriate for use in analyzing the Independence market we also recognize that the performance of a hotel in Independence might perform slightly below some of the better quality hotels in Salem. Conversely, because of the lack of lodging competition in Independence, the performance of a properly sized hotel located there might reach a stabilized level of market penetration faster than one of the many hotels located in Salem. The table on the following page summarizes the historical performance of the competitive lodging market between 2008 and 2013, YTD April 2014 compared to YTD April 2013, and the trailing twelve-month (TTM) performance ending April 30, 2014. These figures were compiled from our analysis of a Smith Travel Research report summarizing the historical performance of the competitive hotels. Revise table and repaste.

Number of RoomProperty Rooms Opened AAA Total Per Room Rates Amenities

Best Western Plus Mill Creek Inn 109 Jul-91 2,496 23 $110-$119 B C D/I E F G HComfort Suites Airport 85 Jun-97 2,500 29 $100-$189 B C D/I E F G HDoubleTree Salem 80 Jun-97 1,200 15 $89-$199 B C D/I E F G HHampton Inn & Suites 86 Apr-12 1,150 13 $99-$199 B C D/I E F G HRed Lion Hotel Salem 144 Jun-79 10,700 74 $99-$169 A B D/I E F HResidence Inn Salem 90 Oct-01 500 6 $99-$249 B C D/I E F G HCompetitive Rooms Supply 594

A - Restaurant & Lounge E - Exercise Room

B - Banquet & Meeting Rooms F - High-Speed Internet

C - Complimentary Continental or Full Breakfast G - Business Center

D - Swimming Pool - (I) Indoor ; (O) Outdoor H - Microwave/Refrigerator in some or all units

Sources: 2015 AAA Tour Book and website, Operator Interviews, K&M

Competitive Lodging Market Profile Meeting Space (s.f.)

Amenities

* Room rates are subject to discounting and seasonal changes, and are shown as published in AAA or per website survey

NR = Not Rated NA = Not Available Meeting space excludes the use of the breakfast room



CAAGR YTD YTD TTM2008 2009 2010 2011 2012 2013 2008-2013 2014 2013 Apr-14

Available RoomsCompetitive Hotels 512 512 512 512 577 596 594 598 595 Percentage Change 0.0% 0.0% 0.0% 12.7% 3.3% -0.7%

Available Room NightsCompetitive Hotels 186,880 186,880 186,880 186,880 210,530 217,534 3.1% 71,280 71,760 217,054 Percentage Change 0.0% 0.0% 0.0% 12.7% 3.3% -0.7%

Occupied Room NightsCompetitive Hotels 123,363 113,580 115,190 116,316 134,012 144,008 3.1% 44,659 43,436 145,231 Percentage Change -7.9% 1.4% 1.0% 15.2% 7.5% 2.8%

Market OccupancyCompetitive Hotels 66.0% 60.8% 61.6% 62.2% 63.7% 66.2% 62.7% 60.5% 66.9%

Market Average Room RateCompetitive Hotels $87.94 $85.69 $86.77 $87.14 $89.66 $95.12 1.6% $96.77 $90.65 $96.96 Percentage Change -2.6% 1.3% 0.4% 2.9% 6.1% 6.7%

Market Average RevPARCompetitive Hotels $58.05 $52.08 $53.48 $54.24 $57.07 $62.97 1.6% $60.63 $54.87 $64.88 Percentage Change -10.3% 2.7% 1.4% 5.2% 10.3% 10.5%

Competitive Hotels - Salem, Oregon AreaHistorical Performance

Notes: YTD figures are through April 30th; Source: Kennedy & Mohn, P.S. & Smith Travel ResearchTTM = Trailing 12-month period



