City of Grand Junction Arena Market, Financial Feasibility & Impact Analysis

Transcription

1 City of Grand Junction Arena Market, Financial Feasibility & Impact Analysis FINAL DRAFT Submitted to: Jay Valentine Internal Services Manager City of Grand Junction 250 N. 5th Street Grand Junction, CO October 31, 2016

2 October 31, 2016 Jay Valentine Internal Services Manager City of Grand Junction 250 N. 5th Street Grand Junction, CO Dear Mr. Valentine, The City of Grand Junction (Client) engaged Hunden Strategic Partners (HSP) to perform an arena feasibility market, financial and impact study, as well as an analysis of combining the operation of the Two Rivers Convention Center, Avalon Theater and new arena. The attached is our final draft report. This deliverable has been prepared under the following general assumptions and limiting conditions: The findings presented herein reflect analysis of primary and secondary sources of information that are assumed to be correct. HSP utilized sources deemed to be reliable, but cannot guarantee their accuracy. No responsibility is taken for changes in market conditions after the date of this report and no obligation is assumed to revise this report to reflect events or conditions occurring after the date of this report. HSP has no control over construction costs or timing of construction and opening. Macroeconomic events affecting travel and the economy cannot be predicted and may impact the development and performance of the project. We have enjoyed serving you on this engagement and look forward to providing you with continuing service. Sincerely yours, Hunden Strategic Partners

3 TABLE OF CONTENTS Executive Summary Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Profile of Two Rivers Convention Center and Avalon Theatre Economic and Demographic Analysis of Grand Junction Convention Industry Trends; Meetings Market Analysis Hotel Market and Trends Analysis Small and Mid-Sized Arena Trends Sports and Entertainment Market Analysis Case Studies and Comparable Market Metrics Recommendations, Drawings, Budget Governance Analysis Demand and Financial Projections Economic, Fiscal and Employment Impact Analysis

4 EXECUTIVE SUMMARY The City of Grand Junction engaged the Hunden Strategic Partners team, which includes Sink Combs Dethlefs (SCD), referred to collectively as HSP, HSP Team or Team, to conduct a market, financial and impact analysis related to the development of an appropriately-sized arena to be located in downtown Grand Junction. The primary questions that HSP was requested to answer are: Is there enough potential activity and demand in the market to support the development of a new arena downtown? Would concerts, family shows and other events be attracted to play in a new facility in Grand Junction? Is there a realistic opportunity to attract an anchor tenant to such a facility? How much would the arena cost and would it need ongoing financial support beyond the initial development? Could combining management with the existing Two Rivers Convention Center and Avalon Theater benefit the arena project and the City? How would this ongoing arena activity benefit downtown and all of Grand Junction? What impacts are expected? What are the optimal governance options for the facility to ensure success? Is the downtown location attached to the Two Rivers Convention Center critical and if so, why? How would the facilities perform if the arena is built slightly outside of the core of downtown and separated from the Two Rivers Convention Center? Many cities have used event facilities as activity and demand generators to enhance their downtowns and overall development efforts. The activity of arenas can generate consistent usage, which provides consistent nearby street-level activity for restaurants and bars and some retail. In relatively isolated economic centers like Grand Junction, they can also induce room nights in hotels, as people travel relatively long distances to see concerts and other events. It also provides downtown employees and residents a major activity center nearby to walk to after work and on weekends. Such facilities are also viewed as economic development assets that help communities attract businesses, businesses attract talented employees and talented employees invest their time and expand families in the local area. This virtuous cycle can be created from a new event center if executed smartly. Yet the facility itself must be able to generate enough events on the calendar to keep it operating without significant financial support. The benefit of the existing Two Rivers Convention Center (TRCC) and Avalon operation is that most of the staffing already exists to support the operation of a new arena attached to the TRCC. If the arena is not attached, these savings will only partially accrue. Based on HSP s analysis, the combined entity may see an operating deficit that is less after the arena is developed (and recommended renovation of the TRCC is completed). Revenues should increase at a rate greater than expenses, leading to an improved annual fiscal operating situation. HSP met with key stakeholders, interviewed potential arena users/promoters/leagues, analyzed the competition, surveyed local businesses related to their support of premium seating, sponsorship and Grand Junction Event Center Analysis Executive Summary Page 2

5 advertising, analyzed the market, investigated comparable situations, and worked with SCD to understand the development costs of the recommended approach as well as the state of art in arena design today. Existing Conditions and Critical Factors Based on HSP s analysis, the following was determined: The market, while relatively small locally, covers a large geographic area that encompasses a larger capture market that is attractive to concert and other event promoters. Given Grand Junction s location equidistant from Denver and Salt Lake City, it makes a logistically smart stopover arena for many acts, family shows and other events traveling between larger metro areas. The East Coast Hockey League (ECHL), including the commissioner and team owners, have expressed strong interest in locating a team in Grand Junction as soon as a new facility as ready, assuming the facility has at least 5,000 seats and premium seating opportunities. There are numerous examples of small markets similar in size to Grand Junction that have successfully developed and supported small arenas (many with hockey teams) over the past several decades. Many of these are located in the United States Mountain West, as well as northern lesser populated areas of the Midwest, Northeast and Canada. Grand Junction s downtown has enhanced its reputation as a fun, walkable city with more leisure time activities, at least in the warmer months via the development of an active retail, restaurant and bar scene, the renovation of the Avalon and the development of three compelling hotels. However, during the cold months, unless there is an event, the downtown still has a limited number of demand generators like an arena or event center. Most restaurants and retail businesses need that consistent year-round demand in order to survive successfully. Currently there are a number of vacant spaces that would be much more viable with more events throughout the year. Parking has been shown to be available during event periods (after business hours and on weekends, without negatively impacting parking for existing restaurants and retailers. The addition of an arena/event center attached to the TRCC will allow for combined operations and additional opportunities to attract larger convention and other events to both the TRCC and new arena (than if otherwise disconnected). The combined operations will engender cost savings and enhance revenue generation, likely lowering the current operating loss sustained by the TRCC and Avalon combined operation. The renovation and new meeting/ballroom components of the TRCC recommended will enhance its ability to host higher revenue ballroom events, conferences, corporate events, trainings and conventions. The development of the arena and renovation of the TRCC will likely induce the development of a fourth downtown hotel. This hotel should be a larger, full-service branded hotel relative to the existing downtown hotels. Such a hotel will induce more conventions, conferences and other events, in addition to what would be generated without such a hotel. The location of the arena in the downtown and adjoining the TRCC is critical for the operating success of the two facilities, as they can share staff and decrease overall staffing and financial Grand Junction Event Center Analysis Executive Summary Page 3

6 losses. Also, the combined facility will allow for increased competitiveness for events, bringing more events downtown and into the hotels. Finally, there is already plentiful parking in the downtown area to support a new facility that will simultaneously help downtown businesses by having people park and walk by these businesses before and after events. The farthest that someone would need to park is minimal, under four blocks from the entrance of the facility. Additional wayfinding will help attendees find this plentiful parking nearby. This will also help the utilization of garages and lots that sit empty in the evenings. If an arena is developed by itself outside of downtown, both it and the TRCC will have operating losses, more parking will need to be developed and the competitiveness of both facilities will be diminished, lowering the economic impact to the point of reconsidering the efficacy of the project. HSP recommends the development of: An arena with a minimum of 5,000 seats, including suites and club seats, combined with the TRCC. Renovation and improvement of the Two Rivers Convention Center. Combined, third-party management. Third party private management will likely enhance results. The following provides more explanation of the findings. SWOT Analysis This section presents HSP s analysis of the arena and event center situation and presents a recommendation for Grand Junction. A SWOT (Strengths, Weaknesses, Opportunities and Threats) Analysis was conducted leading up to these recommendations. A SWOT analysis identifies critical factors that will impact the Project s overall performance. It also suggests implications for the sizing and quality of the project given the current environment. Strengths and weaknesses are currently factors impacting the potential project as well as items inherent in the project or market, while opportunities and threats are potential and external factors impacting the success of the Project. This section provides recommendations on the size and quality of the Project based on HSP s review of the market and other factors. In addition, HSP s experience with similar projects and how they have performed played a role in our recommendations and projections. Strengths Strong Community Leadership. The City of Grand Junction s leadership both civic and political has demonstrated a commitment to stimulating redevelopment and reinvestment in the community, especially the downtown area. Downtown Strength and Authenticity. Downtown Grand Junction is an amazing and authentic place that has seen improvement based on private investment and public leadership. A vibrant Grand Junction Event Center Analysis Executive Summary Page 4

7 Weaknesses downtown consists of popular restaurants, shops and entertainment, providing a more visible face to the city and drawing more visitors from the surrounding areas. This helps the community as a whole and proves to visitors, residents and business owners that it is serious about a vision for itself. When private interests see development occurring on a regular basis downtown, they have more confidence to invest as well. The success of the Avalon and so many restaurants and active retail have given downtown very compelling life. It is also one of the keys to attracting Millennials, retirees and other new residents to move to Grand Junction. Strong Market Opportunity for Hockey, Concerts and Family Shows. Based on interviews and other market analysis, there will be many new events and potential tenants for the arena. The facility would fit a size range that is simply not available today and that is attractive to many potential events. Promoters were very enthusiastic about bringing events to an arena in Grand Junction due to its location between Denver and Salt Lake City. These events are literally already driving through Grand Junction now, and would enjoy the opportunity to stop, put on a show and generate revenue. This benefits them and benefits Grand Junction. The East Coast Hockey League (ECHL) is eager to establish a presence in a new arena in Grand Junction and the team would act as an anchor tenant, helping to generate significant revenue for the building. Net positive impact on the Two Rivers Convention Center. Connecting a new arena to a renovated TRCC would create an event complex that would be very competitive for many more types of events than it is today. The TRCC needs to be renovated as recommended in order to capture this new business. Connecting to the arena will allow for even more events to be attracted to the combined complex. Utilizing the same staff will reduce waste and operating losses. Access. Grand Junction s access off of I-70 give it easy access to markets both to the east and west. A market of more than 300,000 is available within a relatively short drive. Grand Junction, with the new complex, will be a much better location for this widespread market to attend an event versus having to drive to the Denver area or Salt Lake City. Business Community Support. The business community supports the development of an arena and is ready to partner with the facility to provide sponsorships and other investments that will help the financial viability of the enterprise. Growing Content for Small Arenas. There has been a boom in small and mid-sized arenas across the US for 15 years and there is specific content (family shows, concerts, etc.) that has been developed for this size venue. There are many more small and mid-sized venues across the U.S. than major arenas and so this provides the acts a steady stream of opportunity. A new facility would provide an opportunity for those acts to come to Grand Junction. Relatively Small Market. While the market is ideal in many ways, it also has a smaller population than many markets that support similar arenas. However, as HSP has determined, there are numerous examples of arenas in small markets (many smaller than Grand Junction) that have successfully supported hockey franchises and arenas. Grand Junction Event Center Analysis Executive Summary Page 5

8 Opportunities Threats New Events for Grand Junction. Currently, there is no opportunity for major sports, concerts, family shows and other events to come to Grand Junction. There is also no opportunity for many conventions and conferences to come to the market. There simply is no facility able to accommodate them. These events have very special needs and a pre-engineered building without the technology and other amenities required by teams and promoters will not suffice. With the recommended improvements, the number of events and activity to the facilities and downtown will be immense compared to the few events coming downtown to the TRCC now. Opportunity for Events Covered by Television. With a new facility, the community would have the opportunity to attract professional sports exhibition events that may be nationally televised, as well as collegiate and other major games that are also nationally televised. This will provide additional free positive press for the city that currently does not exist. When regional competitors play in the new facility, that will be covered on the news in the other markets. Catalytic Development. The proposed arena can serve as a catalytic development to retain and attract businesses, groups and visitors to downtown Grand Junction. An event center/arena can be the catalytic development that generates year-round activity to support the development of restaurants and other downtown businesses, as well as residential growth. Businesses and entrepreneurs notice when the city is aggressive and takes an active role in improving itself via public-private partnerships, key public investments and other quality of life enhancements. These create an environment where others are then more willing to invest time, money, talent and effort into a new business in downtown, move there as residents, or visit with their group. New conventions that would not consider the area now, may be swayed if the event facilities are expanded in such a way, more restaurants exist and the hotel package is larger. Economic, Fiscal and Employment Benefits. The Project will entice visitors to visit Grand Junction businesses, restaurants and meeting/event facilities. These visits result in increased downtown spending, and in turn, an improved local business environment, additional tax collections and an increased number of employment opportunities. The visibility that visitors will have of the downtown from the new arena will show off the community to a new population that may consider visiting again or even moving to the community. Currently, many people outside Grand Junction simply are not visiting as there are few places to hold events. Strong Relationship & Synergy with Neighboring Projects, Especially the Two Rivers Convention Center. A new arena project in Grand Junction will benefit and partner with the TRCC to attract events that currently cannot be housed in the facilities at the TRCC alone. Cost The cost of the project is not insignificant and will require a strong commitment from the public sector, along with private partner commitments for naming rights and other sponsorships. Locating the Project outside of Downtown or Unattached to the TRCC The arena will not succeed in terms of impact on the community if it is not attached to the TRCC downtown. It will be more expensive to build and parking will need to be built and paid for. Synergies with the TRCC will not occur, so the number of events will be lowered and expenses will be much higher. Both investments (arena and TRCC) should be made to generate the higher event and revenue Grand Junction Event Center Analysis Executive Summary Page 6

9 levels and minimize the operating expenses. The operating losses at both facilities will be large if the two facilities are physically separated. In addition, pre- and post-event spending will be minimized if the arena is developed in an easy in/out location. By locating it downtown, the impact on the quality of life downtown and businesses will be dramatic. That same impact will simply not occur if the arena is not located within walking distance of the central business district. Implications and Recommendations As has been demonstrated in this report, the Grand Junction market, its citizens, and events would benefit from a venue that fits a sizing need that is not currently being offered. There are a number of events that will come to such a facility that are not currently considering Grand Junction as a destination. Location. Attached to the Two Rivers Convention Center in downtown Grand Junction. The block directly to the south of the Two Rivers Convention Center (TRCC) is recommended, due primarily to its ability to connect to the TRCC, its proximity to existing nodes of activity and hotels, and its larger than typical size. The size allows the arena to have some attached loading opportunities. One of the primary purposes of this Project is to act as an economic development generator for downtown. HSP conducted a second scenario with the event center developed near downtown, but not directly in the central business district. This scenario did not include renovation of the TRCC. Impact is much lower in the scenario and costs are much higher. Total Capacity. A facility with nearly 5,100 seats in a hockey configuration is recommended. Parking. A recent study completed for the City of Grand Junction to evaluate the existing downtown parking system determined that the private sector parking options currently offered will be able to support the downtown event center. Premium Seating. Premium seating supports the financial viability of the facility and provides local businesses and other organizations the opportunity to socialize with their stakeholders, clients and customers. Recommended premium seating includes: Five 16-seat suites with seven barstools each Twelve 12-seat suites with four barstools each Two party suites with 28 fixed seats and 13 barstools each 18 total loge suites with four seats and four barstools each Additional loge seating on the west and east ends Additional food and beverage opportunities are available at the premium seating level, with the lounge, loge and suites all featuring food and beverage before and during events. As is standard with all new facilities, a premium lounge/restaurant at the loge level is critical to attracting higher spending attendees and corporate users. Grand Junction Event Center Analysis Executive Summary Page 7

