Executive Meeting & Events Center Marketing and Economic Impact Study

Executive Meeting and Events Center Market and Economic Impact Study – Montgomery County, Pennsylvania

Report Prepared For: King of Prussia District & Valley Forge Tourism & Convention Board

Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Contents

Executive Summary ................................................................................. ii E1 Montgomery County Scorecard Analysis ....................................................... iii E2 King of Prussia Lodging Market Analysis ...................................................... iv E3 Facility Dimensions & Comparable Facilities ................................................. vi E4 Feedback from Key Stakeholders ................................................................. vii E5 Demand & Attendance Projections .............................................................. viii E6 Potential Economic Impacts........................................................................... ix

1

Introduction ..................................................................................... 1 1.1 1.2

2

Background .................................................................................................1 Report Structure ..........................................................................................2

Local Market Conditions & Scorecard Analysis ............................ 3 2.1 2.2 2.3 2.5

Montgomery County - Background .............................................................3 Infrastructure ...............................................................................................4 Companies & Employment .........................................................................7 Local Hotels ..............................................................................................12 2.5.1 Hotel Stock & Hotel Room Density ...................................................12

2.6 2.7

Retail Offerings .........................................................................................15 Overall Scorecard Analysis .......................................................................18

3

King of Prussia Lodging Market Analysis ................................... 21 3.1 3.2

4

King of Prussia Lodging Market ................................................................21 Hotel Benchmark & Comp Set Analysis ...................................................24

Comparable Venues ...................................................................... 29 4.1 4.2

5

Smaller Convention Centers .....................................................................29 Profiles of Comparable Facilities ..............................................................33

Facility Dimensions & Details ....................................................... 45 5.1

Data Normalization ...................................................................................45 5.1.1 Total Sellable Space .........................................................................45

Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

5.1.2

6

Main Exhibit Hall & Banquet Hall SF ................................................46

Industry Trends ............................................................................. 50 6.1 6.2 6.3

7

The Meetings Industry ..............................................................................50 Convention Center Trends ........................................................................51 MICE Industry Trends ...............................................................................52 6.3.1 Reports on the death of meetings are exaggerated .........................52 6.3.2

Meetings are driving economic development ...................................55

6.3.3

Cost consciousness is defining choices ...........................................57

6.3.4

Events are reaching further ..............................................................59

6.3.5

DMOs are driving MICE growth ........................................................59

6.3.6

Events are becoming more targeted.................................................61

Feedback from Key Stakeholders ................................................ 62 7.1 7.2

8

Economic Development Professionals .....................................................62 Potential Corporate Users .........................................................................63

Demand Projections ...................................................................... 65 8.1 8.2

9

Projected Events .......................................................................................65 Projected Attendance ................................................................................67

Economic Impacts ......................................................................... 69 9.1 9.2 9.3 9.4 9.5 9.6

Event Turndowns ......................................................................................69 Direct Event Spending ..............................................................................69 Room Nights Generated ...........................................................................70 Economic Impacts Defined .......................................................................71 Projected Economic Impacts – Montgomery County ................................72 Projected Economic Impacts – State of Pennsylvania .............................74

Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Executive Summary th

In 2012, the Valley Forge Casino Resort (VFCR) opened its doors, becoming the 11 casino in Pennsylvania. While the casino represented a new attraction and recreation option in Montgomery County, it led to a drastic reduction in available space at the Valley Forge Convention Center, and 54,000 square feet (sf) of convention center space was removed from the local market in Montgomery County.

With the reduced exhibit space and meetings and convention offerings, companies and organizers that used to host events at the Valley Forge Convention Center had to find new venues for their events. In addition, while the majority of new casino patrons at VFCR are day-trippers, the lack of corporate meeting/event space in the region has led to reduced demand from the overnight market segment and lost business opportunities and revenues from the convention/meetings industry.

Local stakeholders believe there is need for corporate/convention meeting and event space that would effectively replace the lost meeting space and business opportunities since the opening of VFCR. One main viewpoint mentioned repeatedly by key stakeholders is that the region lacks an attractive, state-ofthe-art facility that can accommodate larger groups. While there are a few newer facilities in the region, they are too small for larger groups. In addition to providing conventional meeting space, the facility could also serve as an event and entertainment center, potentially creating strong synergies with the variety of amenities and facilities that currently exist in Montgomery County.

With the addition of ten new hotels and a significant increase in lodging supply in Montgomery County in recent years, the proposed executive meeting and events center could be a standalone facility and capitalize on the supply of existing hotels based on a strategic geographic location. The facility could have restaurant and retail offerings that would create synergies with existing retailers, restaurants, and recreation/entertainment options surrounding the facility. In addition, as the facility attracts meetings and overnight guests, it could boost group demand and serve as a main revenue generator for local hotels and other local businesses throughout Montgomery County.

Main objectives of the study include: ď Ž

Provide a framework to assess local market conditions to identify a suitable location for the proposed executive meeting and events center in Montgomery County;

ď Ž

Project levels of demand and usability at the facility; and

ď Ž

Estimate the potential economic impacts attributable to the facility.

ii

Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

E1 Montgomery County Scorecard Analysis To identify key localities within Montgomery County that would serve as ideal candidates for a new executive meeting and events center, the analysis focused on the following local market conditions: 

Infrastructure



Companies & employees



Existing hotels



Retail offerings



Demographics

Census places throughout Montgomery County received index scores based on their ranking for each variable. Figure E1 provides summary rankings and final index scores for the top scoring Census places in Montgomery County.

As shown, King of Prussia ranks first (index scores of 100) in all measured categories and has a final scorecard value of 400 (note: higher final index scores are better). Blue Bell/Plymouth Meeting is a second with a final score of 170, as it ranked slightly behind King of Prussia in a number of categories. Horsham/Hatboro/Willow Grove ranks third with a final scorecard value of 166.

Figure E1: Summary Rankings & Final Index Scores, by Census Place

Index Score Interstate Exits

Index ScoreCompanies with More than 100 Employees

Index Score Hotel Rooms

Index Score Retail Sales

100

100

100

100

400

Blue Bell/Plymouth Meeting

50

50

45

25

170

Horsham/Hatboro/Willow Grove

20

50

46

50

166

Fort Washington Conshohocken/West Conshohocken Norristown borough

33

25

18

33

109

33

25

19

13

90

0

13

1

0

14

Place

King of Prussia

Final Index Score

Source: Tourism Economics (2014)

iii

Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

E2 King of Prussia Lodging Market Analysis After identifying King of Prussia as the ideal location for a new executive meeting and events center in Montgomery County, the analysis focused on the lodging market in King of Prussia. As mentioned previously, Montgomery County and King of Prussia lost considerable meeting and exhibit space when the Valley Forge Casino Resort opened its doors in 2012. This loss of meeting and event space led to a corresponding loss in group room demand in the local lodging market. The research team identified a set of nine hotels in, and proximate to, King of Prussia as the King of Prussia Proximate Set. These are properties affiliated with national chains categorized by Smith Travel Research (STR) as upscale or upper upscale, plus the VFCR, which was specifically added given its location and facilities. This set of hotels is a sub-set of the broader inventory of hotels in the area.

As shown in Figure E3, group occupancy contribution in 2011 at the King of Prussia Proximate Set was 22.5%. In other words, group room nights filled 22.5% of available rooms, representing 36.2% of room demand. After the loss of convention and meeting space when VFCR opened, group occupancy contribution dropped five percentage points and registered just 17.5% in 2012. The trend continued in 2013 as group occupancy contribution dropped to 16.3%. Based on current performance levels, a new corporate/convention meeting and events center could be a catalyst for attracting overnight guests, generating new group room demand and boosting group occupancy contribution to levels similar to those prior to the opening of the casino in 2012.

Figure E3: Chart of Group Occupancy Contribution, King of Prussia Proximate Set of Hotels, 2008-2012

Group Occupancy Contribution (%) King of Prussia Set of Hotels 30.0% 25.0%

24.2%

23.8% 21.5%

22.5%

20.0%

17.5%

16.3%

15.0% 10.0% 5.0% 0.0% 2008

2009

2010

2011

2012

2013

Source: Smith Travel Research & Tourism Economics (2014)

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

The analysis compared the King of Prussia Proximate Set of hotels to two benchmark groups. ď Ž

The first benchmark set consisted of hotels in the broader Mid-Atlantic Region with greater than 350 rooms. This set ranged from large group-oriented hotels in Center City Philadelphia, such as the Marriott Philadelphia Downtown, to mid-size hotels in suburban markets. It excluded hotels in Manhattan, and in Atlantic City. Many of the properties have substantial in-house meeting space, and in some cases, are proximate to a large meeting and events center.

ď Ž

The second benchmark set consisted of selected regional hotels in Pennsylvania and New Jersey with between 200 and approximately 400 rooms, and at least 15,000 square feet of in-house meeting space. These properties are in lower density submarkets, rather than in urban core locations, and do not have proximate access to major convention facilities.

Figure E4 compared group occupancy contribution (%) at the King of Prussia set of hotels to the two identified benchmark groups from 2008 to 2013. As shown, the King of Prussia Proximate Set suffered the most substantial drop in group occupancy contribution over the time period and had the lowest contribution in 2013.

Figure E4: Group Occupancy Contribution, King of Prussia Set of Hotels and Benchmark Groups

Group Occupancy Contribution (%) King of Prussia Set of Hotels & Benchmark Groups 35.0%

Regional hotels with 350+ rooms

32.5%

Selected regional hotels with meeting space

30.0%

King of Prussia proximate hotels

27.5% 25.0%

22.5% 20.0% 17.5%

15.0% 2008

2009

2010

2011

2012

2013

Source: Smith Travel Research & Tourism Economics (2014)

Overall, the analysis of the lodging market in King of Prussia indicates that there is potential opportunity for the proposed executive meeting and events center to generate group room demand and boost group occupancy contributions to similar levels prior to the loss of event and convention space when VFCR opened its doors.

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

E3 Facility Dimensions & Comparable Facilities Preliminary plans indicate that the executive meeting and events center could have 125,000 square feet (sf) of total sellable space: a 50,000 sf main exhibit hall, 25,000 sf banquet hall, and approximately 20 meeting rooms. To assess these proposed facility dimensions, the research team assembled detailed data on a number of comparable convention and meeting facilities in varying communities nationwide. The set of comparable convention and meeting facilities was based on a number of criteria, including total event space, local population and employment base, years of operation, and gross revenue. The group of facilities included in the analysis was selected to provide a range of values for the specified metrics. For example, the comparable set of facilities has total square footage ranging from 84,500 sf to 200,000 sf. Providing a range, allows for the comparison of the proposed 125,000 sf at the proposed Montgomery County executive meeting and events center. Figure E5 summarizes facility details for the identified comparable facilities.

Figure E5: Meeting & Events Centers Performance and Facility Detail

Convention Center Performance and Facility Detail Detail

Opened

Total Construction Cost ($ Millions) Total Space (SF) Construction Cost per SF Year Gross Revenue Net Income Rental Income Food/Beverage Revenue Events hosted Room nights generated Attendees Main Exhibit Hall (SF) Banquet Hall (SF)

Other Meeting Space Noted

Attached Hotel

Overland, KS 2002

140,000

2013 $9.4 $0.6 $1.4 $6.4

Lancaster, Irving, TX PA 2009

Gwinnet, GA Opened 1992, 2011 expansion in 2003 Construction

$178 $133 $134 90,000 170,000 84,500 $1,973 $782 $1,586 Financial Data ($ Millions) 2012 2013 2013 $1.6 $6.6 $10.9 -$1.0 -$1.4 -$0.4 $1.5 $1.3 $3.8 $0.1 $4.0 $1.6 Events & Room Nights

400

241

341

Richmond, VA

Waco, TX Major $17.5M renovation in 2012,

125,000

128,883 Facility Size 60,000 26,000

46,000 8,700

50,000 20,000

50,000 21,600

50,000 14,000

Raleigh, NC

2002

2004

2008

$170 178,000 $955

116,000

$225 200,000 $1,125

2012 $2.4 -$0.3

2012 $6.2 -$1.5

133,765 345,000

229 14,000 36,796

300 70,000 440,000

175,000 30,000

32,000 19,500

150,000 33,000

2012 $3.1

281 89,000

Niagara Falls, NY

7 additional 23 additional 20 additional 14 additional 36 total 15 meeting meeting meeting 20 meeting meeting meeting meeting and rooms, 20 meeting rooms of rooms of rooms rooms of rooms, 2,000 banquet 49-seat roomgs various various various sizes SF theater rooms amphitheater sizes sizes

412 Room Sheraton

Reportedly a new hotel will 299 Room open in 2015 Marriott (no affiliation specified)

No (but deal with Marriott to build one was just announced)

No

Yes

No

Yes

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

E4 Feedback from Key Stakeholders Overall, economic development professionals who were surveyed indicated that they strongly supported a new executive meeting and events center in Montgomery County. While some of the interviewees felt the new facility would be best situated in the King of Prussia area, others felt Lansdale would be the most ideal location.

All economic development respondents felt that levels of demand are more than adequate to warrant a new meeting and events center. According to certain respondents, existing meeting and events clients at regional facilities have expressed the desire for new space for smaller corporate meetings. According to ownership/management at the Greater Philadelphia Expo Center at Oaks, the facility has had tremendous success and has exceeded all forecasts since opening.

While the facility primarily deals with consumer/trade shows, its success could complement activity at a new executive meeting and events center.

One common theme among respondents was technology and versatility.

Respondents indicated that to attract a wide variety of events and clients the proposed meeting and events center must be a versatile, multi-use facility in order.

Further, to be successful, the facility must be able to attract business throughout the year.

An additional factor echoed repeatedly across respondents was the importance of the proposed facility and regional economic development. Respondents felt the facility could be an important driver to spur economic development in Montgomery County, particularly for increasing group room demand at local hotels.

The research team also conducted interviews with representatives from local corporations and businesses to better understand the needs of potential users of the proposed meetings and events center.

One main viewpoint mentioned by all of the potential user respondents is that the region lacks an attractive, state-of-the-art facility that can accommodate larger groups. While there are a few newer facilities in the region, they are too small for larger groups.

Respondents indicated that the most important factors that would influence their decision to use the proposed executive meeting and events center include convenience/location, price, technology, and customer service. Additional characteristics factoring into their decision would include the facility’s amenities, ease and availability of parking, minimal traffic issues, a high quality building and experience, and good catering options.

Regarding space requirements, potential user respondents indicated they would need meeting space for 25-200 people and maximum space for 2,000 people.

vii

Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

E5 Demand & Attendance Projections Figures E6 and E7 summarize potential number of events and attendance, respectively, at the proposed Montgomery County executive meeting and events center. These estimates are provided as representative levels of operation consistent with the market opportunity as assessed in this analysis. These estimates are provided for the purpose of illustrating the potential for facility operations in this market context and for the purpose of quantifying the potential economic impacts associated with such a facility.

