anaheim convention center expansion market & economic analysis

4427 W. Kennedy Boulevard ∙ Suite 200 ∙ Tampa, Florida 33609 ∙ Phone 813.281.1222 ∙ Fax 813.315.6040

www.crossroads-fl.com

Anaheim Convention Center Expansion

Market & Economic Analysis

Updated Final Report – February 2014

Presented to:

City of Anaheim

Presented by:

4427 W. Kennedy Boulevard ∙ Suite 200 ∙ Tampa, Florida 33609 ∙ Phone 813.281.1222 ∙ Fax 813.315.6040

www.crossroads-fl.com

February 21, 2014

Ms. Debbie Moreno

Finance Director

City of Anaheim

200 S. Anaheim Blvd.

Anaheim, CA 92805

Dear Ms. Moreno:

Crossroads Consulting Services LLC, in association with Hospitality and Gaming Solutions, has

completed its market and economic analysis for the City of Anaheim associated with the

proposed expansion of the Anaheim Convention Center. This report summarizes our research

and analysis including an update to the fiscal impact and cost benefit analysis based on the most

recent financing assumptions provided by the City on February 14, 2014. No other research or

analysis was updated.

The information contained in the report is based on estimates, assumptions, and information

developed from market research; knowledge of the convention, sports and entertainment industries;

input from existing and potential demand generators; as well as other factors including, but not

limited to, data provided by the City of Anaheim as well as management at the Anaheim Convention

Center and Anaheim/Orange County Visitor & Convention Bureau. We have utilized sources that

are deemed to be reliable but cannot guarantee their accuracy. All information provided to us by

others was not audited or verified and was assumed to be correct. Moreover, estimates and analysis

regarding an expanded facility are based on trends and assumptions and, therefore, there will usually

be differences between the projected and actual results because events and circumstances frequently

do not occur as expected, and those differences may be material. We have no obligation, unless

subsequently engaged, to update this report or revise the information contained therein to reflect

events and transactions occurring after the date of this report.

In accordance with the terms of our engagement letter, the accompanying report is restricted to

internal use by the City of Anaheim and may not be relied upon by any third party for any

purpose including financing. Notwithstanding these limitations, it is understood that this

document may be subject to public information laws and as such can be made available to the

public upon request.

Although you have authorized reports to be sent electronically for your convenience, only the

final hard copy report should be viewed as our work product.

We have enjoyed our ongoing relationship with the City of Anaheim and look forward to providing

you with continued services in the future.

Sincerely,

Crossroads Consulting Services LLC

Table of Contents

1 Introduction and Executive Summary 1

2 General Market Overview 12

3 Industry Trends 20

4 Historical ACC Operations 29

5 Potential Demand Generators 41

6 Competitive Facility and Destination Analysis 44

7 Financial Analysis 57

8 Economic and Fiscal Impacts Analysis 63

9 Cost/Benefit Analysis 73

10 Appendix 76

1. Introduction and Executive Summary 1

Introduction and Executive Summary

Introduction

Founded in 1857, the City of Anaheim is one of California’s most populous cities. Anaheim

covers 50 square miles and supports a thriving business community with companies such as Carl

Karcher Enterprises, L-3 Communications, Pacific Sunwear, and the Disneyland Resort. The

Anaheim Convention Center (ACC) is the largest on the west coast and is located just off

Interstate-5 in the Anaheim Resort area that includes Disneyland and Adventure Park theme

parks, Downtown Disney, and Anaheim Gardenwalk. The area surrounding the ACC also offers

over 7,500 hotel rooms all within one-half mile of the ACC and nearly 20,000 rooms within

Anaheim. Annually, Anaheim welcomes millions of visitors to the city for tourism, business,

and conventions/meetings.

Anaheim first became a meetings and conventions destination in 1967 with construction of the

Arena on Katella Avenue. Since its opening, the ACC has experienced five major expansion

projects plus several cosmetic renovations. Each expansion added an exhibit hall and meeting

space. The last major expansion completed in 2000 resulted in a complete transformation of the

ACC and surrounding campus. The current facility offers a total of 813,500 square feet (SF) of

exhibit space in five halls, a 38,100 square-foot ballroom, and 81,200 SF of meeting space.

The convention center’s recently completed Grand Plaza is a 100,000 SF outdoor multi-use area

that offers meeting planners the opportunity for large outdoor gatherings including alfresco

dining, concerts, receptions, exhibitions, meetings and more. The Grand Plaza creates a

pedestrian esplanade that spans from the entrance to the ACC and flows between the Hilton

Anaheim and the Anaheim Marriott hotels. The Grand Plaza provides a uniquely Southern

California outdoor environment that can be utilized year-round for a wide variety of events.

Given this backdrop, the City retained Crossroads Consulting Services (Crossroads) to update

certain aspects of the Expansion Feasibility Study for the Anaheim Convention Center dated

October 2007 in order to reflect current market conditions. The proposed expansion under

consideration includes re-use of the Carpark 1 parking garage (which needs to be replaced) into

flex space that can be used as exhibit, ballroom, and/or meeting space. The City’s intention is to

design and construct the expansion while the ACC remains fully operational, with no disruptions

to events, customers, staff and surrounding stakeholders. Other features of the proposed

expansion include:

200,000 square feet of climate-controlled, leasable, flexible meeting/ballroom/exhibit space;

Architecturally compatible design with existing facility;

All necessary front-of-house, back-of-house and circulation space;

Outdoor areas to maximize special event activity and existing views;

Replacement of the existing parking inventory on the project site (approximately 1,000

spaces);


Loading docks to accommodate needs of the new space;

Climate controlled connection to existing space;

Finish quality equal to, or above, that of most recently constructed existing space; and

Project to meet the intent of LEED for New Construction Certified, and preferably LEED

Silver.

Specific research tasks conducted for this analysis include, but are not limited to, the following:

Conducted interviews and/or work sessions with a variety of groups including, but not

limited to, representatives from the City, the ACC, the Anaheim/Orange County Visitor and

Convention Bureau (VCB) and area hoteliers;

Summarized trends in the convention/meetings industry;

Profiled select demographic and economic statistics;

Profiled hotel supply and demand characteristics for the City of Anaheim;

Analyzed historical event activity at the ACC;

Surveyed and/or interviewed existing users and potential users of an expanded ACC;

Analyzed attributes of competitive/comparable destinations and facilities;

Developed estimates of incremental utilization and financial operations at an expanded ACC

as well as for a status quo scenario;

Estimated the incremental economic impacts in terms of spending, employment and earnings

and tax revenues for an expanded ACC as well as a status quo scenario;

Conducted a sensitivity analysis;

Developed a cost/benefit analysis; and

Summarized findings into a written report.

Executive Summary

Since its opening the ACC has generated economic and fiscal benefits to the local and State

economies. Over the last five fiscal years, the facility has hosted approximately 1,300 events and

4.95 million in total attendance. During that same period, conventions and tradeshows

represented approximately 25% of total events, 48% of total usage days and 59% of total

attendance annually. The City has made significant financial investments in the ACC including

the recently completed Grand Plaza. The ACC generates significant, quantifiable return on

investment to the City. As such, the ACC has proven to be a valuable economic generator

attracting a variety of industry segments and fostering their unique markets through the exchange

of business ideas and knowledge.


Convention Center Industry Trends

Over the last 20 years, the U.S. convention and meetings market experienced tremendous growth

in the supply of exhibit and meeting space through both new construction and expansion. This

increased supply led to a more competitive marketplace where numerous facilities can

accommodate meeting planners’ needs strictly in terms of the amount of space required.

Industry trends suggest facilities located in destinations offering an attractive package in terms of

overall appeal, hotel supply, accessibility, and cost have been better able to maintain, grow

and/or diversify their business during challenging economic times.

Similar to the broader economy, the convention and meetings industry has experienced a

downturn in recent years. However, several sources are projecting positive economic and

industry growth in key metrics. While convention/meetings industry demand trends have

generally correlated to those of the broader economy, there tends to be lag of between 12 and 18

months.

ACC’s Competitive Position

Even with economic conditions and a finite number of potential conventions/tradeshows, the

ACC has successfully competed for these event types in recent years due to the following

strengths and attributes:

Hotel supply proximate to the ACC

Accessibility via multiple major airports

Perceived price/value by customers

Campus environment of the ACC and surrounding amenities

Visitor amenities such as Disneyland

Tourism service industry

Existing base of convention/tradeshow users

Despite offering one of the lowest ratios of meeting/ballroom space to exhibit space among its

primary convention center competitors, a snapshot of utilization indicates that the existing ACC

compared favorably in terms of convention/tradeshow attendance.

Although Anaheim offers more hotel rooms at its headquarters hotel properties (2,600 vs. 1,100)

relative to the average of the profiled competitive set, it offers less within walking distance

(4,000 vs. 8,600) and citywide (20,000 vs. 62,100).

Several of the ACC competitors either have or are planning to enhance their convention centers

and/or surrounding environment in order to enhance their destination package and overall

competitive position:


Henry B. Gonzalez Convention Center in San Antonio

Las Vegas Convention Center

Los Angeles Convention Center

Moscone Center in San Francisco

San Diego Convention Center

Because convention centers including the ACC operate in a buyer’s market, it is important for

customers to realize both real and perceived value.

Market Demand for ACC Expansion

Several performance measures and industry indicators suggest market demand has equaled and

potentially exceeded the ACC’s current supply of space. According to lost business reports, date

availability and inadequate space at the ACC accounted for 20% of lost events while inadequate

hotel meeting/ballroom space and hotel date availability accounted for an additional 11% of lost

events. As a result, Anaheim is losing convention/tradeshow business to its competitors.

The ACC is operating at or near practical maximum occupancy in its exhibit and ballroom space.

Relatively high occupancy levels sustained for an extended period of time are typically an

indicator that additional space is warranted by market demand. Future bookings suggest ACC

occupancy levels could be sustained for several years beyond 2012. However, if the product and

destination are not continually improved, reinventing the ACC’s marketing strategy will become

more critical in order to sustain similar occupancy levels.

Red 7 Media is a privately-held business media company that publishes magazines and

newsletters as well as produces conferences and trade shows in the Event and Media industries.

The Red 7 Media Research and Consulting Practice helps leaders in the event and media

industries analyze data and information to make more informed business decisions. Red 7 Media

identified the market potential for events requiring various amounts of exhibit space. Excluding

groups that require 100,000 SF of exhibit space or less given these events are often

accommodated by hotel properties, the potential universe of events requiring 100,001 to 1.1

million SF of exhibit space and which rotate nationally or in the Western region is 2,090.

Attracting 3.7% to 3.85% of these potential events annually would equate to a total of 77 to 80

conventions/tradeshows, respectively. The existing ACC is attracting an average of 63 of these

events so the incremental event potential is 14 to 17 assuming an expanded ACC attracts 3.7% to

3.85% of the overall universe of event activity.

According to the 2011 State & Regional Associations of the U.S. and National Trade and

Professional Associations of the U.S., there are 976 associations headquartered in California

which are comprised of 576 state/regional associations and 400 national associations. These

account for 6% of all associations headquartered in the U.S. In addition, the ICCA reports the

U.S. hosted a total of 759 international association meetings in 2011. These groups represent a

target market within the State and region for annual conventions, tradeshows and smaller

division meetings.


In addition to this macro level potential demand industry-wide, representatives of State, regional

and national associations were surveyed in order to assess their future needs at the ACC and their

reasons for choosing (or not choosing) Anaheim as a destination. Survey participants represent

past users of the ACC and lost business reports from the Anaheim/Orange County VCB. This

input provides a basis for evaluating the proposed expansion program and its ability to positively

impact ACC usage.

Findings regarding these groups’ facility-specific and destination-related requirements include

the following:

Surveys with meeting planners indicated Anaheim is a highly ranked destination relative to

other convention/meeting cities even with its existing venue.

Several groups surveyed mentioned they have been unable to secure dates and/or space due

to the ACC availability. This is consistent with the significant portion of lost business due to

date/space availability.

78% of respondents indicated they would utilize the proposed new flex space as exhibit space

for their event; 90% indicated they would utilize the flex space as meeting/ballroom space.

Respondents were allowed to choose more than one type of space.

All respondents indicating an interest in meeting at the ACC were asked the amount of gross

exhibit space required. Overall, positive respondents required an average of 628,000 SF of

exhibit space. 44% of positive respondents indicated the exhibit space required for their

event does not have to be contiguous to host their event at the ACC.

Positive respondents require an average of 28 meeting rooms or 63,800 SF of meeting space

in addition to 36,700 SF of ballroom space.

More than half of respondents anticipate their group’s space needs increasing in the next five

years.

Positive respondents average more than three event days with an additional six move in/out

days. These groups host their events in six different months indicating there is demand

potential for the ACC throughout the year.

Overall groups who have previously met at the ACC are pleased with the facility, its staff,

and general surroundings. The lack of space/date availability was mentioned as a hindrance

to their booking the ACC in the past which could be alleviated by the proposed new flex

space.

Meeting planners indicated the new flex space needs to be capable of adequately

accommodating exhibits, meeting rooms, and banquet functions in order to be marketable. If

the cost of setting up the space for their specific needs is significant, this could negatively

impact the new space’s marketability. Consideration to making the new space as accessible

and visible from the existing space would help to draw attendees from one side to the other.


Potential Impact of Remaining Status Quo

Market research suggests that remaining static will likely result in a decline of event activity and

attendees over time, resulting in an operating loss. The largest impact will likely occur in

convention, tradeshow and meeting activity held at the ACC. This decrease in event activity is

estimated to yield a decrease in spending, jobs and earnings as well as fiscal benefits to the local

and State economies. The table below compares the ACC historical three-year average to the

estimated status quo in key metrics.

Category

Historical

Three-Year

Average Status Quo % Change

Usage/Event Activity

Number of Events 219 196 -11%

Event Days 438 403 -8%

Total Attendance 979,800 927,900 -5%

Total Attendee Days 2,600,600 2,468,600 -5%

High Impact Attendee Days 1,082,800 988,200 -9%

Financial Operations

Operating Revenues $25,787,000 $24,034,000 -7%

Operating Expenses 24,573,000 24,573,000 0%

Net Operating Gain/(Loss) $1,214,000 ($539,000)

Economic Impacts

Direct Spending $368,555,000 $338,022,000 -8%

Indirect/Induced Spending 241,131,000 221,048,000 -8%

Total Spending $609,686,000 $559,070,000 -8%

Total Earnings $233,726,000 $214,412,000 -8%

Total Jobs 5,000 4,600 -8%

Fiscal Impacts

City of Anaheim $30,587,000 $27,919,000 -9%

Orange County 1,304,000 1,192,000 -9%

State of California 30,869,000 28,267,000 -8%

Total $62,760,000 $57,378,000 -9%

Comparison of ACC Historical Three-Year Average to Estimated Status Quo

Sensitivity Analysis

In order to assist the City with its ACC expansion planning efforts, sensitivity analysis was

conducted that compared the cost/benefit of two alternative expansion programs: adding

160,000 SF or adding 180,000 SF of flex space. The incremental impact to utilization, financial

operations, project costs, economic and fiscal impacts were estimated relative to the status quo

scenario and the proposed building program under consideration with 200,000 SF of flex space.


Based on market research including, but not limited to, an analysis of market attributes, industry

trends, historical ACC utilization and lost business reports as well as input from past/potential

users and area stakeholders, the 200,000 SF expansion option is estimated to generate a higher

net incremental gain to the City. Adding 200,000 SF of flex space is also estimated to enhance

the competitive position of the ACC for a longer term than the other two scenarios, increasing

the facility’s total available exhibit space to over one million square feet. Further detail

regarding the sensitivity analysis can be found in Appendix B of this report. However, the

remainder of this report focuses on adding 200,000 SF of flex space.

ACC Expansion Program

Merging an existing asset and new construction offers both opportunities and challenges. One

advantage is the ability to improve the overall program to realize operational efficiencies. If

expansion is pursued, it will be imperative to appropriately position program elements in a way

that realizes critical synergies with the existing building and its functionality. The proposed

programmatic change of adding 200,000 SF of flex space coincides with the market research

conducted in this study. This proposed space should allow the ACC to accommodate larger

events as well as simultaneous events requiring all three function spaces. The need for additional

ballroom and flexible meeting space are supported by both the competitive analysis and input

from existing/potential users.

The primary objectives for an expanded ACC are to host additional shows that cannot currently

be accommodated, host more events simultaneously, and improve event logistical efficiency in

order to increase activity and economic/fiscal benefits. Therefore, the expansion should seek to

maximize flexibility and functionality among spaces.

Anaheim’s supply of hotel rooms within walking distance, occupancy levels throughout the year,

strong performance during the recent recession relative to other destinations and other market-

driven factors suggest a new convention quality hotel within close proximity may be warranted

in the long-term. Additional proximate hotel rooms in conjunction with the proposed new flex

space will further enhance the City’s marketability among its competitors and better allow the

ACC to accommodate simultaneous events.

Impact of ACC Expansion on Annual Event Activity and Financial Operations

Based on market research, the financial and economic analysis focused on quantifying

incremental new event activity, operating revenue and expenses, as well as economic and fiscal

impacts that could potentially be generated by an expanded ACC. The following graphs

compare the status quo scenario (estimated to reflect a decline over historical ACC activity) to

the estimated range of activity for an expanded ACC.


An expanded ACC is estimated to host 35% to 40% more conventions/tradeshows compared to

the status quo scenario.

Comparison of Estimated Annual ACC Total Events

Historical Three-Year Average vs. Status Quo vs. Expanded ACC

Convention/tradeshow attendance at an expanded ACC is estimated to increase by 41 to 50%

over the status quo scenario.

Comparison of Estimated Annual ACC Total Attendance


63 57 77 80

156 139

190 202

0

50

100

150

200

250

300

Historical Three-Year Avg Status Quo Expanded ACC - Low Expanded ACC - High

Conv/TS Other Events

562,100 513,000

725,500 767,500

417,700 414,900

494,200 521,800

0

250,000

500,000

750,000

1,000,000

1,250,000

1,500,000

Historical Three-Year

Avg

Status Quo Expanded ACC - Low Expanded ACC - High

Conv/TS Other Events


Operating revenues are estimated to increase by 17% to 19% relative to the status quo whereas

operating expenses are estimated to increase between 8% and 10%. Under the status quo

scenario, a net operating loss of $539,000 is estimated which would require funding from the

City for on-going operations. The estimated annual net operating gain at an expanded ACC is

$2.0 million higher than status quo.

Category

Historical

Three-Year

Average Status Quo

Operating Revenues $25,787,000 $24,034,000 $28,039,000 - $28,505,000 $4,005,000 - $4,471,000

Operating Expenses 24,573,000 24,573,000 26,524,000 - 26,964,000 1,951,000 - 2,391,000

Net Operating Gain/(Loss) $1,214,000 ($539,000) $1,515,000 - $1,541,000 $2,054,000 - $2,080,000

Operating Recovery Percentage 105% 98% 106% - 106%

Note: Operating Recovery Percentage = Operating Revenues/Operating Expenses.

Estimated Annual Impact to ACC Financial Operations

ACC Expansion Incremental New From Status Quo

The estimates for event activity and financial operations should be considered within the context

of the economic and fiscal benefits to the City and State that could be generated by an expanded

ACC.

Impact of ACC Expansion on Annual Room Nights

Consistent with attendance, room nights generated from conventions/tradeshows at an expanded

ACC are estimated to increase by 41% to 50% over the status quo scenario.

