Rhodes Hilton

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the hilton rhodes resort
i x i a , g r e e c e

HVS HODGES WARD ELLIOTT

the hilton rhodes resort
i x i a , g r e e c e

HVS HODGES WARD ELLIOT T

{ e x e c u t i v e s u m m a ry }

INTRODUCTION
HVS Hodges Ward Elliott has been exclusively commissioned to offer for sale the Hilton Rhodes Resort. The hotel contains 402 rooms and is one of the leading 5-star resort properties on the Island of Rhodes.

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The Hilton Rhodes Resort is a 402-room five-star hotel with a beach-front location, situated in Ixia, Rhodes. The property is one of the premier resort hotels on the island.



The hotel opened in 1993. It benefits from extensive conference and leisure facilities, as well as large guestrooms (standard rooms of 32 m2). The property has a total built area of approximately 62,250 m2 and stands on a land plot of approximately 85,000 m2.



Rhodes is the fourth largest Greek island and benefits from numerous attractive beaches, unspoilt villages and historical attractions. The island has the largest number of hotel beds of all Greece’s islands, which combined with its accessibility and excellent climate, makes it a leading Mediterranean leisure and convention destination.



The hotel is located within walking distance from the island’s two largest conference and convention centres, which are also two of the largest in the Mediterranean region. Both are important demand generators for the hotel.



From opening up to 2000, the hotel was operated by Grecotel. Since then, the hotel has been operated by Hilton International under a management agreement. This management agreement will be terminated upon a sale.



In recent years, the hotel has performed well below its full potential. Through improved operating efficiency, scope exists to substantially improve the profitability of the hotel.



The hotel is offered for sale by Ionian Hotel Enterprises S.A., a member of the Alpha Bank Group.

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Hotel History
Ionian Hotel Enterprises S.A. (the “Company”), a member of the Alpha Bank Group specializing in hotel assets management, undertook in 1987 the construction of a hotel property in Ixia, Rhodes, currently operated as the “Hilton Rhodes Resort” (the “Hotel”). Τhe architect team consisted of renowned Greek professionals, including Mr. Tombazis, Mr Dekavalas, Mr. Georgiadis, and Mr. Kiriakidis. Hotel construction was completed in 1993, and the Hotel started operating under the management of Grecotel S.A. The inauguration ceremony was conducted on June 1993 and the Hotel assumed full operations shortly afterwards under the name “Rhodes Imperial Grecotel”. The management agreement with Grecotel expired on 31st December 2000 and Hilton International has since undertaken the Hotel management and has been operating the Hotel under the name the “Hilton Rhodes Resort.”

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{ p ro p e rt y d e s c ri p t i o n }
Hilton Rhodes

Ixia a Trianta
Diagoras International Airport

(Rhodes)

Rodos

Location
The Hotel is situated on the north-west side of the island, on the beach of Ialyssos (Ixia), a picturesque townlet surrounded by orchards. It is set between a beautiful green hillside (Mt Filaremos) and the beach of Ixia, combining sea and mountain views and providing

Kamiros Alimia Emponas

Afantou Archangelos

opportunities for diverse activities. It is just 13 kilometers from the Diagoras International Airport and 4 kilometers from the city of Rhodes. A footpath for walks connects Ixia bay to the city of Rhodes. A link road that connects the Hotel to the main island artery of Rhodes - Lindos facilitates guests’ transportation. The west side of the island combines popular resorts, important archaeological sites, and picturesque villages. Important sites include the church of the Dormition of Theotokos

Chalki Vatio

(Virgin Mary, Mother of God) with its famous woodcarved temple, the Acropolis of lalyssos

Lindos

(just 6 km away), and ancient Ialyssos, one of the most important archaeological sites on the island located on the hill of Filerimos, that hosts the remains of the temple of Zeus and Athena Poliada as well as the remnants of the Byzantine fortifications, the 14th century church of the Knights. A winding island road leads up to the ancient town of Rhodes, one of the few preserved medieval towns in Europe featuring the buildings in which the Knights of St. John lived six centuries ago.

Kattavia

Ixia is one of the most touristically developed regions of Rhodes Island, hosting two of the largest and most complete conference and convention centres in the Mediterranean. Milder weather conditions are prevalent on the west side of the island compared to the east

RHODES

section. In particular, Ialyssos Bay is considered one of the most favorite sites for windsurfers. In addition, Afandou Golf Course is just 17 kilometers away.

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Property Overview
The Hotel is one of the most luxurious properties on the Island of Rhodes, ranked as a five-star property by the Hellenic Chamber of Hotels (only 12 hotels in Rhodes island, out of 988 in total, are ranked as “five-star”). It is distinctively built in steps against the green hillside, overlooking the Aegean Sea. The Hotel lies in 85.000 m2 of lush landscaped gardens, providing a selection of swimming pools, a private beach and a range of restaurants and bars, as well as modern meeting and conference facilities. Its exterior design combines elements of the Rhodian as well as modern Greek architecture. Local craftsmanship has been extensively utilized to lend to the building a very unique character. Typical examples comprise the facade of the building as well as most public areas of the Hotel, such as the main lounge area and restaurant Castellania, that are artistically veneered with “Rhodian plaster” respecting the regional architectural tradition. The high quality interior design features local marble and wooden paneling which gives the impression of elegance and space, offering luxurious, sophisticated facilities for the leisure or business traveler. To add further, the utilisation of natural daylight is prevalent in all public spaces, the main lobby, the restaurants and the conference areas of the 6th and 7th floor.

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PRIVATE BEACH FRONT
Ixia beach has been awarded the blue flag for purity and cleanliness. The private beach is accessed directly from the Hotel via an underground pedestrian tunnel. The Hotel has been granted a license for the exclusive use of its beach front.

ROOMS
The Hotel provides 402 rooms, with sea or mountain view. The room size is significantly larger than that of the competition, since the hotel’s average room size is 32 m2, compared to 24 m2 for the average of the corresponding 5-star category.

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TYPE OF FACILITIES Luxury Suites (3)

DESCRIPTION • Two-bedroom suites, offering spacious sitting room and dining room facilities. They also offer the possibility of connection to two regular guest rooms, making it practically a three-room facility and allowing for diverse space utilisations. • Two of the luxury suites are on the 10th and 11th floor, with magnificent views over the Aegean sea. The total rooms’ area is 200 m2 including the bathroom, plus a 24 m2 balcony. • The third luxury suite is on the 5th floor, occupying 131 m2, including the bathroom, plus a 24 m2 balcony. • All luxury suites are sumptuously & stylishly decorated.

One Bedroom Suites (6)

• 6 One-Bedroom suites with sea view • They offer spacious separate sitting room areas. • One-bedroom suites are elegantly decorated and occupy areas that range between 52-64 m2 including bathroom, plus 6-12m2 of balcony. They can accommodate up to three adults or two adults and two children .

Junior Suites (37)

• 24 Junior suites with sea view • 13 Junior suites with mountain view • Spacious rooms with combined bedroom and sitting room areas, extending over 39 m2, including bathroom, plus 6m2 of balcony. They can accommodate up to three adults or two adults and two children.

Standard Rooms (355)

• 99 Double/Twin with mountain views • 256 Double/Twin with sea views • Guest rooms’ area range between 28-32 m2 (most of them are 32 m2) including bathroom, plus 6-10m2 of balcony. They can accommodate up to three adults or two adults and one kid.

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89 guestrooms have been recently renovated (58 in 2002 and 31 in 2004). Direct-dial telephone lines, in-room safe deposit, fully equipped mini bar, hair dryer and individually controlled air-conditioning and fan coils to provide fresh air, interactive TV system including satellite channels, information channel and pay TV, electronic lock (including secondary locking device) are a few of the amenities offered at each room. Extra amenities offered in the Suites are two additional telephone lines (one in the bathroom and one for computer access), tea & coffee making facilities, iron & board, and electronic lap-top safe. Finally, smoking and nonsmoking floors are separated. The following table provides more details regarding the distribution of rooms on each floor:
Floor 1 2 3 4 5 8 9 10 11 12 TOTAL Double/Twin Double/Twin Suite Sea View Mountain View Sea View 12 22 24 24 21 35 39 27 27 25 256 Suite View Bedroom Sea View Total Suite Luxury Suite 12 24 27 28 26 37 39 31 34 32 290 View Total

11 17 21 24 26 99

2 3 4 4 2 2 3 5 25

1 1 1 3 4 4 13

1 3 2 6

1 1

12 18 24 28 30 112

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• Total number of rooms in advertising brochure is 401 because one of the luxury suites (on the 5th floor) is currently occupied by Hilton Rhodes Resort General Manager.

