anaheim convention center expansion market & economic analysis
TRANSCRIPT
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);
1. Introduction and Executive Summary 2
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.
1. Introduction and Executive Summary 3
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:
1. Introduction and Executive Summary 4
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.
1. Introduction and Executive Summary 5
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.
1. Introduction and Executive Summary 6
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.
1. Introduction and Executive Summary 7
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.
1. Introduction and Executive Summary 8
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
Historical Three-Year Average vs. Status Quo vs. Expanded ACC
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
1. Introduction and Executive Summary 9
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
Historical Three-Year Average vs. Status Quo vs. Expanded ACC
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
1. Introduction and Executive Summary 10
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
ACC Expansion Incremental New From Status Quo
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
ACC Expansion Incremental New From Status Quo
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.
1. Introduction and Executive Summary 11
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
2. General Market Overview 13
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%
Source: City of Anaheim.
City of Anaheim Principal Employers
2. General Market Overview 14
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.
2. General Market Overview 15
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
2. General Market Overview 16
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.
2. General Market Overview 17
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.
2. General Market Overview 18
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)
Source: City of Anaheim.
$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
2. General Market Overview 19
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
3. Industry Trends 21
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+
3. Industry Trends 22
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
3. Industry Trends 23
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.
3. Industry Trends 24
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
3. Industry Trends 25
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
3. Industry Trends 26
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.
3. Industry Trends 27
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
3. Industry Trends 28
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
4. Historical ACC Operations 30
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
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 56 172 181 294 3.1 5.3 6,800 378,194 Conventions 51 150 166 316 2.9 6.2 5,800 296,371
Tradeshows 10 29 69 98 2.9 9.8 26,200 261,752 Tradeshows 5 13 32 45 2.6 9.0 35,700 178,527
Entertainment 10 13 4 17 1.3 1.7 3,000 29,803 Entertainment 8 12 1 13 1.5 1.6 3,000 23,800
Sporting 13 38 24 62 2.9 4.8 6,700 86,684 Sporting 18 58 41 99 3.2 5.5 14,600 263,454
Consumer 9 24 34 58 2.7 6.4 15,800 141,942 Consumer 15 36 35 71 2.4 4.7 7,300 108,913
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
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 57 138 189 327 2.4 5.7 6,000 344,846 Conventions 57 157 179 337 2.8 5.9 6,190 352,852
Tradeshows 8 23 48 71 2.9 8.9 28,300 226,567 Tradeshows 9 25 53 78 2.8 8.7 26,220 235,982
Entertainment 11 20 8 28 1.8 2.5 5,200 57,122 Entertainment 16 23 6 28 1.4 1.8 2,870 45,851
Sporting 22 59 57 116 2.7 5.3 6,600 145,529 Sporting 27 59 32 92 2.2 3.4 5,100 137,635
Consumer 17 45 56 101 2.6 5.9 11,500 195,456 Consumer 15 37 43 80 2.5 5.3 8,940 134,123
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
Source: Facility management.
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.
4. Historical ACC Operations 31
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
Source: Facility management.
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
Source: Facility management.
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
4. Historical ACC Operations 32
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
Source: Facility management.
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
4. Historical ACC Operations 33
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%
Source: Facility management.
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
Source: Facility management.
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 }
4. Historical ACC Operations 34
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
Source: Facility management.
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
Source: Facility management.
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
}
4. Historical ACC Operations 35
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
Source: Facility management.
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
Source: Facility management.
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
}
4. Historical ACC Operations 36
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
Source: Facility management.
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
Source: Facility management.
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%
Conventions Tradeshows Consumer Shows
0 1 2 3 4 5
4. Historical ACC Operations 37
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
Source: Facility management.
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%
Conventions Tradeshows Consumer Shows
0 SF
1-25,000 SF
25,001-50,000 SF
More Than 50,000 SF
4. Historical ACC Operations 38
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%
Source: Anaheim/Orange County VCB.
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.
4. Historical ACC Operations 39
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.
Source: Anaheim/Orange County VCB.
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
4. Historical ACC Operations 40
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.
5. Potential Demand Generators 42
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.
5. Potential Demand Generators 43
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
Los Angeles Convention Center
Moscone Center in San Francisco
Orange County Convention Center in Florida
Phoenix Convention Center in Arizona
San Diego Convention Center
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.
6. Competitive Facility and Destination Analysis 45
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
6. Competitive Facility and Destination Analysis 46
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.
6. Competitive Facility and Destination Analysis 47
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
Sources: Management at individual facilities; other research.
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
San Diego Convention Center
Dallas Convention Center
Moscone Center
Los Angeles Convention 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
Las Vegas Convention 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
Henry B. Gonzalez Convention Center
Moscone Center
Colorado Convention Center
Phoenix Convention Center
San Diego Convention Center
Walter E. Washington Convention Center
Los Angeles Convention Center
Dallas Convention Center
Existing Anaheim Convention Center
Average (Excluding ACC)
Ernest N. Morial Convention Center
Georgia World Congress Center
Las Vegas Convention Center
Orange County Convention Center
Contiguous Space
Total Exhibit Space
6. Competitive Facility and Destination Analysis 48
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
Sources: Management at individual facilities; other research.
