September 19 & 20, 2013

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Hotel Development
Strategic opportunity for campus development and business growth potential for GWCCA
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Reasons for considering a
Hotel Development
• Respond to customer preference/demands
– Better serve Buildings B & C
– To increase the occupancy of GWCC
• Retain or enhance competitive position
• Support surrounding development (Northside Drive, NSP, neighborhoods)
• Provide a potential revenue stream
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Local Conditions
• Expanding meeting space to accommodate small to medium sized events.
• Three major properties (downtown) have developed environmentally controlled connectors between their properties to improve their ability to enhance their group business.
• Committing to fewer room blocks so they can book internal meetings.
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Development on/around our campus
New Attractions:
– College Football Hall of Fame
– National Center for Civil and Human Rights
– New Stadium Project
– Atlanta Streetcar
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Market/Demand Analysis
Retained three consultants:
• HVS Global Hospitality Services (HVS)
• Jones Lang LaSalle Hotels and Hospitality
Group (JLL)
• PKF Hospitality Research (PKF)
Scope: Determine the feasibility of developing a convention-oriented hotel on GWCCA campus.
Recommend project scope to include number of rooms, meeting space, services, and amenities.
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Results
Rooms
Meeting Space
Ballrooms
Pool
Restaurants
APPX. Cost of Facility
HVS JLL
1,200 1,000
PKF
800
110,000 53,520 60,000
2
2
3
1
2
1
2/500 2/500 2 (n/a)
$290-350M $350-400M $230-250M
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JLL – Atlanta Market
• Strong Travel/Tourism Infrastructure
• Expected economic improvement and with limited supply growth, Lodging RevPar should see near term improvements
• Robust office market shifting to landlordfavorable market as companies move from suburbs to urban core
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JLL – Conventions Market
• Increases in supply
– CEIR outlook (3 years) is moderate demand growth:
• 5.8% Exhibit Net Square Foot growth
• 6.8% increase in revenues
• GWCC exhibition attendance has remained flat (possibly indicating decreased competitiveness).
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JLL – Conventions Market
• Customer surveys indicate proximity of hotel rooms to facility is of paramount importance to meeting planners. The GWCC ranks 14 th in terms of rooms within ½ mile per 1,000sf of exhibit hall space.
• “A new headquarter hotel at the GWCC would likely mitigate some of the ‘refer In-House
Facility/Hotel’ lost business and a portion of the ‘No Availability Hotels’ lost business.”
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Market
Atlanta
Chicago
Dallas
Denver
Houston
Indianapolis
Nashville
New Orleans
Orlando
Phoenix
San Antonio
San Diego
San Francisco
Tampa
Washington DC
Competitive Set Hotel Stock Analysis
Rankings based upon number of rooms per square foot of exhibition space
SF Exhibition
Space
1,366,000
2,600,000
929,726
584,000
862,000
566,000
118,675
1,100,000
2,053,800
645,900
440,000
615,700
538,700
200,000
703,000
3,003
2,309
4,482
3,049
8,321
5,295
13,909
2,176
4,062
Rooms 1/2 mile
1,947
800
3,607
6,445
2,178
6,488
6
8
7
1
9
3
13
12
4
2
5
11
Rank
14
15
10
3,823
13,179
11,685
3,404
12,578
11,307
26,309
2,791
13,296
Rooms 1 mile
10,634
1,032
6,715
7,854
5,053
6,863
6
4
5
1
9
13
14
3
8
2
7
12
Rank
10
15
11
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Summary - JLL
• Development viability is very strong
• Demand is very favorable for project
• Brand is significant
• Will require public support
• Will support debt service but not enough to support private equity requirement
• Would have negative short-term impact on other hotels, but benefit market in long-term.
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HVS – Hotel Market
• Over the past 12 years hotel occupancy has had modest positive growth (even through recessions).
• From 2001 – 2012 local hotel occupancy levels ranged from a low of 55% to a high of 68%
• 2012 National occupancy levels reached highest point since 2007 and may soon exceed 70%.
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Historical Supply & Demand
Trends Local Competitive
Year
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Occupancy
61.5%
62.2%
59.8%
61.7%
64.2%
66.3%
68.2%
63.2%
55.4%
63.6%
62.0%
64.9%
Average Rate
$141.63
$137.45
$128.52
$130.98
$134.42
$145.14
$150.16
$150.99
$142.73
$145.44
$138.64
$144.64
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Average
Year Occupancy Rate
2017
2018
2019
2020
2021
63.0% $176.17
67.0% $182.33
69.0% $187.80
71.0% $193.44
71.0% $199.24
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• Hotel would increase activity in Building C and group room night demand.
• Brand is important for success.
• Feasibility is extremely high.
• Biggest risk is regional/national incident (ie:
Katrina).
• Combination of Public/Private Development
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PKF – Atlanta Market
• Atlanta has made strong progress in higherpaid professional and technical services job growth.
• New attractions (CFHOF, Museum, NSP) will bring new jobs.
• Multiple growth engines and strong demographics will make Atlanta an aboveaverage performer in the long term. (Moody’s
Analytics July 2013).
• Location of current Hotel inventory in relation to Buildings B and C has a negative impact on
GWCC business.
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Hotels in the Atlanta Downtown
Area
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PKF – Atlanta Market
• Demand for hotel rooms is at a historic high since the “Great Recession”.
• Demand has increased following GWCCA expansions (GWCC/Dome/COP) & attractions
(Aquarium, World of Coke).
• Development of Lucky Marietta District has improved the offering of restaurants and entertainment options for visitors.
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PKF - Summary
• Hotel at GWCC would be preferred hotel for customers.
• Creates ability to sell/host multiple events in multiple buildings.
• Opportunity to spur development.
• Overall market feasibility is very high.
• Public development is key
• Consider a non-branded development.
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Hotel Comparisons
Years 1 & 5
Occupancy
ADR
Total
Revenues
Net operating income
PKF – 800 rooms
1 Year
58%
$187
5 Year
65%
$206
HVS – 1,200 rooms
1 Year
63%
$176.17
5 Year
71%
$199.24
$48,495,000 $59,912,000 $41,611,905 $101,550,433
JLL – 1,000 rooms
1 Year
52%
5 Year
66%
$150.52 $181.76
$12,570,000 $17,040,000 $11,519,913 $29,961,324
HVS based upon 6 months operations
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GWCCA Hotel Opportunity
Next Steps
Recommend assigning the Project to Stadium
Development Committee o Consultant Presentations o RFP/Q for Project Manager/Developer
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