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RESTAURANTS & BARS
The Hotel includes 3 restaurants, and 2 bars offering a varied range of food and beverage destinations/environments
CASTELLANIA

Main restaurant of the Hotel, ideal for buffet breakfast, lunch and dinner, situated on the 6th floor, by the 6th floor pool, extends over 1,588 m2, and can sit up to 400 people, 350 indoors and 50 outdoors.
SPECIALITY RESTAURANT

Restaurant-bar on the 6th floor that offers exclusive dining experience, elegantly decorated in a fusion of Mediterranean-Asian style. It is an area of 472 m2 and can accommodate up to 210 guests, including 50 in the bar section.
PERGOLA

Restaurant situated by the main outdoor swimming pool. It is a casual venue, ideal for outdoor a la carte lunches, pool snacks, and dinners. It can sit up to 170 guests, including 50 in the bar section.
PIANO LOUNGE BAR (LOUNGE BAR)

Bar adjacent to the 6th floor pool, which offers a cosy atmosphere. Total area is 280 m2 and can accommodate up to 162 guests, including 14 in the bar section.
POOL BAR

Just outside the main swimming pool, adjacent to Pergola restaurant, for entertaining day and night.

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CONFERENCE AND MULTI-PURPOSE EVENTS FACILITIES
The property can accomodate a wide range of events by use of its multi-purpose conference facilities. Specifically, the available conference areas are the following: Imperial Conference Center/Ballroom Situated at the main lobby level (at the 7th floor), adjacent to the Business Center, the Imperial Conference Center is comprised of: • • • • Two ballroom areas (Imperial A & B) Ballroom areas foyer (Imperial Foyer) 2 large meeting room areas (Artemis & Ariadne) Boardroom (Aphrodite Boardroom); specially designed (based on Hilton specifications) to host high-level meetings; equipped with state of the art facilities such as specially designed table, automated pull-down projector screen, private coffee-break amenities, etc.

All Imperial Conference Center rooms can be combined into one single unit/room that can accommodate events for up to 1,600 people. It is an excellent venue for all events from small meetings to large congresses, with natural light and large terraces for coffee breaks overlooking the wonderful Aegean Sea. Standard conference infrastructure (video/slide/overhead projectors, flipcharts, LCD TV, etc.) is available.

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Lindos Conference Area

Situated one floor above the main lobby area (8th floor). Comprises of 5 different rooms of two sizes (48 or 77 m2) that can host 50 or 70 guests in theatre seating each accordingly. Ideal for break-outs, separate work sessions/work groups and parallel panels during a conference.

Elafos Conference Area

Situated on the 6th floor, adjacent to the Castellania Restaurant/Bar. It comprises 3 different rooms which can accommodate 65, 65 and 130 guests in theatre seating respectively.

The Bar and Foyer section at Elafos Conference provide an ideal space for conference coffee breaks and drinks, small receptions for conference guests. Elafos Rooms have also successfully been used in the past for special viewing sessions and animation activities.

Kamiros Conference Area

Situated on the 6th and 7th floors, comprises three multi-purpose conference rooms connected via an internal staircase.

The design of the Kamiros Conference Area makes it ideal for independent small-size conventions of up to 200 guests capacity, with the possibility of three parallel panels/ work sessions. Its separate (from the main Hotel lobby) entrance, allows for conference privacy from the rest of the activities or other conventions that take place simultaneously at the hotel.

Business Center

Equipped with two computer terminals boasting internet connections, several telephone lines, a fax machine, two printers, and a photocopier, providing all necessary support to accommodate the business needs of hotel guests.

Internet Café

A host of computers with internet connection, located by the main swimming pool, allows guests to keep in touch with their life abroad.

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Conference facilities are equipped with state-of-the-art technical and audio/visual conference infrastructure including microphone installations, slide, overhead and video projectors systems, as well as LCD TV and flip charts. In addition, conference areas have complete mobile telecommunications coverage by all three Greek cell phone providers. Possibilities for external/ outside catering, based on the conferences’ demands are also available.

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The following table summarises the conferences and meeting rooms’ dimensions and capacities based on different seating arrangements:
Dimensions Room Name IMPERIAL CONFERENCE CENTER Imperial Ballroom A + B Imperial Ballroom A Imperial Ballroom B Imperial Foyer Artemis Ariadne Aphrodite Combined Imperial Conference LINDOS CONFERENCE AREA Lindos 1 Lindos 2 Lindos 3 Lindos 4 Lindos 5 Combined Lindos Conference ELAFOS CONFERENCE AREA Elafos 1 Elafos 2 Elafos 3 Combined Elafos Conference KAMIROS CONFERENCE AREA Kamiros Zeus Ialyssos Combined Kamiros Conference TOTAL CONFERENCE CENTER Ceiling Height (m) Area (m2) L/W (m) Banquet Maximum Capacity Reception Classroom Theatre

5.0 5.0 5.0 3.2 3.2 3.2 3.2

618 309 309 418 64 136 64 1,918

16.6*18.6 16.6*18.7 33.2*18.6 33.2*12.6 8.0*8.0 17.0*8.0 8.0*8.0

620 280 280 360 50 120 50 1,760

900 420 420 550 70 150 70 2,580

500 230 230 50 110 50 1,170

820 360 360 65 160 65 1,830

2.6 2.6 2.6 2.6 2.6

48 77 77 77 48 327

8.0*6.0 8.0*9.6 8.0*9.6 8.0*9.6 8.0*6.0

0

0

40 55 55 55 40 245

50 70 70 70 50 310

3.2 3.2 3.2

64 8.0*8.0 64 8.0*8.1 112 14.0*18.0 240

50 50 100 200

70 70 120 260

50 50 90 190

65 65 130 260

3.6 3.6 3.2

368 23.0*16.0 368 23.0*16.0 136 8.5*16.0 872 3,357

100 130 70 300 2,260

250 300 90 640 3,480

100 130 70 300 1,905

170 200 110 480 2,880

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SWIMMING POOLS
The property offers three swimming pool alternatives: • Main Outdoor Swimming Pool: Situated on the ground floor, surrounded by nicely landscaped gardens, the Dance Floor, and the Pergola Restaurant. One of its key points is its unique design topped by a nicely architected bridge. It is supplemented by a Children’s / Paddling Pool for younger guests, on one of its sides. • 6th floor Outdoor Swimming Pool: Adjacent to the Castellania restaurant and the Lobby Lounge, it offers panoramic view of Ixia Bay and provides for an alternative relaxed swimming and sun-bathing experience. • Indoor Heated Swimming Pool: Part of the Health Club and the Indoor Squash Courts, it offers another indoor exercising option, and a swimming alternative during the winter months.

Detailed dimensions of the swimming pools are presented in the following table:
Swimming Pool Dimensions
Floor Main Outdoor Swimming Pool Outdoor Swimming Pool Indoor Heated Swimming Pool Ground Floor 6th Floor Ground Floor Dimensions Area (m2) Height (m) 560 256 180 1.6 1.6 1.6

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SPORT, HEALTH & LEISURE CLUB AND ENTERTAINMENT FACILITIES
The hotel offers a wide selection of sports and recreational facilities of the Hotel, as described below. Indoor Fitness & Leisure Centre: • • • • • Sauna, Jacuzzi, Indoor swimming pool, 2 massage rooms (21 m2 ) Fully equipped Health Club with machines for Fitness Training and areas for aerobic/group classes. Fitness classes can also be performed outdoors by the swimming pool area at the Dance Floor. • 2 indoor squash courts. These are the only squash courts on the island.

The main area of the Health Club extends over 144 m2 covered with special purpose carpet, and the supplementary rooms comprise of a total of 70 m2. A gym equipment storage area of 8 m2 is also available. Outdoor Sport Facilities: • • • • • • 2 outdoor tennis courts - floodlit and they can also be set up as basketball or volleyball courts, Outdoor table tennis, Beach volleyball court set up at the private beach front area, Water polo facilities installed at the main swimming pool, Outdoor Children’s Garden equipped with innovative recreational amenities, Also, independently managed Water Sport Centre on the beach is available, offering windsurfing, jet skiing, wakeboarding, water skiing, canoeing and motorboat excursions, • A choice of two outdoor swimming pools

Games Room:

Adjacent to the indoor gymnasium facilities, it offers a wide selection ranging from traditional board games to darts, table tennis, air hockey and a pool table.

