HVS ACC Market Study 10-31-2013

8/13/2019 HVS ACC Market Study 10-31-2013

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CONVENTION CENTER MARKET STUDY

The Albany Capital CenterALBANY, NEW YORK

SUBMITTED TO:EXISTING

Mr. Duncan Stewart,

Albany Convention Center Authority386 BroadwayAlbany, New York, 12207-2903

[email protected]+1 (518) 275-4920

PREPARED BY:

HVS Convention, Sport& Entertainment

Facilities Consulting205 West RandolphSuite 1650

Chicago, Illinois 60606+1 (312) 587-9900

October 31, 2013


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Convention, Sports & Entertainment

Facilities Consulting

Chicago, Illinois

October 31, 2013

Mr. Duncan Stewart

Albany Convention Center Authority

386 Broadway

Albany, New York, 12207-2903

[email protected]

Re: The Albany Capital Center

Albany, New York

Dear Mr. Stewart:

Attached you will find our Convention Center Market Study of the proposed

Albany Capital Center.

We hereby certify that we have no undisclosed interest in the property, and our

employment and compensation are not contingent upon our findings. This study is

subject to the comments made throughout this report and to all assumptions and

limiting conditions set forth herein.

It has been a pleasure working with you. We look forward to hearing your

comments.

Sincerely,

HVS Convention, Sports & Entertainment


Thomas A Hazinski

Managing Director

Brian Harris

Senior Analyst

205 West Randolph

Suite 1650

Chicago, Illinois 60606

+1 312-587-9900

+1 312-488-3631 FAX

www.hvs.com

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Table of Contents

SECTION TITLE

1. Summary of Findings

2. Statement of Assumptions and Limiting Conditions3. Certification


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October 31, 2013 Summary of Findings

Convention Center Market Study Albany Capital Center 11-1

1. Summary of Findings

The Albany Convention Center Authority (the Authority) engaged HVSConvention, Sports & Entertainment Facilities Consulting (HVS) to analyze the

development of a proposed convention and conference center called the AlbanyCapital Center (ACC). HVS previously studied the Albany convention centermarket and published its results in an October 2009 report. Our prior studyincluded a market assessment, competitor analysis, and a survey of eventplanners. For our updated research, HVS relied on information from the 2009study to the extent it remains relevant.

HVS Convention, Sports & Entertainment staff collected and analyzed allinformation contained in this report. HVS sought out reliable sources and deemedinformation obtained from third parties to be accurate. Thomas Hazinski andBrian Harris traveled to Albany to inspect the site, confer with the physicalplanning team, and meet with representatives of the Authority and other key

project stakeholders.

The Authority proposes to construct the ACC in downtown Albany. See the figurebelow.

NATURE OF THE

ASSIGNMENT

CONVENTION CENTER

ANALYSIS


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FIGURE 1-1 PROPOSED CONVENTION CENTER SITE

The proposed site is bounded by Eagle Street, Howard Street, Wendell Street, andthe skywalk, which would connect it to the Empire Plaza and the Times UnionCenter. The images below show the proposed site in its current condition.


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AERIAL VIEW OF THE PROPOSED SITE

VIEW OF THE PROPOSED SITE FROM THE SOUTH


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EXISTING PEDESTRIAN CONNECTION TO TIMES UNION

The proposed development would include the following elements:

A divisible exhibit hall of approximately 25,000 square feet,

6,300 square feet of pre-function space adjacent to the exhibit hall withretractable walls such that it could combine with the exhibit hall andprovide over 30,000 square feet of contiguous space,

A 10,000 square foot divisible junior ballroom that would also serve asmeeting breakout space,

9,000 square feet of dedicated breakout meeting space,

A commercial production kitchen,

Storage, service, loading and other support areas,

A total floor area of approximately 85,000 square feet, and

Facility parking for 250 vehicles and adjacent parking for 1,000 cars at theTimes Union Center.

The figures below show preliminary conceptual floor plans.


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FIGURE 1-2 LEVEL ONE - PRELIMINARY FLOOR PLANS

Source: Clough Harbor Associates


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FIGURE 1-3 LEVEL TWO - PRELIMINARY FLOOR PLANS



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FIGURE 1-4 PARKING LEVEL - PRELIMINARY FLOOR PLANS



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The project plan also includes conversion of the skyway connection to the TimesUnion Center and the Empire Plaza to an enclosed, secure, and conditionedpedestrian walkway. This connection would allow use of the ACC in conjunctionwith its neighboring venues. For example, a convention could use meeting andbanquet space in the ACC and the Empire Plaza. A consumer show could use thearena floor area and the exhibition hall in the ACC.

The historic DeWitt Clinton building sits on the northwest boundary of the

proposed ACC site. See the image below.

FIGURE 1-5 VIEW OF DEWITT CLINTON HOTEL FROM SITE

In cooperation with Marriott Hotels and Resorts, the Columbia DevelopmentCompanies proposed returning the DeWitt Clinton building to its original purposeas a hotel. A $48.5 million renovation would create a 204-room Renaissance Hotelwith an adjacent 200-car parking garage. Public support for the project wouldcome from the Upstate Regional Blueprint Fund, which would contribute $4.0

million toward the project. The project could be completed by 2015 and coincidewith the opening of the ACC.

Current plans for the Dewitt Clinton redevelopment do not include an enclosedconnection to the ACC despite its location adjacent to the proposed ACC. A directconnection to the hotel, perhaps through the proposed parking deck, couldsignificantly improve the attractiveness of the ACC for meeting, conference, andconvention events, especially during months of inclement weather. Most eventplanners prefer self-contained venues that allow their attendees to move quicklyand conveniently between their lodging accommodations and meeting facilities.HVS highly recommends further consideration of establishing a direct and

Connection of DeWitt

Clinton to the ACC


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enclosed connection between the hotel and the ACC, but for the purposes of thisstudy, we do not assume the connection will be built.

We assume that the Authority would own the ACC and a contracted professionalbuilding management company would operate it. This management companywould enter into cooperative agreements with management of the Empire Plazaand the Times Union Center to host events that would use more than one venue.

Alternatively, a single management company could operate the ACC, one, or two ofthe adjacent venues. Combined management could offer a single point of contactfor customers and reduce overhead and operating costs. While HVS recommendsexploring opportunities for joint management of multiple venues, for the purposesof this study we have modeled a stand-alone operation of the ACC.

The building management company and the Albany County Convention andVisitors Bureau (the Bureau) would share market and sales responsibilities. TheBureau would focus on longer term convention business, with the primary goal ofattracting out-of-town visitors. The building managers and sales force would focuson shorter-term bookings and events such as consumer shows and social eventswith mostly local attendees. We assume that similar to most cities, the Bureau and

building managers would establish priority booking policies and protocols placingemphasis on generating new visitation to Albany.

The figure below shows the floor areas of the Empire Plaza, Times Union and theproposed ACC.

FIGURE 1-6 CAPACITIES OF COMBINED VENUE

ACC Empire

Plaza

Times

Union Total

E xh ib itio n Ar ea* 25 ,00 0 1 7,0 00 58 ,00 0 10 0,0 00

Banquet Space 10,000 26,000 0 36,000

Meeting Rooms 9,000 14,000 0 23,000

*Includes exibition s pace on aren a floor.

Combined use of the venues would significantly expand the capacity of Albany tohost convention, consumer shows, conferences and meetings. The lack ofcontiguous exhibit space could limit the attractiveness of the venue to many eventplanners who prefer that exhibitors all have similar access to space and attendeetraffic.

Ownership and

Management


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Analysis of comparable venues provides a basis for forecasts of event demand andfinancial operations.

The proposed ACC would compete with other cities in the state of New York andacross the U.S. for a share of the meetings market. Event planners select host citiesfor their events based on the overall package that a city offers. Several factorsdetermine a citys strength and potential in the meetings market, including theattributes of the convention facilities, lodging supply, the economic and

demographic profile of the community, transportation access, tourism amenities,and overall destination appeal.

HVS analyzed two sets of competitive and comparable venues shown in the figurebelow.

