City of Petersburg Economic Development

Presented By: Russell A. Archambault

November 20, 2012

Examine the region’s market need for a 10,000 SF conference center with 200-room conference center hotel

Examine future downtown retail opportunities

Study does not answer the question: Who will pay to use the conference center & hotel and how much will they be willing to pay?

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Petersburg’s persistent population decline reversed during past year (2010 to 2011). The City grew by 1.6% to an estimated 32,948 population

961 completed, under-construction and planned residential units have been developed Downtown since 2006. This has reversed Petersburg population decline in recent years

Petersburg has a current median household income of $36,449.

The household incomes of new Downtown residents is likely much higher • $35,172 to $55,029: households in 1-BR units • $49,856 to $73,372: households in 2-BR units

30,000

30,500

31,000

31,500

32,000

32,500

33,000

33,500

34,000

2000 (Census) 2010 (Census) 2016 Projections (Site to Do Business)

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POPULATION TRENDS AND PROJECTIONSCity of Petersburg; 2010-2016

Estimates Projected Population Due to New Downtown Development

Project Name Address Apts. Condos TH

COMPLETEDHigh Street Lofts/ph1 510 High Street 10South Street Lofts 801 Hinton Street 43Mayton Transfer Lofts/ph1 250 E Bank Street 47 5Dunlop Lofts 214 N Dunlop Street 64High Street Lofts/ph2 510 High Street 24Mayton Transfer Lofts/ph2 250 E Bank Street 71Market Street Lofts 9 South Market Street 23Oddfellows 133 N Sycamore Street 19Demolition Coffee/Lofts 215 E Bank St 8Lofts at 301 N Dunlop St 301 N Dunlop St 34River Street Lofts 39 River Street 8Claiborne Square 518 Halifax Street 47Union Pen Lofts 15 N Union Street 44Perry Street Apts 109 Perry Street 150Community Bank Bldg 200 N Sycamore St 41High Street Lofts ph3 510 High Street 35Mayton Transfer Lofts/ph3 250 E Bank Street 109Total - 782 Units -- 743 29 10

Number of Units Built S

UNDER CONSTRUCTION -- 257 E Bank StreetBrown School Building 141 E. Wythe StreetStar Tabacco 16 South Market StreetTotal - 95 Units -- PLANNED -- 219 E Bank StreetGRAND TOTAL - 941 Units -- Source: City of Petersburg Economic Development Dept.

10

19 66 95

64 159 , 2012

Three Hotel Tiers based on proximity to Fort Lee

Mostly Business Class Hotels

No new hotel development in the Greater Petersburg Region or conference hotel market since 2009

Over the past two years, occupancy rates have risen by almost 11 percentage points to a current rate of 67.0%.

The occupancy rate in the conference hotel market increased about 9 percentage points over the last two years, to a current rate of 59.3%.

The current average daily room rate in the Greater Petersburg Region is $77.12, almost three dollars higher than the rates charged in 2010

Current hotel market is healthy and recovering

There is private investor interest in developing two business class hotels off Exit 52 near Downtown Petersburg, which would have a combined total of 230 rooms

A 1,000 unit TLQ lodging facility is being completed on Fort Lee with a 2013 opening

Fort Lee average daily training loads are driving local hotel demand – now and in the future

RKG estimates a 200-room Conference Center hotel could capture between 39,933 and 47,158 annual room nights from regional users, conference/meeting users, and wedding users.

Annual occupancy rates are projected at between 54.7% to 64.6% at stabilization

While there appears to be a market opportunity for a new downtown hotel, an analysis of financial feasibility study is required to determine the hotel/conference center’s operational potential

Hotels closest to Fort Lee have performed better

Conference center hotels in region are performing below other business class hotels

Source: Smith Travel Research and RKG Associates, In., 2011

0%

10%

20%

30%

40%

50%

60%

70%

80%

2006 2007 2008 2009 2010 2011

HOTEL OCCUPANCY RATESConference/Hotel Market and Greater Petersburg Region;

2006 to 2011

Greater Petersburg Region Conference/Hotel Market

30%

40%

50%

60%

70%

80%

90%

MONTHLY OCCUPANCY RATESGreater Petersburg Region; 2009 to 2011

2006 2007 2008 2009 2010 2011

Peak March October

Fort Lee is Driving over 53% of the room nights sold in the competitive hotel supply

Private Market Fort Lee (ALU)

41.0%

Fort Lee Non-ALU13.4%

Fort Lee Construction

0.2%

Tourism3.6%

SERF10.7%

Business24.2%

Transient7.1%

LODGING DEMANDFort-Lee & Non-Fort Lee Hotel Segments; 2012

Total Demand: 1,586,865 Room Nights

g g

Hotel Name Address # of RoomsApproved

Year [1] StatusHOPEWELLSuburban Norman Sisky Dr. 86 2008 Has not moved forwardExecutive Oaklawn Blvd. & Colonial Corner Dr. 53 2009 Has not moved forwardCountry Inn & Suites Oaklawn Blvd. & Colonial Corner Dr. 72 2008 Has not moved forwardStay-Over Suites Expansion 4115 Old Woodlawn St. n/a n/a Has not moved forwardCOLONIAL HEIGHTSTownplace Suites Southpark Blvd. (next to Comfort Suites) 128 2009 Has not moved forwardCHESTERFIELD COUNTYSleep Inn 572 East Hundred Road 88 2009 Has not moved forwardBest Western 19736 Woods Edge Road 68 n/a Has not moved forwardStaybridge Suites Bermuda Hundred Road 109 n/a Has not moved forwardSleep Inn 15860 Woods Edge Road 88 2008 Cancelled PermitLa Quinta Inn 15630 Indian Hill St. 66 2008 Has not moved forwardDays Inn 15600 Indian Hill 52 2008 Has not moved forwardTOTAL -- 810 -- --

