by Julia Lin
Hotels and resorts are among the most popular
types of projects in the EB-5 industry, both from
the investor and project developer point of view.
The projects provide consistent cash flow, real
estate as collateral and relatively generous EB-5
job counts, boosting the confidence of investors.
Additionally, hotel and resort developers are
becoming more and more comfortable with the
use of EB-5 funding as part of the capital stack.
Marriott International alone has endorsed over
14 EB-5 projects since 2008 with more on the
way. Over the last 18 months, developers for
Hilton Worldwide, Hyatt Hotels and Starwood
Hotels & Resorts Worldwide have also turned
to EB-5 financing.
industry, such as transportation, entertainment, recreation,
restaurant, and retail stores. Once the amount of visitor spending
for each industry is determined, they will be used as inputs in the
applicable economic model to calculate the employment impact
with the corresponding multiplier for each industry.
USCIS has historically been hostile to the use of guest expenditures as an input to the econometric model for counting jobs
created by a hotel project. Since 2012, USCIS has challenged
the use of guest expenditures as a basis for job calculation by issuing many requests for evidence (RFEs) to projects, including
regional center applicants, attributing jobs to visitor spending.
Hotel projects are especially attractive because, in addition to
counting jobs generated by construction expenditures and revenue
from operations, economists can also calculate the jobs generated
by visitor spending using the spending of hotel guests on goods
and services outside of the hotel as inputs in the econometric
model. Including the jobs generated from guest expenditures
often significantly increases the number of jobs included in the
EB-5 job count for the project, allowing the project to raise
additional EB-5 funds or create a bigger job buffer.
What is the visitor spending/guest
expenditure job calculation?
The visitor spending job calculation uses
expenditures of hotel guests on goods and
services outside the hotel as an input
in an economic model to calculate job
creation in the hotel context. These are
expenditures made by hotel guests above
their spending at the hotel, resulting in
additional jobs created in the region that
would not have otherwise been created
had the hotel guests not visited the area.
To capture these ripple effects generated
by the hotel guests’ expenditures, economists use data from reports prepared by a
tourism industry consultant and/or convention and visitor’s bureau to calculate the average amount of money spent per night by visitors
to the area. Using the hotel’s occupancy rate, the
economist can then determine the total amount of
visitor spending generated by the hotel guests in each
E B 5 I n v e s to r s M ag a z i n e