HomeMy WebLinkAboutR-94-0354J-94-420
5/16/94;
RESOLUTION NO. 4 - 354
A RESOLUTION, WITH ATTACHMENT, AUTHORIZING
THE CITY MANAGER TO EXECUTE A PROFESSIONAL
SERVICES AGREEMENT, IN SUBSTANTIALLY THE
ATTACHED FORM, WITH ARTHUR ANDERSEN &
COMPANY ("CONSULTANT") TO CONDUCT A
FEASIBILITY STUDY FOR THE DEVELOPMENT OF
TWO HOTELS ("PROJECTS") LOCATED IN THE LITTLE
HAVANA NEIGHBORHOOD, AT APPROXIMATELY
SOUTHWEST FIFTEENTH AVENUE AND SOUTHWEST
EIGHTH STREET, AND IN THE OVERTOWN/PARK
WEST AREA, AT APPROXIMATELY NORTHWEST
FIRST AVENUE AND NORTHWEST FOURTH STREET,
MIAMI, FLORIDA, IN AN AMOUNT NOT TO EXCEED
FIFTY THOUSAND DOLLARS ($50,000.00);
ALLOCATING FUNDS THEREFOR FROM SPECIAL
PROGRAMS AND ACCOUNTS.
WHEREAS, it is the objective of the City of Miami ("City") to stimulate
development in areas where private initiatives have failed to generate the desired level
of economic development; and
WHEREAS, the City has long considered the development of hotels and
other supporting amenities in the Little Havana and Overtown/Park West areas; and
WHEREAS, two sites identified for development are owned by the City
and Department of Off -Street Parking; and
WHEREAS, a feasibility study of the proposed developments has to be
conducted by a qualified consultant to determine the projects' economic viability and
financial feasibility; and
WHEREAS, the City received four proposals from qualified management
consultant firms to undertake a feasibility study of the proposed developments; and
CON TAIHED
CITY L'OMNIIssIom
MEETING OF
MAY 2 3 1994
Resolution No.
94- 354
W
WHEREAS, Arthur Andersen & Company was deemed the most qualified
firm;
NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE
CITY OF MIAMI, FLORIDA:
Section 1. The recitals and findings contained in the Preamble to this
Resolution are hereby adopted by reference thereto and incorporated herein as if fully
set forth in this Section.
Section 2. The City Manager is hereby authorized to enter into a
professional services agreement, in substantially the attached form, with Arthur
Andersen & Company to conduct a feasibility study for the development of two hotels
located in the Little Havana Neighborhood, at approximately Southwest Fifteenth
Avenue and Southwest Eighth Street, and in the Overtown/Park West Area, at
approximately Northwest First Avenue and Northwest Fourth Street, Miami, Florida, with
funds therefor hereby allocated for said services, in an amount not to exceed
$50,000.00, from Special Programs and Accounts.
Section 3. This Resolution shall become effective immediately upon its
adoption.
PASSED AND ADOPTED this 23rd day of May , 1994.
ATTEST
MATT HIRAI, CITY CLERK
z
9;�6�a
STE EN P. CLAR , MAYOR
P)4- 354
PREPARED AND APPROVED BY:
LINDA K. KEARSON
ASSISTANT CITY ATTORNEY
APPROVED AS TO FORM
AND CORRECTNESS:
A. t N J N
CITY ATT Y
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This Agreement entered into this day of , 1994, by and
between the City of Miami, a municipal corporation of the State of Florida, hereinafter
referred to as "CITY", and Arthur Andersen & Company, hereinafter referred to as
"CONSULTANT".
WHEREAS, it is the CITY's objective to stimulate development in areas where
private initiatives have failed to generate economic development; and
WHEREAS, the CITY has long considered to see the development of hotels and
other supporting amenities in the Little Havana and Overtown/Park West areas; and
WHEREAS, two sites identified for development are owned by the CITY and
Department of Off -Street Parking; and
WHEREAS, a feasibility study of the proposed developments has to be
conducted by a qualified consultant to determine the projects' economic viability and
financial feasibility; and
WHEREAS, the CONSULTANT has the necessary professional qualifications
and expereince to undertake a feasibility study of the proposed developments;
NOW THEREFORE, in consideration of the promises, mutual covenants and
obligations herein contained; and subject to the terms and conditions hereinafter stated,
the parties hereto understand and agree as follows:
The term of this Agreement shall be from June 1, 1994 to July 31, 1994.
To evaluate the market potential for hotels at two sites, the CONSULTANT shall
34- 354
perform the following tasks:
1. CONSULTANT will meet with City staff and other members of the parties
involved in the project to obtain the information for both sites. In addition, the
CONSULTANT will review any prior work conducted on these properties or in
the immidiate area;
2. CONSULTANT will visit and analyze each site to evaluate the surrounding
area and other major developments to determine accessibility and other
selected infrastructure issues as they relate to the proposed hotels;
1 CONSULTANT will interview managers of competitive and comparable
hotels, to gauge their past and present occupancy, room rates and markets
served. The selection of competitors will be based on the type and quality of
property envisioned, given the identified site and location considerations;
4. CONSULTANT will interview the City Planning officials and County tourism
representatives to identify any proposed hotels, as well as present and future
sources of lodging demand;
5. CONSULTANT will interview travel agents, tour operators, meeting planners,
and other travel professionals to get their perception as to the relative merits
of the two locations for tourist and business hotels;
6. CONSULTANT will review any existing or proposed plans for the two
proposed properties, and make specific recommendations as to the facilities'
program in order to enhance future market position of the two projects;
7. CONSULTANT will estimate occupancy, average room rates and market
segmentation for each hotel's first five years of operation. Within this
analysis, the CONSULTANT will address the future average room rate by
type of guest, by season of travel and by year;
B. Upon completion of the market assessment, the CONSULTANT will prepare
estimates of future cash flow from operations to be available for debt service
and income taxes for the first five years of operation. These estimates of
financial performance will be presented in current (inflated ) dollars; and
9. At the conclusion of work, the CONSULTANT will prepare two written reports
of their findings. The CONSULTANT will prepare separate reports for each
proposed hotel. Each report will contain the CONSULTANT's findings,
conclusions, recommendations and estimates of future performance for the
proposed hotel. The CONSULTANT will present the reports to the CITY in
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draft form for review and comments. At the completion of this review, the
final report will be issued. The CONSULTANT will also present the final
report to the City Commission at the second Commission Meeting in July
1994.
III COMPENSATION:
A. CITY shall pay CONSULTANT, as compensation for the performance of
services required pursuant to Section II hereof, a fee not to exceed Fifty Thousand
Dollars ($50,000.00).
B. Such compensation shall be paid on the basis of monthly itemized invoices to
the CITY for the performance of services rendered. Fees for the above defined scope
of services will be based on the standard hourly billing rates of the professionals
involved. These rates are as follows:
Partner $350.00 per hour
Manager $265.00 per hour
Staff Consultants $150.00 per hour
C. The CONSULTANT and the CITY hereby agree that the maximum amount
payable under this contract shall not exceed Fifty Thousand Dollars ($50,000.00), and
that the CITY may immediately and at any time terminate this Agreement when the
costs hereinabove reaches Fifty Thousand Dollars ($50,000.00).
D. CITY shall have the right to review and audit the time, payment and related
records of CONSULTANT pertaining to any payment made by the CITY under this
Agreement.
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CONSULTANT shall comply with all applicable laws, ordinances and codes of
federal, state, and local governments.
A. All notices or other communications which shall or may be given pursuant to
this Agreement shall be in writing and shall be delivered by messenger service or by
registered mail addressed to the other party at the address indicated herein or as the
same may be changed from time to time. Such notice shall be deemed given on the
day on which personally served; or, if by mail, on the fifth day after being posted or the
date of actual receipt, whichever is earlier.
DEPARTMENT OF DEVELOPMENT ARTHUR ANDERSEN & CO.
300 Biscayne Boulevard Way One Biscayne Tower
Suite 400 Suite 2100
Miami, FL 33131 Miami, FL 33131
B. Title and paragraph headings are for convenient reference and are not a part
of this Agreement.
C. In the event of conflict between the terms of this Agreement and any terms or
conditions contained in any attached documents, the terms in this Agreement shall
govern.
D. No waiver or breach of any provision of this Agreement shall constitute a
waiver of any subsequent breach of the same or any other provision hereof, and no
waiver shall be effective unless made in writing.
E. Should any provisions, paragraphs, sentences, words or phrases contained in
this Agreement be determined by a court of competent jurisdiction to be invalid, illegal,
or otherwise unenforcable under the laws of the State of Florida or the City of Miami,
such provisions, paragraphs, sentences, words or phrases shall be deemed modified to
the extent necessary in order to conform with such laws, or if not modifiable to conform
with such laws, then same shall be deemed severable, and ineither event, the remaining
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terms and provisions of this Agreement shall remain unmodified and in full force and
effect.
All documents developed by CONSULTANT under this Agreement shall be
delivered to CITY by said CONSULTANT upon completion of the services required
pursuant to Section II hereof and shall become the property of CITY, without restriction
or limitation on its use. CONSULTANT agrees that all documents maintained and
generated pursuant to this contractual relationship between CITY and CONSULTANT
shall be subject to all provisions of the Public Records Law, Chapter 119, Florida
Statutes.
It is further understood by and between the parties that any information, writings,
maps, contract documents, reports or any other matter whatsoever which is given by
CITY to CONSULTANT pursuant to this Agreement shall at all times remain the
property of the CITY and shall not be used by CONSULTANT for any other purposes
whatsoever without the written consent of CITY.
The obligations undertaken by CONSULTANT pursuant to this Agreement shall
not be delegated or assigned to any other person or firm unless CITY shall first consent
in writing to the delegation or assignment of such service or any part thereof by another
person or firm.
MIHMUVG ■
CITY reserves the right to audit the records of CONSULTANT related to the
Agreement at any time during its performance and for a period of one year after final
payment is made under this Agreement.
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CONSULTANT warrants that it has not employed or retained any person
employed by the CITY to solicit or secure this Agreement and that it has not offered to
pay, paid, or agreed to pay any person employed by the CITY any fee, commission
percentage, brokerage fee, or gift of any kind contingent upon or resulting from the
award of this Agreement.
This Agreement shall be construed and enforced according to the laws of the
State of Florida and venue shall be in Dade County, Florida.
This Agreement shall be binding upon the parties herein, their heirs, executors,
legal representatives, successors, and assigns.
CONSULTANT shall indemnify and save CITY harmless from and against any
and all claims, liabilities, losses, and causes of action which may arise out of
CONSULTANT's negligent activities under this Agreement, including all other negligent
acts or omissions to act on the part of CONSULTANT, including any person acting for or
j on its behalf, and from and against all costs, attorney's fees, expenses and liabilities
incurred in the defense of any such claims, or in the investigation thereof.
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94- 354
A. CONSULTANT covenants that no person under its employ who presently
exercises any functions or responsibilities in connection with this Agreement has any
personal financial interests, direct or indirect, with CITY. CONSULTANT further
covenants that, in the performance of this Agreement, no person having such conflicting
interest shall be employed. Any such interest on the part of CONSULTANT or its
employees, must be disclosed in writing to CITY.
B. CONSULTANT is aware of the conflict of interest laws of the City of Miami
(City of Miami Code Chapter 2, Article V), Dade County Florida (Dade County Code
Section 2-11.1) and the State of Florida, and agrees that it shall fully comply in all
respect with the terms of said laws.
CONSULTANT and its employees and agents shall be deemed to be
independent contractors, and not agents or employees of the CITY, and shall not attain
any rights or benefits under the Civil Service or Pension Ordinances of the CITY, or any
rights generally afforded classified or unclassified employees; further they shall riot be
deemed entitled to the Florida Workers' Compensation benefits as employees of CITY.