FIGURE 1-7 COMPARABLE VENUES

State Competitors

Buffalo Niagara Convention Center Buffalo NY 115,897 sf

Conference Center Niagara Falls Niagara Falls NY 52,866

Convention Center at Oncenter Syracuse NY 86,990

Empire State Plaza Convention Center Albany NY 55,827

Rochester Riverside Convention Center Rochester NY 71,875

Saratoga Springs City Center Saratoga Springs NY 33,000

Times Union Center Albany NY 28,000

Combined Albany Venues Albany NY 159,000

Comparable National Venues

Monona Terrace Convention Center Madison WI 68,370 sf

Kansas Expocentre Topeka KS 68,050

MassMutual Center Springfield MA 72,232

Mid-America Center Convention Center Council Bluffs IA 78,000

St. Charles Convention Center St. Charles MO 58,924Century Center South Bend IN 54,151

Evansvil le Auditorium and Convention Centre Evansvi lle I N 59,932

Combined Albany Venues Albany NY 159,000

Name of Venue Location Total Function

Space

Exhibition space is critical for conventions, tradeshows, and consumer shows. Theamount and quality of exhibition space determines the size and types of eventsthat the venue can accommodate. The exhibition space available at each of theselected comparable facilities provides an indication of the amount of spaceappropriate for Albany.

Comparable Venues

Exhibition Space

Assessment


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FIGURE 1-8 EXHIBITION SPACE IN COMPARABLE VENUES

State Competitors sf # halls

Combined Albany Venues 100,000 2

Convention Center at Oncenter 65,250 2

Buffalo Niagara Convention Center 64,410 1

Rochester Riverside Convention Center 49,275 2

Conference Center Niagara Falls 32,300 1

Times Union Center 28,000 1Proposed Albany Capital Center 25,000 2

Saratoga Springs City Center 20,000 4

Empire State Plaza Convention Center 17,000 1

Average 44,582 2

Comparable National Venues sf # halls


Kansas Expocentre 68,050 3

Mid-America Center Convention Center 54,000 0

MassMutual Center 49,000 3

Monona Terrace Convention Center 37,200 2

Evansville Auditorium and Convention Centre 36,252 2

St. Charles Convention Center 35,700 6

Proposed Albany Capital Center 25,000 2Century Center 24,472 2

Average 47,742 3

Due to site constraints, the proposed venue would have less exhibition space thanmost of the comparable venues. However, joint use of the Times Union arena flooror the Empire State Plaza Convention Center for large exhibits could address thisdeficiency.

Facility operators consider banquet space important in their convention centers.They want to grow food service revenues at their facilities and event planners seeka higher level of service for their attendees. In addition to social events (such asweddings and fundraisers) that host banquets, several other types of events, suchas conventions and tradeshows, typically require food services in a ballroomsetting. Event planners hold general assemblies at conventions and tradeshows ina ballroom with a theater or banquet set-up. Consequently, the size of the ballroomcan determine a venues event size capacity. The ballrooms maximum number ofdivisions affects its ability to host simultaneous events that require banquet space.The figure below compares available banquet space in the comparable venues.

Ballroom Space

Assessment


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FIGURE 1-9 BALLROOM SPACE IN COMPARABLE VENUES

State Competitors sf # divisions


Empire State Plaza Convention Center 25,827 0


Buffalo Niagara Convention Center 12,367 1

Conference Center Niagara Falls 10,500 2

Rochester Riverside Convention Center 10,028 1Proposed Albany Capital Center 10,000 3

Saratoga Springs City Center 0 0

Times Union Center 0 0

Average 17,086 2

Comparable National Venues sf # divisions


Mid-America Center Convention Center 23,000 4

St. Charles Convention Center 16,200 6

MassMutual Center 14,880 3

Monona Terrace Convention Center 13,524 4

Evansville Auditorium and Convention Centre 13,312 4

Century Center 12,012 2

Proposed Albany Capital Center 10,000 3

Kansas Expocentre 0 0

Average 17,366 4

The proposed ACC has the smallest ballroom among the comparable venues otherthan the Kansas Expocentre which does not have a ballroom. Management wouldneed to use the exhibit hall (multi-purpose) for banquets and space in the EmpirePlaza to make up for its relatively small size.

Meeting rooms can accommodate sub-groups as they break out of larger generalsessions at conventions and tradeshows. Additionally, these smaller rooms canaccommodate self-contained meetings, training sessions, seminars, classes, and avariety of small meeting functions. Event planners tend to use a facilitys meetingrooms most frequently. Generally, convention centers should offer meeting spaceproportionate to the exhibition space available at the facility. However, theoptimum amount of meeting space can vary depending on a facilitys targetmarket.

The following figure presents a comparison of available meeting space.

Meeting/Break-out

Room Assessment


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FIGURE 1-10 MEETING SPACE IN COMPARABLE VENUES

State Competit ors sf # rooms

Buffalo NiagaraConventionCenter 39,120 20

Comb ined A lb any Ve nu es 2 3,0 00 6

Empire StatePlazaConventionCenter 13,000 7

Saratoga SpringsCity Center 13,000 4

Rochester Riverside ConventionCenter 12,572 20

Conference Center Niagara Falls 10,066 12Pr op osed Alb any Cap ita l Center 9 ,0 00 6


Times Union Center 0 0

Average 15,827 11

Comparable National Venues sf # rooms

Comb ined A lb any Ve nu es 2 3,0 00 6

Ce ntury Ce nte r 1 7,6 67 1 8

Monona TerraceConventionCenter 17,646 14

Evansville Auditorium andConvention Centre 10,368 12

Pr op osed Alb any Cap ita l Center 9 ,0 00 6

Mass Mutual Ce nte r 8,352 5

St. Ch arle s C on ventio n Ce nte r 7 ,0 24 7

Mid-AmericaCenter ConventionCenter 1,000 6Kansas Expocentre 0 0

Average 11,757 9

The proposed ACC has lower than average amounts of meeting breakout space.Use of the ballroom as breakout space and use of space in the Empire Plaza wouldmake Albany more competitive for convention and conference events.

To attract out-of-town groups, an adequate supply of nearby hotel rooms shouldsupport the lodging needs of delegates, exhibitors, and other attendees. Eventplanners value proximity and connectivity when evaluating hotel packagesavailable in competing communities. Generally, they compare the number ofrooms offered at one or more hotels adjacent or connected to the conventioncenters. Other important factors include hotel brands, service levels, building ages,management, and available meeting and banquet spaces in these hotels.

Adjacent Hotel

Capacity


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FIGURE 1-11 ADJACENT OR INTEGRATED HOTEL CAPACITY

State Competitors

Rochester Riverside Convention Center 1,165

Proposed Albany Capital Center 590

Empire State Plaza Convention Center 590

Times Union Center 590

Combined Albany Venues 590

Buffalo Niagara Convention Center 400Convention Center at Oncenter 350

Saratoga Springs City Center 242

Conference Center Niagara Falls 0

Average 565

Comparable National Venues

Proposed Albany Capital Center 590

Combined Albany Venues 590

Century Center 474

Evansville Auditorium and Convention Centre 471

Monona Terrace Convention Center 240

Kansas Expocentre 224

Mid-America Center Convention Center 133

MassMutual Center 0

St. Charles Convention Center 0

Average 389

Assuming the addition of the DeWitt Clinton and with the proximity of the HiltonHotel, the ACC would offer an above average number of adjacent hotel rooms.

In 2009, HVS conducted an event planner survey that provided data on the exhibit,banquet, and meeting space requirements for their events. HVSs 2009 studyprovides the complete results of this survey. The figure below shows the percentof events that the proposed program for the ACC could accommodate.

Ability to Meet Event

Planner Space

Requirements


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FIGURE 1-12 PERCENT OF EVENTS ACCOMMODATED BY PROPOSED DEVELOPMENT

74%

44%

60%

ExhibitSpace

MeetingSpace

BanquetSpace

ACCOnly

Accommodatedby Plan NotAccommodatedby Plan

93%

86%

88%

ExhibitSpace

MeetingSpace

BanquetSpace

CombinedVenues

Percent of Events Accommodated Percent NOTAccommodated

Based on HVSSurvey Results

These results show that management of the ACC must jointly use the Empire Plazaand the Times Union to capture a larger share of the market, particularly formeeting space.

HVS reviewed lost business reports from the Bureau for the years 2009 through2012. Lost business included events that considered Albany by reserving dates butultimately decided not to come to the City. The figure below summarizes this lostbusiness data.