Comparison of Estimated Annual Room Nights


More detail regarding this calculation can be found in Appendix C.

773,400

705,900

998,300 1,056,100

0

250,000

500,000

750,000

1,000,000

1,250,000

Historical Three-Year

Avg

Status Quo Expanded ACC - Low Expanded ACC - High


Economic and Fiscal Benefits Associated with ACC Expansion

The following table summarizes the estimated incremental new economic benefits from ongoing

activities of an expanded ACC as measured by spending, jobs and earnings. The total annual

incremental new spending (i.e., direct/indirect/induced) is estimated to range between $221.6

million and $265.6 million. This spending is estimated to support between 1,800 and 2,200

incremental new jobs annually which represents an increase of 40% to 48% from the status quo

scenario.

Category

Historical

Three-Year

Average Status Quo

Spending

Direct Spending $368,555,000 $338,022,000 $471,833,000 - $498,355,000 $133,811,000 - $160,333,000

Indirect/Induced Spending $241,131,000 $221,048,000 $308,880,000 - $326,292,000 $87,832,000 - $105,244,000

Total Spending $609,686,000 $559,070,000 $780,713,000 - $824,647,000 $221,643,000 - $265,577,000

Total Jobs 5,000 4,600 6,400 - 6,800 1,800 - 2,200

Total Earnings $233,726,000 $214,412,000 $298,911,000 - $315,664,000 $84,499,000 - $101,252,000

Estimated Annual Impact to Economic Benefits


At the City level, total annual incremental new fiscal impacts from an expanded ACC are

estimated to range from $11.5 million to $13.8 million, an increase of between 41% and 50%

compared to the estimate for status quo. Approximately 49% of the fiscal impacts are estimated

to occur at the City level.

Municipality/Tax

Historical Three-

Year Average Status Quo

City of Anaheim

Transient Occupancy Tax $24,688,000 $22,532,000 $31,865,000 - $33,710,000 $9,333,000 - $11,178,000

Local Sales & Use Tax 2,607,000 2,383,000 3,353,000 - 3,545,000 970,000 - 1,162,000

Tourism Improvement District Assessment

- Dedicated to Marketing & Promotion (75%) 2,469,000 2,253,000 3,187,000 - 3,371,000 934,000 - 1,118,000

- Dedicated to Non-Marketing Improvement Projects (25%) 823,000 751,000 1,062,000 - 1,124,000 311,000 - 373,000

Total 30,587,000 27,919,000 39,467,000 - 41,750,000 11,548,000 - 13,831,000

Orange County

Local Sales & Use Tax 1,304,000 1,192,000 1,676,000 - 1,772,000 484,000 - 580,000

State of California

Sales & Use Tax 16,945,000 15,495,000 21,797,000 - 23,042,000 6,302,000 - 7,547,000

Personal Income Tax 10,985,000 10,077,000 14,049,000 - 14,836,000 3,972,000 - 4,759,000

Corporate Income Tax 2,939,000 2,695,000 3,763,000 - 3,975,000 1,068,000 - 1,280,000

Total 30,869,000 28,267,000 39,609,000 - 41,853,000 11,342,000 - 13,586,000

GRAND TOTAL $62,760,000 $57,378,000 $80,752,000 - $85,375,000 $23,374,000 - $27,997,000

Estimated Annual Impact to Tax Revenues


Although not quantified in this analysis, construction of a development project of this scope can

also provide significant economic and fiscal impacts to the region during the construction period.


Cost/Benefit Analysis for the ACC Expansion

As shown in the following table, the cost/benefit analysis for an expanded ACC indicates a

significant return on investment over a 30-year period. In addition, the funding mechanism that

would be used for the ACC expansion would also allow funding for other public projects such as

public safety, neighborhood improvements and other quality-of-life projects and services for the

City.

Category Range

Incremental New Transient Occupancy Tax $341,449,000 - $429,225,000

Incremental New Local Sales & Use Tax $30,264,000 - $38,053,000

Incremental Operating Gain $9,030,000 - $9,810,000

Total Incremental New Revenues $380,743,000 - $477,088,000

Recapture of Lost Revenues $164,250,000 - $164,250,000

Debt Service Including Garage ($409,667,000) - ($409,667,000)

Net Benefit $135,326,000 - $231,671,000

Notes: Debt service includes replacement of the parking garage.

Debt service is based on estimated construction cost and financing terms as provided by the City on February 14, 2014.

Incremental Transient Occupancy Tax reflects an annual increase of 3%.

Incremental Local Sales and Use Tax reflects an annual increase of 2%.

Recapture of Lost Revenues reflects the difference between the historical three-year average and the status quo scenario.

30-Year Cost Benefit Analysis Expanded ACC

A detailed cash flow analysis is provided in Appendix A.

Based on the market and economic analysis, the proposed expansion of the ACC appears

warranted and could serve to increase Anaheim’s share of the convention/tradeshow industry as

well as allow several existing users to grow. In doing so, the City would attract incremental new

events and visitors who would positively impact the area economy. In addition, this expansion

should enhance the ACC marketability and competitive position for the next 10 to 15 years.

Because the information presented in the executive summary is extracted from the more detailed

analysis, it is important for the reader to review the report in its entirety in order to gain a better

understanding of the research, methodology and assumptions used. The remainder of this report

summarizes the key findings and conclusions from our research and analysis which can serve as

a tool for the City’s on-going planning decisions related to the proposed ACC expansion.

2. General Market Overview 12

General Market Overview

When choosing a location, meeting planners and event producers typically view several

characteristics of a destination as important to the success of their event. Key attributes may

include accessibility via air and/or highway, hotel room inventory, and/or the number of

restaurant/retail/entertainment establishments proximate to the event site.

The importance meeting planners and event producers place on these factors differs depending

on the type of event. For instance, local events may place more importance on the accessibility

of the venue to both exhibitors and attendees from the surrounding communities. A consistent

desire from both professional and trade associations is the number of convention quality hotel

rooms proximate to the facility which allows the attendees to move freely between meetings and

can decrease the cost of hosting the event if a shuttle service is not required.

As such, the local market area in which the ACC operates contributes to the center’s

marketability to conventions, tradeshows and meetings. Factors such as demographic/economic

conditions, the vibrancy of the area immediately surrounding the convention center, and overall

destination appeal to both event planners and attendees can all impact a convention center’s

overall competitiveness within the broader marketplace.

This section profiles select market characteristics including demographic/economic statistics,

area employment, accessibility, hotel market, attractions, and travel industry.

Demographic/Economic Statistics

Population serves as a base from which events at the ACC can draw attendance and other forms

of support. According to the U.S. Census Bureau, the City’s population has remained relatively

consistent over the past decade. After declining in 2009, personal income has increased each of

the last three fiscal years. Orange County’s unemployment rate decreased to 7.9% in fiscal year

2012.

Fiscal Year Population

Personal

Income

(in 000s)

Per Capita

Personal

Income

Median

Age

Orange

County

Unemployment

Rate

2003 331,350 $6,878,163 $20,758 32.4 4.0%

2004 332,727 $6,943,347 $20,868 32.4 3.6%

2005 331,458 $6,892,338 $20,794 32.4 3.9%

2006 329,373 $7,351,605 $22,320 32.4 3.7%

2007 329,780 $7,416,752 $22,490 32.4 3.9%

2008 330,659 $7,467,272 $22,583 32.4 5.3%

2009 332,120 $7,198,701 $21,675 32.4 9.3%

2010 336,208 $7,333,705 $21,813 32.4 9.5%

2011 341,034 $7,519,459 $22,049 32.4 9.2%

2012 343,793 $7,807,701 $22,710 32.4 7.9%

Notes: Population and median age were updated to reflect Census 2010 counts.

Per capita income for fiscal year 2012 is estimated.

Source: City of Anaheim.

City of Anaheim Demographic & Economic Statistics


Area Employment

The distribution of an area’s employment by industry is a consideration when targeting various

events. A large services sector is typically a positive indicator for the number of corporate

events being held in the area. The services sector typically has significant financial resources to

host activities such as annual conferences, seminars, banquets, receptions and other special

events. In addition, employers may be members of associations and can be instrumental in

attracting larger regional or national conventions/tradeshows to Anaheim. A significant

leisure/hospitality sector is indicative of a large visitor market that includes convention/meeting

attendees.

Anaheim has a diverse

economy that is currently

led by trade/transportation/

utilities; professional/

business services; leisure/

hospitality; and education/

health services.

Industry Total Jobs % of Total

Trade, Transportation, and Utilities 259,200 18%

Professional & Business Services 253,300 18%

Leisure & Hospitality 181,400 13%

Education & Health Services 165,600 12%

Manufacturing 153,900 11%

Government 144,700 10%

Financial Activities 111,700 8%

Mining, Logging, and Construction 70,600 5%

Other Services 40,600 3%

Information 24,900 2%

Total 1,405,900 100%

Notes: Sorted in descending order by total jobs.

Total jobs are not seasonally adjusted.

Source: U.S. Bureau of Labor Statistics.

Non-Farm Employment by Industry - December 2012

Santa Ana-Anaheim Metro Area

Walt Disney Resort is Anaheim’s largest employer with 22,200 employees representing 14% of

the City’s overall employment. Other principal employers include four hospitals, a supermarket

chain, three communications companies and a hotel. The presence of these companies indicates

Anaheim’s established leisure/hospitality industry that accommodates visitors including

convention/meeting attendees as well as businesses dedicated to the health/medical field.

Employer Employees

% of City

Employment

Walt Disney Resort 22,200 13.8%

Kaiser Permanente Hospital 5,400 3.4%

Kaiser Permanente Anaheim Medical Center 3,700 2.3%

Northgate Gonzalez Supermarkets 1,900 1.2%

Anaheim Memorial Hospital Medical Center 1,200 0.7%

AT&T Inc. 1,000 0.6%

Hilton Anaheim 967 0.6%

L-3 Communications 950 0.5%

Time Warner 800 0.5%

West Anaheim Medial Center 796 0.5%


City of Anaheim Principal Employers


Accessibility

Accessibility via air and highway are important factors to event and meeting planners. In

addition, the location and accessibility of a facility relative to hotels, restaurants, entertainment

establishments and the general population base can impact its marketability for certain types of

events such as conventions/tradeshows and sporting events.

Anaheim is located in southern California, 25 miles south of Los Angeles and 95 miles north of

San Diego. The City is accessible via Interstate 5 serving as the major north/south corridor for

the region.

Vehicular Access

Air access is considered an important factor relative to attracting regional and national

conventions and meetings business. Anaheim is serviced by four nearby airports: John

Wayne/Orange County Airport, Long Beach Airport, Los Angeles International Airport and

Ontario International Airport. In 2011, there were 38.6 million passenger enplanements at these

four airports combined. The Federal Aviation Administration (FAA) defines enplanements as

domestic, territorial and international passengers who board an aircraft in scheduled and non-

scheduled service of aircraft. The ACC’s proximity to multiple major airports offers its

attendees excellent access to U.S. and international destinations.

Hotel Market

The diversity, supply and proximity of hotel rooms are important factors in attracting

convention/meeting business and accommodating out-of-town attendees. The Anaheim hotel

market is unique in many regards. There are approximately 20,000 hotel rooms in the City of

Anaheim and approximately 52,900 rooms in Orange County at various price points. These

properties include chain-affiliated hotels, all-suite, boutique and independent properties. Given

its location, many ACC-related out-of-town attendees stay in the resort area that offers 15,700

guest rooms. Two primary properties serve as headquarter hotels for ACC business, the

Anaheim Hilton & Towers (1,572 rooms) and the Anaheim Marriott Hotel (1,033 rooms) given

their level of service and proximity to the facility. Some attendees may also choose to stay near

the beaches.


PKF Consulting tracks the performance metrics of the Anaheim hotel market and publishes a

hotel forecast report annually. PKF categorizes hotels in Anaheim by various Average Daily

Rates (ADR) achieved by properties in the competitive market. The three categories include:

• Tier One - Hotels achieving an ADR of over $110

• Tier Two - Hotels and motels achieving an ADR of $70-$110

• Tier Three - Hotels and motels achieving an ADR of under $70

Primary Anaheim Hotel Rooms for Convention Center Demand

The following table illustrates the 14 Tier One properties in the Anaheim hotel market which

offer nearly 7,400 rooms in close proximity to the ACC.

Property

Number of

Rooms

Anaheim Hilton & Towers 1,572

Anaheim Marriott Hotel 1,033

Disneyland Hotel 990

Disney's Grand Californian 955

Disney's Paradise Pier Hotel 502

Sheraton Park Hotel 490

Sheraton Anaheim 489

Embassy Suites Anaheim 222

Doubletree Guest Suites 252

Residence Inn Anaheim Main Gate 200

Best Western Park Place Inn 199

Portofino Inn & Suites 190

Courtyard Anaheim at Disneyland 153

Staybridge Suites 143

Total 7,390

Source: PKF Consulting.

Tier One Convention Center Hotels - Anaheim

The aggregate performance metrics for the Tier One properties are presented in the following

table.

Year

Market

Occupancy

%

Change ADR

%

Change REVPAR

%

Change

2006 78.4% $157.88 $123.75

2007 77.8% -0.8% $170.08 7.7% $132.34 6.9%

2008 73.8% -5.1% $180.13 5.9% $133.01 0.5%

2009 66.6% -9.8% $167.72 -6.9% $111.68 -16.0%

2010 69.9% 5.0% $164.61 -1.9% $114.99 3.0%

2011 71.7% 2.6% $175.03 6.3% $125.51 9.1%

2012 76.2% 6.3% $184.97 5.7% $140.99 12.3%

Note: REVPAR denotes revenue per available room.

Source: PKF Consulting.

Historical Performance at Tier One Properties


As shown in the previous table, the historical performance of the Tier One properties in terms of

ADR has been strong. In 2012, the market rebounded to its historical peak in terms of achieved

REVPAR since 2008. Several factors have affected the Anaheim hotel market from 2006 to

2012 including an increased supply of 615 rooms with the addition of the 153-room Courtyard

Marriott and the 252-room Doubletree Guest Suites in 2006 and the 210-room expansion at

Disney’s Grand Californian. The decrease of 16.0% in REVPAR experienced in 2009 is

attributable to the national recession. This decrease was similar to other urban markets with

strong ties to business and leisure travel. However, Anaheim is much more resilient than other

markets nationally as REVPAR levels have rebounded back to historical levels. Most of the

other hotel markets nationally with similar characteristics are not expected to rebound to historic

highs until 2017.

Proposed Additions to Supply

A 120-room, limited-service Marriott Springhill Suites is scheduled to open in March 2014. This

all-suite property will be a Tier One property. The following table summarizes hotel projects

that have been approved.

Property

Number of

Guest Rooms Status

Estimated

Opening Date

Hyatt House 252 Approved Early 2015

Hyatt Place 178 Approved Summer 2014

Springhill Suites, Katella 172 Approved Summer 2014

Marriott Springhill Suites 120 Approved Spring 2014

Note: Sorted in descending order by number of rooms.

Sources: City of Anaheim; secondary research.

Proposed Hotel Additions - City of Anaheim

In addition to the above four hotel properties that have been approved, several others are in

various stages of the application and approval process. These and other impending new hotel

developments will further enhance the ACC’s competitive position in the future.

Meeting Hotels

The supply of hotels offering meeting/banquet space proximate to a convention center is

important to meeting planners given their need for supplemental space for meetings, food

functions, and/or special events. There are several Tier One and Tier Two properties in close

proximity to the ACC which offer meeting space. The following table illustrates those properties

with a minimum of 10,000 SF of total meeting space.


Property

Number of

Guest

Rooms

Number of

Meeting

Rooms

Ballroom

SF

Total

Meeting SF

Disneyland Hotel 990 52 33,000 136,000

Anaheim Hilton & Towers 1,572 51 57,000 120,000

Anaheim Marriott Hotel 1,033 30 63,700 100,000

Disney's Grand Californian 955 8 14,600 20,500

Crown Plaza Anaheim Resort 384 6 17,800 19,900

Disney's Paradise Pier 502 11 7,300 19,500

Sheraton Park Hotel 490 11 8,300 18,500

Doubletree-Orange 454 5 10,000 12,700

Marriott Suites Anaheim 371 7 7,100 10,100

Note: Sorted in descending order by total meeting SF.

Source: Individual hotel properties.

Anaheim Meeting Hotels

We interviewed representatives at the majority of the hotels with substantial amounts of meeting

space. The General Managers and Directors of Marketing at the various properties were

supportive of the proposed expansion of the ACC. Local hoteliers cited an expansion will

complement their properties, rather than be competitive. Group focused properties believe the

proposed ACC expansion is necessary to enable the ACC to be competitive in its offerings as

well as for Anaheim as a convention/meeting destination.

Potential Impact of ACC Expansion on Hotel Performance

Prior reports indicated that the Tier One hotels could expect to achieve a rate premium

subsequent to ACC expansion. In the latter part of 2012, Jones Lang LaSalle Hotels completed a

research study on urban markets where convention centers have undergone a major expansion;

hotel revenue experienced a premium over a five-year period. The report examined 15 urban

hotel markets and found a strong correlation between convention center attendance and

REVPAR.

Three years after an expansion was completed, real REVPAR increased on average 2.2% per

year versus an average increase of 0.4% per year when no expansion occurred.

Five years after an expansion was completed, real REVPAR increased on average 1.6% per

year compared to an average increase of 0.4% per year when no expansion occurred.

The report also discussed the positive effects construction or development of convention centers

had on those markets. According to the report, long-term convention center attendance growth

rates averaged 4.2% per year in comparable markets like Dallas, San Diego, Atlanta and

Phoenix, whose REVPAR is highly correlated to convention center attendance.

The decrease in the number of conventions at the ACC has refocused many of the Tier One

hoteliers to increase their marketing efforts to accommodate more in-house groups in recent

years. Despite previous studies in Anaheim and nationally, our interviews indicate that

achieving a premium in ADR in Anaheim may be challenging, particularly over the long-term.


Most hoteliers believe that Anaheim’s relative hotel affordability is a competitive advantage

when competing for group business.

Transient Occupancy Tax

The City of Anaheim currently imposes a 15% transient occupancy tax on hotel stays. Overall,

these collections have averaged approximately $82.9 million over the last three fiscal years.

After declines in annual collections in both FY 2009 and FY 2010, collections increased by 6%

and 9% in FY 2011 and FY 2012, respectively.

Historical Anaheim Transient Occupancy Tax Collections (in thousands)

Sources: PKF Consulting; City of Anaheim.

The following graph illustrates the distribution of Anaheim’s transient occupancy tax collections

by month using the most recent three-year average. Although collections peaked in August and

April, they are fairly consistent indicating the City’s appeal as a year-round destination.

Historical Anaheim Transient Occupancy Tax Collections by Month –

Three-Year Average (FY 2010 - FY 2012)


$56,331 $62,632

$66,323

$76,036 $82,597

$87,193 $80,732

$77,322 $81,843

$89,465

$0

$25,000

$50,000

$75,000

$100,000

FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

9%

10%

9%

6%

9%

7%

9%

7% 7%

10%

9% 8%

0%

5%

10%

15%

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun


Area Attractions

Convention/meeting planners often weigh a destination’s appeal to delegates when considering

whether to host their event at a particular facility. The ACC is located among the Disneyland

resort area which includes Disney California Adventure Park, the original Disneyland Park, and

Knott’s Berry Farm® Theme Park.

