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Transcript of Greater Fort Lauderdale / Broward County Convention Center · PDF fileConvention Center...
Convention Center Expansion and Hotel Analysis
April 16, 2013
Greater Fort Lauderdale /Broward County Convention Center
- 2 -Data driven creativity for innovative clients
HVS engaged as an independent expert in hoteland convention center development
Scope of Services
Convention and hotel market analyses
Assessment of industry trends impact on Broward County
Event planner survey
Comparable venue analysis
Building program recommendations
Forecast of BCCC event demand and financial operations
Forecast of hotel event demand and financial operations
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Summary Conclusions
Greater Fort Lauderdale/BCCC is losing ground in attractinghigh impact meeting and convention business because of alack of investment hotel and convention center infrastructure.
Competitors are improving their convention infrastructure(e.g. Palm Beach County and Miami Beach).
All important destination appeal is strong in Ft. Lauderdale –except for lack of function space and proximate hotel rooms.
Adjacent hotel development is essential .
Integrated convention center, hotel and entertainment districtdevelopment is optimal.
Long-term impact of convention center and hoteldevelopment on the local hotel market would be positivebecause the project would induce new room night demand.
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Event Planner Surveys
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HVS surveyed meeting planners to understandtheir event needs and perceptions of BrowardCounty
2%
3%
4%
4%
6%
6%
10%
13%
14%
15%
34%
43%
Exhibition Company
Fraternal
Entertainment
Military
Religious
Social
Government
Education
Sports
Other
Corporate
Association
353 SurveyResponses
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Planners recognize that Broward County’soverall destination appeal make it a desirablelocation for attendees
52%
41%
29%
20%
18%
14%
11%
4%
Destination Appeal
Weather
Air Access
Geographic Location
Hotel Options and Price
Site Location & Convenience
Convention Center Event Space & Service
Overall Cost
PerceivedStrengths
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Planners cited hotel supply issues morefrequently than any other weakness
PerceivedWeaknesses
23%
22%
22%
16%
15%
15%
6%
4%
3%
Hotel Availability, Quality, and Price
Destination Apeal
Overall Cost
No Hotel Proximate to Convention Center
Convention Center Event Space & Quality
Geographic Location/Weather
Air Service and Cost
Other
Port Security
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HVS asked meeting planners to describe theevent needs for a typical event
• The existing BCCC exhibit hall is able to accommodate themajority of the exhibit events described by the surveyrespondents.
• A significant portion of events require banquet seating for upto 5,000 attendees.
• While the majority of events require 10 or fewer break outmeeting rooms, larger events average between 30 and 40meeting rooms.
• Thirty percent of respondents who plan exhibit events feelthat the existing hotel product surrounding the BCCC doesnot adequately serve their needs or is a deterrent to theirbooking business in the BCCC.
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Survey respondents identify strong competitionfrom integrated hotel properties as a mainreason for not selecting Broward County fortheir events
10%
17%
73%
Convention Centers Only
Mix of ConventionCenters & Hotels
Hotels and IntegratedProperties Only
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Building Program Recommendations
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New multipurpose space could serve asbanquet, meeting, and exhibition space
Function Space Size (SF) Divisions Size (SF) Divisions
Exhibit Space 199,526 4 199,526 4
Multi-purpose Space - 70,000 8
Ballroom Space 52,248 12 67,248 15
Meeting Space 46,282 31 73,282 46
Existing BCCC Expanded BCCC
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The BCCC needs to reinvent itself as a self-contained destination that can effectivelycompete with integrated hotel & CC venues
• Headquarters hotel with 700 guest rooms
• Lounges, plazas, and other designated areas for informalmeetings, relaxation, and socializing
• Outdoor entertainment areas that for small concerts,receptions or other convention center related functions
• Specialty dining and retail areas adjacent to BCCC, includingrestaurants, casual food and beverage outlets, and specialtyshops
• Waterfront views and access
• Improved access and views from causeway
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BCCC Demand and Financial Forecasts
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The expanded BCCC would be able attract morehigh impact conventions reversing recentdownward trend in attendance and room nights
50,000
100,000
150,000
200,000
250,000
Attendance
Room Nights
Post Expansion
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Increased BCCC demand would allow the venueto earn a modest operating profit
Historical 1 Stabilization
2008/09 2009/10 2010/11 2011/12 2020/21
OPERATING REVENUE $12,001,649 $11,158,444 $10,179,065 $10,680,573 $21,718,000
OPERATING EXPENSES 11,469,065 10,738,203 10,160,991 10,401,414 20,572,000
OPERATING INCOME (LOSS) $532,584 $420,241 $18,074 $279,159 $1,146,000
NON-OPERATING EXPENSES 475,861 444,949 438,813 452,427 589,000
TOTAL NET INCOME (LOSS) $56,723 ($24,708) ($420,739) ($173,268) $557,000
1 Historical data from SMG Operating Results reports, restated by HVS