FIGURE 1-13 LOST BUSINESS

Year Vi sitors Room Nights

2012 41,093 30,514

2011 37,172 31,897

2010 33,600 17,4042009 28,788 27,083

Total 140,653 106,898

Average 35,163 26,725

Source: A lbany County Convention & Visitors Bureau (ACCVB)

For most events, the Bureau was unable identify the reason for the event planneror their boards decision to use another destination. But, this information providesan indication of the overall level of business lost each year. An improved ACCwould enable the Bureau to capture a share of this business and to open up Albanyto new events that cannot be accommodated due to a lack of adequate facilities.

Lost Business Analysis


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HVS developed a demand scenario for the proposed ACC assuming that:

1. It functioned as a stand-alone venue,

2. The Times Union and Empire State Plaza venues continued to operate asthey do today, and

3. The three venues establish a cooperative relationship that allows them to

jointly host events.

The figure below breaks out event projections by type of event. Total and averageattendance figures represent individual event attendees.

FIGURE 1-14 DEMAND PROJECTIONS FOR ACC

2016 2017 2018 2019 2020

Events

Conventions 8 12 14 16 16

Tradeshows 6 8 9 10 10

Consumer Shows 11 14 15 15 15

Special Events 8 11 12 12 12

Assemblies 6 7 8 8 8

Banquets 18 24 30 30 30

Meetings 66 88 110 110 110

Total 123 163 198 201 201

Average Attendance

Conventions 690 690 690 690 690

Tradeshows 900 900 900 900 900

Consumer Shows 2,000 2,000 2,000 2,000 2,000

Special Events 1,000 1,000 1,000 1,000 1,000

Assemblies 1,125 1,125 1,125 1,125 1,125

Banquets 250 250 250 250 250

Meetings 80 80 80 80 80

Total AttendanceConventions 5,520 8,280 9,936 11,040 11,040

Tradeshows 5,400 6,750 8,100 9,000 9,000

Consumer Shows 21,000 27,000 30,000 30,000 30,000

Special Events 8,400 10,800 12,000 12,000 12,000

Assemblies 6,750 8,100 9,000 9,000 9,000

Banquets 4,500 6,000 7,500 7,500 7,500

Meetings 5,280 7,040 8,800 8,800 8,800

Total 57,000 74,000 85,000 87,000 87,000

A brief description of the event types and explanation of demand projectionsfollows.

Demand Projections


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ConventionsConventions are events that require a combination of exhibition,banquet, and meeting space. Planners could divide and set up the existing exhibithall in various configurations to accommodate these events. If needed, the newmulti-purpose hall could provide additional exhibition space. Meeting andballroom space could accommodate the break out meetings and meals in thesemulti-day events. Most conventions would comprise of national, regional, and stateassociations. This demand category could also include religion and other SMERFgroups rotating to Albany for annual events.

TradeshowsTradeshows provide a means for wholesalers and retailers totransact business with industry buyers. As such, these exhibit-oriented eventsinvolve the display and demonstration of their products. Tradeshows requiresome meeting and meal space; however, tradeshow planners require much lessspace than they need for conventions. The expansion of existing shows producedby regional corporations and enterprises would drive additional tradeshowdemand. HVS projects that the average trade show would modestly increase inboth exhibit size and attendance.

Consumer ShowsConsumer shows are ticketed, public events that attract localand regional attendees, such as home and garden shows and car shows. The

existing exhibit hall would remain the main exhibit space for vendors. Theseevents would need some meeting space for support and back of house uses. Foodand beverage services would be limited to concessions. HVS projects consumershow demand to be consistent with historical levels.

MeetingsMeetings require breakout meeting space but do not use banquet orexhibit space. Food service consists simply of coffee breaks, breakfasts, orluncheons in meeting rooms. Civic organizations, local corporations, stateassociations, religious groups, and government agencies all host meetings.Although the size of the meetings ranges from 10 to over 1,000 persons, mostmeetings and conferences have fewer than 100 attendees and take place inbreakout meeting space. The multi-purpose hall and ballrooms could also handlelarger meetings or several smaller simultaneous meetings as needed. HVS projectsthat the improved meeting space and reduced conflicts would moderately increaseoverall demand for meetings.

ConferencesConferences occur over multiple days and have similarities withmeetings. However, conferences typically have a banquet component. Conferencesrequire a mix of banquet and breakout space set-up with occasional assemblyspace. But, they do not require any exhibit set-up. With the introduction of themulti-purpose hall and the additional ballroom and breakout meeting space, HVSincorporated this new event category into its demand projections. Similar to


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conventions, conference demand would primarily come from national and stateassociations and corporations.

BanquetsBanquets consist of stand-alone social events, luncheons, and othermeals typically booked by local corporations, social and civic organizations, andprivate clients. The flexibility of the ballroom and pre-function spaces would allowfor a variety of banquet sizes and multiple simultaneous events. Since theballrooms must also accommodate the needs of the venues convention clients, this

flexibility is crucial to operate the facility with minimal scheduling conflicts.

OtherOther events include a variety of local-oriented facility rentals that includesuch events as exams, charity events, press conferences, radio/television satellitebroadcasts, blood drives, and other civic uses. HVS projects that the demand forthese other events would remain consistent with historical levels.

A venues ability to expand its established base of business indicates strength ofdemand. An analysis of demand at comparable facilities and markets tests thereasonableness of these demand projections. In order to evaluate the demandprojections effectively, HVS expanded its comparable analysis to include a muchbroader selection of markets with conference center venues of similar size. The

following figure compares the average convention and meeting demand for severalyears of recent historical demand of five venues with similar sized function spaces.These venues represent a wide range of markets with a mix of population size,economic breadth, and destination appeal. Because of the unique operatingcharacteristics of exhibit and meeting facilities, no single facility or market servesas a direct comparable to the proposed ACC. The averages from a large set of eventdata provide evidence for the reasonableness of our projections.

Event Demand at

Comparable Venues


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FIGURE 1-15 COMPARABLE CONVENTION CENTER EVENT DEMAND

Mid-

America

Center

Convention

Center

St. Charles

Convention

Center

Monona

Terrace

Convention

Center

Century

Center

Rochester

Riverside

Convention

Center

Sarasota

Springs City

Center

Average* Proposed

Albany

Buffalo St. Charles Madison South Bend Rochester Saratoga

SpringsAlbany

MO MO WI IN NY NY NYFY CY CY CY FT CY FY

2011 2011 2011 2010 2013 2012 2019

Number of Events

Conventions & Tradeshows 31 34 30 15 26 7 24 26

Consumer Shows 29 30 23 16 14 0 22 15

Banquets 39 64 210 69 0 22 81 30

Meetings & Conferences 46 155 239 297 36 71 141 110

Assemblies, Sports, Concerts & Other 47 28 128 114 251 50 103 20

Total 192 311 630 511 327 150 354 201

Average Attendance

Conventions & Tradeshows 556 642 NA 973 2,931 NA 1,275 771

Consumer Shows 1,392 4,389 NA 2,789 3,258 NA 2,957 2, 000

Banquets 280 444 NA 259 0 NA 328 250

Meetings & Conferences 109 120 NA 93 194 NA 129 0

Assemblies, Sports, Concerts & Other 728 986 NA 464 388 NA 642 0

Overall Average 561 734 339 308 692 949 597 435

Total Attendance

Conventions & Tradeshows 17,230 21,829 NA 14,594 76,201 NA 32,464 20,040

Consumer Shows 40,366 131,680 NA 44,629 45,609 NA 65,571 30, 000

Banquets 10,916 28,423 NA 17,844 0 NA 19,061 7,500

Meetings & Conferences 5,031 18,647 NA 27,533 6,966 NA 14,544

Assemblies, Sports, Concerts & Other 34,228 27,619 NA 52,896 97,500 NA 53,061

Total 107,771 228, 199 213,301 157, 496 226,276 142, 404 179,241 87, 340

*Average the only available data.

Sources: Event Data from Respective Facilties as Classified by H VS

Data Year

HVS projections fall below the results of most of these comparable venues due tothe proposed ACCs smaller size. Combined use of the Times Union and ACC couldgenerate more events, greater attendance, and lift the ACCs performance towardthe average level of comparable venues.

