Updated Planning Analysis for an Expanded/Improved Boston Convention & Exhibition Center November 30, 2010 DRAFT FOR POLICY DISCUSSION ONLY Table of Contents I. Industry Characteristics and Trends II. Boston as a Convention Destination III. Current Industry Development IV. Review of the BCEC Vision V. The Broad View of Convention Centers & Economic Impacts DRAFT FOR POLICY DISCUSSION ONLY Industry Characteristics and Trends DRAFT FOR POLICY DISCUSSION ONLY Annual Changes to Traditional Convention & Tradeshow Demand and S&P 500 EPS Source: Tradeshow Week, 2010; Standard & Poor's, 2010 DRAFT FOR POLICY DISCUSSION ONLY Comparison of Overall Exhibition Industry Performance (2000 – 2009) Note: 2000 is the base year and is assigned a value of 100. Source: Center for Exhibition Industry Research (CEIR), 2010 DRAFT FOR POLICY DISCUSSION ONLY Comparison of Exhibition Industry Performance by Market Segment (2000 – 2009) Note: 2000 is the base year and is assigned a value of 100. Source: Center for Exhibition Industry Research (CEIR), 2010 DRAFT FOR POLICY DISCUSSION ONLY Comparison of Meeting Attendance (2008 – 2010) Source: MeetingsNet, 2009 DRAFT FOR POLICY DISCUSSION ONLY Comparison of Exhibitor/Sponsor Attendance (2008 – 2010) Source: MeetingsNet, 2009 DRAFT FOR POLICY DISCUSSION ONLY Recent Indications of a Recovery • The exhibition industry contracted by 12.5 percent in 2009 (in terms of space sold, revenue, number of exhibiting companies and attendance). • For the first time in nine consecutive quarters, all four indexes were up (between five and seven percent) in the 3rd Quarter of 2010. • The third quarter is historically the weakest of the four quarters and has seen the greatest declines in recent years. Source: Center for Exhibition Industry Research (CEIR), 2010 DRAFT FOR POLICY DISCUSSION ONLY Performance Trends in Similar Markets Philadelphia, PA - Event and attendance levels are down 10 to 15 percent year over year since 2007, starting to see signs of improvement. Houston, TX - Attendance and occupancy are beginning to trend up after a minor decline (five to eight percent) in past several years. Atlantic City, NJ - Events are generally flat year over year, but space use, room nights, attendance, occupancy and rental revenue are down 15 to17 percent year over year. Kansas City, MO - Occupancy is on a downward trend – off 10 to 15 percent from previous years. There are no signs of an upward tick-hoping to stay flat. San Diego, CA - Occupancy and attendance are down approximately 10 percent since 2007; however, trends are reversing with larger events and added corporate business. San Antonio - After a very strong 2008, event and attendance levels decreased by 10-15 percent in 2009. Nice rebound in 2010. Future bookings for 2011 and 2012 follow a consistent pattern of growth. DRAFT FOR POLICY DISCUSSION ONLY Boston as a Convention Destination DRAFT FOR POLICY DISCUSSION ONLY Ranking of Competitive and Comparable Markets (All Respondents) – National Conventions and Tradeshows San Diego 3.72 Orlando 3.37 San Antonio 3.32 New Orleans 3.24 Las Vegas 3.22 Denver 3.16 Chicago 3.14 San Francisco 3.11 Boston 3.09 Washington DC 2.95 Atlanta 2.95 Baltimore 2.77 Philadelphia 2.70 Los Angeles 2.70 Miami Beach Average = 3.02 Median = 3.10 2.56 New York 2.29 0.0 1.0 2.0 Low Note: Data represented includes all organizations interviewed Source: CSL Interviews, 2008 3.0 4.0 5.0 High DRAFT FOR POLICY DISCUSSION ONLY Ranking of Competitive and Comparable Markets (Positive Respondents) – National Conventions and Tradeshows San Diego 4.00 Boston 3.65 Orlando 3.52 Washington DC 3.47 San Francisco 3.46 San Antonio 3.45 New Orleans 3.45 Chicago 3.33 Denver 3.32 Las Vegas 3.19 Baltimore 3.11 Atlanta 3.09 