In 2012, the Walt Disney Company completed its $4 billion acquisition of Lucasfilm - the

creators and owners of the "Indiana Jones" and "Star Wars" franchises. The entertainment giant

also announced "Star Wars: Episode VII" for 2015, with Episodes VIII and IX waiting in the

wings. The future plans on how these acquisitions may impact Disneyland Anaheim have not

been announced at this time.

In addition to Disneyland, the surrounding area offers several other attractions including, but not

limited to, the following:

Aquarium of the Pacific

Area Beaches

Bowers Museum

Discovery Science Center

Flightdeck Air Combat Center

K1 Speed

Pretend City Children’s Museum

Richard Nixon Presidential Library & Museum

Travel Industry

Anaheim/Orange County's visitor industry plays

an influential role in the local economy. As

shown in the adjacent table, the area attracted

more than 43.8 million domestic and

international travelers (i.e., leisure visitors,

convention attendees and business travelers) that

were estimated to spend approximately $8.7

billion on accommodations, dining,

entertainment, recreation, shopping, sporting

events and transportation in 2012.

This robust visitor industry supports

approximately 160,000 jobs in the

Anaheim/Orange County area according to the

Anaheim/Orange County VCB. The ACC is a

significant feature of the area’s visitor industry

serving to support area hotels and businesses by

attracting non-leisure visitors and diversifying its

visitor markets.

Year Annual Visitors % Change

2003 42,700,000

2004 43,500,000 1.9%

2005 44,700,000 2.8%

2006 44,900,000 0.4%

2007 44,300,000 -1.3%

2008 43,100,000 -2.7%

2009 42,700,000 -0.9%

2010 42,700,000 0.0%

2011 42,900,000 0.5%

2012 43,800,000 2.1%

Average 43,530,000 2.6%

Source: CIC Research, Inc.

Estimated Orange County Visitors

3. Industry Trends 20

Industry Trends

The ACC’s success is somewhat dependent on the attributes of the industry as a whole. In order

to assess potential market demand for an expanded ACC, this section summarizes historical and

projected industry trends relative to the supply and demand for convention center space in the

U.S. as well as site selection criteria that meeting planners consider when selecting a facility and

a destination.

General Overview of U.S. Convention & Meetings Market

Over the last 20 years, the U.S. convention and meetings market experienced tremendous growth

in the supply of exhibit and meeting space through both new construction and expansion. This

increased supply led to a more competitive marketplace where numerous facilities can

accommodate meeting planners’ needs strictly in terms of the amount of space required.

The increase in supply combined with broader economic conditions such as higher

unemployment, increased costs associated with travel and lower corporate returns has resulted in

a downward trend in overall demand for convention and meeting space in recent years.

However, the current environment provides an edge to those facilities located in destinations

offering an attractive amenities package and proximate to a broad industry base of conventions

and meetings hosted for a variety of geographic segments (i.e., State, regional, national or

international). Anaheim’s overall appeal, hotel supply, accessibility, regional corporate and

association base combined with the ACC’s proximity to restaurants and entertainment options

have allowed it to maintain a relatively steady flow of convention, tradeshow and meeting

business during challenging economic times.

As a point of reference, the following table illustrates the destination and venue selection criteria

that meeting planners considered most important and their relative ranking. Overall cost, space

requirements, location and overall value rank highly in terms of both the site and venue

selection.

Factor % Factor %

Overall cost 42% Meeting space requirements 45%

Available venues which meet space requirements 42% Overall cost 41%

Ease of access/travel 39% Location 38%

Overall value 33% Condition and quality of venue 37%

Attractive location to attendees 32% Overall value 31%

Proximity to members/delegates 29% Flexible contracts 26%

Travel cost to destination 29% Attractive location to attendees 24%

Area hotel rates 22% Customer service 24%

Distance between airport and venue 20% Meeting room rates 19%

Public perception 14% Flexible and dedicated staff 16%

Attractions and activities 11% Incentives and concessions 15%

Availability of airlift 11% Amenities and services offered 11%

Source: MPI 2012 Business Barometer.

Most Important Decision Factors When Choosing a Destination Most Important Decision Factors When Choosing a Venue


There is no one source that measures the strength and performance of the convention and

meetings industry. The breadth of facility types and geographic locations coupled with the

variety of event types and sizes makes the ability to succinctly account for the entire industry’s

current or future position difficult. However, this section of the report presents data that

represents the leading and most comprehensive sources available including Center for Exhibition

Industry Research (CEIR), Meeting Professionals International (MPI), International Congress

and Convention Association (ICCA), Red 7 Media Research and Consulting, and Standard &

Poor’s (S&P).

Supply Trends

As shown in the following graph, the convention center building boom peaked in 2002 and 2003

with gross SF annual growth exceeding 6.5% each year.

Supply of Convention Center Space - Millions of Gross SF

Source: Tradeshow Week.

While supply growth has slowed significantly, new space has recently been developed and/or is

under construction; much of which were underway prior to the economic downturn. For

instance, the San Diego Convention Center and Moscone Center are both contemplating

expansion. The new convention center in Nashville opened this month and features 515,000 SF

of function space.

There has been a similar supply boom in hotel meeting and exhibit space. As shown in the

following graph, hotel function space in the U.S. has more than doubled from approximately

11.2 million in 1998 to 25.5 million in 2009. This development primarily took place in Las

Vegas and other resort-type, all-inclusive properties such as those operated by Gaylord Hotels.

Consequently, a growing number of hotels are able to directly compete with exhibition/

convention facilities.

63.2 64.2 64.2 63.4 65.6

67.6

72.4

77.2 80.5 82.3

85.1 85.9 88.5 90.0

94.4

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2012+


Supply of Hotel Space - Millions of Gross SF

Source: Tradeshow Week.

Perhaps more importantly, hotels with exhibit space can have an advantage over convention

centers because they control all major components of an event (i.e., function space, lodging and

food/beverage) under one roof. Since the hotel is the primary beneficiary of all revenue streams,

it can negotiate packages as it sees fit in any or all areas to attract business. For instance, a hotel

can offer meeting and/or exhibit space for free or at a deeply discounted rate because it would

still receive revenue from the rooms and food service which is often more profitable. In

addition, some privately operated hotels offer entertainment (i.e., a headliner act for a banquet)

as part of their overall package to entice meeting planners. Many of these properties are situated

in suburban locations, remote from other businesses that might attract some of the attendee

spending away from the hotel’s internal revenue generators.

Four of the 15 largest U.S. hotel/convention facilities comprise the large convention hotel brand

of Marriott International: Gaylord Texan Resort & Convention Center in Grapevine, Texas;

Gaylord Palms in Kissimmee (outside of Orlando); Gaylord Opryland in Nashville; and Gaylord

National Resort & Convention Center in National Harbor, Maryland. These all-inclusive

developments are important for several reasons. First, private sector development suggests

market demand for convention space adjacent to hotel rooms since the private sector is typically

more cautious about making large financial investments without expecting a relatively high

return on investment. Secondly, now that the brand has multiple properties, Gaylord Hotels is in

a strong competitive position to geographically route groups for several years within their own

hotel/convention properties.

5.7 5.3 5.9 6.0 6.9 8.3 8.6 9.2 9.8 10.6 11.4 12.1

13.4

5.5 5.6 5.9 6.1

6.3

6.9 7.3 8.4

9.6 10.5

12.1 13.4

13.7

0.0

5.0

10.0

15.0

20.0

25.0

30.0

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2012+

Exhibit Space Meeting Space


Demand Trends

While the supply of exhibition and meeting space has experienced significant growth over the

past decade, demand has been less aggressive. In fact, overall economic conditions have led to a

larger gap between the supply of and demand for space. The result has been a buyer’s market in

recent years with larger convention centers vying for more moderately sized events and hotels

aggressively marketing their function space to small and mid-sized events. As a result,

convention centers such as the ACC have had to compete on the overall package price. Meeting

planners are comparing destinations on their facility rental, hotel room rates as well as other

financial concessions to attract their business.

The following table summarizes industry data provided by CEIR which tracks annual changes in

several industry metrics: net SF used for exhibitions, total number of exhibitors and attendees

and industry revenues. As shown, the industry has undergone two seasons of negative growth at

the start of the decade as well as between 2008 and 2010. Several national economic events led

to periods of slower growth or retraction in the convention/exhibition industry since 2001. The

events of September 11, 2001, had a direct impact on the recession in the early part of the decade

while various national and global events impacted the convention/exhibition industry during

2008 to 2010. According to data provided by CEIR, the industry rebounded to pre-recession

levels approximately three years after the recession in 2001 - 2002. CEIR noted moderate

growth in all metrics in 2011, a first since 2007, and projects similar growth through 2014.

Metric 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012p 2013p 2014p

CAGR,

2000-2011

Net SF 1.2 -3.3 0.0 3.8 2.2 1.4 3.6 -1.4 -10.9 -2.1 2.7 3.0 3.3 3.3 -0.3

Exhibitors -2.5 -3.2 2.0 2.6 2.2 -1.8 2.2 -2.0 -10.7 -1.1 2.3 2.7 2.9 3.1 -1.0

Attendees -2.7 -4.2 3.0 2.4 -0.5 0.7 3.9 -3.2 -7.5 2.4 3.4 3.1 3.3 3.5 -0.3

Real Revenues1

3.8 -5.6 -2.1 3.9 5.7 0.6 4.8 -3.6 -9.6 -8.4 2.3 2.7 3.3 3.6 -0.9

Total -0.1 -4.1 0.7 3.2 2.4 0.2 3.6 -2.6 -9.7 -2.4 2.7 2.9 3.2 3.4 -0.61Inflation adjusted revenues, adjusted for CPI for all urban consumers.

p = projected

Source: CEIR

Year-On-Year Percent Change of the Metrics and CEIR Index

The following graph illustrates annual changes of key convention industry measures alongside

the S&P 500 earnings-per-share (EPS) in order to further illustrate the relationship between the

convention industry and overall economic conditions.


Annual Changes to Convention Demand and S&P 500 EPS

Note: p = projected

Sources: CEIR, Standard & Poors, 2013.

The correlation between overall U.S. economic trends and that of the convention industry is

highlighted in the graph. Negative S&P earnings per share data precedes periods of convention

industry retraction similar to periods of positive economic and industry growth. S&P earnings

began to experience growth in 2009 whereas the convention and meetings industry tends to lag

12 to 18 months behind the broader economy. According to S&P and CEIR, overall economic

and convention industry conditions are projected to increase throughout 2012 and 2013. This is

further substantiated by event planner projections discussed later in this section.

CEIR also tracks the exhibition industry by segment. As shown in the following table, the

medical and healthcare industry represents the most exhibition events which, despite the overall

economic conditions, managed to sustain a minor average annual growth rate during the past

decade. Other sectors also experiencing slight average annual growth over the past 11 years

include the government sector; machinery and finished business outputs; medical and healthcare;

sporting goods, travel and amusement; as well as raw materials and science.

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012p 2013p

S&

P 5

00

EP

S

CE

IR I

nd

ex

S&P 500 EPS Net SF Exhibitors Attendees


Industry

% of

Exhibitions

2011 Growth

Rate

CAGR 2000-

2011

Government 3.9% 7.0% 3.9%

Machinery and Finished Business Outputs 4.9% 11.2% 3.2%

Medical and Healthcare 17.3% 0.2% 0.5%

Sporting Goods, Travel and Amusement 5.5% -0.8% 0.5%

Raw Materials and Science 10.4% 3.3% 0.2%

Discretionary Consumer Services 5.3% 2.3% -0.8%

Communications and Information Technology 8.7% 8.1% -1.0%

Building, Construction, Home & Repair 4.3% -5.3% -1.3%

Transportation 4.6% 5.7% -1.3%

Financial, Legal, Real Estate 7.3% 3.6% -1.8%

Consumer Good/Retail 7.2% 2.6% -2.0%

Education 7.5% 1.0% -2.2%

Food 3.1% 1.4% -2.2%

Business Services 10.0% 1.5% -3.0%

Overall Exhibition Industry 100.0% 2.7% -0.6%

Notes: Sorted in descending order by CAGR 2000-2011 growth.

Source: CEIR.

Industry Wide Growth by Segment

CEIR also tracks exhibition industry data by segment and projects future changes given broader

economic and segment-specific factors which is illustrated in the following table. As shown,

machinery and finished business outputs, communications and information technology, as well

as financial, legal and real estate are projected to experience the greatest growth over the next

several years.

Segment 2012p 2013p 2014p

Machinery and Finished Business Outputs 8.0% 6.7% 5.9%

Communications and Information Technology 7.9% 8.0% 7.5%

Financial, Legal & Real Estate 5.0% 5.7% 6.0%

Transportation 3.5% 3.6% 4.2%

Overall Exhibition Industry 2.9% 3.2% 3.4%

Raw Materials and Science 2.9% 3.2% 3.3%

Professional Business Services 2.6% 2.9% 3.1%

Food 2.5% 2.4% 2.5%

Government 2.5% 2.8% 2.9%

Discretionary Consumer Services 2.3% 2.5% 3.1%

Consumer Goods & Retail Trade 1.6% 2.5% 2.1%

Sporting Goods, Travel and Amusement 1.3% 1.5% 2.0%

Education 1.1% 1.2% 1.1%

Building, Construction, Home & Repair 0.8% 2.0% 2.2%

Medical and Healthcare 0.8% 1.4% 2.2%

Source: CEIR

CEIR Index Projections by Segment


CEIR predicts the current positive momentum and releases of pent-up consumer and business

demand should sustain continued recovery in consumer expenditures and business investment

through 2014. Projected growth in construction, automotive, equipment, and other

manufacturing sectors should sustain relatively strong growth in the machinery and finished

business outputs sector. Personal consumption of electronics and communications services are

expected to increase more rapidly than overall consumption spending, with purchases of wireless

telecommunications equipment and services leading the way.

According to CEIR, the education sector is likely to be negatively impacted in the next several

years by substantial constraints in state and local government spending with resulting projected

declines in the segment’s CEIR index. Exhibitions in the government sector outperformed the

overall exhibition industry during the past decade. Increases in the number of government

programs and level of expenditures, particularly for security related activities, helped fuel this

growth. Increasing federal deficits are resulting in declining federal aid to state and local

governments which is anticipated to lead to slower growth in the CEIR government sector index

during 2012 through 2014.

MPI conducts an annual survey (Business Barometer) to gather key facts and comment on

meeting industry trends. The following table illustrates that Canadian, European, and U.S.

meeting planners project growth in attendance, planner budgets, and the number of meetings in

2013.

Category Canada Europe U.S. Overall

Number of Meetings 3.3% 3.2% 2.8% 2.9%

Meeting Budget 0.1% 0.7% 1.0% 0.9%

Attendance 1.4% 2.0% 1.9% 1.9%

Source: MPI 2012 Business Barometer

% Change

Meeting Planner Predictions - 2013

Other trends noted by survey respondents include the following:

The flood of new technological capabilities into the market has meeting planners facing

difficult decisions on which solutions are best for their events.

Meeting professionals are designing meeting spaces and agendas to accommodate attendees

who network electronically as well as those who prefer to network face-to-face.

Globally, meeting professionals see significantly shorter lead times.

Venues continue to charge premiums for network availability in contrast to meeting

professionals’ expectations that Internet access be treated as standard.

Contract negotiations are becoming more complex as suppliers seek to minimize unallocated

resources and planners seek to minimize wasted dollars.


MPI’s Business Barometer also reports that many event managers in the U.S. and Canada will

evaluate 20% more locations per meeting in 2013 in order to increase competition, hoping to

lower prices or create more favorable contract terms. The same survey reports an increasing

number of meeting professionals are attempting to lower risk by negotiating bulk agreements in

which audio/visual, guest nights, food/beverage and technology are simultaneously purchased for

more than one meeting or event in more than one location.

The ICCA represents over 900 member companies and organizations in 87 countries

representing the leading players in the international meetings field. According to the ICCA there

are approximately 21,000 different association meetings organized on a regular basis. The ICCA

database has collected information on approximately 80% of them. The Statistics Report is

based on this database and covers meetings that rotate between a minimum of three countries.

As shown in the following graph, the population of rotating international association meetings

experienced steady growth through 2010 with a small decline in 2011.

Number of Rotating International Association Meetings

Source: ICCA.

According to the ICCA report, the U.S.

ranked highest in terms of the number of

international meetings in 2011.

The estimated total number of

participants at all 2011 meetings is over

5.5 million, a 3% increase over 2010.

Country

Number of

Meetings

United States 759

Germany 577

Spain 463

United Kingdom 434

France 428

Italy 363

Brazil 304

China 302

Netherlands 291

Austria 267

Source: ICCA.

2011 Worldwide Rankings by Country

6,155 6,405

7,645 8,121

8,745

9,536 10,149 10,346 10,406

10,070

0

2,000

4,000

6,000

8,000

10,000

12,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011


The most popular U.S. cities in terms of the

number of 2011 international association

meetings hosted are summarized in the

adjacent table. As shown, both San Francisco

and San Diego ranked among the top five

destinations. Las Vegas and Seattle are also

popular western U.S. destinations.

Total attendance at all U.S. international

meetings in 2011 was estimated to be 563,800.

City

Number of

Meetings

Washington, D.C. 51

Boston, MA 44

New York, NY 32

San Francisco, CA 32

San Diego, CA 31

Chicago, IL 28

Las Vegas, NV 24

Miami, FL 22

Seattle, WA 20

Orlando, FL 19

Source: ICCA.

2011 Worldwide Rankings by City

The average number of participants per meeting reached its lowest point of the past decade in

2011 with 535 participants per international meeting which is a drop of 6% from 2010 figures.

North America has been the region with the largest average numbers of participants per meeting

over the same time period, with an average of 732 in 2011.

Over the last decade, the usage of hotel meeting facilities has gradually increased at the expense

of conference/exhibition centers. Hotels originally took first place as the most popular venue for

international meetings in 2005 and have retained this position with nearly 45.4% of the market

share in 2011. Despite a decline over the past ten years, conference/exhibition centers remain

the second most popular venue type. The most common subject areas at international meetings

have consistently been medical science and technology.

4. Historical ACC Operations 29

Historical ACC Operations

Understanding historical utilization at the ACC is one factor in assessing the potential need for

expansion. In order to gain an understanding of the types of events that the ACC has held as well as

general event attributes, the facility’s event activity was analyzed for FY 2008 through FY 2012.

This section of the report includes an analysis of event activity by type, seasonality, occupancy

levels, as well as the amount of exhibit space utilized. Lost business reports are also analyzed.

Understanding the reasons for lost business, particularly as they relate to space limitations and/or

date conflicts, is helpful to assist the City in assessing the potential demand for an expanded ACC.

ACC Utilization Trends

The following graph illustrates the number of events and total attendance at the ACC for the last five

fiscal years. ACC event activity declined each year through FY 2011 but increased in both total

events and total attendance in FY 2012. The increase in the number of FY 2012 events was driven

primarily by seven additional conventions whereas the increase in attendance was distributed among

a number of event types including consumer shows (+86,500), tradeshows (+48,000), other events

(+40,000), and entertainment (+33,300).

ACC Historical Events & Attendance - FY 2008 – FY 2012

Note: ACC event activity shown above differs slightly from that shown in the City’s CAFR.