Entertainment / Animation Facilities • Dance floor by the pool,

• Conference rooms used for entertainment.

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Rhodes, due to its geographic morphology, mild weather conditions (the longest summer in Greece with nine months of sunlight) and sports infrastructure, is ideal for diverse athletic activities.



Winding paths on the island’s numerous hills provide the setting for memorable walking and mounting trekking while enjoying magnificent views and visiting cultural monuments.



The Mediterranean Sea morphology in combination with the geography of the island (easily accessible sea shore and several small/protected bays) makes it ideal for most water sports such as jet-skiing, water skiing, canoeing, and motorboat tours.



Windsurfing is prevalent in the northern part of the island, where the hotel is situated.

Afando Golf Course



Additional sports facilities available on the island include, inter alia, golf course, football pitch, indoor basketball courts and a cycling track.

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RETAIL OUTLETS
Two Shopping Arcades within the hotel offer a variety of shopping spaces sufficient for diverse retail/concession alternatives like mini market, tailor/clothing shop, jewellery & art shop, and hairstyling & beauty treatments studios, among others. More specifically: • 1st floor Shopping Arcade offers nine individual store spaces ranging from 9-96 m2 • 7th floor Shopping Arcade offers four sizeable individual store spaces of around 24 m2 each. All stores are connected to hotel’s central air conditioning/heating facilities. None of the store spaces have window or door openings to the public road, only towards the private Hotel property areas.

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Detailed store dimensions information is presented in the following table:

Shopping Arcade Store Dimensions
Location First Floor Unit 1 2 3 4 5 6 7 8 9 10 Total Seven Floor 1 2 3 4 Total Total Shopping Store Area Area (m2) 26.0 28.0 24.0 9.5 11.5 11.0 34.5 9.5 96.0 9.0 259.0 24.0 24.5 24.0 25.0 97.5 356.5

The variety of stores that operate currently in the shopping arcades, include: • On the 1st floor: mini market, tailor shop, women’s accessories store (occupies two combined store areas), hairdressing salon and casual clothes’ store. One of the remaining stores is currently utilised as an animation room for young kids. • On the 7th floor: jewellery shop and the Business Centre

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TRANSPORTATION
A Car Rental desk is available in the hotel lobby area and a 100-space underground Car Parking, of total size of 2,500 m2, exists. An additional plot of land of 4,000 m2 , owned by the hotel, is also currently used as an open-space parking area.

INFRASTRUCTURE
A fire detection system is installed in all public areas. All the guest rooms are equipped with two water sprinklers each. There is a central air conditioning system with three chillers (four compressors each).

BUILDING SYNOPSIS / KEY CONSTRUCTION DATA
The overall land area is 85,000 m2. The total built area is 62,254 m2, including the underground parking and all recreational spaces and support rooms. The edifice is divided into two sections/wings, upper and lower. Floors 6 and 7 are the common floor for both wings. There are separate foundations for the two wings and all the necessary expansion joints exist. Foundation is supported with armed bind-beams. Standard construction techniques have been followed: reinforced concrete foundation with interior and exterior walls made of brick. Overall, the construction is deemed very solid by external evaluators. Due to the ground incline, there is effectively no underground space. All of the supplementary/supporting areas (engine room, laundry, parking, maintenance, storage, etc) are internal, and usually located between floors 1 and 4. All storeys have balconies and all floors are covered with wall-to-wall carpeting. Frames are metallic, doors are wooden with T30 fire protection grade, and the facades are covered with plaster.

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Detailed information of the building layout on a floor-by-floor basis is presented in the following table:

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Floor-by-Floor Building Layout
Floor Area (m2) Facilities 0 1 3,740 Underground Car Parking 3,886 12 Rooms Pergola Restaurant and Pool Bar Outdoor pool Indoors Heated Swimming Pool Health Club, Sauna, Jacuzzi & Massage Rooms Two tennis and two squash courts Outdoor children garden 10 Stores Biological cleaning plantroom Outdoor pool machinery 3,101 24 Rooms 3,967 27 Rooms Machinery/Engine room 4,063 28 Rooms Machinery/Engine room Maintenance room 5,001 26 Rooms Storage Rooms Laundry and Linen Rooms Linen Room Staff Dressing Rooms Floor Area (m2) Facilities 6 g 7,054 Central Kitchen area «Castellania» and Speciality Restaurants Piano Lounge Bar Conference rooms ELAFOS CAMIROS Multi-purpose rooms Outdoor swimming pool Staff cafeteria Training room Goods receiving area 5,841 Central Lounge Area - Reception and Business Centre Management Offices IMPERIAL Ballroom, Board Room and Meeting Rooms 3 Stores (4th store utilised as Business Center) 4,486 Machinery floor 4,600 49 Rooms and 5 LINDOS Meeting rooms 4,416 57 Rooms 4,144 57 Rooms 4,006 62 Rooms 3,815 62 Rooms 134 Machinery/Engine Room

7

2 3 4

5

7B 8 9 10 11 12 12B Total

62,254

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CAPITAL EXPENDITURE
Significant investments have been made to the hotel property since its completion in 1993, totaling up to €4.2 million, and include replacements, extensions and renovation of key property facilities.

Schedule of Capital Expenditure 1994 - 2005
( ) 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Total

Addition and Replacements 125,852 104,160 49,288 11,830 354,524 640,706 321,424 906,865 335,034 2,311 397,715 560,000
3,809,709

Operational Equipment 60,590 40,266 49,336 73,368 35,454 31,008 50,895 100,145 89,369 200,367 143,423 72,000
946,221

Total 186,442 144,426 98,624 85,198 389,978 671,714 372,319 1,007,010 424,403 202,678 541,138 632,000
4,755,930

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Expenditure for the last five years has primarily targeted the modernisation of the convention facilities, amounting to €1 million and include the following: • • • • construction of the boardroom, creation of a business centre, upgrading of conference halls according to the standards of Hilton Meetings, Business center and computer room configuration.

In addition, during the last five years, investments to renovate the Hotel public areas as well as the rooms and to upgrade systems infrastructure and other equipment totaled up to €1.5 million and include the following: • • • • • • construction of a supplementary pool bar, renovation of the lounge bar, refurbishment of 87 rooms (27 on 5th floor, 30 on 12th floor, and 30 on 11th floor) that amounted up to €1 million in total, improvement of systems infrastructure, and installation of new software programs, new equipment, improvement of fire, life and safety system in all rooms.

A capital expenditure plan suggests additional required capital investments in the area of €3-4 million within the next 3 to 5 years to cover renovation of the rest of the guestrooms, refurbishment of the health club, replacement of gym equipment, and substitution of the refrigeration towers.

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OWNERSHIP AND MANAGEMENT
The hotel is owned FREEHOLD by Ionian Hotel Enterprises S.A. “Ionian Hotel Enterprises S.A.” was founded in 1957 and is a member of the Alpha Bank Group, which, according to recent data, participates in its share capital with an 90.28% stake. The company is listed on the Athens Stock Exchange. The “Hilton Rhodes Resort” operates as a branch of the Company, under a management agreement signed on 21 June 2000 with Hilton International. This management agreement will be terminated upon a sale of the hotel and, therefore, can be acquired by a purchaser unencumbered by the Hilton brand and management.

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Introduction
Rhodes (or Rodos), one of the most beautiful islands in the North Eastern Mediterranean Sea, is the fourth largest of the Greek islands and the largest in the Dodecanese island complex that lies south east of mainland Greece. It is a scenic spot comprising unique beaches, unspoilt villages, varied landscapes and historical sites. Its landscape comprises mainly of hills and low mountains. Rhodes is the third most popular destination in Greece (based on annual tourist arrivals’ figures), following Athens and Heraklion, Crete. It has become a leading leisure and business destination due to its ability to attract all types of tourist activity year round. Characteristically, monuments from its turbulent history can be found throughout Rhodes, intermingled with modern hotels, bars and restaurants.

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the hilton rhodes resort
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Rhodes is located at the southeastern edge of the archipelagos of the Dodecanese, facing the shores of Asia Minor, which are about 9-10 kilometers away. Easy accessibility to the island via the airport and the sea port, facilitates travelling to and from other regions of Greece and abroad: • There are daily boats from Pireaus (Athens port) and frequent connections to the rest of the Dodecanese islands (Patmos, Kalymnos, Leros and Kos) as well as to other islands in the Aegean sea, including the popular Santorini, Mykonos, and Crete. There are also less frequent ferries to islands at the Northern side of the Aegean Sea (Samos, Chios, Lesvos and Limnos) as well as to Thessaloniki, the second largest city in Greece. • Highspeed boats allow for daily excursions or overnight trips to nearby locations (such as the islands of Simi, Kastelorizo, Kos, Kalymnos, Patmos, Tilos and Leros) and the Turkish sea shore. Daily cruises around the island visiting isolated pristine beaches are also available. • There are several daily flights from Athens and three flights a week from Santorini. Charters directly from major European cities are arranged during the summer months. • British Airways has two direct flights per week, on Wednesday and Saturday, from London Gatwick.