Philadelphia 2.94 Los Angeles 2.86 Miami Beach 2.78 New York Average = 3.25 Median = 3.33 2.45 0.0 1.0 2.0 3.0 4.0 5.0 Low High Note: Data represented includes all organizations with a potential interest in the Boston Convention and Exhibition Center. Source: CSL Interviews, 2008 DRAFT FOR POLICY DISCUSSION ONLY Benefits of Boston as a Potential Host Market for Events • Proximity to major East Coast markets • History • Corporate Base • Quality, well-kept event facilities • Concentration of Medical Centers • Retail and nightlife • Museums/symphonies/cultural attractions • Transportation • Variety of restaurants (including fine dining) • Great experience • Great accommodations • Excellent service • Sightseeing/popular attractions DRAFT FOR POLICY DISCUSSION ONLY Reasons for Lack of Future Interest in BCEC – National Conventions and Tradeshows High Costs Associated with the City 28% 27% Geographic Location 13% Weather 0% 10% 20% 30% Note: Data represented includes all organizations interviewed. Source: CSL Interviews, 2008 DRAFT FOR POLICY DISCUSSION ONLY Current Industry Development DRAFT FOR POLICY DISCUSSION ONLY Timeline of Added Convention Center Space and Visitor Industry Amenities Pennsylvania Convention Ctr. Orange County Convention Ctr. • 1,400-room Hilton headquarter hotel • 239,000 sq. ft. of exhibition space • 123,000 sq. ft. of meeting space Music City Center (Nashville) • 55,000 sq. ft. of ballroom space • New 500,000+ sq.ft. Center and 800 room hotel Javits Convention Center Dallas Convention Center • Adding 50,000 sq. ft. of meeting/ballroom space • 1,000-room headquarter hotel • Renovation of existing space January 2009 January 2010 Anaheim Convention Center • Adding 100,000-sq. ft. outdoor plaza January 2011 January 2012 January 2013 January 2014 January 2015 Cobo Convention Center Phoenix Convention Center • 437,000 sq. ft. of exhibit space Indiana Convention Center • 90,000 sq. ft. of meeting space • 254,000 sq. ft. of exhibition space • 45,000 sq. ft. of ballroom space • 63,000 sq. ft. of meeting space • Modest expansion/facility remodeling Moscone Convention Center Washington Convention Center • 1,175-room headquarter hotel • $70 million in facility improvements Other Planned Projects Miami Beach Convention Center San Diego Convention Center • New ballroom/enhancements • 350,000 sq. ft. of sellable space • New headquarter hotel • 500 room hotel New Orleans Convention Center • Reconfiguration of exhibit hall space/other improvements Gonzalez Convention Center • Exhibit space expansion/facility improvements Kansas City Convention Center • 1,000-room headquarter hotel DRAFT FOR POLICY DISCUSSION ONLY Philadelphia – Expanded CC and New Headquarter Hotel • Center opened in 1993. • The $786 million project will add more than 400,000 sellable square feet (a nearly 60 percent increase). Completion is expected in March 2011. • The expansion will allow two conventions to be held simultaneously and is estimated to result in more than 280,000 additional room nights and more than $140 million in economic impact annually. • The expanded Center represents a primary competitor to the BCEC. • The corporate demographics (medical, pharmaceutical) are also similar to Boston. DRAFT FOR POLICY DISCUSSION ONLY Washington DC – New CC and Planned Headquarter Hotel • New Center opened in 2003 with nearly 900,000 sellable square feet. • Approximately 30,000 square feet of meeting space was added in 2009. • Lack of headquarter hotel inventory was cited as a primary shortcoming of the convention package. • Funding for a new $537 million, 1,167room Marriott Marquis headquarter hotel was approved in 2009 and bonds have been sold. • Ground breaking took place in November 2010 and the hotel is