Source: Facility management.

As shown in the table that follows, conventions and tradeshows have consistently accounted for the

highest portion of total attendance at the ACC over the last five fiscal years. These events typically

attract a higher percentage of overnight attendees and thus generate significant economic impact.

Average attendance for conventions has been fairly consistent over the time period shown attracting

approximately 6,200 attendees per event. Average tradeshow attendance has fluctuated over the

same time period ranging from 20,200 to 35,700.

1,0

98

,00

7

91

1,3

51

94

5,6

58

93

2,4

73

1,0

61

,20

3

98

9,7

38

341

309

231

200

222

261

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

0

50

100

150

200

250

300

350

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Average

Attendance Events


Event Type Events Event Days

Move-

In/Out

Days

Total

Usage

Days

Event

Length

Total Use

Length

Average

Attendance

Total

Attendance Event Type Events Event Days

Move

in/out

Days

Total

Usage

Days

Event

Length

Total Use

Length

Average

Attendance

Total

Attendance

Conventions 68 177 203 380 2.6 5.6 6,000 408,699 Conventions 53 150 157 307 2.8 5.8 6,300 336,148

Tradeshows 13 30 59 89 2.3 6.8 20,200 263,136 Tradeshows 11 29 58 87 2.6 7.9 22,700 249,930

Entertainment 29 39 14 53 1.3 1.8 2,600 75,590 Entertainment 20 29 2 31 1.5 1.6 2,100 42,941

Sporting 42 67 18 85 1.6 2.0 2,400 102,310 Sporting 39 74 22 96 1.9 2.5 2,300 90,199

Consumer 17 47 52 99 2.8 5.8 7,400 126,386 Consumer 15 34 39 73 2.3 4.9 6,500 97,920

Other 47 83 47 130 1.8 2.8 1,400 64,931 Other 39 70 20 90 1.8 2.3 800 30,986

Social 31 32 4 36 1.0 1.2 400 12,770 Social 20 23 3 26 1.2 1.3 400 8,263

Meeting 94 125 24 149 1.3 1.6 500 44,185 Meeting 112 143 25 168 1.3 1.5 500 54,964

Total 341 600 421 1,021 1,098,007 Total 309 552 326 878 911,351


Move-

In/Out

Days

Total

Usage

Days

Event

Length

Total Use

Length

Average

Attendance

Total


Move

in/out

Days

Total

Usage

Days

Event

Length

Total Use

Length

Average

Attendance

Total

Attendance






Other 25 42 9 51 1.7 2.0 600 14,210 Other 30 49 13 62 1.6 2.1 800 24,053

Social 20 20 1 21 1.0 1.1 300 5,955 Social 12 12 4 16 1.0 1.3 300 3,858

Meeting 88 133 21 213 1.5 2.4 300 27,118 Meeting 61 77 26 103 1.3 1.7 500 33,497

Total 231 471 343 814 945,658 Total 200 407 318 725 932,473


Move

in/out

Days

Total

Usage

Days

Event

Length

Total Use

Length

Average

Attendance

Total


Move

in/out

Days

Total

Usage

Days

Event

Length

Total Use

Length

Average

Attendance

Total

Attendance






Other 35 66 30 96 1.9 2.7 1,800 63,994 Other 35 62 24 86 1.8 2.5 1,130 39,635

Social 16 16 4 20 1.0 1.3 300 4,655 Social 20 21 3 24 1.1 1.2 360 7,100

Meeting 56 69 22 91 1.2 1.6 400 23,034 Meeting 82 109 24 133 1.3 1.6 450 36,560

Total 222 436 414 850 1,061,203 Total 261 493 364 858 989,738

Summary of ACC Event Activity - FY 2008 Summary of ACC Event Activity - FY 2009

Summary of ACC Event Activity - FY 2010 Summary of ACC Event Activity - FY 2011

Summary of ACC Event Activity - FY 2012 Summary of ACC Event Activity - Five Year Average


Until FY 2012, meetings represented the largest number of ACC events but these tend to be among the smallest in terms of average

attendance. Social functions consistently attract the smallest groups in terms of average attendance over the past three fiscal years.

Consumer shows, which typically attract local residents, can be beneficial in terms of occupying a building during non-peak seasons for

other events generating overnight stays. Consumer shows also serve the local community by bringing many dealers/providers of a particular

product or service to one location for buyers’ convenience. Other events include talent competitions, college fairs, and class reunions.


Sporting events, which include competitions such as volleyball, dance, cheerleading, and the martial

arts, are likely to attract family and/or friends who join the competitor as part of the overnight

visitors. In addition, sporting competitions are also likely to have attendees who extend their stay to

enjoy the host destination’s amenities.

Over the last five fiscal years,

conventions and tradeshows have

represented approximately 25%

of total events, 48% of total usage

days and 59% of total attendance

annually.

Distribution of Event Activity - Historical Five-Year Average


The following graphs illustrate the seasonality of ACC event activity by the number of events

and attendance. As shown, conventions/tradeshows and other events peak in spring, early

summer and fall. Other event activity occurs more frequently in April/May and

October/November.

Seasonality of Event Activity by Month – Historical Five-Year Average


25%

48%

59%

75%

52%

41%

Events Usage Days Attendance

0%

20%

40%

60%

80%

100%

Conventions/Tradeshows All Other Events

0

5

10

15

20

25

30

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Nu

mb

er o

f E

ven

ts

Conv/TS All Other Events


Convention/tradeshow attendance peaks in January and March due primarily to the NAMM

convention which draws 85,000 to 95,000 attendees in January and the Natural Products West

Expo which draws 54,000 to 60,000 attendees in March. All other events draw peak attendance

in February through April and July through October.

Seasonality of Attendance by Month – Historical Five-Year Average


It is useful to analyze the long-term trend of Anaheim/Orange County VCB bookings at the ACC

in order to understand the facility’s usage over time. The following table presents the historical

number of bookings, attendance and total room nights generated by those attendees. As shown,

the number of bookings peaked in 2004 and has fluctuated since. Bookings in 2012 were the

highest since 2007. Attendance and room nights peaked in 2004; these statistics experienced a

59% and 43% increase, respectively, in 2012 compared to the prior year.

Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Number of Bookings 88 104 73 64 84 68 66 59 58 80

% Change 18% -30% -12% 31% -19% -3% -11% -2% 38%

Attendance 898,430 1,209,835 594,990 757,900 372,335 769,180 631,575 544,865 538,170 858,035

% Change 35% -51% 27% -51% 107% -18% -14% -1% 59%

Total Room Nights 612,687 780,481 650,022 465,965 421,480 511,561 344,194 349,283 382,433 546,786

% Change 27% -17% -28% -10% 21% -33% 1% 9% 43%

Source: Anaheim/Orange County VCB.

ACC Historical Convention Booking Trend by VCB

There are several methods of calculating convention center occupancy. Some facilities utilize a

measurement of total days used divided by the days available, others account for only event

days. For purposes of this analysis, occupancy is calculated based on the total usage days

divided by the total days available which accounts for the amount of space used by each event.

It is generally considered that function space with occupancy levels of 60% to 70% is operating

at its practical maximum given that events utilizing these types of facilities often require move

in/out days which can hinder its ability to immediately accommodate another incoming event.

Furthermore, occupancy is impacted by the number of days that are required for building

maintenance and upkeep, etc. when the center cannot be sold as well as the amount of space.

0

25,000

50,000

75,000

100,000

125,000

150,000

175,000

200,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Att

end

an

ce

Conv/TS All Other Events


The following table summarizes ACC historical occupancy for the last three years for which data was

available.

FY 2009 FY 2010 FY 2011

Nunber of Exhibit Hall Events

Conventions/Tradeshows 58 47 56

Consumer Shows 26 23 37

Total 84 70 93

Exhibit Hall Event Attendance

Conventions/Tradeshows 584,978 638,000 477,000

Consumer Shows 239,063 258,000 392,000

Total 824,041 896,000 869,000

Attendance per Exhibit Hall Event

Conventions/Tradeshows 10,086 13,574 8,518

Consumer Shows 9,195 11,217 10,595

Exhibit Hall Occupancy

Conventions/Tradeshows 39% 49% 37%

Consumer Shows 10% 11% 14%

Total 49% 60% 51%

Ballroom Occupancy 39% 60% 61%


ACC - Summary of the Historical Occupancy

ACC exhibit hall occupancy fluctuated between FY 2009 through FY 2011 (FY 2012 data was not

available at the time of this report). Ballroom occupancy experienced a significant increase in FY

2010 and remained above 60% in FY 2011. As shown in the following graph, ACC exhibit and

ballroom space are approaching practical maximum occupancy.

ACC Exhibit Hall & Ballroom Occupancy


49%

39%

60% 60%

51%

61%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Exhibit Space Ballroom Space

FY 2009 FY 2010 FY 2011

Practical

Maximum

Occupancy }


Hall E consistently realizes the lowest occupancy which is primarily due to its location on a separate

level from the other halls and its number of columns.

ACC Exhibit Hall Occupancy by Hall - Historical Three-Year Average


Exhibit hall occupancy is reported by ACC management in two event categories: conventions/

tradeshows (including corporate conventions) and consumer shows. The following graph illustrates

that conventions/tradeshows have consistently accounted for the highest percentage of exhibit hall

usage days over the last three fiscal years. The percentage of exhibit hall usage for consumer shows

has fluctuated during the profiled period. This is consistent with sound booking policies which allow

management to book these types of events within a shorter timeframe as space is available.

% of Exhibit Hall Total Use Days by Event Type – Historical Three-Year Average


49%

58% 59%

53%

23%

63%

69% 66%

69%

30%

58% 58% 57% 53%

28%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Hall A Hall B Hall C Hall D Hall E

FY 2009 FY 2010 FY 2011

80% 81% 73%

20% 19% 27%

0%

20%

40%

60%

80%

100%

FY 2009 FY 2010 FY 2011

Conventions/Tradeshows Consumer Shows

Practical

Maximum

Occupancy

}


Each of the five ballroom sections has fairly consistent annual occupancy, as illustrated in the

following graph. As mentioned previously, FY 2010 and FY 2011 experienced a significant

increase in ballroom occupancy relative to FY 2009.

ACC Ballroom Occupancy by Section


As illustrated in the following table, conventions use an average of 191,700 SF of exhibit space

whereas tradeshows use an average of 539,000 SF based on ACC usage data provided for FY

2010 through FY 2012. Conventions and tradeshows require an average of 46% (54,300 SF) and

62% (74,200 SF), respectively, of the ACC’s existing meeting/ballroom space. This relatively

high usage percentage of meeting/ballroom space to exhibit space makes it difficult for the

facility to host simultaneous events given its current supply of space.

Event Type Exhibit Ballroom Meeting Total

Conventions 191,700 18,900 35,400 246,000

Tradeshows 539,000 21,100 53,100 613,200

Entertainment 73,600 700 800 75,200

Sports 112,900 2,000 2,300 117,200

Consumer Shows 239,200 7,500 12,700 259,400

Other 45,500 4,900 3,700 54,100

Banquets 3,000 8,800 2,900 14,700

Meetings 0 4,400 6,700 11,100


Historical Three-Year Average Space Used by Event Type

38% 41% 40% 39% 39%

61% 62%

61% 57% 60% 58% 59%

62% 62% 62%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Ballroom A Ballroom B Ballroom C Ballroom D Ballroom E

FY 2009 FY 2010 FY 2011

Practical

Maximum

Occupancy

}


It is also useful to analyze the number of exhibit halls used by each event type. The average

existing ACC exhibit hall offers 162,700 SF. As shown in the following graph, the majority of

conventions and consumer shows held in the past three fiscal years utilized one exhibit hall. By

contrast, 50% of tradeshows required all five exhibit halls or 813,500 SF.

Number of Exhibit Halls Used by Event Type - Historical Three-Year Average


Over the past three fiscal years, an average of 42% of conventions has used the entire ballroom.

Similarly, 57% of tradeshows have required the entire ballroom.

Number of Ballroom Sections Used by Event Type - Historical Three-Year Average


29%

0%

25%

41%

25%

56%

18%

0%

6% 6%

13%

6% 4%

13%

0% 2%

50%

6%

0%

10%

20%

30%

40%

50%

60%

70%

Conventions Tradeshows Consumer Shows

0 1 2 3 4 5

43% 43%

65%

2% 0%

6% 6%

0% 0%

6%

0%

6%

2% 0%

6%

42%

57%

18%

0%

10%

20%

30%

40%

50%

60%

70%

80%


0 1 2 3 4 5


Over the past three fiscal years, 36% of conventions and 71% of tradeshows have used more than

50,000 SF of meeting space, on average. Conventions and tradeshows required an average of 19

and 28 meeting rooms, respectively, over the past three fiscal years. Approximately two-thirds

of consumer shows do not use any meeting space.

Meeting Room SF Used – Historical Three-Year Average


While conventions utilize limited exhibit space relative to the total amount available, these

events often utilize a significant portion of the existing ACC’s meeting/ballroom space. This in

turn limits management’s ability to book other events that require supporting meeting/ballroom

space. Based on historical space usage, the proposed new flex space could serve to allow for

more simultaneous conventions requiring one exhibit hall and supporting meeting/ballroom

space as well as allowing some of the ACC’s largest tradeshows the opportunity to expand their

exhibitions.

ACC Lost Business

The Anaheim/Orange County VCB maintains statistics from meeting planners that considered

Anaheim for their event but ultimately decided not to bring their business to the City. For

purposes of this analysis, only events that were viable candidates to be hosted at the ACC were

analyzed. As shown in the following table, group decision factors such as Board decision,

meeting canceled, geographic rotation, no client decision/response, and political decision

represent the largest number of total hotel rooms lost during the period analyzed. Inadequate

space reasons including the desire for one building, insufficient exhibit or meeting space at the

ACC, preferred date and/or space unavailability rank second.

27%

0%

64%

22%

29%

21%

15%

0% 0%

36%

71%

14%

0%

10%

20%

30%

40%

50%

60%

70%

80%


0 SF

1-25,000 SF

25,001-50,000 SF

More Than 50,000 SF


Reason Number % Number % Number %

Group Decision 134 34% 328,959 41% 892,760 44%

Space/Date Availability 120 31% 218,218 27% 533,425 26%

Facility and/or Destination Pricing 59 15% 107,344 13% 280,940 14%

Other 23 6% 65,052 8% 130,678 6%

City/Area Image 31 8% 62,394 8% 127,575 6%

ACC Booking Policy/Negotiations 25 6% 28,226 3% 61,650 3%

Total 392 100% 810,193 100% 2,027,028 100%


Summary of ACC Lost Business Reports (Tracked 2008 through 2012)

Events Peak Hotel Rooms Attendance

Lost business reports tracked between 2008 and 2012 and provided by the VCB indicate that the

ACC has lost 447 events, 2.3 million in total attendance and 940,371 peak hotel rooms. These

totals differ from the summary table above due to the fact that some groups did not provide any

reason. Combined, inadequate ACC space accounted for 27% of peak room nights lost. As

previously mentioned, ACC exhibit hall and ballroom occupancy are approaching practical

maximum in recent years; this trend is contributing to the space availability issues for additional

groups. Space and date availability are considered controllable factors in the sense that they can

be changed by facility ownership/management. Group decision factors, however, are considered

uncontrollable in a direct sense by facility management. In aggregate, facility and/or destination

pricing accounted for 13% (or 107,344) of lost peak room nights. Maintaining competitive ACC

rental rates and hotel ADRs will be important for the ACC’s long-term competitive position.

Other reasons include accessibility, hotels declined, and economy. ACC booking policy/

negotiations reasons include dates too far in advance to reserve required space. This is consistent

with industry wide practices to not allow groups with smaller peak room night needs to book

outside 18 months without pairing them up with other groups. Other lost business in this

category may include groups that require significant meeting space relative to their use of exhibit

space and/or peak room nights. The ACC and Anaheim/Orange County VCB have requirements

that preclude them from booking the facility too far in advance in these types of situations. Some

customers are not flexible on their dates and, as such, cannot be accommodated within their

desired timeframe, allowing the Anaheim/Orange County VCB and ACC staff greater flexibility

for larger, citywide events. In general, these reasons appear to be consistent with the facility’s

booking policy and sound business decisions routinely employed in the industry.

ACC lost business is also tracked by the amount of exhibit space required. As shown in the

following table, 83% of events require up to 200,000 square feet of exhibit space suggesting that

the majority of lost business is not due to the amount of space but rather the lack of available

space or dates at the facility. Adding the proposed new space could potentially alleviate some of

these booking conflicts and allow stand-alone events to utilize the new flex space.


Exhibit Space SF Requirement Number % Number % Number %

<= 100,000 253 57% 416,445 44% 884,990 38%

100,001-200,000 117 26% 234,698 25% 514,590 22%

200,001-300,000 36 8% 105,981 11% 274,700 12%

300,001-400,000 12 3% 43,747 5% 137,000 6%

400,001-500,000 8 2% 40,300 4% 152,000 6%

500,001-600,000 2 0% 18,500 2% 54,000 2%

600,001-700,000 4 1% 17,000 2% 81,000 3%

700,001-800,000 4 1% 20,900 2% 90,000 4%

800,001-900,000 6 1% 22,750 2% 39,138 2%

900,001-1,000,000 5 1% 20,050 2% 118,000 5%

Total 447 100% 940,371 100% 2,345,418 100%

Note: Totals will not match previous "Reason Lost" table because some groups did not provide a reason.


ACC Lost Business by Gross Exhibit Space Required (Tracked 2008 through 2012)

Events Total Hotel Rooms Attendance

Historical ACC Financial Operations

As shown in the following table, the ACC has averaged operating income of $577,000 over the

last five fiscal years excluding non-operating revenues and expenses. Room rental revenue

averaged 40% of total operating revenue during the profiled period. Salaries, wages and benefits

averaged 65% of total operating expenses over the past five fiscal years. Both operating

revenues and operating expenses have fluctuated during the profiled period.

Category FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Five-Year

Average

Operating Revenues

Room Rental $10,805,000 $9,525,000 $10,733,000 $9,599,000 $10,302,000 $10,193,000

Event Services 6,343,000 5,570,000 6,952,000 6,230,000 6,541,000 6,327,000

Parking 5,142,000 4,807,000 5,081,000 5,532,000 6,170,000 5,346,000

Food/Beverage 3,040,000 1,660,000 3,258,000 2,614,000 2,137,000 2,542,000

Other Revenue 957,000 771,000 705,000 715,000 791,000 788,000

Total 26,287,000 22,333,000 26,729,000 24,690,000 25,941,000 25,196,000

Operating Expenses

Salaries, Wages, Benefits $16,506,000 $15,813,000 $16,411,000 $15,471,000 $16,079,000 $16,056,000

Utilities 3,192,000 3,078,000 3,205,000 3,174,000 3,554,000 3,241,000

Repairs and Maintenance 1,773,000 1,973,000 1,972,000 1,687,000 1,917,000 1,864,000

General/Administrative 1,660,000 1,412,000 1,778,000 1,799,000 1,425,000 1,615,000

Contract Services 763,000 685,000 586,000 447,000 464,000 589,000

Insurance 563,000 398,000 563,000 563,000 563,000 530,000

Materials and Supplies 562,000 434,000 376,000 308,000 338,000 404,000

Other Charges 317,000 246,000 305,000 286,000 447,000 320,000

Total 25,336,000 24,039,000 25,196,000 23,735,000 24,787,000 24,619,000

Operating Income/(Loss) $951,000 ($1,706,000) $1,533,000 $955,000 $1,154,000 $577,000

Summary of Historical ACC Financial Operations


ACC financial operations were analyzed for a five-year period in order to recognize any impacts

of the national recession. FY 2009 experienced the lowest operating revenues during the time

period which is consistent with overall industry trends impacted by the national recession. Since

that time, the ACC has experienced increased operating revenues. For purposes of the financial

and economic analysis shown later in this report, the historical three-year average is utilized in

order to reflect more stabilized operations.