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Kythira

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SIZE AND POPULATION
The island covers an area of 1,398 square kilometers, and its population exceeds 110,000 people.

WEATHER
Rhodes has around nine months of sunlight annually, which sets it as the sunniest place in Greece and one of the sunniest in Europe. Its climate is subtropical and healthy. Refreshing westerly winds moderate the summer heat, while the winter is nearly always mild, with long periods of sunshine. Temperatures range from 19°C to 35°C between April and October and from 10°C to 22°C between November and March.

RHODES
Rhodes’ rich history dates back to before 3000BC, when the first inhabitants arrived. It was not, however, until around 1550BC when the Minoans arrived followed by the Myceaneans and the Dorians in 1100BC, that Rhodes began to flourish. Since then, numerous peoples and countries ruled the island before it finally became part of Greece in 1948 along with all of the other Dodecanese islands.

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RHODES KEY ATTRACTIONS
The island is split into 10 Municipalities, each offering distinctive attractions and catering to a variety of tourist interests: Municipality of Rhodes - Home to the historic old town of Rhodes, this is a region rich in history. The City of Rhodes was founded in 408BC. Designed by architect Hippodamous, Rhodes became one of the most beautiful cities of its period. The city was transformed into the medieval city we still see today, when the Knights of St. John conquered the island and built strong fortifications, magnificent buildings, wide roads and numerous squares. Modern Rhodes Town is currently inhabited by well over 60,000 residents. It is also the first port of call for many visitors due to its commercial harbour. The city’s infrastructure is well equipped for tourism and offers a wide variety of entertainment from nightlife, shopping and beaches to historical sights, family facilities and numerous parks and squares for relaxing.

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The major attractions of the municipality of Rhodes include the following: • Old Town of Rhodes - the World Heritage listed that the “old town of Rhodes is the largest inhabited medieval town in Europe”. • Hellenistic Stadium - built in the 3rd century BC and used for the Alioi Games. • • • Roman Odeon - still used for events today. Temple of Pythion Apollo - the patron deity of the city. Aquarium- the most important marine research centre in Greece. • National Theatre - plays and concerts are held here throughout the year. • The temple of Aphrodite - dating back to the 3rd century BC. • Rodini Park - home of the famous Rhodian Deer. Also contains the remains of an ancient necropolis and the Tomb of Ptolemy. • Grand Master's Palace - once the headquarters of the leader of the Order of the Knights of St. John. Now a museum containing important archaeological finds from ancient and medieval Rhodes. • • City Art Gallery - containing works of art by Greek painters. Archaeological Museum of Rhodes - numerous exhibits including the statue of Venus. Rhodes Aquarium

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Municipality of Lalyssos - This is a thriving and popular tourist resort region, with modern hotels suitable for holidaymakers, business travellers and conferences alike. Its location on the north westernly part of the island protects it from the strong southerly winds, making it a haven for watersports. Inland, the region has an abundance of archaeological sites, with picturesque countryside and excellent sea views. Municipality of Kallithea. Stretching the length of Faliraki beach, the region has numerous churches which are well worth visiting, but what really attracts the crowds are the beaches, the hotels, entertainment and Italianate spas. Kallithea Bay is home of the Italian spa complex and exotic vegetation, while Traganou beach exhibits impressive rock caves. Municipality of Petaloudes - The region comprises numerous villages, communities and valleys. Although very much a rural area, tourism to the municipality is starting to grow. There are many attractions here from Byzantine monasteries and churches to unique flora and fauna. The villages are also very welcoming, and locals and tourists mix in the traditional village tavernas. Key attraction is the Petaloudes (“Butterflies”) Valley, an area of natural beauty famous for its panaxia quadripunctaria butterflies. Municipality of Afandou - Combining the villages of Afandou, Kolymbia and Archipoli, this is a very traditional region where locals still retain their customs and simple manners. It has plenty to offer to visitors, especially outdoor pursuits. Main attraction is a 18-hole golf course, close to Afandou beach, that is open year round. Little Afandou train, great for families, makes the circuit round all the interesting sights in the region, including the beach at Afandou Bay. Municipality of Kamiros - This is one of the most important regions of Rhodes, with numerous historical sites and areas of natural beauty. The ruins of the ancient city of Kamiros were discovered in the 19th century and are still open today for visitors to see. There are many monasteries throughout the region. Salakos, a traditional village at the foot of Profitis Ilias, is known for its picturesque countryside and natural springs and is ideal for walkers. The Church of Agios Nikolaos is one of the most beautiful and esteemed Byzantine churches in the Mediterranean region. Municipality of Archagelos- Probably one of the most traditional regions of Rhodes, the municipality of Archangelos still retains its particular character. While the region has hotels for visitors, they are family run affairs, rather than the larger hotels found on the rest of the island. Natural beauty is unmatched combining a beautiful valley

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with clear springs and enormous plane and pine trees, and small picturesque harbours. There is also much evidence of arts and crafts since pottery and hand-made tapestries are still practised. Municipality of Ataviros - Mt. Ataviros is the highest mountain on Rhodes, overlooking the other nine villages that make up this region. The area is a combination of mountainsides covered with vineyards and villages, rugged coastline and isolated beaches. The stunning ruins of the Medieval castle of Kritinia, and the castle of Monolithos are a few remnants of past glory. Municipality of Lindos - Combining several picturesque villages, this region is steeped in history with the main point of interest being the huge Acropolis. Built on a steep rock 116 metres high, the Acropolis overlooks the town of Lindos, which it has protected since the 4th century. Lindos is an attractive town with unique architectural style of pretty houses, magnificent flower filled courtyards and narrow streets with tavernas, shops and restaurants. Municipality of Southern Rhodes - Rhodes’ largest region, Southern Rhodes is made up of 12 villages and is very different from the rest of the island. Most of the villages date back to medieval times and have retained their unique character. Apolakia Dam, an important development on this part of the island, has been built to create a natural reserve and is home to a variety of unusual plant and bird life.

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Tourism Infrastructure
Rhodes is one of the most popular tourist destinations in Greece, as arrivals’ distribution statistics show. Rhodes ranks third, based on arrivals by planes that comprise 81.82% of total arrivals in Greece. In addition, the Islands of the Aegean Sea (Dodecanese and Cyclades) account for 32.6% of total annual tourists staying in Greece, compared to Creta (27.3%), Ionian Islands (13.7%) and Attica (9.1%). (ICAP survey data).

SEA
Rhodes port is one of the busiest ones in Greece, as Rhodes is featured on the itinerary of many cruises originating in Greece and some from other countries as well.

Port Annual Activity 2001 - 2004
Boats Volume Growth (%) Cruiseships Volume Growth (%)

2001 2002 2003 2004

248,698 293,975 315,037 321,898

18.2 % 7.2 2.2

416,584 347,768 374,445 350,448

-16.5 % 7.7 -6.4

Compound Annual Growth Rate

6.7 %

-4.2 %

Source: Hellenic Chamber of Hotels, 2004

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AIRPORT
The third busiest airport in Greece, represented in recent years total arrivals figures:

g r e e c e

Airport Annual Arrival Volume 1997 - 2005
Total Arrivals 1997 1998 1999 2000 2001 2002 2003 2004 2005 1,028,500 1,111,672 1,335,875 1,340,830 1,361,951 1,288,132 1,228,120 1,162,169 1,193,547 Growth (%)

8.1 % 20.2 0.4 1.6 -5.4 -4.7 -5.4 2.7 1.7 %

Compound Annual Growth Rate
Source: Hellenic Chamber of Hotels, 2004

CASINO
Casino Rodos located at the Grande Albergo delle Rose boutique hotel complex is situated in Rhodes town, found on the northern tip of Rhodes. It is only a fifteen-minute drive from Diagoras International airport and a fiveminute drive from the hotel.

HOTELS
The supply of hotels in the island is abundant with a large percentage of luxury hotels, a data point that speaks to the level of overall tourist development of the island and the number and type of tourists it can attract.

