Columbus Hilton Hotel - Greater Columbus Georgia Chamber of
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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 $140@75% $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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