10 In terms of support amenities, all the modern amenities, including locker rooms, offices, large and numerous restrooms and other support facilities are recommended. Connection to the Two Rivers Convention Center is recommended so that more events can be lured to a shared, larger facility than if the two were separated. Given the proximity of nearby hotels, the arena addition to the complex would make it quite impressive to meeting and event planners. Two Rivers Convention Center Renovations. The following table summarizes the recommended expansion of the function space at the Two River Convention Center. Table 1 Two Rivers Convention Center Existing Recommended Space Divisions Square Feet Divisions Square Feet Existing Multipurpose Room 3 18, Grand Ballroom (Improved from Existing) ,000 Junior Ballroom (Divisible to Meeting Rooms) ,000 Dedicated Meeting Rooms 6 4, ,500 Total 9 22, ,500 Source: Hunden Partners, Sink Combs Dethlefs As the table shows, recommendations include converting the existing multipurpose room into a sevendivision, 18,000 square foot Grand Ballroom. Divisibility of the space can be improved by adding a service corridor around the ballroom and inserting dividers, resulting in each end of the ballroom offering three divisions. The increase in total meeting room space to 12,500 square feet includes the addition of an 8,000 square foot junior ballroom that can also function as six divisible meeting rooms. Recommendations also include increased pre-function space, cleaned up under-area parking (lighting, paint, wayfinding), and a Main Street-facing pre-function area. If both projects are developed, it is likely that a full-service hotel will be built downtown to accommodate increased demand. Recommended Site Based on the analysis, the best site is the block just south of the Two Rivers Convention Center. It will focus event activity downtown and leverage existing strengths, provide a unique and interesting site and walkable location and will be amongst other community assets. The following figure shows the overall site layout. Grand Junction Event Center Analysis Executive Summary Page 8

11 Figure 1 The next figure shows a close up of the TRCC changes. Grand Junction Event Center Analysis Executive Summary Page 9

12 Figure 2 The changes to the TRCC do not change the footprint as much as they change the effectiveness of the existing building, by reconfiguring it and enhancing sellable and other spaces. As noted, a second scenario was conducted for a facility a few blocks from the central core of downtown and not attached to the TRCC. The TRCC was assumed not to be developed in that scenario. Budget The estimated cost for the arena is shown below. Table 2 Grand Junction New Arena Project Cost Estimates Project Cost Arena: 5,100 "fixed" seats for hockey, 7,000 seats maximum capacity $46,500,000 Source: Sink Combs Dethlefs Grand Junction Event Center Analysis Executive Summary Page 10

13 The estimated project cost for the convention center project is below. Table 3 Grand Junction Renovated Convention Center Project Cost Estimates Project Cost Mid Sized Banquet/Meeting Room (8,000sf net) & Pre-function $4,500,000 New Main Street Banquet Pre-function $3,000,000 Existing Two Rivers Renovation $7,500,000 Main Street Re-configuration $650,000 Total Project Cost (without land or financing) $15,650,000 Source: Sink Combs Dethlefs The renovation of the Two Rivers Convention Center and linkage to the new arena is critical for two reasons. The first is that the renovations will allow the TRCC to be more competitive and grow its business and revenue. Additional expenses in Scenario A (attached facilities) will be minimal with the increased revenue, which will shrink the net operating deficit. The addition of the adjoining arena will allow the TRCC to go after larger events that can use the floor of the arena along with the TRCC, growing revenues. On the expense side, the co-joining of the facilities will allow for minimal increases in staffing to accommodate a combined staff payroll, which will improve the overall operating performance of the combined entity, to the point where it may not be operating in the red. Governance HSP profiled the options for managing and marketing the event complex. Based on the analysis, HSP suggests creating an authority model. This occurs when an independent authority (often appointed by elected officials) hires an independent manager or a management company to run the facility. The CVB can be formed under this structure as well as and report to and receive funding from the authority. The authority receives funding from dedicated tax revenues most often. Essentially, the facility management team (private company or directly hired by the authority) would report to the authority. Also, the CVB would receive funding and report up to the Authority. This would ensure cooperation between the CVB and facility stakeholders and also make sure the efforts of the total structure are aligned. HSP recommends this structure. Whether the Authority hires a private management company or directly hires a manager, the structure is taken outside of the public sector s departmental structure and is an independent entity. By moving the CVB and its hotel tax funding structure under the same authority, it pulls this entity outside the public departmental structure as well and aligns it with the facilities. Both are part of an extremely competitive business and marketplace, unlike city services. As such, they should operate as much as possible like independent businesses in a competitive marketplace, united forces and maximizing efficiencies. Demand Projections Based on the analysis conducted, HSP has developed demand and financial projections for the proposed event center/arena combined with the Two Rivers Convention Center, Scenario A. HSP also projected the Grand Junction Event Center Analysis Executive Summary Page 11

14 financial performance of the Avalon and assumed that all three buildings would be managed by the same team. The assumptions are based on the recommendations in the prior chapters. This chapter also includes projections for a second scenario, Scenario B, in which an arena is developed outside of the core CBD and the TRCC is not renovated. The site for the arena would be within about three to four blocks of the main stretch of the Central Business District. Essentially, it will expand the boundaries of what is considered to be the core of downtown, although it will likel take many years to fill in the gaps between the current core on the site of the arena. Pro s and Con s of Scenario A: Pro: Combines facilities and operations, lowering expenses in total between the two venues. Costs would be lowered for personnel, advertising/promotion and utilities. Pro: Creates an event complex that will be able to compete for more events than today and more than if the facilities were physically separated. This is due to the multiple types of spaces that will be available under one roof. The events would also generate more hotel room nights. Pro: Induces/Captures more pre- and post-event spendings in restaurants and retail stores because the facilities are within easy walking distance of the downtown restaurants, shops and hotels. People will be less likely to get in their car and leave right after an event, for example. Pro: Improves the TRCC to become more competitive as a meeting and conference venue. Con: Does not allow for easy future expansion of TRCC or boundaries of downtown. Pro s and Con s of Scenario B: Pro: Allow for easy future expansion of TRCC and the boundaries of downtown. Con: Does not combines facilities and operations, increasing expenses in total between the two venues. Costs would be increased for personnel, advertising/promotion and utilities. Con: Creates a separate event complex that will not be able to easily compete for large events or share events. Con: Induces/Captures less pre- and post-event spendings in restaurants and retail stores because the facilities are likely to be several blocks from the core of downtown restaurants, shops and hotels. People will be more likely to get in their car and leave right after an event if options are not easily walkable. Con: Does nothing to improve the TRCC to become more competitive as a meeting and conference venue. Two Rivers Convention Center The table below shows the expected attendance at the renovated and slightly expanded TRCC in Scenario A. Grand Junction Event Center Analysis Executive Summary Page 12

15 Total Attendance - TRCC Table 4 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Convention/Conference 6,525 7,360 8,160 8,750 8,750 8,750 8,750 8,750 8,750 8,750 Tradeshows 17,780 19,875 21,600 22,400 22,400 22,400 22,400 22,400 22,400 22,400 Meetings & Service Clubs 26,950 30,000 32,800 36,125 36,125 36,125 36,125 36,125 36,125 36,125 Weddings 420 1,000 1,680 2,400 2,400 2,400 2,400 2,400 2,400 2,400 Special Events 12,600 15,120 16,875 19,200 19,200 19,200 19,200 19,200 19,200 19,200 Other 5,625 7,000 8,060 9,350 9,350 9,350 9,350 9,350 9,350 9,350 Total 69,900 80,355 89,175 98,225 98,225 98,225 98,225 98,225 98,225 98,225 Source: Hunden Strategic Partners Total attendance at the TRCC is expected to increase from 70,000 annually to approximately 100,000. The largest and most high profile events will see the biggest increase, due the the expanded abilities and flexibilty fo the venue to host larger events. The next table shows the expected annual attendance by type of event in Scenario B. Total Attendance - TRCC Table 5 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Convention/Conference 6,343 6,343 6,343 6,343 6,343 6,343 6,343 6,343 6,343 6,343 Tradeshows 18,453 18,453 18,453 18,453 18,453 18,453 18,453 18,453 18,453 18,453 Meetings & Service Clubs 27,166 27,166 27,166 27,166 27,166 27,166 27,166 27,166 27,166 27,166 Weddings Special Events 12,656 12,656 12,656 12,656 12,656 12,656 12,656 12,656 12,656 12,656 Other 11,736 11,736 11,736 11,736 11,736 11,736 11,736 11,736 11,736 11,736 Total 76,772 76,772 76,772 76,772 76,772 76,772 76,772 76,772 76,772 76,772 Source: Hunden Strategic Partners HSP projects an annual attendance of approximtely 77,000 based on historical attendance data at the TRCC, about 25,000 fewer attendees than if it is renovated and attached to the arena. The next table shows the expected attendance for the arena in Scenario A. Grand Junction Event Center Analysis Executive Summary Page 13

16 Table 6 Projected Paid Attendance by Category and Year Category Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Minor League Hockey 127, , , , , , , , , ,800 Family Shows 22,500 27,000 31,500 31,500 31,500 31,500 31,500 31,500 31,500 31,500 Concerts 40,500 45,000 49,500 49,500 49,500 49,500 49,500 49,500 49,500 49,500 Other Sporting Events 16,000 18,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 Graduations 2,000 3,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 Flat-Floor Events (Conventions, Other) 9,600 12,000 14,400 14,400 14,400 14,400 14,400 14,400 14,400 14,400 Meetings/Banquets 2,300 3,000 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 Total 220, , , , , , , , , ,800 Source: Hunden Strategic Partners Total attendance is expected to increase from 220,700 to nearly 240,000 over the period, as the number of events increases and offsets slightly lower attendance per event after the first year. More than half of the expected attendance is projected to be generated by the ECHL franchise events. The next table shows the expected annual attendance by type of event in Scenario B. Table 7 Projected Paid Attendance by Category and Year Category Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Minor League Hockey 127, , , , , , , , , ,800 Family Shows 22,500 27,000 31,500 31,500 31,500 31,500 31,500 31,500 31,500 31,500 Concerts 40,500 45,000 49,500 49,500 49,500 49,500 49,500 49,500 49,500 49,500 Other Sporting Events 16,000 18,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 Graduations 2,000 3,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 Flat-Floor Events (Conventions, Other) 3,800 4,500 5,300 5,300 5,300 5,300 5,300 5,300 5,300 5,300 Meetings/Banquets Total 213, , , , , , , , , ,000 Source: Hunden Strategic Partners Total attendance is expected to be about 10,000 less than in Scenario A, based on lower attendance and fewer events for conventions and other flat floor events, as well as meetings. Financial Projections Combined Revenues and Expenses for Three Venues The following table shows the total revenue, total expense and net operating income/loss for the three venues as of 2015, then with the new arena and combined operations for Scenario A. Grand Junction Event Center Analysis Executive Summary Page 14

17 Table 8 Proforma - Combined Facilities (000s) Combined & Private Management Personnel Adjusted for Allocations 2015 without Arena & TRCC Renovation Stabilized Year with Arena & Combined Ops Change from 2015 Arena Revenue $0 $2,391 $2,391 TRCC Revenue $1,417 $1,904 $487 Avalon Revenue $527 $536 $9 Total Revenue $1,943 $4,831 $2,888 Arena Non-Personnel Operating Expenses $0 $1,229 $1,229 TRCC Non-Personnel Operating Expenses $782 $991 $209 Avalon Non-Personnel Operating Expenses $267 $268 $1 Total Non-Personnel Expenses $1,048 $2,488 $1,440 Arena Additional Personnel Expenses $0 $992 $992 TRCC Personnel Expenses $1,143 $625 ($518) Avalon Personnel Expenses $191 $194 $3 Total Personnel Expenses $1,334 $1,811 $478 Total Expenses, all facilities $2,382 $4,300 $1,917 Net Operating Income ($439) $532 $971 Source: Hunden Strategic Partners In 2015, total revenue was less than $2 million and total expenses were $2.3 million, leading to a net operating loss of more than $400,000. However, once the TRCC is improved and connected with the new arena/event center, the total revenue should reach nearly $5 million, with a lesser increase in expenses, leading to a net positive operating position of more than $500,000. The swing from the present situation should be nearly $1 million, if efficiently managed and aggressively marketed. The following table shows the same table for Scenario B. Grand Junction Event Center Analysis Executive Summary Page 15

18 Table 9 Proforma - Combined Facilities (000s) Combined & Private Management 2015 without Arena & TRCC Renovation Stabilized Year with Arena & Combined Ops Change from 2015 Arena Revenue $0 $2,345 $2,345 TRCC Revenue $1,417 $1,418 $1 Avalon Revenue $527 $536 $9 Total Revenue $1,943 $4,299 $2,356 Non-Personnel Expense Arena $0 $1,233 $1,233 TRCC $782 $796 $14 Avalon $267 $268 $1 Total Expenses $1,048 $2,297 $1,249 Personnel Expense Arena Additional Personnel Exp $0 $1,319 $1,319 TRCC Personnel Exp $1,143 $967 ($176) Avalon Personnel Exp $191 $194 $3 Total Personnel Exp $1,334 $2,481 $1,147 Net Operating Income ($439) ($479) ($40) Source: Hunden Strategic Partners Instead of a positive net operating income between the three venues, the three venues are estimated to lose more money than the two combined today. The following table shows the projected performance of the combined facilities under Scenario A. Grand Junction Event Center Analysis Executive Summary Page 16

19 Table 10 Stabilized Year Revenue & Expense Per Facility Stabilized Year Arena Revenue $2,391 Arena Expense $2,221 Net $170 TRCC Revenue $1,904 TRCC Expense $1,616 Net $288 Avalon Revenue $536 Avalon Expense $462 Net $74 Source: Hunden Strategic Partners Stabilized operations at the facilities, with shared operations, should result in net positive operating revenue at each venue. The proposed arena/event center, when developed as part of an enlarged event complex with the TRCC, with shared staff, back-of-house, purchasing and other items, should actually result in an improved operating situation compared with the status quo. If the TRCC is left as is, its performance will continue to deteriorate, costing taxpayers more over time than if it were made more competitive. By combining staff with the new arena/events center, staff time and effort will be shared and allocated, allowing for a potential break even or operating profit amongst the three venues. The following table shows the projected performance of the combined facilities under Scenario B. Grand Junction Event Center Analysis Executive Summary Page 17

20 Table 11 Stabilized Year Revenue & Expense Per Facility Stabilized Year Arena Revenue $2,345 Arena Expense $2,553 Net ($208) TRCC Revenue $1,418 TRCC Expense $1,763 Net ($345) Avalon Revenue $536 Avalon Expense $462 Net $74 Source: Hunden Strategic Partners Stabilized operations at the facilities, with an arena development outside the CBD, should result in net operating deficits at the Arena and TRCC compared with net operating income in the prior scenario. Impact of the Arena and TRCC The table that follows shows the economic, fiscal and employment impact of the two scenarios, as well as the operating performance of the arena and TRCC. Grand Junction Event Center Analysis Executive Summary Page 18

