Columbus Hilton Hotel - Greater Columbus Georgia Chamber of

January 5, 2018 | Author: Anonymous | Category: Business, Management, Hospitality Management
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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.

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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%

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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

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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

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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.

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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

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Questions 18

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