Figure E6: Projected Events at Proposed Montgomery County Executive Meeting and Events Center Event Description Exhibit Events Conventions & Tradeshows Consumer & Specialty Shows Subtotal, Exhibit Events

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9 Year 10

16 6 22

18 7 25

20 8 28

22 8 30

24 8 32

24 8 32

24 8 32

24 8 32

24 8 32

24 8 32

Cultural & Social Events Meetings & Seminars Banquets Entertainment Events Civic Events & Other Events Subtotal, Cultural & Social Events

106 40 6 20 172

108 42 7 22 179

110 44 8 24 186

110 46 8 26 190

110 48 8 28 194

110 48 8 28 194

110 48 8 28 194

110 48 8 28 194

110 48 8 28 194

110 48 8 28 194

Total Events

194

204

214

220

226

226

226

226

226

226

Source: Tourism Economics (2014)

Figure E7: Projected Attendance at Proposed Montgomery County Executive Meeting and Events Center Event Description Exhibit Events Conventions & Tradeshows Consumer & Specialty Shows Subtotal, Exhibit Events

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9 Year 10

5,440 4,500 9,940

6,480 7,000 13,480

7,400 9,000 16,400

8,360 10,000 18,360

9,120 10,000 19,120

9,120 10,000 19,120

9,120 10,000 19,120

9,120 10,000 19,120

9,120 10,000 19,120

9,120 10,000 19,120

Cultural & Social Events Meetings & Seminars Banquets Entertainment Events Civic Events & Other Events Subtotal, Cultural & Social Events

31,800 12,000 7,200 17,000 68,000

35,100 13,650 9,100 19,250 77,100

37,125 14,850 10,800 21,300 84,075

38,500 16,100 11,200 23,400 89,200

38,500 16,800 11,200 25,200 91,700

38,500 16,800 11,200 25,200 91,700

38,500 16,800 11,200 25,200 91,700

38,500 16,800 11,200 25,200 91,700

38,500 16,800 11,200 25,200 91,700

38,500 16,800 11,200 25,200 91,700

Total

77,940

90,580 100,475 107,560 110,820 110,820 110,820 110,820 110,820 110,820

Source: Tourism Economics (2014)

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

E6 Potential Economic Impacts Figure E8 summarizes the projected countywide economic impacts of the proposed facility. In Montgomery County, $30.1 million of total event spending in the facility’s first year of operations is estimated to generate $19.1 million in indirect and induced expenditures, resulting in an economic impact of $49.2 million throughout Montgomery County. This countywide economic impact is estimated to include $9.0 million in employee salaries and wages, supporting an estimated 416 total jobs.

Once the proposed facility reaches its stabilized year of operations in year five, the total countywide economic impact is estimated to amount to $85.0 million, including $15.6 million in employee salaries and wages, supporting 719 total jobs throughout the county.

Figure E8: Projected Economic Impacts, Montgomery County ($ Millions & Total Jobs) Description Total Event Spending ($ Millions) Indirect & Induced Expenditures ($ Millions) Total Economic Impact ($ Millions) Total Employment Impact Total Employee Salaries & Wages ($ Millions)

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Economic Impacts - Montgomery County

Year 7

Year 8

Year 9 Year 10

$30.1

$38.5

$45.4

$50.1

$52.0

$52.0

$52.0

$52.0

$52.0

$52.0

$19.1

$24.5

$28.8

$31.8

$33.0

$33.0

$33.0

$33.0

$33.0

$33.0

$49.2 416

$63.0 533

$74.2 628

$81.9 693

$85.0 719

$85.0 719

$85.0 719

$85.0 719

$85.0 719

$85.0 719

$9.0

$11.5

$13.6

$15.0

$15.6

$15.6

$15.6

$15.6

$15.6

$15.6

Source: Tourism Economics (2014)

Figure E9 summarizes the projected statewide economic impacts of the proposed facility. In the State of Pennsylvania, $30.1 million of total event spending in the facility’s first year of operations is estimated to generate $33.5 million in indirect and induced expenditures, resulting in an economic impact of $63.6 million throughout the State. This statewide economic impact is estimated to include $19.0 million in employee salaries and wages, supporting an estimated 818 total jobs. Once the proposed facility reaches its stabilized year of operations in year five, the total statewide economic impact is estimated to amount to $109.9 million, including $32.8 million in employee salaries and wages, supporting 1,415 total jobs throughout the State.

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Figure E9: Projected Economic Impacts, State of Pennsylvania ($ Millions & Total Jobs) Description Total Event Spending ($ Millions) Indirect & Induced Expenditures ($ Millions) Total Economic Impact ($ Millions) Total Employment Impact Total Employee Salaries & Wages ($ Millions)

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Economic Impacts - State of Pennsylvania

Year 7

Year 8

Year 9 Year 10

$30.1

$38.5

$45.4

$50.1

$52.0

$52.0

$52.0

$52.0

$52.0

$52.0

$33.5

$42.9

$50.6

$55.8

$57.9

$57.9

$57.9

$57.9

$57.9

$57.9

$63.6 818

$81.4 1,048

$96.0 $105.9 $109.9 $109.9 $109.9 $109.9 $109.9 $109.9 1,236 1,363 1,415 1,415 1,415 1,415 1,415 1,415

$19.0

$24.3

$28.6

$31.6

$32.8

$32.8

$32.8

$32.8

$32.8

Year 8 226 110,820 52,737

Year 9 226 110,820 52,737

$32.8

Source: Tourism Economics (2014)

Figure E10 summarizes the projected impacts of the proposed facility by total room nights generated at local hotels, primarily in Montgomery County. As shown, in the first year of operation, the facility is estimated to host 194 events and nearly 78,000 attendees, generating 36,564 total room nights at local hotels. By the time the facility reaches steady state operations in year five, it is anticipated to host 226 events and 110,820 attendees, generating 52,737 total room nights.

Figure E10: Projected Lodging Impacts, Montgomery County Description Total Events Total Attendance Total Room Nights Generated

Year 1 194 77,940 36,564

Year 2 204 90,580 42,783

Year 3 214 100,475 47,674

Year 4 220 107,560 51,156

Year 5 226 110,820 52,737

Year 6 226 110,820 52,737

Year 7 226 110,820 52,737

Year 10 226 110,820 52,737

Source: Tourism Economics (2014)

Assuming approximately 70% of the 52,737 room nights will represent incremental room demand to the local area, the proposed facility has the potential to raise occupancy levels among a group of 15 local hotels by 3.9 percentage points, and raise RevPAR by $4.90 (in 2013 dollars). Among these hotels, the effects are expected to be concentrated at ten hotels in particular, yielding a potential occupancy rate increase of 4.7 percentage points, with a RevPAR gain of $5.94 (in 2013 dollars). This potential impact would increase the group occupancy contribution at these hotels to approximately 21.0%, which is close to the 22.5% group occupancy contribution realized by these hotels in 2011, before the reduction in available space at the Valley Forge Convention Center.

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

1 Introduction 1.1

Background

The meetings industry is a significant economic engine for the US economy. Recent studies have shown that the US meeting industry played a critical role in a recovering economy, as it supported jobs in communities across America and created environments that foster innovation and business success. In 2012 there were an estimated 1.83 million corporate and business meetings, trade shows, conventions, congresses, incentive events, and other meetings in the US. These meetings generated $280 billion in direct spending, $67 billion in labor income, and $28 billion in federal, state, and local tax 1 revenues, while supporting 1.8 million total jobs. th

In 2012, the Valley Forge Casino Resort (VFCR) opened its doors, becoming the 11 casino in Pennsylvania. While the casino represented a new attraction and recreation option in Montgomery County, it led to a drastic reduction in available space at the Valley Forge Convention Center, and 54,000 square feet (sf) of corporate meeting/event space was removed from the local market in Montgomery County. With the reduced exhibit space and meetings and convention offerings, companies and organizers that had hosted events at the Valley Forge Convention Center have had to find new venues for their events. In addition, while the majority of new casino patrons at VFCR are day-trippers, the lack of corporate meeting/event space in the region has led to reduced demand from the overnight market segment and lost business opportunities and revenues from the convention/meetings industry.

Local stakeholders believe there is need for approximately 100,000+ square feet of corporate meeting and event space that would effectively replace the lost meeting space and business opportunities since the opening of VFCR. In addition to providing conventional meeting space, the facility could also serve as an event and entertainment center, potentially creating strong synergies with the variety of amenities and facilities that currently exist in Montgomery County.

There has been a significant increase in lodging supply in Montgomery County in recent years including the addition of ten new hotels, the proposed executive meeting and events center could be a standalone facility capitalizing on the supply of existing hotels.

Based on a strategic geographic location, the facility could have restaurant and retail offerings that would create synergies with existing retailers, restaurants, and recreation/entertainment options surrounding the facility. In addition, as the facility attracts meetings and overnight guests, it could boost group demand and serve as a main revenue generator for local hotels and other local businesses throughout Montgomery County.

1

Source: Economic Significance of Meetings, Convention Industry Council

1

Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

1.2

Report Structure

Main objectives of the study include: 

Provide a framework to assess local market conditions to identify a suitable location for the proposed executive meeting and events center in Montgomery County;



Project levels of demand and usability at the facility; and



Estimate the potential economic impacts attributable to the facility.

The remainder of the report is broken down into the following sections: 

Section 2 outlines local market conditions in Montgomery County and includes a scorecard analysis of various metrics to identify potential locations for the proposed executive meeting and events center. The scorecard metrics include public transportation, highway accessibility, number of companies, and retail offerings.



Section 3 provides an in-depth analysis of the King of Prussia lodging market.



Section 4 identifies similar sized meeting and convention facilities throughout the US and also provides in-depth case studies for a selected set of comparable facilities



Section 5 analyzes the potential dimensions of the proposed Montgomery County executive meeting and events center in terms of total sellable space, exhibit and banquet hall space, and meeting rooms. This section also focuses on the potential activity and attendance levels at the facility.



Section 6 identifies current trends in the MICE (meetings, incentives, conferences, and exhibitions) industry.



Section 7 provides feedback from interviews with key regional stakeholders, including economic development professionals and potential corporate users of the proposed facility.



Section 8 focuses on the potential levels of demand at the proposed executive meeting and events center. Levels of demand are outlined by number of events and estimated attendance.



Section 9 estimates the regional and statewide economic impacts attributable to the proposed executive meeting and events center.

2

Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

2 Local Market Analysis

Conditions

&

Scorecard

A local market’s strength in socioeconomic and demographic attributes can provide insight to the market’s ability to attract and accommodate meetings and conventions of varying sizes. A market’s existing hospitality system, along with its transportation, infrastructure, entertainment, and retail offerings, all contribute to the success of a potential corporate meeting and events center.

The analysis focused on the following data points to identify key localities within Montgomery County that would serve as ideal candidates for a new corporate meetings and events center.

2.1



Infrastructure



Companies & employees



Existing hotels



Retail offerings



Demographics

Montgomery County - Background

Montgomery County, PA is the third largest county in Pennsylvania. It is the second st wealthiest county in the Commonwealth and ranks as the 51 wealthiest nationwide.

Montgomery County is approximately 487 square miles and is home to nearly 2 800,000 residents . It is also home to major employers in pharmaceuticals, manufacturing, banking, healthcare, and education. The county is diverse, ranging from farms and open land in Upper Hanover to densely populated streets in Cheltenham.

Montgomery County is part of the Philadelphia-Camden-Wilmington, PA-NJ-DE-MD Metropolitan Statistical Area (MSA), as well as the larger Philadelphia-ReadingCamden, PA-NJ-DE-MD Combined Statistical Area (CSA).

Montgomery County maintains 75 miles of roads and 133 bridges. The county has developed over 60 miles of multi-use trails and cares for seven county parks and five historic sites.

2

Montgomery County website. http://www.montcopa.org

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

2.2

Infrastructure

Figure 2.1 illustrates the location of Montgomery County, major roads and highways, and highway exits. Major interstates in Montgomery County include I-476, I-76, and I-276. As shown in this figure, locations in King of Prussia, Plymouth Meeting, and Conshohocken (all located towards the Southeastern border of Montgomery County) have high numbers of highway exits, offering easy access by car for a potential meeting and events center.

Figure 2.1: Map of Montgomery County, Major Roads, and Highway Exits

Source: Delaware Valley Regional Planning Commission & Tourism Economics (2014)

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Figure 2.2 provides indexed scores for the Census places in Montgomery County with the highest number of interstate exits in each place. Counts of interstate exits are based on data compiled by the Delaware Valley Regional Planning Commission.

In Montgomery County, King of Prussia ranks first with 21 interstate exits, followed

by Blue Bell/Plymouth Meeting with ten exits and Conshohocken/ West Conshohocken and Fort Washington each with eight interstate exits.

Figure 2.2: Count of Montgomery County Interstate Exits, by Census Place Place

Number of Interstate Exits

Index Score

King of Prussia

21

100

Blue Bell/Plymouth Meeting Conshohocken/West Conshohocken Fort Washington

10

50

8

33

8

33

Horsham/Hatboro/Willow Grove

2

20

Stowe

2

20

Flourtown

1

14

Kulpsville

1

14

Spring House

1

14

Source: Delaware Valley Regional Planning Commission & Tourism Economics (2014)

Figure 2.3 maps the density of highway exits throughout Montgomery County.

Areas with low densities of highway exits are shaded in blue while areas with high densities of highway exits are shaded in red. As shown, King of Prussia offers the highest density of highway exits, providing easy access to/from I-76, I-276, Route 202, and Route 252.

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Figure 2.3: Highway Exit Density Map, Montgomery County

Source: Delaware Valley Regional Planning Commission & Tourism Economics (2014)

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

2.3

Companies & Employment

Many major employers have headquarters or branches in Montgomery County.

Large companies span a diverse set of industries, including pharmaceuticals, manufacturing, banking, healthcare, and education. Figure 2.4 provides a table of the top 30 employers in Montgomery County.

Figure 2.4: Top 30 Employers in Montgomery County

Rank Company 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Employees in Montgomery County

Glaxosmithkline LLC Lockheed Martin Corporation Holy Redeemer Health System, Inc. Mercy Health System of Southeastern Pennsylvania Abington Memorial Hospital The Pennsylvania State University Unisys Corporation Mds Pharma Services (US) Inc. Main Line Hospitals, Inc. County of Montgomery S E I Investments Company PRA International Operations, Inc. Clemens Family Corporation Giant Food, Inc. Almac Group Incorporated First Niagara Financial Group, Inc.

9,900 5,150 5,000

CL&T, Inc. First Quality Retail Services, LLC Clemens Food Group, LLC Susquehanna Structured Products, LLC Acts Retirement-Life Communities, Inc. Merck Sharp & Dohme Corp.

Wal-mart Stores, Inc. Quest Diagnostics Clinical Macy's Retail Holdings, Inc. Nectar Acquisition Corporation Home Depot USA, Inc. JBS Souderton, Inc Genesis Healthcare Corporation Acme Markets, Inc.

1,600 1,600 1,558 1,500

4,000 3,900 3,683 3,400 2,871 2,854 2,683 2,587 2,100 1,800 1,789 1,691 1,615

1,496 1,440 1,405 1,375 1,356 1,301 1,300 1,200 1,169 1,100

Source: Hoovers Downloaded January 2014 and Select Greater Philadelphia and Montgomery County Development Corporation

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Figure 2.5 provides counts of companies and index scores for the census places with the most companies in Montgomery County with more than 100 employees.

King of Prussia ranks first with 34 companies with more than 100 employees, followed by Horsham/Hatboro/Willow Grove and Blue Bell/Plymouth Meeting, each of which have 19 companies with more than 100 employees.