21 Table 12 Summary of 30-Year Impacts & Stablized Operating Results - Arena & TRCC Scenario A Scenario B Joint Facility Complex Arena Separated from Core CBD Improved TRCC TRCC Not Renovated Shared Mgmt Shared Mgmt Difference (A minus B) 30-Year Impacts* Net New Spending (millions) $999 $487 $512 Net New Earnings (millions) $318 $156 $162 Net New FTE Jobs (actual) Local Taxes Collected City Sales % $10.0 $4.6 $5.4 City Lodging % $5.0 $2.6 $2.4 Total $15.0 $7.1 $7.9 One-Time Construction Impact (millions) New Materials Spending $25 $19 $6 New Labor Spending $37 $28 $9 Job Years from Construction (actual) Operating Results (Stabilized Year) Arena Revenue $2,391 $2,345 $46 Arena Expense $2,221 $2,553 ($332) Arena Net $170 ($208) $378 TRCC Revenue $1,904 $1,418 $486 TRCC Expense $1,616 $1,763 ($147) TRCC Net $288 ($345) $633 Combined Net $458 ($553) $1,011 * Includes Direct, Indirect & Induced Impacts Source: Hunden Strategic Partners The projected 30-year net new spending impact of Scenario A is $512 million greater than Scenario B, and net new earnings are projected to be $160 million greater in Scenario A. The arena and TRCC are projected to generate net operating incomes in Scenario A, while the facilities are projected to suffer deficits in Scenario B. Overall, the combined net operating difference in the two scenarios in a stabilized year is projected to be more than $1 million. Conclusion Essentially, the event complex is capturing economic spending from outside the city and supporting 400 employees in Grand Junction in Scenario A. By concentrating this currently disparate spending in one place, Grand Junction, the event complex is creating a stronger economic engine and center of activity in Grand Junction. This makes the community more sustainable and attractive to businesses and residents. While Scenario B also provides many benefits for the community, it leaves many benefits on the table due to the lack of a combined, first-class facility with shared, more efficient operations than two separate facilities. Combining the venues is a strategy many cities have employed to enliven both and make the pair a 1+1=3 situation. However, if the City wants to spend more resources for a facility in a different location with less impact, it will have the opportunity to then expand the TRCC at a future date. Grand Junction Event Center Analysis Executive Summary Page 19

22 Report Layout Executive Summary Chapter 1 Profile of Two Rivers Convention Center and Avalon Theatre Chapter 2 Economic and Demographic Analysis of Grand Junction Chapter 3 Convention Industry Trends; Meetings Market Analysis Chapter 4 Hotel Market and Trends Analysis Chapter 5 Small and Mid-Sized Arena Trends Chapter 6 Sports and Entertainment Market Analysis Chapter 7 Case Studies and Comparable Market Metrics Chapter 8 Recommendations, Drawings, Budget Chapter 9 Governance Analysis Chapter 10 Demand and Financial Projections Chapter 11 Economic, Fiscal and Employment Impact Analysis About Hunden Strategic Partners Hunden Strategic Partners is a full service real estate development advisory practice specializing in destination assets. The firm provides a variety of services for all stages of destination development in the following primary areas: Real estate market and financial feasibility and financial consulting Owner s representation and operating consulting Strategy and master planning Public incentive analysis Economic, fiscal and employment impact analysis (cost/benefit) Economic and tourism policy/legislation consulting Organizational development Research and statistical analysis Developer solicitation and selection; Private management company solicitation and selection Hunden Strategic Partners professionals have provided all of the above services for hundreds of client projects worldwide for the public, non-profit and private sectors. In addition, our professionals have prior professional career experience in municipal and state government, economic and real estate development, hotel operations and non-profit management. Over 80 percent of our clients are public entities, such as Grand Junction Event Center Analysis Executive Summary Page 20

23 municipalities, counties, states, convention bureaus, authorities and other quasi-government entities empowered to conduct real estate, economic development and tourism activities. Limiting Conditions HSP relied on primary and secondary sources of information for the assumptions made in this report and assumes these sources to be accurate. Assumptions created for the analysis were based on the data available to HSP during the study period as well as professional judgment. The Projects are assumed to be owned and operated in a first-class manner by parties who have operated similar facilities. No responsibility is taken for unforeseen events occurring after the date of the analysis, including war and terror attacks, natural disasters and major economic recessions. This report is intended to be used as a tool for decision-making by the contracting parties related to this Project and for no other purpose. Grand Junction Event Center Analysis Executive Summary Page 21

24 TABLE OF CONTENTS Executive Summary Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Profile of Two Rivers Convention Center and Avalon Theatre Economic and Demographic Analysis of Grand Junction Convention Industry Trends; Meetings Market Analysis Hotel Market and Trends Analysis Sports and Entertainment Market Analysis Small and Mid-Sized Arena Trends Case Studies and Comparable Market Metrics Recommendations, Drawings, Budget Governance Analysis Demand and Financial Projections Economic, Fiscal and Employment Impact Analysis Grand Junction Event Center Analysis Chapter 1- Page 1

25 PROFILE OF THE TWO RIVERS CONVENTION CENTER AND AVALON THEATRE The Two Rivers Convention Center and Avalon Theatre are owned by the City of Grand Junction and operated together by the same staff. The reason a profile of these facilities is included in this study is to understand how a new arena, if built, could fit into the overall public event facilities efforts of the city. Should the facilities be renovated or modified in any way as part of a larger arena project? What is the current situation with each venue and how could the TRCC, in particular, be improved? The focus of this chapter is the Two Rivers Convention Center and Avalon Theatre s physical attributes, historical performance and current challenges. The Avalon has recently been renovated and it is performing much better than in the past. However, the TRCC has not undergone a major renovation in many years and its performance has been a concern for the community, given the financial losses that are fairly high relative to the size of the venue. The HSP Team examined the facilities in terms of both size and quality to identify the opportunities for improvement to Grand Junction s offerings as well as potential synergy with a new arena development downtown. HSP also analyzed five years of data across a multitude of performance metrics related to events, attendance and revenues. The data provides insight into what is working, what is not working and potential areas of opportunities for Grand Junction. Profile of Two Rivers Convention Center The Two Rivers Convention Center (TRCC) opened in 1975 in downtown Grand Junction, Colorado. The facility is located just east of S.1 st St on Main St. Grand Junction is a major hub between Salt Lake City and Denver, approximately 2 hours from Aspen, CO and 4 hours from Denver, CO and Salt Lake City, UT. The following figure shows the exterior the Two Rivers Convention Center. Grand Junction Event Center Analysis Chapter 1- Page 2

26 Figure 1-1 Notable physical attributes include a fountain named The Song of Two Rivers located at the entrance. The following figure shows the layout of the first floor of the facility. Grand Junction Event Center Analysis Chapter 1- Page 3

27 Figure 1-2 Upon entering the first floor of the TRCC from the main entrance, visitors enter into an atrium followed by office space. There is a large ballroom divided into three individual rooms, as well as six meeting spaces, with restrooms in between. There is also a dedicated catering kitchen. Most of the building sits on a parking deck, which allows for parking below the TRCC. Since the TRCC is slightly elevated, the parking is not completely subterranean. The following table shows the square footage of event space at the Two Rivers Convention Center. Grand Junction Event Center Analysis Chapter 1- Page 4

28 Table 1-1 Two Rivers Convention Center Function Space Facilities Total (SF) By Division (SF) Divisions Ballroom Facilities Two Rivers Ballroom 18,600 3 Colorado River Room 6,000 1 Colorado River Room II 6,000 1 Gunnison River Room 6, ,600 3 Meeting Room Facilities Adobe Creek Room Kannah Creek Room 1,360 1 Plateau Creek Room Escalante Creek Room Whitewater Creek Room 1,360 1 Dominguez Crek Room ,320 6 Hotel Rooms 0 Total Ballroom Space 18, Total Meeting Room Space 4, Total Function Space 22, Ballroom Divisions 3 -- Meeting Room Divisions 6 -- Total Divisions (including Ballroom) 9 -- Source: Two Rivers Convention Center, Cvent, Hunden Strategic Partners The Two Rivers Convention Center has two main areas of function space. The Ballroom facilities account for the largest portion of square footage, which totals 18,600 square feet and can be divided into three areas, of 6,000 square feet each. While the rooms are considered ballrooms, the space is designed and functions as a dressed up expo hall on many occasions, presenting challenges. It does not have the higher end finishes and lighting options of a modern ballroom. There are a total of six meeting rooms totaling 4,320 square feet. Two meeting rooms, Kannah Creek and Whitewater Creek, are 1,360 square feet, while Adobe Creek, Plateau Creek, Escalante Creek and Dominquez Creek rooms each are 400 square feet. The following figure shows the map of Downtown Grand Junction and includes the TRCC, entertainment districts and existing hotels. Grand Junction Event Center Analysis Chapter 1- Page 5

29 Figure 1-3 As the figure shows, there are five hotels within walking distance to the TRCC. All five, including the Knights Inn, SpringHill Suites, Fairfield Inn, Hampton Inn and the Historic Melrose Hotel, are located on the west end of the Historic Downtown District and a few blocks from the TRCC. There are three theater venues: Roper Music, Mesa Theater & Pub and the Avalon Theatre (profiled in this chapter). All are within a four-block radius to the TRCC. Roper Music and Mesa Theater & Pub are on the northeast side of the Historic Downtown District, while the Avalon Theatre is on the east side. Event and Attendance History The following table shows the number of events by type from 2011 through While there are great variations from year to year in certain categories, general trends can be noted. Grand Junction Event Center Analysis Chapter 1- Page 6

30 Table 1-2 Two Rivers Convention Center - Events Event Cater Out Concert Convention/Conference Graduations Meals Meetings Meetings w/ Meals Service Club Special Events Sporting Events Theatrical Performance Tradeshow Weddings Other Total Source: City of Grand Junction As the table shows, meetings w/ meals and service club events account for approximately 52 percent of the building usage over this five-year period. The most important category for the Two Rivers Convention Center is conventions. Conventions generate the most impact due to their combination of size and likelihood that guests are from out of town, which requires hotels, restaurants and entertainment. The growth in this category is an important metric for the facility s overall health. This growth occurred against the backdrop of a tough convention industry struggling with the economic recession. The following table shows the historical event overview of event days per year between Grand Junction Event Center Analysis Chapter 1- Page 7

31 Table 1-3 Two Rivers Convention Center - Event Days Event Cater Out Concert Convention/Conference Graduations Meals Meetings Meetings w/ Meals Service Club Special Events Sporting Events Theatrical Performance Tradeshow Weddings Other Total Source: City of Grand Junction The table shows that meetings with meals and service club events had approximately 46 percent of all event days booked over this five-year span, whereas conventions/conferences only had 25 percent of event days booked over this span. This is not an unusual ratio, as there are often fewer larger events and more, smaller meetings and event. The key for a successful convention center is to create a facility that induces the most impactful events (those multi-day events that produce hotel room nights, auto rentals, retail spending and restaurant spending) and can backfill the calendar with local events that serve local needs. HSP analyzed recent activity to understand the character of demand for the facility. The table below shows attendance by type of event at the Two Rivers Convention Center from 2011 through Grand Junction Event Center Analysis Chapter 1- Page 8

32 Table 1-4 Two Rivers Convention Center - Attendance Event Cater Out 1,956 3,391 2,068 1,698 1,639 Concert 8,035 2,204 1,801 4, Convention/Conference 5,650 5,206 4,863 8,978 7,016 Graduations -- 1,600 1,975 1, Meals 6,654 7,583 5,011 3,979 2,807 Meetings 2,012 4,277 2,037 1, Meetings w/ Meals 18,660 6,177 7,097 3,998 4,268 Service Club -- 10,158 8,917 7,761 9,268 Special Events 13,577 17,405 12,395 11,899 8,004 Sporting Events ,440 3,823 5,200 Theatrical Performance Tradeshow 19, ,215 16,125 18,715 Weddings Other ,494 7,687 1,317 Total 76,602 77,856 80,759 73,588 59,310 Source: City of Grand Junction Total attendance has declined from 74,000 81,000 from 2011 to 2014 to 59,000 in Declines were fairly spread out in nearly every category. Convention/Conference attendance has ranged from 5,200 to nearly 9,000 over the period, with the past two years showing the two highest numbers of visitors. Tradeshows include business-to-business events as well as consumer-based ticketed events. The businessto-business events are impactful, while consumer shows generate revenue for the building, but do not generate much impact on the community since most attendees are local. Special events and sporting events generated 8,000 and 5,200 attendees in 2015, respectively. Sports has been an increasingly important business type, increasing from none in 2011 to 5,200 in The most impactful events convention/conferences, special events and sport events generated approximately 20,000 attendees in 2015, or 38 percent of attendees. This is a fairly standard ratio, given that the facility hosts consumer shows as well as conventions and local meetings. However, the decline in attendance is a concern. In addition, as will be discussed later, the facility itself is not ideal for many events and could be renovated to create the types of spaces that would draw more high impact groups. The next table shows average attendance per event by type over the period. Grand Junction Event Center Analysis Chapter 1- Page 9

33 Table 1-5 Two Rivers Convention Center - Average Attendance per Event by Category Event Cater Out Concert 1,148 1, , Convention/Conference Graduations Meals Meetings Meetings w/ Meals Service Club Special Events Sporting Events ,274 1,040 Theatrical Performance Tradeshow 1,310 1,237 1,478 1,344 1,248 Weddings Other Average Source: City of Grand Junction When there are concerts, the average attendance is about 1,000, although there was not a concert held in Sporting events also generate about 1,000 attendees per event. Conventions have generally averaged under 300 people per event. This size constraint is largely due to the size of the building and the number of hotel rooms that can be blocked in the downtown area. With a more flexible facility that could hold more and larger events, the average group size for conventions should increase, as would the number of impactful events. Historical Financial Performance HSP also analyzed the financial activity at the Two Rivers Convention Center. The following table shows the operating revenues for the TRCC from 2011 to 2015 by category. Preliminary data was used for the 2015 data set. Grand Junction Event Center Analysis Chapter 1- Page 10

34 Table 1-6 Two Rivers Convention Center Operating Revenues & Expenses Item Revenues Rental $339,707 $361,485 $345,902 $417,951 $312,100 Food & Beverage $1,240,508 $1,220,096 $1,106,014 $1,161,963 $886,399 Professional Services $258,617 $260,729 $238,673 $245,162 $184,385 Merchandise $47,377 $54,631 $46,003 $24,197 $15,319 Other $31,849 $41,375 $25,727 $21,742 $18,337 Total Revenues $1,918,058 $1,938,317 $1,762,319 $1,871,015 $1,416,540 Expenses Full-Time Wages $491,730 $572,500 $627,007 $610,281 $585,307 Part-Time Wages $373,046 $399,727 $347,051 $350,678 $302,091 Benefits $216,335 $275,460 $315,100 $303,825 $255,624 Food & Bar $401,804 $366,443 $311,093 $335,619 $290,707 Utilities $148,385 $138,285 $137,493 $140,413 $149,393 Contracted Services $85,082 $87,737 $85,834 $92,323 $50,365 Internal Services $150,530 $151,683 $153,039 $177,958 $183,879 Supplies $56,513 $72,571 $51,733 $50,554 $53,648 Repairs & Maintenance $44,443 $34,443 $29,554 $35,300 $32,601 Equipment & Rentals $23,607 $51,379 $49,317 $30,438 $5,458 Admin $18,253 $21,044 $12,667 $10,830 $11,422 Travel/Training $5,311 $5,760 $1,941 $1,263 $1,578 Advertising $3,816 $6,380 $4,630 $7,835 $2,747 Total Expenses $2,018,856 $2,183,412 $2,126,459 $2,147,316 $1,924,820 Net Operating Income/(Deficit) ($100,798) ($245,095) ($364,140) ($276,301) ($508,280) Source: City of Grand Junction The table shows revenues remained steady approximately above $1.9 million in 2011 and 2012, but shows a decline in 2013 with $1.76 million, an incline in 2014 with $1.87 million, to a decline in 2015 to $1.41 million. Food & Beverage is the largest revenue stream, remaining steady from 2011 to 2014, with a decline in This lone item accounts for approximately 63 percent of the total revenue, followed by rent revenues at 20 percent and professional services at 13 percent. As shown in the table, expenses increased from $1.9 million in 2011 to $2 million from 2012 to Full-time wages, part-time wages, benefits and food & bar accounted for 82 percent of total expenses over the period. In 2011, TRCC consistently operated at a deficit from 2011 through 2015, experiencing its greatest operating loss in 2015, with a deficit of more than $500,000. Challenges In addition to the lack of a true dedicated ballroom with breakouts and local and regional competition for events, the analysis of performance, the HSP Teams review of the space and conversations with management indicate that the Two Rivers Convention Center faces numerous challenges in its current state. These include: Grand Junction Event Center Analysis Chapter 1- Page 11