Both parties retain the right to terminate this Agreement at any time prior to the
completion of the services required pursuant to Section II hereof without penalty to
either. In that event, notice of termination of this Agreement shall be in writing to the
other party at least ten (10) days in advance of termination. CONSULTANT shall be
paid for those services performed prior to the effective date of termination. In no case,
however, will CITY pay CONSULTANT an amount in excess of the total sum provided
by this Agreement.
It is hereby understood by and between CITY and CONSULTANT that any
payment made in accordance with this Section to CONSULTANT shall be made only if
said CONSULTANT is not in default under the terms of this Agreement.
'04- 354
XVI NON-DISCRIMINATION
CONSULTANT agrees that it shall not discriminate as to race, sex, color, creed,
national origin, or handicap in connection with its performance under this Agreement.
XVII MINORITY PROCUREMENT ORDINANCE:
i
CONSULTANT acknowledges that it has been furnished a copy of Ordinance
No. 10062, the Minority Procurement Ordinance of the City of Miami, and agrees to
comply with all applicable substantive and procedural provisions therein, including any
amendments thereto.
XVIII CONTINGENCY CLAUSE:
Funding for this Agreement is contingent on the availability of funds and
continued authorization for program activities and is subject to amendment or
termination due to lack of funds, or authorization, reduction of funds, and / or change in
regulations.
f
XIX DEFAULT PROVISION:
In the event that CONSULTANT shall fail to comply with each and every term
and condition of this Agreement or fails to perform any of the terms and conditions
contained herein, then CITY, at its sole option, upon written notice to CONSULTANT
may cancel and terminate this Agreement, and all payments, advances, or other
compensation paid to CONSULTANT by CITY while CONSULTANT was in default of
the provisions herein contained, shall be forthwith returned to the CITY.
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XX ENTIRE AGREEMENT:
This agreement and its attachments constitute the sole and only Agreement of
the parties hereto and correctly set forth the rights, duties, and obligations of each to the
other as of its date. Any prior agreements, promises, negotiations, or representations
not expressly set forth in this Agreement are of no force or effect.
XXI AMENDMENTS:
No amendments to this Agreement shall be binding on either party unless in
writing and signed by both parties.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by the respective officials thereunto duly authorized, this the day and year
above written.
ATTEST:
MATTY H I RAI
City Clerk
ATTEST:
Corporate Secretary
9
CITY OF MIAMI, a Municipal
Corporation of the State of Florida
By:
CESAR H. ODIO
City Manager
CONSULTANT:
ARTHUR ANDERSEN & COMPANY
By:
(Title)
- 4 - 354
APPROVED AS TO INSURANCE
REQUIREMENTS:
F. K. ROLLASON, DIRECTOR
Risk Management
to
APPROVED AS TO FORM AND
CORRECTNESS:
A. QUINN JONES, III.
City Attorney
94- 354
CITY OF MIAMI, FLORIDA
INTER -OFFICE MEMORANDUM
TO : Honorable Mayor and Members DATE MAY. LIS 1994. FILE
of the City Commission ,
SUBJECT : Professional Services
Agreement
cppM ; Cie , REFERENCES
Cit II g City Commission
0
ENCLOSURES: Meeting of May 23, 1994
It is respectfully recommended that the Commission adopt the attached Resolution,
authorizing the City Manager to enter into a professional services agreement, in
substantially the form attached, with Arthur Andersen & Company to conduct a feasibility
study for the development of two -hotel projects in the Little Havana and Overtown/Park
West areas. The total fee for professional services will not exceed $50,000.
Department of Development & Housing Conservation recommends the hiring of the
Arthur Andersen & Co. to undertake an economic and financial feasibility study for the
development of two hotels in the City.
Two sites identified for the proposed developments are located in the Little Havana and
Overtown/Park West neighborhoods Both sites are owned by the City and Department
of Off -Street Parking. The development plan contemplates the City to finance and
develop both hotels, and enter into a long term mananagement agreement with a
recognized hotel chain. Efforts will be made to involve minorities with all aspects of
development and management of the hotels.
The following four firms presented written proposals and qualifications in response to the
City's request:
Arthur Andersen & Co.
The Hospitality Consulting Services, a Miami based management consulting
division of Arthur Andersen & Co., is providing a wide range of specialized
consulting and appraisel services to the hotel owners, developers and investors
in the hospitality industry. Arthur Andersen also assists in transactions by
advertising clients in owner -operator negotiations, and in the lease, purchase,
sale or financing of hotel and related real estate. The firm has an impressive list
of clients located in US and abroad.
Cayuga Hospitality tality Advisors, Inc.
An International Association of Senior Executives counselling the hotel, resort
club & foodservice industries. The members of the firm includes present and
former senior executives, entrepreneurs and educators serving virtually every
facet of the hospitality industries. The expertise includes project planning,
design, development, finance, marketing, operations and brokerage. The
principal of the firm conducted a market feasibility study for the New Washington
Height CDC hotel project.
Horwath Hospitality Consulting. Inc.
Horvath Hospitality Consulting, Inc., a member of Horwath International, is
based in Boca Raton, Florida. The firm has extensive experience in the areas of
hospitality, convention, and tourism expertise providing services to both small
and large companies. The firm represented a long list of well known clients in
the US and abroad. The firm is 100% women owned.
PKF ConSUltinc!
PKF Consulting, a member of Pannell Kerr Forster International, is a hospitality,
firm offering a complete range of services for hospitality, tourism and real estate
industries including: market analyses, feasibility studies, appraisals, operational
reviews, needs analyses, impact studies, asset oversight management,
transaction assistance and other services needed by the worldwide hospitality
and tourism industries. PKF is a well qualified firm with long history of experience
with hotels and resorts throughout Florida, the Caribbean and Latin America.
Based on credentials and experience presented in their proposals, we believe all four
firm are more than capable of delivering the proposed feasiblity study. Nevertheless,
the Arthur Andersen & Company seems to have a slight edge over the other firms in
overall experience and staff assigned for the project. Therefore, it is respectfully
requested that the City Commission approve the recommendation of the Administration
to hire Arthur Andersen & Company.
Attachments:
Resolution
Copies of four Proposals
Professional Services Agreement
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.PROPOSAL TO CONDUCT MARKET ASSESSMENTS FOR
TWO PROPOSED HOTELS IN THE
CITY OF Mum, FLORIDA
MAY 13,1994
.f�NDERS. I (tEN
AMWR ANDERSEN & Co,
Sc
Prepared for:
Mr. Cesar H. Odio
City Manager, City of Miami
Prepared by:
Arthur Andersen & Co
Real Estate Services Group
Miami, Florida
4- 3;4 17
ARTHUR
ANDERSEN
I ARTHUR ANDERSEN & CO, SC
May 13, 1994
Mr. Cesar H. Odio
City Manager
City of Miami
P.O. Box 330708
Miami, Florida 33233-0708
W
Arthur Andersen & Co.
Suite 2100
One Biscayne Tower
Miami FL 33131-1801
305 789 2578
305 789 2573 Fax
Re: Market Assessment for Two Proposed Hotels in the City of Miami, Florida
Dear Mr. Odio:
Per the City's request, Arthur Andersen (Andersen) has prepared this proposal to conduct a
market assessment for two proposed hotels to be located in the City of Miami, Florida. The
specific sites under consideration are:
N.W. corner of S.W. 15th Avenue and S.W. 8th Street
and
N.W. corner of N.W. I st Avenue and N.W. 4th Street
Our Miami -based hospitality consulting services group is eminently qualified to serve the City's
needs on this assignment. Attached to this letter, for your review, is a description of the services
we offer as well as resumes of select members of our hospitality consulting team. The remainder
of this letter outlines the services we would undertake, the terms and conditions which will
govem the engagement, and the professional fees and expenses to be incurred in the performance
of our work.
SCOPE OF SERVICE
To evaluate the market potential for lodging facilities at the two sites, we will perform the
following tasks:
• Meet with City staff and other members of the group involved in the project to obtain the
information we will need in our work. In addition, we will review any prior work conducted
on these properties or in the immediate area;
• Visit and analyze each site to evaluate the surrounding area and other major developments.
We will analyze accessibility and other selected infrastructure issues as they relate to the
proposed lodging facilities;
• Interview managers of the competitive and comparable lodging facilities, to gauge their past
and present occupancy, room rates and markets served. Our selection of competitors will be
l� 94- 354
1
Mr. Cesar H. Odio
City of Miami - 2 - May 13, 1994
based on the type and quality of property envisioned, given the identified site and location
considerations;
Interview City planning officials and County tourism representatives to identify any rumored
or proposed properties, as well as present and future sources of lodging demand;
• Interview travel agents, tour operators, meeting planners, and other travel professionals to get
their perception as to the relative merits of the two locations for tourist and business lodging
facilities;
• Review any existing or proposed plans for the two proposed properties, and make specific
recommendations as to the facilities' program in order to enhance future market position of
the two projects;
• Estimate occupancy, average room rate and market segmentation for each hotel's first five
years of operation. Within this analysis, we will address the estimated future average room
rate by type of guest, by season of travel and by year•,
• Upon completion of the market assessment, we will prepare estimates of future cash flow
from operations to be available for debt service and income taxes for the first five years of
operation. These estimates of financial performance will be presented in current (inflated)
dollars; and
• At the conclusion of our work, we will prepare two written reports of our findings. We will
prepare separate reports for each facility. Each report will contain our findings, conclusions,
recommendations and estimates of future performance for the proposed hotel. We will
present the reports to you in draft for your review and comments. At the completion of this
review, we will issue the final report.
TIMING, MEETINGS AND PROFESSIONAL FEES
Our fee for the above defined scope of services will be based on the standard hourly billing rates
of the professionals involved. Our standard rates are as follows:
Partner $350 per hour
Manager 265 per hour
Staff consultants 150 per hour
Our professional fee for this assignment will not exceed $50,000. We have budgeted for up to
two presentations at the conclusion of the assignment. Preparation for and attendance at any City
requested meetings and presentations beyond these planned meetings will be charged separately,
�4 0
- 354
Mr. Cesar H. Odio
City of Miami - 3 - May 13, 1994
based on the actual hours of professional time expended at our standard hourly billing rates for
the professionals involved.
Charged in addition to the fee for professional time will be expenses including, but not limited to
lodging, mileage, long-distance telephone calls, computer time charges, production/reproduction
services, and other expenses. These expenses vary, of course, and will be invoiced at cost.
Our fees plus out-of-pocket expenses will be billed upon completion of the draft report. We
reserve the right to invoice on a monthly basis, or upon early termination, in proportion to the
work accomplished and the expenses incurred as of that date.
If, at some point during the course of the work, a decision is made to discontinue, our fee will be
based upon the actual professional time expended and the out-of-pocket expenses incurred to that
date. Any unused portion of the initial payment will be returned to you in that eventuality.
In order to be equitable to all our clients, we schedule work in the order that signed engagement
letters and retainers are received. Upon receiving your authorization to schedule the work, we
will call you to notify you of our starting date, and estimated time of completion. Naturally, we
will work with you to the extent we are able to accommodate your organizatioWs internal timing
constraints.
RESTRICTIONS
Our study and report are subject to the following restrictions and conditions:
1. We have no obligation to update our findings and conclusions for changes in market
conditions which occur subsequent to our fieldwork. Any such changes in market
conditions will affect the validity of our estimates.
2. Our study and report are based on assumptions and estimates which are subject to
uncertainty and variation. These estimates are often based on data obtained in interviews
with third parties, and such data are not always completely reliable. In addition, we make
assumptions as to the future behavior of consumers and the general economy which are
highly uncertain. Therefore, while our estimates will be conscientiously prepared on the
basis of our experience and the data available to us, we make no warranty of any kind that
the occupancy, rates, revenues or expenses projected will, in fact, be achieved.