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The Hellenic Chamber of Hotels conducts annually a rating of all hotels, based on both the property evaluation (public space and individual rooms) and the overall service offering. Hotels are classified in five distinct categories, of which the “five-star” is the highest one. The island offers the largest capacity (hotel beds) in Greece, as portrayed in the following table of the top four (in capacity) Greek tourist destinations:
Capacity Rhodes Heraklio Corfu Chalkidiki 68,738 60,680 43,529 41,745

The largest luxury (five-star) hotel complexes in Greece reside in Rhodes, and the island offers in total the largest capacity of five star hotel rooms & beds in Greece. Locations that offer the majority of the luxury (five-star) hotels in Greece are:
Hotels Athens Heraklio Lasithi Rhodes 13 12 12 12 Rooms 3,834 3,570 2,247 4,622 Beds 7,182 7,214 4,307 8,860

The distribution of lodging facilities in Rhodes is as follows:
Hotels 5-star 4-star 3-star 2-star 1-star 2.5 % 21.3 24.9 36.8 14.5 Rooms 12.8 % 46.6 19.0 18.4 3.3

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The cumulative 2004 hotel rankings of the top four destinations in Greece (Athens, Heraklis and Rhodes), as well as totals for Greece and Dodecanes are presented in the following table.
Detailed Supply per Category
Hotels Dodecanes Athens Heraklio Rhodes Greece 14 13 12 12 139 Five-star Rooms 5,215 3,834 3,570 4,622 26,756 Two-star Rooms 16,233 3,944 6,392 6,658 122,615 Beds 10,096 7,182 7,214 8,860 51,967 Hotels 144 29 114 104 896 Four-star Rooms 24,854 3,743 13,085 16,855 88,837 One-star Rooms 1,630 1,459 2,922 1,185 31,056 Beds 47,591 6,848 24,770 32,101 168,940 Hotels 216 44 96 122 1,66 Three-star Rooms 11,483 3,316 5,875 6,857 82,627 Total Rooms 59,415 16,296 31,844 36,177 351,891 Beds 21,851 6,055 11,269 13,049 157,495

Dodecanes Athens Heraklio Rhodes Greece

Hotels 513 102 198 180 4,473

Beds 30,340 7,248 11,971 12,450 230,281

Hotels 101 64 91 71 1,731

Beds 3,112 2,816 5,456 2,278 59,588

Hotels 988 252 511 489 8,899

Beds 112,990 30,149 60,680 68,738 668,271

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COMPETITION IN LALYSSOS
The primary competition of Hilton Rhodes resort is as follows:
SOFITEL CAPSIS

www.capsis.gr Owner: Key facts: Description: Private ownership and management by Capsis family, Sofitel brand name 5-star hotel, 691 rooms, 11 food and beverage venues, Conference Center with congress hall for up to 4,000 people and 18 meeting rooms. Large conference – oriental hotel, possessing one of the two largest Conference Centres on the island.

MIRAMARE WONDERLAND

www.mamhotel.gr Owner: Key facts: Description: Member of Mamidakis Hotels 5-star hotel, 70,000 m2, 175 rooms, 2 food and beverage locations. Conceived and built as a small community, nested along its private 1,5 km long sea-front. Distinct landscape design, translates into extensive areas of gardens, a pool, an artificial lagoon and several covered walkways. Each villa or cluster of bungalows is designed in individual unique architectural style.
RODOS PALACE

www.rodos-place.gr Owner: Key facts: Member of Cambourakis Group of Hotels 5-star hotel, 3,000 m2, 785 rooms, 11 food and beverage venues, Convention Center accommodating up to 4,000 guests, 21 meeting rooms. Complex comprises of a 20-storey tower with luxurious rooms and suites, 7-storey Executive VIP Wing for conference delegates and 14 units with studios, apartments and bungalows. Description: The International Convention is recognised as one of the most complete and largest purpose-built Conference Centers in the Mediterranean region, and is the second largest on the island. It is the official venue for the European Union Summit and Western European Union Council of ministers.

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RODIAN AMATHUS BEACH HOTEL

www.rodian-beach.gr Owner: Key facts: Member of Cypriot Company Amathus 5-star hotel, 333 rooms, 6 food and beverage venues, banqueting facilities in main ballroom with capacity of up to 200 people. Description: Spacious public space with medieval architecture. The hotel has undergone partial refurbishment over the past two years.

HOTELS LOCATED IN OTHER PARTS OF THE ISLAND
The following hotels, in other parts of Rhodes Island, compete to some extent with Hilton Rhodes Resort:
PARADISE ALDEMARE

Owner: Key Facts:

Member of the Aldemare Group. 5-star hotel, 787 rooms, 12 food and beverage venues, banqueting facilities in main ballroom up to 600 people, 14 meeting rooms

Description:

Located at Kallithea beach. Nice sandy beach front.

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GRECOTEL RODOS ROYAL

www.grecotel.gr Owner: Key Facts: Member of the Grecotel Group. 4-star hotel, 308 rooms and 61 bungalows, 4 outdoor swimming pools Description: Located at Faliraki beach. The well-kept gardens, the marble lobby, the stylish lounges with wall and ceiling frescos are key characteristics of the resort.
PALLADIUM

www.rodospalladium.gr Owner: Private ownership by George Katris, Rhodian Company of Hotel Enterprises Katri A.E. Key Facts: 5-star hotel, 377 rooms, conferencing capabilities of up to 750 delegates total, 5 food and beverage venues Description: Located at Faliraki beach.

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SERVICE OFFERING AND BUSINESS MIX
The hotel is largely aimed at the leisure package and convention markets.
HOTEL PACKAGES TOURISM

g r e e c e

The most prevalent tourism type worldwide and in particular in Rhodes, hotel packages address the annual vacation needs of families, couples and friends’/relatives’ companies. The size of the hotel, as well as its offerings across lodging, dining and entertaining can make it suitable for the variety of ages and interests of this group.
CONVENTION TOURISM

The Island of Rhodes is a top-of-mind conference destination in the wider Mediterranean and South Eastern European region, due to the overall proposition of the Island, its mild weather conditions, location, natural beauty, as well as the recent investments in large-scale convention facilities. Attracting convention tourism is a key marketing strategy for the hotel that can allow for extension of the regular “annual season” before April and beyond October. Proximity to the two largest conference centers of the island (and most fully equipped in the Mediterranean sea) of total capacity around 8,000 people makes the universe of National or International Conference-related partnerships endless. Tour Operators consistently make up the largest proportion of business, with Groups/Incentives (corporate events) second. Under Grecotel Management, the focus was primarily on tour operator business. Hilton have increased the emphasis on the group and incentive segment.

Marketing Mix
1994-2000 Tour Operators F.I.T./Individuals Groups/Incentives Travel Agents Other 85.5 % 3.9 6.1 3.5 1.0 2001 76.0 % 7.1 12.6 1.3 3.1 2002 78.0 % 6.0 11.0 0.8 4.3 2003 77.1 % 3.7 14.0 0.5 4.8 2004 79.0 % 3.3 12.2 0.5 5.0 2005 76.5 % 5.6 14.4 0.2 3.3 Average 82.1 % 4.4 8.9 2.3 2.3

Note: Between 1994 and 2000, the hotel was managed by Grecotel

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The Hotel has traditionally worked with and has established strong long-term relationships with mainstream tour operators, which include TUI, Jet Air, Pegase, and Thomson among others. The following table breaks down the business generated by Tour Operators between 2000 and 2005, presenting actual production numbers. Tour Operators Production
Tour Operator Jet Air Unital Tourism Ltd TUI Thomson Aviation Links Pegase Holland Int’l Luxair Costa Croisiere Jmc Holidays Libra Holidays Grp Flying Carpet LTD Kras Star Vakanties Alpitour SPA Country Belgium Israel Germany United Kingdom Israel Belgium The Netherlands Luxembourg Italy United Kingdom United Kingdom Israel The Netherlands Italy 2001 4,542 10,851 4,58 43 5,138 1,789 Production Roomnights 2002 2003 2004 3,831 2,707 7,140 4,505 1,739 4,309 1,668 508 366 31,345 548 3,451 3,475 732 1,722 1,058 1,393 2,978 704 1,596 849 2,739 753 2,997 2,440 4,690 1,294 1,093 2,416 1,563 1,020 2,833 1,273 1,245 1,169 2,303 720 2005 4,241 3,443 2,947 2,590 1,889 1,870 1,791 1,286 1,001 985 958 851 -