35 Lack of distinct exhibit and ballroom spaces. The current ballroom space is used for both exhibit events and ballroom events, but it is more of an exhibit quality space. The facility needs a true ballroom that can also host exhibit events. The additional catering revenue will help, but more importantly, having a ballroom would make the facility competitive for many more events, both non-local and local. Lack of enough breakout meeting rooms to support most events. The focus for today s conventions is having more ballroom and breakout meeting space, so that education and training can occur for attendees. With so few breakout rooms, there is no ability for the TRCC to accommodate the needs of most association and corporate events. More breakout rooms would help make the facility more competitive. Lack of a service corridor. Food service is delivered from the same hallway that attendees use, causing a logistical challenge and putting food quality and delivery timing at risk. The kitchen is too small to accommodate larger events. Any additional space or development of an attached arena would render the kitchen unable to support even larger events without significant challenges. Deferred maintenance in a number of areas, including a parking area that could use additional paint and lighting to create a safer, more pleasing feeling for attendees. Lack of pre-function space for pre and post events. The hallway in front of the ballroom is very small and cannot safely accommodate all of the people that would need to enter and exit the ballroom in a short period of time. Also, pre-function areas are key spaces for hosting cocktail events prior to the main event in the ballroom. This is not possible in the TRCC. The lack of prefunction space hampers the facility in several critical ways. Office in a prime-location. The offices for staff are currently located in a prime space that could be used for enhancing the ability of the venue to compete for and perform well for conventions and other events. In hospitality properties, such as hotels, convention/conference centers and arenas, the office space is located in an area of least value to the attendee/user/visitor. As space and funding are limited, the building is typically geared for the benefit of the attendee/user/visitor and not the staff. Minimal interaction between the facility s exterior and the street. The TRCC does not have a good relationship with those walking or driving by. It is fairly hidden behind trees and has no windows to the street. In this way, it does not appear the be the community s front door or living room. Minimal storage space. Lack of storage space adds costs for logistics, part-time labor and also makes it more difficult to flip the building for different types of events that may want to occur in rapid succession. Based on the restrictions presented by the facility and after conversations with management, many conventions, conferences and other events cannot be accommodated at TRCC. Many groups that do use it make do with the current conditions, but would pay more for space and spend more in catering if the facilities were able to accommodate their needs better. As will be shown later in this report, today s groups require more breakout rooms and ballroom space. Grand Junction Event Center Analysis Chapter 1- Page 12

36 Profile of the Avalon Theatre The Avalon Theater opened in 1923 in downtown Grand Junction, Colorado. The facility is located five blocks to the east of the Two Rivers Convention Center on Main Street, in the downtown area. The theatre is one of Western Colorado s largest performing arts halls and seats more than 900. In 2014, the theatre completed a $6.9 million renovation for life safety and functionality purposes, which included expanding seating capacity, acoustic and digital/visual improvements, addition of Encore Hall and a new rooftop terrace. Once the renovation was completed, many more events have been held, including the showing of films. The following figure shows the exterior the Avalon Theatre. Figure 1-4 The only live performance theatre in the community, the Avalon also offers a multipurpose room that can hold events for up to 220 guests. The lobby and outdoor terrace are two of the most sought after spaces in the community, according to management. While the theater accommodates a variety of performances, it is unable to hold a Broadway series due to its limited rigging capabilities. The following figure shows the mezzanine level layout of the facility. Grand Junction Event Center Analysis Chapter 1- Page 13

37 Figure 1-5 The mezzanine level of the Avalon Theatre contains one upper mezzanine seating section and three lower mezzanine seating sections. The following figure shows the first level of the Avalon Theatre. Grand Junction Event Center Analysis Chapter 1- Page 14

38 Figure 1-6 The first floor of the Avalon Theatre contains an auditorium seating layout, with three sections of seating and a sound booth. Event and Attendance History HSP reviewed the performance of the Avalon Theatre to determine how the building has been used. The following table shows the number of events by type from 2011 through Although there are great variations from year to year in certain categories, general trends can be noted. Grand Junction Event Center Analysis Chapter 1- Page 15

39 Table 1-7 Avalon Theatre - Events Event Movies Concert Convention/Conference Film Graduations Special Events Meetings Meetings w/ Meals Service Theatrical Performance Other Total Source: City of Grand Junction Showing movies accounts for approximately 61 percent of the building usage over this five-year period. All event types declined during the renovation, but have ramped up again following its completion. The facility is better able to accommodate concerts and special events, due to the improved facilities inside and outside the theatre itself. The following table shows the historical event overview of event days per year between 2011 and Event days are the number of days associated with one event. For example, if a single movie is shown over four days or four times, building management will count that as four event days. Table 1-8 Avalon Theatre - Event Days Event Movies Concert Convention/Conference Film Graduations Special Events Meetings Meetings w/ Meals Service Theatrical Performance Other Total Source: City of Grand Junction The table shows an increase in total event days from 2011 at 401 to 2012 at 449, followed by a decline in 2013 and 2014 during renovation. In 2015 the total event days increased to 609. Movies and concerts account for approximately 84 percent of the total event days over this five-year period. Grand Junction Event Center Analysis Chapter 1- Page 16

40 HSP analyzed recent activity to understand the character of demand for the facility. The table below shows attendance by type of event at the Avalon from 2011 through Table 1-9 Avalon Theatre - Attendance Event Movies 13,418 13,868 5,714 4,224 15,326 Concert 14,646 20,724 5,525 4,698 20,611 Convention/Conference 213 1, Film 2,789 2,519 2,509 1,130 4,301 Graduations 1, Special Events ,749 1,777 Meetings Meetings w/ Meals Service 16,300 20,780 8,794 9,321 13,960 Theatrical Performance 4,613 6,468 1,911 2,607 6,334 Other ,615 Total 53,521 66,309 25,465 26,295 70,988 Source: City of Grand Junction Movie attendance remained steady at approximately 13,500 in 2011, 2012 and 2015,except during renovation in 2013 and Concerts showed a similar trend and typically have averaged about 15,000 20,000 when the building was fully functional. Service events, which are local and fairly non-impactful, account for 29 percent of attendees over this five-year period, followed by concerts at 27 percent and movies at 22 percent. All remaining event types account for approximately 23 percent during the period. The next table shows average attendance per event by type over the period. Table 1-10 Avalon Theatre - Average Attendance per Event by Category Event Movies Concert Convention/Conference Film ,091 Graduations Special Events Meetings Meetings w/ Meals Service Theatrical Performance Other Average Source: City of Grand Junction The average event size has increased since the renovation, with movie attendance nearly tripling, theatrical performances doubling and film attendance increasing by nearly ten times. This is not indicative of the Grand Junction Event Center Analysis Chapter 1- Page 17

41 average attendance per event occurrence, as there are multiple occurrences of each event, but does show that the building is becoming much more productive. Historical Financial Performance HSP also analyzed the financial activity at the Avalon Theatre. The following table shows the operating revenues for the theatre from 2011 to 2015 by category. Preliminary data was used for the 2015 data set. Table 1-11 Avalon Theatre Operating Revenues & Expenses Item Revenues Rental $60,189 $69,038 $31,736 $28,851 $122,818 Food & Beverage $84,213 $116,412 $36,094 $88,438 $284,261 Admissions $61,140 $59,706 $24,105 $14,976 $60,498 Professional Services $6,734 $21,261 $3,663 $15,688 $42,586 Merchandise $2,055 $5,543 $1,693 $1,841 $6,826 Other $7,805 $7,478 $1,763 $5,710 $9,523 Total Revenues $222,136 $279,439 $99,054 $155,505 $526,512 Expenses Full-Time Wages $9,931 $20,901 $5,440 $19,999 $51,890 Part-Time Wages $64,751 $74,118 $23,766 $32,706 $109,270 Benefits $10,317 $20,015 $6,540 $10,388 $29,692 Food Stuffs $13,933 $26,225 $6,663 $35,356 $67,874 Utilities $39,419 $39,252 $22,380 $38,045 $78,551 Contracted Services $9,436 $12,568 $8,325 $15,659 $27,132 Internal Services $16,571 Supplies $7,962 $17,505 $444 $16,394 $9,203 Repairs & Maintenance $7,589 $11,104 $947 $1,432 $8,955 Equipment & Rentals $8,747 $8,654 $6,451 $10,253 $8,791 Admin $41,548 $42,470 $18,061 $16,282 $43,720 Advertising $8,463 $13,963 $2,086 $1,529 $5,809 Total Expenses $222,096 $286,776 $101,102 $198,042 $457,458 Net Operating Income/(Deficit) $41 ($7,338) ($2,048) ($42,537) $69,054 Source: City of Grand Junction The table shows revenues increased significantly after the renovation was completed and the facility became profitable. The biggest increases in revenue were from rentals (nearly doubling) and food & beverage, which more than doubled from the high in Expenses also increased, but were offset by the higher revenue, leading to an operating profit. Implications Built more than 40 years ago, the Two Rivers Convention Center s current layout, function space and amenities present a variety of issues for management and meeting planners. The facility s lack of a true Grand Junction Event Center Analysis Chapter 1- Page 18

42 ballroom and very few meeting rooms, combined with its minimal pre-function space and back-of-house service corridor, has hurt Grand Junction s ability to attract impactful events. The 2015 performance of the Avalon Theatre demonstrates the impact that investment in aging facilities can have, with increased utilization and achievement of breakeven status. The performance of the Two Rivers Convention Center will continue be under competitive pressure until the deficiencies identified have been addressed. However, with renovation and space adjustments, the TRCC could be much more competitive. Grand Junction Event Center Analysis Chapter 1- Page 19

43 TABLE OF CONTENTS Executive Summary Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Profile of Two Rivers Convention Center and Avalon Theatre Economic and Demographic Analysis of Grand Junction Convention Industry Trends; Meetings Market Analysis Hotel Market and Trends Analysis Sports and Entertainment Market Analysis Small and Mid-Sized Arena Trends Case Studies and Comparable Market Metrics Recommendations, Drawings, Budget Governance Analysis Demand and Financial Projections Economic, Fiscal and Employment Impact Analysis

44 ECONOMIC & DEMOGRAPHIC ANALYSIS Local market area characteristics such as population, demographics, a diversified economy, access, quality of downtown and tourist attractions influence the potential demand for arenas, convention centers and supportive hotel developments. This chapter profiles Grand Junction, including an overview of the economic characteristics of the metropolitan market, as well as a description of local attractions. The following figure shows a map of the populated areas in the city of Grand Junction. It is surrounded by smaller, populated towns and community areas. Figure 2-1 As shown, Grand Junction lies in a broad valley known as Grand Valley in the arid western portion of Colorado where the Gunnison River meets the Colorado River. The city has several outlying towns and bedroom communities that make up a larger urbanized area of nearly 150,000 people that lie mostly in the Grand Valley. Interstate I-70 (aligned with U.S. 6) meets U.S. 50 at this point. Grand Junction Event Center Analysis Chapter 2 - Page 2

45 Regional Access and the Local Highway System Grand Junction is served by one interstate, two U.S. highways and one state highway. Interstate 70 runs from Interstate 15 in Cove Fort, Utah to Baltimore Maryland, connecting Grand Junction to Denver, Kansas City, St. Louis, Indianapolis Columbus, Ohio, and Pittsburgh. Beyond Cove Fort, Utah, most I-70 traffic heads southwest to Las Vegas and Los Angeles, or northwest on U.S. 6 to Salt Lake City and points west. It is one of the busiest cross-country highways on the continent and is an important crossroads in the central western United States. State Highway 340 runs east-west starting at First Street in downtown Grand Junction, crossing the Redlands and ending at US Highway 6 and US Highway 50, useful mostly as a local highway. Airport Access Grand Junction Regional Airport serves as the major airport in the area. The airport is located in north Grand Junction on Horizon Drive. As of 2011, one-way flights to Denver, Salt Lake City, Las Vegas, Dallas, Phoenix, Los Angeles and Houston are available. The airport is served by five airlines: Allegiant Air, American Eagle, Delta Connection, Denver Air Connection and United Express. The only mainline jets at Grand Junction are Allegiant Air several days a week nonstop to Las Vegas and Los Angeles. All other airlines use regional jets. Population The table below shows population changes in the United States, Colorado, the MSA, Mesa County and Grand Junction. Table 2-1 Population Percent Change Estimate United States 248,709, ,421, ,745, ,857, % State of Colorado 3,294,394 4,301,262 5,029,196 5,355, % Grand Junction MSA 93, , , , % Mesa County 93, , , , % Grand Junction 29,034 41,986 58,566 60, % City Pop. As % of MSA 31.2% 36.1% 39.9% 40.6% -- Source: U.S. Census Bureau Population and Growth Rates From 2000 to 2010 the population for the city of Grand Junction increased by 39.5 percent to 58,566. Additionally, the County and MSA populations experience substantial growth from 2000 to 2010 of 26.2 percent in each. The metro area is now estimated to have approximately 148,255 residents. Events at a new arena, especially concerts performed by major touring acts, can draw people from far beyond the relatively small metropolitan area of Grand Junction. The following map and series of tables show populations and the associated income of those populations within various distances of Grand Junction. Grand Junction Event Center Analysis Chapter 2 - Page 3

46 Figure 2-2 Table 2-2 Grand Junction - Population by Radius Category 10 miles 30 miles 50 miles Population 123, , ,580 Househoulds 49,250 59,040 75,149 Source: Esri Table 2-3 Grand Junction - Population by Radius Category 75 miles 90 miles 105 miles Population 289, , ,894 Househoulds 114, , ,203 Source: Esri Grand Junction Event Center Analysis Chapter 2 - Page 4