Figure 2.5: Counts of Montgomery County Companies with 100 or More Employees,

by Census Place

Place

Local Businesses with More than 100 Employees

Index Score

King of Prussia

34

100

Horsham/Hatboro/Willow Grove

19

50

Blue Bell/Plymouth Meeting Conshohocken/West Conshohocken Fort Washington

19

50

10

25

Pottstown borough

5

17

Harleysville

5

17

Norristown borough

4

13

Audubon

4

13

Bryn Mawr

4

13

10

25

Source: InfoUSA & Tourism Economics (2014)

Figure 2.6 maps business in the tri-county region (Montgomery, Chester, and Delaware Counties) with 100 or more employees. Areas in the county with high numbers of companies include King of Prussia and Horsham/Hatboro/Willow Grove, where there are numerous business parks and office complexes.

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Figure 2.6: Map of Companies with 100 or More Employees, by Total Number of Employees

Source: InfoUSA & Tourism Economics (2014)

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Based on the company employment data outlined in Figure 2.4, Figure 2.5, and Figure 2.6, Figure 2.7 displays the employment density throughout the tri-county area. Areas shaded in red indicate the highest employment densities in Montgomery, Chester, and Delaware counties.

In the eastern part of Montgomery County, the Willow Grove/Horsham area has the highest concentration of employees. In southern portion of the County, King of Prussia, near Montgomery County’s borders to Chester and Delaware Counties, has the highest concentration of workers.

Figure 2.7: Employment Density Map, Tri-County Area

Source: InfoUSA & Tourism Economics (2014)

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Analysis of existing meeting venues in the Southeastern Pennsylvania and New Jersey noted three other proximate areas with concentrations of meeting facilities: Cherry Hill, NJ area, Philadelphia, PA area, and Princeton, NJ area. The demographic data presented in Figure 2.8 provides a comparison between King of Prussia and these other areas. This demonstrates that King of Prussia has similar broad regional density of population and income as these other areas.

Figure 2.8: Demographic Profile of King of Prussia and Competing Communities

Demographic Data: Competing Communities Cherry Hill, NJ Population (2014) Ave Household Inc. (2013) Per Capita Income Total Income (000s)

25-mile 4,439,362 $78,097 $30,177 $133,966,627

50-mile 8,212,098 $87,196 $33,055 $271,450,899

75-mile 15,074,003 $86,271 $32,318 $487,161,628

100-mile 29,081,157 $86,415 $32,685 $950,517,616

King of Prussia, PA Population (2014) Ave Household Inc. (2013) Per Capita Income Total Income (000s)

25-mile 4,314,134 $81,101 $31,520 $135,981,503

50-mile 8,214,317 $84,455 $32,175 $264,295,649

75-mile 13,789,364 $88,010 $33,209 $457,930,989

100-mile 29,449,188 $84,056 $32,036 $943,434,186

Princeton, NJ Population (2014) Ave Household Inc. (2013) Per Capita Income Total Income (000s)

25-mile 2,513,647 $109,404 $39,562 $99,444,902

50-mile 17,036,006 $88,517 $34,081 $580,604,120

75-mile 25,924,755 $89,914 $33,709 $873,897,566

100-mile 30,296,318 $90,457 $33,814 $1,024,439,696

Philadelphia, PA Population (2014) Ave Household Inc. (2013) Per Capita Income Total Income (000s)

25-mile 4,688,882 $81,237 $31,436 $147,399,694

50-mile 7,941,067 $85,271 $32,526 $258,291,145

75-mile 13,732,380 $87,972 $33,113 $454,720,298

100-mile 29,400,527 $85,107 $32,327 $950,430,836

Source: Tourism Economics (2014)

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

2.5 2.5.1

Local Hotels Hotel Stock & Hotel Room Density

The existing stock of hotels is expected to directly contribute to the ability of a community to host meetings and events. In addition, hospitality infrastructure plays a key role in the ability of a proposed meeting and events center to generate economic impacts.

Figure 2.9 maps hotels throughout Montgomery County. In Montgomery County areas with the most hotels include Horsham/Hatboro/Willow Grove as well as King of Prussia. Both of these areas also offer easy access via interstate highways and also have the highest concentrations of businesses in the County.

Figure 2.9: Map of Hotels in Montgomery County, by Total Number of Rooms

Source: Smith Travel Research & Tourism Economics (2014)

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Based on data from Smith Travel Research, Figure 2.10 provides counts of hotels, hotel rooms throughout Montgomery County, and index scores, by Census place and proximate area. As shown, King of Prussia ranks first with 15 hotels and an estimated 2,606 hotel rooms. Horsham/Hatboro/Willow Grove ranks second with nine hotels and nearly 1,200 total hotel rooms. Blue Bell/Plymouth Meeting ranks third with eight hotels providing more than 1,000 total hotel rooms. The index score is calculated based on number of hotel rooms.

Figure 2.10: Counts of Montgomery County Hotels & Hotel Rooms, by Census Place Place

Hotels

King Of Prussia

Hotel Rooms

Index Score

15

2,606

100

Horsham/Hatboro/Willow Grove

9

1,199

46

Blue Bell/Plymouth Meeting

8

1,166

45

Montgomeryville

7

602

23

Conshohocken/West Conshohocken

3

496

19

Fort Washington

3

469

18

Pottstown

5

445

17

Audubon

3

365

14

Kulpsville

2

317

12

Limerick/Royersford

4

296

11

Source: Smith Travel Research & Tourism Economics (2014)

Based on the total number of hotel rooms by property, Figure 2.11 maps the density of hotel rooms in the tri-county area. King of Prussia offers the highest density of hotel rooms, as indicated by the areas shaded in red. Despite having many hotels, the Horsham/Hatboro/Willow Grove does not have a high density of hotel rooms.

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Figure 2.11: Hotel Room Density Map, Tri-County

Source: Smith Travel Research & Tourism Economics (2014)

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

2.6

Retail Offerings

The overall attractiveness of the potential host region to a executive meeting and events center will depend, in part, on the local retail and food and beverage offerings. As shown in Figure 2.12, King of Prussia offers the highest number of retail and food and beverage options in Montgomery County. Included in King of Prussia’s numerous retailers and food and food and beverage establishments is King of Prussia Mall, which is the largest shopping mall on the East Coast in terms of gross leasable retail square feet. King of Prussia Mall is a luxury mall with numerous upscale retailers and a variety of food and beverage options and would complement a new corporate meeting and events center.

Figure 2.12: Montgomery County Retail & Food and Beverage Companies

Source: InfoUSA & Tourism Economics (2014)

Based on data from InfoUSA, Figure 2.13 provides estimates of total retail and food & beverage sales and index scores by Census place. King of Prussia ranks first

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

with nearly $11.3 billion in total sales. Horsham/Hatboro/Willow Grove ranks second with approximately $1.7 billion in sales, followed by Fort Washington with $0.9 billion in sales.

Figure 2.13: Montgomery County Retail and Food & Beverage Sales, by Census Place ($ Millions)

Place King of Prussia

Retail and Food & Beverage Sales ($ Millions)

Index Score

$11,292.3

100

$1,708.9

50

Fort Washington

$930.7

33

Blue Bell/Plymouth Meeting

$867.2

25

Montgomeryville

$506.8

20

Ardmore

$321.1

17

Audubon Conshohocken/West Conshohocken Flourtown

$199.2

14

$114.1

11

Harleysville

$111.8

10

Horsham/Hatboro/Willow Grove

$150.0

13

Source: InfoUSA & Tourism Economics (2014)

Based on the establishment level estimates of retail sales, Figure 2.14 maps retail sales densities throughout Montgomery County. Areas in red indicate areas with high concentrations of retail sales. As shown, while Horsham/Hatboro/Willow Grove has high concentrations of retail sales, King of Prussia by far has the highest concentration of retail and food and beverage sales in Montgomery County.

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Figure 2.14: Retail & Food and Beverage Establishment Density Map

Source: InfoUSA & Tourism Economics (2014)

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

2.7

Overall Scorecard Analysis

The preceding sections have outlined various local market conditions throughout Montgomery County. The analysis examined transportation options, highway accessibility, countywide concentrations of companies and employment, existing hotel stock, and retail and food and beverage offerings. Each section provided visualizations/maps of how the various regions throughout Montgomery County had particular strengths for each metric. Each individual metric served as an input for the overall scorecard analysis, which helps identify the ideal location for the proposed corporate meeting and events center.

Figure 2.15 provide a graphical description of how the various scorecard variables interact and combine to arrive at the overall scorecard for Montgomery County.

Figure 2.15: Montgomery County Scorecard Outline

Source: Tourism Economics (2014)

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Figure 2.16 summarizes the final index scores based on the various score card metrics outlined in previous sections. As shown, King of Prussia ranks first (index scores of 100) in all measured categories and has a final scorecard value of 400 (note: higher final index scores are better). Blue Bell/Plymouth Meeting is second with a final score of 170, as it ranked slightly behind King of Prussia in a number of categories. Horsham/Hatboro/Willow Grove ranks third with a final scorecard value of 166.

Figure 2.16: Summary Rankings & Final Index Scores, by Census Place

Index Score Interstate Exits

Index ScoreCompanies with More than 100 Employees

Index Score Hotel Rooms

Index Score Retail Sales

100

100

100

100

400

Blue Bell/Plymouth Meeting

50

50

45

25

170

Horsham/Hatboro/Willow Grove

20

50

46

50

166

Fort Washington Conshohocken/West Conshohocken Norristown borough

33

25

18

33

109

33

25

19

13

90

0

13

1

0

14

Place

King of Prussia

Final Index Score

Source: Tourism Economics (2014)

Figure 2.17 depicts the results of the overall scored analysis throughout Montgomery County. Blue areas indicate regions with low overall scores, while areas shaded in yellow and red highlight areas with high overall scores.

As shown in the map, areas along I-276 (the Pennsylvania Turnpike) scored relatively high, including the Horsham/Willow Grove area. However, King of Prussia ranked the highest in the scorecard analysis. As described in previous sections, King of Prussia offers high densities of highway exits and easy access by car, and high concentrations of employees and companies that could help support a new corporate meeting and events center.

In addition to providing easy accessibility, King of Prussia offers some of the nation’s largest and most diverse set of retail and food and beverage options. More importantly, King of Prussia boasts the highest concentration of hotel rooms in Montgomery County, which is an important factor in considering a community’s ability to support meetings and events. Further, as discussed in the benchmarking analysis in the following section, current group room demand at King of Prussia hotels indicates that a new meeting and events center could generate new group room demand at local hotels.

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Figure 2.17: Map of Montgomery County Scorecard Analysis

Source: InfoUSA & Tourism Economics (2014)

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

3 King of Prussia Lodging Market Analysis 3.1

King of Prussia Lodging Market

The inventory of local hotels includes the 15 hotels in King of Prussia as well as hotels in proximate areas. Among this inventory of local hotels, the research team identified a set of nine hotels proximate to King of Prussia, that are anticipated to accommodate the majority of overnight guests attending meetings and events at the proposed executive meeting and events center. These hotels are listed in Figure 3.1 as the King of Prussia Proximate Set. Eight of these hotels are in King of Prussia, Montgomery County, while the ninth is in Wayne, Chester County.

King of Prussia Proximate Set was identified by the research team as hotels that are affiliated with national chains that are classified by STR as upscale or above, plus the Valley Forge Casino Resort, which was specifically added given its location and facilities. There are other hotels in the local area (all within Montgomery County) that would also be expected to accommodate overnight guests attending events at the proposed executive meeting and events center. In particular: 

Best Western Plus The Inn at King of Prussia (168 rooms, upper midscale by STR chain scale);



Comfort Inn Valley Forge National Park (121 rooms, upper midscale

by STR chain scale);



Fairfield Inn Valley Forge King of Prussia (80 rooms, upper midscale by STR chain scale);



Hampton Inn Philadelphia King of Prussia Valley Forge (147 rooms, upper midscale by STR chain scale);



Holiday Inn Express & Suites King of Prussia (155 rooms, upper midscale by STR chain scale); and,



Motel 6 Philadelphia King of Prussia (170 rooms, economy by STR chain scale).

In total, the 1,775 rooms at the nine hotels in the King of Prussia Proximate Set, plus the 841 rooms at the six upper midscale and economy hotels listed above, represent a total of 15 hotels with 2,616 rooms. The particular hotels that would accommodate guests related to a particular meeting or even at the proposed executive meeting and events center would depend on the characteristics of the group. We anticipate the majority of the impact would be the nine hotels in the King of Prussia Proximate Set, with additional impacts to the other six local hotels identified and at other hotels in Montgomery County, and in the surrounding area.

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Figure 3.1: King of Prussia Proximate Set of Hotels Meeting space (sq. ft.)

Property

Location

Courtyard Philadelphia Valley Forge King Of Prussia Crowne Plaza Philadelphia King of Prussia Doubletree Philadelphia Valley Forge Hyatt House King Of Prussia Hyatt Place Philadelphia King Of Prussia Radisson Hotel Valley Forge Springhill Suites Philadelphia Valley Forge King Of Prussia Sheraton Valley Forge Valley Forge Casino Resort - Casino Tower

Wayne, PA King Of Prussia, PA King Of Prussia, PA King Of Prussia, PA King Of Prussia, PA King Of Prussia, PA King Of Prussia, PA King Of Prussia, PA King Of Prussia, PA Total Average

Rooms 150 226 327 147 129 325 131 180 160 1,775 197

Total

Per guest room

1,250 16,378 30,177 3,367 1,064 21,807 350 37,136 111,529 12,392

8.3 72.5 92.3 22.9 8.2 67.1 2.7 206.3 62.8

Source: Smith Travel Research & Tourism Economics (2014)

Figure 3.2 provides historical performance data for the identified set of nine King of Prussia hotels.

Figure 3.2: Historical Performance, King of Prussia Proximate Set of Hotels, 2008-2013

2008

53.8%

$ 132.74

Group room nights 128,387

2009

47.5%

$ 116.95

113,789

21.5%

45.2%

$ 116.84

2010

55.1%

$ 110.92

130,943

23.8%

43.2%

$ 108.47

2011

62.2%

$ 120.56

113,135

22.5%

36.2%

$ 118.18

2012

60.9%

$ 123.49

102,259

17.5%

28.7%

$ 124.72

2013

62.7%

$ 124.51

105,306

16.3%

25.9%

$ 126.70

Year

Total Total ADR occupancy

Group occupancy contribution 24.2%

Group share

Group ADR

45.0%

$ 121.67

Source: Smith Travel Research & Tourism Economics (2014)

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

As mentioned previously, Montgomery County and King of Prussia lost considerable meeting and exhibit space when the Valley Forge Casino Resort opened its doors in 2012. This loss of meeting and event space led to a corresponding loss in group room demand in the local lodging market. As shown in Figure 3.3, among hotels in the King of Prussia Proximate Set group occupancy contribution in 2011 was 22.5%.

In other words, group room nights filled 22.5% of available rooms, representing 36.2% of room demand. After the loss of convention and meeting space when VFCR opened, group occupancy contribution dropped five percentage points and registered just 17.5% in 2012. The trend continued in 2013 as group occupancy contribution dropped to 16.3%. Based on current performance levels, a new corporate meeting and events center could be a catalyst for attracting overnight guests, generating new group room demand and boosting group occupancy contribution to levels similar to those prior to the opening of the casino in 2012.