308

1,196

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GEOGRAPHIC ORIGIN OF BUSINESS
In general, the hotel’s business distribution by guests’ nationality is in line with that of the Island. Rhodes is cited as one of UK’s favourite summer destinations, while the Benelux countries provide a steady (and one of the highest) tourist streams to the island and the hotel in specific. Germans have traditionally enjoyed a strong representation in the hotel’s clientele mix, and finally, the property is becoming increasingly popular over the last few years with Israeli crowd. The percentages in the table below portray the Hotel‘s total business broken down by the nationality of the guests:

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BEDNIGHT BY NATIONALITY
1997 Greece ( inland ) United Kingdom Austria Benelux France Germany Switzerland Italy USA Israel Turkey Other TOTAL 5,041 11,799 1,583 21,168 1,137 52,792 2,852 6,904 1,297 1,096 56 3,786 109,511 1998 9,772 17,302 781 36,395 1,924 39,169 2,275 12,843 2,039 2,713 2,351 8,877 136,441 1999 12,016 21,496 1,583 38,003 1,460 39,399 2,806 7,944 1,362 8,733 1,572 8,291 144,665 2000 7,651 18,654 2,354 33,624 1,039 49,990 2,604 4,332 2,444 1,104 298 1,048 125,142 2001 11,654 20,297 1,169 21,986 1,299 18,147 1,653 2,615 2,511 16,067 528 21,005 118,931 2002 12,313 24,442 1,329 20,189 1,873 15,604 1,230 2,267 3,362 16,909 906 17,302 117,726 2003 12,855 26,297 511 21,906 1,802 10,346 903 8,288 2,487 7,600 2,441 15,706 111,142 2004 14,379 19,054 1,305 22,585 1,577 11,038 1,021 10,357 3,294 11,684 2,862 9,759 108,915 2005 18,731 21,498 612 22,506 2,970 9,084 715 10,186 5,650 15,346 3,475 12,752 123,525 CAGR 15.7 % 6.9 - 10.0 0.7 11.3 - 17.8 - 14.2 4.4 17.8 34.1 14.4 1.3 %

Recent trends based on 2004 and 2005 experience imply an increase on the Belgian and German markets, and a strengthening relationship with the Israeli market.

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LABOUR FORCE
The hotel has historically operated for an average of 214 days per year, between the months of April and October (“season”), while for the rest of the year it remains closed. During the “season”, the Hotel employs about 220 people on average, while the rest of the year, the hotel staff amounts up to about 20 people in total. Total number of full-time and seasonal employees could vary significantly based on hotel management choices and operations standards. All employees currently working at the hotel are directly employed by the Ionian hotel Enterprises with the exception of the General Manager who is a Hilton International executive. All personnel related data described in the following paragraphs are based on historical hotel operations data. “Full time” employees (that support the hotel operations throughout the year), include the general manager, accountant, human resources officer, director of operations, sales officer, information systems manager, conferences organizer, financial director, chief engineer and technical building/equipment maintenance & support.

“Seasonal” employees are employed under fixed term employment contracts and are subject to the local “Collective Hotel Employees Employment Agreement”, that defines monthly salaries per employee expertise (with the exception of some posts at the kitchen). Personnel hiring is executed in stages at the beginning of the “season” based on occupancy forecasts. “Collective Hotel Employees Employment Agreement” in Rhodes necessitates employee reimbursement in case of non-renewal of seasonal employees’ contracts. Total reimbursement cost for the Hotel is estimated at €972,000, in case of non-renewal of all seasonal staff contracts.

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Typical personnel roles’ distribution at “season”, based on past hotel operations, is the following: Management Division (20) General Manager Secretary Director of Finance Accountants (5) Driver Storage room personnel (3) HR Officer PR Officer (2) Sales/ Reservations (3) Lifeguard Information Systems Room Service Division (63) Division Director Reception (11) Grooms (5) Head of Floors & Assistants (3) Chambermaids (31) Cleaners (4) Laundry room personnel (7) Linen room employee Food & Beverage Outlets (113) Director Head Head of outlets (2) F&B control (2) Cooks (29) Buffet (3) Pastry cooks (3) Butcher (2) Kitchen cleaning (11) Waiters (53) Barmen (7) Recreational Division (8) Head Gym Instructor (2) Musician Animation (6) Maintenance Division (18) Division Head Technicians (9) Gardners (3) Pool & Beach (5)

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Based on 2004 data, personnel costs per division are as follows: Total Annual Employee Costs Management Division Room Service Division F&B Outlets Maintenance Division Recreational Division TOTAL € 747,935 € 1,056,106 € 1,211,636 € € 384,691 100,373

€ 3,500,741

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SEASONALITY OCCUPANC Y SEASONALIT Y 2002 - 2005
Occupancy Seasonality 2002-2005
January 2005 Available Rooms Occupied Rooms Occupancy (%) Average Room Rate ( ) February March April 4,010 1,196 29.8% 45.4 May 12,431 6,110 49.2% 56.0 June 12,030 8,504 70.7% 59.2 July 12,431 10,420 83.8% 72.7 August September 12,431 11,794 94.9% 78.8 12,030 11,075 92.1% 61.6 October November December 10,426 7,006 67.2% 62.2 2,406 625 26.0% 59.2 Total 78,195 56,730 72.5% 65.9

2004 Available Rooms Occupied Rooms Occupancy (%) Average Room Rate ( )

11,629 3,331 28.6% 46.3

12,431 7,540 60.7% 71.3

12,030 7,834 65.1% 76.2

12,431 9,071 73.0% 70.4

12,431 10,712 86.2% 78.8

12,030 9,762 81.1% 67.8

9,624 6,218 64.6% 57.0

82,606 54,468 65.9% 69.5

2003 Available Rooms Occupied Rooms Occupancy (%) Average Room Rate ( ) 2002 Available Rooms Occupied Rooms Occupancy (%) Average Room Rate ( ) 1,604 1,120 69.8% 36.57

12,030 4,186 34.8% 50.5 12,030 4,970 41.3% 43.5

12,431 5,650 45.5% 53.6 12,431 7,598 61.1% 56.4

12,030 8,405 69.9% 67.2 12,030 8,901 74.0% 67.8

12,431 9,056 72.9% 80.3 12,431 9,829 79.1% 70.6

12,431 11,749 94.5% 77.0 12,431 11,380 91.5% 77.6

12,030 10,640 88.4% 69.4 12,030 9,750 81.0% 70.9

12,431 5,926 47.7% 69.7 12,431 5,657 45.5% 65.8 1,203 27 2.2% 57.3

85,814 55,612 64.8% 69.5 88,621 59,232 66.8% 66.4

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HISTORICAL PERFORMANCE
The Hilton Rhodes Hotel has been operating fully since 1994. During the period 1994 – 2004 the hotel has been managed by two specialised operators, namely Grecotel S.A. (1994-2000) and Hilton International (2001-2004). The financial performance of the hotel has been following a mixed trend, steadily improving in the first half of the period, – peaking in 1999 – and presenting moderate results henceforth. Factors contributing, among others, to recent results can be attributed to the 11 September 2001 terrorist attack in the U.S., which severely affected global tourism, the war in Iraq, the tardy implementation of a strategic plan from the Greek Ministry of Tourism, the economic slowdown on both sides of the Atlantic and the European Tour Operators status. The table below summarily presents the key financial indicators of the Hilton Rhodes Hotel for the period 1994-2004
Key Financial Indicators 1994 - 2005
1994 Number of Rooms: Days in Operation: Occupied Rooms: Occupancy: Average Rate: RevPAR: REVENUE ( 000s) Rooms Food & Beverage Other Revenue Total GROSS OPERATING PROFIT ( 000s) ) 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

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243 83,975 86.0 % 32.8 28.2

242 68,384 70.3 % 41.4 29.1

226 70,144 77.2 % 43.1 33.3

227 76,136 83.4 % 44.1 36.8

218 67,697 77.3 % 48.0 37.1

214 71,093 82.6 % 51.1 42.2

209 66,419 79.1 % 55.3 43.7

216 59,448 68.6 % 67.5 46.3

221 59,232 66.8 % 66.1 44.1

214 55,612 64.8 % 69.4 45.0

206 54,468 65.9 % 71.0 46.8

195 56,730 72.5 % 66.4 48.1

2,757 3,115 381 6,253 1,741 27.8 %

2,832 3,002 416 6,250 1,748 28.0 %

3,025 3,292 308 6,625 1,894 28.6 %

3,360 3,559 407 7,326 2,364 32.3 %

3,252 3,574 367 7,193 2,409 33.5 %

3,633 3,952 383 7,968 2,836 35.6 %

3,673 3,918 388 7,979 2,183 27.4 %

4,011 3,414 344 7,769 747 9.6 %

3,912 3,395 281 7,589 660 8.7 %

3,862 3,342 293 7,497 1,333 17.8 %

3,865 3,129 268 7,262 848 11.7 %

3,765 3,251 357 7,373 999 13.6 %

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O P E R AT I N G H I S TO R Y 2 0 0 2 - 2 0 0 5
2002 Number of Keys: 401 Occupied Rooms: 59,232 Days Open: 221 66.8 % Occupancy: Average Rate: 66.1 RevPAR: 44.1 3,912 3,395 52 229 7,589 1,306 3,011 0 97 4,414 3,175 1,043 238 622 612 2,515 660 85 85 576
51.6 % 44.7 0.7 3.0