Using assumptions regarding the percentage of attendees that require lodging,double room occupancy and length of stay, HVS calculated the potential generationof room nights. See the figure below.

Room Night

Projections


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FIGURE 1-16 ROOM NIGHT ESTIMATES

Type 2016 2017 2018 2019 2020

Conventions 12,420 18,630 22,356 24,840 24,840

Tradeshows 6,750 8,438 10,125 11,250 11,250

Consumer Shows 2,100 2,700 3,000 3,000 3,000

Total 21,270 29,768 35,481 39,090 39,090

In a stabilized year of demand, the ACC would induce nearly 40,000 room nightsinto the Albany hotel market.

HVS demand projections should show the expected levels of event numbers andattendance. Projections show smooth growth over time. However, event demandand booking cycles do not always move smoothly. Unpredictable local and nationaleconomic factors affect businesses. Event demand often moves in cycles based onrotation patterns and market conditions. Therefore, HVS recommends interpretingthe demand projections as a mid-point of a range of possible outcomes and over a

multi-year period rather than relying on projections for any one specific year.

HVS uses a proprietary financial operating model to estimate revenues andexpenses at conventions centers. This model quantifies the key variables andoperating ratios that determine revenue potential and expenses levels. Unlessotherwise indicated, the model assumes that an annual inflation rate of 2.5 percentapplies to both revenues and expenses.

The convention center industry does not use a standardized set of accountingprinciples for reporting financial performance. Convention center operatorsemploy a variety of accounting methods. Financial statements from differentconvention centers organize revenues and expenses differently. However, most

convention facilities commonly use a few major revenue and expense categories.HVS developed a financial operating model that organizes financial operationsaccording to these primary revenue and expense categories. We organized thefinancial operating projections presented below differently from most financialoperating statements.

Revenue line items include facility rental, food and beverage sales, event services,event labor, and parking fees. The model uses a series of revenue assumptionsbased on attendance, floor area utilization, or occupied days. HVS measuresattendance in delegate-days, the average daily attendance times the number ofevent days. HVS measures floor area utilization in Gross Square Foot Days(GSFD)the amount of floor area rented times the number of rental days

Financial Analysis

Operating Revenues


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including move-in and move-out days. Occupied days only include days withpresent attendees.

To formulate the revenue assumptions, HVS relied on industry information,knowledge of the performance of comparable venues, and information on pricelevels from local area sources. We adjusted the assumptions for inflation and otheranticipated trends in price levels.

The figure below summarizes the departmental revenue assumptions for theproposed center by type of event. A brief description of each revenue item follows.

FIGURE 1-17 REVENUE ASSUMPTIONS IN A BASE YEAR (UNINFLATED)

Space Rental Event Services Food & Other Revenue

per per per perGSFD GSFD Attendee GSFD

Conventions 0.11$ 0.06$ 6.40$ 0.02$

Tradeshows 0.11 0.06 3.70 0.02

Consumer Shows 0.11 0.06 2.25 0.02

Special Events 0.11 0.06 2.25 0.02

Assemblies 0.11 0.06 2.25 0.02Banquets - - 42.40 -

Meetings - - 32.00 -

Type

Space RentalFacility rental revenue includes the revenue the venue receivesfrom clients that reserve one or more function areas in the facility. Despite havingpublished rates, convention centers typically charge rental fees based onnegotiated daily rental fees. Facilities do not charge a rental fee for every event. Afacility may reduce or waive the exhibit rental charges to book an event that has astrong economic impact on the local market.

Event ServicesEvent Services include the fees charged to tenants for servicessuch as business services, audio and video technical assistance, set-up and takedown of function spaces, cleaning services, security services, electricity and otherutilities, commissions from decorators and other services provided by third-partycontractors at events. Many events also require audio, video, communications andinternet services. Banquets and other upscale events can often require elaboratedecorating services. Almost all events require cleaning services. Some venuesinclude complimentary cleaning of common areas, while cleaning services offeredto individual exhibitors can represent a significant source of revenue. Servicecharges vary by type of event. Some of these services incur rental charges for usingthe facility.


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Food and BeverageMost events that use the proposed facilitys function spacewould also arrange for food service for their attendees during their events. Thisfood service includes catering which can range from coffee breaks associated witha meeting to a full dinner associated with a convention or banquet. Consumershows, sporting events, and other events may generate concessions revenue. Mostconventions and conferences generate demand for multiple meals during thecourse of these multi-day events. Meetings and banquets generally include a singlemeal or refreshment services. HVS projects estimated gross food and beverage

revenues on a per delegate-day basis depending on the type of event. Events likeconventions and tradeshows typically spend the most per attendee. Consumershows have lower per capita spending.

OtherThe HVS model estimates other revenue based on occupied square footdays. Other revenue may include advertising revenue, damages billed to tenants,interest income, special fees, and other non-recurring ancillary income.

HVS estimated operating expenses as a blend of fixed costs and variablepercentage of operating revenues as summarized in the figure below. HVS basedthese fixed and variable assumptions on multiple years of historical revenue andexpense data and other industry standards. An explanation of these estimates and

a brief description on each expense line item follows.

FIGURE 1-18 EXPENSE ASSUMPTIONS (2012 DOLLARS)

Expenditure Percentage Revenue Fixed Expense for

Base Year

Personnel $910,000

Benefits 30.0% of Personnel

G&A $100,000

Contractual Services $70,000

Cost o f Event Services 50 .0% of Event Services

Food & Beverage Cost 70 .0% of Food & Beverage

Marketing & Sales Costs $60,000

Utilities $220,000

Maintenance & Repairs $50,000

Supplies & Equipment $40,000

Insurance 0.5% of Total Operating Rev $40,000

Management Fee $75,000

R es erv e f or R eplac ement 4 .0% of Total Operating Rev

Operating Expenses


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Salaries & BenefitsBased on existing staffing level and salary & benefitexpenses, HVS estimated the salaries and associated benefits for permanent fulland part-time employees dedicated to administration, marketing, buildingoperations, and other functions. This category does not include part time food &beverage staffing, which includes vendor costs.

Food & Beverage CostsHVS assumes that an in-house food service operatorwould operate the food and beverage operation. Costs of food service include the

raw costs of food and beverages sold as well as the labor associated with foodpreparation and service.

Event Services CostsEvent services costs are the costs incurred by the facilityfor client reimbursed expenses such as audio visual set-up, security, cleaning, andevent set-up. HVS estimated event services costs as a percentage of gross eventservices based on historical operations.

Contractual ServicesContractual services include any outsourced operationsand maintenance services as well as professional services in conducting venueoperations such as legal, accounting, tax, consulting or other advice.

Administrative & GeneralOffice and administrative operations incur day-to-day facility expenses. Such expenses typically include travel, telephone, printing,permits, and other miscellaneous services.

Repair & MaintenanceThis category includes both routine and one-timefacility maintenance expenses that in-house facility operations personnel handle. Italso includes more specialized activities, such as HVAC system maintenance,electrical work, and maintenance of other mechanical systems often contractedout to third parties.

Supplies & EquipmentThis category includes items such as computers, officemachines, furniture, consumables, and chemicals that are required to support and

maintain the operations of the facility.

UtilitiesUtilities, including electricity, gas, water, and other charges oftenrepresent one of the largest expenses incurred by facility operators.

InsuranceInsurance costs include property insurance and other liabilityinsurance required for facility operations.

Other ExpensesOther expenses could include miscellaneous operations costs,legal costs, special training expenses, collection costs, credit losses, bank fees, andother small miscellaneous expenses.


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Management & Incentive FeesHVS assumes the Authority pay managementfees for the operation of the ACC. HVS based these fees on a typical qualifiedmanagement agreement for a venue of this size. The base management feeincreases by an inflationary rate of 2.5 percent each year from a base rate of$75,000 in 2012 dollars.

Reserve for Replacement HVS assumes the Authority will fund a reserve forreplacement account for future building needs.

The figure below presents the five-year financial projections for the proposedproperty, including the expanded multi-purpose hall, banquet and meeting spaces.HVS made projections in inflated dollars beginning July 1, 2016, the projectedopening of the proposed ACC.