3. The report and parts thereof, and any additional material submitted are for your internal
use only and may not be shared with third parties without our prior written consent which
will not be unreasonably withheld. The report and parts thereof, and any additional
material submitted, may not be used in any prospectus or printed material used in
a° 24- 354
Mr. Cesar H. Odio
City of Miami - 4 - May 13, 1994
connection with the sale of securities or participation interests in any Public Offering as
defined under US securities laws.
4, The Cityagrees to hold harmless Andersen and its personnel from and against any
claims, liabilities, costs and expenses (including, without limitation, attorney's fees and
the time of Andersen personnel involved) brought against, paid or incurred by Andersen
at any time and in any way arising out of or relating to Andersen's services under this
letter, except to the extent finally determined to have resulted from the negligence or
willful misconduct of Andersen personnel, This provision shall survive the termination
of this agreement for any reason.
5. Andersen's maximum liability relating to services rendered under this letter (regardless of
form of action, whether in contract, negligence or otherwise) shall be limited to the
charges paid to Andersen for the portion of its services or work products giving rise to
liability. In no event shall Andersen be liable for consequential, special, incidental or
punitive loss, damage or expense (including without limitation, lost profits, opportunity
costs, etc.) even if it has been advised of their possible existence.
6. Andersen reserves the right to invoice periodically, or upon early termination, in relation
to the level of effort incurred, and expenses incurred, as of that date. The retainer
payment called for will be applied to the final billing, with interim billings occurring as
appropriate. The full amount of the fee and direct expenses will be due upon completion
of the work program and submission of the final report in the form specified in the basic
letter. Payment for services rendered will be due upon receipt of invoice. If payment is
not received within thirty, (30) days of billing date, Andersen reserves the right to
suspend work until payment is made and apply a service charge of 1.5 percent per month
or fraction thereof to the total unpaid sum. It is understood that Andersen may extend the
time for payment on any part of the billings rendered without affecting the understanding
outlined above. It is further agreed that in the event legal action becomes necessary to
enforce collection of bills rendered, the client will be responsible for all collection costs,
including but not limited to court costs and reasonable legal fees.
The foregoing restrictions and provisions shall survive the termination of this agreement for any
reason.
4— 3ro4 `�
Mr. Cesar H. Odio
City of Miami - 5 - May 13, 1994
ACCEPTANCE
Please sign the enclosed copy of this letter for our files and send it to us with the requested
retainer check. We appreciate the opportunity to work with you. If you have any question about
the scope of our work, please call Michael A. Stein at (305) 789-2577 or David W. Heath (305)
789-2574.
Very truly yours,
llg4v4&�OZ4 -
ACCEPTED BY THE CITY OF MIAMI:
Name:
Title:
Date:
i
D4- 354
Introducing Miami Hospitality
Consulting Services
Arthur Andersen
One Biscayne Tower, suite 2100 Real Estate Services Group
Miaau, FL 33173
(M) 37"700 4 - 3 5 4 d3.
Hospitality Consulting
Services
Arthur Andersen, as part of its full -
service practice, provides a wide range
of specialized consulting and appraisal
services to hotel owners, developers and
investors in the hospitality industry.
Arthur Andersen also assists in
transactions by advising clients . in
owner -operator negotiations, and in the
lease, purchase, sale or financing of
hotel and related real estate.
Recent hospitality engagements
concern independent and chain -
affiliated properties in the U.S. and
abroad at a variety of locations -- urban,
suburban, airport, roadside and resort --
and include full -service commercial and
conventional hotels, all -suite, budget,
limited service and luxury properties,
and hotel -related uses (e.g., conference
centers, convention facilities, exhibit
halls).
The firm's professional staff are well-
rounded. They offer you the advantage
of premier educational backgrounds,
hands-on experience in the industry,
and experience in the consulting
environment. The staff of the firm's
Miami office has extensive experience
serving clients in the U.S., the
Caribbean, Latin America and Europe.
`! / • : 00��
Project development services for new
hotels and related facilities include:
• Concept development and
refinement, by providing practical
advice about product and strategy
based on a client's business
objectives, current activities and
market and financial considerations.
• Market research, which
encompasses site analysis,
supply/ demand relationships,
projections of economic and
demographic growth and
competitive development potentials.
• Development planning, such as
identifying a competitive concept
and determining the size and mix of
rooms/facilities and necessary
ancillary amenities to best compete
in the market, recommending project
timing and analyzing the impact of
alternative development programs.
• Financial analysis, which includes
land and building development,
projections of operating income,
discounted cash flow analysis, and
economic feasibility.
Today, with thousands of engagements
completed throughout North America
and abroad, a major segment of the
firm's practice is hotel consulting •
services.
Management contract review and
operator selection, based on owner
objectives, operator capacity, facility
requirements and similar
considerations. Advising about
hotel management agreements,
technical service contracts, leases
and other transactions.
Economic and fiscal impact
dq 2 M-- 3 or 4
A RTUMn A NnFRRFN REAL ESTATE SERvirF,; C;RnTTP
1 _
P",I FsIAIT DVISORY iFRylrpg
analysis to determine the costs and
benefits of new hotel development.
Advisory services for existing
properties include:
+ Financial planning, including
advice on the analysis, structuring
Acquisition and disposition,
and negotiation of debt and equity
including strategies and advice on
arrangements such as joint
sale, lease, purchase, financing or
ventures, sale/leasebacks,
development terms.
leaseholds, and other financing
structures.
Hotel operation reviews, including
analysis of hotel financial
• Development services, to
performance (e.g., by comparing
implement feasible projects,
operating ratios and profit margins
include:
with comparable properties) and
evaluation - of problem areas (e.g.,
— Outlining necessary
occupancy, room rates, payroll,
commitments and agreements
administration, maintenance,
among parties of interest (e.g.,
internal controls.)
developers, operators, land
owners) on a staged basis if
Primary market research, including
appropriate.
survey research (e.g., questionnaires
mailed to former guests and focus
— Determining the appropriate
group interviews with major
financial structure for the
customers) and analysis of supply
project, taking into account
and demand in the local lodging
investment return criteria, tax
market.
consequences and similar
considerations.
Property evaluations and profit
improvement studies, including
— Solicitation and evaluation of
detailed analysis and
proposals (e.g., with respect to
recommendations in such areas as
experience and capacity of
guest service, pricing, budgeting,
proposing organizations).
internal controls, staff motivation,
salary administration and market
— Financial packaging, as part of
positioning of the hotel vs.
lender packages, syndications,
competition.
public and private placements
or public funding applications.
Business strategy, based on
maintaining or increasing market
— Marketing services, such as
share (e.g., by broadening market
creating marketing plans and
appeal, diversifying product, or
continual monitoring of
acquiring new locations).
marketing initiatives.
4- 354
3 '?r
e WrUTM 4XMTZRRF.N REAL ESTATE SF.RvT(`FC r,RnTTP
Appraisal and portfolio valuation
services are for financing, purchase,
lease, sale or other business purposes.
Typically, appraisal engagements
address the economic value of an
existing (or proposed) facility (or
portfolio of properties) based on
projected income and other approaches
to value.
The firm also renders additional services
as needed, e.g., expert witness
testimony, assistance in obtaining public
approvals, and "troubleshooting,"
directed at getting programs moving
that have been stalled by inertia,
controversy, conflict or lack of clear
direction
Within the hospitality and leisure time
industry, the firm's professionals have
worked with the following local,
regional, national and international
developer -operator entities for hotels,
motels, resort hotels, conference centers,
etc. (either directly or through owner -
operator negotiations):
• Doubletree Hotels Corporation
Phoenix, AZ
• Hilton Hotels Corporation
Beverly Hills, CA
• Marriott Corporation
Washington, D.C.
• Radisson Hotel Corporation
Minneapolis, MN
Days Inn
Chemical Realty Group
• Trust House Forte
London, England
• Inter -Continental Hotels
Miami, FL
• Hyatt Hotels
Chicago, IL
• Holiday Inns
Worldwide
• Hyatt International
London, England
• Danubius Hotels
Hungary
• Westin Hotels & Resorts
San Diego, CA
• Casa de Campo
La Romana, Dominican Republic
• Rosewood Hotels & Resorts
Santa Fe, NM
• Jumby Bay
Antigua
Glitter Bay
Barbados
• . Royal Pavillion
Barbados
Hyatt Regecy
Tampa, Florida
4- 354
A wrmyvm A *TnTrRCFN RFAT ESTATE SFRvTf FC rRnTTP
MICHAEL A. STEIN
Partner
Mr. Stein, a partner with Arthur Andersen & Co., Real Estate Services Group, has been part of
the hospitality/resort real estate industry for the past 25 years. During this time, he has been
involved in the management and planning of projects on a national and international scale. Some
of his areas of specialization include operation and system reviews, management contract
negotiations, assistance to on -site management in projections, economic property evaluation and
appraisals of existing business ventures, tourism, fiscal and economic impact analysis. In
addition, he has been involved in a number of transaction -related activities, including workouts
for under -performing assets. His latest activities have included the asset management of six
properties in the Southeastern United States for owners and/or financial institutions.
He has conducted hundreds of engagements in the United States and is recognized by his peers as
a leader in the hospitality/resort real estate consulting industry. His extensive experience in Latin
America and the Caribbean makes him an authority in this region. He has published numerous
articles and has been invited to act as keynote speaker at many national and international
conferences.
Mr. Stein holds board membership in several professional associations and is also strongly
involved in community organizations in the Greater Miami area
Mr. Stein attended the University of Southern Mississippi receiving his Bachelor of Science
degree in 1968. He continued his studies at Cornell University where he received a second
degree in Hotel Administration. He attended the University of Miami (1976) and Scale
University (1989) to complete work in accounting, finance, and advance management.
Furthermore, his education has been enhanced by over 1000 hours of professional development
courses.
ARTHUR ANDERSEN REAL ESTATE SERVICES GROUP 9
Some of the key projects Mr. Stein has directed include:
• Hotel Privatization Program: Mr. Stein directed a major study for
the government of Jamaica. The study involved the preparation of
future market and financial performance estimates as well as the
economic evaluation of 12 government hotels located throughout
the island. The study was prepared for National Hotels &
Properties, Ltd., an agency created specifically to divest
government interest in these properties. An integral component of
the study was the Caribbean Market Overview which provided an
evaluation of Jamaica in terms of its competitive positioning in the
Caribbean.
• Appraisal Services: Mr. Stein was involved in the management
and coordination of the market study element of hotel and real
estate appraisals of large-scale mixed -use developments as well as
for companies such as Ritz -Carlton, Williams Hospitality, Hyatt
Hotels, Hilton Hotel Corporation, among many others.
• Cancun/Mayaluum corridor. Mexico: This project required overall
jproject coordination for the definition of a conceptual program for
2,500 acres in the Cancun/Mayaluum corridor. Phase I of this
program consisted of market research to define precisely the
critical elements of a mega -resort development. Phase II of this
engagement included a conceptual program which contained
residential, multi -hotel sites, golf retail, and marina components.
• Grand Bay: The Continental Companies, along with European
joint venture partners, requested a project evaluation for each of
the projects/markets they selected for Grand Bay Hotel
development in four countries.
• Cayman Island Department of Tourism: A long-term Master Plan
for tourism development was created to address long-term social,
economic, ecological and cultural priorities, to control and direct
the extent of tourism development and insure a high quality of
tourism product. For this assignment, the status and future need
for tourist facilities and services (by type and size) was analyzed
and recommendations as to the location of the tourist facilities and
service, the infrastructure requirements of these facilities, and the
availability of an adequate labor market were presented.
do ARTHUR ANDERSEN REAL ESTATE SERVICES GROUP
04- 3,54
Bahia Beach Plantation, Puerto Rico: This project was envisioned
to be a major golf/beach oriented resort -residential development to
be contained on approximately 700 acres. Selected team members
were involved in project concept review and recommendations as
well as market feasibility and appraisal preparation. Key issues
included golf club membership structure, type and concept for
lodging products and residential product pricing and phasing.
