Feasibility Study for a New Multi-Purpose Entertainment & Conference Center Development on the South Shore
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CONFIDENTIAL DRAFT Feasibility Study for a New Multi-Purpose Entertainment & Conference Center Development on the South Shore Presented to the: January 20, 2015 CONFIDENTIAL Presentation Outline DRAFT Executive Summary 1. Introduction 3 2. Local Market Analysis 8 3. Demographics Analysis 24 4. Analysis of Competitive &Comparable Facilities 31 5. Market Demand – State & Regional Organizations 60 6. Market Demand – Corporate & Other Events 81 7. Market Demand – Promoted Entertainment Events 98 8. Market Demand - Broadway/Theatrical Performances 105 9. Market Demand – Sporting Events 107 10.Economic & Fiscal Impact Analysis 110 2 DRAFT COPY Executive Summary CSL has completed a market and economic analysis for potential development of a multi-use event center to be located on the South Shore. Our research has included extensive local market analysis and stakeholder interviews; review of competitive and comparable venues in the local, regional and national market; and surveys of over 60 planners of events representing hundreds of concerts, entertainment, sports and conference events. Based on this research, we have developed an assessment of potential event center program elements and community- wide economic impacts. This analysis is structured to help key project stakeholders in making informed decisions as to next phases of project planning. Within this summary, we highlight key project analysis results and findings. A full presentation of analysis results is included in the attached slide presentation. This summary is organized into the following sections: Local Market and Demographic Analysis Analysis of Competitive &Comparable Facilities Market Demand Analysis Market Demand and Program Summary Event Levels and Economic Impact Analysis In evaluating the feasibility of the project, it is common to consider various metrics including the market demand for event space, the ability to host valuable community events, the ability to support valuable hospitality industry businesses, and the regional economic and tax revenue impacts (taking place in both Nevada and California). As part of this study, we consider and evaluate each of these metrics. The proposed multi-use event center could be considered a hybrid between traditional flat floor conference and convention center projects, and tiered seating music, entertainment and sporting event venues. The market research, including event planner research, has therefore been necessarily broad in order to address each of these markets. Page 1 of 15 DRAFT COPY Local Market and Demographic Analysis The South Shore of Lake Tahoe is an internationally known-destination with significant year-round recreation activities in a resort/casino environment. These features help to support market demand from a broad cross section of events including meetings, conferences, music, and entertainment. With the proliferation of gaming within a several hundred mile radius surrounding the Lake Tahoe area, and with increasing gaming options throughout the U.S., gaming revenue within Douglas County has decreased by more than 40 percent since 2000, from a high of more than $352 million to $208 million in 2013. Local market conditions have hampered the viability of the gaming infrastructure, exemplified by the closing of the 539-room Horizon Casino Resort in 2014. Note that the potential conversion of the property to a Hard Rock Hotel and Casino may improve the overall trajectory of gaming revenue in the market. Lake Tahoe Area Drive Time Map There is a significant population base within a 180-minute driving distance of the market that captures Reno, Sacramento and into the Bay Area of California. The more than 4.3 million people within a three-hour drive of Stateline represents a large potential population base from which to draw entertainment event attendees. The above average median household income levels indicate a moderate to strong availability of disposable income. The corporate base in the immediate region is low, which can impact event levels at an event facility, as well as the availability of advertising and sponsorship opportunities. However the recent announcement of the Tesla Motors battery factory and plans for corporate expansion from Apple and Amazon, along with supporting industry, will expand the area corporate base. In addition, the corporate base within the broader region (including Sacramento and the Bay area) is significant. Given its resort setting, a conference facility in the South Shore area has the potential to draw various incentive and board retreat meetings. Page 2 of 15 DRAFT COPY Analysis of Competitive and Comparable Facilities There are 20 hotels in the South Shore with more than 100 sleeping rooms, and eight of these properties offer event space. The largest contiguous space available at these properties ranges from 700 to 