5. Potential Demand Generators 41

Potential Demand Generators

In order to assess the potential demand for an expanded ACC, it is important to understand the

macro level population of events as well as gather input directly from potential users to gauge

how the ACC and Anaheim are viewed in terms of attracting their event(s). Several sources

were used to assess potential demand including primary and secondary research. It is important

to note that there is not one single industry source that can provide a measure of the universe of

demand. As such, several sources are presented to show the order-of-magnitude demand that

exists in the broader market place as well as the ACC’s potential to grow its current share. The

various sources do not represent mutually exclusive demand potential.

Red 7 Media identified the market potential for events requiring various amounts of exhibit

space. Excluding groups that require 100,000 SF of exhibit space or less given that these events

are often accommodated by hotel properties, the potential universe of events requiring 100,001

to 1.1 million SF of exhibit space and which rotate nationally or in the Western region is 2,090.

Attracting 3.7% to 3.85% of these potential events annually would equate to a total of 77 to 80

conventions/tradeshows, respectively. The existing ACC has attracted an average of 63 of these

events so the incremental event potential is 14 to 17 assuming Anaheim attracts 3.7% to 3.85%

of the overall universe of event activity.

Exhibit Space Gross SF Share Number of Events

Total Number 3,121

Require up to 100,000 SF 33.0% 1,031

Require 100,001 to 200,000 SF 18.3% 571

Require 200,001 SF to 800,000 SF 48.2% 1505

Require 800,001 to 1,100,000 SF 0.4% 14

Incremental Universe of Possible Events 67.0% 2,090

Sources: Red 7 Media, Tradeshow Week, Tradeshow News Network.

Gross SF Used by Convention & Exhibit Market - Rotate Nationally or in Western Region

In addition, the Anaheim/Orange County VCB lost business reports for the past five years

identify 120 lost events that were either too large to be accommodated by the current ACC or

have been lost because of space/date availability issues; the vast majority of lost business

required 200,000 SF of space or less. These groups average 1,800 peak room nights and attract

4,500 attendees.

According to the 2011 State & Regional Associations of the U.S. and National Trade and

Professional Associations of the U.S., there are 976 associations headquartered in California

which are comprised of 576 state/regional associations and 400 national associations. These

account for 6% of all associations headquartered in the U.S. As mentioned previously, the ICCA

reports the U.S. hosted a total of 759 international association meetings in 2011. These groups

represent a target market within the State and region for annual conventions, tradeshows and

smaller division meetings.


In addition to this macro level potential demand industry-wide, representatives of State, regional

and national associations were surveyed in order to assess their future needs at the ACC and their

reasons for choosing (or not choosing) Anaheim as a destination. Survey participants represent

past users of the ACC and lost business reports from the Anaheim/Orange County VCB. This

input provides a basis for evaluating the proposed expansion program and its ability to positively

impact ACC usage.

Telephone interviews or web-based surveys were completed with meeting planners responsible

for planning conventions or tradeshows for the following organizations:

Aircraft Owners & Pilots Association

American Association of Animal Lab

Science

American College of Cardiology

American Heart Association

American Society of Landscape Architects

American Trucking Association

Helicopter Association International

International Music Products Association

Medical Design & Manufacturing

Natural Products Expo West

Produce Marketing Association

Solar Energy Industries Association

Specialty Tools & Fasteners Distributors

Association

The survey process sought to gauge how the existing ACC is positioned to meet the long-term

needs of the groups from the meeting planners’ perspective. Because these types of projects can

take several years to develop from conception to construction, it is important to obtain input on

meeting planners’ anticipated long-term needs rather than just their current short-term needs.

Questions focused on event-related information (e.g., scope, seasonality of event, attendance,

event length, and location where group has met in the past), convention space requirements (e.g.,

amount and type of space requirements), hotel requirements (e.g., required peak room night

block, total room nights) as well as other factors influencing their decision to meet in Anaheim

as well as their interest level in meeting at the ACC with and without expansion.

This section of the report presents a summary of the findings from this analysis including

facility-specific and destination-related requirements.

Meeting planners were asked to rank Anaheim among other meeting/convention destinations

with its current convention center/amenities package as well as with the proposed expansion/

development. Surveys with meeting planners indicated that Anaheim is a highly ranked

destination relative to other convention/meeting cities even with its existing venue.

Other cities where respondents have held their events include, but are not limited to: Atlanta,

Boston, Chicago, Dallas, Denver, Las Vegas, Los Angeles, Minneapolis, New Orleans,

Orlando, Phoenix, San Antonio, San Diego, San Francisco, and Washington D.C.

Meeting planners were asked if they would consider meeting at the ACC given the existing

program and with the proposed expansion. Only two groups responded “Definitely Yes”

given the existing program whereas nine groups did so given the proposed expansion.


Several groups surveyed mentioned that they have been unable to secure dates and/or space

due to the ACC availability which is consistent with the tracked lost business reports.

Overall positive respondents report an average total attendance of approximately 32,800

including delegates, exhibitors and spouses/guests. Excluding NAMM (with 94,000

attendees), the average attendance is 25,100. Three-quarters of respondents indicated they

anticipate their attendance increasing over the next five years.

Meeting planners that responded favorably to hosting their event at an expanded ACC

responded that Anaheim’s strengths were campus environment of the facility and

surroundings, location/accessibility, hotel supply/location, access to membership, and

climate.

By contrast, those that responded unfavorably to hosting their event at the ACC cited the

City’s attractions as a potential distraction to their convention/tradeshow delegates.

78% of respondents indicated they would utilize the proposed new flex space as exhibit space

for their event; 90% indicated they would utilize the flex space as meeting/ballroom space.

Respondents were allowed to choose more than one type of space.

All respondents indicating an interest in meeting at the ACC were asked the amount of gross

exhibit space required. Overall, positive respondents required an average of 628,000 SF of

exhibit space. 44% of positive respondents indicated that the exhibit space required for their

event does not have to be contiguous to host their event at the ACC.

Positive respondents require an average of 28 meeting rooms or 63,800 SF of meeting space

in addition to 36,700 SF of ballroom space.

More than half of respondents anticipate their group’s space needs increasing in the next five

years.

Positive respondents average more than three event days with an additional six move in/out

days. These groups host their events in six different months indicating there is demand

potential for the ACC throughout the year.

Overall groups who have previously met at the ACC are pleased with the facility, its staff,

and general surroundings. The lack of space/date availability was mentioned as a hindrance

to their booking the ACC in the past which could be alleviated by the proposed new flex

space.

Meeting planners indicated that the new flex space needs to be capable of adequately

accommodating exhibits, meeting rooms, and banquet functions in order to be marketable. If

the cost of setting up the space for their specific needs is significant, this could negatively

impact the new space’s marketability. Consideration to making the new space as accessible

and visible from the existing space would help to draw attendees from one side to the other.

6. Competitive Facility and Destination Analysis 44

Competitive Facility and Destination Analysis

In order to gain an understanding of the market within which an expanded ACC would operate,

competitive/comparable facilities and destinations are analyzed and compared to the ACC and

Anaheim’s characteristics.

For purposes of this analysis, profiled facilities used in this analysis were chosen based on one or

more of the following: the amount of exhibit and meeting/ ballroom space; information in lost

business reports; input from past and potential users; as well as input from ACC management

and the VCB.

Based on this criterion, the following convention centers are profiled:

Colorado Convention Center in Denver

Dallas Convention Center in Texas

Ernest N. Morial Convention Center in New Orleans

Georgia World Congress Center in Atlanta

Henry B. Gonzalez Convention Center in San Antonio

Las Vegas Convention Center in Nevada


Moscone Center in San Francisco

Orange County Convention Center in Florida

Phoenix Convention Center in Arizona


Walter E. Washington Convention Center in Washington D.C.

Crossroads obtained and analyzed programming information, destination attributes and operating

data from the profiled set based on detailed interviews with management, industry resources,

published reports and our internal database. The data shown in this report is based on available

information for each of the profiled facilities.


Building Programs

The table below summarizes the building programs for the profiled competitive/comparable facilities. On average, these centers offer

a comparable amount of contiguous exhibit space to the existing ACC but significantly more ballroom and meeting space.

Facility Location

Maximum

Contiguous

Exhibit SF

Exhibit

Hall SF

Ballroom

SF

Meeting

Room SF

Total

Function

SF

Ratio of

Ballroom/

Meeting

SF to

Exhibit SF

Divisible

Meeting

Rooms

Average SF /

Meeting

Room

Plans for

Expansion?

Orange County Convention Center Orlando, FL 1,103,500 2,053,800 62,200 479,200 2,595,200 26% 235 2,039 no

Las Vegas Convention Center Las Vegas, NV 908,500 1,940,600 0 251,000 2,191,600 13% 140 1,793 yes

Georgia World Congress Center Atlanta, GA 607,500 1,366,000 58,700 282,700 1,707,400 25% 110 2,570 no

Ernest N. Morial Convention Center New Orleans, LA 1,026,300 1,026,300 41,100 227,900 1,295,300 26% 131 1,740 no

Existing Anaheim Convention Center Anaheim, CA 670,100 813,500 38,100 81,200 932,800 15% 43 1,888 yes

Walter E. Washington Convention Center Washington, D.C. 473,000 703,000 52,000 116,300 871,300 24% 68 1,710 no

Phoenix Convention Center Phoenix, AZ 312,500 584,500 118,800 167,200 870,500 49% 106 1,577 no

Los Angeles Convention Center Los Angeles, CA 346,900 720,000 47,900 101,600 869,500 21% 60 1,693 no

Moscone Center San Francisco, CA 260,600 538,700 67,500 251,400 857,600 59% 87 2,890 yes

Dallas Convention Center Dallas, TX 724,500 724,500 46,100 70,600 841,200 16% 68 1,038 no

San Diego Convention Center San Diego, CA 525,700 615,700 81,700 118,700 816,100 33% 63 1,884 yes

Colorado Convention Center Denver, CO 579,000 579,000 82,200 100,000 761,200 31% 63 1,587 no

Henry B. Gonzalez Convention Center San Antonio, TX 438,500 438,500 89,100 102,200 629,800 44% 58 1,762 yes

Average (Excluding ACC) 608,900 940,900 62,300 189,100 1,192,200 31% 100 1,900

Median (Excluding ACC) 552,400 711,500 60,500 143,000 870,000 26% 80 1,800

Notes: Sorted in descending order by total function space.

Prefunction, concourses and lobby spaces are excluded from all centers.

Sources: Management at individual facilities; secondary research.

Competitive/Comparable Facility Building Program Characteristics


The following profiled centers are contemplating expansion:

Henry B. Gonzalez Convention Center - Expansion of the Convention Center was approved in

2012 and is envisioned to increase exhibit space to more than 500,000 square feet in addition to

more meeting space on the facility’s east end. The expansion will be followed by demolition of

the facility's west wing, which will free up a 12-acre parcel for the HemisFair Park master plan.

Completion is anticipated to be in 2016.

Las Vegas Convention Center – In mid 2012 an adjacent land parcel was acquired to improve

access to the convention center’s south hall annex. Efforts are underway to understand what

users’ future needs are prior to any expansion planning.

Los Angeles Convention Center – The City is seeking a new governance authority and related

operational and policy matters to better position Los Angeles as a destination and the LACC to

attract more citywide conventions. In addition, the City hired a private management company to

oversee operations of the center. Until the NFL’s announcement that no NFL team would file

for relocation to Los Angeles for the 2013 season, the City had been in on-going negotiations

with the private sector with regard to expansion of the LACC in conjunction with the potential

development of an adjacent NFL stadium which would be privately owned and operated.

Moscone Center – The Board of Supervisors recently approved the creation of the Moscone

Expansion District along with other pieces of legislation that will eventually provide two-thirds

of the funds needed for the approximately $500 million project. Initial plans call for an

additional 140,000 square feet of exhibit space, 28,000 square feet of meeting space, 87,000

square feet of multipurpose space and 178,000 square feet of support space. Construction is

scheduled to begin in November 2014.

San Diego Convention Center – Plans are underway for a Phase III expansion of the convention

center. Initial plans include 225,000 square feet of exhibit space, 101,000 square feet of meeting

space, and a 80,000 square-foot ballroom. In addition, the project would include a five-acre

rooftop park/plaza, 45,000 square feet of visitor-serving retail space and a 500-room expansion

of the Hilton San Diego Bayfront Hotel, located just south of the Convention Center.

As shown in the following graph, the existing ACC offers the fifth highest amount of total

function space relative to the profiled competitive/comparable facilities.


Competitive/Comparable Facilities – Total Function Space

Sources: Management at individual facilities; other research.

The ACC offers the largest amount of contiguous and total exhibit space among California

convention centers. Expansion plans for centers in San Diego and San Francisco could make

these destinations more competitive for larger exhibit-oriented events in the future.

Competitive/Comparable Facilities – Exhibit Space


0 400,000 800,000 1,200,000 1,600,000 2,000,000 2,400,000 2,800,000

Henry B. Gonzalez Convention Center

Colorado Convention Center


Dallas Convention Center

Moscone Center


Phoenix Convention Center

Walter E. Washington Convention Center

Existing Anaheim Convention Center

Average (Excluding ACC)

Ernest N. Morial Convention Center

Georgia World Congress Center


Orange County Convention Center

Exhibit SF

Ballroom SF

Meeting Room SF

0 400,000 800,000 1,200,000 1,600,000 2,000,000 2,400,000


Moscone Center













Contiguous Space

Total Exhibit Space


The ACC currently offers the smallest amount of ballroom space other than the Las Vegas

Convention Center which has none. Primary competitors in San Diego and San Francisco offer

significantly more ballroom space than the ACC.

Competitive/Comparable Facilities – Ballroom Space


0

38,100

41,100

46,100

47,900

52,000

58,700

62,200

62,300

67,500

81,700

82,200

89,100

118,800

0 20,000 40,000 60,000 80,000 100,000 120,000 140,000










Moscone Center






As with ballroom space, the ACC ranks in the bottom two in terms of the amount of total

meeting room space.

Competitive/Comparable Facilities – Meeting Room Space


The ACC’s ratio of meeting/ballroom space to exhibit space is significantly lower than many of

its competitors including Moscone Center and the San Diego Convention Center which each

offer more than double the ratio. This is an important feature for many meeting-intensive groups

and can positively impact a center’s financial operations given these higher-end spaces often

yield higher rental rates.

Competitive/Comparable Facilities – Ratio of Meeting/Ballroom Space to Exhibit Space


70,600

81,200

100,000

101,600

102,200

116,300

118,700

167,200

189,100

227,900

251,000

251,400

282,700

479,200

0 100,000 200,000 300,000 400,000 500,000 600,000












Moscone Center



13%

15%

16%

21%

24%

25%

26%

26%

31%

31%

33%

44%

49%

59%

0% 10% 20% 30% 40% 50% 60% 70%














Moscone Center


Convention/Tradeshow Activity

The ACC hosted 16% more convention/tradeshow attendees than the average of the profiled peer

facilities.

Competitive/Comparable Facilities – Convention/Tradeshow Activity


Destination Characteristics

As mentioned previously, convention and meeting planners consider destination characteristics

in their site selection process. Particularly as the exhibition/meeting industry has undergone a

supply boom and a demand slump in recent years, planners are increasingly booking venues with

better overall destination packages (i.e., proximate hotel rooms, nearby entertainment/

restaurants, safe/secure surroundings, etc.) to support their facility. In addition, the resulting

buyer’s market has planners considering the overall price of hosting their event in a particular

city including facility, lodging, food and transportation costs. The table that follows outlines

various metrics used by meeting planners to gauge the relative competitiveness of cities under

consideration.

Hotel Supply and Proximity

Average Daily Rates

Occupancy

Corporate Travel

Total Tax on Hotel Rooms

996,200

748,800

571,400 539,700 493,300 473,000

416,500

326,600 255,700

190,100

89 95

65

49

73

113

69

36

73

59

0

250,000

500,000

750,000

1,000,000

0

25

50

75

100

125

150

Facility 1 Facility 2 ACC Facility 3 Peer

Average

Facility 4 Facility 5 Facility 6 Facility 7 Facility 8

Conv/TS Attendance Conv/TS Events


Most of the profiled destinations offer one or more headquarter hotel(s) or are constructing one.

Anaheim offers more (2,600) headquarter hotel rooms than the competitive set average (1,800)

but well below the average hotel supply within walking distance of the ACC. On average,

competitive cities offer about three times more citywide hotel rooms than Anaheim.

Profiled Destinations - Hotel Supply

Sources: Individual facilities; destination marketing organizations; secondary research.

0 20,000 40,000 60,000 80,000 100,000 120,000 140,000

San Diego

Anaheim

New Orleans

Washington D.C.

San Francisco

Denver

San Antonio

Phoenix

Average (Excluding Anaheim)

Dallas

Atlanta

Los Angeles

Orlando

Las Vegas

Citywide

Walking Distance


Anaheim ranks sixth highest for average daily rates at $120 which is the lowest among

California competitive convention destinations. This can be an advantage since many meeting

planners consider hotel pricing a critical factor when choosing locations for their events.

Profiled Destinations – Hotel Average Daily Rate

Source: Smith Travel Research.

$86

$86

$95

$97

$101

$106

$108

$120

$120

$130

$132

$133

$144

$172

$0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200

Dallas

Atlanta

San Antonio

Orlando

Denver

Phoenix

Las Vegas


Anaheim

Los Angeles

San Diego

New Orleans

Washington D.C.

San Francisco


Anaheim ranks fourth among profiled destinations in terms of CY 2012 hotel occupancy. The

City’s broad base of leisure, corporate and convention/meeting business helps to mitigate

dependency on one market segment. Despite its relatively high occupancy among peers, there is

still availability at area hotels to support additional ACC business.

Profiled Destinations – Hotel Occupancy

Source: Smith Travel Research.

58%

61%

61%

64%

67%

68%

68%

69%

69%

71%

73%

75%

80%

84%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Phoenix

Dallas

Atlanta

San Antonio

Denver

Washington D.C.

New Orleans

Orlando


San Diego

Anaheim

Los Angeles

San Francisco

Las Vegas


Business Travel News publishes an annual corporate travel index ranking 100 U.S. cities in terms

of various travel related costs including lodging, car rental and food. According to the 2012

index, Anaheim ranks lowest among competitive California convention destinations in terms of

corporate travel costs with a total for the three categories of $298. The following graph

compares Anaheim’s corporate travel index ranking among the profiled set.

Profiled Destinations - Corporate Travel Costs

Source: Business Travel News.

$266

$275

$297

$297

$298

$300

$301

$302

$306

$313

$324

$359

$409

$463

$0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500

San Antonio

Orlando

New Orleans

Atlanta

Anaheim

Phoenix

Las Vegas

San Diego

Dallas

Denver


Los Angeles

San Francisco

Washington D.C.


