Idaho Falls Auditorium District Event Center Hotel Impact Analysis
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Idaho Falls Auditorium District Event Center Hotel Impact Analysis Submitted to: Ms. Cindy Ozaki Chairman Idaho Falls Auditorium District 425 N. Capital Avenue Idaho Falls, ID 83402 December 9, 2016 December 9, 2016 Ms. Cindy Ozaki Chairman Idaho Falls Auditorium District 425 N. Capital Avenue Idaho Falls, ID 83402 Dear Ms. Ozaki, The Idaho Falls Auditorium District (IFAD or Client) engaged Hunden Strategic Partners to perform a combined hotel market analysis and impact analysis addressing hotel and motel revenue projections for hotels within the City limits of Idaho Falls relative to a new event center development. The study includes a full hotel market analysis in order to project the impact that a new multi-use events center will have on the community and IFAD. The analysis also includes hotel revenue trends and projections through 2028. The attached is our final report. This deliverable has been prepared under the following general assumptions and limiting conditions: ! The findings presented herein reflect analysis of primary and secondary sources of information that are assumed to be correct. HSP utilized sources deemed to be reliable, but cannot guarantee their accuracy. ! No responsibility is taken for changes in market conditions after the date of this report and no obligation is assumed to revise this report to reflect events or conditions occurring after the date of this report. ! HSP has no control over construction costs or timing of construction and opening. ! Macroeconomic events affecting travel and the economy cannot be predicted and may impact the development and performance of the project. We have enjoyed serving you on this engagement and look forward to providing you with continuing service. Sincerely yours, Hunden Strategic Partners TABLE OF CONTENTS ----------- Executive Summary Chapter 1 Project Profile Chapter 2 Economic and Demographic Analysis of Idaho Falls Chapter 3 Local and Regional Event, Meeting, Sports, and Entertainment Market Analysis Chapter 4 IFAD Hotel Market Analysis Chapter 5 Projection of New Room Nights and Hotel Revenue Chapter 6 Economic, Fiscal, and Employment Impact Analysis EXECUTIVE SUMMARY Hunden Strategic Partners (HSP) was engaged by the Idaho Falls Auditorium District (IFAD or Client) to perform a combined hotel market analysis and impact analysis addressing hotel and motel revenue projections for hotels within the City limits of Idaho Falls relative to the development of a new event center. Idaho Falls Auditorium District, governed by a five-member Board of Directors, was created in 2011 to construct a multi-use events center in Idaho Falls. In addition, the IFAD was formed to enact a transient room tax (TRT) of 5.0 percent on all hotel and motel stays for overnight accommodations within the Idaho Falls City limits. HSP conducted a hotel market analysis and projection of hotel impact from the new events center based on a number of analytics. The primary objectives of this analysis include the following: ! Determine the key drivers of demand for the hotel market in Idaho Falls for both the current climate and the projected future of the City. ! Determine the current annualized occupancy rates for all hotels and motels operating within the City limits. ! Illustrate the general hotel industry trends, both regional and national. ! Analyze the competitive market as it relates to meeting and entertainment venues, both locally and regionally ! Analyze the impact that the construction of the events center will have on the City in terms of both the hotel market in Idaho Falls and the impact to IFAD revenue. ! Provide a quantitative analysis of projected IFAD revenue, by year, to 2028. The analysis includes three scenarios. HSP investigated all of the previous components, including the 2008 ERA study, in order to determine the current and potential future lodging demand in the market area, as well as assess the existing and potential future hotel supply and piece of the market that could be captured by the proposed Project. HSP met with a number of key stakeholders, interviewed potential facility users and management, reviewed the competition, and analyzed the market to project the future impact of an event center in Idaho Falls. Projection of New Room Nights and Hotel Revenue Based on the analysis conducted, HSP has developed three demand projections for the proposed event. The likely scenario assumes a minor league NA3HL hockey tenant and a moderate calendar of other events, the worst-case scenario assumes no hockey tenants and a limited calendar of events, and the best-case scenario assumed an NA3HL tenant and a robust calendar of events. The following table summarizes the revenue projections for the three