hvs 205 w randolph street, suite 1650 chicago, illinois 60606 presented to: convention center hotel...

HVS

205 W Randolph Street, Suite 1650

Chicago, Illinois 60606

Presented to:Convention Center Hotel - Finance Subcommittee

Economic Impact Analysis

May 18, 2010May 18, 2010

HVS


Chicago, Illinois 60606 2

Overview

1. Does Lost Business = Demand Potential?

2. Substitution Effect (i.e. Displacement)

3. Estimate of Incremental Room Night Demand

4. Direct Spending Estimate

5. Spending Categories

6. Multiplier Effect

7. New Tax Revenues

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Lost Business Analysis

Event Year Events Attendance Room Nights

2006 CYTotal Lost 218 549,635 997,620 Winnable 26 64,850 154,757 Citywides 15 53,250 128,340



2009 CYTotal Lost 235 793,070 1,061,154 Winnable 26 112,750 151,285 Citywides 16 99,800 120,705

Four-Year TotalsTotal Lost 854 2,524,171 3,780,126 Winnable 107 299,660 594,623 Citywides 61 252,250 486,852

Percent of Total 7.1% 10.0% 12.9%

Sources: HVS, Event Planners, KCCVA

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Incremental Room Nights: Substitution Effect

• Lost Room Nights = 128,340

• Regression Coefficient = 1,279

• 15 Citywide Events

• 77 Event Days

• Incremental Room Nights = 98,494

4

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Sources of New Spending

• Delegates = $311 per delegate per day

• Organizers = $142 per attendee

• Exhibiting Companies = $399 per attendee

5

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Direct Spending Estimates

Summary of Direct Spending

Delegate Spending $ 32,100,000

Event Organizer Spending 9,000,000

Exhibiting Company Spending 25,200,000

Total Direct Spending $ 66,300,000

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Direct Spending by Industry Category

7

Industry Amount % of Total

Retail Trade $ 5,878,268 8.9%

Transit / Ground Transportation 4,317,018 6.5%

Advertising Services 1,059,732 1.6%

Equipment Rental 3,561,599 5.4%

Professional / Technical Services 5,800,529 8.7%

Amusement / Recreation 931,699 1.4%

Sporting Events 107,841 0.2%

Accommodations 25,045,216 37.8%

Food and Beverage Places 14,322,394 21.6%

Facility Rentals 2,656,696 4.0%

Other Services 2,642,954 4.0%

Total Direct Spending $ 66,323,947 100.0%

Rounded $ 66,300,000 100.0%

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Multipliers

Industry Output Earnings Jobs

Retail Trade 1.9532 0.4626 18.7296

Transit / Ground Transportation 2.1168 0.5923 31.0706

Advertising Services 1.7290 0.3669 9.3864

Equipment Rental 1.5981 0.2817 7.4741

Professional / Technical Services 1.7766 0.4481 10.6407

Amusement / Recreation 1.9304 0.5301 23.8269

Sporting Events 2.0823 0.6518 17.6330

Accommodations 1.8364 0.4682 20.1772

Food and Beverage Places 1.9981 0.5293 32.9038

Facility Rentals 1.7741 0.5328 21.8729

Other Services 1.9429 0.4542 17.5640

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Total Economic Impacts

9

Industry Output Earnings Jobs

Retail Trade $ 11,481,433 $ 2,719,287 101.40

Transit / Ground Transportation 9,138,264 2,556,970 123.54

Advertising Services 1,832,277 388,816 9.16

Equipment Rental 5,691,791 1,003,302 24.52

Professional / Technical Services 10,305,220 2,599,217 56.85

Amusement / Recreation 1,798,552 493,894 20.45

Sporting Events 224,558 70,291 1.75

Accommodations 45,993,035 11,726,170 465.43

Food and Beverage Places 28,617,576 7,580,843 434.04

Facility Rentals 4,713,244 1,415,488 53.52

Other Services 5,134,995 1,200,430 42.75

Total Annual Impacts $ 124,930,945 $ 31,754,707 1,333.41

Rounded $ 124,900,000 $ 31,800,000 1,333

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Sources of New Tax Revenues

10

Name of Tax1 Applicable Spending Categories

Tax Rates

% $

Convention & Tourism Tax Hotel Hotel 7.500%Convention & Tourism Tax Restaurant Meals 2.000%

Sales TaxHotel, Retail, Meals, Rentals 2.375%

Utilities Tax Gas and Electric 10.000%

Arena Fee

Accommodations Hotel $ 1.50

Rental Cars Car Rental $ 4.00

Aviation Department Charges

Auto Rental Concession Fee Car Rental 10.000%

Rental Car Facility Car Rental $ 3.00

Bus Transportation System Car Rental $ 2.10

Earnings Tax Employee Earnings 1.000%

1 Gaming taxes and user fees at ticketed events would be additional, but are considered insignificant.

Sources: City's Finance Department, Aviation Department, Entertainment Center District

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Estimates of New Tax Revenues

11

Name of TaxSpending Estimate

Taxed UnitIncremental Tax

Revenue

Convention & Tourism Tax Hotel $ 45,993,035 Gross Sales $ 3,449,478

Convention & Tourism Tax Restaurant 28,617,576 Gross Sales 572,352

Sales Tax 105,635,342 Gross Sales 2,508,839

Utilities Tax1 2,623,550 Gross Sales 262,355

Arena Fee

Accommodations2 98,250 Room Nights 147,375

Rental Cars3 28,126 Rental Car Days 112,504

Aviation Department Charges

Auto Rental Concession Fee 1,406,296 Gross Sales 140,630

Rental Car Facility 28,126 Rental Car Days 84,378

Bus Transportation System 28,126 Rental Car Days 59,064

Earnings Tax 31,754,707 Earnings 317,547

Total Incremental Tax Impact $ 7,654,521

Total Incremental Tax Impact (Rounded) $ 7,700,000

1 Based on Annual Industry Accounts, Advanced Statistics on GDP, which indicate Utilities share of GDP is 2.1%.

2 Based on HVS forecast of incremental new room nights in a stable operating year.

3 HVS assumes a price of $50 per rental car day as the basis for tax calculations.

Sources: U.S. Bureau of Economic Analysis, City of Kansas City, HVS

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THANK YOU

hvs 205 w randolph street, suite 1650 chicago, illinois 60606 presented to: convention center hotel...

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