Anaheim has the second highest perceived total tax on hotel rooms - 17% which consists of the

15% Transient Occupancy Tax plus the 2% Anaheim Tourism Improvement District (ATID)

Assessment. This cost factor could potentially impact Anaheim’s competitive position,

particularly in a buyer’s market, and is consistent with lost business reports which citied pricing

(related to the ACC itself and other destination-related costs such as lodging) as the third most

popular reason.

Profiled Destinations – Total Tax on Hotel Rooms

Sources: Individual facilities; destination marketing organizations; secondary research.

Expansion Lessons Learned

In order to assist the City with various development planning decisions associated with the

proposed ACC expansion, Crossroads interviewed management at select competitive/comparable

facilities and conducted secondary research to compile input on lessons learned. Each of the

communities faced unique funding, site and/or operational challenges that can provide useful

insights for the City as it continues to evaluate the merits of the proposed ACC expansion. Some

of the observations provided by representatives of these communities/facilities include, but are

not limited to, the following:

Minimizing disruption/facility closure during construction/expansion is imperative.

Additional convention function space alone does not ensure that a destination will increase

its market share.

12.50%

12.50%

13.00%

13.27%

14.50%

14.85%

14.96%

15.00%

15.50%

15.50%

16.00%

16.75%

17.00%

20.10%

0.00% 5.00% 10.00% 15.00% 20.00% 25.00%

San Diego

Orlando

New Orleans

Phoenix

Washington D.C.

Denver


Dallas

San Francisco

Los Angeles

Atlanta

San Antonio

Anaheim

Las Vegas


The appropriate balance of exhibit and flexible meeting/ballroom space may vary based on

target market segments (i.e., some are more meeting room intensive).

Maximizing contiguous, column-free exhibit space augments a facility’s marketability,

flexibility, and overall competitiveness.

Proximity to hotels and other supporting elements such as restaurants, retail and

entertainment outlets enhances a convention center’s marketability.

Offering a headquarter hotel(s) is crucial to a convention center’s long-term success.

Accessibility for pedestrians and auto traffic is important in terms of attracting high

attendance events and for perceived safety/appeal.

Fostering an environment that promotes both public and private investment in the overall

destination package, rather than viewing the convention center as a stand-alone asset, helps

facilities to compete more effectively in the convention/meeting industry.

7. Financial Analysis 57

Financial Analysis

With respect to financial performance, it is important to understand that many similar convention

centers realize an operating deficit or operate near break-even. However, one of the primary

reasons for developing these types of facilities is the economic activity that they can generate in

terms of spending, employment, earnings, as well as tax revenues to local and state governments.

These facilities typically attract events that draw patrons from outside the immediate market area

who spend money on hotels, restaurants and other related services. In many instances, these net

new benefits can outweigh the operating costs. Consequently, when evaluating the merits of

these types of projects, it is important to consider all aspects of the costs and benefits including

operating requirements, debt service and economic/fiscal benefits. An order-of-magnitude

estimate of the economic/fiscal benefits and debt service payments associated with an expanded

ACC is provided later in this report.

Crossroads assisted the City in developing a hypothetical, order-of-magnitude estimate of

operating revenues and expenses before taxes, depreciation and debt service for the proposed

expansion of the ACC for a stabilized year of operations. This analysis is also based on certain

assumptions pertaining to operations of the facility, usage levels and other related financial

assumptions agreed to by the City. The accompanying analysis was prepared for internal use by

the City for its consideration of plans for the proposed expansion and should not be used or

relied upon for any other purpose including financing of the project.

The analysis performed was limited in nature and, as such, Crossroads does not express an

opinion or any other form of assurance on the information presented in this report. As with all

estimates of this type, we cannot guarantee the results nor is any warranty intended that they can

be achieved. The estimates of revenues and expenses are based on the anticipated size, quality

and efficiency of the expanded ACC. Since these estimates and assumptions are based on

circumstances that have not yet transpired, they are subject to variation. Further, there will

usually be differences between estimated and actual results because events and circumstances

frequently do not occur as expected, and those differences may be material.

The financial operations of an expanded ACC will be impacted by several factors including, but

not limited to, its larger size in terms of gross square footage as well as its anticipated increase in

event activity. For these and other reasons, it is difficult to make direct comparisons between

historical facility operations and those estimated for an expanded ACC. Discussions were

conducted with facility management to consider the impact that expansion would have on

individual line items. In addition, historical revenue generated per event was analyzed for FY

2010 through FY 2012. These discussions and historical analysis were the basis for various

assumptions regarding the operations of an expanded ACC.


General Assumptions

Based on input from the client group, the following assumptions were used to develop

estimates of event activity, financial operations and economic/fiscal impacts for the proposed

expanded ACC.

The recommended building program outlined earlier is developed.

The facility continues to be managed by professional, experienced staff.

An aggressive marketing approach is taken by the Anaheim/Orange County VCB and

management at ACC, particularly in attracting convention/tradeshow business.

A high level of quality customer service continues to be provided.

Tax rates continue at their current rates.

Amounts are presented in current dollars and reflect a stabilized year of operations.

It should be noted these assumptions are preliminary in nature and will continue to be refined

as decisions related to the building program, broader development plan and other operating

characteristics continue to evolve.

Potential Impact of Remaining Status Quo

Market research suggests that

remaining static will likely

result in a decline of event

activity and attendees over

time as competitive facilities

continue to improve their

physical product and

destination attributes,

resulting in an operating loss.

The largest impact will likely

occur in convention,

tradeshow and meeting

activity held at the ACC.

This decrease in event

activity will yield a decrease

in spending, jobs and

earnings as well as fiscal

benefits to the local and State

economies. The adjacent

table compares the ACC

historical three-year average

to the estimated status quo in

key operating metrics.

Category

Historical

Three-Year

Average Status Quo % Change


Number of Events 219 196 -11%

Event Days 438 403 -8%

Total Attendance 979,800 927,900 -5%

Total Attendee Days 2,600,600 2,468,600 -5%

High Impact Attendee Days 1,082,800 988,200 -9%


Operating Revenues $25,787,000 $24,034,000 -7%

Operating Expenses 24,573,000 24,573,000 0%

Net Operating Gain/(Loss) $1,214,000 ($539,000)

Economic Impacts

Direct Spending $368,555,000 $338,022,000 -8%

Indirect/Induced Spending 241,131,000 221,048,000 -8%

Total Spending $609,686,000 $559,070,000 -8%

Total Earnings $233,726,000 $214,412,000 -8%

Total Jobs 5,000 4,600 -8%

Fiscal Impacts

City of Anaheim $30,587,000 $27,919,000 -9%

Orange County 1,304,000 1,192,000 -9%

State of California 30,869,000 28,267,000 -8%

Total $62,760,000 $57,378,000 -9%

Comparison of ACC Historical Three-Year Average to Estimated Status Quo


Proposed Expansion Impact to Usage/Event Activity

The financial and economic/fiscal impact analyses are based on several factors including an

estimate of usage/event activity that was developed based on historical utilization at the ACC,

research previously summarized in the market analysis including input from the client group,

market characteristics, industry trends, input from potential demand generators, information on

competitive/comparable facilities as well as other research.

Many of the events will likely occur over multiple days and include event days (when an event

occurs at the facility) as well as move-in/move-out days. Likewise, attendees often attend each

event day. An attendee day is defined as total attendance multiplied by the event length. For

example, a three-day convention with 200 attendees equates to 600 attendee days which reflects

that the same attendees return to the event each of the three days.

Event activity at expanded facilities typically experiences a “ramp up” period to a stabilized level

of activity which occurs for several reasons. For instance, some groups that book their event

years in advance may not want to risk that a facility’s construction is delayed and not completed

in time for their event. In addition, some groups may choose to let management “fine tune” its

operations before meeting in the expanded facility. However, it is important to recognize that

the overall utilization at any facility is typically dependent on a number of factors and is rarely

consistent. As such, the estimated range of utilization shown in the table below compares an

expanded ACC to the status quo scenario for a stabilized year of operations.

Category

Historical Three-


Events

Conventions 55 50 67 - 69 17 - 19

Tradeshows 8 7 10 - 11 3 - 4

Entertainment 10 10 10 - 10 0 - 0

Sporting 18 18 18 - 18 0 - 0

Consumer 14 14 18 - 20 4 - 6

Other 30 25 36 - 38 11 - 13

Social 16 12 28 - 32 16 - 20

Meeting 68 60 80 - 84 20 - 24

Total 219 196 267 - 282 71 - 86

Incremental Impact 36% - 44%

Total Attendance

Conventions 339,800 310,000 435,500 - 448,500 125,500 - 138,500

Tradeshows 222,300 203,000 290,000 - 319,000 87,000 - 116,000

Entertainment 36,900 38,000 38,000 - 38,000 0 - 0

Sporting 165,200 169,200 169,200 - 169,200 0 - 0

Consumer 148,800 152,600 196,200 - 218,000 43,600 - 65,400

Other 34,100 27,500 39,600 - 41,800 12,100 - 14,300

Social 4,800 3,600 11,200 - 12,800 7,600 - 9,200

Meeting 27,900 24,000 40,000 - 42,000 16,000 - 18,000

Total 979,800 927,900 1,219,700 - 1,289,300 291,800 - 361,400

Incremental Impact 31% - 39%

Estimated Impact to ACC Event Activity

ACC Expansion

Incremental New from

Status Quo


Impact to Financial Operations

The following table compares the estimated operating revenues and operating expenses for an

expanded ACC in a stabilized year of operations to the status quo scenario. Operating revenues

are estimated to increase by 17% to 19% relative to the status quo whereas operating expenses

are estimated to increase between 8% and 10%. Under the status quo scenario, a net operating

loss is estimated which would require the City to fund on-going operations.

Category

Historical

Three-Year

Average Status Quo




Operating Recovery Percentage 105% 98% 106% - 106%

Note: Operating Recovery Percentage = Operating Revenues/Operating Expenses.

Estimated Annual Impact to ACC Financial Operations


While the tables in this section compare the status quo scenario to the estimate of ACC financial

operations with expansion, the description and related assumptions for each line item only relate

to the estimate for expanded ACC operations.

This analysis focuses on operating revenues and operating expenses and excludes non-operating

revenues such as interest income, land leases, loan proceeds, and transfers. Non-operating

expenses such as bond payments, loan payments, resort area maintenance and capital outlay are

also excluded.

Operating Revenues

The following table shows the estimated operating revenues for an expanded ACC in a stabilized

year of operations compared to the status quo scenario:

Revenue Category

Historical Three-


Room Rental $10,211,000 $9,700,000 $10,722,000 - $10,824,000 $1,022,000 - $1,124,000

Event Services 6,574,000 5,917,000 7,363,000 - 7,494,000 1,446,000 - 1,577,000

Parking 5,594,000 5,314,000 5,734,000 - 5,762,000 420,000 - 448,000

Food/Beverage 2,670,000 2,403,000 3,471,000 - 3,658,000 1,068,000 - 1,255,000

Other Revenue 737,000 700,000 749,000 - 767,000 49,000 - 67,000

Total $25,787,000 $24,034,000 $28,039,000 - $28,505,000 $4,005,000 - $4,471,000

Incremental Impact to Operating Revenues 17% - 19%

Expansion Range Incremental New from Status Quo

Estimated Annual ACC Operating Revenues

The following provides a description of each operating revenue line item.

Room Rental includes revenue from the rental of function space at the facility. Typically,

convention centers charge different rate structures for various types of events such as

conventions, tradeshows, consumer shows, and other events depending on the type of space

utilized (i.e., exhibit halls and meeting rooms). Although ACC has published rental rates for

various areas of the facility, effective rates realized are typically lower than published rates due

to several factors including: some rates may be negotiated to attract quality, high-impact events;


meeting rooms or other space may be complimentary in conjunction with rented space or food

functions; move-in/move-out days are often priced at one-half the normal rate; and/or some

facilities offer reduced rental rates to special groups such as local, non-profit, and charitable

organizations. For purposes of this analysis, rental rate discounts similar to those used in

existing ACC operations and commonly employed in the industry are assumed.

Event Services include income received from event personnel, services/equipment, electrical,

plumbing, phone and audio/visual services provided to exhibitors and event organizers.

Parking includes parking passes purchased by the event organizer as well as associated event

parking revenues. While the expansion plan currently under consideration would include using

an existing parking garage for the new space, for purposes of this analysis it is assumed that this

parking would be replaced and similar charges would be maintained by the ACC.

Food & Beverage includes sales from catering, concessions and vending. Currently, the ACC

contracts with ARAMARK for food and beverage services. According to management, ACC

retains 25% of net food/beverage revenues. As such, a similar percentage is assumed for an

expanded ACC for purposes of this analysis.

Other Revenue includes event related fixed/digital displays and printing/copying charges.

Operating Expenses

The following table shows the estimated operating expenses for an expanded ACC in a stabilized

year of operations compared to the status quo scenario:

Expense Category

Historical Three-


Salaries, Wages, Benefits $15,987,000 $15,987,000 $16,626,000 - $16,626,000 $639,000 - $639,000

Utilities 3,311,000 3,311,000 4,039,000 - 4,139,000 728,000 - 828,000

Repairs and Maintenance 1,859,000 1,859,000 2,082,000 - 2,194,000 223,000 - 335,000

General/Administrative 1,667,000 1,667,000 1,750,000 - 1,834,000 83,000 - 167,000

Contract Services 499,000 499,000 574,000 - 609,000 75,000 - 110,000

Insurance 563,000 563,000 681,000 - 732,000 118,000 - 169,000

Materials and Supplies 341,000 341,000 384,000 - 412,000 43,000 - 71,000

Other Charges 346,000 346,000 388,000 - 418,000 42,000 - 72,000

Total $24,573,000 $24,573,000 $26,524,000 - $26,964,000 $1,951,000 - $2,391,000

Incremental Impact to Operating Expenses 8% - 10%

Estimated Annual ACC Operating Expenses

Expansion Range Incremental New from Status Quo

Salaries, Wages and Benefits can represent a significant expense and vary based on permanent

full-time staffing plans and other factors. One factor relates to the management philosophy of

maintaining event-related personnel as full-time or part-time staff. Another factor relates to the

management and physical relationship the facility might have to other facilities. For example,

the staffing plan for a stand-alone facility is different than for an entire complex that can share

administrative costs among several venues. In addition, the extent that contracted services are

used also impacts staffing at a facility. This line item includes costs associated with personnel

including health and retirement benefits as well as worker’s compensation.


Utilities generally represent one of the highest expense items for convention centers and can vary

depending upon the level of utilization, age of the building, shared spaces with other facilities

and climate. For purposes of this analysis, it is assumed that the operating entity passes through

to the user, to the extent possible, utility costs related to a particular event. In many facilities,

these costs are handled as an expense that is fully or partially reimbursed by the event at a later

date or, for civic uses, a utilities charge is assessed. The utility cost shown in this analysis

represents the total non-reimbursable costs. It should be noted that actual utility expenses will

depend on facility design and decisions concerning physical design/layout, energy systems and

management.

Repairs and Maintenance includes various expenses incurred related to building, equipment and

grounds maintenance (e.g., landscaping, waste removal, HVAC, etc.) and generally varies based

on utilization. Expense allocations for repairs and maintenance are also highly dependent upon

the owner/management philosophy relative to upkeep of the facility.

General Administrative includes general expenses used in the day-to-day management of the

facility such as travel, communications, technology, postage and membership dues.

Contract Services represent a variety of professional services which may include legal and/or

accounting contracts, life safety systems, physical plant related, landscaping as well as other

services that are not reimbursable and are borne by the facility.

Insurance includes property and liability coverage for the facility.

Materials and Supplies includes various materials/supplies necessary for the operation of the

proposed expanded facility such as electrical equipment, office and janitorial/building

maintenance supplies.

Other Charges include miscellaneous expenses not accounted for in the above line items.

Taxes, Debt Service and Depreciation expenses are not included in this analysis.

8. Economic and Fiscal Impact Analysis 63

Economic and Fiscal Impact Analysis

One of the primary objectives of this study is to estimate the incremental new economic and

fiscal impacts associated with expansion of the ACC to the local economy. The City, County

and State would continue to benefit from the ACC’s operations in a number of ways, including

such tangible and intangible benefits as:

Enhancing the area’s image as a business, meetings and tourist destination

Receiving increased State and regional exposure through destination marketing and visitation

Providing a first-class venue for area residents and out-of-town visitors

Increasing the overall quality of life and livability of the area

Providing a catalyst for further development initiatives including private sector investment

Maintaining and generating additional economic activity

Maintaining and generating additional fiscal revenues for local and State governments

Each of these benefits is important in assessing the overall impact of an expanded ACC to the

City. While the value of most of these benefits is difficult to measure, the estimated economic

activity generated can be quantified. This analysis quantifies the direct, indirect and induced

benefits associated with operations of an expanded ACC including the associated tax revenues.

Although some of the estimated event activity is occurring at the existing ACC, an expanded

facility will likely maintain and grow existing business as well as attract incremental new events

that cannot currently be accommodated.

General Methodology Overview

An assessment of the economic benefits that occur in the City and the State as a result of the

operations of an expanded ACC can be approached in several ways. The approach used in this

analysis considers expenditures generated from facility operations from items such as salaries,

wages and benefits; utilities; repairs and maintenance; general administrative; contract services;

insurance; materials and supplies; and other expenses as well as spending by attendees,

sponsoring organizations/event producers and exhibitors outside the facility on items such as

lodging, restaurants, retail, entertainment and transportation as an initial measure of economic

activity in the marketplace. Once the amount for direct spending is estimated, a calculated

multiplier is applied to generate the indirect and induced effects. The sum of direct, indirect and

induced effects equals total economic impact which is expressed in terms of spending (output),

employment (jobs), and personal earnings.


This analysis also estimates the fiscal impacts generated from ongoing operations of an expanded

ACC. The governmental entities considered in this fiscal analysis are the City, County and the

State.

The number of events and attendance, event mix, origin of attendees, facility financial

operations, industry trends, economic conditions, direct spending categories used, per person

spending amounts, distribution of spending, multipliers, and specific taxes quantified are all

variables that influence the economic and fiscal impact estimates. All amounts are presented in

current dollars and rounded to the nearest thousand.

Methodology – Economic Impact Analysis

Regional input-output models are typically used by economists as a tool to understand the flow

of goods and services among regions and measure the complex interactions among them given

an initial spending estimate.

Direct Spending

Estimating direct spending is the first step in calculating economic impact. Direct spending

represents the initial change in spending that occurs as a direct result of operations of an

expanded ACC. This spending occurs both inside and outside of the facility. Direct spending

related to ACC operations is generated from attendees, exhibitors, and event organizers outside

the facility as well as from facility expenditures. Spending related to these categories was

adjusted to reflect leakage (spending which occurs outside of the local economy) and

displacement (spending which would have occurred elsewhere in the economy without the

presence of an expanded ACC).

Economic and Fiscal Impacts Associated with Proposed Expansion of the ACC

Spending (Output)

Total direct, indirect, induced spending

effects generated by expansion

Employment (Jobs)

Number of full and part-time jobs supported by

expansion

Personal Earnings

Wages and salaries earned by employees

of businesses associated with or

impacted by expansion

Tax Revenues (Fiscal)

Sales and use tax

Personal income tax

Corporate income tax

Transient occupancy tax

Tourism improvement district assessment


Indirect and Induced Impacts

The economic activity generated by operations of an expanded ACC affects more than just the

facility itself. In preparation for new spending in the economy, several other economic sectors

are impacted and jobs are created. Indirect effects reflect the re-spending of the initial or direct

expenditures or the business-to-business transactions required to satisfy the direct effect.