9,200 square feet. To create a net new benefit for the local market, an event center will have to accommodate events significantly larger than current hotel capacity. Hotel rates have increased each of the past three years, while occupancy has remained consistent at around 60 percent. During peak summer months, occupancy rates above 75 percent are common and often drop below 50 percent in winter. These seasonality patterns will help guide the event focus for a new center, with a goal of attracting event activity during slower periods. Air access to the market is primarily served by airports in Reno and Sacramento (located 60 and 160 miles away, respectively). Reno provides non-stop service to 16 destinations. Given the lack of direct air access, a new multi-use event center will have to attract a drive-in audience, in addition to events that draw attendees flying into regional airports. Competitive Regional Event Venues The South Shore market currently houses several entertainment venues including Harvey’s outdoor theater (8,000 seats), Montbleau Theaters (4,800 outdoor and 15 2 18 2010 3 12 5 1,750 indoor); and Harrah’s South Shore 13 14 Venue Location Capacity Room (750 seats). In addition, 1 Sleep Train Amphitheatre Wheatland, CA 18,500 1 2 Lawlor Events Center (Univ. of Nevada-Reno) Reno, NV 11,784 consideration is being given to a new 2,000 3 Reno Events Center Reno, NV 7,000 4 Ironstone Vineyards Murphys, CA 6,700 to 3,000-seat indoor theater as part of the 5 Reno Sparks Livestock Event Center Reno, NV 6,200 7 8 17 Hard Rock project. A new indoor venue of 11 6 Mountain Winery Saratoga, CA 2,500 7 Sacramento Community Center Theater Sacramento, CA 2,452 this size may have a material impact on 8 Wells Fargo Pavilion Sacramento, CA 2,200 16 9 Bob Hope Theater Stockton, CA 2,042 event activity for any new multi-use venue. 10 Silver Legacy Resort Casino Reno, NV 2,000 4 11 Mondavi Center Davis, CA 1,801 9 12 Grand Sierra Resort Reno, NV 1,800 13 Pioneer Center for Performing Arts Reno, NV 1,500 Regionally, there are competitive venues 19 14 Cargo Reno, NV 1,100 15 Robert Z. Hawkins Event Amphitheatre Reno, NV 900 ranging in size from the 18,500 seat Sleep 16 Uptown Theatre Napa Napa, CA 860 Train Amphitheater, the 7,000 seat Reno 17 Harris Center For The Arts Folsom, CA 850 18 John Ascuaga's Nugget Sparks, NV 775 6 19 SF JAZZ San Francisco, CA 700 20 The Plaza (Harrah's Reno Hotel/Casino) Reno, NV 500 Page 3 of 15 DRAFT COPY Events Center, the 6,700 seats at the Ironstone Vineyards, the 2,200 seat Wells Fargo Pavilion in Sacramento, and 16 other large and small venues. Each of these caters to particular segments of the music, entertainment, sports and other fixed seating event segment. Our demand and event projection analysis carefully considers the potential impact of these venues. From a flat-floor event perspective, we have identified 20 venues throughout the region and nationally that are competitive or that offer some form of comparability to a proposed multi-use venue on the South Shore. These include a mix of multi- purpose convention and conference facilities that were selected based on characteristics including location, market population, building size and event focus. Regional & National Flat Floor Venues – Total Sellable Space Branson, MO 87,100 On average, these convention and conference St. George, UT 76,700 oriented facilities offer approximately 35,700 Springfield, MA 63,400 square feet of exhibit space, 7,700 square feet of Syracuse, NY 59,700 meeting space and 18,000 square feet of Enid, OK 49,600 Bellevue, WA 48,000 ballroom/multi-purpose space. Note that not all Salisbury, MD 46,900 venues provide exhibit, meeting and ballroom Layton, UT 43,500 space. For example, the Boise Centre offers Brookings, SD 42,000 Redding, CA 39,000 24,400 square feet of contiguous space that is Boise, ID 33,300 considered a ballroom, but no exhibit space. Plano, TX 33,000 Conversely, the Meydenbauer Center in Bellevue, Fort Myers, FL 32,000 Monterey, CA 30,300 Washington offers 36,000 square feet of carpeted Ogden, UT 27,700 space considered exhibit space, but not ballroom Loveland, CO 26,500 Average= 40,800 space. Rio Rancho, NM 25,000 Grand Junction, CO 22,900 Median= 36,200 Pueblo, CO 21,100 In practice, these multi-use venues can Mountain Village, CO 7,500 accommodate a wide variety of exhibit, banquet, 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 general session and other flat floor functions. On average, the total sellable space among the comparable and competitive flat floor venues reviewed approximates 40,800 square feet. The market demand analysis specific to the South Shore market summarized later is required to more specifically target supportable sellable spaces for any new multi-use facility development. Page 4 of 15 DRAFT COPY Market Demand Analysis As part of the market demand analysis, we have conducted the following research: • 50 surveys of California and Nevada state/regional association organizations.