In 2013, the competitive hotels achieved an average occupancy rate of roundly 66 percent at an average room rate of $95.12, an increase in occupancy of 2.5 occupancy points over prior year performance and a 6.1 percent increase in the market average room rate, as compared to 2012. The market’s occupancy rate in 2012 increased by 0.6 percent compared to 2011, despite the partial year addition of the Hampton Inn & Suites that opened in April, positive signs that the market was able to absorb the addition of a new hotel. Between 2008 and 2013 rooms supply and demand both increased by 3.1 percent, indicating that the market was able to absorb all the new rooms. During this same period, despite having to rebound from a global recession, average room rates and revenue per available room (RevPAR) increased at an average annual rate of approximately 1.6 percent, exceeding pre-recession levels. As can be seen in the preceding table, market demand declined by roundly 9,800 room nights in 2009 compared to 2008, despite no growth in the available competitive room supply, a direct result of the global recession. Market demand increased by 1.0 to 1.4 percent in 2010 and 2011, as the market slowly began to recover. Year-to-date (YTD) growth in rooms demand through April 2014 compared to YTD April 2013 shows and additional 2.8 percent increase in demand, another indication that the market has recovered from the recession. Segmentation Based on our interviews of the competitive hotels, lodging demand has been segmented into three general categories: commercial and government travelers doing business in the area; leisure travelers visiting area attractions or friends and family in the area; and group travelers, which includes those attending meetings, sporting events, or other group functions. Hotel operators indicated that annual lodging demand in Salem is typically strongest weekdays due to the commercial base of business, peaking during midweek and moderately busy weekends (Friday and Saturday nights) due to leisure travel and visitors throughout much of the year. During the summer months weekends are busier. This is further supported by our Smith Travel Research Report. Demand is also higher during holidays or special events. The adjacent table summarizes the approximate mix of demand for the competitive market for 2013. Seasonality In Occupancy and Average Room Rates To provide an indication of the seasonality of demand in the competitive lodging market, we summarized monthly hotel performance for the competitive set based on data provided by Smith Travel Research for 2013. Generally, the summer months of June through September are the busiest times with occupancy rates reaching as high as the upper 70 to mid-80 percent level in 2013. The lowest occupancy rates occur in the winter months of December through January.

Occupied Percent ofDemand Segment Rooms Total Demand

Commercial/Government 91,200 63%Group 24,800 17%Leisure 28,000 19%Total Demand 144,000 100%

Percentage may not sum due to rounding

Estimated Mix of Rooms DemandCompetitive Hotels - 2013



Average room rates for the competitive hotels increase by $10 to $13 during the peak summer months compared to the slowest winter months. A table graphing monthly average room rates for the competitive hotels in 2013 is provided in the table below.



At the time of our fieldwork, we heard of one hotel being contemplated for development north of Salem at Keizer Station. Given the preliminary nature of this development and its more limited proximity to Independence, we have not included this property within our analysis.

Lodging Demand Surveys/Interviews

Due to the lack of a quality lodging facility in Independence a survey of major employers or sources of demand was conducted in the Independence area to further evaluate hotel needs and preferences, determine where travelers are now staying, approximate room rates paid, preferences for amenities, banquet and meeting needs, and to help evaluate whether or not these travelers might consider staying at a good quality hotel if one was available in Independence. The information from this survey was also used to help select the competitive set used for our market analysis as presented earlier. A copy of the survey form is provided in the addendum of this letter report. While this type of survey would not typically be relied upon to quantify the total amount of demand that might be captured by a new hotel, it can help to determine primary sources of demand, seasonality of demand, rates paid and amenities that might be recommended, and whether these sources would use a hotel if it was available in Independence. With the help of the Independence Economic Development Director we were able to obtain input from most of the major employers surveyed and had direct interviews with several of the areas wineries to gather input regarding lodging demand needs and preferences. Relevant information drawn from the completed surveys and telephone interviews is summarized in the following bullet points.

♦ Primary hotels now used include: the Grand Hotel Salem, DoubleTree Salem, Hampton Inn & Suites, Red Lion Salem, and the Best Western Dallas Inn & Suites

♦ Rates paid for hotel rooms ranged from less than $85 per night to more than $115, with rates commonly paid ranging from $96 to more than $115

♦ Location of the hotel, price, hi-speed internet (wireless & hard wired connections), complimentary breakfast, in-room coffee maker, air conditioning, flat screen TV, in house or adjacent restaurants, hair dryer, work desk, microwave, refrigerator, and hair dryer are considered very important; a fitness room and some banquet and meeting space was considered somewhat important, and an independent or chain affiliation were not considered important