Figure 3.3: Chart of Group Occupancy Contribution, King of Prussia Proximate Set of Hotels, 2008-2012

Group Occupancy Contribution (%) King of Prussia Set of Hotels 30.0% 25.0%

24.2%

23.8% 21.5%

22.5%

20.0%

17.5%

16.3%

15.0% 10.0% 5.0% 0.0% 2008

2009

2010

2011

2012

2013

Source: Smith Travel Research & Tourism Economics (2014)

Figure 3.4 charts total ADR and group ADR for the identified set of hotels in King of Prussia. In 2008, total ADR was higher than group ADR, indicating strong transient rates. During the national recession, both total ADR and group ADR declined as hotels competitively reduced room rates in a context of weak demand. Since then, the local lodging market has gradually regained pricing, and group ADR has recovered to a level that is ahead of its 2008 level. This indicates that some groups continue to value the opportunity to stay at hotels in the local market, in some cases potentially paying a premium to secure limited available meeting and event space.

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Figure 3.4: Chart of Total ADR & Group ADR, King of Prussia Proximate Set of Hotels, 2008-2013

Total ADR & Group ADR King of Prussia Set of Hotels $135.00

$124.51 $126.70

Group ADR

$123.49 $124.72

$105.00

$120.56 $118.18

$110.00

$110.92 $108.47

$115.00

$116.95 $116.84

$120.00

$132.74

$125.00

Total ADR

$121.67

$130.00

2012

2013

$100.00 2008

2009

2010

2011

Source: Smith Travel Research & Tourism Economics (2014)

3.2

Hotel Benchmark & Comp Set Analysis

In addition to the set of hotels in King of Prussia, the analysis also identified two sets of hotels to serve as benchmarks for the level of group business that is typically accommodated at hotels that have adequate meeting space, either in-house or in nearby convention facilities. These sets of benchmark hotels also help illustrate that group business has declined more significantly in King of Prussia since 2012.

The first benchmark set, as shown in Figure 3.5, consists of hotels in the broader Mid-Atlantic Region with greater than 350 rooms. This set ranges from large grouporiented hotels in Center City Philadelphia, such as the Marriott Philadelphia Downtown, to mid-size hotels in suburban markets. It excluded hotels in Manhattan, and in Atlantic City. Many of the properties have substantial in-house meeting space, and in some cases, are proximate to a large meeting and events center.

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Figure 3.5: Selected Regional Hotels with 350+ Rooms

Area New Jersey excluding Atlantic City New York excluding Manhattan Maryland (primarily Baltimore metro) Pennsylvania (Philadelphia metro) Delaware Connecticut (Stamford and Greenwich) Sub-total

Guest rooms

Share of total

6,484 5,205 4,730 5,230 500 2,096 24,245

26.7% 21.5% 19.5% 21.6% 2.1% 8.6%

Source: Tourism Economics (2014)

The second benchmark set outlined in Figure 3.6 consists of selected regional hotels in Pennsylvania and New Jersey with between 200 and approximately 400 rooms, and at least 15,000 square feet of in-house meeting space. These properties are in lower density submarkets, rather than in urban core locations, and do not have proximate access to major convention facilities.

Figure 3.6: Selected Regional Hotels with Meeting Space (Between 200 and 400 Rooms and at Least 15,000 SF of In-house Meeting Space) Meeting space (sq. ft.)

Property

Location

Crowne Plaza Philadelphia Cherry Hill Crowne Plaza Princeton Dolce Stockton Seaview Hotel & Golf Club Hilton Philadelphia City Avenue Hyatt Regency Princeton Princeton Marriott at Forrestal

Cherry Hill, NJ Plainsboro, NJ Galloway, NJ Philadelphia, PA Princeton, NJ Princeton, NJ Total Average

Rooms 408 291 296 209 330 302 1,836 306

Total 24,900 29,069 16,638 23,863 26,372 29,510 150,352 25,059

Per guest room 61.0 99.9 56.2 114.2 79.9 97.7 81.9

Source: Tourism Economics (2014)

The historical performance of each of the benchmark sets is summarized in Figure 3.7. We noted that the King of Prussia Proximate Set has experienced a significant decline in its group occupancy contribution, which declined from 24.2% in 2008, to 16.3% in 2013. This is a larger magnitude decline than was experienced by either of the two other sets of hotels.

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Figure 3.7: Historical Performance of Benchmark Sets

Historical performance of benchmark sets Regional hotels with 350+ rooms

Year 2008 2009 2010 2011 2012 2013

Total occupancy 65.3% 60.4% 65.4% 66.5% 68.9% 69.9%

Total ADR 163.62 144.37 139.81 144.48 150.26 153.23

Group occupancy contribution 25.3% 22.0% 23.6% 24.5% 25.4% 24.6%

Group share 38.8% 36.4% 36.0% 36.8% 36.9% 35.2%

Group ADR 157.60 146.77 140.42 144.17 150.47 153.78

Group room nights 161,652 128,883 136,457 135,553 131,847 113,848

Group occupancy contribution 23.0% 18.3% 19.4% 20.1% 19.1% 18.2%

Group share 43.6% 37.9% 39.3% 38.1% 36.8% 35.4%

Group ADR 153.72 139.14 126.01 126.63 133.59 135.02

Group room nights 128,387 113,789 130,943 113,135 102,259 105,306

Group occupancy contribution 24.2% 21.5% 23.8% 22.5% 17.5% 16.3%

Group share 45.0% 45.2% 43.2% 36.2% 28.7% 25.9%

Group ADR 121.67 116.84 108.47 118.18 124.72 126.70

Group room nights 2,127,324 1,922,576 2,076,332 2,164,749 2,249,166 2,175,607

Selected regional hotels with meeting space

Year 2008 2009 2010 2011 2012 2013

Total occupancy 52.7% 48.3% 49.3% 52.7% 52.0% 51.4%

Total ADR 146.83 128.38 121.23 124.22 129.92 134.03

King of Prussia proximate hotels

Year 2008 2009 2010 2011 2012 2013

Total occupancy 53.8% 47.5% 55.1% 62.2% 60.9% 62.7%

Total ADR 132.74 116.95 110.92 120.56 123.49 124.51

Source: STR; Tourism Economics

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Figure 3.8: Group Occupancy Contribution, King of Prussia Proximate Set of Hotels and Benchmark Groups

Group Occupancy Contribution (%) King of Prussia Set of Hotels & Benchmark Groups 35.0%

Regional hotels with 350+ rooms

32.5%

Selected regional hotels with meeting space

30.0%

King of Prussia proximate hotels

27.5% 25.0%

22.5% 20.0% 17.5%

15.0% 2008

2009

2010

2011

2012

2013

Source: Smith Travel Research & Tourism Economics (2014)

We summarized the meeting space and guest room inventory of each of the three sets in the following table. Total meeting and exhibit space per guest room, which includes in-house space and selected convention facilities, averages 109 square feet per guest room at the regional hotels with greater than 350 rooms, and 88 square feet per guest room at the selected regional hotels with meeting space, as shown in Figure 3.9. Meanwhile, hotels in the King of Prussia set offer only 63 square feet of meeting space per guest room.

Figure 3.9: Meeting Space and Group Room Nights (2013)

Regional hotels with greater than 350 rooms

Selected regional hotels with meeting space

KOP proximate set

1,717 150,000 88

1,775 112,000 63

Guest rooms In-house meeting space (in square feet, at hotels) Meeting space per guest room (in square feet)

24,207 1,274,000 53

Selected convention facilities (in square feet) Meeting and exhibit space per guest room (in square feet)

1,362,000

Total meeting and exhibit space (in square feet) Total meeting and exhibit space per guest room (in square feet)

2,637,000

150,000

112,000

109

88

63

56

Source: STR & Tourism Economics (2014)

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

We expanded this analysis to include the group room nights generated in each of the sets, as reported to STR. The regional hotels with greater than 350 rooms generate 90 room nights of group demand per guest room annually, compared to 66 room nights at the selected regional hotels, and 59 room nights at the King of Prussia Proximate Set. The hotels in the King of Prussia Proximate Set generate a high level of group demand relative to meeting space (944 annual group room nights per 1,000 square feet of meeting space), but have a low level of meeting space (63 square feet per guest room). Group demand at properties in the King of Prussia Proximate Set contributes a moderate level of occupancy (16.3%) compared to hotels in the regional set of properties with more than 350 rooms (24.6%) or compared to the selected regional hotels with between 200 and approximately 400 rooms (18.2%), as shown in Figure 3.10. Overall, this analysis is consistent with the potential opportunity for the proposed meeting and events center.

Figure 3.10: Meeting Space and Group Room Nights (2013)

Regional hotels with greater than 350 rooms

Selected regional hotels with meeting space

KOP proximate set

KOP proximate set (stabilized year)

1,717 150,000 88

1,775 112,000 63

1,775 112,000 63

Guest rooms In-house meeting space (in square feet, at hotels) Meeting space per guest room (in square feet)

24,207 1,274,000 53

Selected convention facilities (in square feet) (b) Meeting and exhibit space per guest room (in square feet)

1,362,000

100,000

56

56

Total meeting and exhibit space (in square feet) Total meeting and exhibit space per guest room (in square feet)

2,637,000

150,000

112,000

212,000

109

88

63

119

Group room nights (annual, in thousands) Group room nights per guest room (annual) Group contribution in occupancy points Group segment share of total occupancy Group room nights per 1,000 square feet of meeting space (annual)

2,176 90 24.6% 35.2%

114 66 18.2% 35.4%

105 59 16.3% 25.9%

825

757

944

Source: STR & Tourism Economics (2014)

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

4 Comparable Venues This section identifies comparable convention and meetings facilities throughout the US and takes a closer, in depth look at the profiles of certain facilities. The main purpose of examining a set of comparable facilities is to obtain insight into the physical and operational characteristics of facilities located in similar communities. More importantly, data compiled on various aspects of these comparable facilities will serve as inputs for the subsequent estimation of physical and operational data for the potential meeting and events center in King of Prussia.

4.1

Smaller Convention Centers

With approximately 100,000+ square feet of exhibit and meeting space, the proposed Montgomery County executive meeting and events center would fall under the group of “smaller” convention centers offering between 50,000 and 125,000 sf of prime exhibit space. According to the publication Trade Show Executive, this group of centers, also referred to as “Tier IV”, constitutes 57% of the 307 North American convention centers with a minimum of 50,000 sf of prime exhibit space, as shown in Figure 4.1. The average square footage of prime exhibit space for Tier IV venues in North America is slightly over 80,000.

Figure 4.1: Convention Centers by Size Classification (%)

Convention Centers by SIze Classification Tier I 1,000,000 + sf, 4%

Tier IV 50,000 124,999 sf, 57%

Tier II 350,000 999,999 sf, 13%

Tier III 125,000 349,999 sf, 26%

Source: Trade Show Executive (2013)

Tier IV smaller convention centers located in the US account for a total of approximately 11.4 million sf of prime exhibit space. A list of these convention centers is detailed in Figure 4.2. This list was originally published in Trade Show Executive magazine and may not include every convention/executive meeting facility throughout the US and may have inconsistencies in the reported prime exhibit space.

29

Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Figure 4.2: Listing of Tier IV Convention Facilities (50,000 – 124,999 sf of Prime Exhibit Space) Exhibition Facility 1 Duluth Entertainment Convention Center

Prime Exhibit Space (sf) 120,000

Location

Web Site

Duluth, MN

www.duluthconventioncenter.com

2 Knoxville Convention Center

119,922

Knoxville, TN

www.kccsmg.com

3 Rushmore Plaza Civic Center

119,000

Rapid City, SD

www.gotmine.com

4 Nashville Convention Center

118,675

Nashville, TN

www.nashvilleconventionctr.com

5 Seaport Boston Hotel & Seaport World Trade Center

118,000

Boston, MA

www.seaportboston.com

6 Charleston Area Convention Center

115,000

Charleston, SC

www.charlestonconvention.com

7 Hilton Chicago

115,000

Chicago, IL

www.hiltonchicago.com

8 Ontario Convention Center

115,000

Ontario, CA

www.ontariocc.com

9 Tucson Convention Center

114,000

Tucson, AZ

www.tucsonconventioncenter.org

10 Springfield Exposition Center

112,000

Springfield, MO

www.springfieldexpo.com

11 Arizona Exposition & State Fair

111,000

Phoenix, AZ

12 Walt Disney World Swan & Dolphin Resort

110,500

13 John Ascuaga's Nugget Resort Casino

110,000

www.arizonaexposition.com Lake Buena Vista, FL www.swandolphinmeetings.com Sparks, NV www.janugget.com

14 Fargodome

110,000

Fargo, ND

www.fargodome.com

15 Franklin County Veterans Memorial

110,000

Columbus, OH

www.fcvm.com

16 Peoria Civic Center

Peoria, IL Sevierville, TN

www.peoriaciviccenter.com

17 Sevierville Convention Center

110,000 108,261

18 Mobile Civic Center

108,000

Mobile, AL

www.mobilecivicctr.com

19 Hot Springs Convention Center

103,000

Hot Springs, AR

www.hotsprings.org

20 Cox Business Center

Tulsa, OK Hampton, VA

www.coxcentertulsa.com

21 Hampton Roads Convention Center

102,600 102,600

22 Caesars Palace

102,000

Las Vegas, NV

www.lvmeetingsbyharrahs.com

23 Georgia Dome

102,000

Atlanta, GA

www.gadome.com

24 Chattanooga Convention Center

100,800

Chattanooga, TN

www.chattanoogaconventioncenter.org

25 Myrtle Beach Convention Center

100,800

Myrtle Beach, SC

www.myrtlebeachconventioncenter.com

26 Spokane Convention Center

100,160

Spokane, WA

www.visitspokane.com

27 Alliant Energy Center

100,000

Madison, WI

www.alliantenergycenter.com

28 Baton Rouge River Center

100,000

Baton Rouge, LA

www.brrivercenter.com

29 Cox Convention Center

100,000

Oklahoma City, OK

www.coxconventioncenter.com

30 Dulles Expo Center

100,000

Chantilly, VA

www.dullesexpo.com

31 Knoxville Expo Center

100,000

Knoxville, TN

www.knoxvilleexpocenter.com

32 Monroeville Convention Center

100,000

Monroeville, PA

www.monroevilleconventioncenter.com

33 North Atlanta Trade Center

100,000

Norcross, GA

www.northatlantatradecenter.com

34 Arthur R. Outlaw Mobile Convention Center

100,000

Mobile, AL

35 Palm Beach County Convention Center

100,000

www.mobileconventions.com West Palm Beach, FL www.pbconventioncenter.com

36 Renaissance Schaumburg Hotel & Convention Center

100,000

Schaumburg, IL

37 Rhode Island Convention & Entertainment Complex

100,000

Providence, RI

www.riconvention.com

38 Santa Clara Convention Center

100,000

Santa Clara, CA

www.santaclara.org

39 Savannah International Trade & Convention Center

100,000

Savannah, GA

www.savtcc.com

100,000

Greensboro, NC

Sheraton Greensboro Hotel at Four Seasons/ Joseph 40 S. Koury Convention Center 41 Hara Arena, Conference & Exhibition Center

www.seviervilleeventscenter.com

www.thehrcc.com

www.renaissanceschaumburg.com

www.sheratongreensboro.com

98,400

Dayton, OH

www.haracomplex.com

42 Las Vegas Cashman Convention Center

98,100

Las Vegas, NV

www.vegasmeansbusiness.com

43 Fresno Convention & Entertainment Center

98,000

Fresno, CA

www.fresnoconventioncenter.com

44 Clark County Event Center at the Fairgrounds

97,200

Ridgefield, WA

www.clarkcoeventcenter.com

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Exhibition Facility 45 Wynn | Encore