• Costa Isabela ResortPuerto Rico: This project, which included
over 2,500 acres, involved the concept development as well as the
market feasibility and economic impact analyses of the entire
resort. Upon completion, the project is to incorporate five to six
hotels, including a 650-room convention -styled hotel, two first-
class chain -affiliated hotels, a 350-room upscale hotel, a 70-room
"boutique" hotel, a 75-room, 150-guest capacity spa, five world -
class golf courses, a major tennis center, a 150,000-square foot
retail center and a variety of residential products.
• Toba o Trinidad. West Indies_ A resort residential program, his
project involved concept development for a 200-acre site in
Tobago. The development program included an all-inclusive hotel
and villa/condominium development. Key issues in this project
included limited accessibility and difficult flight schedules to
Tobago as well as the Alien Land Holdings Act as it related to the
sale of residential units to foreign investors. As a result of the
research performed, the Act was modified to allow foreign
investors to acquire rights in land.
• El Conquistador Resort. Fajardo, Puerto Rico: Development of the
concept, market feasibility and financial viability for the
redevelopment of the former 220-acre El Conquistador Resort in
Fajardo, Puerto Rico were completed for this project. The
developer of the proposed project wished to create a premier
destination resort similar in scope to the "fantasy resorts" found in
Hawaii. As a result of the research, the recommendations and,
subsequently, the assessment of financial feasibility, the project is
expected to contain a 750-room hotel, 300 condominium units, a
10,000-square foot casino, 16 food and beverage outlets, 85,000
square feet of meeting and banquet space, two golf courses, a
30,000-square foot spa and an extensive array of first-class
recreational facilities
ARMUR ANDERSEN REAL ESTATE SERVICES GROUP :A- 354 1
• Barbados Tourism Study: Preparation of a ten-year tourism
development program. The study addressed the Island's existing
and potential tourism product, and in doing so, more than 1000
computer -assisted consumer interviews were completed. The
analysis of the information obtained from these interviews was the
basis for all the marketing programs and strategies recommended.
Once a development program and marketing strategy was
established, the social and economic impact of this program was
projected.
Panama Iourism Development and __Incentives Law Project:
Created a framework or basis for the planned and coherent
development of Panama's tourism industry, defining in macro
terms the reasons behind its creation, its mission within the content
of the national strategy, and the short and medium tern objectives
which need to be successfully implemented in order to create an
environment which motivates the private sector to invest in this
industry.
Proposed mechanisms for dynamic cooperation between the
private and public sector, for a more agile, flexible and less
bureaucratic system of development and operation of the tourism
industry in Panama.
Evaluated and recommended the most logical legislative options,
including laws which: (a) establish an enabling legal framework,
(b) create a bridge between various sectors, and (c) relate to
specific sectors.
60 ARTHUR ANDERSEN REAL ESTATE SERVICES GROUP 1-4— 354
DAVID W. HEATH
Manager
David Heath, a Manager with Arthur Andersen & Co's Real Estate Services Group, provides
operational consulting services for the hospitality industry. Mr. Heath has an extensive
hospitality management background; his consulting experience includes operational consulting
and labor productivity analysis for hotels, restaurants, airports and private clubs.
Among Mr. Heath's areas of specialization are the following:
• Strategic planning for distressed properties;
• Design and implementation of internal control systems for
hospitality related businesses;
• Measurement and analysis of employee productivity in the
service sector, and
• Implementation of human and automated solutions to internal
control and labor productivity management problems.
At the outset of his career, Mr. Heath worked for more than ten years in various management
capacities in hotel and restaurant operations with, among other companies, Hyatt Hotels and the
Ritz -Carlton Hotel Company. Prior to joining Arthur Andersen, Mr. Heath supervised the
Florida hospitality operational consulting practice at Laventhol & Horwath and directed
numerous operational consulting engagements in Florida and the Caribbean.
Mr. Heath attended the University of Massachusetts at Amherst, receiving his Bachelor of
Science (Cum Laude) in Hotel Administration with election to the Eta Sigma Delta National
Honor Society in 1980. He continued his education by attending Northeastern University in
Boston, completing the Master of Business Administration program in 1989. Mr. Heath
currently conducts continuing education seminars on Internal Controls for Hotels and
Restaurants for the American Institute of Certified Public Accountants. Mr. Heath has also guest
lectured at the University of New Hampshire, the University of Massachusetts, and for the
Florida Restaurant Association.
354
ARTNUR ANDERSEN REAL ESTATE SERVICES GROUP 31
Some of Mr. Heath's current and former clients include:
Hotel Inter -Continental Miami. Florida: Conducted a
comprehensive analysis of labor productivity in both fixed and
variable service areas, resulting in the identification of annual
available savings exceeding $1 million. Developed a
comprehensive implementation plan to enable the property to
achieve the identified savings. Additional clients for whom labor
productivity engagements have been performed include:
• • Sheraton Bonaventure Resort & Spa, Ft. Lauderdale,
Florida;
• • VISTA International Hotel, Pittsburgh, Pennsylvania;
• • Mayfair House, Coconut Grove, Florida.
Peninsula Hotel, Beverly Hills. _ California: On behalf of
ownership, conducted a full review of operations with specific
emphasis on organizational structure, labor management and
internal controls. Worked with management to develop a revised
organizatioal structure and formula for variable labor utilization
which is estimated to save in excess of $1,000,000 annually.
Boca Raton Resort & Club. Boca Raton, Florida: Project
entailed time and motion analysis of selected departments to
improve quality and optimize labor productivity, the development
of productivity standards for all variable departments, as well as
implementation of automated time and attendance and scheduling.
Total project resulted in annual payroll savings exceeding $1.1
million. Developed and implemented a comprehensive
productivity management tool to enable management to measure
and monitor labor productivity for more than fifty service areas
within the property.
Casa de Camp,, La Romana, Dominican ReIpublic: This
assignment consisted of a detailed operational review and market
position analysis of this world -class luxury resort located on 7,000
acres in the Dominican Republic. The client received a detailed
action plan for upgrading services and facilities as well as a current
market assessment and plan for improving market penetration and
average daily room rate for the resort. The second phase of the
project consisted of the preparation of five-year strategic marketing
and capital expense programs and operating budgets.
The Club at Landfall. Wilmington, N.C.: Assignment consisted
of a complete food and beverage and labor cost analysis for the
ARTHUR ANDERSEN REAL ESTATE SERVICES GROUP " _
J4 354
--ter, -- -- R -A • ECjy,TF ADVISORY SERVICES
private club component of this residential mixed -use development.
Recommendations included an organizational restructuring and the
implementation of a food and beverage cost control system. These
recommendations, set fdrth in a detailed action plan were
subsequently implemented in their entirety. In a follow-up
assignment, the operational consulting team performed an
executive search for a new chief operating officer for the project.
• 12gbbs Housg& Miami Intern tional Airport. Miami, Florida:
Implemented an automated scheduling and productivity
management system to track labor utilization for more than 35
food service outlets. Developed a custom, automated forecasting
system to enable management to accurately predict daily food and
beverage sales for each outlet. Forecasts were designed to
facilitate the scheduling of labor to business volume.
• Center Valley,. Club, -Celater Valley. PA: During this assignment,
the operational consulting team designed the organizational
structure, including job descriptions for top management as well as
an action plan and timetable for the opening of the golf club
component of this large mixed -use land development in Central
Pennsylvania. In the subsequent follow-up assignment Arthur
Andersen was called upon to conduct an executive search for the
club's Director of Golf.
• Lost Tree Club. North Palm Beach, Florida: This engagement,
conducted for one of South Florida's most prestigious private
clubs, entailed a review of fixed staffing within the club which
resulted in the combination of positions and ensuing payroll
savings. The assignment also included an organizational analysis
and action plan for improving the day to day working relationship
between management and the club's board of governors.
• Gleneagles Country Club. Delray, Florida: Working on behalf
of the club's board, this engagement entailed an extensive review
of food and beverage policies and rocedures related to service and
cost effectiveness. In addition, a comprehensive review of the
club's organizational structure and staffing levels, policies and
procedures was conducted, with recommendations made to
improve communication and streamline the organization.
• Food Service Facilities, CenTrust Tower, Miami, Florida:
Engagement involved a complete review of internal controls,
policies, procedures, wage rates and staffing of five separate food
service facilities within the complex; developed and implemented a
a4- 354
ARTHUR ANDERSEN REAL ESTATE SERVICES GROUP a3>
custom food and beverage cost control system.
• Operational and Internal Control Reviews: Often working on
behalf of ownership, Mr. Heath has supervised numerous
assignments to review operational policies and procedures as they
relate to financial performance, marketing activities, guest service,
as well as food, beverage and cash controls. Present and former
clients receiving this service include:
• • Hyatt Regency Miami, Miami, Florida;
• • Doral Resorts of Florida, Miami, Florida;
• • Embassy Suites - St. Louis, St. Louis, Missouri;
•• Hyatt Virgin Grand, St. John, U.S.V.I., and
•• St. Petersburg Hilton, St. Petersburg, Florida.
3 L) ARTHUR ANDERSEN REAL. ESTATE SERVICES GROUP y9 4 - 354
54
`I 1DWA 1 / .fit . /q.
MARY LYNN MARKS
Staff Consultant
Mary Lynn Marks recently joined Arthur Andersen & Co. Real Estate Advisory Services
after gaining several years of experience in the hospitality industry. Prior to joining the
Firm's Miami office, Ms. Marks lived in Boston, Massachusetts, where she worked in a
number of capacities for a convention hotel. Additionally, she assisted in the opening of
a luxury hotel in Boston's financial district and was manager of a premier catering
company which won "Best of Boston". Within the Food & Beverage Department, Ms.
Marks has held several positions which have provided her with exposure to operations
and sales, and a specialization in training and managing line personnel. In addition, she
has assisted in the development of departmental procedures and their implementation.
In addition to her exposure to the hospitality industry, Ms. Marks worked as a research
assistant with Arthur D. Little, Cambridge, Massachusetts. In this capacity she worked
on local economic development projects and proposal research. Most recently with
Arthur Anderson & Co., Ms Marks has been involved in hotel and theme restaurant
feasibility studies.
In 1993, Ms. Marks earned a Masters in Business Administration from Simmons College
Graduate School of Management. While attending Simmons College, she worked in the
Admissions Office assisting prospective students with the admission process as well as
conducting a comparative analysis of Boston area business schools. She received her
bachelor's degree in French Literature from Boston College,1984.
?4- 354
ARTHUR ANDERSEN REAL ESTATE SERVICES GROUP 3S
Mimi OMce: 16410 SouthWest 77th Court
Miami, Florida 33157-3765 USA
Te1305-253.7418 Fax 305-251-2108
CAYUGA HOSPITALITY ADVISORS, INC.
An International Network of Senior Executives
Counseling the Hotel, Resort. Club, Casino X Foodservice Industries
Principal Office: 1140 FAA Bay Shone Drive
Vvgix" Beach, VA 23451, USA
Tel 804-422-9427 Fax 804-422-W7
f4— 3v4 37
CAYUGA HOSPITALITY ADVISORS, INC.