♦ Businesses tend to require accommodations during the week (Monday through Thursday) throughout the year; WOU business, winery and attraction visits, sports related business, and wedding business is more likely to occur on Thursday, Friday, and Saturday nights seasonally

♦ The average length of stay for travelers ranged from one to three nights, with most requiring one to two nights

♦ Western Oregon University (WOU), located in Monmouth, Bethel Heights Vineyard located in Salem, Elkay Wood Products (Medallion), Oregon Association of Utilities, Forest River, Inc., and Green Villa Barn located in Independence appear to be good potential sources of demand for a hotel located in Independence collectively generating thousands of room nights annually



♦ Green Villa Barn is an historical building built in 1928 that was used during Prohibition as a dance hall. The facility is family owned and includes spacious gardens, beautiful grounds and a fruit stand. Green Villa can accommodate weddings, dances, meetings, training seminars, proms, parties, anniversaries, and class reunions. Approximately 70 to 80 weddings with attendance that usually averages 150 to 200 are held here annually. Summer and fall months generate the highest volume of demand. Out of town guests now use the better quality Salem area hotels and usually stay more than one night

♦ WOU athletic events and games generate significant hotel demand, typically on Wednesday through Saturday nights between September and June; some from competing sports teams and others from out-of-town attendees. Based on input provided by staff, athletic events alone generate approximately 500 reservations for one to two nights annually (estimate based on actual input from athletic director)

♦ WOU has 5 to 7 Fine Arts Series Events annually, held at various times of the year with 400 attendees; artists require accommodations and usually stay at B&B’s or in Salem hotels

♦ Other WOU events or festivities with hard to quantify hotel demand include: Commencement (held in June), alumni gatherings, reunions, Homecoming (fall), awards ceremonies, Academic Excellence (spring), four Admission Events/Orientations (June and July - 200 students with families, some from out of town requiring lodging) and 7 Preview Days (2 in fall, 1 October, 1 November, 1 January, 1 February, 1 the end of April. These events and activities draw hundreds of people at various times of the year, many that include out-of-town visitors that require lodging. Because most of these visitors arrange for their accommodations without the assistance of the University, they are very difficult to quantify

♦ A previous interview with the director of WOU’s business programs indicated an estimated 1,500 room nights annually during each season of the year on week and weekends.

♦ Nearby wineries attract thousands of people each year (primarily from spring through fall) that now stay at the better quality hotels in Salem or at upscale hotels or bed & breakfasts mostly in other locations such as McMinnville or Dundee. Thus far, tours are unable to focus much attention near Independence due to the lack of appropriate quality lodging. The wineries currently generate hundreds of rooms nights to Salem area hotels but would gladly use a hotel in Independence.

♦ Virtually all survey respondents indicated they would use a good quality hotel if available in Independence.

♦ Chatoe Rogue Farmstead Brewery (Rogue Ales Hop Farm), located just south of Independence is a 42-acre hop farm that is operated through an agreement with Rogue Agriculture and a local family. The farm has a tasting room that hosts thousands of guests annually to taste the beer and for various events and tours of the hop farm and grounds. Located on the Willamette River, Chatoe Rogue now attracts 8 to 11 weddings annually with attendance often ranging from 150 to 200. This demand occurs mostly during the summer and fall months and is typically on weekends. Salem area hotels now accommodate most of this demand



♦ The Polk County Fairgrounds, located south of OR-22 in Rickreal attracts thousands of attendees to meetings and events each year (mostly local area residents). Average attendance is 15,000 to 20,000 persons with most of the overnight business generated by gun shows, RV shows, and various vendors that support the events. Salem area hotels now accommodate overnight demand from these events, but a hotel located in Independence would be closer and potentially more desirable.