Prime Exhibit Space (sf) 96,197

Location

Web Site

Las Vegas, NV

www.wynnmeetings.com

46 Rosen Shingle Creek Hotel & Golf Club

95,848

Orlando, FL

www.rosenshinglecreek.com

47 Ocean Center

95,000

Daytona Beach, FL

www.oceancenter.com

48 Will Rogers Memorial Center

95,000

Fort Worth, TX

www.willrogersmemorialcenter.com

49 Shreveport Convention Center

95,000

Shreveport, LA

www.shreveportcenter.com

50 Roland E. Powell Convention Center

93,180

Ocean City, MD

www.ococean.com

51 Ford Park Event Center

93,000

Beaumont, TX

www.fordpark.com

52 Trump Taj Mahal Casino & Resort

93,000

Atlantic City, NJ

www.trumptaj.com

53 Omaha Civic Auditorium

92,700

Omaha, NE

www.omahacivic.com

54 Palm Springs Convention Center

92,000

Palm Springs, CA

55 The Broadmoor

90,000

56 Lee Civic Center

90,000

www.palmspringscc.com Colorado Springs, CO www.broadmoor.com Fort Myers, FL www.leeciviccenter.com

57 JW Marriott Desert Ridge Resort & Spa

90,000

Phoenix, AZ

www.jwdesertridgeresort.com

58 The Mirage Hotel & Casino

90,000

Las Vegas, NV

www.mirage.com

59 Bally's Las Vegas

86,000

Las Vegas, NV

60 Disney’s Coronado Springs Resort

86,000

61 Paris Las Vegas

85,000

62 Expo Center at the South Florida Fairgrounds

84,750

63 Montana ExpoPark

84,000

West Palm Beach, FL www.southfloridafair.com Great Falls, MT www.goexpopark.com

64 Statehouse Convention Center

83,000

Little Rock, AR

www.littlerockmeetings.com

65 Island Grove Regional Park & Events Center

82,400

Greeley, CO

greeleygov.com/parks/

66 U.S. Cellular Center

81,779

Cedar Rapids, IA

www.uscellularcenter.com

67 Empire State Plaza Convention Center

81,500

Albany, NY

www.empirestateplaza.org

68 Champlain Valley Exposition

81,000

Essex Junction, VT

cvexpo.org

69 El Paso Convention & Performing Arts Centers

80,000

El Paso, TX

www.visitelpaso.com

70 Fredericksburg Expo & Conference Center

80,000

Fredericksburg, VA

www.fredericksburgexpocenter.com

71 Gillette Stadium

80,000

Foxborough, MA

www.gillettestadium.com

72 South Point Hotel & Spa

80,000

Las Vegas, NV

www.southpointmeetings.com

73 Town & Country Resort & Convention Center

80,000

San Diego, CA

www.towncountry.com

74 Prime F. Osborn III Convention Center

78,500

Jacksonville, FL

www.jaxevents.com

75 Cajundome/Convention Center

77,303

Lafayette, LA

www.cajundome.com

76 Dayton Convention Center

77,000

Dayton, OH

www.daytonconventioncenter.com

77 American Bank Center

76,500

Corpus Christi, TX

www.americanbankcenter.com

78 La Crosse Center

75,000

La Crosse, WI

www.lacrossecenter.com

79 Miami Airport Convention Center

75,000

Miami, FL

www.macc.com

80 SeaGate Convention Centre

75,000

Toledo, OH

www.toledo-seagate.com

81 The Wildwoods Convention Center

75,000

Wildwood, NJ

www.wildwoodsnj.com

82 St. Cloud River's Edge Convention Center

74,000

St. Cloud, MN

www.stcloudriversedgeconventioncenter.com

73,000

Montgomery, AL

72,000

Lansing, MI

www.lansingcenter.com

85 Gwinnett Center

71,600

Duluth, GA

www.rentgwinnettcenter.com

86 D.C. Armory

70,000

Washington, DC

www.dcsec.com

87 Hyatt Regency Chicago

70,000

Chicago, IL

chicagohyatt.com

88 KCI Expo Center

70,000

Kansas City, MO

www.kciexpo.com

89 LVH - Las Vegas Hotel & Casino

70,000

Las Vegas, NV

www.thelvh.com

90 Palmer Events Center

70,000

Austin, TX

www.palmereventscenter.com

91 Roberts Centre

70,000

Wilmington, OH

www.robertscentre.com

92 Tinley Park Convention Center

70,000

Tinley Park, IL

www.tinleyparkconventioncenter.net

The Renaissance Montgomery Hotel & Spa at the 83 Convention Center 84 Lansing Center

www.lvmeetingsbyharrahs.com Lake Buena Vista, FL www.disneymeetings.com Las Vegas, NV www.lvmeetingsbyharrahs.com

www.visitingmontgomery.com

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Exhibition Facility 93 XL Center

Prime Exhibit Space (sf) 69,000

Location

Web Site

Hartford, CT

www.xlcenter.com

94 Gatlinburg Convention Center

67,000

Gatlinburg, TN

www.gatlinburg-tennessee.com

95 Hilton Americas Houston Hotel

66,000

Houston, TX

www.americashouston.hilton.com

96 Lexington Convention Center

66,000

Lexington, KY

www.lexingtoncenter.com

97 Washington Marriott Wardman Park

66,000

Washington, DC

www.marriott.com/wasdt

98 Nicholas J. Pirro Convention Center at Oncenter

65,250

Syracuse, NY

www.oncenter.org

99 Neal S. Blaisdell Center

65,000

Honolulu, HI

www.blaisdellcenter.com

100 Buffalo Niagara Convention Center

64,000

Buffalo, NY

www.buffaloconvention.com

101 Kansas Expocentre

62,300

Topeka, KS

www.ksexpo.com

102 Garden State Convention & Exhibit Center

62,000

Somerset, NJ

www.gsec.com

103 ODEUM Sports & Expo Center

62,000

Villa Park, IL

www.odeumexpo.com

104 Peppermill Resort Spa Casino

62,000

Reno, NV

www.peppermillreno.com

105 Meadowlands Exposition Center

61,000

Secaucus, NJ

www.mecexpo.com

106 Big Sandy Superstore Arena

60,000

Huntington, WV

www.bigsandyarena.com

107 Crown Center

60,000

Fayetteville, NC

www.atthecrown.com

108 Jackson Convention Complex/SMG

60,000

Jackson, MS

www.jacksonconventioncomplex.com

109 Nassau Veterans Memorial Coliseum

60,000

Uniondale, NY

www.nassaucoliseum.com

110 Norfolk Scope

60,000

Norfolk, VA

www.sevenvenues.com

111 Overland Park Convention Center

60,000

Overland Park, KS

www.opconventioncenter.com

112 Lane Events Center

59,000

Eugene, OR

www.laneeventscenter.org

113 Hyatt Regency Atlanta

58,243

Atlanta, GA

www.atlantaregency.hyatt.com

114 Hilton Anaheim

57,084

Anaheim, CA

www.hiltonanaheimhotel.com

115 Comcast Arena Everett & Hansen Conference Center

57,000

Everett, WA

116 Reno Events Center

56,000

Reno, NV

www.renoeventscenter.com

117 MassMutual Center

55,000

Springfield, MA

www.springfield-first.com

118 Pasadena Convention Center

55,000

Pasadena, CA

www.pasadenacenter.com

119 Valley Forge Convention Center

54,000

King of Prussia, PA

www.vfconventioncenter.com

120 Charleston Civic Center & Auditorium

52,000

Charleston, WV

www.charlestonwvciviccenter.com

121 Crown Center Exhibit Hall

52,000

Kansas City, MO

www.crowncenter.com

122 The Lakeland Center

52,000

Lakeland, FL

www.thelakelandcenter.com

123 Overland Park International Trade Center

51,391

Overland Park, KS

www.optradecenter.com

124 Amarillo Civic Center

51,265

Amarillo, TX

www.amarillociviccenter.com

125 New York Hilton Midtown (formerly Hilton New York)

51,084

New York City, NY

www.hiltonfamilynewyork.com

126 Rio All-Suite Hotel & Casino

51,000

Las Vegas, NV

www.lvmeetingsbyharrahs.com

127 Sioux Falls Convention Center

50,400

Sioux Falls, SD

www.siouxfallscc.com

128 Arlington Convention Center

50,000

Arlington, TX

www.arlingtoncc.com

129 M.C. Benton Jr. Convention Center

50,000

Winston-Salem, NC

www.twincityquarter.com

130 Bismarck Civic Center

50,000

Bismarck, ND

www.bismarckciviccenter.com

131 Branson Convention Center

50,000

Branson, MO

www.bransonconvention.com

132 DCU Center

50,000

Worcester, MA

www.dcucenter.com

133 Dena'ina Civic & Convention Center/Egan Center

50,000

Anchorage, AK

www.anchorageconventioncenters.com

134 Exhibition Building at Osceola Heritage Park

50,000

Kissimmee, FL

www.ohpark.com

135 Fair & Expo Center

50,000

Rochester, NY

www.fairandexpocenter.org

136 Foxwoods Resort Casino & MGM Grand at Foxwoods

50,000

Mashantucket, CT

137 Grand Wayne Convention Center

50,000

Fort Wayne, IN

www.grandwayne.com

138 Irving Convention Center at Las Colinas

50,000

Irving, TX

www.irvingconventioncenter.com

139 Rochester Riverside Convention Center

50,000

Rochester, NY

www.rrcc.com

140 Greater Tacoma Convention & Trade Center

50,000

Tacoma, WA

gtctc.org

141 The Westin Diplomat Resort & Spa

50,000

Hollywood, FL

www.diplomatresort.com

www.comcastarenaeverett.com

www.foxwoods.com

Source: Trade Show Executive (2013)

32

Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

4.2

Profiles of Comparable Facilities

As a meeting and events center destination, King of Prussia presents an unusual profile since it is a suburban location of a large metropolitan area that is already well served by competing business meeting space in the central business district. The research team identified a variety of comparable meeting and events centers to compile a set of facilities with varying characteristics (i.e., size and offerings) and demographics of the facilities’ respective host communities. The identified facilities included:  Overland Park Convention Center – Overland, KS  Lancaster County Convention Center – Lancaster, PA  Irving Convention Center at Las Colinas – Irving, TX  Gwinnett Convention Center – Gwinnett, TX  Waco Convention Center – Waco, TX  Greater Richmond Convention Center – Richmond, VA  Conference & Event Center Niagara Falls - Niagara Falls, NY  Raleigh Convention Center – Raleigh, NC

Figure 4.3 provides community profiles for the identified comparable venues as well as for Montgomery County.

33

Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Figure 4.3: County Profiles for Comparable Meeting and Events Centers Proposed Overland Park Lancaster Irving Gwinnet Waco Richmond Niagara Falls Convention Center Montgomery, PA Johnson, KS Lancaster, PA Dallas, TX Gwinnet, GA McLennan, TX Henrico, VA Niagara, NY County/State Population 812,376 566,836 529,600 2,480,331 859,304 241,481 318,611 214,249 # Households 308,083 214,670 193,306 849,874 264,592 83,966 123,392 88,542 Median Household Inc $78,984 $75,139 $56,172 $49,159 $61,944 $41,589 $61,300 $47,736 Total Businesses 26,675 20,937 12,636 70,602 24,439 4,965 10,203 4,730 Total Employees 468,668 319,958 221,104 1,494,676 311,894 102,663 179,427 70,953 Total Payroll ($ 000s) $28,989 $16,324 $9,030 $89,945 $15,046 $4,100 $8,933 $2,686 Payroll /Est ($ 000s) $1,087 $780 $715 $1,274 $616 $826 $876 $568 Total Retail Sales ($ 000s) $15,151 $9,255 $6,542 $33,177 $13,857 $2,943 $6,737 $2,075 Accomodation and food service sales ($ 000s) $1,478 $1,083 $764 $5,705 $375 $375 $686 $662 Persons per sq. mile 1,656 1,150 550 2,718 227 227 1,313 414

Raleigh Wake, NC

Montgomery County is of average size (population of 812,000) compared to the other eight locations (average of 777,000 excluding Montgomery County) but has the highest median household income of nearly $79,000.

In addition, Montgomery County is near the top on payroll per business establishment, lagging slightly behind Dallas County, Texas.

It is interesting to note that, despite ranking either first or second in population, income, and retail sales, Montgomery County does not rank as high in accommodation and food service sales, further suggesting that a new meeting and events center could generate new group room demand and revenue for the accommodation sector.

The following pages provide summary descriptions and floor plans for each identified comparable facility.

34

974,289 341,303 $65,826 29,579 473,854 $23,627 $799 $12,598 $1,727 1,079

Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Overland Park, KS- Located in suburban Kansas City.

The exhibit hall offers 60,000 square feet that can be divided into two rooms, as well as seven meeting rooms and an executive conference room available for smaller-scale corporate meetings. The attached Sheraton hotel was built in conjunction with the convention center. The hotel has an additional 25,000 square feet of meeting space and is attached by covered walkway to the center. In addition, the facility also offers a 25,000 square foot outdoor courtyard. Of note, Overland Park is the only one of the comparable facilities showing a profit; and its revenue from food and beverage exceeds its rental income by a nearly $5/1 ratio.

35

Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Lancaster, PA – Located 60 miles to the west of King of Prussia, this convention center does not serve any major metropolitan market. In general, its events tend to be small trade shows (crafts, furniture) and trade associations. No blue chip corporate events were highlighted or noted.

Providing more than 90,000 square feet of combined space for conventions, events, and trade shows, this $177-million integrated facility is ideal for groups ranging in size from five to 5,000 in a location that is convenient to northeast metropolitan cities

36

Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Irving, TX – The Irving Convention Center at Las Colinas represents the innovative future of meetings and events. With almost 100,000 square feet of meeting and exhibit space, the building's unique architecture, vertical design, and interior finishes create a new niche in the marketplace. Situated on 40 acres in the heart of Irving's Las Colinas Urban Center, the convention center is the first phase of a mixed-use entertainment district that will include a 6,000-person capacity performance venue and unique dining and shopping.

Located a short distance from DFW Airport, Irving has both convenient access and a very large cluster of leading companies located in immediate proximity to the convention center. Of note, there are over 2,500 hotel rooms located within one mile of the facility.

37

Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Gwinnet, GA- Located in Duluth, GA a community located at the fringe of the greater Atlanta metropolitan area (25 miles to the northeast of Atlanta’s Central Business District.). The center does some trade show and business association meetings; however, large religious gatherings are an important recurring source of revenue. The convention center is located in a complex that includes an arena and performing arts center. Local hotels are oriented toward family as opposed to corporate visitors.

The heart of the Convention Center is the 50,000 square foot Exhibit Hall. The Exhibit Hall has a ceiling height of 28 feet, an unlimited load-bearing floor and the ability to be divided into three individual halls.

With drive-in access and nine covered loading docks, set-up and breakdowns are a smooth and efficient process for over 300 exhibitors. The Convention Center also has 23 versatile meeting rooms and a 21,600 square foot Grand Ballroom that is fully capable of meeting various needs.

38

Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Waco, TX- Located in Waco, TX between Dallas/Fort Worth and Austin, the Waco Convention Center is blocks from Interstate 35, minutes from Waco Regional Airport, and within walking distance of restaurants, shopping, attractions, and a variety of entertainment options. There are 1,000 convention-quality hotel rooms within a one-mile radius of the Waco Convention Center and 4,200 hotel rooms in greater Waco.