Operating Pro Forma


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FIGURE 1-19 PROJECTED FIVE YEAR FINANCIAL OPERATIONS FOR THE ALBANY CAPITAL CENTER (ACC)

Expansion Stabilized

2016 2017 2018 2019 2020

ACC OPERATING REVENUESpace Rental $184,000 $494,000 $578,000 $616,000 $632,000

Event Services 92,000 247,000 289,000 308,000 316,000Food & Beverage 274,000 748,000 937,000 973,000 997,000

Other Revenue 28,000 76,000 89,000 95,000 98,000Total $578,000 $1,565,000 $1,893,000 $1,992,000 $2,043,000

ACC OPERATING EXPENSES

Personnel $502,000 $1,030,000 $1,055,000 $1,082,000 $1,109,000Benefits 151,000 309,000 317,000 325,000 333,000G&A 55,000 113,000 116,000 119,000 122,000

Contractual Services 39,000 79,000 81,000 83,000 85,000Cost of Event Services 46,000 123,000 144,000 154,000 158,000Food & Beverage Cost 192,000 524,000 656,000 681,000 698,000Marketing & Sales Costs 33,000 68,000 70,000 71,000 73,000

Utilities 121,000 249,000 255,000 262,000 268,000Maintenance & Repairs 28,000 62,000 70,000 77,000 79,000Supplies & Equipment 22,000 45,000 46,000 48,000 49,000

Total $1,189,000 $2,602,000 $2,810,000 $2,902,000 $2,974,000

ACC OPERATING INCOME (LOSS) ($611,000) ($1,037,000) ($917,000) ($910,000) ($931,000)

ACC NON-OPERATING EXPENSESInsurance 24,000 53,000 56,000 58,000 59,000

Management Fee 41,000 85,000 87,000 89,000 91,000Reserve for Replacement 12,000 47,000 76,000 80,000 82,000

Total $77,000 $185,000 $219,000 $227,000 $232,000

SUBTOTAL ($688,000) ($1,222,000) ($1,136,000) ($1,137,000) ($1,163,000)

ACCA Operations1 $292,000 $500,000 $525,000 $551,250 $578,812

SUBTOTAL ($980,000) ($1,722,000) ($1,661,000) ($1,688,250) ($1,741,812)

Estimated Hotel Tax Receipts 1/2 $2,194,696 $3,799,956 $3,837,957 $3,876,336 $3,915,099

ACC COMBINED NET INCOME (GAIN) $1,214,696 $2,077,956 $2,176,957 $2,188,086 $2,173,287

(1) Source: ACCA

(2) Based upon existing hotel tax distribution formula

HVS financial projections should show the expected levels of revenues andexpense. Projections show smooth growth over time. Again, HVS recommendsinterpreting the financial projections as a mid-point of a range of possibleoutcomes and over a multi-year period rather than relying on projections for anyone specific year.


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HVS analyzed the competitive hotel room supply and demand and assessed theimpact of reopening the DeWitt Clinton Hotel on the Albany hotel market. HVSdefined a competitive set of hotels based on three factors, 1) the proximity to theproposed ACC, 2) the amount of meeting space in the hotel, and 3) their ability toprovide rooms for city-wide events at the proposed ACC.

The figure below lists the hotels in the competitive set and includes the number ofrooms in each hotel and the level of competitiveness in the downtown Albany

market.

FIGURE 1-20 COMPETITIVE PROPERTIES

Primary Competitors

Property

No of

Rooms

74 State Hotel 74 100 % 74

Hampton Inn & Suites Albany Downtown 165 100 165

Hilton Garden Inn Albany Medical Center 129 100 129

Hilton Albany 386 100 386

Sub-Totals/Averages 754 100 % 754

Secondary Competitors 995 61 % 610

Totals/Averages 1,749 78 1,364

Secondary Competitors

Property

No of

Rooms

Desmond Hotel & Conference Center 324 75 % 243

Holiday Inn Albany Wolf Road 312 60 187

Marriott Albany 359 50 180

Sub-Totals/Averages 995 61 % 610

Totals/Averages 1,749 78 % 1,364

Total Comp

Level

2012 Weighted

Annual Rm Count

2012 Weighted

Annual Rm Count

Total Comp

Level

Hotels fit in two possible categories: primary competitors (100 percentcompetitive) and secondary competitors (partially competitive). The secondarycompetitors do not exist in the downtown market but still compete withdowntown hotels for meeting and group business.

HOTEL MARKET

IMPACT ANALYSIS


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The DeWitt Clinton project described earlier in this report is the only known newsupply expected to enter the market.

The following figure presents the available room nights, accommodated roomnights, occupancy, average daily room rate (ADR), and revenue per availableroom (RevPAR) for the years 2010 through 2012 for the competitive set.

FIGURE 1-21 HISTORICAL ALBANY COMPETITIVE HOTEL MARKET TRENDS

Year

Estimated 2010 293,264 497,751 58.9 % $112.91 $66.52

Estimated 2011 293,649 0.1 % 497,751 0.0 % 59.0 115.88 2.6 % 68.36 2.8 %

Estimated 2012 294,644 0.3 497,751 0.0 59.2 119.62 3.2 70.81 3.6

Avg. Annual Compounded

Chg., Estimated 2010-Estimated 2012: 0.2 % 0.0 % 2.9 % 3.2 %

Accommodated Room

Nights % Change

Room Nights

Available

Market

RevPAR % Change

%

Change

%

Change

Market

Occupancy Market ADR

The Albany market exhibited weak demand growth in 2011 and 2012. Market ADR

increased at a faster pace in 2012 versus 2011.

For the purpose of analyzing demand, HVS divided the overall market into threesegments based on the nature of travel. Based on our knowledge of the locallodging market, we estimate the 2012 distribution of accommodated room nightdemand as shown in the figure below.

FIGURE 1-22 ALBANY COMPETITIVE MARKET ACCOMMODATED ROOM

NIGHT DEMAND

Competitive Market

Market Segment

Commercial 133,811 45 %

Meeting and Group 106,319 36

Leisure 54,514 19

Total Room Nights 294,644 100 %

Percentageof Total

AccommodatedDemand

Supply Changes

Demand

Demand Analysis

Using Market

Segmentation


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Commercial demand (45 percent) includes individuals traveling for businesspurposes and represents the strongest source of demand in this market. Meetingand group events generate approximately 36 percent of market demand. Leisuredemand (19 percent) consists of individual travelers on vacation or visiting familyand friends.

HVS assumes the Albany competitive hotel market will grow at the rates shown inthe below table.

FIGURE 1-23 AVERAGE ANNUAL COMPOUNDED MARKET SEGMENT GROWTH RATES

Market Segment

Commercial 3.0 % 1.0 % 1.0 % 1.0 % 1.0 % 1.0 % 1.0 % 1.0 %

Meeting and Group 3.0 0.5 0.5 0.5 0.5 0.5 0.5 0.5

Leisure 2.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0

Base Demand Growth 2.8 % 0.8 % 0.8 % 0.8 % 0.8 % 0.8 % 0.8 % 0.8 %

Projected Annual Base Demand Change

2017 2019 20202013 2014 2015 2016 2018

In addition to growth in base demand, which should mirror overall economicgrowth, HVS projected changes in latent demand. Latent demand reflects potentialroom night demand not absorbed by the existing competitive supply and includesunaccommodated demand and induced demand.

Unaccommodated demand refers to individuals who cannot secureaccommodations in the market because of unavailable rooms. These travelersmust defer their trips, settle for less desirable accommodations, or stay inproperties located outside the market area. Because this demand does not yield

occupied room nights, estimates of historical accommodated room night demanddo not include them.

Analysis of weekly and monthly patterns of occupancy reveals the number of sold-out days during which the market cannot accommodate all room night demand.High occupancy during the legislative session causes much of theunaccommodated demand. The following figure presents our estimates by marketsegment.

Latent Demand

Unaccommodated

Demand


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Aggregating estimates of base growth and latent demand yields projections of totalfuture room night demand for the competitive set. The figure below shows ourestimates of room night demand assuming the ACC opens in July of 2016.