Companies and organizations either responding to our surveys or that were interviewed include:

• Oregon Association of Water Utilities • Green Villa Barn, (Green Villa LLC) • Forest River, Inc. • Elkay Wood Products Company (Medallion) • Bethel Heights Vineyard • Emerson Vineyards • Left Coast Cellars • Eola Hills Wine Cellars • Chatoe Rogue Ale & Hop Farm • Airlie Winery • Freedom Hill Winery • Zenith Vineyard • Jackson Family Wines • Leyton House Professional / Sojourn Hairstyle Academy • Western Oregon University Athletic Department • Polk County Fairgrounds & Event Center

Because surveys and interviews cannot fully evaluate all of the demand for area lodging due to multiple sources making reservations within the various organizations/companies and the vendors or other organizations that they do business with, our surveys are not used to quantify the total amount of demand in the market, but rather, as a general indication of support for a project. Our survey indicated that more than 8,000 room nights of demand could potentially be captured by a hotel if available in Independence. Other possible sources of demand that are difficult to quantify include, relatives visiting students or friends in the area, graduations, weddings, funerals, or miscellaneous other activities or events. The table on page 22 shows the projected performance of the Salem lodging market between 2014 and 2020 with the addition of only the 50-room subject property, opening in 2016. During the projection period, the competitive room supply is expected to increase at an average annual rate of 1.4 percent reflecting a supply increase of 8.4 percent while rooms demand is projected to increase at an average annual rate of 2.3 percent. Between 2008 and 2013, the competitive rooms supply increased at an average annual rate of 3.1 percent, reflecting an overall increase of 16.8 percent (prior to Red Lion room reduction). During this same period, rooms demand also increased at an average annual rate of 3.1 percent, keeping pace with demand. The market



occupancy rate is projected to increase to 69 percent by 2015, before decreasing to a low of 66 percent in 2016, when the subject opens. We have estimated the proposed hotel will attract approximately 5,400 room nights of new demand to the market with more than 60 percent of the new room nights being accommodated in the market during the 92-day summer period, or 70 percent occupancy, and approximately 2,000 room nights during the remaining part of the year, equal to 15 percent occupancy during the remaining 273-day period. This is equal to a hotel attracting just under 30 percent of its available room nights in new demand, or approximately 45 percent of its occupied rooms in its stabilized year of operation at 65 percent occupancy (likely to be achieved between year two and three). Assuming the proposed hotel opens in 2016, this would mean the hotel would penetrate the competitive market at roundly 94 percent of its fair share of demand, which we consider reasonable given its size, the lack of competing lodging in the area, and its highly desirable riverfront location. Fair share is calculated by dividing the number of guestrooms at a competitive hotel by the total number of rooms in the competitive market. If all the competitive hotels had the same facilities, locational attributes, and charged the same room rates, guests would likely be indifferent about which hotel they would use. Because all hotels are not exactly alike and charge different prices, guests are not indifferent about where they stay. As a result, hotels achieve different penetration rates, resulting in varying occupancy rates. The average room rate is based on input from demand interviews and information provided by the competitive hotels. An average room rate of roundly $103, in current 2014 dollars, would position the hotel’s average room rate approximately 20 percent lower than the Grand Hotel and roundly five to ten percent below the average room rates achieved by better performing Salem area hotels.



AnnualGrowth

MARKET SUPPLY: 2014 2015 2016 2017 2018 2019 2020Best Western Plus Mill Creek Inn 109 109 109 109 109 109 109Comfort Suites Airport 85 85 85 85 85 85 85DoubleTree Salem 80 80 80 80 80 80 80Hampton Inn & Suites 86 86 86 86 86 86 86Red Lion Hotel Salem 144 144 144 144 144 144 144Residence Inn Salem 90 90 90 90 90 90 90

Proposed Hotels:Subject 50 50 50 50 50 Average Daily Rooms 594 594 644 644 644 644 644 Annual Room Nights 216,810 216,810 235,060 235,060 235,060 235,060 235,060 1.4% Percentage Change 3.0% 0.0% 8.4% 0.0% 0.0% 0.0% 0.0%

MARKET DEMAND:Corporate/Government Demand 93,000 94,900 98,600 101,200 103,200 105,300 106,900 2.3%Underlying Change 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 1.50%Induced/Unsatisfied Demand 0 1,800 600

Group/Meeting Demand 25,200 25,600 26,800 27,500 27,900 28,300 28,600 2.1%Underlying Change 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.00%Induced/Unsatisfied Demand 0 0 800 300