An International Association of Senior Executives
Counseling the Hotel, Resort, Club & Foodservice Industries
William J. Callnin, CHA
Managing Director
May 13, 1994
Mr. Cesar H. Odio
City Manager
City of Miami
c/o Department of Development
300 Biscayne Boulevard Way, Ste 400-401
Miami, Florida 33131
Re: HOTEL FEASIBILITY STUDIES
2 SITES, MIAMI, FLORIDA
Dear Mr. Odio:
In accordance with the request of Mr. Erdal Donmez of the Department of
Development, Cayuga Hospitality Advisors takes pleasure in submitting this
proposal to the City of Miami to perform market feasibility studies for the two
identified hotel sites in Miami, Florida. As we understand it, you are seeking an
independent comprehensive study of the market and the economic potential for two
hotel projects: one near the Government Center in downtown Miami and the other
on 8th Street in Little Havana.
Based on a short telephone call and a development specifications sheet on the two
sites, we have developed this proposal which outlines the scope of services to be
1 provided, the team assembled to perform the work and estimates of the
engagement timing required to complete the agreed -upon tasks.
MWW Office: 16410 southwest 77th Court
Miami, Florida 33157-3765
Te1305-253-7415 Fax 305-251-2108
34-- 354
IT
CITY OF MIAMI -2- MAY 13, 1994
�T
❑ ORGANIZATION BACKGROUND: CAYUGA HOSPITALITY ADVISORS
Cayuga Hospitality Advisors (Cayuga) is uniquely qualified to undertake an
,T assignment of this type. Cayuga is an international network of more than 200
members worldwide, each an alumnus or a member of the faculty of the School of
Hotel Administration at Cornell University, with tremendous experience in all facets
of the industry and unequaled industry -wide connections for quick background
research on virtually any question that might come up in the assignment.
F. The primary difference between Cayuga and other major consulting organizations
• is the fact that we are comprised solely of senior level executives: there are no
juniors to be trained on client assignments nor any need to "make work" for a firm
several layers of staff. Clients receive the benefits of years of successful operations
and consulting experience with each member working on an engagement. Also,
Cayuga consultants counsel the hospitality industries; we do not manage hotels,
sell furniture, fixtures and equipment or act as investment bankers. We provide
independent advice with no motive other than the best interests of our clients.
Cayuga has just completed a large consulting engagement involving a thorough
operational review and market positioning of a major hotel (and other, mixed -use
facilities in a) real estate complex in Miami. In this engagement we assembled a
team perfectly suited to the tasks required and, equally importantly, very familiar
with the Miami marketplace.
❑ PROJECT STAFFING
Cayuga Hospitality Advisors utilize only highly experienced senior level executives
throughout any engagement. Your assignment will not be a training ground for
inexperienced staff or those without the necessary expertise to efficiently and
effectively complete the engagement.
Due both to location and experience, Scott W. Brush will act as project manager for
the engagement and take direct responsibility for coordination of assignment and
liaison between the consulting team and your office. We have identified the
following four executives who will participate in the project.
: 4- 354 °!
f�
CITY OF MIAMI -3- MAY 13, 1994
• Scott W. Brush, President, BRUSH & COMPANY. Prior to the start of BRUSH &
CovrnANY (a woman -owned firm) in 1993, Mr. Brush had over twenty years in
hospitality operations and consulting experience, including almost 15 years
(over seven as Senior Principal) in the Miami office of Pannell Kerr Forster with
responsibilities for the region covering Florida, Latin America and the
Caribbean. Mr. Brush brings to the team a great deal of experience with
large-scale consulting assignments and an intimate knowledge of the Miami
market. His operations experience provides a depth of understanding and
expertise not available to most consulting firms. Mr. Brush provided a market
feasibility study for New Washington Heights Community Development
Corporation in 1979 and also provided ongoing assistance in their attempt
to develop a hotel near the downtown Government Center. Other local hotels
for which Mr. Brush performed, supervised or participated in market studies
include: Days Inn Downtown, the airport Hilton Hotel, the Airport Regency,
the Radisson Mart Plaza, the Days Inn Airport and a number of hotels in the
Miami Beach Art Deco District among others.
• William J. Callnin, Managing Director, Cayuga Hospitality Advisors, Inc. Mr.
Callnin is a founding partner of Cayuga and manages Cayugas operations.
®
Mr. Callnin previously developed, owned and operated three 200-room hotels
�#
in the Atlantic City area as General Partner, and was General Partner in a
fourth hotel and marina complex in North Carolina. He was Eastern Regional
MAS Director for Laventhol & Horwath from 1969 through 1978. - While in
Laventhol & Horwath he supervised the conduct of all of the firm's market
feasibility studies for Marriott, ITT Sheraton and Holiday Inns, for whose
accounts he held international responsibility. He has supervised many large
and complex consulting assignments and brings the extra dimension of his
personal experience as a hotel developer, owner and operator.
• LeVon Keenan -Dayton, Vice President, Dayton -Keenan Inc. Based in Miami
for 18 years, Mrs. Dayton's firm has served clients in Europe, the Middle East,
the Caribbean and the United States. Major projects include: repositioning,
renovating and staffing both a large resort in Spain and an apartment hotel
in Washington D.C., an in-depth study of the hotel indusry of the Bahamas for
the government of the Bahamas, the evaluation of various hotel properties for
possible acquisition (including the purchase of a closed hotel in downtown
® A- 3554
CITY OF MIAMI
-4-
MAY 13, 1994
Miami for a European client followed by the complete renovation, furnishing,
equipping, staffing and re -opening of the existing Marina Park Hotel. Prior to
Dayton -Keenan, Mrs. Dayton was Assistant to the President of Inter -
Continental Hotels for 13 years and handled operational planning for 40 new
projects and supervised the opening of 24 hotels around the world. Other
activities including field surveys for possible acquisitions and trouble
shooting at problems properties. Mrs. Dayton, a third generation hotelier,
initially worked for Pannell Kerr Forster in New York City hotels, later
becoming controller and then manager of a 350-room East Side hotel.
• David M. Theophilus, President, DMT Hospitality Associates, Inc. Mr.
Theophilus is the Florida Regional Director for Cayuga as well as President
and founder of Orlando -based DMT Hospitality Associates, Inc., a consulting
firm providing professional services for hotels, resorts and the hospitality
industry. Dave has 30 years (28 years in Florida) of solid and varied
experience in the hospitality field. For 16 years he served as Executive Vice
President and Vice President of Operations, Sales & Marketing, and
Development with AIRCOA, the nation's largest hotel management company.
Prior to AIRCOA, Mr. Theophilus was a Partner in the Management Advisory
Services division of the Miami office of Laventhol & Horwath where he
t provided management and financial consulting services to clients in the
hospitality and real estate industries. He has extensive experience in both
management and development of hotel and resort properties; having
personally held ownership positions in over 20 hotels, he knows the business
s from "both sides of the table".
0 SCOPE OF SERVICES
In order to provide you with an understanding of the potential methodology we will
use to complete the engagement, this section identifies a series of tasks that could
be performed as integral elements of the research and analysis phase of the
engagement. We will be pleased to meet with you to further define this scope of
services, if necessary, and outline the costs involved.
- 354 y l
i
CITY OF MIAMI -5- MAY 13, 1994
PHASE I: MARKET OVERVIEW AND CONCEPT
f�
Task 1.1 - Orientation/Review of Proposed Development Program
�1 Pursuant to this task, we will meet with you and your team to review current plans
for the proposed developments. We will discuss and obtain from you any
information that you may have available concerning the general project concepts
as well as more specific information regarding specifications of the sites, any
variances which might be considered, incentives which the city might grant to
developers, possible contract guest room usage by city -sponsored entities, etcetera.
Task 1.2 - Preliminary Site Inspection
We will visit the subject sites to gain a first-hand understanding of the access,
surrounding land uses, relationship to demand generators and competitive
properties for each proposed development.
Task 1.3 - Preliminary Market Review
In order to establish a starting point for our in-depth analysis, we will conduct a
preliminary assessment of potential markets for the proposed hotels. The central
theme of this task would be to analyze and evaluate certain basic market factors
regarding the proposed projects to understand the inherent advantages and
disadvantages of each location.
Factors we will analyze and compare in this context would include:
• Accessibility of the individual sites as affected by Miami's
supporting land, air and sea transportation network;
• Attributes of the market area in general, and the individual
sites specifically, that might affect potential hotel uses;
• General land use attributes of the sites that might affect
hotel operations;
(41 Relationship of the project sites to their demand sources
and hotels in their competitive fields;
7b. 4` 354
CITY OF MIAMI -6- MAY 131 1994
• General economic and tourism trends in South Florida and
Miami;
• General characteristics of the competitive markets.
Task 1A - Preliminary Report
Based on our analysis of the information gathered during Tasks 1.1, 1.2 and 1.3, we
will prepare our general recommendations relative to the conceptual use of the
sites in terms of number of guest rooms, supporting public space, market
orientation and a preliminary opinion of market feasibility.
At the end of Phase One, we will prepare a brief letter report and meet with you to
discuss our conclusions and recommendations. Assuming positive results from the
work done to date, we envision directly proceeding with Phase II of the
engagement.
PHASE II: IN-DEPTH MARKET ANALYSIS
Based on the conclusions reached during Phase One of the engagement, which
should result in an initial program definition, we will complete an in-depth market
study relative to each project.
The work plan for this phase would include supplementing the information
developed in the initial phase by performing the following tasks:
Task 2.1 -- Primary Fieldwork
As art of this onion of the overall engagement, we will complete the gathering
P P
of background information and conduct primary research in the site areas. This
information would then be analyzed, leading to estimates of attainable occupancy
levels and average daily room rates for the hotel facilities. We will:
Perform a more comprehensive analysis of each site to evaluate access
p y ,
visibility, location, area economic/demographic trends, surrounding
aesthetics and other area developments. We will also visit and
interview officials at existing market demand generators.
CITY OF MIAMI -7- MAY 13, 1994
• Interview managers of competitive hotels in each market area to gauge
their past and present occupancy, attained room rates and the market
demand segments currently being served.
i
Meet with local government tourism officials, private tourism industry
representatives and other demand generators to identify proposed or
rumored developments as well as prospective sources of demand that
might impact the future operating performance of the proposed
properties.
ITask 22 - Project Analyses
The foregoing will serve as the basis for our analysis of the two hotels. Specifically,
to complete this task we will estimate potential growth in the demand for, and the
supply of, hotel accommodations in each competitive market. We will evaluate each
of the principal segments of demand and describe their characteristics in this
particular market. We will then estimate attainable occupancy, average room rates
and probable market segmentation for the initial years of each hotel's operation,
beginning in 1996 if appropriate.
s
y PHASE III - FINANCIAL ESTIMATES/REPORT FINALIZATION
i
One of the most important portions of the engagement, the estimates of operating
results and economic feasibility are built upon all the information gathered to date
coupled with operating results from competitive/comparable properties and based,
on the consultants' knowledge and experience in the industry. No organization can
bring the expertise and experience available to Cayuga to any project.
ITask 3.1 - Estimated Operating Results
This portion of the engagement would be concerned with the operating potential
of the hotels as proposed and recommended on the specific sites.
We would develop statements (one for each property) of estimated operating results
for the hotel facilities and their other components (e.g., food and beverage outlets)
for the initial years of operation including revenues, departmental costs and
34- 354
e
CITY OF MIAMI -8- MAY 13, 1994
undistributed operating expenses. These statements will reflect estimated cash
flow before debt service and taxes.
Since the projected operating results would be based on estimates and assumptions
which would be subject to uncertainty and variation, we would not represent them
as results that would actually be achieved.
if Task 3.2 - Economic Feasibility
In order to determine probable economic feasibility of the hotels we will relate the
Itestimated operating results to reasonable project costs and financing. This
consulting area is one in which Cayuga's expertise carries a significant added
benefit for the client since many Cayuga members have developed and financed
hotels, not just advised other people how to do so. Thus, we bring an added
dimension of reality to the process of ascertaining the economic viability of a
project.
As part of this assignment, we would relate the anticipated operating cash flows
before debt service and taxes to:
• the estimated cost of each development; • the City's actual financing plan or an assumed "market -rate" financing
plan; and
• probable leasehold income to the City from the operator of each hotel.