FIGURE 1-26 FORECAST OF AVERAGE COMPETITIVE SET OCCUPANCY WITH THE ALBANY CAPITAL

CENTER

Albany Capital Center Opens July 2016

133,811 137,825 139,204 140,596 142,002 143,422 144,856 146,304

Unaccommodated Demand 2,417 2,441 2,466 2,490 2,515 2,541 2,566

0 0 2,700 3,600 3,600 3,600 3,600

140,243 141,645 145,762 148,092 149,537 150,996 152,470

Growth Rate 4.8 % 1.0 % 2.9 % 1.6 % 1.0 % 1.0 % 1.0 %

106,319 109,509 110,056 110,606 111,159 111,715 112,274 112,835

2,956 2,971 2,986 3,001 3,016 3,031 3,046

0 0 1,800 10,800 24,800 27,600 30,400

112,465 113,027 115,392 124,960 139,531 142,905 146,281

5.8 % 0.5 % 2.1 % 8.3 % 11.7 % 2.4 % 2.4 %

54,514 55,604 56,160 56,722 57,289 57,862 58,441 59,025526 531 536 542 547 553 558

0 0 2,700 3,600 3,600 3,600 3,600

56,130 56,691 59,958 61,431 62,009 62,593 63,183

3.0 % 1.0 % 5.8 % 2.5 % 0.9 % 0.9 % 0.9 %

Base Demand 294,644 302,938 305,420 307,924 310,450 312,999 315,570 318,165

Induced Demand 0 0 7,200 18,000 32,000 34,800 37,600

Total Demand 308,837 311,364 321,112 334,483 351,077 356,494 361,935

Overall Demand Growth 2.8 % 0.8 % 3.2 % 6.2 % 5.0 % 1.5 % 1.5 %

Competitive Hotels Mix

45.4 % 45.4 % 45.5 % 45.4 % 44.3 % 42.6 % 42.4 % 42.1 %

36.1 36.4 36.3 35.9 37.4 39.7 40.1 40.4

18.5 18.2 18.2 18.7 18.4 17.7 17.6 17.5

1,364 1,364 1,364 1,364 1,364 1,364 1,364 1,364

0 0 154 204 204 204 204

Total Supply 1,364 1,364 1,364 1,517 1,568 1,568 1,568 1,568

Nights per Year 365 365 365 365 365 365 365 365

Available Rooms per Night 497,751 497,751 497,751 553,851 572,211 572,211 572,211 572,211

Rooms Supply Growth 0.0 % 0.0 % 11.3 % 3.3 % 0.0 % 0.0 % 0.0 %

Competitive Set Occupancy 59.2 % 60.8 % 61.3 % 56.9 % 58.5 % 61.4 % 62.3 % 63.3 %

Commercial

2016 2017 2018 20192012 2013 2014 2015

Base Demand

Induced Demand

Growth Rate

Total Demand

Induced Demand

Total Demand

Total Demand

Meeting and Group

Base Demand

Unaccommodated Demand

Induced Demand

Growth Rate

Leisure

Base DemandUnaccommodated Demand

Totals

Proposed Hotel Rooms

Commercial

Meeting and Group

Leisure

Existing Hotel Supply

Accommodated Demand

and Occupancy for the

Competitive Set


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To assess the impact of the proposed ACC, we estimated market growth withoutthe proposed ACC as shown in the following table.

FIGURE 1-27 FORECAST OF AVERAGE COMPETITVE SET OCCUPANCY WITHOUT THE ALBANY CAPITAL

CENTER

133,811 137,825 139,204 140,596 142,002 143,422 144,856 146,304

Unaccommodated Demand 2,417 2,441 2,466 2,490 2,515 2,541 2,566

0 0 2,700 3,600 3,600 3,600 3,600

140,243 141,645 145,762 148,092 149,537 150,996 152,470

Growth Rate 4.8 % 1.0 % 2.9 % 1.6 % 1.0 % 1.0 % 1.0 %

106,319 109,509 110,056 110,606 111,159 111,715 112,274 112,835

2,956 2,971 2,986 3,001 3,016 3,031 3,046

0 0 1,800 2,400 2,400 2,400 2,400

112,465 113,027 115,392 116,560 117,131 117,705 118,281

5.8 % 0.5 % 2.1 % 1.0 % 0.5 % 0.5 % 0.5 %

54,514 55,604 56,160 56,722 57,289 57,862 58,441 59,025

526 531 536 542 547 553 558

0 0 2,700 3,600 3,600 3,600 3,600

56,130 56,691 59,958 61,431 62,009 62,593 63,183

3.0 % 1.0 % 5.8 % 2.5 % 0.9 % 0.9 % 0.9 %

Base Demand 294,644 302,938 305,420 307,924 310,450 312,999 315,570 318,165

Induced Demand 0 0 7,200 9,600 9,600 9,600 9,600

Total Demand 308,837 311,364 321,112 326,083 328,677 331,294 333,935

Overall Demand Growth 2.8 % 0.8 % 3.2 % 3.5 % 0.8 % 0.8 % 0.8 %

Competitive Hotels Mix

45.4 % 45.4 % 45.5 % 45.4 % 45.4 % 45.5 % 45.6 % 45.7 %

36.1 36.4 36.3 35.9 35.7 35.6 35.5 35.4

18.5 18.2 18.2 18.7 18.8 18.9 18.9 18.9

1,364 1,364 1,364 1,364 1,364 1,364 1,364 1,364

0 0 154 204 204 204 204

Total Supply 1,364 1,364 1,364 1,517 1,568 1,568 1,568 1,568

Nights per Year 365 365 365 365 365 365 365 365

Available Rooms per Night 497,751 497,751 497,751 553,851 572,211 572,211 572,211 572,211

Rooms Supply Growth 0.0 % 0.0 % 11.3 % 3.3 % 0.0 % 0.0 % 0.0 %

Competitive Set Occupancy 59.2 % 60.8 % 61.3 % 56.9 % 57.0 % 57.4 % 57.9 % 58.4 %

Commercial

2016 2017 2018 20192012 2013 2014 2015

Base Demand

Induced Demand

Growth Rate

Total Demand

Induced Demand

Total Demand

Total Demand

Meeting and Group

Base Demand


Induced Demand

Growth Rate

Leisure

Base Demand


Totals

Proposed Hotel Rooms

Commercial

Meeting and Group

Leisure

Existing Hotel Supply


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FIGURE 1-28 PROJECTED OCCUPANCY FOR THE COMPETITIVE SET WITH AND

WITHOUT THE PROPOSED ALBANY CAPITAL CENTER

Stabilized Occupancy without the Albany Capital Center 58.4%

Stabilized Occupancy with the Albany Capital Center 63.3%

Increase in Occupancy in the Competitive Hotel Set 4.9%

New Induced Room Nights from the opening of the ACC 28,000

We conclude that occupancy within the competitive set would increase by nearly5.0% due to the development of the ACC. The market would absorb 28,000 newroom nights induced by the opening of the ACC. The local area economy wouldbenefit from the spending generated by new visitors on lodging, restaurant, retail,transportation, and other visitor spending. The following Economic ImpactAnalysis section breaks down the quantity of impact from the new room nights.


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Based on the demand projections presented previously in this report, HVSidentified the new spending that would occur in the local economy due to theoperations of the proposed Albany Convention Center (ACC). HVS directspending estimates include only new spending that originates from outside themarket area. We analyzed two market areas: the State of New York, and AlbanyCounty. Spending by attendees who live within the market areas is a transfer ofincome from one sector of the areas economy to another; therefore, this analysisdoes not count spending by local residents as a new economic impact. HVS further

removes attendee spending from groups that transfer business to the ACC fromanother property within the state or county.

Spending falls into three categories:

Direct spending impacts include the new spending of event attendees andorganizers. For example, an attendees expenditure on a restaurant meal is adirect spending impact.

Indirect spending impacts stem from the business spending resulting from theinitial direct spending. For example, an event attendees direct expenditure ona restaurant meal causes the restaurant to purchase food and other items from

suppliers. The portion of restaurant purchases that occur within New York orAlbany counts as an indirect impact.

Induced spending impacts represent the change in local consumption due tothe personal spending by employees whose incomes are affected by direct andindirect spending. For example, a waiter at a local restaurant may gainpersonal income from an event attendee dining at the restaurant. The amountof the increased income that the waiter spends in the local economy counts asan induced impact.

HVS enters the direct spending estimate into the IMPLAN input-output model ofthe local economy to estimate indirect and induced spending. The sum of direct,indirect, and induced spending estimates make up the total estimated spending

impact of the proposed ACCs operations.