0 0 0Tourist/Leisure Demand 28,400 28,800 30,600 31,600 32,100 32,600 32,900 2.5%Underlying Change 1.5% 1.50% 1.50% 1.50% 1.50% 1.50% 1.00%Induced/Unsatisfied Demand 0 0 1,400 500

Total Demand 146,600 149,300 156,000 160,300 163,200 166,200 168,400 2.3%Total % Change 1.8% 1.8% 4.5% 2.8% 1.8% 1.8% 1.3%Total Induced/Unsatisfied Demand 0 0 4,000 1,400

MARKET OCCUPANCY RATE: 68% 69% 66% 68% 69% 71% 72%

Note: This table is presented subject to the comments contained in the attached report.

Projected Changes in Market Occupancy RatesCompetitive Hotel Market

Calendar Years



Conclusions & Recommendations

Based on our research and analysis, we find adequate support for development of approximately a 50-room limited-service hotel in Independence. Because of the small size and cost of a franchise, it is highly unlikely the hotel could support an affiliation with a major hotel chain. Accordingly, we recommend the hotel be independently operated and a professional website be developed that is strategically positioned on hotel OTA sites. An independent hotel is also more likely to be able to attract independent travelers visiting wineries or wishing for a more unique lodging experience and it may potentially enhance the property’s ability to drive average room rate. Independence has an attractive downtown riverfront area with businesses and organizations that suggest they would gladly support a good quality hotel if it were available in their town. Furthermore, tourists already travel to and through Independence to conduct business in the area, attend meetings or events at Western Oregon University, or visit nearby attractions to enjoy the abundant fishing, biking, hiking, canoeing, kayaking, winery tours, bird watching and other recreational opportunities in the area. Riverview Park and amphitheater provide a unique, downtown, riverfront location for many of the events and activities in Independence. For these reasons, we feel confident a small, well designed, independent hotel could be successful in Independence. Based on our research of the lodging market and area, and Independence’s proximity to Monmouth, Dallas, and the Salem MSA, we consider a 50-room hotel developed south of Riverview Park & amphitheater in downtown Independence to be well suited for the city and adequately supported by demand patterns in the local market. Because business travelers can utilize rooms with one or two beds, we recommend approximately 60 percent of the guestrooms be configured with two queen beds, and 40 percent offer rooms with a king bed and a lounge chair and ottoman. We recommend no less than four of the king rooms offer suite-type accommodations with a wet bar in a separate seating area with a lounge chair and ottoman and a sofa that folds out into a hide-a-bed, and a bedroom area with a partition wall that can be used to separate the seating area from the bedroom area. We also recommend four, corner, river view rooms that provide a gas fireplace. Depending on the design of the hotel, all river view rooms should be slightly more upscale and receive a rate premium. You should consider designs that orient riverfront guestrooms perpendicular to the river to optimize the number of direct-view or oblique-view rooms within the property. Premium room rates can always be discounted for preferred guests or during slower periods. Guestrooms should average approximately 300 to 350 square feet in size. The guestroom configuration and furnishings should be consistent with that of a limited-service hotel. Typically this would include: one or two beds with night stands; excellent-quality mattresses and linens; a good quality AM/FM radio with an I-pod charging connection and an alarm; a 40-inch, remote control, flat-screen television offering extended cable; artwork; ample energy efficient lighting (recommend task-lighting for the work desk); convenient plug-ins for computers and other electrical accessories; high speed Internet access with both Wi-Fi and cabled connections; an



