Greater Columbus Georgia
Chamber of Commerce
September 26, 2013
Franklin County Convention Facilities Authority
• 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.
2
Greater Columbus Convention Center
• 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.
3
Need for a Full Service Convention Hotel
• 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%
4
Columbus Hotel Pre-Development Timeline
Feasibility/
Demand Study
(confirmation
of previous
study)
completed;
recommended
potential
expansion of
Hyatt as
alternative
Feasibility/
Demand
Study
completed
Determined
Hyatt
expansion too
difficult
Mayor
decided to
explore public
financing due
to expense of
using private
development
Elected
officials
briefed on
potential
public
financing
plans
2010
City, County,
CFA
announce
agreement to
finance
project
2009
County
endorses
project
2008
Market/Financial
Feasibility Study
completed by
SAG
2007
Financial
Feasibility
Study
completed
2005
2004
2003
Feasibility/
Demand
Study
completed
2006
Feasibility/
Demand
Study
completed
2002
2001
Experience
Columbus
began
lobbying for
more hotel
rooms
Subcommittees
formed to
understand
financing,
marketing,
economic
impact and
connectivity
City, County,
CFA agree to
financing
terms
5
Conditions Driving HQ Hotel Public Participation
The last convention hotel to be financed
without public support (other than in Las
Vegas or Orlando) was the Chicago
Sheraton in 1992
6
Impact on Convention Center Generated Room Nights
Change in Convention Center Generated Room
Nights
Three years after Hotel Opened
80%
70%
60%
50%
40%
70%
50%
43% 42% 40%
30%
20%
10%
32%
25%
20% 20% 18% 18%
6%
0%
Source: Local convention and visitor bureaus.
7
Impact on Competitive Hotels
Supply/Demand Increase
60%
Supply
Demand Yr 1
50%
Demand Yr 2
Demand Yr 3
21%
40%
9%
Demand Yr 4
Demand Yr 5
30%
55%
48%
43%
20%
0%
7%
45%
32%
10%
7%
50%
26%
20%
7%
25%
23%
Denver
2005
Houston
2004
Hyatt
1,100
Hilton
1,203
Source: Smith Travel Research.
3%
2%
40%
35%
Louisville Charlotte
2005
2003
Marriott
616
Westin
700
Austin
2003
Hilton
800
26%
20%
Indianapolis St. Louis
2011
2003
JW Marriott Renaissance
1,005
917
17%11%
3%
San
Diego
2008
Hilton
1,190
3%
12%
22%
7%
17%
6%
7%
Baltimore San Antonio
2008
2008
Hilton
757
Grand Hyatt
1,003
Opened in Recession
8
Typical Problem
Private Finance Approach – Prototypical 700 Rooms
$250m
$236m
$200m
Land Allowance $14
500 Parking Spaces $12m
Meeting Space
$52m
Financing Gap
$50m
Donate Land
Self Supporting Parking
$150m
$100m
Rooms
$158m
Private
$160m
[email protected]%
$16m NOI
10% Yield
$50m
$0m
Development Cost
Warranted Investment
9
Convention Hotel Financing Models
PRIVATE
FINANCING
With Public
Incentives
Pittsburgh
Norfolk
Philadelphia
Denver
1991
1992
1995
1998
Miami
Nashville
Tampa
Baltimore
Jacksonville
North Charleston
Seattle
Charlotte
Richardson
St. Louis
San Jose
1999
2000
Providence
Chicago
2001
Pittsburgh Airport
Sacramento
2002
Overland Park
Trenton
2003
Cambridge MD
Myrtle Beach
Austin
Houston
Omaha
Schaumburg
Denver
Phoenix
2004
Shreveport
Winston-Salem
Raleigh
2005
2006
San Antonio
La Vista
2008
Lancaster
Ft Worth
Manhattan KS
Indianapolis
Nashville
Washington DC
Austin
Houston
Miami Beach*
2009
2011
2012
2013
2014
2015
2016
2018
PUBLIC
FINANCING
San Juan
Baltimore
Dallas
Columbus OH
* No public incentives.
10
Public Private Partnerships
• 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.
