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AUSTIN CONVENTION CENTER EXPANSION: PROMISES AND PERFORMANCE HEYWOOD SANDERS UNIVERSITY OF TEXAS AT SAN ANTONIO C.H. JOHNSON CONSULTING, INC. Experts In Convention , Sport and Real Estate Consulting the obstacles to future growth in Austin's Convention Center business have continued to mount. Table 2-1 summarizes the major reasons for lost business. The reasons are distributed by the number of room nights lost. Table 2-1 Reasons for Lost Business Primary Reason Facility dates unavailable Inadequate meeting space Lack of large hotel Room rates Political Large room block not available Location No response from hotels Meeting canceled Other reasons Room Nights Lost % of Total 69,820 31,045 28,155 25,133 11,874 11, 130 11,002 9,625 9,175 33,488 29% 13% 12% 10% 5% 5% 5% 4% 4% 14% Source :Austin Convention and Visitor's Bureau Meeting planners reported the lack of available facility dates more than any other reason for not using the Convention Center. The lack of available dates stems from the size of the facility, which prevents the occurrence of simultaneous events. Lack of adequate meeting space was the second most frequently cited problem. The availability of hotel rooms at reasonable rates is also important. Hotel-related factors (four categories in total) account for over 31 percent of the lost business . Additional hotel supply and greater cooperation from tl1e existing hotel community are essential if the city is to realize its meeting market potential. The current convention center is too small to accommodate Austin's pot ential demand . Center management is now facing severe problems in its attempts to retain a number of annual repeating events . Many national rotating events that previously came to Austin and liked the community cannot return because they are now too large for the facility . Many state events have also outgrown the facility. The chart below shows potential scenarios for exhibit-hall occupancy under three potential growth rates (2, 4, and 6 percent) . Exhibit-hall occupancy is the number of days an exhibition hall is rented (including move-in and move- OUt days) divided by the number of days in the year. The following chart h 'b ' t hall occupancy and potential future occupancy under a displays recent ex 1 1 - range of growth rates. I nnn R;innP. StriltP.nV• Austin r.nnv11ntinn r.,mtDr C.ortil\t'l ? _ 0!'!1"o ,:; C.H. JOHNSON CONSULTING, INC. Experts In Convention , Sport and Real Estate Consulting the obstacles to future growth in Austin's Convention Center business have continued to mount. Table 2-1 summarizes the major reasons for lost business. The reasons are distributed by the number of room nights lost. Table 2-1 Reasons for Lost Business Room Nights % of Total Primary Reason Facility dates unavailable Inadequate meeting space Lack of large hotel Room rates Political Location Large room block not available No response from hotels Meeting canceled Other reasons Lost 69,820 31,045 28,155 25,133 11,874 11, 130 11,002 9,625 9,175 33,488 Source :Austin Convention and Visitor's Bureau 29% 13% 12% 10% 5% 5% 5% 4% 4% 14% Meeting planners reported the lack of available facility dates more than any other reason for not using the Convention Center. The lack of available dates stems from the size of the facility, which prevents the occurrence of simultaneous events. Lack of adequate meeting space was the second most frequently cited problem. The availability of hotel rooms at reasonable rates is also important. Hotel-related factors (four categories in total) account for over 31 percent of the lost business . Additional hotel supply and greater cooperation from tl1e existing hotel community are essential if the city is to realize its meeting market potential. The current convention center is too small to accommodate Austin's pot ential demand . Center management is now facing severe problems in its attempts to retain a number of annual repeating events . Many national rotating events that previously came to Austin and liked the community cannot return because they are now too large for the facility . Many state events have also outgrown the facility. The chart below shows potential scenarios for exhibit-hall occupancy under three potential growth rates (2, 4, and 6 percent) . Exhibit-hall occupancy is the number of days an exhibition hall is rented (including move-in and move- OUt days) divided by the number of days in the year. The following chart h 'b ' t hall occupancy and potential future occupancy under a displays recent ex 1 1 - range of growth rates. I nnn R;innP. StriltP.nV• Austin r.nnv11ntinn r.,mtDr C.ortil\t'l ? _ 0!'