scenarios. Idaho Falls Auditorium District Combined Market and Impact Analysis Executive Summary – Page 2 Table 1 IFAD Hotel Revenue Projections 2019 - 2028 Category W/O Event Center Worst Case Likely Case Best Case Total Room Night Demand 5,738,235 5,816,122 5,839,843 5,876,108 Total Room Revenue $674,847,748 $687,956,345 $690,754,608 $694,956,067 Total Increased Room Revenue -- $13,108,597 $15,906,860 $20,108,319 Total TRT Tax $33,742,387 $34,397,817 $34,537,730 $34,747,803 Total Increased TRT Tax -- $655,430 $795,343 $1,005,416 Source: Hunden Partners As the table shows, HSP projects a total increase in TRT tax revenue ranging from $655,000 to $1 million for the three scenarios throughout the ten year period. The following table shows the projected demand for room nights, ADR (average daily rate), room revenue, and TRT tax collections as a result of the event center development for the likely scenario. Table 2 IFAD Event Center - Likely Scenario 2016 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Total Room Demand 418,545 ADR $93 Future Demand w/out Event Center 473,528 493,416 514,140 535,733 558,234 581,680 606,111 631,567 658,093 685,733 5,738,235 Future Demand w/ Event Center 481,262 502,554 524,732 546,325 568,826 592,272 616,703 642,159 668,685 696,325 5,839,843 Difference in Room Nights per Year 7,734 9,137 10,592 10,592 10,592 10,592 10,592 10,592 10,592 10,592 101,608 Future ADR w/o Event Center $ 99.59 $ 102.97 $ 106.47 $ 110.09 $ 113.84 $ 117.71 $ 121.71 $ 125.85 $ 130.12 $ 134.55 Future ADR w/ Event Center $ 99.75 $ 103.23 $ 106.82 $ 110.55 $ 114.40 $ 118.38 $ 122.51 $ 126.78 $ 131.20 $ 135.77 Difference $ 0.16 $ 0.25 $ 0.35 $ 0.45 $ 0.56 $ 0.68 $ 0.80 $ 0.93 $ 1.07 $ 1.22 - Room Revenue w/out Event Center $ 47,156,472 $ 50,807,704 $ 54,741,643 $ 58,980,179 $ 63,546,896 $ 68,467,205 $ 73,768,484 $ 79,480,230 $ 85,634,225 $ 92,264,712 $ 674,847,748 Room Revenue w/ Event Center $ 48,005,515 $ 51,876,327 $ 56,053,342 $ 60,393,909 $ 65,072,687 $ 70,116,104 $ 75,552,655 $ 81,413,063 $ 87,730,455 $ 94,540,551 $ 690,754,608 Increased Room Revenue $ 849,043 $ 1,068,623 $ 1,311,699 $ 1,413,730 $ 1,525,791 $ 1,648,899 $ 1,784,171 $ 1,932,833 $ 2,096,230 $ 2,275,840 $ 15,906,860 TRT Tax w/out Event Center $ 2,357,824 $ 2,540,385 $ 2,737,082 $ 2,949,009 $ 3,177,345 $ 3,423,360 $ 3,688,424 $ 3,974,011 $ 4,281,711 $ 4,613,236 $ 33,742,387 TRT Tax w/ Event Center $ 2,400,276 $ 2,593,816 $ 2,802,667 $ 3,019,695 $ 3,253,634 $ 3,505,805 $ 3,777,633 $ 4,070,653 $ 4,386,523 $ 4,727,028 $ 34,537,730 Increased TRT Tax $ 42,452 $ 53,431 $ 65,585 $ 70,687 $ 76,290 $ 82,445 $ 89,209 $ 96,642 $ 104,811 $ 113,792 $ 795,343 Source: HSP The following table shows the projected demand for room nights, ADR, room revenue, and TRT tax collections as a result of the event center development for the worst-case scenario. Idaho Falls Auditorium District Combined Market and Impact Analysis Executive Summary – Page 3 Table 3 IFAD Event Center - Worst Case Scenario 2016 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Total Room Demand 418,545 ADR $93 Future Demand w/out Event Center 473,528 493,416 514,140 535,733 558,234 581,680 606,111 631,567 658,093 685,733 5,738,235 Future Demand w/ Event Center 479,707 500,587 522,207 543,801 566,301 589,747 614,178 639,634 666,160 693,800 5,816,122 Difference in Room Nights per Year 6,179 7,171 8,067 8,067 8,067 8,067 8,067 8,067 8,067 8,067 77,887 Future ADR w/o Event Center $ 99.59 $ 102.97 $ 106.47 $ 110.09 $ 113.84 $ 117.71 $ 121.71 $ 125.85 $ 130.12 $ 134.55 Future ADR w/ Event Center $ 99.75 $ 103.23 $ 106.82 $ 110.55 $ 114.40 $ 118.38 $ 122.51 $ 126.78 $ 131.20 $ 135.77 Difference $ 0.16 $ 0.25 $ 0.35 $ 0.45 $ 0.56 $ 0.68 $ 0.80 $ 0.93 $ 1.07 $ 1.22 - Room Revenue w/out Event Center $ 47,156,472 $ 50,807,704 $ 54,741,643 $ 58,980,179 $ 63,546,896 $ 68,467,205 $ 73,768,484 $ 79,480,230 $ 85,634,225 $ 92,264,712 $ 674,847,748 Room Revenue w/ Event Center $ 47,850,373 $ 51,673,357 $ 55,783,619 $ 60,114,785 $ 64,783,836 $ 69,817,187 $ 75,243,320 $ 81,092,948 $ 87,399,184 $ 94,197,736 $ 687,956,345 Increased Room Revenue $ 693,901 $ 865,653 $ 1,041,976 $ 1,134,607 $ 1,236,940 $ 1,349,982 $ 1,474,837 $ 1,612,718 $ 1,764,959 $ 1,933,024 $ 13,108,597 TRT Tax w/out Event Center $ 2,357,824 $ 2,540,385 $ 2,737,082 $ 2,949,009 $ 3,177,345 $ 3,423,360 $ 3,688,424 $ 3,974,011 $ 4,281,711 $ 4,613,236 $ 33,742,387 TRT Tax w/ Event Center $ 2,392,519 $ 2,583,668 $ 2,789,181 $ 3,005,739 $ 3,239,192 $ 3,490,859 $ 3,762,166 $ 4,054,647 $ 4,369,959 $ 4,709,887 $ 34,397,817 Increased TRT Tax $ 34,695 $ 43,283 $ 52,099 $ 56,730 $ 61,847 $ 67,499 $ 73,742 $ 80,636 $ 88,248 $ 96,651 $ 655,430 Source: HSP HSP projects a total increase of approximately 78,000 room nights throughout the ten-year period as a result of the event center development in the worst-case scenario.