2013 GWCCA Planning RetreatDay TwoSeptember 19 & 20, 2013

GWCCA Opportunities

2

Hotel Development

3

Strategic opportunity for campus development and business growth potential for GWCCA

Reasons for considering a Hotel Development

• Respond to customer preference/demands– Better serve Buildings B & C– To increase the occupancy of GWCC

• Retain or enhance competitive position

• Support surrounding development (Northside Drive, NSP, neighborhoods)

• Provide a potential revenue stream

4

Local Conditions

• Expanding meeting space to accommodate small to medium sized events.

• Three major properties (downtown) have developed environmentally controlled connectors between their properties to improve their ability to enhance their group business.

• Committing to fewer room blocks so they can book internal meetings.

5

Development on/around our campus

New Attractions:– College Football Hall of Fame– National Center for Civil and Human

Rights– New Stadium Project– Atlanta Streetcar

6

Market/Demand Analysis

Retained three consultants:• HVS Global Hospitality Services (HVS)• Jones Lang LaSalle Hotels and

Hospitality Group (JLL)• PKF Hospitality Research (PKF)

Scope: Determine the feasibility of developing a convention-oriented hotel on GWCCA campus. Recommend project scope to include number of rooms, meeting space, services, and amenities.

7

Results

8

HVS JLL PKFRooms 1,200 1,000 800Meeting Space 110,000 53,520 60,000 Ballrooms 2 3 2Pool 2 1 1Restaurants 2/500 2/500 2 (n/a)APPX. Cost of Facility $290-350M $350-400M $230-250M

9

JLL Report Summary

JLL – Atlanta Market

• Strong Travel/Tourism Infrastructure

• Expected economic improvement and with limited supply growth, Lodging RevPar should see near term improvements

• Robust office market shifting to landlord-favorable market as companies move from suburbs to urban core

10

JLL – Conventions Market

• Increases in supply

– CEIR outlook (3 years) is moderate demand growth: • 5.8% Exhibit Net Square Foot

growth• 6.8% increase in revenues• GWCC exhibition attendance has

remained flat (possibly indicating decreased competitiveness).

11

JLL – Conventions Market• Customer surveys indicate proximity of

hotel rooms to facility is of paramount importance to meeting planners. The GWCC ranks 14th in terms of rooms within ½ mile per 1,000sf of exhibit hall space.

• “A new headquarter hotel at the GWCC would likely mitigate some of the ‘refer In-House Facility/Hotel’ lost business and a portion of the ‘No Availability Hotels’ lost business.”

12

13

Competitive Set Hotel Stock Analysis

Market

SF Exhibition

SpaceRooms 1/2 mile Rank

Rooms 1 mile Rank

Atlanta 1,366,000 1,947 14 10,634 10

Chicago 2,600,000 800 15 1,032 15

Dallas 929,726 3,607 10 6,715 11

Denver 584,000 6,445 5 7,854 7

Houston 862,000 2,178 11 5,053 12

Indianapolis 566,000 6,488 4 6,863 8

Nashville 118,675 3,003 2 3,823 2

New Orleans 1,100,000 2,309 13 13,179 9

Orlando 2,053,800 4,482 12 11,685 13

Phoenix 645,900 3,049 9 3,404 14

San Antonio 440,000 8,321 3 12,578 3

San Diego 615,700 5,295 7 11,307 5

San Francisco 538,700 13,909 1 26,309 1

Tampa 200,000 2,176 6 2,791 6

Washington DC 703,000 4,062 8 13,296 4

Rankings based upon number of rooms per square foot of exhibition space

Summary - JLL

• Development viability is very strong• Demand is very favorable for project• Brand is significant• Will require public support• Will support debt service but not enough

to support private equity requirement• Would have negative short-term impact

on other hotels, but benefit market in long-term.

14

HVS Report Summary

15

16

HVS – Hotel Market

• Over the past 12 years hotel occupancy has had modest positive growth (even through recessions).

• From 2001 – 2012 local hotel occupancy levels ranged from a low of 55% to a high of 68%

• 2012 National occupancy levels reached highest point since 2007 and may soon exceed 70%.

Historical Supply & Demand Trends Local Competitive

Year Occupancy Average Rate

2001 61.5% $141.63

2002 62.2% $137.45

2003 59.8% $128.52

2004 61.7% $130.98

2005 64.2% $134.42

2006 66.3% $145.14

2007 68.2% $150.16

2008 63.2% $150.99

2009 55.4% $142.73

2010 63.6% $145.44

2011 62.0% $138.64

2012 64.9% $144.64

17

18

Subject Property’s Occupancy & Average Rate Forecast (FY)

AverageYear Occupancy Rate

2017 63.0% $176.172018 67.0% $182.332019 69.0% $187.802020 71.0% $193.442021 71.0% $199.24

Summary - HVS• Hotel would increase activity in Building

C and group room night demand.• Brand is important for success.• Feasibility is extremely high.• Biggest risk is regional/national incident

(ie: Katrina).• Combination of Public/Private

Development

19

20

PKF Report Summary

PKF – Atlanta Market

• Atlanta has made strong progress in higher-paid professional and technical services job growth.

• New attractions (CFHOF, Museum, NSP) will bring new jobs.

• Multiple growth engines and strong demographics will make Atlanta an above-average performer in the long term. (Moody’s Analytics July 2013).

• Location of current Hotel inventory in relation to Buildings B and C has a negative impact on GWCC business.

21

22

Hotels in the Atlanta Downtown Area

PKF – Atlanta Market

• Demand for hotel rooms is at a historic high since the “Great Recession”.

• Demand has increased following GWCCA expansions (GWCC/Dome/COP) & attractions (Aquarium, World of Coke).

• Development of Lucky Marietta District has improved the offering of restaurants and entertainment options for visitors.

23

PKF - Summary

• Hotel at GWCC would be preferred hotel for customers.

• Creates ability to sell/host multiple events in multiple buildings.

• Opportunity to spur development.• Overall market feasibility is very high.• Public development is key• Consider a non-branded development.

24

Hotel Comparisons Years 1 & 5

PKF – 800 rooms HVS – 1,200 rooms JLL – 1,000 rooms 1 Year 5 Year 1 Year 5 Year 1 Year 5 Year Occupancy 58% 65% 63% 71% 52% 66% ADR $187 $206 $176.17 $199.24 $150.52 $181.76 Total Revenues

$48,495,000 $59,912,000 $41,611,905 $101,550,433

Net operating income

$12,570,000 $17,040,000 $11,519,913 $29,961,324

25

HVS based upon 6 months operations

GWCCA Hotel OpportunityNext Steps

26

Recommend assigning the Project to Stadium Development Committee

o Consultant Presentations

o RFP/Q for Project Manager/Developer

Questions?

27