enclosed closet, dresser, a designated area for a coffeemaker, refrigerator and microwave; iron and ironing board; hair dryer; one or two sinks; with stone, granite, or other non-stain vanity top; tile flooring for the bathroom; and a telephone with programmable wake-up service. Bathrooms should feature oversize showers in most king rooms and most of the double queen rooms, with approximately 20 percent of the double queen rooms providing a tub/shower combination to accommodate families traveling with children, or those that prefer a bathtub. We recommend the hotel include a breakfast room for serving a complimentary hot, full breakfast with eggs, a meat (sausage, bacon, or ham), waffles, fresh fruit, cereals, toast, and coffee, tea, and juices. Furthermore, a service kitchen, designed to accommodate the breakfast room should be of sufficient size and conveniently located near the breakfast room and meeting room so that it can easily service both areas. The hotel’s food and beverage area should be flexible, with grab and go cases that offer sandwiches, salads, and beverages for guests that want to grab a light meal or snack for their room or to go. In addition, we recommend the hotel offer pizza, pasta, and salad that can be served from the service kitchen and offered daily at lunch and dinner during the busier times, using reduced staffing levels and service during slower periods. Because we recommend the hotel be located on a site near the amphitheater, not too far from the Independence Event Center which offers adequate banquet and meeting facilities, we recommend the hotel provide only a board room, capable of seating approximately 12 persons (approximately 350 square feet), located adjacent to the breakfast room, so that the breakfast room can also be used for small meetings, dining for groups, or wine tastings. If possible, the breakfast room should look out onto a partially covered patio / deck area overlooking the river that can be used for pre-function space or social events. The patio / deck area should include a large outdoor fireplace, so that guests can congregate or enjoy an espresso or glass of wine, and a whirlpool. You may also wish to consider a small bar area adjacent to the breakfast room that could serve cocktails, espresso, and snacks, during the evening hours. A social hour might be considered during the week prior to dinner offering complimentary beer and wine for hotel guests. Other standard hotel amenities should include a fitness room, business center, guest laundry, secure parking for automobiles and bicycles, and an outdoor covered patio area with a large fireplace for evening gatherings. Because the area is so popular for travelers that wish to tour wineries, we recommend the breakfast room be designed for use in the evening so that local area wineries can host a wine tasting. A small pantry/gift shop area selling reading materials, sundry items, and snack foods and beverages, should be located close to the registration desk so that guest service representatives can service this area. At least one parking space should be provided for each available guestroom as well as a few spaces for every 1,000 square feet of restaurant or meeting area and a few employee parking spaces. We recommend the hotel be designed to accent its northwest setting and also provide a porte cochere to create a more prominent hotel entrance and sense of arrival. The hotel should be



ADDENDUM



GENERAL ASSUMPTIONS Hourly consulting services have been prepared under the following general assumptions:

♦ No responsibility is assumed for matters of a legal nature.

♦ Responsible ownership and competent property management are assumed.

♦ The information provided by others is believed to be reliable. However, no warranty is given for its accuracy.

♦ All engineering is assumed to be correct. The plot plans and illustrative material in

this report are included only to assist the reader in visualizing the property.

♦ It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures that render it more or less useful. No responsibility is assumed for such conditions or for arranging for engineering studies that may be required to discover them.

♦ Full compliance with all applicable federal, state, and local environmental

regulations and laws is assumed.

♦ Full compliance with all applicable zoning and use regulations and restrictions is assumed.

♦ It is assumed that all required licenses, certificates of occupancy, consents, or other

legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained.

♦ It is assumed that the utilization of the land and improvements is within the

boundaries or property lines of the property described and that there is no encroachment or trespass.



LIMITING CONDITIONS Hourly consulting services have been prepared under the following general limiting conditions: ♦ Possession of this report, or a copy thereof, does not carry with it the right of

publication. It may not be used for any purpose by any person other than the party to whom it is addressed without the written consent of Jinneman, Kennedy, and Associates, P.S., and in any event only with proper written qualification and only in its entirety.

♦ Jinneman, Kennedy, and Associates, P.S., is not required to give further consultation,

testimony, or be in attendance in court with reference to this report unless arrangements have been previously made.

♦ Projections of future revenue, expenses, net operating income, mortgage debt service,

capital outlays, cash flow, or inflation represent our judgment of the assumptions likely to be used by informed persons in the marketplace. These estimates are intended solely for analytical purposes and are not intended to accurately predict future results or events. Actual performance will differ from these projections, and these differences may be significant.

♦ In accordance with our contract with the client, the accompanying analysis is not

intended to be a complete market analysis or appraisal. The purpose of this market overview feasibility study is to assist in the initial development planning of the client. The results of this market overview analysis are subject to change based on completion of a full market study or appraisal.

