- 134-Room, Exterior Corridor, Economy Hotel Built in 1984
- Fully Renovated with over $1.2M Spent on Capital Expenditures
- Located Nine Miles from Chicago O’Hare International Airport
- Priced Significantly Below Replacement Cost at $51,866 per Key
- Well-Positioned with Excellent Visibility from Highway 62
- Hotel RevPAR Penetration of 112 Percent Compared to the Market Competitive Set
- Operating as One of the Premier Hotels in the Market Competitive Set
Investment Overview:
Marcus & Millichap’s National Hospitality Group, as an exclusive representative of the seller, is pleased to present for sale to qualified investors the Red Roof Inn O’Hare Airport Arlington Heights. The hotel is priced at $6,950,000 or $51,866 price per room; this represents a 3.49 times multiple on year-end 2018 room revenues. An established property, constructed in 1984, is located at 22 Algonquin Road, along the Highway 62 corridor which provides great visibility for transient business.
Priced at an attractive 12.3 percent capitalization rate, this two-story, 134-room hotel presents a new investor the opportunity to acquire a fully-stabilized asset within the Chicago metropolitan statistical area. The well-maintained hospitality asset is being sold at a price below replacement cost. The hotel is strategically positioned less than 10 miles from O’Hare International Airport.
Operationally, this hotel achieved $1,990,757 in room revenue, resulting in a net-operating income of approximately 42.7 percent of overall revenues; this equates to roughly $855,446 before debt service. The subject property’s above market RevPAR has allowed the hotel to experience higher than average returns and become one of the leading properties in the market. Through an increase in hotel marketing, there is additional value-add potential by increasing hotel rates to meet the market.
Chicago O’Hare International Airport announced a complete overhaul with an $8.5 billion expansion. Already the number one airport for flights, with this expansion over the next seven years, O’Hare will add 35 new gates, a global terminal, and underground pedestrian tunnels. Chicago has already developed a centrally located car rental facility, part of an $876 million expansion, including Chicago Metra rail lines and parking locations. Chicago O’Hare International Airport has released plans to drastically expand the airport terminal capacity. This $8.5 billion expansion is expected to be completed in 2028. Part of this airport revamp comprises of a new $876 million rental car facility that will facilitate all rental car operations to one central location. Additional renovations include a 24-hour rail line that connects with each terminal and the Chicago Metra rail and parking locations.
The expenses include provisions for a three percent management fee and four percent reserves for capital replacement. The hotel is offered fee simple, unencumbered by management and debt.
Property Overview:
The Red Roof Inn Chicago - O’Hare is a 134-room, two-story, limited-service hotel built in 1984. Well equipped with numerous common area and guest room amenities, this hotel offers spacious guest rooms that come furnished with a microwave, refrigerator, work desk, lounge chair, flat-screen television with premium channels. Additionally, some common area amenities the hotel has to offer consist of a 24-hour front desk, elevator, picnic area, complimentary wi-fi, and laundry facilities.
Location Overview:
Arlington Heights, Illinois is a city located in Cook County in the northeastern region of the state, 25 miles northwest of Chicago and 20 miles east of Elgin. The Red Roof Inn Chicago - O’Hare is superbly positioned at Algonquin Road and South Arlington Heights Road, between Highway 58 and Highway 62. The O’Hare International Airport is set to have significant renovations over the next 10 years, including a new $876 million rental car facility which opened in late 2018 with a 24-hour rail system serving each of the terminals. The $8.5 billion plan to expand the airport will involve 35 new gates with 3.1 million square feet of additional terminal space, as well as an underground pedestrian terminal. With the city’s major employers and popular revenue generators in close proximity to the property, this sought-after hotel benefits from many key industries of the city which include healthcare and social assistance, manufacturing, and professional, scientific, tech services. Northwest Community Hospital and Comcast, two of the city’s largest employers located approximately three miles from the hotel, are prime revenue drivers for the surrounding area. The hotel site is located approximately a mile from the Elk Grove Technology Park which upon completion will include 85 acres of technology and industrial businesses within close proximity to major lifestyle and cultural amenities. Other major employers that are responsible for a significant portion of the workforce include United Continental Holdings (23.2 miles), JP Morgan Chase Chicago Headquarters (23.4 miles), University of Chicago (31.7 miles). Revenue generators in the area, like Woodfield Mall (3.8 miles) and O’Hare International Airport (9.5 miles) help bring additional revenue to the hotel through an increase in transient business. Extra demand drivers for the city include Robert Morris University - Arlington Heights (.8 miles), the Allstate Arena (7.4 miles), and Rivers Casino Des Plaines (7.9 miles).