Hotel occupancy will drop in 2013 with the opening of the TLQ Lodging Facility

Occupancy would decline below 58% with the addition of the pipeline hotels

67.0%

72.5%

66.1%

61.9%

58.9%58.1%

57.9% 58.2% 58.6% 58.9%

50.0%

60.0%

70.0%

80.0%

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

CONSERVATIVE REGIONAL OCCUPANCY PROJECTIONSFull Buildout Potential; 2011-2020

Only one small conference/meeting facility located within a hotel in Petersburg. The Country Inn and Suites Petersburg can accommodate 60 people maximum

Hotel conference facilities with 100+ capacity located primarily in Colonial Heights and Chesterfield (Hilton Garden Inn and Holiday Inn Petersburg North Fort Lee - approximately 300 capacity each)

There are conference facilities within hotels that can accommodate groups larger than 300 people. There are 16 hotels located in Richmond that can accommodate groups of 500 or larger, with four of these hotels able to accommodate groups of over 1,000

Virginia State University has plans to build a 160,000 SF to 180,000 SF convocation facility that will also include about 8,000 SF of meeting space. The VSU meeting space places it in direct competition with the proposed Petersburg conference facility

Facility would appeal to regional users: companies, non-profit organizations, civic organizations, local schools, trade shows and weddings

Yes 46 51.7%No 29 32.6%Not now, but perhaps in the future 14 15.7%Total Responses 89 100.0%

Q: During the course of an average year, does your business or organization have a need for outside meeting space or hotel rooms?

Survey Response

Answer 0-10 11-30 31-50 51-100 101-300 301-500 Over 500

Regular Org. or Business Meetings 3 11 6 1 1 0 0Organizational Retreats 4 9 3 0 0 1 1Conferences 0 1 5 4 5 1 1Personnel Training Events 1 7 1 1 4 0 0Classes and Seminars 0 7 5 3 3 0 0Community Events/Dances/Banquets 0 0 1 10 8 3 0Wedding Receptions 0 0 0 1 1 0 0Religious Activities 0 0 0 1 0 0 0Trade Shows 0 0 0 2 4 2 1Other 0 1 1Total Responses 8 36 21 23 27 7 3Percent of Total Responses 6.4% 28.8% 16.8% 18.4% 21.6% 5.6% 2.4% [1] Indicates the single largest response to the question.

Q: Please estimate the avg. # of attendees at each off-site meeting activity using the following categories.

# of Attendees

0.0% 5.0% 10.0% 15.0% 20.0%

On-Site Sundry Store

On-Site Restaurant

On-Site Hotel

On-Site Business Center

Ballroom Area for Min. 500

A/V Support Staff

Lecture Rooms with High-Tech A/V

On-Site Kitchen

Meeting Rooms for Min. 25

High-speed Wireless Internet

On-Site Parking

Percent of Responses

MOST IMPORTANT AMENITIES

Conservative Scenario • 5.5% to 21.4% of the 10,000 SF meeting space capacity

would be filled on an annual basis

Moderate Scenario • 15.6% to 58.9% of the 10,000 SF meeting space capacity

would be filled on an annual basis

Aggressive scenario • 30.8% to 100%15.6% to 58.9% of the 10,000 SF meeting

space capacity would be filled on an annual basis

RKG believes there may be a market opportunity for conference space in Downtown. However, further study is needed to determine project feasibility from a financial perspective.

Scenario Conservative Minimum

Conservative Minimum % of TotalConservative Maximum

Conservative Maximum % of TotalModerate Minimum

Conservative Minimum % of TotalModerate Maximum

Conservative Maximum % of TotalAggressive Minimum

Aggressive Minimum % of TotalAggressive Maximum

Aggressive Maximum % of TotalSource: RKG Associates, Inc., 2012

Capacity

202,125

5.5% 782,424

21.4% 571,008

15.6% 2,150,525

58.9% 1,124,039

30.8% 4,181,748

114.6%

Address Retail Office RestaurantUnknown

Commercial TotalCOMPLETEDOddfellows 10,000 10,000 2,500 22,500215 E Bank St 1,900 1,9008 W Old Street 3,500 3,50039 River Street 13,000 13,000200 N Sycamore St 6,000 6,000Total 10,000 19,500 17,400 -- 46,900 UNDER CONSTRUCTION257 E Bank Street 2,500 2,500 5,000PLANNED219 E Bank Street 10,000 10,000Source: City of Petersburg Economic Development Dept. and RKG Associates, I

Total Built or Planned Square Feet

Limited-Service Restaurants 3,621 SF to 6,036 SF of national limited-service restaurants. Up to 3

restaurants (e.g. Captain D’s, Pizza Hut, Long John Silver’s, etc.

Full-Service Restaurants 5,784 to 8,253 SF of full-service restaurants. 1 to 2 restaurants. Could be

locally-owned or national full-service restaurants (e.g., Ponderosa, Golden Corral, Denny’s, and Shoney’s

Special Food Stores 5,448 SF to 5,666 SF in special food stores. Specialty stores include: cup

cake stores, candy stores, donut shops, ice cream shops. Can be locally-owned or national stores (e.g., Krispy Kreme, Donut Connection and Ben and Jerry’s Ice Cream

Grocery Store 15,371 SF to 17,692 SF of grocery store space. Large enough for a

neighborhood size grocery

Downtown residential growth is improving conditions in the downtown

The downtown population is underserved in terms of retail goods and services

A new downtown conference center and hotel would meet an unmet demand in the region, but development feasibility is uncertain

Direct competition from VSU’s proposed meeting facility could dilute the region’s conference market

A new conference center hotel is sensitive to new hotels in the development “pipeline”