!1"o ,:; C.H. JOHNSON CONSULTING, INC . EXPERTS IN CONVENTION, SPORT ,\ND R UL E.ST,1 TE CONSUL TING Table 4-1 Comparison of Demand-1996 VS. 125,000 SF. Expansion, Stabilized joem11nd Categories Exhibit Hall Events 125,970 S.F. Facility- 1996 255,600 S.F. Facility- 2005 Increment 2005 VS. 1996 # of Events Attendees # of Events Attendees # of Events Attendees I # of I # of I # of Conventions & Trade Shows 47 150,000 32,000 90,000 117,000 42,000 48,000 329,000 - (1 79,000 ) -- Seminars Conferences & 17 150,000 372,000 222,000 32 30 26 6 4 98 15 9 3 2 1 30 7 1 8 10 2 0 9 19 13 6 4 51 6 4 0 2 1 13 0 0 0 0 0 0 5 1 0 0 0 6 0 49 114 163 233 12,000 12,000 0 11,000 12 22,000 11,000 31 136 167 245 16,000 20,000 36,000 359,000 80 250 330 478 41,000 37,000 78,000 813,000 42,000 454,000 23 11 13 9 5 3 7 1 8 5 1 6 0-50,000 SF 50,001-100,000 SF 100,001-150,000 SF 150,001-200 ,000 SF 200,001-250,000 SF Subtotal Consumer Shows 0-50,000 SF 50,001-100,000 SF 100,001-150,000 SF 150,001-200,000 SF 200,001-250,000 SF Subtotal Meetings 0-50,000 SF 50,001-100,000 SF 100,001-150,000 SF 150,001-200,000 SF 200,001-250 ,000 SF Subtotal Local Events 0-50,000 SF 50,001-100,000 SF 100,001-150,000 SF 150,001-200,000 SF 200,001-250,000 SF Subtotal Meeting Room & Ballroom Conventions & Tradeshows Events Other Subtotal Total Source : Johnson Con$uHing Analysis of demand at the Coliseum and Palmer Auditorium indicates that its origin is primarily local. Therefore, this analysis does not include the impact of the City Coliseum or the Palmer Auditorium. To the extent that the Palmer or Coliseum may have generated some additional net new economic impact, this study understates the overall economic imp act. C.H. JOHNSON CONSULTING, INC. Experts in Convention, Sport and Real Estate Consulting for a combination of green space and additional urban development. A series of attractive parks and appropriate pedestrian-oriented development along this stretch could provide a link between the currently fragmented East and West sides of I-35. A revitalized area between the downtown core and the Convention Center would benefit the entire downtown area. A mixed-use, hotel, parking, retail project in this area would augment the nearby hotel room and parking supplies and generate synergy between the Convention Center and Austin's vibrant 6th Street entertainment district. This proposed initiative, combined with the ongoing enhancements that are extending the functional boundaries of 6th Street's entertainment district, could create a highly attractive pedestrian environment linking the convention center neighborhood to the rest of downtown. With this vision in mind, the City of Austin needs to take steps to compete with cities that aggressively pursue the state and national meeting markets. Austin has not adopted a downtown masterplan that takes advantage of the City's most positive attributes. In spite of its strong economy and superior image, the City of Austin has not yet taken steps to compete nationally for tourism and convention business. The development of a hotel room inventory capable of accommodating Austin's meeting potential is critical to maximizing the level of activity at the Convention Center. If left to follow current development patterns, the City of Austin will face a geographical dispersion of its room supply. This trend may result in increasing numbers of rooms outside of Austin's City limits. These suburban hotel properties will not grow the City's taxbase or adequately serve demand generated by the Convention Center. ., The current Convention Center generates approximately 150,500 room nights. Johnson Consulting projects that an expanded Center will generate approximately 332,600 room nights in Austin. The City can leverage this increasing demand to influence its future hotel development. ( the most appropriate An 800-room-plus hotel would be for accommodating Austin's increasing meeting-related demand. A property of this size will not be too large to be absorbed by Austin's hotel market, but would be large enough to enable Austin to compete in the national meeting market. A property in the 400 to 600 room range would have a tendency to focus on current demand sectors and would not be dependent upon Convention Center business. Once a large headquarters property is in place, the City can consider initiatives to further