47 As shown, the population within ten miles is about 124,000 people, however that does not entirely cover the Grand Valley s suburban area. Population figures within both 30 and 50 miles are more accurate in determining the market from which events at the arena could draw. For larger events such as family shows and concerts, people are willing to drive farther distances. The 75, 90, and 105-mile radii have vastly more of a market from which to draw, topping out at 381,894, and 151,203 households within 105 miles of Grand Junction. The following tables break down these same populations by household incomes. ` Category Table Grand Junction Households by Income 10 Mile Radius Total Households 49, < $15k 5, % $15k- $25k 5, % $25k - $35k 6, % $35k - $50k 7, % $50k - $75k 9, % $75k - $100k 6, % $100k - $150k 5, % $150k - $200k 2, % $200k+ 1, % 30 Mile Radius 50 Mile Radius # of Households % of Households # of Households % of Households # of Households % of Households 59, , , % 8, % 5, % 8, % 7, % 9, % 8, % 11, % 11, % 13, % 8, % 10, % 6, % 8, % 2, % 2, % 1, % 1, % Median Household Income $49, Average Household Income $66, Per Capita Income $26, $51, $49, $67, $65, $27, $26, Source: Esri ` Category Table Grand Junction Households by Income 75 Mile Radius Total Households 114, < $15k 13, % $15k- $25k 12, % $25k - $35k 13, % $35k - $50k 17, % $50k - $75k 20, % $75k - $100k 16, % $100k - $150k 12, % $150k - $200k 4, % $200k+ 2, % 90 Mile Radius 105 Mile Radius # of Households % of Households # of Households % of Households # of Households % of Households 133, , , % 17, % 13, % 15, % 15, % 17, % 19, % 22, % 25, % 28, % 19, % 21, % 15, % 17, % 5, % 6, % 4, % 5, % Median Household Income $50, Average Household Income $65, Per Capita Income $26, $51, $52, $67, $69, $27, $27, Source: Esri Grand Junction Event Center Analysis Chapter 2 - Page 5

48 The tables show that the largest income group is between $50,000 and $75,000 per household, at around 18 to 19 percent. As distance increases from Grand Junction the average household incomes increase gradually, averaging $66,500 in the Grand Valley and increasing to almost $70,000 at the 105-mile marker. About 52.5 percent of the households in the 105-mile radius ring earn over $50,000 annually, which allows for discretionary income purchases such as hockey and concert tickets. The following maps show the actual drive-time from Grand Junction, Denver and Salt Lake City. Figure 2-3 The map shows that a 90-minute drive from Grand Junction actually covers a relatively small area compared to Denver and Salt Lake City because of the rugged topography and few highways. The population is 247,000 within that drive-time boundary. Because there are large open and underserved spaces between Grand Junction s primary market and that of Denver or Salt Lake City, it is appropriate to view maps that show twohour and 2.5-hour drive times. Yet even 250,000 people within 90 miles is enough to support a small arena, as will be shown throughout the report. Grand Junction Event Center Analysis Chapter 2 - Page 6

49 Figure 2-4 In the two-hour drive time map, Grand Junction and Denver s boundaries now just barely reach each other along I-70, however there are still large expanses of rural populations between the two cities. This map also suggests that the people living east of Eagle, Colorado (east of Glenwood Springs) are more likely to drive to Denver for a show, game or concert, than Grand Junction. It is also instructive to note that Denver s television market through cable and satellite dish networks reach most of Colorado, including just about all of western Colorado. Advertising on Denver stations for concerts may pull more people throughout western Colorado for a Denver event of show, whereas advertising on Grand Junction television will be limited to a much smaller area; generally, the area of the two-hour drive time boundary. All territory on the Utah side of the state line is part of the Salt Lake City TV market, however those communities that are closest to Grand Junction also receive news about events in Grand Junction. This would suggest that promoters and any sports team should also advertise on cable and radio stations in the areas beyond the Grand Junction television market. The next figure shows the 2.5-hour drive time population. Grand Junction Event Center Analysis Chapter 2 - Page 7

50 Figure 2-5 At 2.5 hours, the Grand Junction and Salt Lake City boundaries begin to overlap, as do Denver and Grand Junction. The 366,000 people within this area for Grand Junction show that there is currently a large underserved population that an arena in Grand Junction could serve. At present, these populations have either learned to drive four+ hours or more to see a large-scale concert or touring show, or a hockey game, or they are not able or willing to participate in that amenity at all. Diversified Economy A healthy and diversified economy provides not only employment and disposable income for a market s residents, but it also helps to insulate an area from economic downturns. Markets that have historically relied on one sector, such as manufacturing, have often had difficulty recovering from market shifts to other sectors, which lead to an overall loss of local income and employment. This situation will often lead to declining population trends, as residents move to other areas with better opportunities. The table below shows how the city and the larger MSA employment total is diversified. Grand Junction Event Center Analysis Chapter 2 - Page 8

51 Table 2-6 Mesa County Employment by Industry Description Employees ercentage of Total Total employment 86, % By industry Farm employment 2, % Nonfarm employment 83, % Private nonfarm employment 73, % Other services, except public administration 14, % Health care and social assistance 10, % Retail trade 9, % Accommodation and food services 6, % Construction 5, % Administrative and waste management services 4, % Real estate and rental and leasing 4, % Mining 4, % Professional, scientific, and technical services 4, % Finance and insurance 3, % Manufacturing 3, % Transportation and warehousing 3, % Wholesale trade 2, % Arts, entertainment, and recreation 1, % Information % Educational services % Management of companies and enterprises % Forestry, fishing, and related activities % Utilities % Government and government enterprises 10, % State and local 8, % Local government 5, % State government 2, % Federal, civilian 1, % Military % (D) Not shown to avoid disclosure of confidential information, but the Source: Bureau of Economic Analysis, Hunden Strategic Partners The top six industries by employment in Mesa County are the Other services (except public administration), Healthcare and Social Assistance, Retail Trade, Accommodations and Food Services, and Construction, Other services (except public administration) employ percent. Health care and social assistance and retail trade follow, employing and percent, respectively. Grand Junction Event Center Analysis Chapter 2 - Page 9

52 Income and Housing The depth and strength of a market s employment base and income levels is an indicator of its ability to support tourism and event facilities, which in turn drive the demand at nearby airports. Indicators of a market s overall wealth and growth can include trends in its income and employment. The following table provides data on home ownership, income and retail sales, based on the latest data from the US Census Bureau. Table 2-6 Income, Spending and Other Demographic Data Category United States Colorado Mesa County Grand Junction Homeownership rate, % 65.4% 71.7% 61.9% Median value of owner-occupied housing units, $176,700 $236,200 $210,100 $217,700 Persons per household, Median household income, $53,046 $58,433 $49,471 $46,842 Persons below poverty level, percent, % 13.2% 14.7% 17.0% Private nonfarm employment, ,266,253 2,090,975 49, Private nonfarm employment, percent change, % 2.7% -1.1% -- Retail sales per capita, 2007 $12,990 $13,609 $17,279 $36,494 Source: US Census Bureau The homeownership rates in the city are below the national average but the county has a higher rate. The median home value in Grand Junction is $217,700 and approximately $210,100 in Mesa County. Home values in Grand Junction are approximately $41,000 above the national average and home values in Mesa County are approximately $33,400 above the national average. The City has a higher poverty rate than the national rate whereas the county has a lower poverty rate. Grand Junction and Mesa County also have median household incomes below the national average and well below the state average. Unemployment The following figure shows the unemployment rate in the City, County, State and MSA in comparison to the national unemployment rate. High unemployment relative to the nation indicates there may be chronic economic structural concerns such as low education rates and mismatched industry and employment resources. A city dominated by one industry type may also see chronic unemployment levels higher than the nation as a whole. Cities with balanced economies, tend to weather economic downturns better and have unemployment rates that generally mimic the U.S. level. Grand Junction Event Center Analysis Chapter 2 - Page 10

53 Figure 2-2 Unemployment Rates US Unemployment Rate State of Colorado Grand Junction MSA Source: Bureau of Labor Statistics The MSA has an unemployment rate that has trended above that of the national and state averages for the past five years. The Grand Junction MSA unemployment rate has steadily declined over the last five years from approximately 11.8 percent to a low of 4.8 percent. The state unemployment rate has been lower than the national average since Corporate Presence & Major Employers In general, a market s corporations will provide a base of demand for event and expo services, as they continually require travel, host events and entertain clients. The following table shows the largest employers in Grand Junction, by number of full-time employees. Grand Junction Event Center Analysis Chapter 2 - Page 11

54 Company Name Mesa County School District St Mary's Hospital State of Colorado Mesa County Star Trek Inc City Markets, Inc City of Grand Junction Colorado Mesa University VA Medical Center-Grand Junction Community Hospital Hilltop Community Resources West Star Aviation Family Health West Hospital Mind Springs Health HopeWest Primary Care Partners Capco Inc United Companies Stroller Newport News Nuclear, Inc CoorsTek Union Pacific Railroad Daily Sentinel Reynolds Polymer Technology Alsco Inc Central Distributing CO Source: Grand Junction Economic Partnership Table 2-7 Grand Junction Major Employers Industry # of Employees Education 2,675 Healthcare 1,500 Government 1,004 Government 978 Business Outsourcing 675 Grocery 648 Government 641 Education 622 Healthcare 593 Healthcare 538 Education 443 Aviation Maintenance 355 Healthcare 335 Healthcare 272 Healthcare 271 Healthcare 249 Defense Contractor 240 General Contractor 155 Nuclear Facility Management 153 Manufacturing 150 Rail 136 News 130 Manufacturing 128 Uniform 112 Distribution 93 Some of the largest employers in most communities are local health systems and schools, which is true in Grand Junction as well. However, as a regional center for such a large geographic area, the health care industry is even larger in Grand Junction than in most cities and employs nearly 4,000 people. The area is also a regional center for oil and gas related work that occurs in the wider area, as well as defense related companies. Higher Education Higher education institutions create event demand due to the numerous invited personnel as well as friends and family of students. Heavy populations of enrolled students suggest that the market will continue to reap the benefits of a more innovative and educated workforce. The following table shows the academic institutions within 50 miles of Downtown Grand Junction. Grand Junction Event Center Analysis Chapter 2 - Page 12

55 Table 2-5 Grand Junction Area Colleges and Universities Institution Colorado Mesa University Intellitec College-Grand Junction Grand Total Highest Degree Offered Enrollment Doctorate 9,116 Associates 617 9,733 Source: National Center for Education Statistics There are two higher education institutes within 50 miles of downtown Grand Junction, totaling nearly 10,000 students. This is a high ratio of students (approximately 20 percent), given the approximately 50,000 local residents. Colorado Mesa University is the largest university and has been growing and driving growth in the community as well. Educational Attainment The level of education in a community is generally linked to income potential and hence, disposable income and long-term growth. Highly educated people have more choices in their decision to choose employment and locate themselves and their families. The higher the education level, the stronger the labor market and the more disposable income that is available to spend on recreational activities, such as travel. The following table shows the education attainment levels in the area. Table 2-6 Highest Education Level Attained Population Age 25+ United States Colorado Mesa County Grand Junction Did Not Complete High 7.5% 5.3% 7.9% 5.5% Completed High School 27.7% 21.9% 28.3% 28.4% Some College 21.0% 22.1% 25.5% 26.1% Completed Associate 8.2% 8.2% 8.8% 9.0% Completed Bachelor 18.7% 24.1% 17.1% 19.2% Completed Graduate 11.4% 14.3% 8.0% 9.2% Source: U.S. Census Bureau In general, the percentage of the adult population with a graduate degree is much lower than Colorado and the nation as a whole, as well as lower proportion of residents with a bachelor s degree than the state (but approximately equal to the U.S.). Tourist Attractions Listed below are the top attractions in the area. Grand Junction Event Center Analysis Chapter 2 - Page 13

56 Grand Junction Motor Speedway The Grand Junction Motor Speedway is one of the premier Kart racing facilities in the United States. It provides a full Kart rental program, corporate and team-building programs, professional race management, racing schools, private and race team test sessions, and regularly scheduled race events. Grand Junction Motor Speedway offers a 0.9 mile, 32 foot wide go-kart track with hairpin turns and technical corners. Powderhorn Resort Powderhorn Mountain Resort is located 45 minutes east of Grand Junction. Powderhorn is unique among Colorado ski resorts because of its terrain and climate. It sits on the side of one of the world s largest flattop mountains rather than in a mountain canyon, which allows for views extending more than 20 miles. Kokopelli s Trail The Kokopelli Trail is a 142-mile multi-use trail, popular with mountain bikers. The trail is widely varied in difficulty, terrain and elevation. It has intense downhill sections and steep climbs, but several gently sloping road sections as well, to make it accessible to advanced and beginning mountain bikers alike. Palisade Peach and Wine Festivals Each year, at different dates, Palisade hosts a peach festival and a wine festival in the park. The Peach Fest hosts many booths and vendors giving away and selling everything peach related from pie to peach beer. Colorado National Monument Colorado National Monument is a National Park Service unit. It is an area of desert land high on the Colorado Plateau. The park hosts a wide range of wildlife including red-tailed hawks, golden eagles, ravens, jays, desert bighorn sheep and coyotes. Activities include hiking, horseback riding, road bicycling and scenic drives. Grand Mesa The Grand Mesa is the largest flat-topped mountain in the world, stretching about 40 miles east of the city between the Colorado and Gunnison Rivers. The mesa rises about 6,000 feet above the lower lands in Grand Valley. The ridges and mesa-tops are popular picturesque drives while the sometimes rugged lands and hundreds of lakes and reservoirs provide many opportunities for recreation. Two Rivers Winery & Chateau, Whitewater Hill Vineyards and the Mesas Wine Trail The Mesas Wine Trail are six wineries located in the Grand Valley near Grand Junction. Two Rivers is not a part of the trail, however is a popular winery. Located in the Redlands above the city of Grand Junction, the Grand Junction Event Center Analysis Chapter 2 - Page 14

57 Two Rivers Winery began in 1999 and has become a popular attraction in the Grand Valley. Tours and tasting rooms are available to the public. The Whitewater Hill Vineyards and five others are part of the Mesas Wine Trail, established in Museum of the West Located in downtown Grand Junction, this small museum offers visitors a look into the more recent past, with the uranium mines of the 1950s, back to the stagecoach days of westward expansion, and back a thousand years to the natural history of the lands and the culture of the ancient Anasazi culture. Implications Grand Junction and its metropolitan area is the largest population center between Denver, Salt Lake City and Las Vegas. The varied industries, growing tourism and university presence have kept the city busy with progress, partly because of its sunny, mild climate and lack of other nearby population centers. The city is drawing new residents, new visitors, and new opportunities like much of the Mountain West, but to a lesser degree than the booming Denver and Front Range area. Nevertheless, as a city that is at the center of a region of nearly 150,000 residents, Grand Junction has its own network television and radio media outlets, an airport with commercial service, many large retail offerings including a mall and big-box superstores, and multiple hotel accommodations, all of which make it the undisputed urban center for at least one hundred miles in any direction. The city lies along a major national east-west highway and near many recreational areas that are popular tourist destinations. Because of the relative isolation of the metropolitan area and its continued growth, there is an opportunity to create a multi-faceted complex of civic facilities that allow local people to gather for entertainment and large group meetings. The downtown area has been thoughtfully preserved, marketed, and revitalized. It is a historic and civic hub for the Grand Valley, and a multi-use arena is a natural demand inducing component that would round-out the many facilities, restaurant, nightlife and retail attractions within walking distance. Grand Junction Event Center Analysis Chapter 2 - Page 15