With a 32,976 square foot exhibit hall, a 15,000 square foot exhibit hall, and the new 13,818 sq. ft. Brazos Ballroom—the Waco Convention Center has the space needed to accommodate larger conventions, social events, and tradeshows.

In July, 2012, the Waco Convention Center completed a three year, $17.5 million renovation, adding over 25,000 sq. ft. and increasing the total square footage to 144,000 sq. ft.

39

Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Richmond, VA- The Greater Richmond Convention Center is Virginia's largest exposition and meeting facility. The Center brings hundreds of thousands of visitors into the metropolitan area each year. Located in Virginia’s capital, the Greater Richmond Convention Center is a 700,000-square-foot facility that sits on five and a half city blocks. Interior accommodations include 178,159 square feet of exhibit space, meeting and banquet rooms, and the 30,550-square foot Grand Ballroom.

Parking consists of two adjoining decks that hold 1,540 vehicles and an additional 4,600 spaces are within a six-block radius.

There are 650 hotel rooms adjacent to the center, with thousands more nearby.

40

Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Niagara Falls, NY- The Conference & Event Center Niagara Falls combines 116,000 square feet of versatile state-of-the-art indoor meeting and event space with vibrant outdoor activities. Its unique Western New York location, along the dynamic Old Falls Street, USA, offers a myriad of customized convention, meeting and banquet options including the ability to host private outdoor receptions, just footsteps from Niagara Falls State Park and the famed waterfalls themselves. The facility is also a 20-minute drive from Buffalo, NY.

41

Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Raleigh, NC- Since opening in September 2008, the Raleigh Convention Center has been a bustling hub for the culture, commerce and technologies that make the Triangle one of the most admired and sought after regions in the United States. The modern, 500,000 sq ft, LEED Silver-certified facility includes a soaring street level lobby, an elegant, easily partitioned ballroom, a 150,000 sq ft exhibit hall and a 4,100 sq ft mezzanine as well as cutting edge tech amenities and award-winning culinary offerings. Convention center staff also operates the nearby Red Hat Amphitheater and Duke Energy Center for the Performing Arts, which can also be part of an event experience.

42

Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Figure 4.4 provides a summary table of detailed characteristics and available financial and event information for the comparable facilities.

Figure 4.4: Meeting & Events Centers Performance and Facility Detail

Convention Center Performance and Facility Detail Overland, KS

Detail

Opened

Total Construction Cost ($ Millions) Total Space (SF) Construction Cost per SF Year Gross Revenue Net Income Rental Income Food/Beverage Revenue Events hosted Room nights generated Attendees Main Exhibit Hall (SF) Banquet Hall (SF)

Other Meeting Space Noted

Attached Hotel

2002

140,000

2013 $9.4 $0.6 $1.4 $6.4

Lancaster, Irving, TX PA 2009

Gwinnet, GA Opened 1992, 2011 expansion in 2003 Construction

$178 $133 $134 90,000 170,000 84,500 $1,973 $782 $1,586 Financial Data ($ Millions) 2012 2013 2013 $1.6 $6.6 $10.9 -$1.0 -$1.4 -$0.4 $1.5 $1.3 $3.8 $0.1 $4.0 $1.6 Events & Room Nights

400

241

341

Richmond, VA

Waco, TX Major $17.5M renovation in 2012,

125,000

128,883 Facility Size 60,000 26,000

46,000 8,700

50,000 20,000

50,000 21,600

50,000 14,000

Raleigh, NC

2002

2004

2008

$170 178,000 $955

116,000

$225 200,000 $1,125

2012 $2.4 -$0.3

2012 $6.2 -$1.5

133,765 345,000

229 14,000 36,796

300 70,000 440,000

175,000 30,000

32,000 19,500

150,000 33,000

2012 $3.1

281 89,000

Niagara Falls, NY

7 additional 23 additional 20 additional 14 additional 36 total 15 meeting meeting meeting 20 meeting meeting meeting meeting and rooms, 20 meeting rooms of rooms of rooms rooms of rooms, 2,000 banquet 49-seat roomgs various various various sizes SF theater rooms amphitheater sizes sizes

412 Room Sheraton

Reportedly a new hotel will 299 Room open in 2015 Marriott (no affiliation specified)

No (but deal with Marriott to build one was just announced)

No

Yes

No

Yes

Source: Tourism Economics & Respective Convention Facilities (2014)

43

Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Based on available data on sellable exhibit space, banquet halls, meeting rooms, and operating data for the eight identified facilities, Figure 4.5 provides averages of various metrics across the facilities.

On average, the eight identified facilities offer approximately 77,000 sf in the main exhibit hall, 22,000 sf in the main banquet hall, and 19 meeting rooms. With an average of nearly 300 events, the facilities generate an average of $5.0 million in revenues and operate at a net loss of $0.5 million.

Figure 4.5: Average Sellable Space and Operating Data of Identified Comparable Facilities (Square Feet & $ Millions) Description Main Exhibit Hall (SF) Banquet Hall (SF) Total Sellable Space (SF) Meeting Rooms Gross Revenue ($ Millions) Net Income ($ Millions) Events Hosted

Average 76,625 21,600 137,938 19 $5.0 -$0.5 299

44

Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

5 Facility Dimensions & Details The following section analyzes the potential dimensions of the proposed Montgomery County executive meeting and events center in terms of total sellable space, exhibit and banquet hall space, and meeting rooms.

For purposes of the analysis, we assume that the proposed Montgomery County executive meeting and events center will offer the following physical space dimensions: 

Main Exhibit Hall: 50,000 sf



Banquet Hall: 25,000 sf



Meeting Rooms: 20 rooms



Total sellable sf: 125,000

5.1

Data Normalization

5.1.1

Total Sellable Space

Section 4 identified a set of comparable convention and events/meeting centers that share certain characteristics with the proposed Montgomery County facility. The analysis provided various size and performance metrics and calculated averages in absolute terms. It is also important, however, to examine these metrics in terms of normalized values.

One way of normalizing data is to calculate total sellable space in a market divided by the market’s total employment, effectively providing a measurement of sellable space per employee. For example, the Overland Park Convention Center offers 140,000 sf of total sellable space. Johnson County, KS has a total workforce of approximately 320,000. Dividing total sellable space by the total population yields a result of 0.44. The weighted average across the eight identified comparable facilities is 0.35.

Based on an estimated 125,000 sf of total sellable sf at the proposed facility, and the absence of other facilities in Montgomery County, along with a countywide workforce of approximately 474,000, total sellable sf per employee yields a result of 0.26. Montgomery County’s result of 0.26 total sellable sf per employee is lower than the average value across the eight identified comparable facilities. As shown in Figure 6.1, it has the second lowest value in the identified group of facilities, which suggests that a facility with 125,000 sf of total sellable space is in line (and somewhat conservative) compared to the identified markets.

The facilities in markets with labor forces closest to that of Montgomery County (approximately 474,000 employees) are the Gwinnett Center in Georgia

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

(approximately 320,000 employees) and the Raleigh Convention Center in North Carolina (approximately 474,000 employees). These markets also have similar numbers of businesses and population bases. The Gwinnett Center offers approximately 85,000 sf total sellable space (though it is also part of a complex that offers a full size arena), while the Raleigh Convention Center has 200,000 sf of total sellable space. The Montgomery County facility’s normalized total sellable space value of 0.26 is nearly identical to the Gwinnett Center’s value of 0.27 and is comparable to the Raleigh Convention Center’s value of 0.42.

Figure 5.1: Total Sellable Space (SF) per Employee, by Facility

Total Sellable Space SF/Employee 1.63 1.22

0.42

0.44

Overland Park Convention Center (KS)

Gwinnett Center (GA)

0.41

Raleigh Convention Center (NC)

0.27

Lancaster County Convention Center (PA)

0.26 Montgomery County (PA)

0.99

The Conference & Event Center Niagara Falls (NY)

Waco Convention Center (TX)

Greater Richmond Convention Center (VA)

0.11 Irving Convention Center (TX)

1.80 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00

Source: Tourism Economics (2014)

5.1.2

Main Exhibit Hall & Banquet Hall SF

In addition to examining total sellable space normalized by employment, the analysis also focused on normalized values of main exhibit hall and banquet hall square footage.

Figure 5.2 summarizes the values of main exhibit hall space normalized by number of employees for the proposed Montgomery County facility and the eight identified existing facilities. As shown in Figure 5.2, with a main exhibit hall of 50,000 sf, the Montgomery County facility’s normalized value of exhibit hall space per employee would be 0.11. The normalized values for the eight identified facilities range from a low of 0.03 at the Irving Center in Texas to a high of 0.98 at the Greater Richmond

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Convention Center in Virginia. Across all eight facilities, the weighted average of banquet space per employee is 0.19.

Similar to the normalized value for total sellable space, the proposed Montgomery County facility’s normalized value for main exhibit hall space falls in the lower spectrum of values across the identified sites.

Figure 5.2: Main Exhibit Hall Space (SF) per Employee, by Facility

Main Exhibit Hall SF / Employee 1.20

0.98

1.00

0.40

0.49

0.16

0.19

Lancaster County Convention Center (PA)

0.03

0.11

Overland Park Convention Center (KS)

0.32 0.21

Gwinnett Center (GA)

0.20

0.45

Waco Convention Center (TX)

0.60

The Conference & Event Center Niagara Falls (NY)

0.80

Greater Richmond Convention Center (VA)

Raleigh Convention Center (NC)

Montgomery County (PA)

Irving Convention Center (TX)

0.00

Source: Tourism Economics (2014)

Figure 5.3 summarizes the values of banquet hall space normalized per employee for the proposed Montgomery County facility and the eight identified existing facilities. As shown, with a 25,000 sf banquet hall, the normalized value for the Montgomery County corporate meeting and events center would be 0.05. The normalized values for the eight identified facilities range from a low of 0.01 at the Irving Convention Center to a high of 0.27 at the Conference and Events Center in Niagara Falls. Across all eight facilities, the weighted average of banquet space normalized by population is .05.

As with the normalized values for total sellable space and main exhibit hall space, the proposed Montgomery County facility’s normalized value for banquet hall space falls towards the lower end of values across the identified sites.

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Compared to the markets with similar population and business counts, the Montgomery County facility’s normalized banquet hall space value of .05 is higher than the Lancaster County Convention Center and the Irving Convention Center.

Figure 5.3: Banquet Hall Space (SF) per Employee, by Facility

Banquet Hall SF / Employee 0.30

0.27

0.25 0.20

0.17 0.14

0.05

0.04

0.05

0.07

0.07

Raleigh Convention Center (NC)

0.10

Gwinnett Center (GA)

0.15

0.08

0.01 The Conference & Event Center Niagara Falls (NY)

Greater Richmond Convention Center (VA)

Waco Convention Center (TX)

Overland Park Convention Center (KS)

Montgomery County (PA)

Lancaster County Convention Center (PA)

Irving Convention Center (TX)

0.00

Source: Tourism Economics (2014)

Figure 5.4: Summary Metrics Normalized by Population (Total Sellable Space, Main Exhibit Hall, and Banquet Hall SF per Employee) Eight Identified Sites Description

Montgomery County

Minimum Value

Maximum Value

Weighted Average

Total Sellable Space

0.26

0.11

1.63

0.35

Main Exhibit Hall

0.11

0.03

0.98

0.19

Banquet Hall

0.05

0.01

0.27

0.05

Figure 5.4 summarizes the various metrics normalized by employment (total sellable space, main exhibit hall space, and banquet hall space) for Montgomery County, along with the minimum value, maximum value, and weighted average for the eight identified facilities. All of the normalized values for the Montgomery facility fall between the minimum-maximum range of values and are equal to or below the

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

weighted average for each category. This suggests that the indicated physical dimensions of the proposed Montgomery County facility (50,000 sf main exhibit hall, 25,000 sf banquet hall, and 125,000 total sellable sf) are reasonable compared to the dimensions of existing facilities in markets with similar characteristics.

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

6 Industry Trends 6.1

The Meetings Industry

In 2013, facilities hosted an estimated 1.8 million meetings throughout the US. These 1.8 million meetings had nearly 225 million participants, with approximately half of these participants attending corporate/business meetings. Conventions, conferences, and congresses had the second most participants with nearly 61 million, constituting 27% of all participants. While trade shows had the least number of meetings, they attracted nearly 27 million participants, or 12% of all participants.

Figure 6.1: Number of Meetings & Participants by Meeting Type, 2013 Meeting Type Corporate/Business Meetings Conventions/Conferences/Congresses Trade Shows Incentive Meetings Other Meetings Total

Meetings 1,298,300 273,700 10,900 67,700 182,600 1,833,200

Participants 113,337,000 60,960,000 26,768,000 9,172,000 14,710,000 224,947,000

% Participants 50% 27% 12% 4% 7% 100%

Source: Trade Show Executive (2014)

Figure 6.2 summarizes total numbers of meetings and participants by host type. As shown, corporations hosted the most meetings in 2013. Over one million meetings hosted by corporations had nearly 110 million participants, or nearly half of all participants. Associations and membership organizations drew the second most participants (more than 59 million) at approximately 315,000 events.

Figure 6.2: Number of Meetings & Participants by Host Type, 2013 Meeting Type Corporate Association/Membership Non-Government, Not-For-Profit Government Total

Meetings 1,017,000 315,400 432,100 68,600 1,833,100

Participants 109,571,000 59,495,000 51,572,000 4,308,000 224,946,000

% Participants 49% 26% 23% 2% 100%

Source: Trade Show Executive (2014)

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

6.2

Convention Center Trends

Based on Trade Show Executive’s 2013 Word’s Top Convention Centers (WTCC), more than half (57%) of convention centers in the United States, Canada, and Mexico were in the “Tier IV Smaller Facilities” category, comprised of convention centers offering 50,000 sf to 124,999 sf of prime exhibit space.

Venues in this category have a total square footage of 13,933,713, and their space represents approximately 20% of the total square footage of North American venues listed in the 2013 WTCC. This segment of the market continues to grow, as two new convention centers completed construction in 2013:the U.S. Cellular Center in Cedar Rapids, IA (featuring 81,779 sf of prime exhibit space) and the Dulles Expo Center in Chantilly, VA (which added 30,000 sf of prime exhibit space and now offers a total of 130,000 sf). In 2012, this tier of smaller convention centers included 173 facilities, offering an average of 79,931 sf of prime exhibit space.

According to Trade Show Executive, small convention centers typically fill their space with a wide range of statewide meetings, regional trade shows, corporate events, consumer shows, and other local events. However, these facilities have also started trying to attract more national and international exhibitions that would ultimately generate a higher economic impact to their respective local communities.

To attract national and international business, some facilities are adding more space or making renovations. According to Johnna Boxley, general manager of the Spokane Convention Center in Washington, “Our goal is to attract more national business…We didn’t have the right configuration before, but our expansion should help us gain more market share.” The Spokane Convention Center is currently adding 20,000 sf of prime exhibit space and 25,000 sf of meeting space. Upon completion, the center will offer 120,160 sf of prime exhibit space, 67,900 sf of meeting space, and 17,390 sf of flex space.