expand its downtown room-inventory. The Consulting Team analyzed three cities that have embarked on strategies to address the very hotel issues that Austin faces. Columbus, Indianapolis and Minneapolis have each followed a long-range master plan for Long Range Strategy-Austin Convention Center Section 2 - Page 8 July 1997 % & ’( ) # " * "# $ ! & % ( *+ , + - . /0 City of Austin Downtown Report April 2002 Revised 4/2/2002 # ) ! "# $ % & ’( Convention Center Expansion City of Austin Downtown Report April 2002 *+ , + - . /0 * ( % & " Revised 4/2/2002 Summary The original Austin Convention Center facility covered four city blocks downtown, bounded by Red River, East Cesar Chavez, Trinity and East Third streets. This project is a $110 million expansion of the Convention Center on adjacent land north of the current facility, pushing the footprint to Fourth Street. The Center, which opened in July 1992, was built to allow for future expansion. Convention Center Expansion Status Summary The exterior skin is almost complete and the building is entirely enclosed. Sitework is underway. Interior The original Austin Convention Center facility covered four city blocks downtown, bounded by Red River, fi nishes are well underway, working east to west (the building is two blocks wide). The roof, mechanical, East Cesar Chavez, Trinity and East Third streets. This project is a $110 million expansion of the Convention electrical and plumbing systems are substantially complete. Estimated date of Substantial Completion is Center on adjacent land north of the current facility, pushing the footprint to Fourth Street. The Center, April 29, 2002. which opened in July 1992, was built to allow for future expansion. Status Description The exterior skin is almost complete and the building is entirely enclosed. Sitework is underway. Interior The expansion will add an additional 130,000 square feet of exhibit space, a new 40,000 square foot ballroom fi nishes are well underway, working east to west (the building is two blocks wide). The roof, mechanical, and another 35,000 square feet of meeting rooms, doubling its capacity. electrical and plumbing systems are substantially complete. Estimated date of Substantial Completion is Room nights - the nights people spend in area hotels - are expected to increase from 150,500 to 332,600 April 29, 2002. with the expansion. Description A feasibility study on the Convention Center anticipates a community economic impact of an expansion to increase from $70.6 million annually and 1,464 jobs to $156.6 million annually and 3,268 jobs. The fi scal The expansion will add an additional 130,000 square feet of exhibit space, a new 40,000 square foot ballroom impact including property, sales and hotel taxes for Austin would grow from $3.3 million annually to $7.4 and another 35,000 square feet of meeting rooms, doubling its capacity. million annually. During construction of the expansion, Austin is expected to have a one-time benefi t of $145 million and 1,143 jobs. Room nights - the nights people spend in area hotels - are expected to increase from 150,500 to 332,600 with the expansion. Basic Data A feasibility study on the Convention Center anticipates a community economic impact of an expansion to increase from $70.6 million annually and 1,464 jobs to $156.6 million annually and 3,268 jobs. The fi scal Project Contact: Tom Wood, Public Works Department, 404-4084 impact including property, sales and hotel taxes for Austin would grow from $3.3 million annually to $7.4 Project Manager: Gilbane Building Company million annually. During construction of the expansion, Austin is expected to have a one-time benefi t of General Contractor: SpawGlass $145 million and 1,143 jobs. Substantial Completion: April 2002 Basic Data Project Contact: Tom Wood, Public Works Department, 404-4084 Project Manager: Gilbane Building Company General Contractor: SpawGlass Substantial Completion: April 2002 Redevelopment Services Offi ce 5.8 Redevelopment Services Offi ce 5.8 4 4 AUSTIN CONVENTION CENTER FY17-18 CONVENTION EVENTS WITH ATTENDANCE AND ROOM NIGHTS  2018 TRVA Austin RV Expo 2018 Austin Auto Show 2018 UIL Robotics State Championship - FIRST Division Life Sciences Women's Conference 2018 2018 Austin Fall Home & Garden Show Minefaire 2018 Wizard World Austin Comic Con Convention (CONV) - Count: 33 KeHE 2017 Natural Show SpiceWorld Austin 2017 2017 AALAS National Meeting 2017 SWE Annual Conference Texas Society of Architect's 78th Annual Convention & Design Expo 