58 TABLE OF CONTENTS Executive Summary Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Profile of Two Rivers Convention Center and Avalon Theatre Economic and Demographic Analysis of Grand Junction Convention Industry Trends & Meetings Market Analysis Hotel Market and Trends Analysis Sports and Entertainment Market Analysis Small and Mid-Sized Arena Trends Case Studies and Comparable Market Metrics Recommendations, Drawings, Budget Governance Analysis Demand and Financial Projections Economic, Fiscal and Employment Impact Analysis

59 CONVENTION INDUSTRY TRENDS AND LOCAL/REGIONAL MARKET ANALYSIS In order to understand how Grand Junction compares and competes with other statewide and regional meeting and event options, competitive convention and event markets and facilities were identified and analyzed. Competitive facilities are identified by type, which include regional convention centers and individual large meeting hotels. However, it is important for stakeholders in Grand Junction to understand the forces shaping the convention and meetings business. While it is ever changing, the expectations for ease, convenience and low prices have increased, while the yearning for authenticity and large blocks of branded hotel rooms and attached highquality flexible spaces have also increased. Authenticity tied to large generic blocks of hotel rooms and space is ironic, indeed, but is the case. This higher level of expectation for everything at a lower price point is a challenge for cities, as it creates a market that is not willing to pay for the quality it expects. At the very least, Grand Junction offers an authentic experience, but the facilities it can offer today are not in line with expectations, hence why so few conventions and conferences are occurring at the Two Rivers Convention Center. Major and mid-sized cities that rely on convention business to fill their hotels and power their downtown economies often give away space or pay for shuttling or other costly items in order to lure meeting planners and their respective conventions. This effective rent reduction then cycles through the market to all venues in the smallest cities, including Grand Junction. As the largest venues fill their space with subsidized events, the others follow suit. There is an expectation of reduced rent for impactful events, since they are actively sought after. Until demand exceeds supply, this market situation will continue. Meeting and Event Industry Trends Conventions, exhibitions and trade shows are conducted for the purposes of exchanging information, conducting business transactions and for educational, cultural and social enrichment. As developments occur in the larger economy, simultaneous developments occur in the meetings market, such as the growth of the tech sector generating growth in tech related meetings and events. Often, a single event will use many different types of spaces, including exhibit halls, banquet facilities and breakout meeting rooms. Well-designed multi-purpose facilities offer the proportions of different types of spaces appropriate for the market. In addition, it offers the flexibility to host multiple events at one time. Different types of conventions and meetings have differing needs. The following table summarizes the key attributes of various types of meetings, including facility requirements. Grand Junction Event Center Analysis Chapter 3 - Page 2

60 Table 3-1 Facility Types & Requirements for Various Event Types Event Type Attendance Range Conventions with Exhibits Conventions Tradeshows , , ,000 Consumer Shows Assemblies Sports Events Conferences Meetings Trainings Banquets 8,000-1,000,000 5,000-50, , , ,000 Primary Purpose Info Exchange & Sales Info Exchange Sales Advertising & Sales Info Exchange Sports Info Exchange Info Exchange Training Social, Business & Charity Facility Requirements Exhibit Halls, Ballroom, Meeting Rooms, Hotel Block Ballroom, Meeting Rooms, Hotel Block Exhibit Halls, Hotel Block Exhibit Halls Arena or Exhibit Halls, Hotel Block Arena, Stadium or Exhibit Halls, Hotel Block Ballroom, Meeting Rooms, Hotel Block Meeting Rooms, Hotel Block Meeting Rooms, Hotel Block Ballroom Typical Facility Used Convention Center & Large Hotels Convention Center & Large Hotels Expo Facilities & Convention Centers Expo Facilities & Convention Centers Arenas or Convention Centers Arena, Stadiums, Convention Centers Convention/ Conference Centers and Hotels Convention/ Conference Centers and Hotels Convention/ Conference Centers and Hotels Convention/ Conference Centers and Hotels Source: HSP The various types of convention and conference center events are described as follows: Conventions and Trade Shows Associations, professional groups and other membership organizations hold conventions and trade shows, with attendance ranging from 150 to 50,000 attendees. The larger of these meetings take place in convention centers with large exhibit halls, but as a Center for Exhibition Industry Research (CEIR) survey indicates, the majority of events require less than 50,000 square feet. Conventions and trade shows may feature a single meeting, but usually offer a number of concurrent meetings and exhibitions. Facility needs include assembly space for general sessions and displays, banquet facilities and numerous breakout-meeting rooms. Two-thirds of conventions and trade shows use exhibit space as a means to communicate ideas and to display products. Conventions are high-impact events economically because a large percentage of attendees originate from outside the local area, typically stay several nights in the host city and spend money on accommodations, food, transportation, retail goods, and entertainment. Spouses, family, or companions typically accompany a significant number of attendees. Like conventions, trade shows offer a forum for exchanging industry ideas. They vary slightly from conventions in that they are more product- and sales-oriented. Trade shows are exhibit-intensive, and exhibitors prefer column-free, open-space facilities in which temporary custom booths for product display are constructed. Trade shows typically attract a large number of attendees, who originate from outside the host city, but tend to have a shorter average stay than convention attendees. Consumer Shows Consumer shows are public, ticketed events featuring exhibitions of merchandise for sale or display. Consumer shows provide a means of product distribution and advertising. Some, such as auto and boat shows, have a recreational and entertainment function as well. Consumer shows range in size from small local and specialized shows with a few hundred attendees to large shows with thousands of attendees. The larger consumer shows may occur in convention centers, shopping malls, fairgrounds and other publicassembly facilities with large exhibition areas. The majority of attendees are local, but exhibitors often come Grand Junction Event Center Analysis Chapter 3 - Page 3

61 from out of town. Site selection considerations for consumer shows include the size and income of the local population, availability of facilities and the number of competitive shows in the market. Assemblies Assembly events are social, military, educational, religious, and fraternal (SMERF) events. They attract large numbers of people and require seating arrangements to support all the visitors. Larger assemblies are held in arenas or stadiums while smaller assemblies are held in venues such as school s auditoriums, churches and community centers. Similar to conventions, attendees originate from outside the host city, but, unlike conventions, these events do not usually require large amounts of exhibit and meeting room space. Sports Sporting events are any youth, amateur, professional, or senior event of any variety of sports that can be played indoors. Typically, such events are held in arenas or stadiums; however, many events, from boxing to wrestling, to basketball, can be held in exhibit facilities with temporary seating/stands. A growing trend in this sector is cheerleading competitions. As such, a multipurpose facility can be marketed for a variety of event types. Conferences Conferences are meetings typically held by associations, professional groups, and other membership organizations. Educational institutions also host conferences. These events do not usually require exhibit space, but otherwise the facility demands are similar to those of conventions such as meeting space for general sessions, food service facilities and breakout rooms. Hotels and conference centers typically serve as venues for conferences. Corporate, Training and Other Meetings Corporate meetings include training seminars, professional and technical conferences, business/job fairs, incentive trips and management meetings. Corporate meeting planners and attendees demand high-quality facilities. High quality and flexible technology capabilities are an essential element corporate and business users are requiring when selecting meeting facilities. Banquets Banquets are typically locally generated events, from social and wedding events to the annual Chamber of Commerce event, which can be the largest of its kind in a given city. A mainstay of hotels and convention centers, banquets provide significant catering income and provide the community with its largest dining room, in most cases. National Supply Demand for meeting and exhibition space allowed many communities in the U.S. to develop successful convention and trade show facilities during the 1970s and 1980s. Public sector involvement in these developments was motivated primarily by the desire to capture the economic benefits of the events they hosted in their communities. The following figure shows the comparison of supply and demand growth beginning in Grand Junction Event Center Analysis Chapter 3 - Page 4

62 Figure 3-1 National Exhibit Space Supply & Demand Index Source: MEHD 2009, HSP Exhibit Space Supply Growth Net Square Feet of Paid Exhibit Space Exhibit space supply has increased every year since 1999, however paid exhibit space rises and falls with the economy, decreasing in 2001 and 2002 as well as 2008 and especially in This has led to increased competition amongst convention centers. While demand is now increasing at a higher rate than supply, the gap in the supply/demand index still provides meeting and event planners an edge in negotiations. Most existing facilities are in some form of expansion or renovation to update aging facilities, add new technology features and services and add space to attract larger events. The following table shows the percentage of national facilities that are currently in some form of growth. Table 3-2 Current Improvements in Industry Type of Improvement Percentage New Construction 9% Expansion 27% Renovation 27% Total 63% No Development Plans 36% Source: AIPC (2012), R7M Research & Consulting Grand Junction Event Center Analysis Chapter 3 - Page 5

63 Sixty-three percent of facilities nationally are taking some current action to improve the facility, either through new construction, expansion or renovation. Forty-five percent of the respondents to AIPC s survey added at least one new revenue stream in the past year, which is up from 27 percent in Examples of new revenue streams from the survey responses include the following: Expanded, enhanced meeting and conference spaces and services Enhanced and improved audio-visual, telecommunications and IT services Advertising and signage income Upgraded food and beverage and catering services Hosting cultural exhibitions, entertainment and sporting events One of the major considerations in renovations and expansion is improvements to the facilities to accommodate new technology. The Internet has become an essential part of all exhibit space and convention facilities. The following table sets out the changes that have occurred in convention center technology in the past ten years. Table 3-3 Convention Facilities Technology Status Ten-Year Comparison Type Ten Years Ago Today Facility Facility Website 87% 100% Internet Access 77% 100% Wireless Internet 60% 94% Teleconferencing 58% 72% Video Conferencing 50% 66% Social Media Presence 0% 54% Security Access Cards 43% 44% Online Event Planning Booking Events 20% 19% Ordering Supplies for Events 18% 31% Booking Accommodations 16% 23% Source: PricewaterhouseCoopers Every convention center in the United States has a website and Internet access, which was not the case ten years ago. Almost every facility has wireless Internet, 94 percent, up from sixty percent ten years ago. More than half of the convention centers in the United States have some social media presence, either on Facebook, Twitter, or some other platform. Online event planning has not changed much in the past ten years, however. The only category that has significantly changed is ordering supplies for events, up from 18 percent to 31 percent. This indicates that Grand Junction Event Center Analysis Chapter 3 - Page 6

64 staffing and personal marketing are still very important to a convention center, with the one-on-one contact through telephone and in person still essential for event planning. Industry investment in technology during the next five years will be necessary for facilities to increase space flexibility and enhance attendee experience. Facilities will need to use and create mobile platforms and internet-based applications to assist and accommodate attendees. Traditionally, facilities technological efforts have focused on staples such as website development, standard audio/visual equipment and videoconferencing capabilities. However, according to an industry technology survey, facilities are increasingly focusing investment toward mobile and wireless capabilities, increasing network bandwidths, technologies that allow attendees to learn collaboratively and interactively as well as social media, e-marketing platforms, applications and webinars. Facilities must learn how to use these new technologies to their benefit, as they may pose a potential threat to industry revenue in the long run by allowing people to attend conferences and participate remotely. Ultimately, technology will need to be used as a tool that enhances business and individuals' experiences to drive demand for services. The following table summarizes the ownership structure of U.S.-based convention centers. Table 3-4 Convention Centers Ownership Total Convention Centers Large Medium Small Ownership City 48% 27% 52% 57% Authority 27% 55% 22% 14% State 8% 18% 4% 7% County / Council 10% --- 7% 21% Private 2% --- 4% --- Non-Profit 2% --- 4% --- Other 4% --- 7% --- Is part of a complex 33% 27% 41% 21% Source: International Association of Venue Managers, Inc. As shown, most convention facilities are owned by the public sector. This public ownership however can take multiple forms as shows, such as directly through the city, by means of a created authority or even through the state or county / council. State or county / council ownership however is less common within the public sector. And while many convention facilities are privately managed, very few are privately owned. The following table shows the various convention center management types based on the exhibit space size. Grand Junction Event Center Analysis Chapter 3 - Page 7

65 Exhibit Space Size Table 3-5 North American Convention Center - Management Type Private Company Quasi-Public Authority Local Government Other Less than 100,000 square feet 30% 18% 40% 13% 100,000 to 500,000 square feet 44% 24% 22% 9% More than 500,000 square feet 17% 50% 33% 0% Source: PricewaterhouseCoopers The three primary types of management are private, a quasi-public authority or public, through the local government. Of the three classifications of convention centers, based on the size of the associated exhibit space, convention centers with 100,000 to 500,000 square feet of exhibit space are largely privately managed, by companies such as Spectra (formerly Global Spectrum) or SMG, or 44 percent. This trend toward private management has increased as governments and citizens are demanding more professional management and accounting related to the results at these major public investments. The following table breaks down North American convention centers personnel by the size of exhibit space offered. Table 3-6 North American Convention Centers - Personnel Exhibit Space Size Full-Time Total Full-Time Sales Staff Full-Time Equivalent Less than 100,000 square feet ,000 to 500,000 square feet More than 500,000 square feet Source: PricewaterhouseCoopers As expected, the larger the convention center the larger the full-time or full-time equivalent staff required. Meeting Demand Meeting planners have the strongest influence on conventions and meetings held nationwide. This section includes some of the preferences of U.S. meeting planners based on Meetings Media s Market Trends Survey as well as data from other sources. The following table shows the size of convention center events, measured by the total gross square feet of space used for the event. Grand Junction Event Center Analysis Chapter 3 - Page 8

66 Table 3-7 Event Size (Gross Function Space) Function Space (SF) Percent of Total Cumulative Total 6,000-14,999 19% 19% 15,000-24,999 13% 32% 25,000-34,999 15% 47% 35,000-49,999 13% 60% 50,000-99,999 19% 79% 100, ,999 14% 93% 200,000+ 7% 100% Source: Center for Exhibition Industry Research Distribution is fairly equal for the size of exhibitions, although nearly half of all events can fit in spaces smaller than 50,000 square feet. Nearly 20 percent of exhibitions occur in less than 15,000 square feet of function space, and an additional 13 percent take place in 15,000 to 25,000 square feet of space. Facilities with less than 25,000 square feet of gross exhibit space can host just one third of conventions. The following table shows the typical meeting duration organized by meeting planners. Table 3-8 Typical Meeting Duration Duration 0.5 day 1.0 day 1.5 days 2.0 days 2.5 days 3.0 days 3.5 days 4.0 days 4.5 days 5.0 days More than 5 days Source: Meetings Media, HSP Percent of Total 8% 14% 7% 16% 14% 20% 7% 5% 4% 4% 2% Half of all meetings and events last between two and three days. However, without a good hotel package, these longer meetings and events are very difficult to secure. The following table shows the types of facilities used for all conventions and meetings (respondents could give more than one answer). Grand Junction Event Center Analysis Chapter 3 - Page 9

