Presentation on theme: "Greater Columbus Georgia Chamber of Commerce September 26, 2013."— Presentation transcript:
Greater Columbus Georgia Chamber of Commerce September 26, 2013
Franklin County Convention Facilities Authority 2 The FCCFA was created in 1988 to build the Greater Columbus Convention Center. The FCCFA is a special government unit created under Chapter 351 of the Ohio Revised Code. The FCCFA has an 11 member board appointed by the Franklin County Commissioners (6), City of Columbus (3) and Suburban Mayors (2). The FCCFA was created to develop, build and operate convention facilities in Franklin County. The FCCFA has full governmental powers to levy a 4% countywide and additional.9% citywide hotel tax, set its own budgets, appropriate property and other duties outlined in ORC 351. The FCCFA owns the Greater Columbus Convention Center, Nationwide Arena, the Columbus Hilton Downtown, land used to develop the Hyatt Regency and Drury Inn and Suites and various parking facilities.
Greater Columbus Convention Center 3 The Greater Columbus Convention Center (GCCC) was developed by a community urban redevelopment corporation (CURC) and opened in 1980 as a mixed use facility called the Ohio Center. The CURC became the operating company that managed the facility. The Ohio Center consisted of 90,000 sf of arena/exhibit space, 50,000 sf of meeting space, an 18,000 sf ballroom and a retail mall. It was connected to the 631 room Hyatt Regency. Almost as soon as it opened, the Ohio Center was too small to be an effective convention center and planning began for a new convention center. The FCCFA opened the GCCC in March, 1993. It contained 216,000 sf of exhibit space, 50,000 sf of meeting space and a 25,000 sf ballroom. In 1996, the FCCFA assumed ownership of the Ohio Center and through an RFP process hired SMG to manage the combined convention center. The convention center was expanded in 2001 to add 125,000 sf of exhibit space, 15,000 sf of meeting space and a 15,000 sf ballroom.
Need for a Full Service Convention Hotel 4 The target market for Columbus conventions are groups with room blocks ranging from 1,000 to 3,500 that have met in our geographic region. With the Hyatt Regency (631 rooms) as the HQ hotel, Columbus was able to meet the HQ hotel requirement for 65% of our target market. The addition of an additional 500 room HQ hotel enables us to meet the HQ hotel requirement of 92% of our target market. At 426,000 sf of exhibit space, the Greater Columbus Convention Center can accommodate approximately 98% of our target market. Based on market surveys, a new 500 room HQ hotel increased the propensity of customers to meet in Columbus by 170%
Columbus Hotel Pre-Development Timeline 5 2001 Experience Columbus began lobbying for more hotel rooms 200220032004200520062007200820092010 Feasibility/ Demand Study (confirmation of previous study) completed; recommended potential expansion of Hyatt as alternative Feasibility/ Demand Study completed Feasibility/ Demand Study completed Feasibility/ Demand Study completed Financial Feasibility Study completed Determined Hyatt expansion too difficult Subcommittees formed to understand financing, marketing, economic impact and connectivity Mayor decided to explore public financing due to expense of using private development Market/Financial Feasibility Study completed by SAG Elected officials briefed on potential public financing plans County endorses project City, County, CFA agree to financing terms City, County, CFA announce agreement to finance project
Conditions Driving HQ Hotel Public Participation 6 The last convention hotel to be financed without public support (other than in Las Vegas or Orlando) was the Chicago Sheraton in 1992
Impact on Convention Center Generated Room Nights 7 Source: Local convention and visitor bureaus.