slated to open in spring 2014. (A) – Marriott Marquis (1,200 rooms) 1 – Grand Hyatt Washington (888) 2 – Renaissance Washington, DC (807) DRAFT FOR POLICY DISCUSSION ONLY Miami Beach – Expansion, Reconfiguration and HQ Hotel • Existing Center outdated, no ballroom, no adjacent hotel. • City has largely exited the convention business. • Development in surrounding areas includes Lincoln Road, Gehry designed theater, waterfront, memorials and parks. • Center is located in a sensitive development area, massive tradeshows not suited for Center. • Demand exists for extensive “repositioning” and enhancement of Center. • Architects have created an “inside/outside” approach to the project – linking surrounding amenities – creating WALKABLE environment. • Headquarter hotel to be located on SE portion of the site. DRAFT FOR POLICY DISCUSSION ONLY Nashville – New CC and HQ Hotel Development • Existing Center undersized, out of date. • Research indicated significant unmet market demand. • Project offers ability to significantly increase convention business. • Nashville offers a compelling visitor industry brand. • The new CC site offers linkages to the Country Music HOF, Broadway and the Arena. • The CC represents a key component of a convention, sports & entertainment district. • Key assets are offered in a walkable environment. • Project includes a 800 room Omni headquarter hotel. DRAFT FOR POLICY DISCUSSION ONLY San Diego – Center Expansion and Hotel Development • San Diego has been a top performer in west coast convention industry. • Space demand has exceeded availability, Center runs high occupancy. • Center has seen only modest drop off in business during the recession. • Expansion represents a “full build-out” of the site. • The project adds to the extensive adjacent hotel inventory (500 rooms). • Project adds a 3rd ballroom (80,000 square feet) and added meeting space. • Convention Center supports the extensive and successful restaurant/entertainment district. DRAFT FOR POLICY DISCUSSION ONLY San Antonio – CC Repositioning and Expansion • The Center is poorly laid out, little integration between old and new. • The destination amenities (Riverwalk, etc.) create a desirable visitor destination. • Significant renovation of original space needed. • Expansion is part of a comprehensive Destination Development Plan • Demand exists for a “one hall” expansion. • Consideration being given to significant replacement of original space. • Budget issues will impact final project decisions. DRAFT FOR POLICY DISCUSSION ONLY Phoenix – New CC and Headquarter Hotel Development • Existing downtown Center was outdated and undersized. • $800 million expansion completed in 2009. The project nearly tripled the size of the Center. • The Center is served by Metro Rail. • Facility is part of a downtown entertainment complex that consists of the US Airways Center, Chase Field, Symphony Hall, Science Center, etc. • The West Ballroom is a 45,200-square foot multi-purpose space that offers retractable, telescopic riser seating for approximately 1,200. • The 21,000-square foot Executive Conference Center is a venue within a venue built to IACC standards. DRAFT FOR POLICY DISCUSSION ONLY Some of the “Why’s” of Convention Center Development • Event planners demonstrate a continuing need for sleeping rooms – Headquarter Hotel. • Key component of walkable convention, sports, entertainment districts. • Support for ancillary development (restaurants, retail, etc.) also benefits local residents. • Reconfiguration of existing space is often the central theme. • Building on a successful visitor industry brand – using a Center to create broader destination exposure to the traveling public. “I can not overstate the importance to