Induced effects reflect changes in local spending on goods and services that result from income

changes in the directly and indirectly affected industry sectors. The model generates estimates of

these impacts through a series of relationships using local-level average wages, prices and

transportation data, taking into account commute patterns and the relative interdependence of the

economy on outside regions for goods and services.

Multiplier Effect

In an effort to quantify the inputs needed to produce the total output, economists have developed

multiplier models. The estimation of multipliers relies on input-output models, a technique for

quantifying interactions between firms, industries and social institutions within a local economy.

This analysis uses IMPLAN software and databases which are developed under exclusive rights

by the Minnesota IMPLAN Group, Inc. IMPLAN, which stands for Impact Analysis for

Planning, is a computer software package that consists of procedures for estimating local input-

output models and associated databases. The IMPLAN software package allows the estimation

of the multiplier effects of changes in final demand for one industry on all other industries within

a defined economic area. Its proprietary methodology includes a matrix of production and

distribution data among all counties in the U.S. As such, the advantages of this model are that it

is sensitive to both location and type of spending and has the ability to provide indirect/induced

spending, employment and earnings information by specific industry category while taking into

account the leakages associated with the purchase of certain goods and services outside the

economy under consideration.

Sources of Direct Spending

Facility Operating Expenses

Salaries, Wages, Benefits

Utilities

Repairs & Maintenance

General & Administrative

Materials & Supplies

Contract Services

Insurance

Attendee Spending Outside the Facility

Hotels/Lodging

Restaurants

Retail

Transportation

Entertainment


Once the direct spending amounts are assigned to a logical category, the IMPLAN model

estimates the economic multiplier effects for each type of direct new spending attracted to or

retained in the local area and the State resulting from operations of an expanded ACC.

For purposes of this analysis, the following industry multipliers were used:

Category Spending Employment* Earnings

Hotels 1.6870 13.0 0.6018

Eating & Drinking Places 1.6256 20.2 0.6347

Retail Trade 1.6166 16.8 0.7639

Entertainment/Recreation 1.6374 17.6 0.5862

Transportation 1.7270 11.7 0.6841

Utilities 1.4478 3.50 0.3065

Business Services 1.6198 9.20 0.6520

Note: *indicated the number of jobs per $1 million in spending.

Source: IMPLAN.

Summary of Orange County Multipliers

These multipliers reflect IMPLAN’s latest available economic data reflecting 2011 transactions

and the complex interactions among regions.

Total Economic Impact

The calculated multiplier effect is then added to the direct impact to quantify the total economic

impact in terms of spending, employment and earnings which are defined as follows:

Spending (output) represents the total direct, indirect and induced spending effects generated

by expanded ACC operations. This calculation measures the total dollar change in spending

(output) that occurs in the local economy for each dollar of output delivered to final demand.

Employment (jobs) represents the number of full and part-time jobs supported by expanded

ACC operations. The employment multiplier measures the total change in the number of

jobs supported in the local economy for each additional $1.0 million of output delivered to

final demand.

Personal Earnings represent the wages and salaries earned by employees of businesses

associated with or impacted by expanded ACC operations. In other words, the multiplier

measures the total dollar change in earnings of households employed by the affected

industries for each additional dollar of output delivered to final demand.


The following graphic illustrates the multiplier effects for calculating total economic impact.

Methodology - Fiscal Impact Analysis

The estimated spending generated by ongoing operations of an expanded ACC creates tax

revenues for the City, County and the State. Experience in other markets suggests that while a

significant portion of the direct spending likely occurs near the facility, additional spending

occurs in other areas within the State, particularly spending on items such as business services

and everyday living expenses of residents. Major tax sources impacted by facility operations

were identified and taxable amounts to apply to each respective tax rate were estimated.

Although other taxes, such as property taxes, may also be positively impacted by ongoing

operations of an expanded ACC, this analysis estimates revenues generated from local sales and

use taxes, transient occupancy tax and ATID assessment at the local level as well as corporate

income tax, personal income tax and sales and use tax at the State level.

Summary of Estimated Annual Economic Benefits

The following table compares the estimated economic benefits from ongoing activities of an

expanded ACC as measured by spending, jobs and earnings to the status quo scenario.

Total Economic Impact

Spending (Output) Employment (Jobs) Personal Earnings

Induced Spending – changes in local spending on goods/services resulting from income changes

Household Spending Business Services Government SpendingOther Economic

Sectors

Indirect Spending – re-spending of the initial or direct expenditures

Wholesalers Manufacturers Distributors Transporters RetailerOther

Industries

Direct Spending – initial change in spending

Facility Operating Expenses & Spending Outside of the ACC


Category

Historical

Three-Year

Average Status Quo

Spending

Direct Spending $368,555,000 $338,022,000 $471,833,000 - $498,355,000 $133,811,000 - $160,333,000


Total Spending $609,686,000 $559,070,000 $780,713,000 - $824,647,000 $221,643,000 - $265,577,000

Total Jobs 5,000 4,600 6,400 - 6,800 1,800 - 2,200

Total Earnings $233,726,000 $214,412,000 $298,911,000 - $315,664,000 $84,499,000 - $101,252,000

Estimated Annual Impact to Economic Benefits


The following section provides a detailed description of the assumptions used in this analysis.

Direct Spending

As mentioned previously, the first step in calculating economic impact is estimating the direct

spending. The economic benefits generated by ACC operations result from the impact of

incremental new direct spending both by attendees and activities that support events held at an

expanded ACC. The primary types of spending quantified in this analysis include attendee

spending outside the facility; sponsoring organization/event producer spending outside the

facility; exhibitor spending outside the facility; and budgetary spending by the ACC.

The spending amounts for each of these categories were based on data provided by several

secondary sources including ACC management, Anaheim/Orange County VCB and the 2012

Summary Analysis of ACC Primary Business Event Visitors prepared by CIC Research, Inc.

The CIC Research study included a survey of convention, conference and trade show event

attendees in Anaheim. This first-hand research provided estimates of visitor spending, event

organizer/exhibitor spending, average length of stay and the percent of attendees staying in

hotels.

Attendee Spending Outside the Facility

Estimated utilization at an expanded ACC was used to calculate attendee spending. Daily

spending amounts were assigned to high impact attendees who stay overnight in a hotel. For

purposes of this analysis, no spending was attributable to low impact attendees who likely

originate from the area or only travel for the day. In addition, no spending associated with non-

registered attendees, spouses or significant others is estimated as part of this analysis. Data

provided by the CIC Research report was used to calculate the average length of stay by event

type for attendees staying in hotels. Based on information from Anaheim/Orange County VCB

as well as the CIC Research report, average daily spending amounts were estimated for high

impact attendees staying overnight in a hotel. For purposes of this analysis, 86% of attendees are

assumed to be non-local. Of these non-local attendees, 80% are assumed to stay in hotels in the

City of Anaheim reflecting that some may choose to stay in surrounding communities or area

beaches.


Sponsoring Organization/Event Producer & Exhibitor Spending Outside the Facility

Sponsoring organizations/event producers have substantial investments in the events that they

host. These organizations purchase goods and services from either the ACC or from outside

sources. In addition, exhibitors often spend money outside of the facility to entertain existing

and potential clients. Items such as exhibit space and equipment rental are typically provided by

the facility, which are reflected as revenues for the provider. Since this spending is reflected in

the budgetary spending by an expanded ACC, these amounts are excluded from sponsoring

organization/event producer and exhibitor spending to avoid double-counting. For purposes of

this analysis and based on the CIC Research report, an average spending amount was applied to

attendees at conventions/trade shows to reflect sponsoring organization/event producer and

exhibitor spending.

Budgetary Spending for the ACC

Budgetary spending refers to operating expenses generated by an expanded ACC. Regardless of

the source or magnitude of the revenues the building takes in, this analysis focuses on the

operating expenses occurring in the local and State economies. Operating expenses from an

expanded ACC for items such as salaries, wages and benefits; utilities; repairs and maintenance;

general administrative; contract services; insurance; materials and supplies; and other expenses

were estimated.

Estimates were also made regarding the percentage of these expenditures that occur in the local

economy. For example, the local electric company typically provides utility services and the city

or county provide water/sewer services, etc. In contrast, the percentage of living expenses for

employees, which is spent in the area, may be relatively moderate. For example, after taking into

account taxes and savings (an estimate of 30% to 40% might be reasonable), amounts which may

leak outside of the area include home mortgage payments, car loan payments, insurance, travel

spending, spending on higher education, mail-order purchases and other significant amounts.

Summary of Direct Spending Inputs

Based on this information, the direct spending related to attendees, sponsoring organizations/

event producers, and exhibitors outside the facility and budgetary spending at an expanded ACC

is estimated to generate the following:

Category

Historical

Three-Year

Average Status Quo

Direct Spending $368,555,000 $338,022,000 $471,833,000 - $498,355,000 $133,811,000 - $160,333,000


These direct spending estimates were applied to the multipliers previously shown in order to

calculate estimates for total spending, total jobs and total earnings.


Indirect and Induced Impacts

The IMPLAN model is used to generate the indirect and induced impacts spawned from the

estimated economic activities within the local economy. The indirect impacts represent inter-

industry trade from business to business. Likewise, the induced impacts represent the economic

activity spurred by the household trade that occurs when employees make consumer purchases

with their incomes. According to the IMPLAN model, direct spending spurred by ongoing

operations of an expanded ACC is estimated to generate the following indirect/induced impacts:

Category

Historical

Three-Year

Average Status Quo


Incremental New From Status QuoACC Expansion

Total Spending

Outputs from the IMPLAN model indicate that total (i.e., direct, indirect and induced) spending

from activity at an expanded ACC is estimated generate the following:

Category

Historical

Three-Year

Average Status Quo

Total Spending $609,686,000 $559,070,000 $780,713,000 - $824,647,000 $221,643,000 - $265,577,000


Total Jobs

Based on the IMPLAN model, which calculates the number of jobs per $1.0 million in direct

spending, the economic activity associated with the ongoing operations of an expanded ACC is

estimated to generate the following number of total jobs:

Category

Historical

Three-Year

Average Status Quo

Total Jobs 5,000 4,600 6,400 - 6,800 1,800 - 2,200


Total Earnings

Outputs from the IMPLAN model indicate that an expanded ACC is estimated to generate the

following total earnings:

Category

Historical

Three-Year

Average Status Quo

Total Earnings $233,726,000 $214,412,000 $298,911,000 - $315,664,000 $84,499,000 - $101,252,000



Summary of Estimated Annual Fiscal Impacts (Tax Revenues)

As shown in the table that follows, the annual tax revenues related to ongoing operations of an

expanded ACC are estimated to range from $39.5 million to $41.8 million at the City level and

$39.6 million to $41.9 million at the State level. Approximately 49% of tax revenues are

estimated to occur at the City level primarily driven by the transient occupancy tax.

Municipality/Tax

Historical Three-


City of Anaheim

Transient Occupancy Tax $24,688,000 $22,532,000 $31,865,000 - $33,710,000 $9,333,000 - $11,178,000

Local Sales & Use Tax 2,607,000 2,383,000 3,353,000 - 3,545,000 970,000 - 1,162,000

Tourism Improvement District Assessment

- Dedicated to Marketing & Promotion (75%) 2,469,000 2,253,000 3,187,000 - 3,371,000 934,000 - 1,118,000

- Dedicated to Non-Marketing Improvement Projects (25%) 823,000 751,000 1,062,000 - 1,124,000 311,000 - 373,000

Total 30,587,000 27,919,000 39,467,000 - 41,750,000 11,548,000 - 13,831,000

Orange County

Local Sales & Use Tax 1,304,000 1,192,000 1,676,000 - 1,772,000 484,000 - 580,000

State of California

Sales & Use Tax 16,945,000 15,495,000 21,797,000 - 23,042,000 6,302,000 - 7,547,000

Personal Income Tax 10,985,000 10,077,000 14,049,000 - 14,836,000 3,972,000 - 4,759,000

Corporate Income Tax 2,939,000 2,695,000 3,763,000 - 3,975,000 1,068,000 - 1,280,000

Total 30,869,000 28,267,000 39,609,000 - 41,853,000 11,342,000 - 13,586,000

GRAND TOTAL $62,760,000 $57,378,000 $80,752,000 - $85,375,000 $23,374,000 - $27,997,000

Estimated Annual Impact to Tax Revenues


The following outlines significant assumptions utilized in this analysis.

City of Anaheim Taxes

Transient Occupancy Tax – The City of Anaheim imposes a 15% tax on the rent charged by a

hotel operator for any property in the City. For purposes of this analysis, this tax rate is applied

to direct hotel spending estimated to be generated by expanded ACC operations. Currently, 30%

of revenues from the transient occupancy tax are dedicated to debt service for other projects. A

more detailed analysis related to this assumption including the estimated room nights and room

rates can be found in Appendix C.

Local Sales and Use Tax – The State of California remits one point of its Statewide sales and use

tax collections to the jurisdiction within which the tax is collected. Collections within the City of

Anaheim from one point of the State tax is remitted to City operations. For purposes of this

analysis, the one point was applied to estimated taxable direct and indirect/induced spending

from expanded ACC operations.

Tourism Improvement District Assessment – In 2010, the City of Anaheim established the ATID

as a means of providing necessary resources to enhance tourism activity and increase hotel room

stays. The ATID assesses 2% of the room rent for all hotels located within the ATID

boundaries. Monies collected from this assessment are used to cover the costs of activities,

improvements, services and programs that will benefit the assessed hotels and the

tourism/convention industry in the City. The 2% rate is applied to direct hotel spending

estimated to be generated by expanded ACC operations. As shown above, 75% of funds are

dedicated to marketing and promotion; the remaining 25% of funds are directed to the City for

transportation improvements.


Orange County Taxes

Local Sales and Use Tax – Orange County collects a 0.5% sales and use tax from sales of

tangible personal property and some services throughout the County. This tax source is

dedicated to the Orange County Local Transportation Authority. The local tax is governed by

the State of California’s code which is described below. For purposes of this analysis, the 0.5%

tax rate was applied to estimated taxable direct and indirect/induced spending from expanded

ACC operations.

State of California Taxes

Sales and Use Tax – The State of California collects a sales and use tax from sales of tangible

personal property and some services throughout the State. Sales and use tax is uniform

throughout the State at 7.5%. This tax source is the State’s second largest source of general fund

revenue. Exempt items include hotel room stays and unprepared food; the sales and use tax rate

for the sale of motor vehicle fuel is 2.25%. For purposes of this analysis, a 6.5% tax rate was

applied to estimated taxable direct and indirect/induced spending generated from expanded ACC

operations given that collections from one point of the tax is allocated to the City shown under

its benefits.

Personal Income Tax – The State of California imposes a personal income tax assessed against

personal income earned in the State. The State income tax is a graduated rate ranging from 1.1%

to 14.63% of taxable income. Non-residents are subject to the tax for income derived within

California. This tax source is the State’s largest single source of general fund revenue. For

purposes of this analysis and based on information provided by the State Controller’s Office, an

effective tax rate of 4.7% was calculated based on the federal adjusted gross income and the total

personal income tax paid to the State in 2010 (the most recent year for which data was available).

This effective tax rate was applied to total earnings estimated to be generated by expanded ACC

operations.

Corporate Income Tax – A corporate income tax ranging from 1.5% to 10.84% of corporate

federal taxable income adjusted by State modifications is also levied by the State of California

on corporations. The applicable rate is dependent on the type of corporation. For purposes of

this analysis and based on information provided by the State Controller’s Office, an effective tax

rate of 0.48% was calculated based on the Gross State Product and the total corporate income tax

paid to the State in 2011. This effective tax rate was applied to total spending estimated to be

generated by expanded ACC operations.

9. Cost/Benefit Analysis 73

Cost/Benefit Analysis

The project team of Crossroads and Hospitality & Gaming Solutions was retained to assess the

proposed development of approximately 200,000 SF of flex space adjacent to the existing ACC.

The proposed expansion under consideration includes re-use of the Carpark 1 parking garage

(which needs to be replaced) into function space that can be used as exhibit, ballroom, and/or

meeting space. It is our understanding that the driving forces of the proposed expansion are to

attract incremental new group business to the ACC as well as accommodate the growth needs of

several of its largest conventions/tradeshows. Given the significant number of visitors and

associated spending that ACC events bring to Anaheim, this project is one of the few that allow

the local government to positively impact the economy through its investment.

Research conducted as part of the market analysis resulted in several key findings that support

the proposed development concept. These include, but are not limited to, the following:

Anaheim’s established leisure/hospitality industry to support convention/meeting attendees.

Accessibility to four major airports is a competitive advantage for drawing regional, national

and international group business to the City.

Supply of proximate hotel rooms.

Area hoteliers envision the proposed expansion as augmenting the destination and drawing

incremental new visitation to the area.

Reputation as a family-friendly, safe travel destination.

Growth projected for exhibition industry.

Significant base of existing convention/tradeshow business.

Exhibit and ballroom space is approaching practical maximum occupancy.

Historically, conventions have utilized relatively limited exhibit space and a

disproportionately high percentage of existing meeting/ballroom space suggesting the new

flex space could help the ACC attract more simultaneous events.

In contrast, a high percentage of tradeshows have historically utilized all the existing exhibit

space suggesting the new flex space could allow these groups to expand their exhibitions.

Lost business reports indicate date and/or space availability was a factor influencing the

decision for 120 groups choosing not to meet in Anaheim in the past five calendar years.

These groups represent more than 218,200 peak room nights and 533,400 attendees.

Date/space availability for some groups could be mitigated by the new flex space.

Competitive and comparable facilities offer a higher ratio of meeting/ballroom space to

exhibit space than the ACC.

A large population of potential events that could be accommodated by the ACC suggests that

attracting only a small portion of these groups could make a significant impact to financial

operations and economic/fiscal benefits.


The following table summarizes key elements of the cost/benefit analysis of the proposed ACC

expansion in terms of its impact to the facility’s utilization, financial operation and economic/

fiscal benefits.

Category

Historical

Three-Year

Average Status Quo


Number of Events 219 196 267 - 282 71 - 86

Event Days 438 403 532 - 559 129 - 156

Total Attendance 979,800 927,900 1,219,700 - 1,289,300 291,800 - 361,400

Total Attendee Days 2,600,600 2,468,600 3,227,500 - 3,409,900 758,900 - 941,300

High Impact Attendee Days 1,082,800 988,200 1,397,600 - 1,478,500 409,400 - 490,300

Financial Operations -




Economic Impacts

Direct Spending $368,555,000 $338,022,000 $471,833,000 - $498,355,000 $133,811,000 - $160,333,000

Indirect/Induced Spending 241,131,000 221,048,000 308,880,000 - 326,292,000 87,832,000 - 105,244,000

Total Spending $609,686,000 $559,070,000 $780,713,000 - $824,647,000 $221,643,000 - $265,577,000

Total Earnings $233,726,000 $214,412,000 $298,911,000 - $315,664,000 $84,499,000 - $101,252,000

Total Jobs 5,000 4,600 6,400 - 6,800 1,800 - 2,200

Fiscal Impacts

City of Anaheim $30,587,000 $27,919,000 $39,467,000 - $41,750,000 $11,548,000 - $13,831,000

Orange County 1,304,000 1,192,000 1,676,000 - 1,772,000 484,000 - 580,000

State of California 30,869,000 28,267,000 39,609,000 - 41,853,000 11,342,000 - 13,586,000

Total $62,760,000 $57,378,000 $80,752,000 - $85,375,000 $23,374,000 - $27,997,000

Overall Summary of the ACC Expansion Analysis

Expansion Range Incremental Impact From Status Quo

As shown in the following table, the cost/benefit analysis for an expanded ACC indicates a

significant return on investment over a 30-year period. In addition, the funding mechanism that

would be used for the ACC expansion would also allow funding for other public projects such as

public safety, neighborhood improvements and other quality of life projects and services for the

City.