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
Las Vegas Convention Center
Existing Anaheim Convention Center
Ernest N. Morial Convention Center
Dallas Convention Center
Los Angeles Convention Center
Walter E. Washington Convention Center
Georgia World Congress Center
Orange County Convention Center
Average (Excluding ACC)
Moscone Center
San Diego Convention Center
Colorado Convention Center
Henry B. Gonzalez Convention Center
Phoenix Convention Center
6. Competitive Facility and Destination Analysis 49
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
Sources: Management at individual facilities; other research.
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
Sources: Management at individual facilities; other research.
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
Dallas Convention Center
Existing Anaheim Convention Center
Colorado Convention Center
Los Angeles Convention Center
Henry B. Gonzalez Convention Center
Walter E. Washington Convention Center
San Diego Convention Center
Phoenix Convention Center
Average (Excluding ACC)
Ernest N. Morial Convention Center
Las Vegas Convention Center
Moscone Center
Georgia World Congress Center
Orange County Convention Center
13%
15%
16%
21%
24%
25%
26%
26%
31%
31%
33%
44%
49%
59%
0% 10% 20% 30% 40% 50% 60% 70%
Las Vegas Convention Center
Existing Anaheim Convention Center
Dallas Convention Center
Los Angeles Convention Center
Walter E. Washington Convention Center
Georgia World Congress Center
Orange County Convention Center
Ernest N. Morial Convention Center
Average (Excluding ACC)
Colorado Convention Center
San Diego Convention Center
Henry B. Gonzalez Convention Center
Phoenix Convention Center
Moscone Center
6. Competitive Facility and Destination Analysis 50
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
Sources: Management at individual facilities; other research.
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
6. Competitive Facility and Destination Analysis 51
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
6. Competitive Facility and Destination Analysis 52
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
Average (Excluding Anaheim)
Anaheim
Los Angeles
San Diego
New Orleans
Washington D.C.
San Francisco
6. Competitive Facility and Destination Analysis 53
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
Average (Excluding Anaheim)
San Diego
Anaheim
Los Angeles
San Francisco
Las Vegas
6. Competitive Facility and Destination Analysis 54
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
Average (Excluding Anaheim)
Los Angeles
San Francisco
Washington D.C.
6. Competitive Facility and Destination Analysis 55
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
Average (Excluding Anaheim)
Dallas
San Francisco
Los Angeles
Atlanta
San Antonio
Anaheim
Las Vegas
6. Competitive Facility and Destination Analysis 56
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.
7. Financial Analysis 58
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
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
7. Financial Analysis 59
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-
Year Average Status Quo
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
7. Financial Analysis 60
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 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
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-
Year Average Status Quo
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;
7. Financial Analysis 61
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-
Year Average Status Quo
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.
7. Financial Analysis 62
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.
8. Economic and Fiscal Impact Analysis 64
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
8. Economic and Fiscal Impact Analysis 65
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
8. Economic and Fiscal Impact Analysis 66
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.
8. Economic and Fiscal Impact Analysis 67
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
8. Economic and Fiscal Impact Analysis 68
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
ACC Expansion Incremental New From Status Quo
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.
8. Economic and Fiscal Impact Analysis 69
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
ACC Expansion Incremental New From Status Quo
These direct spending estimates were applied to the multipliers previously shown in order to
calculate estimates for total spending, total jobs and total earnings.
8. Economic and Fiscal Impact Analysis 70
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
Indirect/Induced Spending $241,131,000 $221,048,000 $308,880,000 - $326,292,000 $87,832,000 - $105,244,000
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
Incremental New From Status QuoACC Expansion
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
ACC Expansion Incremental New From Status Quo
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
Incremental New From Status QuoACC Expansion
8. Economic and Fiscal Impact Analysis 71
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-
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
ACC Expansion Incremental New From Status Quo
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.
8. Economic and Fiscal Impact Analysis 72
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.
9. Cost/Benefit Analysis 74
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
Usage/Event Activity
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 -
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
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
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
9. Cost/Benefit Analysis 75
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
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.
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
Usage/Event Activity
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
Financial Operations
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
Average Attendees 29,000 29,000 29,000 - 29,000 0 0 - 0 0 - 0
Total Attendees 222,282 203,000 290,000 - 319,000 (19,282) 67,718 - 96,718 87,000 - 116,000
Average Length of Stay 2.8 2.8 2.8 2.8 0
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
Average Attendees 8,900 9,000 9,400 - 9,600 100 500 - 700 400 - 600
Total Attendees 562,082 513,000 725,500 - 767,500 (49,082) 163,418 - 205,418 212,500 - 254,500
Average Length of Stay 2.8 2.8 2.8 2.8 0
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