San Diego of remaining competitive in the convention business,” Sanders said. “In the midst of an economic downturn, we cannot afford to neglect an asset that reliably produces revenues that support essential city services.” - Jerry Sanders – Mayor of San Diego • Expansion can protect and expand market share in a desirable industry. • Employment, tax and other quantifiable impacts. DRAFT FOR POLICY DISCUSSION ONLY Review of the BCEC Vision DRAFT FOR POLICY DISCUSSION ONLY BCEC Development Parameters • Sufficient headquarter hotel inventory is a clear shortcoming of the overall BCEC package. • Ballroom capacity is low relative to competition. • Exhibit and meeting space development could result in occupancy levels within the 50 to 70 percent target range. • Auditorium space would add value, but may not provide sufficient return given significant costs. • Specialty space targeted to medical and other fields may represent a low-cost opportunity for competitive advantages. DRAFT FOR POLICY DISCUSSION ONLY The Broad View of Convention Centers & Economic Impacts DRAFT FOR POLICY DISCUSSION ONLY Broad View of Convention Center & Economic Impacts • Traditionally measured tax revenue and economic impacts. • Catalyst for ancillary development in adjacent and nearby areas – and these developments create greater tax base. • Events held at Center provide exposure for the market to business leaders and key decision makers. • Local industry can benefit from hosting of marquee industry events. • Successfully competing in the convention industry can boost an important sector of the local economy. DRAFT FOR POLICY DISCUSSION ONLY Updated Planning Analysis for an Expanded/Improved Boston Convention & Exhibition Center November 30, 2010 DRAFT FOR POLICY DISCUSSION ONLY Comparison of Hotel Rooms Within ½ Mile of the Convention Center – Competitive and Comparable Markets San Francisco, CA 19,100 Las Vegas, NV 16,600 Orlando, FL (1) 10,800 San Antonio, TX 9,350 New Orleans, LA 8,600 Philadelphia, PA 8,400 Atlanta, GA 8,300 San Diego, CA (2) 8,200 Washington, DC (3) 7,600 Miami Beach, FL 6,850 Denver, CO 6,600 Baltimore, MD 6,100 Boston, MA (4) 6,000 New York, NY 1,700 Boston, MA (5) 1,700 Los Angeles, CA (6) 1,700 Chicago, IL 1,100 0 (1) (2) (3) (4) (5) (6) Average = 7,570 Median = 7,600 5,000 10,000 15,000 Number of Rooms 20,000 25,000 Includes approximately 750 rooms under construction and expected to open in winter 2010-2011. Includes the 240-room Residence Inn by Marriott Gaslamp Quarter expected to open November 2009. Includes the approved new 1,167-room Marriott Marquis expected to open 2013. Estimated number of hotel rooms within ½ mile of the Hynes Convention Center. Estimated number of hotel rooms within ½ mile of the Boston Convention and Exhibition Center. Includes an estimated 1,001 rooms currently under construction. Pending funding approval, an additional 702 rooms not included in the total above are planned to be constructed within DRAFT FOR POLICY one-half mile of the LACC. Source: Convention and Visitors Bureaus, industry publications, 2009 DISCUSSION ONLY Hotel Rooms Within ½ Mile of the Boston Convention and Exhibition Center – 0 hotels with more than 1,000 rooms. – 1 hotel with 500 to 999 rooms. – 2 hotels with 100 to 499 rooms. ½ Mile Radius 1 – Westin Boston Waterfront (793 rooms) 3 2 – Marriott Renaissance (471) Boston Convention and Exhibition Center 2 3 – Seaport Hotel (426) 1 DRAFT FOR POLICY DISCUSSION ONLY Hotel Rooms Within ½ Mile of the Washington (DC) Convention Center – 1 hotel with more than 1,000 rooms. ½ Mile Radius – 2 hotels with 500 to 999 rooms. – 17 hotels with 100 to 499 rooms. (A) – Marriott Marquis Hotel (1,167 rooms) (expected to open 2013) 1 – Grand Hyatt Washington (888) 18 7 6 4 Washington (DC) Convention Center 19 13 15 5 – Embassy Suites Washington, DC (384) 6 – The Madison Hotel (353) 7 – Washington Plaza Hotel (340) 12 2 5 9 3 3 – Marriott at Metro Center (456) 4 – Westin Washington, DC City Center (406) (A) 10 8 2 – Renaissance Washington, DC (807) 8 – Hamilton Crowne Plaza (318) 9 – Hilton Garden Inn DC (300) 10 – Four Points Downtown by Sheraton (265) 1 14 11 – Harrington Hotel (242) 12 – Hampton Inn Washington, DC (228) 13 – Residence Inn by Marriott (202) 14 – Red Roof Inn Downtown DC (195) 16 11 17 15 – Donovan House (193) 16 – Courtyard by Marriott (188) 17 – Hotel Monaco (183) 18 – Hotel Helix (178) POLICY 19 – Comfort Inn ConventionDRAFT CenterFOR (100) DISCUSSION ONLY Hotel Rooms Within ½ Mile of the Pennsylvania (Philadelphia) Convention Center – 1 hotel with more than 1,000 rooms. – 3 hotels with 500 to 999 rooms. – 18 hotels with 100 to 499 rooms. ½ Mile Radius 1 – Philadelphia Marriott (1,408 rooms) 2 – Sheraton City Center (758) 3 – Loews Philadelphia Hotel (581) 4 – Courtyard by Marriott (500) 7 11 2 Convention Center Expansion Pennsylvania Convention Center 16 4 1 14 10 8 13 17 21 6 – Doubletree Hotel Philadelphia (434) 7 – Four Seasons Hotel (364) 8 – Sofitel Philadelphia (306) 22 18 5 5 – Crowne Plaza Center City (445) 15 9 – The Ritz-Carlton Philadelphia (299) 10 – The Westin Philadelphia (290) 11 – Embassy Suites Center City (288) 3 12 – Hilton Garden Inn City Center (279) 13 – Club Quarters Philadelphia (275) 14 – Residence Inn by Marriott (269) 9 20 19 12 6 15 – Hampton Inn Philadelphia (250) 16 – W Hotel (Opening 2009) (250) 17 – Hotel Palomar (230) 18 – Le Meridien Philadelphia (201) 19 – Park Hyatt Philadelphia (172) 20 – Holiday Inn Express Midtown (168) 21 – Latham Hotel (139) 22 – Hotel Windsor (106) DRAFT FOR POLICY DISCUSSION ONLY Hotel Rooms Within ½ Mile of the San Diego Convention Center – 3 hotels with more than 1,000 rooms. 14 13 10 5 ½ Mile Radius 15 17 – 1 hotels with 500 to 999 rooms. – 13 hotels with 100 to 499 rooms. 1 – Manchester Grand Hyatt (1,625 rooms) 7 2 – San Diego Marriott Convention Center (1,362) 3 – Hilton San Diego Bayfront (1,190) 16 1 2 9 12 11 8 6 4 – Omni San Diego Hotel (511) 5 – Westin Gaslamp Quarter (450) 6 – Hard Rock Hotel (420) 7 – Embassy Suites San Diego Bay (337) 4 8 – San Diego Marriott Gaslamp (306) 9 – Hilton San Diego Gaslamp (282) 10 – The US Grant (270) San Diego Convention Center 3 11 – Residence Inn by Marriott Gaslamp (opening November 2009) (240) 12 – Hilton Solamar (235) 13 – The Westgate Hotel (223) 14 – The Sofia Hotel (211) 15 – Ivy Hotel (159) 16 – Horton Grand Hotel (132) 17 – Comfort Inn Gaslamp (103) DRAFT FOR POLICY DISCUSSION ONLY Hotel Rooms Within ½ Mile of the Gonzalez Convention Center (San Antonio) – 2 hotels with more than 1,000 rooms. – 2 hotels with 500 to 999 rooms. 7 19 11 10 2213 14 – 21 hotels with 150 to 499 rooms. 8 3 6 15 20 17 21 23 12 9 4 5 ½ Mile Radius 1 – Grand Hyatt San Antonio (1,003 rooms) 2 – Marriott Rivercenter (1,001) 18 3 – Hyatt Regency (632) 4 – Marriott Riverwalk (512) 2 5 – Hilton Palacio del Rio (483) 1 8 – Wyndham St. Anthony (352) 25 6 – Westin Riverwalk (473) 7 – Crowne Plaza Riverwalk (410) 24 9 – La Quinta Inn & Suites Conv. Ctr. (350) 10 – Omni La Mansion del Rio (338) 11 – Sheraton Gunter Hotel (322) 16 Henry B. Gonzalez Convention Center 12 – The Historic Menger Hotel (316) 13 – Holiday Inn Riverwalk (313) 14 – Drury Plaza Hotel San Antonio Riverwalk (306) 15 – Hotel Contessa (265) 16 – Marriott Plaza San Antonio (251) 17 – Residence Inn by Marriott Alamo (220) 18 – Red Roof Inn Downtown (215) 19 – Hotel Valencia Riverwalk (213) 20 – Emily Morgan (177) 21 – Hampton Inn Downtown (169) 22 – Drury Inn & Suites Riverwalk (150) 23 – Crockett Hotel (138) 24 – Staybridge Suites Sunset Station (138) 25 – Four Points by Sheraton (116) DRAFT FOR POLICY DISCUSSION ONLY Hotel Rooms Within ½ Mile of the Orange County Convention Center (Orlando, FL) – 6 hotels with more than 1,000 rooms. 