RAPID CITY, South Dakota — State of opportunity now that the lodging industry shows signs of positioning and market development.

RAPID CITY, South Dakota — have you received a phone call from me? “Hi I am Judd Uhre with HotelBrokerOne, the nation-wide hotel broker.” I created this newsletter because I know how important the hotel industry is to you and our community. I hope you find that this newsletter offers valuable hotel investment information and intellectual capital you can profit from.

Rapid City’s Hospitality Market

Despite a lot of negative economic news nationally, and tough new standards in place to secure financing; western South Dakota's travel market has held up well enough to attract new investments:

Hilton Garden

• The 120 unit Hilton Garden Inn opened its' doors in July, and as expected with its premium franchise contribution system, it enjoyed solid bookings and is taking corporate market share.

• Choice Hotel's 111 unit Cambria Suites is currently under construction and wants its piece of both the corporate and leisure markets. Swift Hospitality will be managing the property and is preparing for a grand opening in the spring of 2012. With a debt 
• obligation rumored to be very safe, Cambria is positioned to be a competitive new entrant in our market.

• Have you heard about the new hotel company pursuing deals in Rapid City? They have been negotiating here for quite some time now. Will they re-position a tired asset? Or will they build new?
  



Cambria Suites

• Rapid City has 3 extended stay hotels planning to enter the already competitive market place, so choosing the right brand is imperative. Will the new owner accept a possibly higher debt obligation for a premium extended stay hotel brand? Or, will they choose an economy brand and risk the best possible buyout situation? According to Penn State's research on the hospitality market, "This can make quite a difference." (read more)

What we know for sure is that all 6 possible hotels will be looking to capture Rapid City's market share. So it will be interesting to see what comes of their due diligence. But, not all of the news concerning Rapid City’s hotel investors is positive:

• One local hotel has given its keys back to the bank. According to public records, the hotel has a debt ceiling of 32K per unit. 
• Other hotels are seeking ways to relieve what could be a debt crisis. (According to Dunn and Bradstreet's prescreen score)

When all is said and done, we expect Rapid City to see at least an 8%, to possible 12%, rise in room supply in 2012 and 2013. This poses some interesting questions when reviewing the data provided by the Smith Travel Research:

1. Will the current 56.8 % occupancy rate in Rapid City suffer seriously, and drive down prices?
2.  Or, will the current $92.5 ADR increase with the presence of new market leading franchises?
3. Which Rapids City hotels will suffer from the influx of new rooms in the market? 

I hope you found the information in this newsletter valuable. If you would like a detailed summary of the hospitality market in Rapid City and the Black Hills, please contact me at (605) 858-0545.

Judson Uhre
Regional Vice President
HotelBrokerOne
1721 N Lacrosse St. | Rapid City South Dakota
Direct-(605)858-0545 | Fax-(605)348-0073
Email- judduhre@gmail.com | Web- www.hotelbrokerone.com