2003 401 55,612 214 64.8 % 69.4 45.0 3,862 3,342 31 262 7,497 1,187 2,695 87 3,969 3,528 862 163 600 570 2,195 1,333 94 94 1,239
51.5 % 44.6 0.4 3.5

2004 401 54,468 206 65.9 % 71.0 46.8 3,865 3,129 25 243 7,262 1,221 2,584 0 86 3,892 3,370 957 252 706 607 2,522 848 93 93 755
53.2 43.1 0.3 3.3 %

2005 401 56,730 195 72.5 % 66.4 48.1 3,765 3,251 33 324 7,373 1,206 2,521 22 217 3,965 3,408 920 207 631 650 2,408 999 89 89 910
51.1 44.1 0.4 4.4 %

( 000s) REVENUE Rooms Food & Beverage Telephone Other Income Total DEPARTMENTAL EXPENSES Rooms Food & Beverage Telephone Other Income Total DEPARTMENTAL INCOME UNDISTRIBUTED OPERATINH EXPENSES Administrative & General 1 Marketing Property Operations & Maintenance Energy Total GROSS OPERATING PROFIT (GOP) FIXED EXPENSES Property Taxes Total NET INCOME
1

100
33.4 88.7 0.0 34.6 58.2 41.8 13.7 3.1 8.2 8.1 33.1 8.7 1.1 1.1 7.6 %

100
30.7 80.6 0.0 29.7 52.9 47.1 11.5 2.2 8.0 7.6 29.3 17.8 1.3 1.3 16.5 %

100
31.6 82.6 0.0 32.2 53.6 46.4 13.2 3.5 9.7 8.4 34.7 11.7 1.3 1.3

100
32.0 77.5 65.7 60.9 53.8 46.2 12.5 2.8 8.6 8.8 32.7 13.6 1.2 1.2 12.3 %

10

%

Includes Property Insurance

Source: Hotel Management

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PERFORMANCE POTENTIAL
The management of Ionian Hotel Enterprises S.A. has identified numerous factors which should contribute to a substantial improvement of the hotel’s financial performance: • Increase cost efficiency and achieve improved cost/income ratios, in alignment with those of comparable hotels, and particularly with regard to personnel costs. • Establish relationships with local operators and improve relationships with current partners. • Develop new partners in the local market in order to increase exposure internally, and enhance domestic tourism. • Target other distribution channels’ untapped potential, in order to shift the business mix toward more lucrative customers. • • Place emphasis on recurring business. Extend the operating period through the offering of specialty tourism and selective targeting of customers. • Refurbish rooms, the health club and upgrade restaurants, so as to maintain a market leading position in terms of facilities as a premium hotel of 5-star status.

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H OT E L P E R F O R M A N C E - S TAT I S T I C D E TA I L S
Operating Statistics ( ) Occupancy Average Daily Rate RevPAR
RevPAR Percentage Growth

2003 64.8 % 69 45 401 55,612 3,862 60.1 0.6 4.7 2003 30.7 21.3 80.6 48.5 33.2 11.5 71,820 2.2 8.0 50,023 10.3 7.6 7,824 -

Actuals 2004 65.9 % 71 47
4.0 %

2005 72.5 % 66 48
2.9 %

Year One 72.0 % 72 52
7.7 %

Year Two 74.0 % 79 59
13.1 %

Forecast Year Three 78.0 % 91 71
21.2 %

Year Four 80.0 % 105 84
17.9 %

Year Five 80.0 % 110 88
5.0 %

Number of Rooms Occupied Rooms Revenue ( ) Rooms (000s) Food & Beverage Telephone Other Income Departmental Expenses Rooms Food & Beverage Telephone Other Income

401 54,468 3,865 57.5 0.5 4.5 Actuals 2004 31.6 22.4 82.6 47.4 35.5 13.2 79,769 3.5 9.7 58,821 11.1 8.4 7,734 -

401 56,730 3,765 57.3 0.6 5.7 2005 32.0 21.3 77.5 44.4 65.7 67.1 12.5 76,687 2.8 8.6 52,583 11.5 8.8 7,417 -

402 60,782 4,376 57.1 0.6 6.2 Year One 28.0 % 20.2 75.6 % 43.2 53.0 % 49.8 % 10.9 75,027 3.2 5.8 40,193 10.8 7.9 3.0 % % %

402 62,471 4,948 58.4 0.6 6.2 Year Two 25.8 % 20.4 74.9 % 43.7 52.4 % 49.4 % 10.1 75,648 3.1 5.6 42,055 10.9 7.6 3.0 % % %

402 67,415 6,140 59.4 0.7 6.2 Forecast Year Three 22.5 % 20.5 73.5 % 43.7 51.3 % 48.6 % 8.8 72,186 2.9 5.2 42,538 11.0 7.0 3.0 % % %

402 69,144 7,242 60.7 0.7 6.3 Year Four 19.9 % 20.8 72.9 % 44.2 50.8 % 48.3 % 8.4 71,251 2.7 4.9 41,987 11.4 6.6 3.0 % % %

402 69,144 7,604 62.2 0.7 6.4 Year Five 19.4 % 21.3 72.9 % 45.4 50.8 % 48.3 % 8.3 68,293 2.7 4.9 40,244 11.6 6.5 3.0 % % %

Per Occupied Room Per Occupied Room Per Occupied Room

Percentage Per Occupied Room Percentage Per Occupied Room Percentage Percentage

% % % % % % %

% % % % % % %

% % % % % % %

Undistributed Oper. Expenses Admin. & General Percentage Marketing Prop. Operations & Maint. Energy Management Fee Fixed Charges Property Taxes Reserve for Replacement
Per Month Percentage Percentage Per Month Per Occupied Room Percentage Percentage

% %

% %

% %

% %

% %

% %

% %

% %

Expense per Month Percentage

7,372 4.0 %

7,556 4.0 %

7,319 4.0 %

6,966 4.0 %

6,664 4.0 %

NOTE: The financial projections and investment analyses represented herein contain estimates and assumptions based on our study of the current market conditions. HVS Hodges Ward Elliott neither warrants nor guarantees the results of these projections and analysis.

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HOTEL PERFORMANCE - FORECAST
Actuals 2005 Number of Keys: Occupied Rooms: Occupancy: Average Rate: RevPAR: Year One Year Two Forecast Year Three Year Four Year Five

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( 000s) REVENUE Rooms Food & Beverage Telephone Other Income Total DEPARTMENTAL EXPENSES Rooms Food & Beverage Telephone Other Income Total DEPARTMENTAL INCOME UNDISTRIBUTED OPERATINH EXPENSES Administrative & General Marketing Property Operations & Maintenance Energy Total GROSS OPERATING PROFIT (GOP) Management Fee GOP AFTER MANAGEMENT FEES FIXED EXPENSES Property Taxes Reserve for Replacement Total NET INCOME Includes Property Insurance

401 56,730 72.5 % 66 48.1 3,765 51.1 % 3,251 44.1 33 0.4 324 4.4 7,373 100.0 1,206 2,521 22 217 3,965 3,408 920 207 631 650 2,408 999 0 999 89 0 89 910
32.0 77.5 65.7 67.1 53.8 46.2 12.5 2.8 8.6 8.8 32.7 13.5 0.0 13.5 1.2 0.0 1.2 12.3 %

402 60,782 72.0 % 72 51.8 4,376 53.0 % 3,473 42.0 38 0.5 374 4.5 8,262 100.0 1,226 2,625 20 187 4,059 4,203 900 264 482 654 2,301 1,902 248 1,654 88 330 419 1,235
28.0 75.6 53.0 49.8 49.1 50.9 10.9 3.2 5.8 7.9 27.8 23.1 3.0 20.1 1.1 4.0 5.1 15.0 %