Many refer to indirect and induced impacts as multiplier effects. The relationshipbetween direct spending and the multiplier effects can vary based upon thespecific size and characteristics of a local areas economy.

HVS identified three sources of new direct spending impact for state and AlbanyCounty market areas:

Overnight Attendee SpendingParticipants, including convention and tradeshow delegates, meeting attendees, banquet guests, and other group eventattendees, who attend ACC events and require paid lodging.

ECONOMIC IMPACT

ANALYSIS

Direct, Indirect, and

Induced Spending

Sources of Direct

Spending


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events only. The origin of exhibit attendees is not relevant in this case; however,HVS assumes that a portion of exhibitor spending would occur outside Albany orthe State of New York.

HVS combined the event demand forecasts for a stabilized year of demandfollowing the opening of the proposed ACC with the assumptions of the percent ofdemand that is new to the market. This analysis yields an estimate of the sourcesof new impact shown in the figure below.

FIGURE 1-30 SOURCE OF NEW IMPACT IN STABILIZED YEAR

Event Type Overnight

Visitors Day Trips

Convention

Delegate Days

New York

Conventions 4,968 690 5,520

Tradeshows 2,250 1,350 5,400

Consumer Shows 60 588 6,000

Special Events 0 240 0

Assemblies 0 180 0

Total 7,278 3,048 16,920

Albany County

Conventions 14,904 4,140 16,560

Tradeshows 6,750 8,100 16,200

Consumer Shows 300 2,940 18,000

Special Events 0 1,200 0

Assemblies 0 900 0

Total 21,954 17,280 50,760

The above figure is net of the existing demand at the ACC and represents only new

sources of impact to Albany and New York as a direct result of the development ofthe ACC. These estimates of overnight stays and day trips provide the basis forestimating new spending in the local market.

Attendees and event organizers spend locally on lodging, meals, recreation, localtransportation, facility rentals, vendor services, meeting room rentals, equipmentrentals, and other goods and services.

In order to estimate average spending by overnight guests, day trippers, and eventorganizers in Albany and the State of New York, HVS compiled and evaluated datafrom two sources. First, the 2004 Destination Marketing Association International(DMAI) survey (the most recent one available) focuses on spending by

Sources of Impact

Spending Parameters


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Chicago, Illinois



convention participants and organizers. Second, the 2011 Corporate Travel Index(CTI) survey focuses on visitor spending in the top 100 business destinations inthe country. HVS uses the CTI survey to index the national results contained in theDMAI survey so that they more accurately reflect the probable level of spending inAlbany. Based on these three sources, HVS estimated total spending by overnightattendees, day trippers, and event organizers. All daily spending parameters arestated as the daily spending by individual overnight stays and day trippers in 2013dollars. The following figures present the direct spending estimates for each

spending category.

FIGURE 1-31 OVERNIGHT ATTENDEE DIRECT SPENDING 2013 DOLLARS

Daily Spending Parameter Spending Per

Overnight Stay

Hotel Rate $119.62

Hotels and motels, including casino hotels $50.25

Automotive Equipment Rental and leasing $8.25

Food services and drinking places $64.31

Retail Stores - Gasoline Stations $1.99

Retail Stores - General Merchandise $29.68

Transit and ground passenger transportation $9.05Scenic and sightseeing transportation and support activities for transportation $4.80

Motion picture and video industries $1.34

Museums, Historical Sites, Zoos, and Parks $10.23

State and local government passenger transit $1.75

Total $301.26

Sources: DMAI, CTI, and HVS

Multiplying the number of new overnight stays projected in each of the demandscenarios by the daily spending parameters produces an estimate of new grossspending by overnight attendees for each program scenario.

Approximately 22,000 new overnight visitors spending 301.26 dollars implies6.61 million dollars of spending would occur in the local market in a stabilizedyear. For the State of New York, approximately 5,000 new overnight visitors wouldyield 1.50 million dollars of spending in a stabilized year.


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FIGURE 1-32 DAYTRIP ATTENDEE DIRECT SPENDING 2013 DOLLARS

Daily Spending Parameter Spending Per

Daytrip


Retail Stores - Gasoline Stations $1.99


Scenic and sightseeing transportation and support activities for transportation $4.80

Motion picture and video industries $1.34

Museums, Historical Sites, Zoos, and Parks $10.23

State and local government passenger transit $1.75

Total $114.09

Sources: DMAI, CTI, and HVS

Attendees at conventions and other events who do not stay overnight generatedaytrip spending. Multiplying the number of new attendees to the Albany or NewYork market area by the estimated daily spending figure produces an estimate ofnew spending by daytrip delegates in Albany for each program scenario.

Approximately 17,300 new daytrip visitors spending 114.09 dollars yieldsapproximately 1.97 million dollars of spending in the local market in a stabilizedyear. In the State of New York, 690 new daytrip visitors would yield approximately79,000 dollars of spending in a stabilized year.

Event organizers spend money to rent the ACC. Organizers and exhibitors pay thevenue for event services, catering, decorating, and other charges related toproduce an event. The following figures present the new venue revenues for eachprogram scenario, net of existing group business revenues collected by the ACC,for a stabilized year of demand in 2013 dollars. The following figure includes onlythose revenues that pertain to group meeting events.

FIGURE 1-33 NEW VENUE REVENUE (IN 2013 DOLLARS)

New York Albany County

OPERATING REVENUE

Space Rental $70,000 $282,000

Event Services $35,000 $141,000

Food & Beverage $114,000 $456,000

Other Revenue $11,000 $44,000

Total 230,000 923,000

Source: HVS

Event Organizer

Spending


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Some of the new venue revenues collected at the ACC would transfer over fromother properties within Albany County or the State of New York. Based on existingcompetition within the Albany market area, HVS estimated the percent of theabove venue revenues that represent new spending in the City or State.

In addition to facility spending, event organizers also spend on outside lodging,meals, local transportation, facility rentals, equipment rentals, and other goodsand services required to plan and organize a successful event. Adjusted DMAI data

provides estimates of organizer spending per attendee-day as shown in the figurebelow. Note that event organizer spending is based on the total number ofattendees, regardless of from where those attendees originate. Event organizerspending on facility rental, facility services, and event food and beverage isincluded in the above facility revenue estimates.

FIGURE 1-34 EVENT ORGANIZER SPENDING (IN 2013 DOLLARS)

Daily SpendingParameter

Spending Per

Convention

Delegate Day

Hotel Room Rate $0.97

Hotels and m otels, including casino hotels $0.14

A utomotive Equipment Renta l and leasing $0.05



Transit a nd ground passenger transportation $0.02

A dvertising and Related Services $1.03

State and local government passenger tra nsit $0.04

Total $3.99

Sources: DMAI, CTI, HVS

Approximately 50,760 new convention delegates spending four dollars would

yield 202,000 dollars of spending in Albany in a stabilized year. Approximately16,920 new convention delegates would yield 67,000 dollars of spending in theState of New York in a stabilized year.

HVS uses the IMPLAN input-output model to estimate indirect and inducedimpacts. IMPLAN, a nationally recognized model developed at the University ofMinnesota, estimates indirect and induced economic impacts. An input-outputmodel generally describes the commodities and income that normally flowthrough the various sectors of a given economy. The indirect and inducedspending and employment effects shown here represent the estimated changes inthe flow of income and goods caused by the estimated direct spending. The

IMPLAN Impact

Modeling


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Chicago, Illinois



IMPLAN model accounts for the specific characteristics of the local area economyand estimates the share of indirect and induced spending that it would retain.

HVS categorized new direct expenditures into spending categories that are inputsinto the IMPLAN model. Specifically, the IMPLAN model relies on spendingcategories defined by the U.S. Census according to the NAICS. Because thespending data from the spending surveys used by HVS do not match the NAICSspending categories, HVS translates the spending categories into the NAICS

spending categories that most closely match the intent of the data.

Spending at retailers does not create as large of an impact on the economy asspending in other industries. Retailers add value equal to the margin or priceincrease of the good above the paid amount to obtain the good. The IMPLAN modelis product based, so HVS uses IMPLAN margin numbers to account for thediscrepancy between retail purchaser prices and producer prices.

