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We will also perform a similar competitive positioning analysis for the proposed <br />hotel's forecasted room rate, which will result in a quantification and <br />documentation of probable future trends in the proposed subject property's <br />overall rooms revenues. <br />A similar procedure will be utilized in projecting food, beverage, and other <br />revenues. Using actual income and expense statements of comparable lodging <br />facilities, we will develop income and expense estimates corresponding to the <br />level of activity and quality of operations indicated by the projected occupancy <br />and average rate. <br />A projection of income and expenses representing future expectations of income <br />potential will be made for a ten-year period. This analysis will utilize HVS <br />Software —a sophisticated, computerized financial -analysis package that was <br />developed by Steve Rushmore and Suzanne Mellen. The logic behind the <br />projection of income and expense is based on the premise that hotel revenue and <br />expenses have one component that is fixed and another that varies directly with <br />occupancy and facility usage. The software takes a known level of revenue or <br />expense and calculates the fixed and variable components. The fixed component <br />is then held constant, while the variable component is adjusted for the percent <br />change between the projected occupancy and facility usage that produced the <br />known level of revenue or expense. Our projected income statements conform <br />with the Uniform System of Accounts for the Lodging Industry and include a <br />detailed line -by-line account of all revenue sources and expenses. <br />Phase Five: Complete documentation of our fieldwork and analyses will be set forth in a <br />Written Report written report and will contain the following sections: <br />• Purpose of the market study <br />• Description of the site and neighborhood <br />• Review of the market area <br />• Analysis of the market for hotel accommodations <br />• Examination of existing and proposed competition <br />• Facilities overview <br />• Projection of occupancy and average rate <br />• Income and expense projections <br />HVS Consulting and Valuation Services Proposal 5 <br />