This will give the City of Miami a projection of cash shortfall or surplus during the
critical initial years of operation. (A property which we estimate would not "cash
flow" even after stabilization would be recognized at an early point in the process;
we would bring this conclusion to your attention immediately as described under
Estimated Timing of the Engagement.)
Task 3.3 - Report Production
Upon completion of Task 3.2, we will issue draft reports of our final conclusions,
recommendations and projections for each project. The finalized reports will be
issued upon receipt of any comments you may have regarding the draft reports.
14- 3554 A%
CITY OF MIAMI -9- MAY 13, 1994
f
j
❑ LIMITATIONS OF THE STUDIES
The reports will be developed and issued in a format normal) acceptable to p p y p mayor
sources of financing, franchise companies and management organizations. The
report may be used in presentations to these companies, but are subject to the
following limitations:
• Our reports and other materials submitted may not be included as part
of an offering statement, prospectus or in printed material or
advertising used in connection with the sale of securities or
participation interests to the public without our prior written approval.
• The scope of the studies and reports will not include the possible
impact of existing or future zoning or environmental regulations,
licensing requirements or other legal or regulatory matters unless they
have been brought to our attention and are disclosed in the pertinent
report.
I❑ - ESTIMATED TIMING OF THE ENGAGEMENT
P
1
Based on the work described in this proposal, our present scheduling, and assuming
your timely acceptance, we would expect to commence this assignment within one
to two weeks of receiving your authorization and our mutual agreement as to the
fulll scope of services. Subsequent timing will be as follows:
�— 3S4
CITY OF MIAMI -10- MAY 13, 1994
During the analyses, we will update you by telephone or in person on the progress
qof the work. if, during our research, our preliminary findings lead us to believe that
It would be appropriate to stop either evaluation, we will advise you immediately
and meet with you to discuss the reasons. If you then decide to end either or both
studies, we will invoice you only for the time expended and actual expenses
incurred.
rl
0
I
❑ Professional Fees and Expenses
Our fee for the type of studies described herein would be based on the final agreed -
upon scope of services and our standard per diem rates. Based on the information
provided, we believe that the final scope of services will result in total fees and
expenses less than the $50,000 cap.
In accordance with standard industry policy, we require a retainer in order to
schedule this engagement. An interim payment will be invoiced at the time we
issue our Phase I letter reports and is payable prior to the issuance of the draft
reports. The final fees and expenses will be invoiced upon delivery of the draft
reports and are due prior to delivery of the final reports. In order to maintain our
independence, full payment of all fees must be received prior to our issuing the
final reports. This schedule is reflected in the following table:
It is understood that in the event either of our final reports are submitted to third
parties who require additional analyses or documentation, time and charges will be
invoiced at our normal per diem rates. Further, we are not required to give
testimony in court by reason of these market feasibility studies unless fee
arrangements have been agreed upon prior to any such court appearance.
r
"-j ��� y/
CITY or MIAMI -1 1- MAY 13, 1994
❑ ACCEPTANCE
If the engagement as outlined is in keeping with the work you wish undertaken and
the arrangements are satisfactory, please sign the enclosed copy of this proposal
and return it as our authorization.
❑ SUMMARY
We believe that the structure and extensive resources of Cayuga provide a
uniquely qualified team to address'this engagement. The experience and expertise
of our individual team members as well as the resources available throughout our
network gives us a depth which other firms are not able to commit to a single
assignment.
Thank you for your time and attention. We look forward to working closely with you
on this most interesting assignment. Please do not hesitate to call if we can provide
any additional information or if you have any questions.
Very tru
APPROVED AND ACCEPTED:
City Of Miami
sy:
Title:
Date:
�A- 354
19Hi' 13 ' 94 09:57HP,1 HOrWOZ H._% HCRWATH
S
May 14, 1994
Mr. Erdol Donmez
City of Miami
300 Biscayne Boulevard
Suite 400
Miami, Florida 33131
via facsimile: (305) 371-9910
near Mr. Donmez:
P. G. 1?
`�`HORWATH moss IT`ALITY
CONSULTING, )NC.
61.10i4.. It.-od
5�.nrr 324 Altik :ll
R Heir.. H. 1.1.. ;
I rlef.v i.11
we are pleased to present this proposal outlining the consulting
services we can provide in connection with the proposed development
of two hotels on city -owned land. In submitting this proposal, we
commit our professional and organizational resources to the City of
Miami. We hope that you will agree. that the addition of Horwath
Hospitality Consulting, Inc. will significantly enhance the in-
house resources of the City of Miami and contribute to the success
of the proposed projects.
As you review these materials, we ask you to consider the
followings
Horwath Hospitality Consulting, Inc, is a member of
Horwath International. Horwath International is regarded
as the worldwide leader in the hospitality industry. The
members of Horwath International have extensive
hospitality, convention, and tourism expertise. As part
of an international accounting and consulting network, we
draw upon data bases, industry specialists, technical
support personnel, and other resources worldwide. We
offer extensive expertise, employ trained professionals,
and make a firm -wide commitment to service the
hospitality industry.
Horwath Hospitality Consulting, Inc. provides the
benefits of both a large and small firm operation.
Unlike any other international accounting or consulting
firm, Horwath Hospitality Consulting, Inc.'s affiliation
with Horwath International and provides a network of
local hospitality consulting professionals throughout the
United States and worldwide, providing a source of
information of history, performance, and experiences of
potentially similar projects. Further, as a small firm,
Horwath Hospitality Consulting, Inc. prides itself on the
level of personalized and professional attention to
insure timely, responsive service.
Horwath Hospitality Consulting, Inc. Is Directors offer
extensive industry expertise, bringing local market
knowledge to every engagement. Each Director brings over
15 years of industry experience to the practice. Horwath
Hospitality Consulting, Inc.'s Directors do not use y
4- 3 15 4
6v
I,IH'r' 13 '94 09 C�.APi H"�F'IaIH��`.: H'�F'IJHTII
Mr. ordol Donm®$ a - May 14, 1994
city of Miami
junior level staff to conduct the research that forms the
basis of all conclusions and future estimates.
• Each Horwath Hospitality Consulting, Inc.'s practice is
independently owned and operated. The office in Florida
is 100 percent women -owned and has been approved by
various government entities as an Minority/women Owned
Business.
BACKGROUND AND OEJECTI`O
Based on the information provided to us, we understand that the
locations of the sites under consideration for future hotel
development are:
• Little Havana Site at Southwest 15th Avenue and Southwest
8th Street. This site is envisioned to include the
development of a maximum of 100 hotel rooms on this 0.8
acre site.
• Arena ---Site at Northwest 1st Avenue and Northwest 4th
Street. The facilities program for this 1.1 acre site
will be based upon the results of the market research and
analysis as presented in this proposal.
As we currently understand this assignment, the City of Miami plans
to finance and construct hotels on each of these sites and enter
into management contracts with internationally -recognized hotel
chain(s) for their operation. To evaluate the market and financial
feasibility of these developments, you have requested the services
of an independent firm specializing in market and financial
analysis of hotel projects.
This proposal outlines the scope of services which Horwath
Hospitality Consulting, Inc. is highly qualified to perform and
addresses the communication process, our qualifications, estimated
timing and professional fees, and the terms of the engagement.
Specifically, our study will address the following issues:
• Conduct market research to determine whether there is
sufficient market potential to warrant hotel development
at each of the sites.
• Determine and/or confirm the number of supportable rooms
and other elements of the facility programs to derive a
conceptual plan beat suited to capture targeted hotel
demand. Such an evaluation will take into consideration
the number of units to be developed, the type of
facilities and amenities needed to support development,
4- 34
P. 3 %1
HAY 1 = -D-1 09: 1�:OHM HOPWATH m- irDRI, HT1 I
dr. Brdol Done+ - 3 - May 14, 1994
city of Miami
and the quality level considered appropriate for the
identified markets.
• Prepare a market study and an analysis of each of the
hotels' likely occupancy, average room rates, and market
mix for the first five full years of operation.
• Evaluate the likely financial performance for each of the
proposed hotels, preparing estimates of future cash flow
from operations available for debt service, estimated
cost of construction, and debt service.
A detailed description of our approach i3 provided on the following
pages.
SCOPE or SERVICES
To accomplish these objectives, the scope of services will include
the following:
MARKET RESHl,RCH AND ANALYSIS
The field work and analysis described below will form the basis for
the evaluation of prospective performance for each of the proposed
hotels. Worksteps will include the following:
• Meet with City officials, project planners, and any other
professionals the City deems appropriate to obtain a
briefing on the proposed projects. During this meeting
we would like to obtain any available pertinent
information about the proposed hotels such as site
information, plot plans, architectural drawings, zoning
restrictions, and any internal research conducted and/or
studies prepared.
• Visit each of the sites to evaluate their suitability for
hotel development. This evaluation will address
locational issues such as accessibility, view features,
nearby recreational amenities, and compatibility of
surrounding land uses.
• Evaluate current and future accessibility to the areas
from major feeder markets, visitor travel_ patterns,
existing and planned transportation routes, airline
schedules, etc.
P. .3 " I'D
• obtain general economic and socio-demographic trends for
the areas to assess the climate in which each of the
hotels would operate.
'114- 354 ��
Mr. Er,dol Doninez - e - May 14, 1994
City of mami
• Interview government officials and tourism sector
representatives to identify present and future sources of
demand, current and planned marketing programs, and
evaluate their effectiveness.
• Interview the Downtown Development Authority, the Greater
Miami Chamber of Commerce, and other business and other
economic organizations to obtain information on patterns
of development and redevelopment, anticipated business
growth areas, etc.
• Interview management at the Miami Arena to obtain their
event schedule, historic and projected attendance levels,
input regarding hotel demand generated by this facility
(i.e sports teams, attendees, etc.), anticipated future
hotel needs, etc. Furthermore, we will gather
management's perceptions of those issues discussed in the
following bullet.
• Interview other selected demand generators to include
area businesses, travel agents serving the market, and
other travel professionals. interviews will address
their perceptions regarding:
•• The types of facilities and services which
should be offered at each of the proposed
hotel sites including the number of rooms,
size and type of rooms, in -unit amenities,
location and number/type of food and beverage
outlets, size and configuration of the meeting
and function facilities, and other support
facilities and amenities.
•• Room rate sensitivities.
•• Propensity to use the proposed hotels.
•• Discussion regarding which marketing efforts
are the most successful to attract their
demand.
• Identify hotels expected to be competitive with each of
the proposed projects and interview management. To the
extent that information is available, these interviews
will address:
•• Location, age, affiliation, and management.
•• Facility profile to include the number of
rooms, size and type of rooms, in -unit
�� 4-- 354
MAY 1 �a 10; c�LAl1 HuRWHTF `" 1 h10RI4ATI I
-.
Mr. Hrdol Donmez - S - May 14, 1994
city of Miami
amenities, location and number/type of food
and beverage outlets, size and configuration
of the meeting and function facilities, and
other support facilities and amenities.
•• Historic annual and seasonal occupancy rates,
average room rates, and market segmentation.
•• characteristics of demand by market segment.
•+ competitive strengths and weaknesses.
•• Other amenities offered or special attributes.
•• Facilities, amenities, or other programs which
are not currently offered in the market, but
for which there is evidence of market demand.
•• Marketing concepts which have been implemented
in the past and an evaluation of their
effectiveness.
• Identify other selected cities in the United States that
have successfully developed hotels in "Redevelopment
Zones" whereby the hotel development has served as a
catalyst for future area redevelopment. Once identified,
we will interview ci.ty officials to gather the following
information:
•• Infrastructure, incentives, and other
conditions which were necessary for successful
redevelopment.