67 Table 3-9 Types of Facilities - U.S. Meetings and Conventions Facility Type Percent of Total Downtown Hotels 68% Suburban Hotels 48% Resort Hotels (excluding golf resorts) 42% Airport Hotels 26% Convention Centers 19% Golf Resorts 16% Suites Hotels 16% Gaming Facilities 9% Residential Conference Centers 9% Nonresidential Conference Centers 6% Cruise Ships 1% Source: Meetings Market Report For all meetings and conventions, hotels are the primary host venue, while convention centers host one out of five meetings or conventions. This again underscores the value of having a high quality downtown meetings hotel. The term residential conference center refers to a conference center with hotel rooms. For the larger convention events, typically only convention centers and large hotels host these types of events. The next set of tables presents the trend of important industry metrics such as exhibit hall demand, occupancy, attendance, room nights and critical financial information from surveyed participants by PricewaterhouseCoopers. This data represents approximately 35 percent of 2013 convention center participants and 45 percent of 2013 destination marketing organization participants. The following table shows the average event count and attendance for survey respondents by facility size. Table 3-10 North American Convention Centers - All Event Characteristics Exhibit Space Size Average Event Count Average Total Attendance Less than 100,000 square feet , ,000 to 500,000 square feet ,800 More than 500,000 square feet 199 1,277,400 Source: PricewaterhouseCoopers The following table lists average annual exhibit event attendance for 2013 for facilities of varying size. Grand Junction Event Center Analysis Chapter 3 - Page 10

68 Table 3-11 North American Convention Center - Annual Exhibit Event Attendance Exhibit Space Size Convention / Trade Shows Consumer Shows Subtotal Less than 100,000 square feet 42,100 66, , ,000 to 500,000 square feet 146, , ,300 More than 500,000 square feet 567, ,100 1,014,700 Source: PricewaterhouseCoopers As shown, the 2013 annual attendance of consumer shows is greater at smaller convention centers with less than 100,000 square feet of exhibit space than that of convention or trade shows. The number of annual exhibit event attendance is nearly split evenly between the two types of events for mid-sized convention centers. Larger convention centers, with more than 500,000 square feet of exhibit space, are opposite of their smaller counterparts, with convention and trade show attendance accounting for the largest portion of the annual exhibit event attendance. The following table displays the number of convention/trade show and consumer show events hosted by survey respondents. Table 3-12 Surveyed National Exhibit Halls - Average Number of Events Exhibit Space Size Conventions / Trade Shows Consumer Shows Total Less than 100,000 square feet ,000 to 500,000 square feet More than 500,000 square feet Source: PricewaterhouseCoopers The following table presents average attendance for convention/trade shows and consumer shows. Table 3-13 North American Convention Center - Average Attendance Exhibit Space Size Conventions / Trade Shows Consumer Shows Less than 100,000 square feet 1,600 4, ,000 to 500,000 square feet 4,300 10,500 More than 500,000 square feet 11,000 32,800 Source: PricewaterhouseCoopers Grand Junction Event Center Analysis Chapter 3 - Page 11

69 The following table shows the average number of room nights generated annually by respondents to the convention center survey. In general, convention centers should generate from.25 to.75 room nights per square foot of exhibit space. The average for larger convention centers is about.50 to.60 room nights per square foot of exhibit space. Exhibit Space Size Table 3-14 North American Convention Centers - Hotel Room Nights Average Number of Room Nights Less than 100,000 square feet 27, ,000 to 500,000 square feet 141,400 More than 500,000 square feet 807,600 Source: PricewaterhouseCoopers The following graph breaks down the annual exhibit hall occupancy into conventions and trade shows, consumer shows and other events. 60% Figure 3-2 Annual Exhibit Hall Occupancy 50% 40% 30% 20% 10% 0% 6%$ 11%$ 8%$ 13%$ 11%$ 11%$ 38%$ 19%$ 27%$ Less than 100,000 square feet 100,000 to 500,000 square feet More than 500,000 square feet Source: PricewaterhouseCoopers Conventions / Trade Shows Consumer Shows Other Events As shown, conventions and trade shows provide the largest portion of the overall exhibit hall demand for all three categories of convention centers. As the amount of exhibit space increases so does its utilization by convention and trade shows. These larger convention centers are able to attract various kinds of conventions, particularly the larger events that the smaller convention centers are unable to accommodate. Occupancy was higher in the larger facilities, led by convention and trade show occupancy. Consumer shows are less important as buildings increase in size. Exhibit hall occupancy, which can only practically reach 70 percent due to move in/out days and holidays, ranged from 42 percent in smaller buildings to 51 percent in larger buildings, on average. Grand Junction Event Center Analysis Chapter 3 - Page 12

70 The following table lists the North American convention center annual ballroom occupancy. Table 3-15 North American Convention Center - Annual Ballroom Occupancy Exhibit Space Size Total Less than 100,000 square feet 43% 100,000 to 500,000 square feet 42% More than 500,000 square feet 51% Source: PricewaterhouseCoopers As demonstrated, ballroom occupancy within North American convention centers, regardless of size, averaged 45 percent from all event types. The following breaks down the North American convention center exhibit hall average daily rate per squarefoot. Table 3-16 North American Convention Center - Exhibit Hall Average Daily Rate (per square foot) Size Conventions / Trade Shows Consumer Shows Less than 100,000 square feet $0.123 $ ,000 to 500,000 square feet $0.068 $0.069 More than 500,000 square feet $0.063 $0.055 Source: PricewaterhouseCoopers The larger the event that is able to be accommodated in the event facilities, the lower the exhibit hall average daily rate per square-foot. The average daily rate per square-foot for convention or trade shows in larger convention centers is reduced by nearly half that of the rate recorded for smaller centers. The following table categorizes the catering and concession operations of North American convention centers based on the amount of exhibit space offered. Grand Junction Event Center Analysis Chapter 3 - Page 13

71 Table 3-17 North American Convention Center - Catering & Concession Operations Exhibit Space Size Exclusive Center Exclusive Contractor Other / Multiple Less than 100,000 square feet 41% 38% 21% 100,000 to 500,000 square feet 38% 62% 0% More than 500,000 square feet 11% 89% 0% Source: PricewaterhouseCoopers Of convention centers with 100,000 square feet of exhibit space or more, catering and concession operations are predominately contracted through an exclusive contractor. While 41 percent of convention centers with less than 100,000 square feet of exhibit space exclusively manage catering and concession operations within the center, nearly just as many (38 percent), are also contracted through an exclusive contractor. The following table shows the gross food and beverage revenue per convention/tradeshow and consumer show event attendee to North American convention centers. Table 3-18 North American Convention Center - Gross F&B Revenue per Attendee (All Events) Exhibit Space Size Convention / Trade Shows Consumer Shows Less than 100,000 square feet $20.64 $ ,000 to 500,000 square feet $22.08 $2.71 More than 500,000 square feet $33.04 $3.59 Source: PricewaterhouseCoopers The larger convention centers draw the greatest revenue from food and beverage per attendee. Convention centers with more than 500,000 square feet of exhibit space in 2013 generated nearly $13 more per convention/trade show attendee than centers with less than 100,000 square feet of exhibit space and nearly $1.75 more per consumer show attendee. The following figure shows the seasonality of the convention calendar across the United States. Grand Junction Event Center Analysis Chapter 3 - Page 14

72 Figure 3-3 Seasonality of U.S. Conventions 20% 18% 16% Percent of Conventions Occuring 14% 12% 10% 8% 6% 4% 2% 0% January February March April May June July August September October November December Source: Meetings Market Report The fall is the most popular time of year for conventions and events, followed by the spring and summer. The following table shows the important factors considered when choosing a meeting destination/city. Grand Junction Event Center Analysis Chapter 3 - Page 15

73 Factor Table = Very Important 2 = Moderately Important 3 = Not Important Hotel room prices and quality 80% 13% 7% Hotel room availability and capacity 80% 12% 8% Convention center and exhibition hall size and quality 76% 15% 9% Facilities "under one roof" (i.e. meeting rooms, exhibit halls, hotels in one facility complex or connected) 61% 27% 12% Labor costs and service issues 58% 36% 7% Proximity of HQ hotel(s) to the convention center 54% 28% 19% Destination appeal to attendees 48% 41% 11% Concentration of our members, clients or industry professionals in the city and region 48% 41% 11% Airport capacity and airfares 48% 37% 15% Total population, demographics 27% 38% 35% Road and highway access 26% 49% 24% Climate / weather 17% 54% 29% Cultural and entertainment amenities 13% 57% 30% Source: R7M Research & Consulting Event Site-Selection Trends - Factors for Host City Selection The top factors selected as very important are hotel room prices and quality, hotel room availability and capacity, and convention center and exhibition hall size and quality. The lowest-rated elements considered when choosing a meeting destination were the total population or demographics, climate/weather, and the cultural and entertainment amenities. While cultural and entertainment amenities ranked lower on the list of factors, the appeal of the evaluated city to the attendees was still important. While a city may have a lot to offer in terms of walkable entertainment, food and beverage options and other amenities, if the potential attendees negatively perceive the city, these factors are not even evaluated. The following table highlights the critical components for site-selection and what is considered important in proposals from CVBs, venues and/or hotels. Grand Junction Event Center Analysis Chapter 3 - Page 16

74 Table 3-20 Event Site-Selection Trends - Necessary Proposal Components Factor Percent Hotel rebates or discounts 79% Exhibit hall discounts 73% Other venue or hotel related service discounts or credits 61% Having everything "under one roof" (i.e., meeting rooms, exhibit halls, hotels in one facility complex or connected) 57% Single point of contact at the venue 46% Attendance promotion support 39% Transportation credits or discounts 34% Other 18% Source: R7M Research & Consulting As seen from the previous two tables, not only is the price of the hotels a key element in selecting a host city but also the affordability of the destination as a whole is of primary importance. Price is followed closely by the availability, as well as quality of a suitable hotel and meeting space. Below-market rent for facilities is a key factor driving the industry. Discounts on hotel bookings and function space rental are ranked as the top two components in any evaluated proposal. However, availability of hotels and the proper types of function space (ballrooms and breakout meeting rooms) remain vital. Having a large quality hotel within walking distance of a multi-functional meeting facility opens up the market for many types of events that can accommodate and drive corporate demand, which then draws non-local visitors. Having restaurants and entertainment attached or in the immediate proximity will also enhance its appeal. Another highly ranked proposal component is listing a single point of contact at the venue. Essentially any means of reducing the amount of work necessary to coordinate an event and eliminate any confusion due to poor communication is weighed heavily. The following table lists the key factors considered when assessing a potential venue for an event. Grand Junction Event Center Analysis Chapter 3 - Page 17

75 Factor Table = Very Important 2 = Moderately Important 3 = Not Important Cost (to you, the event management group) 91% 9% 0% Costs (to exhibitors and attendees) 88% 10% 2% Exhibit halls(s) size and quality 82% 16% 4% Exhibit space layout (single floor, contiguous) 80% 17% 3% Meeting room capacity and quality 78% 16% 6% Quality and proximity of hotels 71% 20% 9% Labor costs and service issues 65% 31% 4% Food and beverage quality and costs 62% 36% 2% Ballroom capacity 54% 32% 14% Technology services and capabilities 45% 45% 10% Airport access to venue and hotels 41% 42% 17% Attached, headquarters hotel 41% 37% 22% Regional population / demographics 34% 39% 27% Parking availability 33% 46% 21% Proximity to entertainment and restaurants 31% 52% 17% Highway and mass transportation access 20% 57% 23% Environmental sustainability 7% 65% 28% Proximity to tourism and cultural amenities 7% 52% 41% Proximity to recreational activities 5% 51% 45% Source: R7M Research & Consulting Event Site-Selection Trends - Factors for Venues While the walkability, entertainment and amenities of a potential host location are critical to the selection process, the factors coupled with the venue are just as significant. As seen from the previous tables, cost is a key element considered in all areas associated with a meeting or event. This is true of the venue itself. The cost to the event management group, exhibitors and attendees ranks the highest of all the considered components. The next vital areas of consideration for a venue are the size and quality of function space available. Once a destination is selected, planners must then choose a hotel. The following table shows the important factors for selecting hotels within the destination. Grand Junction Event Center Analysis Chapter 3 - Page 18

76 Table 3-22 Convention Association Meeting Corporate Meeting Number, Size and Quality of Meeting Rooms 93% 69% 81% Negotiable Food, Beverage and Room Rates 87% 80% 79% Cost of Hotel or Meeting Facility 82% 80% 80% Number, Size and Quality of Sleeping Rooms 79% 54% 72% Quality of Food Service 70% 63% 70% Source: Meetings Market Report Important Factors when Selecting a U.S. Meeting Destination As shown, this reinforces the importance of the availability of the right spaces and the fees for those spaces as primary factors. The following table reflects changes in the event and meeting planner s events and show. Table 3-23 Changes in Event & Meeting Planner's Events and Shows Changes Percentage Increased Negotiations 72% Requiring more telecom/internet bandwidth and related services 72% Shorter booking windows, they are booking closer to the event dates 68% Requiring higher-quality food and beverage 52% Event attendance is growing 40% Events are getting larger in terms of space requirements 40% Requiring attendance promotion assistance 32% Short Events in terms of total number of days 28% Events attendance is declining 20% Events are getting smaller in terms of space requirements 20% Asking for more Public Relations assistance and outreach to city and regional leaders 16% Shorter event day periods 12% Focusing more on event design and ambiance 12% Longerevent day periods 8% Longer booking windows, they are booking futher from the event dates 8% Other 4% Source: Red 7 Media Research & Consulting As shown in the table, event and meeting planners are utilizing their leverage, being in a buyer s market, to increase negotiations for better deals. Their events and shows are requiring more telecom/internet bandwidth and higher-quality food and beverage. Even though 68 percent of events and shows are being booked closer to the event date compared to only eight percent being booked further in advanced, 32 percent of events and shows are requiring attendance promotion assistance, which puts more pressure on convention centers and exhibit halls. Grand Junction Event Center Analysis Chapter 3 - Page 19

77 The following table displays the importance of information sources for attracting events and shows. Table 3-24 Event Site-Selection Trends - Information Sources Information Source Importance Past Experience 89% Attendance Feedback 79% Reputation/Image of Location 71% Hotel Rating/User Review Sites 41% Meeting Facility Web Sites 38% Destination Web Sites 38% Business Contacts at Location 24% Travel Magazine Articles 15% Social Networks/Media 14% "Fam" Trips 13% Trade Magazine Articles 13% Travel Brochures 10% Trade Shows 9% Incoming 9% Newspaper Articles 9% Meeting Planning Firms/DMOs 8% Trade Magazine Advertising 7% Promotions* 7% Webinars* 7% Online Trade Publications 4% Virtual Trade Shows 4% CDs/DVDs 3% Destination Blogs 3% Bureau Sales Calls 3% Podcasts 3% Direct Mail Promotions 2% Source: Metropoll Highlights Report XIV The most important information source that dictates whether or not event and meeting planners choose a site is past experience, followed by attendance feedback. The only other information source above 50 percent is the reputation/image of the location. Websites for hotel ratings and user reviews, meeting facilities, and destinations also had a more significant impact on attracting events and shows than other listed information sources. The following table highlights the critical components for site-selection and what is considered important in proposals from CVBs, venues and/or hotels. Grand Junction Event Center Analysis Chapter 3 - Page 20

78 Table 3-25 Event Site-Selection Trends - Necessary Proposal Components Item Percentage Hotel rebates or discounts 82% Exhibit hall discounts 75% Having everything "under one rood" 73% Other venue or hotel related service discounts or credits 49% Source: Red 7 Media Research & Consulting Most event and meeting planners consider hotel rebates or discounts a necessary proposal component involved in site-selection. Exhibit hall discounts as well as having all the event space and hotels under one roof are necessary proposal components. The following table shows the preferred locations for consumer public shows. Table 3-26 Event Site-Selection Trends Preferred Location Location Percentage Suburban area 69% Urban downtown area 31% Airport area 8% Ocean beach area 8% Fairgrounds 8% Source: Red 7 Media Research & Consulting A suburban area location is most preferred for consumer public shows, followed by urban downtown area. The table below shows the importance of proximate amenities. Grand Junction Event Center Analysis Chapter 3 - Page 21