11
Public Approach Case Study: Columbus
• 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
12
5.0%
2.5%
0.0%
Goal
-2.5%
-5.0%
Dept. Profits
G&A Expense
$3m
$20m
$7m
$12m
$6m
$10m
Actual
Budget
PY
Actual
PY
$0m
$16m
Sales & Mkting
Expense
$12m
$30.00
$20.00
$10m
$8m
Goal
$0.00
$0m
$4m
$2m
$2m
$1m
$0m
$2m
$1m
$0m
Actual
Budget
Actual
Budget
PY
$0m
PY
Actual
Budget
PY
Actual
PY
Actual
Budget
PY
-$5.00
$3m
*Gross
D/S
prior to
BABs
subsidy
Deposit
Goal
$0.00
$3m
$6m
Debt Service
$5.00
Actual
Other Expense
$10.00
$2m
Budget
$6m
$4m
$8m
$4m
PY
Actual
PY
RevPAR
$5m
$4m
$3m
$2m
$1m
$0m
$10.00
$0m
$14m
Y E Cash Forecast
$1m
ADR
$5m
$8m
BABs
$18m
$14m
$10m
Debt Service
$2m
$20m
$15m
NOI
Deposited
$25m
Financial Dashboard
Occupancy
December 1 Pmt*
Revenues
June 1 Pmt*
August
2013
August
2013
Occupancy Index (thru July 2013)
Hilton Compared to Competitive Set
150%
125%
125%
100%
100%
75%
Hilton Compared to Competitive Set
75%
50%
(STAR data thru July 2013)
STAR Report & SALT Dashboard
150%
Revenue / Available Room Index (thru July 2013)
50%
25%
Current
Month
YTD
Running 3
Mo
Running 12
Mo
Average Daily Rate Index (thru July 2013)
150%
Hilton Compared to Competitive Set
125%
100%
75%
50%
25%
Current
Month
YTD
Running 3
Mo
Running 12
Mo
25%
Current
Month
YTD
Running 3
Mo
Running 12
Mo
Guest Satisfaction Scores (SALT) (thru August 2013)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
--- Hilton Brand Benchmark
Prop Loyalty
Overall
Experience
Service
Accomm.
Arrival
Departure
% of respondents that rated hotel either 9 or 10 on a scale of 1 to 10
August
2013
Prospects by Year
70k
80k
Hilton Columbus Dashboard
Room Night Bookings By Year
Room Night Pace
60k
Over Goal
Remaining to be Booked
Tentative
Booked
60k
70k
50k
40k
60k
50k
40k
30k
30k
20k
20k
50k
10k
10k
0k
0k
40k
2013
2014
2015
Definite Booking Types
30k
20k
10k
0k
Tentative Booking
Definite
2016
2017
Average Rate
100%
90%
80%
City-Wide
Goal/Budget to date
Hilton bookings reflect contracts received and out for signature.
In-House
Group
2014
2015
Prospect by Type
135k
120k
105k
90k
75k
60k
45k
30k
15k
0k
110%
80k
70k
60k
50k
40k
30k
20k
10k
0k
2013
2018<
70%
% of Goal
2016
2017
2018
Conv. Center Revenue
Generated by Hilton
$500k
$400k
Contracted
through Yr End
$300k
$200k
$100k
Year to
Date
Actual
$0k
City-Wide In-House
F&B + Rental
Revenue
August
2013
CVB Goal
CVB Pace and Position
350k
275k
250k
2012
2013
300k
250k
Room Nights
200k
175k
Room Nights
CVB Dashboard
225k
150k
125k
100k
Definite room nights as
of 9/3/2013
200k
150k
100k
75k
50k
50k
25k
0k
0k
Goal
Actual
Current
Year
1 Year
Out
2 Years
Out
3 Years
Out
4 Years
Out
5 Years
Out
Secrets to Success
Build What
You Can Afford
Design the Hotel
Through DD, THEN
Retain the Brand
• Agree upon a reasonable NOI projection
• Back into development budget
• Fight – Fight – Fight to keep it in budget
• Brands some times want to better their image at your expense
• Make approval of DD part of Brand selection
Square Feet is
Your Enemy
• 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
Get the Public
Role Approved
• Approve incentive package then seek development partner
• Good developers with capital relationships won’t take approval
risk
• Avoid “other people’s money” developers
Make the Right
“Business” Decision
• Make it about economics, keep politics out
• Select someone you want to do business with
• Consider a community led selection/recommendation
17
Questions
18
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Columbus Hilton Hotel - Greater Columbus Georgia Chamber of