♦ Unless otherwise stated in this report, the existence of hazardous substances, including

without limitation asbestos, polychlorinated biphenyls, petroleum leakage, or agricultural chemicals, which may or may not be present on the property, or other environmental conditions, were not called to the attention of nor did the consultant become aware of such during the consultant's inspection. The consultant has no knowledge of the existence of such materials on or in the property unless otherwise stated. The consultant, however, is not qualified to test such substances or conditions. The presence of such substances, such as asbestos, urea formaldehyde foam insulation, or other hazardous substances or environmental conditions, may affect the feasibility of the project. Our analysis is predicated on the assumption that there is no such condition on or in the property or in such proximity thereto. No responsibility is assumed for any such conditions, nor for any expertise or engineering knowledge required to discover them.

Kennedy & Mohn, P.S.Hotel Brokerage, Consulting, & Appraisals - Renton, WA

Name of company or organizationCity Phone:State Fax:Contact person:Email Address:Title

Approximate number of employees at this location

Confidential Lodging Demand Survey

Does your company or organization require overnight lodging for guests or employees visiting the Independence or Monmouth areas? Yes _____ No _____

Who typically makes the hotel reservations (circle one)Individual traveler Staff person

Please estimate the total number of reservations your company or organization generates over the course of a typical year (ballpark estimate)? ________

What time of the year does this demand typically occur? (circle all that apply)Spring Summer Fall Winter

During what days of the week does this demand typically occur? (circle all that apply)Mon / Tue / Wed / Thu / Fri / Sat / Sun

On average, how many nights do guests typically stay in the area? ____________

paid.

Please choose from (or add to) the list below, indicating which hotels your guests currently stay at and the range of room rates typically paid.

Rate Range

Kennedy & Mohn has been engaged by the City of Independence, Oregon to evaluate the feasibility for hotel development. To get a better perspective of your needs and preferences, we would greatly appreciate your input. The information you provide will be summarized in an aggregate format and individual identity will be kept anonymous.

Hotel Location < $8

5$8

6-$9

5$9

6-$1

05$1

06-$

115

> $1

15 Best Western Plus Mill Creek Inn Salem, OR Comfort Inn & Suites Salem, OR Comfort Suites Airport Salem, OR Doubletree by Hilton Salem, OR The Grand Hotel Salem Salem, OR Hampton Inn & Suites Salem, OR LaQuinta Inn & Suites Salem, OR Red Lion Hotel Salem, OR Residence Inn by Marriott Salem, OR Shilo Inn Suites Salem, OR Best Western Dallas Inn & Suites Dallas, OR Other (please list):

Please note what you like or dislike about the hotels you now use.

Please rank the relative importance of the following: 5 = very important and 1 = not important.

5 4 3 2 1 5 4 3 2 1

Price In-room coffee maker Location close to your business Refrigerator Restaurant (in-house) Microwave Restaurant (adjacent) Hair dryer Lounge Hi-speed Internet (Wireless) Complimentary breakfast Hi-speed Internet (Hardwired) Indoor swimming pool 2-Line Phone Exercise room Voice Messaging Board room (10-15 ppl) Flat Screen Television Banquet room (100 ppl) Work desk with chair Air conditioning Chain affiliated Shopping nearby Independent hotel

Yes

No

Weekly Monthly Semi-annually Annually

Yes No

If no, why not?

Yes No

If no, why not?

Yes No

State reason

Tom Kennedy (425) 277-5755Kennedy & Mohn, P.S.email: [email protected]

Thank you very much for your input.

Please email or fax your response to: Fax: (425) 277-5759

Would you use a hotel in Independence for your banquet and meeting needs?

Could a hotel located in Independence meet the lodging needs of guests or visitors to your company or organization?

Would you stay at a hotel located in Independence, Oregon adjacent to Riverview Park?

Meeting room up to 100 persons

Does your company/organization have a need for banquet and meeting rooms?

Approximately how often do you require banquet and meeting rooms? (Circle all that apply)

Please indicate the size of banquet and meeting room required. (Circle all that apply)Boardroom - up to 15 personsMeeting room up to 50 persons

phase i report on - independence, oregon...the independence event center was developed on the ground...

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