2017 STAFDA Annual Convention and Tradeshow 2017 The Running Event Xerocon Austin 2017 2018 American Meteorological Society 2018 TASA Midwinter Conference 2018 TCEA Annual Convention AAAS Annual Meeting NDA 2018 Annual Convention & Expo NTCA 2018 SXSW Conference and Festivals 2018 Distributors Conference Work Human 2018 2018 Annual Spring Clinical Meeting 2018 Annual Clinical & Scientific Meeting IMMUNOLOGY 2018 2018 TCEQ Environmental Trade Fair & Conference 2018 NI WEEK DreamHack Austin 2018 SPIE Astronomical Telescopes and Instrumentation 2018 2018 TASSP Summer Workshop 2018 National Charter Schools Conference 2018 NASFAA National Conference 02/13/18 02/18/18 04/16/18 04/23/18 05/17/18 05/19/18 08/07/18 08/09/18 08/22/18 08/27/18 09/13/18 09/16/18 09/20/18 09/23/18 10/01/17 10/06/17 10/06/17 10/11/17 10/13/17 10/19/17 10/23/17 10/28/17 11/06/17 11/12/17 11/09/17 11/15/17 11/25/17 12/02/17 12/04/17 12/06/17 01/04/18 01/12/18 01/26/18 01/31/18 02/02/18 02/10/18 02/13/18 02/19/18 02/19/18 02/25/18 02/22/18 03/01/18 03/02/18 03/19/18 03/21/18 03/30/18 03/31/18 04/06/18 04/07/18 04/14/18 04/24/18 05/01/18 05/02/18 05/08/18 05/11/18 05/16/18 05/16/18 05/25/18 05/26/18 06/04/18 06/08/18 06/15/18 06/11/18 06/15/18 06/15/18 06/20/18 06/22/18 06/27/18 10,000 10,000 500 1,000 20,000 10,000 4,000 365,730 1,500 3,000 4,800 13,700 3,500 4,300 1,700 80 3,700 6,500 15,000 6,000 1,200 2,500 150,000 3,800 3,000 2,500 6,000 3,000 6,000 6,000 27,000 2,300 2,850 4,800 2,000 9,458 10,000 750 350 20,000 8,215 4,412 398,510 2,000 2,670 4,136 14,500 3,074 4,470 2,629 80 4,198 6,700 10,547 6,836 1,055 2,268 200,310 2,975 2,850 2,900 6,800 3,652 4,900 4,754 36,000 2,227 2,253 4,502 2,135 0 0 0 0 0 0 0 236,677 1,972 2,637 8,174 7,972 1,144 4,900 2,296 671 7,996 5,043 10,394 5,298 1,457 5,902 53,681 5,451 4,674 4,258 8,414 14,462 2,353 5,487 1,079 2,982 3,302 4,281 6,064 Past Conference Attendance: Indianapolis, IN/Hybrid – 16,609 Virtual WE20 – 18,825 Anaheim, CA WE19 – 16,627 Minneapolis, MN WE18 – 14,100 Austin, TX WE17 – 14,600 Philadelphia, PA WE16 – 11,700 Nashville, TN WE15 – 8,539 Future Locations: Houston, TX WE22 October 20-22, 2022 Los Angeles, CA WE23 October 26-28, 2023 Chicago, IL WE24 October 24-26, 2024 SpiceWorld 2022 is hybrid! We can't wait to see you virtually or in person in Austin, TX. September 28 - 30, 2022! Future AVMA meeting dates 2022 Philadelphia, Friday, July 29 – Tuesday, August 2, 2022 2023 Denver, Friday, July 14 – Tuesday, July 18, 2023 2024 Austin, Friday, June 21 – Tuesday, June 25, 2024 2025 Washington D.C., Friday, July 18 – Tuesday, July 22, 2025 2023 Anaheim, Friday, July 10 – Tuesday, July 14, 2026 FISCAL YEAR DATA FROM RESPONSE TO ALTER EXCLUDING SXSW YEAR FY15-16 FY16-17 FY17-18 CONV ATTD ROOM NIGHTS CONV ATTD ROOM NIGHTS 315,711 224,072 165,711 167,696 338,232 239,189 188,232 183,542 403,770 246,235 203,460 192,554 Austin Convention Center EXPANSION STUDY AUSTIN, TEXAS SUBMITTED TO: EXISTIN G Mrs. Trisha Tatro Austin Convention Center 500 East Cesar Chavez Street Austin, Texas 78701 Trisha.Tatro@austintexas.gov +1 (512) 404-4000 HVS Convention, Sports & Entertainment PREPARED BY: Facilities Consulting 205 West Randolph Suite 1650 Chicago, Illinois 60606 +1 (312) 587-9900 June 10, 2020 Convention, Sports & Entertainment Facilities Consulting Chicago, Illinois FIGURE 6-2 SUMMARY OF DEMAND HISTORY 2015 2016 2017 2018 2019 Event Conventi ons Tra des hows Cons umer Shows Conferences Ba nquets Meeti ng Sports Concerts & Enterta inment Other South by Southwes t Total Estimated Attendees Conventi ons Tra des hows Cons umer Shows Conferences Ba nquets Meeti ng Sports Concerts & Enterta inment Other South by Southwes t Total 37 2 11 12 7 31 8 1 3 1 113 130,329 1,700 86,063 23,854 12,250 14,225 33,500 900 35 105,000 407,856 38 1 9 11 5 18 4 3 na 1 90 174,600 10,000 45,100 12,875 3,280 8,330 22,700 2,850 na 150,000 429,735 Source: ACC 42 3 16 11 9 25 5 1 2 1 115 186,480 3,200 132,600 17,275 5,775 15,165 29,100 2,500 30 150,000 542,125 36 1 11 12 7 15 3 2 3 1 91 216,500 1,500 80,700 23,400 5,275 7,800 18,000 4,600 32 200,000 557,807 38 1 11 10 6 26 3 1 2 1 99 156,750 1,200 84,700 13,000 8,730 10,913 4,300 1,000 15 200,300 480,908 Historic demand at the ACC varied from 90 events in 2016 to 115 in 2017, while the attendance ranged from nearly 408,000 attendees in 2015 to more than 557,000 in 2018. The drop in attendance from 2018 to 2019, while the number of events at the ACC increased, was likely caused by several large conventions using a