Impact on Competitive Hotels 8 Denver 2005 Hyatt 1,100 Houston 2004 Hilton 1,203 Louisville 2005 Marriott 616 Charlotte 2003 Westin 700 Austin 2003 Hilton 800 Indianapolis 2011 JW Marriott 1,005 St. Louis 2003 Renaissance 917 San Diego 2008 Hilton 1,190 Source: Smith Travel Research. Supply Demand Yr 1 Demand Yr 2 Demand Yr 3 Demand Yr 4 Demand Yr 5 Baltimore 2008 Hilton 757 San Antonio 2008 Grand Hyatt 1,003 Opened in Recession Supply/Demand Increase
Typical Problem 9 Private Finance Approach – Prototypical 700 Rooms Meeting Space $52m Land Allowance $14 500 Parking Spaces $12m Financing Gap $50m Private $160m $140@75% $16m NOI 10% Yield Rooms $158m Self Supporting Parking Donate Land $236m
Convention Hotel Financing Models 10 Pittsburgh 1991 Norfolk 1992 Philadelphia 1995 Denver 1998 Providence Miami 1999 Nashville 2000 Tampa Baltimore 2001 Pittsburgh Airport Jacksonville Sacramento North Charleston Seattle Charlotte 2002 Overland Park Richardson Trenton St. Louis San Jose 2003 Cambridge MD Myrtle Beach 2004 Austin Houston 2005 Omaha Winston-Salem 2006 Schaumburg Raleigh Denver Columbus OH Washington DC San Antonio San Juan La Vista 2008 Phoenix Manhattan KS Baltimore Lancaster 2009 Shreveport 2011 2012 2014 PRIVATE FINANCING With Public Incentives PUBLIC FINANCING Houston 2016 Miami Beach* 2018 Nashville 2013 Austin 2015 Dallas Ft Worth Indianapolis * No public incentives. Chicago
Public Private Partnerships 11 Nationwide Realty Investors developed the office buildings immediately south of the hotel site and brought 9,000 jobs downtown. The FCCFA expanded the garage next to the hotel by 900 spaces to provide daily parking for these new workers. The revenue received from these daily parkers covers approximately 85% of the debt service on the bonds. Hilton International provided $3 million in upfront cash to help develop the Hilton Columbus Downtown. The current convention center accounts for approximately 208,000 room nights annually for an economic impact of $140 million. With the new hotel this impact is expected to increase by at least 52,000 room nights worth $35 million in economic activity. The convention center accounts for 2,100 jobs, $44 million in wages and $9.2 million in tax collections annually. With the new hotel, we expect 550 new jobs, $11 million in wages and $2.3 million in new tax collections.
Public Approach Case Study: Columbus 12 Opened fall 2012 532 Rooms; 22,000 sf meeting space $142.8m project cost; $268,400/key Plus Land Contribution Hotel guests park in a CFA garage and pay market rates $178m w/ issuance & reserves $160m bond sale $15m Authority equity $3m Hilton “key money” contribution 10% hotel occupancy tax rebated forever No property tax – public ownership $17.8m in Reserves (working capital, operating, rental, debt service) Other Financing Pledges Authority hotel land lease revenues from two other hotels Equal amount of City Parking Meter Revenues County Full Faith and Credit
Financial Dashboard Revenues August 2013 Dept. Profits Occupancy Goal ADR RevPAR Goal G&A Expense Sales & Mkting Expense Other Expense NOI Debt Service June 1 Pmt* December 1 Pmt* Y E Cash Forecast *Gross D/S prior to BABs subsidy Deposited BABs
STAR Report & SALT Dashboard (STAR data thru July 2013) August 2013 Occupancy Index (thru July 2013) Average Daily Rate Index (thru July 2013) Revenue / Available Room Index (thru July 2013) Guest Satisfaction Scores (SALT) (thru August 2013) Hilton Compared to Competitive Set --- Hilton Brand Benchmark
Hilton Columbus Dashboard Room Night Pace Room Night Bookings By Year Average Rate Definite Booking Types Goal/Budget to date Hilton bookings reflect contracts received and out for signature. Tentative Booking Definite August 2013 Prospects by Year Prospect by Type Conv. Center Revenue Generated by Hilton Year to Date Actual Contracted through Yr End
CVB Dashboard CVB Goal August 2013 CVB Pace and Position Definite room nights as of 9/3/2013
Secrets to Success Agree upon a reasonable NOI projection Back into development budget Fight – Fight – Fight to keep it in budget Build What You Can Afford Brands some times want to better their image at your expense Make approval of DD part of Brand selection Design the Hotel Through DD, THEN Retain the Brand Think quality, but small rooms – conventions are short term stays Study non-revenue support spaces diligently Limit meeting space (a little) if hotel “laminated” to Center meeting spaces Square Feet is Your Enemy Approve incentive package then seek development partner Good developers with capital relationships won’t take approval risk Avoid “other people’s money” developers Get the Public Role Approved Make it about economics, keep politics out Select someone you want to do business with Consider a community led selection/recommendation Make the Right “Business” Decision 17
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