402 62,471 74.0 % 79 58.6 4,948 54.8 % 3,645 40.4 40 0.4 389 4.3 9,022 100.0 1,277 2,729 21 192 4,220 4,803 908 278 505 681 2,372 2,431 271 2,160 91 361 452 1,708
25.8 74.9 52.4 49.4 46.8 53.2 10.1 3.1 5.6 7.6 26.4 26.8 3.0 23.8 1.0 4.0 5.0 18.8 %

402 67,415 78.0 % 91 71.0 6,140 57.9 % 4,004 37.8 45 0.4 418 3.9 10,607 100.0 1,383 2,945 23 203 4,554 6,053 938 306 553 743 2,541 3,513 318 3,195 95 424 519 2,675
22.5 73.5 51.3 48.6 42.9 57.1 8.8 2.9 5.2 7.0 23.9 33.2 3.0 30.2 0.9 4.0 4.9 25.3 %

402 69,144 80.0 % 105 83.8 7,242 60.8 % 4,196 35.2 47 0.4 434 3.6 11,919 100.0 1,439 3,059 24 210 4,732 7,187 998 327 588 786 2,698 4,489 358 4,131 98 477 574 3,557
19.9 72.9 50.8 48.3 39.7 60.3 8.4 2.7 4.9 6.6 22.6 37.7 3.0 34.7 0.8 4.0 4.8 29.9 %

402 69,144 80.0 % 110 88.0 7,604 61.3 % 4,301 34.7 48 0.4 445 3.6 12,398 100.0 1,475 3,136 24 215 4,850 7,548 1,024 337 604 803 2,769 4,779 372 4,407 100 496 596 3,811
19.4 72.9 50.8 48.3 39.1 60.9 8.3 2.7 4.9 6.5 22.4 38.5 3.0 35.5 0.8 4.0 4.8 30.7 %

NOTE:
The financial projections and investment analyses represented herein contain estimates and assumptions based on our study of the current market conditions. HVS Hodges Ward Elliott neither warrants nor guarantees the results of these projections and analysis.

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R E T U R N A N A LY S I S
SOURCE AND USE OF FUNDS (000s) Property Acquisition Renovation & Closing Costs Total Use of Funds Number of Rooms Total Cost per Room FIRST MORTGAGE (000s) Mortgage Amount Cumulative Mortgage Amount Interest Rate Amortisation Period Beginning Balance Annual Payment Portion to Interest Portion to Principal Increase in Debt Ending Balance YEARLY CASH FLOW SUMMARY (000s) Year One 1,235 1,333 ( 97) 0.93 Year Two 1,708 1,873 ( 164) 0.91 Year Three 2,675 1,873 802 1.43 Year Four 3,557 1,873 1,684 1.90 Year Five 3,811 1,873 1,938 2.04 27,300 26,650 5.00% 25 years Monthly Payment Annual Payment 156 1,873 40,000 2,000 42,000 402 104 First Mortgage Equity Total Source of Funds 27,300 14,700 42,000 65% 35% 100%

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Year One 26,650 1,333 1,333 — — 26,650

Year Two 26,650 1,873 1,320 553 — 26,097

Year Three 26,097 1,873 1,292 581 — 25,516

Year Four 25,516 1,873 1,262 611 — 24,906

Year Five 24,906 1,873 1,231 642 — 24,264

Net Operating Income First Mortgage Annual Payment Cash Flow after Debt Service Debt Service Coverage Ratio

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R E T U R N A N A LY S I S
CAPITAL GAIN CALCULATION (000s) Sixth Year Net Operating Income Terminal Cap Rate Gross Sales Price Selling Costs Net Sales Price Remaining First Mortgage Balance Return of Equity Capital Gain Sales Price per Room LEVERAGED IRR ANALYSIS (000s) Year Zero (14,700) Year One (97) Year Two (164) Year Three 802 Year Four 1,684 Year Five 1,938 51,939 (24,264) 29,614 3,955 7.5% 52,730 1.5% 51,939 24,264 14,700 12,975 131

Equity Cash Flow after Debt Service Net Sales Price Remaining First Mortgage Balance Net Cash Flow Cash-on-Cash Return Five-Year Leveraged IRR

( 14,700)

( 97) -0.7%

( 164) -1.1%

802 5.5%

1,684 11.5%

17.0%

NOTE: The financial projections and investment analyses represented herein contain estimates and assumptions based on our study of the current market conditions. HVS Hodges Ward Elliott neither warrants nor guarantees the results of these projections and analyses.

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BASIS OF SALE
The hotel is offered for sale by Ionian Hotel Enterprises. The contemplated sale can be effected via the two alternative structures presented below: 1. Asset Sale: the most straightforward route*. 2. Company Sale: more complicated and potentially time consuming structure where: Either, a. Ionian Hotel Enterprises spins off the business unit of Hilton Rhodes Hotel to a 100% subsidiary of the company (no taxes incurred). Subsequently, it sells the shares of the non-listed subsidiary company to the Selected Investor and incur a tax on the transfer of non-listed shares (approx. 5%) calculated on the value of the transaction. Or, b. Ionian Hotel Enterprises spins off the business unit of Hilton Rhodes Hotel to a company indicated by the selected investor. Subsequently, it will receive shares equal to the book value of the transferred assets, and can transfer sell these to the Selected Investor, incurring a tax on the transfer of non-listed shares (approx. 5%) calculated on the value of the transaction.
* the purchaser will incur an asset transfer tax of 11%

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CONTACTS
For further information, or to organise an inspection of the property, please contact:

Charles Human – Managing Director [email protected]

Pascal Bichon – Senior Associate [email protected]

H V S H O D G E S WA R D E L L I OT T 1 Lancaster Place London WC2E 7ED UNITED KINGDOM Tel: +44(0) 20 7257 2000 Fax: +44(0) 20 7257 2009 www.hvshwe.com

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HVS HODGES WARD ELLIOT T

DISCLAIMER
HVS Hodges Ward Elliott (‘the Advisers’) have been appointed on an exclusive basis by the Owners to advise on the sale of the hotel. This memorandum was prepared by HVS Hodges Ward Elliott and has been reviewed by representatives of the owners. It contains selected information pertaining to the owners and does not purport to be all-inclusive or to contain all of the information which prospective lenders may desire. The material in this memorandum is based in part upon information supplied by existing management and in part upon information obtained by HVS Hodges Ward Elliott from sources they deem to be reliable. The Owners’ existing management has provided HVS Hodges Ward Elliott with certain data contained in this memorandum; this information has not been independently verified by the Advisers. It should be noted that all projections are provided for general reference purposes only in that they are based on assumptions relating to the general economy, competition, and other factors beyond the control of the Owners and the Advisers, and therefore are subject to variation. Neither the Owners, nor HVS Hodges Ward Elliott, nor any of their respective subsidiaries or affiliates, directors, officers, employees or agents, nor any of the sources referred to above, have made, or are making, any representation or warranty as to the completeness of this memorandum or any of its contents, and no legal or other commitments or obligations shall arise by reason of this memorandum or its contents. Prospective investors must make their own investigations, projections and conclusions entirely without reliance upon the material contained in this memorandum. The Owners and the Advisers expressly reserve the right, at their sole discretion, to reject any or all expressions of interest or offers to lend and/or to terminate discussions with any entity at any time with or without notice. The Owners shall have no legal commitment or obligation to any entity reviewing this memorandum or making a proposal unless and until a written agreement for such investment has been fully approved by the Owners. By receipt of this memorandum, you agree that this memorandum and its contents are of a confidential nature, that you hold and treat it in the strictest confidence, and that you will not disclose this memorandum or any of its contents to any other entity without the prior written authorisation of the Owners or the Advisers; nor will you use this memorandum or any of its contents in any fashion or manner detrimental to the interest of the Owners or the Advisers or any of their respective subsidiaries or affiliates. In this memorandum, certain documents are described in summary form. The summaries do not purport, and are not warranted, to be complete, nor necessarily accurate, descriptions of the full agreements involved, nor do they purport to constitute a legal analysis of the provisions of the documents. The terms and conditions stated in this section will relate to all sections of the memorandum as if stated independently therein. This document does not constitute a prospectus, or listing particulars or an investment advertisement pursuant to Section 21 of the Financial Services and Markets Act 2000 and is exempt from any legal requirement that its contents be approved by an authorised person.

HVS HODGES WARD ELLIOT T

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the hilton rhodes resort
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HVS HODGES WARD ELLIOT T

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