($600,000)
($350,000)
($100,000)
$150,000
$400,000
$650,000
2008/09 2009/10 2010/11 2011/12 2020/21
Ne
tIn
com
e(L
oss
)
StabilizedDemand
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Hotel Market Overview
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HVS selected the performance of a competitiveset of hotels based on the following criteria:
Similar market type
Proximity to proposed hotel
Size of hotel
Market segmentation of hotel
Brand
Quality
Degree of competitiveness
Some hotels are only partly competitive
These hotels are selected as secondary competitors
A percentage of competitiveness is determined for eachproperty
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Competitive hotels consist of primary andsecondary competitors
Hotel Name P/SNumber of
Rooms
Embassy Suites 17th Street P 361
Hilton Fort Lauderdale Marina P 589
Hyatt Regency Pier 66 P 384
Renaissance Cruise Port Hotel P 236
Sheraton Hotel Beach Resort P 487
Bahia Mar Doubletree Hotel S 296
Hyatt Regency Bonaventure Resort &Spa
S 501
Marriott Harbor Beach Resort & Spa S 650
Westin Beach Resort & Spa S 432
Westin Diplomat Resort and Golf Spa S 998
Total 4,934
Primary competitors are100% competitive full-service hotels, are mostlyoff beach and serve thecruise industry
Secondary competitorsare beachfront propertiesand only partiallycompetitive with theproposed hotel
Current competitive setcontains 4,934 availablehotel rooms
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New supply will change the dynamics of thedowntown Ft. Lauderdale hotel market
HVS assumes thetroubled 298-roomTrump Tower condo hotelproject will open in 2014as a hotel
For the analysis weassume 700-roomheadquarters hotelopens in October of 2017 Trump Tower Ft. Lauderdale
We assume a 200-property that is 75% competitive will openin 2016.
If these developments do not occur, other limited servicehotel developments may be initiated
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Occupancy is higher than its peak in 2008 butADR is lower—RevPAR has almost recovered
$25
$75
$125
$175
$225
20%
30%
40%
50%
60%
70%
80%
90%
100%
01 02 03 04 05 06 07 08 09 10 11 12
Historical Occupancy, ADR and RevPAR *
Occupancy ADR RevPARSource: STR
*RevPAR is the occupancy rate times ADR (average daily room rate) and is astandard measure of hotel performance.
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The increase in new hotel rooms will inducenew demand into the Ft. Lauderdale market
New meeting and group demand will come from:
New business at the BCCC
The in-house meeting space of the headquartershotel
The increase in hotel rooms will induce new leisuretravel into the competitive set
New supply would absorb unaccommodateddemand
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If a 700-room property opens, occupancy rateswould decline but soon recover to a stabilizedmarket rate above 70%
0200400600800
1,0001,2001,4001,6001,8002,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Tho
usa
nd
so
fR
oo
mN
igh
ts
Room Supply Room Demand
Occupancy Rate* 75.3% 75.8% 74.3% 75.3% 73.9% 72.2% 68.1% 71.6% 72.8% 72.8%
*Forecasted occupancy for the weighted competitive set of hotels
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HVS estimated room night demand by marketsegment
HVS separately analyzed four sources of room night demand
Convention
Meeting and groups
Leisure
Commercial
HVS determined the percentage of room night demand ineach segment for the competitive hotels (assuming newsupply enters the market)
HVS then determined the penetration of the proposed hotelin each of the four market segments
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A headquarters hotel would over-penetrateconvention and in-house group demand, andachieve an overall 98% RevPAR penetration
39%
71%
106%
215%
0% 50% 100% 150% 200%
Commercial
Leisure
In-house Group
Convention
Penetration Fair share
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For example, a 700-room hotel would be a rateleader but not the highest in the market
Occupancy would stablize at 69%
In 2012 dollars, the proposed hotel is positioned at a $145annual average room rate
The average daily room rate times the estimated occupied roomrates determines rooms revenue, the largest single source ofrevenue for the hotel
Other revenues and expenses are forecast based on a ratioanalysis using the revenue and expense ratios of comparablehotels
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
Occupancy 60% 64% 67% 69% 69%
Average Daily Rate $167 $173 $179 $184 $188
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A 700-room hotel could generate a stabilizednet income of $13.1 million* in 2020/21
2017/18 2018/19 2019/20 2020/21
Revenue $40.4 $44.3 $47.7 $50.3
Expense $32.0 $34.0 $35.9 $37.2
NOI** $8.4 $10.3 $11.8 $13.1
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
Mill
ion
s
*We assume the hotel would be exempt from property taxes**Before debt service
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Capital market conditions for full-service hotelfinancing is improving but remains unfavorable
Reasonably priced debt for new full-service hotelprojects is not available
Loan-to-value ratios are low (60% to 65%)
High levels of equity participation required
Most available capital is directed toward transactionsinvolving existing properties
Public sector support would be mandatory tosuccessfully finance a headquarters hotel
- 28 -Data driven creativity for innovative clients
Thomas Hazinski
Managing Director
HVS Convention, Sports and Entertainment Facilities Consulting
312-587-9900 x 11
Contact Information