+� Patterns of economic development stimulated by
the construction of the subject hotel. This
will include a profile of the surrounding
area, prior to and after hotel development.
•• Their experience and lessons learned.
Furthermore, we will interview management of hotels in
these Redevelopment Zones and obtain information
regarding:
•• Facilities description.
+• Market demand opportunities.
•• History of performance. J -.
P. C 1_
t-loy 1 ' 94 1C1: 00AI•I HOJ--'WA•L1-� £: HOF'NiWIA
Mr. Erdol Donmez - 6 -
city of Miaxi
•• Marketing concepts.
•• Facilities and services offered.
•• Problems faced and solutions employed.
May 14, 1994
Based on the results of market research, we will begin our analysis
of potential future performance for each of the proposed hotels.
Specifically, we will:
• Analyze the potential for capturing existing demand and
for creating new demand due to the introduction of each
of the proposed hotels.
• Review/recommend the facilities programs for each of the
proposed hotels to include the number of rooms, size and
type of rooms, in -unit amenities, location and
number/type of food and beverage outlets, size and
configuration of the meeting and function facilities, and
other support facilities and amenities.
• Recommend marketing concepts and features to be included
to enhance the marketability of each of the hotels.
Prepare estimates of occupancy, average room rate, and
market mix of the first five full years of operation for
each of the five hotels. Our evaluation of location and
market support, together with the recommendations
regarding rates, facilities, services, etc. will form the
basis for these estimates.
once we have completed our analysis and estimates of market
performance for each of the hotels, we will meet with persons
designated by the City to discuss our findings and conclusions to
date.
ANBLYBIs or irnwmAL BERFOR mmi
We will evaluate the likely financial performance for each of the
proposed hotels based on their estimated the costs of construction
and likely cash flow after debt service. This analysis will be
based on industry standards for construction costs, the performance
of comparable properties, and debt structure parameters provided by
the City as described below:
• Based on the facilities program recommended for each of
the proposed hotels, we will obtain estimates of
development costs from architects/construction companies.
111 A- 354
HAY 1 _, ' gq 10 : C 1 AM HGRWAP " W)RHOTH
Mr. Erdol Donates 7 - MALy 14, 1594
city of Miami
We will develop a financial data base for each of the
proposed hotels, based on the performance of comparable
facilities drawn. fram our files and information collected
during our market analysis. The comparable facilities
considered in our financial analysis will be selected
based upon their similarities with the proposed hotel
facilities, average occupancies and rates achieved, and
geographic location. We will be pleased to consider the
performance of any comparable properties you may wish to
provide.
We will prepare estimates of future cash flow from
operations after debt service for the first five full
years of operation for each of the hotels. These
estimates will be prepared in both constant and current
(inflated) dollars. Debt service requirements will be
based on the estimated construction costs and information
provided by the City relative to the proposed financing
structure.
once the financial analysis is completed, we will provide a draft
copy of these estimates to persons designated by the city and
conduct a meeting to discuss our findings and conclusions to date.
NARRATIVZ REPORT
Upon the City's authorization to proceed, we will prepare either
one report addressing both sites or two separate reports, one for
each site. This/these written reports will set forth detailed data
on market conditions, the rationale for our estimates of future
performance, findings, conclusions, and recommendations for each of
the proposed hotels. Major sections of the report(s) would
include, but not necessarily be limited to: Introduction;
Executive Summary; Site and Area Analyses; General Market Analysis;
Competitive Supply; Demand Analysis; Facilities Analysis and
Recommendations; Estimated Future Occupancy, Average Rate, and
Market Mix; and Financial Analysis.
We will send you a draft of the report(s) for your comments. Our
objective in doing so is to assure that the final document is
properly structured and comprehensive. Client comments are sought
and issues of potential conflict will be resolved, within the
bounds of our requirements for independence. We will arrange for
a meeting to discuss your comments before we begin our final review
of the report.
F' . 1 E.
our report(s) are intended for use by the City in evaluating the
feasibility of the proposed hotel developments. Any use of the
report(s) or work product must include the entire contents of such s�
ti.on or excepts
�4- 354
Mr. Erdol Dor m+ez - a - M&y 14, 1994
City of Miami
thereof may be otherwise quoted or referred to in any offering
statement, prospectus, loan agreement, or other document unless
expressly approved in writing by Horwath Hospitality Consulting,
Inc;. .
COMMUXICATION
As part of our scope of services, we anticipate a kick-off
conference, whereby team members may be debriefed on the project.
We anticipate interacting with you throughout the assignment;
additionally, at the conclusion of our market research and
analysis, we will hold a meeting to discuss our findings and
conclusions to date. Furthermore, once the financial analysis is
complete, we will provide you with a draft copy of the estimates of
cash flow after debt service, and hold a meeting with you to
discuss these estimates. Once the study is complete, we will
prepare formal written document(s). This/these report(s) will
outline our methodology, research, analysis, and findings.
This/theses document(s) have been described as part of the scope of
services section outlined in the previous pages.
We will be available to attend relevant Commission meetings and
make presentations as required.
QUALIFICATIONS OF THE PROJECT TEAM
The research and analysis will be the responsibility of Ms. Fern
Kanter and Ms. Karen Peterson. Combined, these individuals have
over 35 years experience in hotel management consulting and
operations. As presented under separate cover, our experience in
South Florida, particularly Dade County, is extensive. Further, we
have worked with federal, state, and local governments and agencies
on a number of occasions. Ms. Kanter has specific experience with
the City of Miami, City of Miami Beach, and Dade County; Ms.
Peterson has worked with the City of Coral Gables. These projects
are briefly described below:
City of Miami: This assignment entailed a review of
developer proposals for proposed "for sale" and "for
rent" residential community to be developed in overtown.
Ms. Kanter was project manager for the assignment,
responsible for the research and presentations to the
City Commission.
City of Miami Beach: This assignment required the
preparation of a market and financial feasibility for a
proposed convention -headquartered hotel to be located
proximate to the Miami Beach Convention Center. Ms.
Kanter was project manager for the assignment,
responsible for the research, analysis, preparation of
SO& J'4- 3 55 4
ilrt`r ] 9-1 10:04:41 HORI•1H1'14 H15 I-WrTk i 1^
Mr. Erdol Donmez - 9 - May 144 1994
city o: Miami
the final report, and presentations to City officials and
private sector. representatives.
Dade County: This assignment called for the market and
financial analysis for the development/redevelopment of
convention facilities throughout Dade County. Ms. Kanter
was responsible for the research, analysis, and
preparation of the final report.
City of Coral Gables: The objective of this assignment
was to evaluate the appropriateness of leasing the
Biltmore Hotel. to the current operator. As project
manager, Ms. Peterson was responsible for the analysis of
market support for the reopening of the property, an
evaluation of alternative chain affiliations, analysis of
the operating strength of the proposed hotel operator, an
evaluation of likely financial performance to determine
whether there would be support for lease payments to the
City, and the presentation to the City commission.
In addition, to conduct the research in other metropolitan cities
that have experienced hotel development in "Redevelopment Zones",
we will utilize Directors from other Horwath Hospitality
consulting, Inc. offices in the United States. As all Directors
have a minimum of fifteen years experience in the hospitality
industry, and have extensive experience in their geographic
regions, their participation will be determined based on the
locations of similar redevelopment projects. Currently, we
maintain hospitality consulting offices in Atlanta, Georgia;
Philadelphia, Pennsylvania; Charlotte, North Carolina; Denver,
Colorado; Houston and Dallas, Texas; Kansas City, Missouri; and
San Francisco, California.
ESTIMATED TIMIKO AND PROYESSIONAL FEES
We will begin work on this assignment within two weeks of your
authorization to proceed. Our professional fees are based on our
current hourly rates. Rates for our Directors, who will perform
the assignment, are $100 per hour. In addition, we would be
reimbursed for any out-of-pocket expenses incurred. Out-of-pocket
expenses include expenses incurred while traveling to and from the
sites -as well as the competitive/comparable supply, long distance
telephone calls, federal express charges, supplies/research
material purchased, and xerox copies. we agree that our
professional fees, inclusive of out-of-pocket expenses, will not
exceed $50,000.
Assuming authorization to proceed by May 31, we intend to begin
this assignment in June, 1994 and will complete the field work,
��_�-�`' ���'••^;= f„+-„ram aaf-irA -ps. rind reports) within fight to
4
mr. Erdol DanM*Z
city of Miami
- 10 -
May 14, 1994
ten weeks subsequent to commencement of this assignment. The final
work product(s) will be delivered to you by August 31, 1994.
our preliminary work plan and budget includes an allowance for the
elements and conditions we expect to encounter in the course of our
engagement. In the event that we encounter situations which would
indicate a need for revision or modification in the estimated
timing and/or fee, we will discuss with you the likely► effect of
the required modification.
In accordance with firm policy, we require a retainer of $15,000 as
authorization to begin. we will bill you monthly for professional
fees and out-of-pocket expenses incurred to date, crediting one-
third of the retainer or $5,000 to each month's invoice. Our final
invoice will be submitted with the draft report.
If payment is not received within fourteen (14) days of the invoice
date, Horwath Hospitality Consulting, Inc. reserves the right to
suspend work until payment is made and to apply a service charge of
1.5 percent per month or fraction thereof to the total unpaid sum.
upon receiving payment of our final invoice, we will print and
issue five copies of our final report.
TERKS AND CONDITIONS
Horwath Hospitality Consulting, Inc. reserves the right to modify
the extent and scope of the services outlined, based on the
availability of outside source information and the findings of any
such source information.
Our report(s) will be dated to coincide with the last date of field
work. we have no obligation to update our findings and conclusions
for changes in market conditions which occur subsequent to our
field work. Any such changes in market conditions will affect the
validity of our estimates. Since changes in market conditions are
likely to occur, it is expressly understood that Horwath
Hospitality Consulting, Inc. will have no obligation to revise the
report(s) or the analysis of prospective conditions subsequent to
the submission of our findings.
Site evaluation for the suitability for development shall be
limited to marketing and financial feasibility analysis, and
Horwath Hospitality Consulting, Inc. disclaims any and all opinions
or advice regarding the legal ability to obtain development
approvals for the contemplated development.
our study and report(s) are based on assumptions and estimates
which are subject to uncertainty and variation. These estimates
are often based on data obtained in interviews with third parties,
and such data are not always completely reliable. All information
150 -34- 354
VIM 1 194 10' 0-bAH 1-41.)PI-h-iTH H! �RI-IATH P.
Mr. Lrdol Doamez - 11 - May 14, 1994
city of Miami
provided by others will be accepted without audit or verification
and will be assumed to be correct. In addition, we make
assumptions as to the future behavior of consumers and the general
economy which are highly uncertain. Therefore, while our estimates
will. be conscientiously prepared on the basis of our experience and
the data available to us, we make no warranty of any kind that the
estimates will, in fact, be achieved. some assumptions inevitably
will not materialize and unanticipated events and circumstances may
occur; therefore, actual results achieved will vary from those
described in our report(s), and the variations may be material.
Further., we will. neither evaluate management's effectiveness nor be
responsible for future marketing efforts and other management
actions upon which actual results will depend.
We will not ascertain the legal and regulatory requirements
applicable to these projects. You agree and affirm that Horwath
Hospitality Consulting, Inc. will assume that there is full
compliance with all applicable local environmental laws and
regulations as of the date of the report(s). All legal analysis of
the subject projects and the ramifications of obtaining the
appropriate legal approvals, permits, authorizations, vested
rights, or other property conditions are expressly disclaimed from
the contemplated report(s)I and Horwath Hospitality Consulting,
Inc. shall not be responsible for the impact of any such legal
ramifications upon the reports) issued herein. In the event there
are any legal conditions which may affect the outcome of the
report(s) contemplated herein, Horwath Hospitality Consulting, Inc.
shall use it's best efforts to project the ramifications to the
projects, but shall not be responsible for the extent, scope,
ramifications, or interpretation of any legal conditions. You
further agree and affirm that Horwath Hospitality Consulting, Inc.
will not determine the legal and regulatory requirements applicable
to these projects, including zoning, other local legislation,
including rulings on environmental or ecological matters.