Category Range

Incremental New Transient Occupancy Tax $341,449,000 - $429,225,000

Incremental New Local Sales & Use Tax $30,264,000 - $38,053,000

Incremental Operating Gain $9,030,000 - $9,810,000

Total Incremental New Revenues $380,743,000 - $477,088,000

Recapture of Lost Revenues $164,250,000 - $164,250,000

Debt Service Including Garage ($409,667,000) - ($409,667,000)

Net Benefit $135,326,000 - $231,671,000






30-Year Cost Benefit Analysis Expanded ACC


Based on the market and economic analysis, the proposed expansion of the ACC appears

warranted and could serve to increase Anaheim’s share of the convention/tradeshow industry as

well as allow several existing users to grow. In doing so, the City would attract incremental new

events and visitors who would positively impact the area economy. In addition, this expansion

should enhance the ACC marketability and competitive position for the next 10 to 15 years.

10. Appendix 76

Appendix A – Cash Flow Analysis for an Expanded ACC

Year

Incremental

TOT1

Incremental

Local Sales &

Use Tax2

Incremental

Operating Gain

Total

Incremental

Revenues

Recapture of

Lost Revenues

Total

Incremental

Revenues and

Recaptured

Lost Revenues

Debt Service

Including

Garage

Net Benefit /

(Cost)

2017 $7,177,000 $746,000 $301,000 $8,224,000 $4,133,000 $12,357,000 ($5,081,765) $7,275,235

2018 7,392,310 760,920 301,000 8,454,230 4,202,160 12,656,390 (10,163,532) 2,492,858

2019 7,614,079 776,138 301,000 8,691,217 4,273,351 12,964,568 (10,163,532) 2,801,036

2020 7,842,501 791,661 301,000 8,935,162 4,346,631 13,281,793 (10,163,532) 3,118,261

2021 8,077,776 807,494 301,000 9,186,270 4,422,063 13,608,333 (10,163,532) 3,444,801

2022 8,320,109 823,644 301,000 9,444,753 4,499,710 13,944,463 (10,591,032) 3,353,431

2023 8,569,712 840,117 301,000 9,710,829 4,579,638 14,290,467 (10,614,657) 3,675,810

2024 8,826,803 856,919 301,000 9,984,722 4,661,916 14,646,638 (14,902,032) (255,394)

2025 9,091,607 874,057 301,000 10,266,664 4,746,611 15,013,275 (14,901,357) 111,918

2026 9,364,355 891,538 301,000 10,556,893 4,833,795 15,390,688 (14,902,257) 488,431

2027 9,645,286 909,369 301,000 10,855,655 4,923,541 15,779,196 (14,899,557) 879,639

2028 9,934,645 927,556 301,000 11,163,201 5,015,927 16,179,128 (14,901,807) 1,277,321

2029 10,232,684 946,107 301,000 11,479,791 5,111,030 16,590,821 (14,899,107) 1,691,714

2030 10,539,665 965,029 301,000 11,805,694 5,208,930 17,014,624 (14,902,752) 2,111,872

2031 10,855,855 984,330 301,000 12,141,185 5,309,710 17,450,895 (14,902,887) 2,548,008

2032 11,181,531 1,004,017 301,000 12,486,548 5,413,455 17,900,003 (14,898,803) 3,001,200

2033 11,516,977 1,024,097 301,000 12,842,074 5,520,254 18,362,328 (14,903,292) 3,459,036

2034 11,862,486 1,044,579 301,000 13,208,065 5,630,197 18,838,262 (14,901,435) 3,936,827

2035 12,218,361 1,065,471 301,000 13,584,832 5,743,376 19,328,208 (14,901,525) 4,426,683

2036 12,584,912 1,086,780 301,000 13,972,692 5,859,888 19,832,580 (14,900,625) 4,931,955

2037 12,962,459 1,108,516 301,000 14,371,975 5,979,831 20,351,806 (14,901,525) 5,450,281

2038 13,351,333 1,130,686 301,000 14,783,019 6,103,307 20,886,326 (14,903,100) 5,983,226

2039 13,751,873 1,153,300 301,000 15,206,173 6,230,421 21,436,594 (14,899,725) 6,536,869

2040 14,164,429 1,176,366 301,000 15,641,795 6,361,281 22,003,076 (14,899,500) 7,103,576

2041 14,589,362 1,199,893 301,000 16,090,255 6,495,997 22,586,252 (14,901,075) 7,685,177

2042 15,027,043 1,223,891 301,000 16,551,934 6,634,684 23,186,618 (14,903,100) 8,283,518

2043 15,477,854 1,248,369 301,000 17,027,223 6,777,460 23,804,683 (14,899,725) 8,904,958

2044 15,942,190 1,273,336 301,000 17,516,526 6,924,445 24,440,971 (14,898,825) 9,542,146

2045 16,420,456 1,298,803 301,000 18,020,259 7,075,765 25,096,024 (14,898,825) 10,197,199

2046 16,913,070 1,324,779 301,000 18,538,849 7,231,548 25,770,397 (14,902,650) 10,867,747

$341,448,723 $30,263,762 $9,030,000 $380,742,485 $164,249,922 $544,992,407 ($409,667,068) $135,325,339

Notes:1 Assumes an annual increase of 3%.

2 Assumes an annual increase of 2%.

Cost / Benefit Analysis - Expanded ACC vs. Historical Operations (Low End of Range)

10. Appendix 77

Appendix A – Cash Flow Analysis for an Expanded ACC (cont’d)

Year

Incremental

TOT1

Incremental

Local Sales &

Use Tax2

Incremental

Operating Gain

Total

Incremental

Revenues

Recapture of

Lost Revenues

Total

Incremental

Revenues and

Recaptured

Lost Revenues

Debt Service

Including

Garage

Net Benefit /

(Cost)

2017 $9,022,000 $938,000 $327,000 $10,287,000 $4,133,000 $14,420,000 ($5,081,765) $9,338,235

2018 9,292,660 956,760 327,000 10,576,420 $4,202,160 14,778,580 (10,163,532) 4,615,048

2019 9,571,440 975,895 327,000 10,874,335 $4,273,350 15,147,685 (10,163,532) 4,984,153

2020 9,858,583 995,413 327,000 11,180,996 $4,346,630 15,527,626 (10,163,532) 5,364,094

2021 10,154,340 1,015,321 327,000 11,496,661 $4,422,062 15,918,723 (10,163,532) 5,755,191

2022 10,458,970 1,035,627 327,000 11,821,597 $4,499,710 16,321,307 (10,591,032) 5,730,275

2023 10,772,739 1,056,340 327,000 12,156,079 $4,579,638 16,735,717 (10,614,657) 6,121,060

2024 11,095,921 1,077,467 327,000 12,500,388 $4,661,914 17,162,302 (14,902,032) 2,260,270

2025 11,428,799 1,099,016 327,000 12,854,815 $4,746,608 17,601,423 (14,901,357) 2,700,066

2026 11,771,663 1,120,996 327,000 13,219,659 $4,833,792 18,053,451 (14,902,257) 3,151,194

2027 12,124,813 1,143,416 327,000 13,595,229 $4,923,539 18,518,768 (14,899,557) 3,619,211

2028 12,488,557 1,166,284 327,000 13,981,841 $5,015,925 18,997,766 (14,901,807) 4,095,959

2029 12,863,214 1,189,610 327,000 14,379,824 $5,111,027 19,490,851 (14,899,107) 4,591,744

2030 13,249,110 1,213,402 327,000 14,789,512 $5,208,928 19,998,440 (14,902,752) 5,095,688

2031 13,646,583 1,237,670 327,000 15,211,253 $5,309,708 20,520,961 (14,902,887) 5,618,074

2032 14,055,980 1,262,423 327,000 15,645,403 $5,413,455 21,058,858 (14,898,803) 6,160,055

2033 14,477,659 1,287,671 327,000 16,092,330 $5,520,255 21,612,585 (14,903,292) 6,709,293

2034 14,911,989 1,313,424 327,000 16,552,413 $5,630,198 22,182,611 (14,901,435) 7,281,176

2035 15,359,349 1,339,692 327,000 17,026,041 $5,743,378 22,769,419 (14,901,525) 7,867,894

2036 15,820,129 1,366,486 327,000 17,513,615 $5,859,890 23,373,505 (14,900,625) 8,472,880

2037 16,294,733 1,393,816 327,000 18,015,549 $5,979,833 23,995,382 (14,901,525) 9,093,857

2038 16,783,575 1,421,692 327,000 18,532,267 $6,103,309 24,635,576 (14,903,100) 9,732,476

2039 17,287,082 1,450,126 327,000 19,064,208 $6,230,423 25,294,631 (14,899,725) 10,394,906

2040 17,805,694 1,479,129 327,000 19,611,823 $6,361,283 25,973,106 (14,899,500) 11,073,606

2041 18,339,865 1,508,712 327,000 20,175,577 $6,495,999 26,671,576 (14,901,075) 11,770,501

2042 18,890,061 1,538,886 327,000 20,755,947 $6,634,686 27,390,633 (14,903,100) 12,487,533

2043 19,456,763 1,569,664 327,000 21,353,427 $6,777,462 28,130,889 (14,899,725) 13,231,164

2044 20,040,466 1,601,057 327,000 21,968,523 $6,924,447 28,892,970 (14,898,825) 13,994,145

2045 20,641,680 1,633,078 327,000 22,601,758 $7,075,767 29,677,525 (14,898,825) 14,778,700

2046 21,260,930 1,665,740 327,000 23,253,670 $7,231,550 30,485,220 (14,902,650) 15,582,570

$429,225,347 $38,052,813 $9,810,000 $477,088,160 $164,249,926 $641,338,086 ($409,667,068) $231,671,018

Notes:1 Assumes an annual increase of 3%.

2 Assumes an annual increase of 2%.

Cost / Benefit Analysis - Expanded ACC vs. Historical Operations (High End of Range)

10. Appendix 78

Appendix B – Sensitivity Analysis

In order to assist the City with its ACC expansion planning efforts, sensitivity analysis was conducted that compared the cost/benefit

of two alternative expansion programs: adding 160,000 SF or adding 180,000 SF of flex space.

Based on market research including, but not limited to, an analysis of market attributes, industry trends, historical ACC utilization and

lost business reports as well as input from past/potential users and area stakeholders, the 200,000 SF expansion option is estimated to

generate a significantly higher net incremental gain to the City.

Category 160,000 SF Scenario 180,000 SF Scenario

Incremental Transient Occupancy Tax $113,515,000 $200,007,000 $341,449,000 - $429,225,000

Incremental Local Sales & Use Tax $10,223,000 $17,850,000 $30,264,000 $38,053,000

Incremental Operating Gain ($6,090,000) $2,220,000 $9,030,000 - $9,810,000

Total Incremental Revenues $117,648,000 $220,077,000 $380,743,000 - $477,088,000

Recapture of Lost Revenues $164,250,000 $164,250,000 $164,250,000 - $164,250,000

Total Incremental Revenues and Recaptured Lost Revenues $281,898,000 $384,327,000 $544,993,000 - $641,338,000

Debt Service Including Garage ($360,735,000) ($385,770,000) ($409,667,000) - ($409,667,000)

Net Benefit/(Cost) ($78,837,000) ($1,443,000) $135,326,000 - $231,671,000






Slight differences to the amounts shown in Appendix A due to rounding.

30-Year Cost Benefit Analysis for an Expanded ACC - Sensitivity Analysis

200,000 SF (Range)

Adding 200,000 SF of flex space is also estimated to enhance the competitive position of the ACC for a longer term than the other two

scenarios, increasing the facility’s total available exhibit space to over one million square feet.

As a point of reference, the table on the following page compares the estimated incremental impact to utilization, financial operations,

project costs, economic and fiscal impacts for the three expansion scenarios relative to the status quo scenario.

10. Appendix 79

Appendix B – Sensitivity Analysis (cont’d)

Category Status Quo 160,000 SF 180,000 SF


Number of Events 196 258 262 62 66 267 - 282 71 - 86

Event Days 403 507 517 104 114 532 - 559 129 - 156

Total Attendance 927,900 1,088,800 1,141,100 160,900 213,200 1,219,700 - 1,289,300 291,800 - 361,400

Total Attendee Days 2,468,590 2,865,360 3,009,620 396,770 541,030 3,227,500 - 3,409,900 758,910 - 941,310

High Impact Attendee Days 988,243 1,187,433 1,267,185 199,190 278,942 1,397,600 - 1,478,500 409,357 - 490,257


Operating Revenues $24,034,000 $27,217,000 $27,666,000 $3,183,000 $3,632,000 $28,039,000 - $28,505,000 $4,005,000 - $4,471,000

Operating Expenses 24,573,000 26,206,000 26,378,000 1,633,000 1,805,000 26,524,000 - 26,964,000 1,951,000 - 2,391,000

Net Operating Gain/(Loss) ($539,000) $1,011,000 $1,288,000 $1,550,000 $1,827,000 $1,515,000 - $1,541,000 $2,054,000 - $2,080,000

Fiscal Impacts - City of Anaheim

Transient Occupancy Tax $22,532,000 $27,074,000 $28,892,000 $4,542,000 $6,360,000 $31,865,000 - $33,710,000 $9,333,000 - $11,178,000

Local Sales & Use Tax 2,383,000 2,859,000 3,047,000 476,000 664,000 3,353,000 - 3,545,000 970,000 - 1,162,000

Tourism Improvement District Assessment 3,004,000 3,610,000 3,852,000 606,000 848,000 4,249,000 - 4,495,000 1,245,000 - 1,491,000

Total $27,919,000 $33,543,000 $35,791,000 $5,624,000 $7,872,000 $39,467,000 - $41,750,000 $11,548,000 - $13,831,000

Fiscal Impacts - Orange County 1,192,000 1,429,000 1,524,000 237,000 332,000 1,676,000 - 1,772,000 484,000 - 580,000

Fiscal Impacts - State of California 28,267,000 33,825,000 36,022,000 5,558,000 7,755,000 39,609,000 - 41,853,000 11,342,000 - 13,586,000

Total Fiscal Impacts $57,378,000 $68,797,000 $73,337,000 $11,419,000 $15,959,000 $80,752,000 - $85,375,000 $23,374,000 - $27,997,000

Economic Impacts

Direct Spending $338,022,000 $403,682,000 $429,590,000 $65,660,000 $91,568,000 $471,833,000 - $498,355,000 $133,811,000 - $160,333,000

Indirect/Induced Spending 221,048,000 264,089,000 281,113,000 43,041,000 60,065,000 308,880,000 - 326,292,000 87,832,000 - 105,244,000

Total Spending $559,070,000 $667,771,000 $710,703,000 $108,701,000 $151,633,000 $780,713,000 - $824,647,000 $221,643,000 - $265,577,000

Total Earnings $214,412,000 $255,837,000 $272,205,000 $41,425,000 $57,793,000 $298,911,000 - $315,664,000 $84,499,000 - $101,252,000

Total Jobs 4,600 5,500 5,800 900 1,200 6,400 - 6,800 1,800 - 2,200

Expansion Project Costs $158,500,000 $169,500,000 $180,000,000

Estimated Annual Debt Service $12,024,000 $12,859,000 $13,656,000

Note: Project costs and estimated debt service were provided by the City.

Incremental Impact From Status

Quo 200,000 SF (Range)

Incremental Impact From Status

Quo

ACC Expansion Sensitivity Analysis

10. Appendix 80

Appendix C – Comparison of Estimated Room Nights and Transient Occupancy Tax

Category

Three-Year Average

(FY 2010 - FY 2012) Status Quo

Status Quo &

Historical

Conventions (CV)

Number of Events 55 50 67 - 69 (5) 12 - 14 17 - 19

Average Attendees 6,200 6,200 6,500 - 6,500 0 300 - 300 300 - 300

Total Attendees 339,800 310,000 435,500 - 448,500 (29,800) 95,700 - 108,700 125,500 - 138,500

Average Length of Stay 2.8 2.8 2.8 2.8 0

Total Attendee Days 951,440 868,000 1,219,400 - 1,255,800 (83,440) 267,960 - 304,360 351,400 - 387,800

Tradeshows (TS)

Number of Events 8 7 10 - 11 (1) 2 - 3 3 - 4


Total Attendees 222,282 203,000 290,000 - 319,000 (19,282) 67,718 - 96,718 87,000 - 116,000


Total Attendee Days 622,390 568,400 812,000 - 893,200 (53,990) 189,610 - 270,810 243,600 - 324,800

CV/TS Combined

Number of Events 63 57 77 - 80 (6) 14 - 17 20 - 23


Total Attendees 562,082 513,000 725,500 - 767,500 (49,082) 163,418 - 205,418 212,500 - 254,500


Total Attendee Days 1,573,830 1,436,400 2,031,400 - 2,149,000 (137,430) 457,570 - 575,170 595,000 - 712,600

Percentage Staying Overnight 86% 86% 86% 86%

Overnight Attendee Days 1,353,493 1,235,304 1,747,004 - 1,848,140 (118,189) 393,511 - 494,647 511,700 - 612,836

Percentage Staying In Anaheim 80% 80% 80% 80%

Overnight Attendee Days in Anaheim 1,082,800 988,200 1,397,600 - 1,478,500 (94,600) 314,800 - 395,700 409,400 - 490,300

Number of People Per Room 1.4 1.4 1.4 1.4

Room Nights in Anaheim 773,429 705,857 998,286 - 1,056,071 (67,571) 224,857 - 282,643 292,429 - 350,214

Average Room Rate $212.80 $212.80 $212.80 $212.80

Room Revenue $164,586,000 $150,206,000 $212,435,000 - $224,732,000 ($14,380,000) $47,849,000 - $60,146,000 $62,229,000 - $74,526,000

Transient Occupancy Rate 15% 15% 15% 15%

Total Transient Occupancy Tax $24,688,000 $22,532,000 $31,865,000 - $33,710,000 ($2,156,000) $7,177,000 - $9,022,000 $9,333,000 - $11,178,000

Discretionary % 70% 70% 70% 70%

Discretionary Transient Occupancy Tax $17,282,000 $15,772,000 $22,306,000 - $23,597,000 ($1,510,000) $5,024,000 - $6,315,000 $6,534,000 - $7,825,000

Notes: Discretionary % refers to the 70% of the transient occupancy tax that is not currently dedicated to debt service for other projects.

Slight differences from full report due to rounding.

ACC Expansion Range

ACC Expansion Range &

Historical Three-Year Average

ACC Expansion Range &

Status Quo

Summary of Estimated Room Nights and Transient Occupancy Tax

Difference Between

anaheim convention center expansion market & economic analysis

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