AUSTIN, Texas – June 8, 2021 – Summit Hotel Properties, Inc. (NYSE: INN) (the “Company”) today announced that it has entered into a definitive agreement to acquire the 110-guestroom Residence Inn by Marriott Steamboat Springs for $33.0 million through its joint venture with GIC. Opened in December 2020, the newly built Residence Inn by Marriott Steamboat Springs is ideally located in close proximity to the base of Mount Werner and Gondola Square, biking and hiking trails, downtown Steamboat Springs, restaurants, shopping, and numerous other attractions.
The hotel is well-positioned to capture strong winter ski demand and summer leisure demand in what has been an extremely high barrier-to-entry market as only six other hotels have opened in the last 20 years, and there are none in any stage of development. In addition to robust peak winter and summer demand, the hotel is also expected to benefit from recurring special corporate and project business that will help balance demand patterns, particularly during shoulder seasons. As the newest hotel in Steamboat Springs and first Marriott-branded extended-stay hotel in the market, the hotel has been able to achieve a significant RevPAR premium of more than 30% compared to its competitive set in the first six months of operation.
Steamboat Springs Expansion
As a participant in the Ikon Pass ski program, Steamboat is one of the top five busiest ski resorts in the United States, hosting more than one million skier visits per year and is poised for meaningful growth in part driven by the significant capital investment planned to improve the mountain. Alterra Mountain Company is the current owner and operator of Steamboat Resort and acquired the mountain in 2017 with a goal of increasing airlift, enhancing summer demand, and building out the mountain base. In April 2021, Alterra announced updated plans to spend $135 million on base area improvements, ski acreage expansion and enhancement of the overall guest experience. Phase 1 of the improvement plan is currently underway which includes gondola upgrades that will improve skier circulation and enhance the overall guest experience by reducing ski lift wait times. In addition, the project investment will increase skiable terrain by approximately 20% to more than 3,600 acres, making Steamboat the second largest skiable area in Colorado. The project is expected to be completed by the start of the 2022/23 winter season.
The Steamboat market is serviced by the Yampa Valley Regional Airport which has recently seen incoming seats increase by 20% and continues to service flights from 15 airports in major markets across the country.
Acquisition Funding and Timing
The Company expects to fund its 51% interest in the joint venture acquisition using approximately $17 million of cash on-hand. After completion of the transaction, the Company expects to have over $425 million of total liquidity and over $150 million of current investment capacity permitted under recent credit facility amendments to pursue future investment opportunities. The transaction is expected to be completed late in the second quarter or early in the third quarter and remains subject to customary closing conditions.