You represent that you know of no hidden conditions affecting the
subject properties, including its subsoil or structure, such as
asbestos, radon, toxic or chemical waster, flooding, or any other
conditions which would render the property more or less marketable
or valuable.
Horwath Hospitality consulting, Inc. shall only be responsible for
their actual knowledge and shall not be responsible for implied
knowledge of any type, sort, or thing relative to these projects.
Our study and report(s) are for use within your agency and for
presentation to potential franchisors and/or management companies
and to support financing. If the report(s) are used in a public
offering, we have the right to review the offering documents.
Written authorization from Horwath Hospitality Consulting, Inc. is
-IJ
94- 354
PIRY 13 ' 94 10: OSAM HCi-WATH HGRNATH
Mr. Erdol Dontnsz
city of Miami
- 12 -
May 1.4, 1994
necessary prior to the use of our report(s) in any public offering.
Any use of the report(s) or work product must include the entire
content of such reports in the form delivered to you. No portion
or excerpts thereof may be otherwise quoted or referred to in any
offering statement, prospectus, loan agreement, or other document
unless expressly approved in writing by Horwath Hospitality
Consulting, Inc..
AUTHOR12ATION
We thank you for the opportunity to present this proposal. We can
assure you of highly professional, timely service, and look forward
to working with you. We will be pleased to provide any further
information you may require and welcome the opportunity to meet
with you to discuss our approach to the assignment. Please feel
free to call us with any questions concerning this submittal. if
the terms and conditipns are acceptable as stated, please sign a
copy of this proposal letter and return it along with the retainer
Check.
Horwath Hospitality consulting, Inc.
Fern I. Kanter
Director
ACCEPTED BY:
Name:
Title:
Date:
c:\wol\proposaL\hotet\tityofmiemi\dorvmz
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+KreAn N. Peterson
Director
60 �4- 354
P<*F
CONSULTING
1221 13rickell Avenue
Eleventh Floor
Miami FL 33131
Telephone (305) 381-8522
Teletax (305) 381.8833
May 13, 1994
Mr. Erdal Donniez
Financial Coordinator
City of Miami
Department of Development & Housing Conservation
300 Biscayne Boulevard Way, Suite 400-401
Miami, Florida 33131
Re: Consulting Services, Proposed Hotels
in Miami, Florida
Dear Mr. Donmez:
In accordance with your request, PKF Consulting is pleased to present this proposal for
professional services to assess the market demand and prepare a prospective financial analysis
for two proposed hotels to be located at: (1) NW Corner of SW 15th Avenue and SW 8th Street,
City of Miami; (2) NW corner of NW 1st Avenue and NW 4th Street, City of Miami. As part
of the engagement we would provide specific recommendations with respect to hotel size,
orientation, amenities to be offered and affiliation.
PKF - Miami is particularly well qualified to assist you with this engagement due, in part, to
our wide ranging experience with hotels and resorts throughout Florida, the Caribbean, and
Latin America. Through our monthly Trends in the Hotel Industry publication the Miami
office of PKF Consulting tracks occupancy and average daily rooms rates on over 350 hotels
statewide. In addition, we have performed over 300 hospitality related engagements in Florida
in the past few years. This experience allows us to use our Firm's recognized expertise in the ,
hospitality industry and our unequaled data base to add perspective to the analysis and results
in a well -reasoned formal report.
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Mr. Erdal Donmez -2- May 13, 1994
As consultants, we will assist you by presenting an independent, third -party opinion of the future
market support for each property, providing general planning suggestions within the scope of
the current project concept, identifying potential markets to be served and preparing estimates
of future occupancy levels and attainable average room rates for each hotel's initial years of
operation. Based on this, and actual operating results of comparable properties, we will prepare
a statement of potential cash flow from operations available for debt service (and or lease
payments) and present the information in a formal report.
This proposal outlines the services we propose to perform, the anticipated timetable for the
study, the terms and conditions that will govern this engagement and the professional fees and
expenses expected to be incurred.
ENGAGEMENT SCOPE AND METHODOLOGY
Our study will take advantage of the large data base on the hospitality industry that we have
accumulated over the years; in this instance focusing on information related to the hotels in Dade
County and Florida. We would approach the engagement in two primary phases, as outlined
in the following paragraphs.
Phase I - Market Analysis
Initially we would expect to meet with you and your representatives to detail your current plans
and to review any additional information you may have compiled on the subject venture. In
addition, we will assemble and utilize the information garnered during our previous work in the
market area.
As part of this portion of the overall engagement, we intend to conduct fieldwork and analysis
leading to estimates of attainable occupancy levels and average room rates for the proposed
hotels. These estimates form the basis of the financial statements developed in Phase II. We
would:
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Mr. Erdal Donmez -3- May 13, 1994
• Visit each site to evaluate the surrounding aesthetics and other area
developments.
• Interview managers of comparable/competitive hotels in the market area
to gauge their past and present occupancy, attained room rates and their
mix of demand segments being served, with specific emphasis placed on
identifying growth in the international demand segment, as well as, the
local segment.
• Meet with local government officials in tourism, development,
transportation, etc., and others to identify present and future sources of
lodging demand and proposed or rumored new facilities that might impact
the estimated future operating performance of the subject hotels.
• Estimate attainable occupancy, average room rates and market
segmentation for the initial ten years after opening.
Interim Letter Report
To provide you with an indication of our preliminary findings regarding the market potential for
your project, we will prepare a brief interim letter report (six to ten pages in length) outlining
our initial conclusions and opinions concerning each hotel, including estimates of stabilized
occupancy levels and attainable average room rates.
Phase H - Report Finalization
At the conclusion of Phase I, if the initial results are positive and after your authorization, we
will continue working towards finalization of the report, including recommendations for
development of the project and estimates of potential operating results. This portion of the
assignment will include:
• Food and Beverage Evaluation. During our fieldwork we include
questions regarding food and beverage preferences. On the basis of this
we prepare estimates of potential food and beverage patronage for a
stabilized occupancy level.
• Facilities Recommendations. In our review of plans you may have for the
project, we will provide recommendations, as appropriate, that could be
considered to potentially enhance the future market position of each hotel
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Mr. Erdal Donmez -4- May 13, 1994
with respect to the demand segments to be served.
• Potential Operating Results. We then prepare statements of potential cash
flow (in inflated U.S. dollars) that may be derived from operations as
proposed and recommended. The statements will result in an amount
available for debt service for the initial ten years of operation.
• Narrative Report. At the conclusion of this process, we will issue a
narrative report, containing the results of our analyses. This report will
present the data (except that obtained confidentially), analyses and
reasoning which supports our conclusions.
REPORT PRESENTATION AND ENGAGEMENT CONDITIONS
The report will be developed and issued, in a format normally acceptable to major sources of
financing, franchise companies and management organizations. The report may be used in
presentations to these companies, but is subject to the following limitations:
We are not obligated to update the findings regarding changes in general
market conditions, subject property size or the property's market
orientation which occur subsequent to the completion of our fieldwork.
• Our report, and the material submitted, may not be included as part of an
offering statement, prospectus or in printed material or advertising used
in connection with the sale of securities or participation interests to the
public. Permission to use our report could be granted only upon meeting
certain stringent conditions which may include additional investigation,
analyses, report revisions and professional fees.
• The scope of the study and report will not include the possible impact of
existing or future zoning or environmental regulations, licensing
requirements or other legal or regulatory matters unless they have been
brought to our attention and are disclosed in the report.
The report will be based on estimates, assumptions and other data
developed from our knowledge of the industry and information provided
by others. The sources of the information and the bases of our findings
will be stated within the report. All information provided by others will
be accepted without audit or verification and will be assumed to be
correct.
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Mr. Erdal Donmez -5-
May 13, 1994
• Some assumptions inevitably will not materialize, and unanticipated events
and circumstances may occur; therefore, actual results achieved will vary
from the analyses, and the variations may be material. Further, we will
neither evaluate management's effectiveness nor be responsible for future
marketing efforts and other management actions upon which actual results
will depend.
Drafts or preliminary information communicated to you during the course
of the engagement are for your internal management use only and may not
be disclosed to outside parties without our prior consent.
We cannot be held liable in any cause of action resulting in litigation for
any dollar amount which exceeds the total fees collected from this
individual engagement. Any legal expenses incurred in defending or
representing ourselves concerning this assignment will be the
responsibility of the client.
• This market study will not constitute a complete feasibility study, which
would require analysis of the relationship of the potential earnings to the
investment required, the application of a financial plan, and complete cash
flow projections. Such a study can be provided as a supplement under a
separate proposal, if you so desire, at a later date when the data required
is available.
ESIM"TED MING OF THE ENGAGEMFM
Based on the work described in this proposal, our present scheduling, and assuming your timely
acceptance, we would expect to commence this assignment within two weeks of receiving your
authorization. Approximately two weeks after the completion of our fieldwork, we would issue
our interim letter report. Upon your authorization, we would require two to three weeks for the
preparation of the draft report. Once we receive your comments on the draft report and your
authorization, we will require one additional week to issue the final document.
During the analyses, we will update you by telephone on the progress of the work. If, during
our research, our preliminary findings lead us to believe that it would be appropriate to stop this
evaluation, we will advise you immediately and meet with you to discuss the reasons. If you
then decide to end the study, we will invoice you only for the time expended and actual expenses
incurred.
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Mr. Erdal Donmez -6- May 13, 1994
PROFESSIONAL FEES AND EXPENSES
Our professional fee, net of any local taxes, for the type of study described herein is as follows:
Phase I U.S. $10,000
Phase H U.S. $20,000
Total U.S. $30,000
In addition, we would be reimbursed for expenses incurred in the course of the engagement
including: telephone, facsimile and postage or courier service costs, purchase of statistical data
if applicable, report production, copying charges (including laser color copying when
appropriate), computer usage and printing of the final report copies.
In accordance with Firm policy, we require a retainer of U.S. $10,000 in order to begin this
engagement. A progress payment for the expenses incurred to -date will be invoiced at the time
we issue the interim letter and due upon receipt. If you decide to proceed with Phase H we
would require a second progress payment of $10,000 prior to commencing. Final expenses will
be invoiced at the time we issue the draft report. Full payment of all fees and remaining
expenses must be received prior to our issuing the final report.
If you defer our issuance of the draft more than 45 days after the interim letter or the final
report more than 30 days beyond the delivery of the draft, we may be required to update our
findings at an additional fee.
It is to be understood that in the event the report is submitted to a third party who requires
C
additional analysis or documentation, time and charges will be invoiced at our normal per diem
I
rates. Further, we are not required to give testimony or attendance in court by reason of this
market study unless arrangements have been made previously.
�J
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Mr. Erdal Donmez -7- May 13, 1994
PROPOSAL ACCEPTANCE
To indicate your acceptance of these arrangements, please sign the enclosed copy of this
proposal and send it to us with the requested retainer as our authorization to schedule the
assignment. We would appreciate specific written instructions from you indicating who is
authorized to receive copies of our reports or verbal updates of engagement status.
We appreciate the opportunity to present this proposal. Please contact us if there are any
questions or you would like clarification of any of the points in this letter.
Sincerely,
PKF Consulting
AwiL
By: --Patrick A. D'Sa
Vice President
DJP:PAD:mn
A:propouIdisW/eaumez
Sincerely,
PKF Consulting
By: Dejak J. Pinto
Senior Vice President
APPROVED AND ACCEPTED:
Signature:
Name:
Title:
Firm:
Date:
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