To accurately measure spending impacts, HVS counts spending on products andservices located in the market area. Albany cannot accommodate all of the directspending demand in the market area. For example, an event organizer may need tobuy novelty items not produced in the market area for attendees. The direct

spending leaks outside the market area to the extent that services and othersproduce goods outside the market. This effect occurs for direct, indirect, andinduced spending. HVS uses the IMPLAN SAM values to track the percentage of agood purchased within the market area. As a result, the realized direct spending ina region is lower than the spending in the market area.

We refer to indirect and induced impacts (as defined earlier in the report) asmultiplier effects. The relationship between direct spending and the multipliereffects can vary based on the specific size and characteristics of a local areaseconomy. HVS enters the gross direct spending estimate into the IMPLAN inputoutput model of the local economy to estimate the realized direct, indirect, andinduced spending. HVS obtained data from IMPLAN on Albany County and createdan input-output model for the City.

The following figures present the output of the IMPLAN modelthe new, realizeddirect, indirect, and induced economic impacts and that are attributable to theproposed ACC operation. IMPLAN also estimates the jobs created based on thedirect, indirect, and induced spending estimates. Spending estimates are for astabilized year of demand in 2013 dollars.

Retail Margining

Local Purchase

Percentage

Indirect and Induced

Spending


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Chicago, Illinois



FIGURE 1-35 ANNUAL TOTAL SPENDING (IN MILLIONS OF DOLLARS)

Effect Type New York Albany

County

Direct $4.0 $13.0

Indirect 1.1 3.6

Induced 0.7 2.3

Total $5.8 $18.9

Source: IMPLAN

FIGURE 1-36 ANNUAL TOTAL JOBS

Effect Type New York Albany

County

Direct 38 121

Indirect 7 21

Induced 5 15

Total 49 157

Source: IMPLAN

The IMPLAN output forecasts that almost 70 percent of the impact in a stabilizedyear on both State and Albany County levels would occur through direct spending.

Fiscal impacts represent the public sector share of the economic impacts, asrepresented by tax collections on new spending. The previously discussedspending estimates provide a basis for estimating potential tax revenue, as Albanyand the State of New York would tax some of the spending.

The IMPLAN analysis results in direct, indirect, and induced spending classified

into hundreds of detailed spending categories. HVS evaluated each of thesespending categories to determine which taxes would apply to each type ofspending output. We then used appropriate tax rates to estimate the amount of taxrevenue. See the figure below for the effective tax rates used in the analysis.

Fiscal Impacts


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FIGURE 1-37 EFFECTIVE TAX RATES

Effective Tax Rate

Tax Base State City

Gasoline gross sales of gas 11.10% * 4.00%

Auto Rental gross revenue from auto rentals 5.00% 0.00%

Personal Income Tax personal income 5.00% 0.00%

Hotel Occupancy Tax hotel room sales 4.00% 6.00%

Sales & Use Taxes taxable sales 4.00% 4.00%*State tax of $0.08/gallon of gasoline, excise tax of $0.08/gallon, state petroleum business tax

of $0.171/gallon, and spill tax of $0.002/gallon

Sources: State of New York, City of Albany, and HVS

HVS applied the effective tax rates to a detailed breakdown of spending andincome categories that result from added spending in Albany and the State of NewYork from operation of the proposed ACC. HVS then estimated the potential annualrevenue from each tax source.

FIGURE 1-38 FISCAL IMPACTS (STABILIZED YEAR)

Fiscal Impact State City Total

Gasoline $1,000 $1,000 $2,000

Auto Rental 5,000 0 5,000

Personal Income Tax 10,000 0 10,000

Hotel Occupancy Tax 74,000 395,000 469,000

Sales & Use Taxes 96,000 306,000 402,000

Total $186,000 $702,000 $888,000

Sources: IMPLAN, HVS

HVS estimates that the additional event activity in Albany would generate almost900,000 dollars per year in combined State and City tax revenue in a stabilized

year. Almost all of the impact would occur through additional room nights andsales and use taxes.

These economic and fiscal impact estimates are subject to the assumptions andlimiting conditions described throughout the report. Although we consider theseassumptions reasonable, we cannot guarantee that the project will achieve theforecasted results. Actual events and circumstances could differ substantially fromthe assumptions in this report. Consider these estimates as a mid-point in a rangeof potential outcomes.


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Chicago, Illinois

October 31, 2013 Statement of Assumptions and Limiting Conditions


2. Statement of Assumptions and Limiting Conditions

1. This report is to be used in whole and not in part.

2. No responsibility is assumed for matters of a legal nature.

3. We have not considered the presence of potentially hazardous materials on the

proposed site, such as asbestos, urea formaldehyde foam insulation, PCBs, any form

of toxic waste, polychlorinated biphenyls, pesticides, or lead-based paints.

4. All information, financial operating statements, estimates, and opinions obtained

from parties not employed by HVS are assumed to be true and correct. We can

assume no liability resulting from misinformation.

5. Unless noted, we assume that there are no encroachments, zoning violations, or

building violations encumbering the subject property.

6. We are not required to give testimony or attendance in court by reason of thisanalysis without previous arrangements, and only when our standard per-diem fees

and travel costs are paid prior to the appearance.

7. If the reader is making a fiduciary or individual investment decision and has any

questions concerning the material presented in this report, it is recommended that

the reader contact us.

8. We take no responsibility for any events or circumstances that take place subsequent

to the date of our report.

9. The quality of a convention facility's on-site management has a direct effect on a

facility's economic performance. The demand and financial forecasts presented in this

analysis assume responsible ownership and competent management. Any departurefrom this assumption may have a significant impact on the projected operating

results.

10. The impact analysis presented in this report is based upon assumptions, estimates,

and evaluations of the market conditions in the local and national economy, which

may be subject to sharp rises and declines. Over the projection period considered in

our analysis, wages and other operating expenses may increase or decrease due to

market volatility and economic forces outside the control of the facilitys

management.


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Chicago, Illinois

October 31, 2013 Statement of Assumptions and Limiting Conditions


11. We do not warrant that our estimates will be attained, but they have been developed

on the basis of information obtained during the course of our market research and

are intended to reflect reasonable expectations.

12. Many of the figures presented in this report were generated using sophisticated

computer models that make calculations based on numbers carried out to three or

more decimal places. In the interest of simplicity, most numbers have been rounded.

Thus, these figures may be subject to small rounding errors.

13. It is agreed that our liability to the client is limited to the amount of the fee paid asliquidated damages. Our responsibility is limited to the client, and use of this report

by third parties shall be solely at the risk of the client and/or third parties. The use of

this report is also subject to the terms and conditions set forth in our engagement

letter with the client.

14. Although this analysis employs various mathematical calculations, the final estimates

are subjective and may be influenced by our experience and other factors not

specifically set forth in this report.

15. This report was prepared by HVS Convention, Sports & Entertainment Facilities

Consulting. All opinions, recommendations, and conclusions expressed during the

course of this assignment are rendered by the staff of this organization, as employees,

rather than as individuals.

16. This report is set forth as a market study of the subject facility; this is not an appraisal

report.


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Convention, Sports & E ntertainment


Chicago, Illinois

3. Certification

The undersigned hereby certify that, to the best of our knowledge and belief:

1. the statements of fact presented in this report are true and correct;

1. the reported analyses, opinions, and conclusions are limited only by the

reported assumptions and limiting conditions, and are our personal,

impartial, and unbiased professional analyses, opinions, and conclusions;

2. we have no (or the specified) present or prospective interest in the

property that is the subject of this report and no (or the specified) personal

interest with respect to the parties involved;

3. we have no bias with respect to the property that is the subject of this

report or to the parties involved with this assignment;

4. our engagement in this assignment was not contingent upon developing or

reporting predetermined results;5. our compensation for completing this assignment is not contingent upon

the development or reporting of a predetermined value or direction in

value that favors the cause of the client, the amount of the value opinion,

the attainment of a stipulated result, or the occurrence of a subsequent

event directly related to the intended use of this appraisal;

6. Thomas A Hazinski and Brian Harris personally inspected the property

described in this report; and Alex Moon participated in the analysis and

reviewed the findings, but did not personally inspect the property;

Thomas A Hazinski

Managing Director

Brian Harris

Senior Analyst

Documents

HVS ACC Market Study 10-31-2013