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


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.


Event Planner Surveys


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


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


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


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.


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


Building Program Recommendations


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


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


BCCC Demand and Financial Forecasts


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


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


Hotel Market Overview

- 17 -

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


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

- 19 -

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

- 20 -

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.

- 21 -

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


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


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


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


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


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


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


Thomas Hazinski

Managing Director

HVS Convention, Sports and Entertainment Facilities Consulting

312-587-9900 x 11

[email protected]

Contact Information

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