different facility and being replaced with smaller events. The most common types of events are conventions and meetings, followed by consumer show and conferences. The majority of ACC attendees come for conventions and consumer shows. Lost Business Analysis Visit Austin provided HVS with a summary of lost convention center business for events that were lost from 2015 to 2019. Events are counted as lost if they tentatively reserved dates but ultimately decided not to book the ACC. The summary contains lost event data for approximately 1,300 events. The data included the total June 10, 2020 Demand Analysis Austin Convention Center 6-4 Convention, Sports & Entertainment Facilities Consulting Chicago, Illinois The expansion would allow the ACC to attract more than 100 more events by enabling it to host larger events than it supports today as well as more simultaneous events that are similar in size to those that the ACC currently hosts. All event types are projected to increase except other events, which are mostly photoshoots, and South by Southwest. Total attendance at the ACC is projected to increase from 483,000 in the base year to 837,000 by 2033 when demand stabilizes. These projections assume that the COVID-19 pandemic has been contained by the time of expansion and the number of events and attendees will recover to historical levels. The figure below shows a summary of the demand projections and compares the number of events, average attendance, and total attendance in the base year and a stabilized year. FIGURE 6-6 SUMMARY OF DEMAND PROJECTIONS Events Average Attendance Total Attendance Event Type Base 2024 Stabilized 2033 Conventions Tradeshows Consumer Shows Conferences Banquets Meeting Sports Concerts & Entertainment Other South by Southwest 38 2 12 11 7 23 4 2 2 1 Total 102 214 Base 2024 4,539 2,923 7,232 1,596 1,051 494 4,623 1,530 9 161,060 Stabilized 2033 4,700 2,200 7,200 2,000 1,100 500 4,700 1,500 10 250,000 65 6 15 35 25 55 6 4 2 1 Base 2024 172,000 6,000 87,000 18,000 7,000 11,000 18,000 3,000 20 161,000 483,000 Stabilized 2033 306,000 13,000 108,000 70,000 28,000 28,000 28,000 6,000 20 250,000 837,000 Historic Hotel Market Impact The largest increase in events comes from banquets, conventions, conferences, and meetings. Average attendance is based on historic ACC averages. Total attendance is projected to increase for all events types. While most out of town attendees to ACC events stay in the downtown area, the room nights generated by these events affect the room rates and occupancy of the entire city. A hotel market phenomenon called “compression” occurs when high occupancies in one or more hotels increase occupancy and room rates in other hotels. Visit Austin provided HVS with historic daily STR data for the downtown market in Austin from 2015 through 2019. June 10, 2020 Demand Analysis Austin Convention Center 6-8 Kay Bailey Hutchison Convention Center Dallas (KBHCCD) Master Plan Update and Project Financing Zone Economic Development Committee October 4, 2021 Rosa Fleming - Director, Convention and Event Services Robin Bentley - Director, Economic Development Joey Zapata - Assistant City Manager Dr. Eric A. Johnson - Chief of Economic Development & Neighborhood Services Financing Strategy: Proposed Funding Sources Funding Sources Range of Revenue Sources Note Debt Restructuring $250 - $500 M Project Financing Zone (PFZ) Approx. $2.2 B CES working with Bond Counsel State Funds Redirected to City of Dallas 2% Hotel Occupancy Tax Increase Approx. $1.5 B New visitor fee Monetization of Public RE (CC Sites) $100 - $240 M Leverages existing under- utilized assets Total Proposed Funding Sources $4.0 B - $4.4 B 16 Project Benefits Convention Center Project Creates the Opportunity To: (cid:135) Nearly double annual attendance via the addition of new events and somewhat larger events, on average (cid:135) Generate ~330k additional annual hotel room nights in Dallas by stabilization, bringing annual total to ~700k hotel room nights (cid:135) Yield 50-100K jobs (construction and permanent), up to $2.5 B in property taxes and $30-50B in total spending over 30 years (cid:135) Improve operating efficiency to bolster Convention and Event Services (CES) continued operation as an enterprise department without reliance on the General Fund (cid:135) Redirect state taxes back to Dallas, capture new visitor and user fees, and leverage existing assets to renovate or reconstruct the Convention Center 20 THE CURRENT STATE OF CONVENTION ATTENDANCE