Technology has been a significant factor for smaller convention centers (and for facilities of all sizes). To effectively compete in this category, many facilities offer free WiFi throughout their buildings, including exhibit halls. According to a regional vice president at SMG, “People think of WiFi like they think of air. They think it should be free and it should be always available.” He also said that many smaller convention centers will be investing in distributed antenna systems (DAS) to handle the additional bandwidth from multiple devices.” The Irving Convention Center, which opened just three years ago, has already invested in WiFi upgrades to stay competitive. According to Maura Gast, executive director of the Irving Convention & Visitors Bureau in Texas, WiFi is just not going to be a revenue generator, but it can be a deal maker or breaker.”

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

6.3

MICE Industry Trends

The MICE industry (meetings, incentives, conferences, and exhibitions) has witnessed an acceleration of change over recent years. Key, important trends span a range of issues including: 

Shifts in global participation around the world



Tailoring of event content



Role of DMOs (destination marketing organizations)



Use of technology



New growth drivers



New challenges

Defining trends for the MICE industry include:

6.3.1



Reports on the death of meetings are exaggerated



Meetings are driving economic development



Cost consciousness is defining choices



Events are reaching further



DMOs are driving growth



Events are more targeted

Reports on the death of meetings are exaggerated

The MICE sector has endured harsh conditions since 2009, including sharp cutbacks among companies, widespread adoption of virtual meeting technology, and political opposition.

However, the MICE sector has emerged from the ashes as the underlying value of events to participants and companies remains as strong as ever.

Group room demand in the US fell 16% over the two-year period of 2008 and 2009.

However, it has nearly fully recovered to 97% of its pre-recession level.

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Figure 6.3: US Luxury/Upscale Group Hotel Demand, 2004-2013 (Million Room Nights)

US Luxury/Upscale Group Hotel Demand million room nights

90 85 80

75 70

65 60 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Smith Travel Research

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Data on the exhibition sectors tell a similar story. Attendance fell 11% from 2007 to 2009. In 2013, attendance recovered to pre-recession highs and is expected to expand another 3% in 2014.

Figure 6.4: Exhibition Attendees, 2000-2014

Exhibition Attendees Millions 75 70 65 60

55 50 45

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

40

Source: CEIR

Over the long run, a trend of strength is evident in data on association meeting participation around the world. Global meetings participation has more than doubled form under 10 million in 1993-1997 to 21 million in 2008-2012

Figure 6.5: Global Association Meeting Participants, 1963-2012

Global association meeting participants Millions

25 20 15 10 5

2008-12

2003-07

1998-02

1993-97

1988-92

1983-87

1978-82

1973-77

1968-72

1963-67

0

Source: International Congress and Convention Association

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

6.3.2

Meetings are driving economic development

Meetings, conventions, and exhibitions have long been understood to represent economic value to a destination as attendees, exhibitors, and meeting planners spend money in a destination. According to the Business Events Council of Australia, “The legacy and flow on effects of business events is delivered in many ways... Research has identified that this leads to global profiling, international network creation, cultural and business development, innovation and foreign investment.”

However, these events are increasingly being leveraged as an engine of economic development in other sectors. 

Driving services supply chain



Driving innovation



Driving economic clusters



Driving bottom lines

Driving the services supply chain The development of the MICE sector is one way to develop industries in the event supply chain. These include a broad range of service providers including companies in the fields of technology, marketing, design, catering, and event management & production. MICE is increasingly acting as a catalyst for the development of these related economic sectors.

Driving innovation The MICE sector is driving the knowledge economy and spurring innovation.

Business events deliver much more than travel and hospitality spend. They are the forefront of the knowledge economy, providing a direct and powerful platform for 3 new information

3

Business Events Council of Australia

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Nearly 80% of US executives indicated that conferences provide significant industry insights.

Figure 6.6: Impact of Conference and Convention

Impact of conferences and conventions % of respondents indicating high impact on 1 to 5 scale 4

5

New sales Morale New leads Customer retention Industry partnerships Industry insights

0%

40%

80%

Source: Oxford Economics survey of US executives, 2013

Driving economic clusters The MICE sector is integral to the development of targeted economic clusters.

Singapore and China are leveraging the MICE industry to attract regional headquarters in key industries.

The Cleveland Clinic has built the Global Center for Health Innovation – a showroom space for medical devices and technology. Along with a renovated convention center, the new facility has been designed to spur further development within the health care economic cluster.

In Tampa, a medical learning and simulation center was opened within a block of the convention center. It is expected to attract more than 60,000 medical professionals each year for training.

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Driving bottom lines The MICE sector is being harnessed to drive performance in companies. Nearly 60% of frequent business travelers believe that increase in travel (including MICE events) would have a positive impact on both revenue and profitability. And roughly half of respondents believe such an increase would have a positive impact on employee productivity.

Figure 6.7: Impact of Increased Travel Spending on Revenue, Profits, and Employee Productivity

Impact of increased travel spending on...

70%

positive

no impact

negative

60% 59%

58%

50% 49%

47%

40% 39%

36%

30% 20% 10%

6%

4%

2%

0% Revenue

Profits

Employee productivity

Source: Oxford Economics survey of US business travelers, 2013

6.3.3

Cost consciousness is defining choices

The legacy of the great recession, along with a highly competitive market for attracting events and the longer lead times associated with contracting group room, rates continues to weigh on group room rates. As a result, group hotel room rates remained below pre-recession levels in 2013, even as transient room rates have recovered more strongly.

A move to mid-tier lodging and non-traditional meeting facilities (museums, restaurants, etc.) also reflects budget constraints.

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Figure 6.8: Upper Tier Hotel ADR by Segment

Upper Tier Hotel ADR by Segment $200 $190

$22 diff.

Transient

$180 $170 $160

Group

$150 $140 $130

$120 $110

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

$100

Source: STR

The yields on the MICE segment continue to be squeezed. According to CEIR (Center for Exhibition Industry Research) data on exhibition revenue per attendee, the industry continues to struggle to achieve revenue growth even as attendance recovers. In 2013, CEIR estimates revenue per attendee in the US to have fallen to $163 from $190 in 2007. Events are exploring off-peak bookings more frequently, and incentives by destinations and convention centers are the norm, not the exception, in attracting meeting planners.

Figure 6.9: US Revenue per Exhibition Attendee

US Revenue per Exhibition Attendee $200 $195

$193

$190

$190 $185

$180 $175 $174

$170 $165

$165

$160

$163

$155

$150 $145 2001

2003

2005

2007

2009

2011

2013

Source: CEIR

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

6.3.4

Events are reaching further

MICE events are extending their reach by stronger interactions with participants before and after events as well as by using virtual forums to extend participation to a wider audience.

Virtual and hybrid meetings continue to grow. According to the 2013 American Express survey of planners, these forums are being adopted to achieve a wider reach at a lower cost. These virtual meetings can also open up new revenue streams. However, it appears this growth in virtual meetings is not at the expense of physical meetings due to the former’s difficulty in engaging and monitoring active participation, which is intrinsic to physical meetings.

Figure 6.10: Portfolio with More than 10% Virtual or Hybrid

Portfolio with more than 10% Virtual or Hybrid Share of Client Portfolio

70% 60%

2013

50%

43%

40% 30%

30% 20%

58%

2014 47% 40%

40%

28%

18%

10%

Asia

Latin Am.

Europe

N Amer.

0%

Source: American Express Survey of Planners, Sept 2013

6.3.5

DMOs are driving MICE growth

As meeting demand recovers, DMOs are playing a leading role, steadily increasing their share of overall group room demand in the US since 2010. In addition, rooms booked for future events exceeded rooms consumed in 2013, indicating growth momentum in the DMO channel.

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Figure 6.11: DMO Group Channel Impact

DMO Group Channel Impact Occurred room nights (DMO Markets) DMO % of group hotel room nights sold in DMO markets

2009

2010

2011

2012

20.6%

20.2%

20.3%

20.7%

Sources: DMAI, STR

DMO Group Channel Impact Room nights (million) 2009 Booked

37.0 % growth

Occurred

34.3 % growth

2010

2011

2012

35.4

37.1

39.0

-4.3%

4.8%

4.9%

35.8

37.2

38.3

4.4%

3.8%

3.1%

Source: DMAI

In emerging markets, DMO/DMC support is vital to meeting planners. Destination management support is a significant concern among respondents to the American Express planners survey. “Having a connection to a destination management company (DMC) with local expertise can help ensure the right planning decisions are made and improve the 4 overall attendee experience .�

4

2014 Meetings Forecast by American Express Meetings and Events

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Figure 6.12: Destination management Support of Great Importance Destination Management Support of Great Importance 100%

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

89% 80%

China

India

Brazil

Russia

76%

Source: American Express Survey of Planners, Sept 2013

6.3.6

Events are becoming more targeted

Average participation in association events is illustrating the trend of events becoming more targeted. Association events averaged more than 1,000 participants in the early 1970’s. The past five years has seen this number fall to 424 people per event. However, the number of events has grown at a much faster rate, increasing overall attendance.

Figure 6.13: Participants per Association Meeting

Participants per association meeting Global average

1,400 1,200 1,000 800 600

400 200 2008-12

2003-07

1998-02

1993-97

1988-92

1983-87

1978-82

1973-77

1968-72

1963-67

0

Source: International Congress and Convention Association

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

7 Feedback from Key Stakeholders The research team conducted interviews with key stakeholders who represent a broad spectrum of expertise in Montgomery County’s commerce and hospitality sectors. These stakeholders are familiar with current market dynamics and the various factors and sources of demand that would support business at the proposed corporate meeting and events center. Stakeholders included representatives from economic development agencies, hotel professionals, and meeting and events planners from local corporations.

Some of the key issues and recommendations are summarized in the following sections.

7.1

Economic Development Professionals

Overall, economic development professionals who were surveyed indicated that they strongly supported a new meeting and events center in Montgomery County.

While some of the interviewees felt the new facility would be best situated in the King of Prussia area, others felt Lansdale would be the most ideal location. One respondent even indicated that Montgomery County could potentially benefit from having more than one new meeting and events center.

All economic development respondents felt that levels of demand are more than adequate to warrant a new meeting and events center. According to certain respondents, existing meeting and events clients at regional facilities have expressed the desire for new space for smaller corporate meetings. According to ownership/management at the Greater Philadelphia Expo Center at Oaks, the facility has had tremendous success and has exceeded all forecasts since opening.

While the facility primarily deals with consumer/trade shows, its success could complement activity at a new executive meeting and events center.

One common theme among respondents was technology and versatility.

Respondents indicated that the proposed meeting and events center must be a versatile, multi-use facility that can attract a wide variety of events and clients.

Further, to be successful, the facility must be able to attract business throughout the year. In terms of specific clients and event types, the facility could cater to state and government meetings and other smaller, single-day events during the week, while attracting larger events such as weddings and banquet during the weekends.

An additional factor echoed repeatedly across respondents was the importance of the proposed facility for regional economic development. Respondents felt the facility could be an important driver to spur economic development in Montgomery County, particularly for increasing group room demand at local hotels.

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Additional feedback from economic development professionals is summarized as follows:  Versatility is a key factor. Facility needs to be multi-use in order to maximize its potential.  Certain niche of events that can’t use convention facilities in Center City  Will be important to correctly set up the financials of the new facility, unlike in Lancaster.  New facility can be developed in conjunction with existing hotel(s). One example is the Chase Center in Wilmington, which is adjacent to the Westin Wilmington.  Facility could be very helpful for prompting economic development in the region.  Potential users of the facility are the government and state association meetings that are currently using convention and meeting facilities in Lancaster and Allentown.  During the week, the facility can cater to single-day local/regional meetings with 35-200 attendees. During the weekends, the facility could target large social events with 300+ people (i.e., weddings, concerts, banquets)  The design/layout of the facility should cater to a diverse set of customers.

For example, meeting rooms and common areas should cater to corporate clients, while exhibit areas should cater to large trade shows.  Having meeting space is important, but the biggest need in the region is for a new, state-of-the-art facility that can accommodate large groups.  Maybe Montgomery County could benefit from having more than one new meeting and events center.

7.2

Potential Corporate Users

The research team also conducted interviews with representatives from local corporations and businesses in order to get feedback from potential users of the proposed meetings and events center.

One main viewpoint mentioned by all respondents is that the region lacks an attractive, state-of-the-art facility that can accommodate larger groups. While there are a few newer facilities in the region, they are too small for larger groups.

Respondents indicated that the most important factors that would influence their decision to use the proposed meeting and events center include convenience/location, price, technology, and customer service. Additional

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

characteristics factoring into their decision would include the facility’s amenities, ease and availability of parking, minimal traffic issues, and good catering options.

In terms of space requirements, respondents indicated they would need meeting space for 25-200 people and maximum space for 2,000 people.

Additional feedback from corporate respondents is summarized below:  The region does not offer any attractive facilities that are able to accommodate large groups  Lately, in past year, majority of smaller meetings are scheduled through video conference.  Some current facilities are nice, but too small and can’t accommodate large groups  While there is need for larger event space, the immediate need is for smaller meeting space.  Local facilities are “tired” and old and need a facelift.  Used to go up to convention center before Valley Forge Casino came online.  Desmond Hotel in Malvern has nice facilities, but location isn’t convenient.  Trend is to use local facilities for meetings.  New facility would be good for meetings for upper level (directors, above).

For meetings with lower level employees, usual protocol is to use video conferences.

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

8 Demand Projections Based on the analysis of comparable convention and meetings facilities in Section 4, as well as the estimated dimensions outlined in Section 5, the analysis now focuses on the potential levels of demand at the proposed Montgomery County executive meeting and events center. Levels of demand are outlined in terms of number of events and estimated attendance. The analysis assumes that the facility will be a standalone facility with limited restaurant options.

These estimates are provided as representative levels of operation consistent with the market opportunity as assessed in this analysis. These estimates are provided for the purpose of illustrating the potential for facility operations in this market context and for the purpose of quantifying the potential economic impacts associated with such a facility.

8.1

Projected Events

Figure 9.1 summarizes the projected events at the proposed Montgomery County executive meeting and events center, by event type, for a ten year period after the facility opens. We assume that year five represents the stabilized year of operations As previously mentioned, key stakeholders stressed the need for a versatile facility able to host a diverse set of events ranging from small corporate meetings to entertainment events and trade shows.

Figure 8.1: Projected Events at Proposed Montgomery County Executive Meeting and Events Center

Event Description Exhibit Events Conventions & Tradeshows Consumer & Specialty Shows Subtotal, Exhibit Events

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9 Year 10

16 6 22

18 7 25

20 8 28

22 8 30

24 8 32

24 8 32

24 8 32

24 8 32

24 8 32

24 8 32

Cultural & Social Events Meetings & Seminars Banquets Entertainment Events Civic Events & Other Events Subtotal, Cultural & Social Events

106 40 6 20 172

108 42 7 22 179

110 44 8 24 186

110 46 8 26 190

110 48 8 28 194

110 48 8 28 194

110 48 8 28 194

110 48 8 28 194

110 48 8 28 194

110 48 8 28 194

Total Events

194

204

214

220

226

226

226

226

226

226

Source: Tourism Economics (2014)

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

 Conventions & Tradeshows: these events are generally held by associations, professional groups, and other membership organizations. In the first year of operations, the Montgomery County facility will host an estimated 16 conventions and tradeshows, ramping up to 24 by year five.  Consumer & Specialty Shows: typically have larger average attendances than trade shows. We assume there will be six consumer and specialty shows in the first year and eight by the fifth year.  Meetings & Seminars: usually require less space and attract fewer attendees than the larger exhibit events. Since there is a high concentration of local businesses, we assume meetings and seminars will constitute the highest number of events at the proposed Montgomery County facility, with 106 in year one and 110 by year five.  Banquets: similar to meetings, banquets don’t require as much space as some of the larger exhibit events. However, banquets will require in-house catering services. The ability of the facility to attract banquet events on the weekends will be a key element for its financial viability. We estimate there will be 40 banquets in the first year, ramping up to 48 by the fifth year of operations.  Entertainment Events: again, versatility is key. It will be important for the facility to attract a variety of events throughout the year. The facility will be multi-use and will be able to host concerts, entertainment events, cultural festivals, and other similar events. We assume the facility will host six entertainment events in its first year and eight in its fifth year of operations.  Civic Events & Other Events: are any other events not included in the previously mentioned categories. These events might include school concerts or graduations, as well as other public events. We estimate the facility will host 20 of these event in the first year and 28 in the fifth year.