13 12 ½ Mile Radius – 1 hotel with 500 to 999 rooms. 6 11 8 – 10 hotels with 100 to 499 rooms. 1 – Peabody Orlando (1,641 rooms) (includes approx. 750 rooms under construction and expected to open in winter 2010-2011) 2 – Westgate Lakes Resort & Spa (1,596) 7 2 1 3 – Hilton Orlando Convention Center (1,417) 3 4 Orange County Convention Center 15 9 10 16 14 17 4 – Rosen Centre Hotel (1,334) 5 – DoubleTree Resort Orlando (1,094) 6 – Quality Inn Plaza (1,020) 7 – Rosen Plaza (800) 8 – Westin Imagine Orlando (315) 9 – Clarion Inn and Suites (221) 10 – Days Inn Convention Center (219) 5 11 – Comfort Suites (214) 12 – Hampton Inn Convention Center (170) 13 – Springhill Suites Convention Center (167) 14 – Hawthorn Suites Orlando Conv. Ctr. (135) 15 – Red Roof Inn (134) 16 – Extended Stay America (119) 17 – Extended Stay Deluxe Orlando (113) DRAFT FOR POLICY DISCUSSION ONLY Comparison of Ballroom Space – Competitive and Comparable Facilities Contiguous Space Total Space Chicago, IL 203,500 99,000 San Francisco, CA Philadelphia, PA (1) 91,500 San Antonio, TX 90,100 Denver, CO 82,200 San Diego, CA 81,700 66,900 New Orleans, LA 62,200 Orlando, FL Atlanta, GA 58,700 Washington, DC Contiguous Average = 49,100 Contiguous Median = 41,000 52,000 40,000 Boston, MA Baltimore, MD Total Average = 76,500 Total Median = 66,900 36,700 30,000 New York, NY 0 30,000 60,000 90,000 120,000 150,000 180,000 210,000 Square Feet (1) Includes space currently under construction. Note: The Los Angeles Convention Center, the Miami Beach Convention Center and the Las Vegas Convention Center do not currently offer ballroom space. Ballroom space at the adjacent Hilton Hotel is often used by events at the Las Vegas Convention Center. Source: facility floorplans, management, and industry publications, 2008 DRAFT FOR POLICY DISCUSSION ONLY Trends in Travel Cost Control Efforts 2002 Percent of Respondents 2004 2005 2008 2010 Encourage use of vendors with whom special rates have been negotiated 63% 66% 65% 65% 88% Web/telephone/video conferencing 40% 55% 36% 50% 75% Reduce attendance at conferences and conventions 38% 33% 27% 27% 72% Tighten adherence to travel policies 74% 68% 74% 76% 67% Use of online booking system N/A 45% 58% 56% 65% Strengthen expense reporting procedures 43% 45% 56% 47% 62% Increase communication with travelers, travel arrangers, supervisors 57% 65% 63% 85% 60% Source: Runzheimer’s Travel Management Network, 2010 DRAFT FOR POLICY DISCUSSION ONLY Interviews with Past/Current BCEC Users Comments on Auditorium Space • Large fixed seating venues would definitely be a nice addition as they provide a great environment for pre/post-day events. • We have used fixed-seating venues in the past, including Minneapolis, and will in the near future. This would be an attractive new feature for the BCEC. • Many of us have to use large halls for sessions, and sound is an issue. American College of Rheumatology National Business Travel Association Microsoft Corporation National Fire Protection Association • …sound qualities are an impediment to successful general sessions when using a complete hall (A, B, C) Yankee Dental • Fixed seating theaters are great if they are flexible. Denver’s theater is beautiful and flexible. SAP Global Marketing Heart Rhythm Society • We would love to see some type of auditorium with 5,000 + seats. • This would be a good addition, however only if it has flexibility to be broken into sections. DRAFT FOR POLICY DISCUSSION ONLY