Overall, the facility is estimated to host an estimated 194 total events in its first year of operations. By the fifth year of operations, the proposed Montgomery County executive meeting and events center is estimated to host an estimated 226 total events. As outlined in Section 4, the average number of events hosted at the identified set of comparable convention and meeting facilities was 299 events per facility. The estimated 226 events at the proposed Montgomery County facility are in line with this average number of events at the existing facilities.

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

8.2

Projected Attendance

Based on the projected number of events, Figure 9.2 summarizes estimated attendance levels at the Montgomery County facility.  Conventions & Tradeshows: In the first year of operations, attendance at conventions and tradeshows is estimated to total approximately 5,440 people, resulting in an average of 340 people per event. This is consistent with typical tradeshows and larger exhibit events at similarly sized facilities.

By the stabilized year of operations (year five), average attendance is estimated at 380 per event, resulting in 9,120 total attendees at conventions and tradeshows.  Consumer & Specialty Shows: In the facility’s first year of operations, consumer and specialty shows is estimated to average 750 attendees per events, resulting in total attendance of 4,500. Once operations stabilize in year five, consume and specialty shows are projected to attract 1,250 attendees per event, resulting in total attendance of 10,000 people.  Meetings & Seminars: In year one, the facility is estimated host an estimated 106 meetings with an average attendance of 300 per meeting, resulting in total attendance of 31,800. By year five of operations, average meeting attendance is estimated to ramp up to an estimated 350 per meeting, or a total attendance of 38,500.  Banquets: We assume the proposed Montgomery County facility will host larger banquets, as smaller banquets will utilize existing, smaller banquet facilities. Average banquet attendance of 300 per banquet will result in total attendance of 12,000 in year one. By year five, average banquet attendance is estimated to ramp up to 350 per event, resulting in total attendance of 16,800.  Entertainment Events: Concerts and entertainment events will host an estimated average of 1,200 guests per event, resulting in total attendance of 7,200 in the facility’s first year of operations. By year five, average attendance at entertainment events is estimated to ramp up to 1,400 per events, resulting in total attendance of 11,200.  Civic Events & Other Events: We assume civic events and other events will host an average 850 guests per event in year one. By year, five, average attendance at civic events is estimated to increase to 900 per events, resulting in total attendance of 25,200.

Taken together, total attendance across all categories amounts to an estimated 77,940 attendees in the Montgomery County facility’s first year of operations, resulting in an overall average of 402 attendees per event.

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

By the time the facility reaches steady state operations in year five, average attendance is estimated to ramp up to 490 guests per event, resulting in total attendance of 110,820 guests.

Figure 8.2: Projected Attendance at Proposed Montgomery County Executive Meeting and Events Center Event Description Exhibit Events Conventions & Tradeshows Consumer & Specialty Shows Subtotal, Exhibit Events

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9 Year 10

5,440 4,500 9,940

6,480 7,000 13,480

7,400 9,000 16,400

8,360 10,000 18,360

9,120 10,000 19,120

9,120 10,000 19,120

9,120 10,000 19,120

9,120 10,000 19,120

9,120 10,000 19,120

9,120 10,000 19,120

Cultural & Social Events Meetings & Seminars Banquets Entertainment Events Civic Events & Other Events Subtotal, Cultural & Social Events

31,800 12,000 7,200 17,000 68,000

35,100 13,650 9,100 19,250 77,100

37,125 14,850 10,800 21,300 84,075

38,500 16,100 11,200 23,400 89,200

38,500 16,800 11,200 25,200 91,700

38,500 16,800 11,200 25,200 91,700

38,500 16,800 11,200 25,200 91,700

38,500 16,800 11,200 25,200 91,700

38,500 16,800 11,200 25,200 91,700

38,500 16,800 11,200 25,200 91,700

Total

77,940

90,580 100,475 107,560 110,820 110,820 110,820 110,820 110,820 110,820

Source: Tourism Economics (2014)

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

9 9.1

Economic Impacts Event Turndowns

The Valley Forge Tourism & Convention Board provided data on lost convention business in Valley Forge. Based on the provided data, there have been a total of 34 events that turned down convention space in Valley Forge. Potential clients ranged from national trade shows with estimated room blocks of nearly 5,000 rooms to smaller, regional clients with requested room blocks of 100 to 300 rooms. The 34 events would have generated an estimated 44,000 room nights at a value of more than $70.1 million.

The proposed Montgomery County executive meeting and events center is expected to generate significant impacts as it attracts exhibit event and cultural/social events to the local region. More importantly, with a cutting edge facility offering a variety of amenities, the region is expected to once again be an attractive option for meeting and event planners. As these events utilize the new facility, they will bring exhibitors and attendees, all of whom will spend money in the local economy on items such as lodging, food and beverage, recreation, and retail goods at local businesses and establishments. This spending is expected to generate additional economic impacts as it ripples through the regional and state economies.

9.2

Direct Event Spending

Based on industry averages and historical data from existing convention and meeting facilities, Figure 9.1 summarizes projected event spending for exhibit events and cultural/social events. As shown, total exhibit event spending is estimated to amount to an estimated $19.9 million in the first year of operations, and event spending for cultural and social events will amount to an estimated $10.2 million, resulting in total spending of $30.1 million. In the facility’s stabilized year of operations in year five, exhibit event spending will amount to $38.2 million and cultural/social event spending will amount to $13.8 million, resulting in total event spending of $52.0 million.

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Figure 9.1: Estimated Direct Impacts of Regional Event Spending, Proposed Montgomery County Executive Meeting and Events Center Description Total Events Total Event Days Total Attendance Estimated Room Nights Exhibit Event Spending ($ Millions)

Total Events Total Event Days Total Attendance Spending per Attendee Estimated Room Nights Cultural & Social Event Spending ($ Millions) Total Event Spending ($ Millions) Total Room Nights Generated

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Exhibit Events (Trade Shows, Conventions, Consumer/Specialty Shows 22 25 28 30 32 32 32 66 75 84 90 96 96 96 9,940 13,480 16,400 18,360 19,120 19,120 19,120 5,964 8,088 9,840 11,016 11,472 11,472 11,472 $19.9

$27.0

$32.8

$36.7

172 516 68,000 $150 30,600

179 537 77,100 $150 34,695

$10.2

$11.6

$12.6

$13.4

$30.1

$38.5

$45.4

36,564

42,783

47,674

$38.2

Year 8

Year 9

Year 10

32 96 19,120 11,472

32 96 19,120 11,472

32 96 19,120 11,472

$38.2

$38.2

$38.2

$38.2

$38.2

194 582 91,700 $150 41,265

194 582 91,700 $150 41,265

194 582 91,700 $150 41,265

194 582 91,700 $150 41,265

194 582 91,700 $150 41,265

$13.8

$13.8

$13.8

$13.8

$13.8

$13.8

$50.1

$52.0

$52.0

$52.0

$52.0

$52.0

$52.0

51,156

52,737

52,737

52,737

52,737

52,737

52,737

Cultural & Social Events 186 190 194 558 570 582 84,075 89,200 91,700 $150 $150 $150 37,834 40,140 41,265

Source: Tourism Economics (2014)

9.3

Room Nights Generated

As previously shown, the proposed facility is estimated to host 200 events and 78,000 attendees in its first year of operations. We conservatively estimate that these events will generate a total of 36,564 room nights at area hotels during the first year. By the time the facility reaches steady state operations in year five, it is estimated to host 226 events and nearly 111,000 attendees, generating 52,737 room nights at area hotels.

This stabilized, or steady state, estimate of 52,737 room nights represents the equivalent of approximately 422 group room nights per 1,000 square feet of meeting space. In comparison, as referenced in Figure 3.10, selected regional hotels with meeting space have historically generated 757 group room nights per 1,000 square feet of meeting space (2013), and regional hotels with greater than 350 rooms have generated 825 group room nights per 1,000 square feet of meeting space (2013). The stabilized estimate of 52,737 room nights recognizes that the proposed Montgomery County executive meeting and events center is not assumed to have a connected hotel, and would not be anticipated to generate as many room nights per square foot of meeting space as a result.

To provide an estimate of the magnitude of the potential impact to local hotels, we performed several calculations. First, we assumed that approximately 70% of the 52,737 room nights,

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

equivalent to 36,916 room nights, would represent incremental demand to the local inventory of 15 hotels with 2,616 rooms. This is the group of 15 hotels as described in section 3.1 King of Prussia Lodging Market. It includes nine hotels in the King of Prussia Proximate Set plus six additional upper midscale and economy hotels in the local area. One of 15 hotels is located in Chester County, while the remaining 14 are in Montgomery County. We assumed the remaining 30% of the total room night impact would represent room nights that were not incremental, such as groups that would have otherwise used existing facilities in the area (e.g. smaller on-site space at existing hotels, office buildings, and other venues) at stayed at local hotels, or room nights that would result in a displacement of room nights that would otherwise have been accommodated (e.g. by accommodating a group related to the proposed executive meeting and events center a local hotel would have fewer rooms available on particular peak periods to accommodate transient travelers).

Next, we considered that the inventory of 15 local hotels with 2,616 rooms offers 954,840 available room nights annually. Relative to this inventory, 36,916 incremental room nights is equivalent to an increase to occupancy of 3.9 percentage points. Assuming an average group room rate of $126.70 (based on 2013 average group room rate for the King of Prussia Proximate Set), implies a room revenue impact of $4.7 million annually in 2013 dollars. This is equivalent to a revenue per available room (RevPAR) impact of $4.90 to the set of 15 local hotels.

Within the group of 15 local hotels, we anticipate the greatest impact would be to the nine hotels in the King of Prussia Proximate Set, as well as the Best Western Plus The Inn at King of Prussia, with a total of 1,943 rooms. If 90% of the 36,916 incremental room night impact occurs at these 10 hotels, the occupancy impact would be 4.7 percentage points, and the RevPAR impact would be $5.94 (in 2013 dollars). In 2013, the group occupancy contribution at the King of Prussia Proximate Set was 16.3%, as shown in Figure 3.2. With an increase of 4.7 percentage points, the group occupancy contribution would be 21.0%, which is still slightly below the 22.5% group occupancy contribution realized by these hotels in 2011, before the reduction in available space at the Valley Forge Convention Center.

9.4

Economic Impacts Defined

The economic impacts of the event spending outlined in the previous section were estimated using a regional Input-Output (I-O) model based on IMPLAN (www.implan.com) models. IMPLAN is recognized as one of two industry standards in local-level I-O models. An I-O model represents a profile of an economy by measuring the relationships among industries and consumers. For example, an I-O model tracks the flow of a visitor’s restaurant expenditures to wages, profits, capital, taxes and suppliers. The supplier chain is also traced to food wholesalers, to farmers, and so on. In this way, the I-O model allows for the measurement of the direct and indirect sales generated by a restaurant meal. The model also calculates the induced impacts of tourism. These induced impacts represent benefits to the economy as employees of tourism sectors spend their wages in the local economy, generating additional output, jobs, taxes, and wages.

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Figure 9.2: Illustration of Economic Impact Model

The modeling process begins with aligning the expenditure measurements with the related sectors in the model (e.g. sports & recreation, restaurants, retail, and entertainment). The model is then run to simulate the flow of these expenditures through the economy. In this process, the inter-relationships between consumers and industries generate each level of impact for each economic indicator (sales, wages, employment, etc.).

9.5

Projected Economic Impacts – Montgomery County

Figure 9.3 summarizes the projected countywide economic impacts of the proposed facility. In Montgomery County, $30.1 million of total event spending in the facility’s first year of operations is expected to generate $19.1 million in indirect and induced expenditures, resulting in an economic impact of $49.2 million throughout Montgomery County. This countywide economic impact will include $9.0 million in employee salaries and wages, supporting an estimated 416 total jobs.

Once the proposed facility reaches its stabilized year of operations in year five, the total countywide economic impact is estimated to amount to $85.0 million, including $15.6 million in employee salaries and wages, supporting 719 total jobs throughout the county.

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

Figure 9.3: Projected Economic Impacts, Montgomery County ($ Millions & Total Jobs) Description Total Event Spending ($ Millions) Indirect & Induced Expenditures ($ Millions) Total Economic Impact ($ Millions) Total Employment Impact Total Employee Salaries & Wages ($ Millions)

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Economic Impacts - Montgomery County

Year 7

Year 8

Year 9 Year 10

$30.1

$38.5

$45.4

$50.1

$52.0

$52.0

$52.0

$52.0

$52.0

$52.0

$19.1

$24.5

$28.8

$31.8

$33.0

$33.0

$33.0

$33.0

$33.0

$33.0

$49.2 416

$63.0 533

$74.2 628

$81.9 693

$85.0 719

$85.0 719

$85.0 719

$85.0 719

$85.0 719

$85.0 719

$9.0

$11.5

$13.6

$15.0

$15.6

$15.6

$15.6

$15.6

$15.6

$15.6

Source: Tourism Economics (2014)

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Montgomery County Executive Meeting and Events Center Market & Economic Impact Study January 2015

9.6

Projected Economic Impacts – State of Pennsylvania

Figure 9.4 summarizes the projected statewide economic impacts of the proposed facility. In the State of Pennsylvania, $30.1 million of total event spending in the facility’s first year of operations will generate $33.5 million in indirect and induced expenditures, resulting in an economic impact of $63.6 million throughout the State. This statewide economic impact will include $19.0 million in employee salaries and wages, supporting an estimated 818 total jobs. Once the proposed facility reaches its stabilized year of operations in year five, the total statewide economic impact will amount to $109.9 million, including $32.8 million in employee salaries and wages, supporting 1,415 total jobs throughout the State.

Figure 9.4: Projected Economic Impacts, State of Pennsylvania ($ Millions & Total Jobs) Description Total Event Spending ($ Millions) Indirect & Induced Expenditures ($ Millions) Total Economic Impact ($ Millions) Total Employment Impact Total Employee Salaries & Wages ($ Millions)

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Economic Impacts - State of Pennsylvania

Year 7

Year 8

Year 9 Year 10

$30.1

$38.5

$45.4

$50.1

$52.0

$52.0

$52.0

$52.0

$52.0

$52.0

$33.5

$42.9

$50.6

$55.8

$57.9

$57.9

$57.9

$57.9

$57.9

$57.9

$63.6 818

$81.4 1,048

$96.0 $105.9 $109.9 $109.9 $109.9 $109.9 $109.9 $109.9 1,236 1,363 1,415 1,415 1,415 1,415 1,415 1,415

$19.0

$24.3

$28.6

$31.6

$32.8

$32.8

$32.8

$32.8

$32.8

$32.8

Source: Tourism Economics (2014)

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