79 Table 3-27 Event Site-Selection Trends - Areas and Amenities Very Important Moderately Important Not Important Areas & Amenities On-Site or Near-by Parking 100% 0% 0% Highway access 75% 25% 0% Hotels 64% 18% 18% Proximity to restaurants and bars 36% 45% 18% Proximity to mass transit access 33% 50% 17% Suburban areas 25% 50% 25% Entertainment areas 18% 45% 36% Downtown business district 17% 50% 33% Proximity to tourism, cultural attractions 8% 58% 33% Airport 8% 33% 58% Sports facilities 8% 17% 75% Universities/Colleges 8% 17% 75% Ocean beachfront areas 8% 8% 83% Proximity to recreational activities 0% 58% 42% Manufacturing bases 0% 25% 75% Resorts 0% 25% 75% Casino/Gaming Destination 0% 8% 92% Source: Red 7 Media Research & Consulting On-site of near-by parking availability is a critical issue for most public-consumer public shows. Related to parking is highway access, which is another critical issue. Event and meeting planners want attendees to have easy and convenient access to the facility with plenty of available parking once they arrive. Another very important issue is hotels for exhibitors and attendees to stay. The following table shows preferred host location factors. Grand Junction Event Center Analysis Chapter 3 - Page 22

80 Table 3-28 Event Site-Selection Trends - Host City Key Factors Very Important Moderately Important Not Important Host City Factors Convention center and exhibition hall size and quality 82% 18% 0% Total population, demographics 82% 9% 9% Labor costs and service issues 45% 45% 9% Road and highway access 45% 27% 27% Facilities "under one roof" 40% 40% 20% Hotel room prices and quality 36% 45% 18% Hotel room availability and capacity 27% 36% 36% Proximity of HQ hotel(s) to the convention center 27% 36% 36% Destination appeal to attendees 27% 27% 45% Concentration of our members, clients or industry professionals in the city and region 20% 60% 20% Climate/weather 0% 55% 45% Airport capacity and airfares 0% 27% 73% Cultural and entertainment amenities 0% 27% 73% Source: Red 7 Media Research & Consulting The most important key factor for host city selection is the convention center and exhibition hall size and quality. Planners need to ensure the facility has enough space to meet total attendance and parking requirements. The other key factor is the demographics of the regional population. Planners want to know if there are enough consumers in key lifestyle categories and segments to draw a quality attendance. The following table shows key factors when selecting a venue. Grand Junction Event Center Analysis Chapter 3 - Page 23

81 Table 3-29 Event Site-Selection Trends - Venue Key Factors Very Important Moderately Important Not Important Venue Factors Costs (to exhibitors and attendees) 100% 0% 0% Costs (to you, the event management group) 100% 0% 0% Exhibit halls(s) size and quality 90% 10% 0% Exhibit space layout (single floor, contiguous) 90% 10% 0% Parking availability 90% 0% 10% Labor costs and service issues 80% 20% 0% Regional population/demographics 80% 20% 0% Highway and mass transportation access 60% 20% 20% Food and beverage quality and costs 30% 50% 20% Quality and proximity of hotels 20% 60% 20% Meeting room capacity and quality 20% 40% 40% Ballroom capacity 11% 33% 56% Environmental sustainability 10% 80% 10% Airport access to venue and hotels 10% 40% 50% Attached, headquarters hotel 10% 40% 50% Proximity to entertainment and restaurants 10% 40% 50% Technology services and capabilities 0% 80% 20% Proximity to recreational activities 0% 20% 80% Proximity to tourism and cultural amenities 0% 20% 80% Source: Red 7 Media Research & Consulting Costs to both the event management group as well as the exhibitors and attendees are the most important key factors when selecting venues. The exhibit halls size, quality and layout are also critical factors in the selection process along with parking availability. Other primary factors for public-consumer public shows include labor costs and service issues as well as regional population demographics. Other factors are secondary concerns of planners when selecting a venue. The following table lists the 2012 top 50 U.S. convention and exhibition/tradeshow host cities, the latest listing available. Grand Junction Event Center Analysis Chapter 3 - Page 24

82 Table 3-30 Top 50 U.S. Convention & Exhibition / Tradeshow Host Cities 2012 Host City # Events Host City # Events 1 Las Vegas Philadelphia 66 2 New York Anaheim 62 3 Chicago Baltimore 62 4 Orlando Oklahoma City 62 5 Dallas Miami Beach 59 6 Atlanta Raleigh 59 7 Denver Austin 58 8 San Diego Fort Worth 58 9 Los Angeles Wilmington San Francisco Louisville Boston Pasadena Washington, DC Sacramento Columbus Chantilly San Antonio Rosemont Indianapolis West Palm Beach Houston Santa Clara Phoenix Tucson Charlotte Novi, MI Portland, OR Miami Seattle Reno Nashville Richmond, VA Long Beach Hartford Minneapolis Grand Rapids, MI Tampa Kissimmee New Orleans San Jose 40 Source: R7M, TSNN As seen from this table, Denver ranked 7 out of the top 50 U.S. convention and exhibition/tradeshow host cities. Denver is located 243 miles east of Grand Junction and is the closest city to Grand Junction on the list. Consumer Shows Consumer shows are a key component of convention center use and generate perhaps the greatest share of rent revenue, although have low hotel and other economic impacts because most attendees are local. However, in the case of Grand Junction, which pulls from such a wide geographic area, the impact of consumer shows is higher. The addition of an arena to the convention center would allow for more and larger consumer shows on the arena floor than are able to take place at the TRCC today. Grand Junction Event Center Analysis Chapter 3 - Page 25

83 Other revenue is generally minimal beyond concessions. Consumer shows are public, ticketed events produced by private companies to promote a particular industry, such as the bridal/wedding business, gun/knife, home/garden, etc. The following table shows the breakdown of public-consumer public show organization ownership. Table 3-31 Public-Consumer Show Ownership Structure Type Percent Private 53% Association 32% Partnership 3% Other 13% Source: Red 7 Media Research & Consulting The majority of public-consumer public shows are owned by private organizations. Association ownership is the second-largest type of ownership, with 32 percent. The following table shows the size of respondents largest consumer public show held in net square feet, number of exhibiting companies and attendance. Table 3-32 Size of Largest Consumer Show Net Square Feet Exhibiting Cos. Attendance Average 180, ,101 Median 115, ,000 Source: Red 7 Media Research & Consulting The average size of the respondents largest consumer public show utilizes more than 180,000 net square feet and the median is 115,000 square feet. This suggests that there are a number of very large consumer public shows that pull the average much higher than the median. The median figure for attendance of 17,000 is closer to the typical consumer public show attendance in a large market that HSP sees during its work. The following table shows what type of shows are respondents event types. Grand Junction Event Center Analysis Chapter 3 - Page 26

84 Table 3-33 Largest Show Consumer Show Event Type Event Type Percent Home and Garden 16% Boats and Marine 8% Automotive 5% Sports and Recreation 5% Education 3% Outdoor, Hunting and Fishing 3% Other 61% Source: Red 7 Media Research & Consulting Home and Garden shows are typically the largest event type of all consumer public shows, followed by boat and marine shows. The top six consumer public show types are typical shows held in exhibition spaces across the country. Based on feedback from consumer public show owners, the average total gross revenue for the largest, most important show is approximately $1.16 million, while the median is $500,000. The following table shows a breakout in terms of gross revenue for respondents largest show. Table 3-34 Largest Consumer Show Gross Revenue Sources Revenue Source Average % Exhibit Booth Sales 67.6% Admission/Ticket Sales 19.8% Sponsorships 10.6% Print Advertising 0.7% Online/Website Advertising 0.1% Other 1.3% Source: Red 7 Media Research & Consulting There are three primary revenue sources for a consumer public show. Exhibit booth sales is the largest revenue source for consumer public shows, accounting for two-thirds of gross revenue. Booth sales are followed by ticket sales and sponsorship at 19.8 and 10.6 percent, respectively. Implications The convention and conference event industry is diverse and responds well to facilities that can accommodate needs such as assembly space for general sessions and displays, ballroom facilities and numerous breakout-meeting rooms. Supply has been outpacing demand in the convention and meetings industry, even before the economic downturn in Even in the economic downturn, however, more than 65 percent of convention and meetings facilities expanded, renovated or built new facilities. This hurt pricing power for facilities over the past several years, but as the economy and meetings expand, balance is being Grand Junction Event Center Analysis Chapter 3 - Page 27

85 restored to the supply/demand mix. For those communities with the right mix of facilities and attractiveness, the return on investment can be quite measurable, in jobs, business activity and tax revenue. The Two Rivers Convention Center has limited facilities, which are limiting the types of events that can be secured, forcing user groups to consider other venues outside of the market for their event. In addition, user groups are seeking more flexible spaces that can be used for a multitude of uses and events rather than being confined to specific spaces. Important factors in the decision-making process of choosing a convention or meeting site include availability of nearby hotel rooms, cost of travel, and meeting space in the facility and hotels. The most important types of meeting space now are the number of breakout meeting rooms and ballrooms. Expo and exhibition space are still important, but less so now than in the past. Higher rated businesses (e.g. corporate, medical, associations that are willing to pay more for better facilities and experiences) need many breakout rooms and high quality ballrooms to conduct their trainings and other meetings. The renovation of the existing ballroom into a true, higher quality and flexible ballroom space will enhance the TRCC s competitiveness, as well the addition of an arena floor for exhibitions and more breakout meeting rooms for training and education. Is investment in this industry worth it? For those that construct and manage the right set of facilities within an attractive market, yes. The market is currently absorbing expansions planned during the past economic expansion. With the economy on the rebound and civic budgets strained, supply increases should be constrained for the next several years while demand should increase. This will mean that for the next five to ten years, the expanding demand will shift the market more toward the seller s advantage. Those that put the right package together: hotels and the right kinds of function space in a walkable environment, will generate new meetings and event business. Enhancing the fun side of the community, such as a nearby downtown or entertainment/restaurant district, will provide the community more to sell against its competitors. Ultimately, those communities with a competitive package will generate a constant flow of group and event business that will support a number of hotels, restaurants and jobs. LOCAL MEETING MARKET ANALYSIS Beyond the TRCC, the local supply of meeting facilities is fairly limited. The local meeting market area consists of a theater, three hotels, a university and the Fairgrounds. The following table lists the current function space offered locally within Grand Junction, broken down by function space type and not including the Two Rivers Convention Center. Table 3-35 Facility The Avalon Theatre Colorado Mesa University Clarion Inn Grand Junction Doubletree by Hilton Hotel Grand Junction Mesa County Fairgrounds Courtyard Grand Junction Average Grand Junction Local Event Facilties Distance from TRCC Total Function Space Exhibit Space Ballroom Space Meeting Room Space 0.5 2, , , ,500 2, , ,096 6, , ,000 5, ,000 5, , , miles 8,385 5,000 5,865 4,832 Hotel Rooms Source: CVENT, Hunden Strategic Partners Grand Junction Event Center Analysis Chapter 3 - Page 28

86 Grand Junction currently has five meeting facilities with more than 4,000 square feet of total function space. Colorado Mesa University is the largest meeting facility with 11,048 square feet of total function space in a ballroom and six meeting rooms. The Clarion Inn and Doubletree both have small ballrooms. The three hotel properties offer very similar amounts of meeting space that average approximately 5,600 square feet. Between these venues, there is very limited meeting and event space locally. The following figure shows the locations of the local meeting facilities. Figure 3-4 As shown in the figure, the meeting centers are not located in Downtown Grand Junction. Colorado Mesa University is located 1.7 miles northeast of the Two Rivers Convention Center. The three hotel properties are located approximately four miles northeast of downtown on I-70. The Mesa County Fairgrounds is located approximately 4.5 miles southeast of Downtown Grand Junction. Grand Junction Event Center Analysis Chapter 3 - Page 29

87 Avalon Theatre This venue is profiled in detail in Chapter One of this report. Colorado Mesa University Colorado Mesa University is located 1.7 miles northeast of Downtown Grand Junction. Colorado Mesa, established in 1925, has an enrollment of nearly 10,000 students. The following table shows the total function space at Colorado Mesa University. Table 3-36 Colorado Mesa University Function Space Facilities Total (SF) By Division (SF) Divisions Ballroom Facilities Meyer Ballroom 8, ,500 3 Meeting Room Facilities Total Meeting Rooms 2, ,548 6 Total Ballroom Space 8,500 Total Meeting Space 2,548 Total Function Space 11,048 Ballroom Divisions 3 Meeting Room Divisions 6 Total Divisions (including Ballroom) 9 Source: Colorado Mesa University, Cvent, Hunden Strategic Partners As the table shows, Colorado Mesa University has the Meyer Ballroom, an 8,500-square foot meeting space with three divisions. The University also has six meeting rooms that total 2,548 square feet. The function space at Colorado Mesa University can be used for meetings, conferences and entertainment events. While the facility is sizeable and features high-quality amenities, the University s priority is school-related events, limiting the availability to outside organizations. Clarion Inn Grand Junction The Clarion Inn Grand Junction is located 4.3 miles northeast of the TRCC on I-70 and is less than one mile from Grand Junction Regional Airport. The following table shows the function space offered at the Clarion Inn Grand Junction. Grand Junction Event Center Analysis Chapter 3 - Page 30

88 Table 3-37 Clarion Inn Grand Junction Function Space Facilities Total (SF) By Division (SF) Divisions Ballroom Facilities Grand Ballroom 4, ,096 1 Meeting Room Facilities Board Room Board Room Dominguez Room Escalante Room Grand Mesa La Sal Room Monument Mt. Garfield 1,452 1 San Juan Room Boardroom , Hotel Rooms 239 Total Ballroom Space 4,096 / Guest Room 17.1 Total Meeting Space 6, Total Function Space 10, Ballroom Divisions 1 / 100 Guest Rooms 0.4 Meeting Room Divisions Total Divisions (including Ballroom) Source: Clarion Inn Grand Junction, Cvent, Hunden Strategic Partners As the table shows, the Clarion Inn Grand Junction has a ballroom with nearly 4,100 square feet. The Clarion Inn also offers ten meeting rooms with 6,612 square feet of meeting space, which puts it at a competitive advantage for meetings and trainings that require groups to be broken down into smaller sections. There are 239 guest rooms at this property, which also makes it attractive for groups needing a large room block. The downside is the lower quality brand name and quality relative to the newer properties downtown with better regarded brand names. Doubletree by Hilton Hotel Grand Junction The Doubletree by Hilton Hotel Grand Junction, built in 1983 and renovated in 2012, is located 4.2 miles northeast of Two Rivers Convention Center on I-70. It is located approximately one mile from the Grand Junction Regional Airport. The following table presents the total function space of the Doubletree by Hilton Hotel Grand Junction. Grand Junction Event Center Analysis Chapter 3 - Page 31

89 Table 3-38 Doubletree by Hilton Hotel Grand Junction Function Space Facilities Total (SF) By Division (SF) Divisions Ballroom Facilities Grand Ballroom 5, ,000 1 Meeting Room Facilities Aspen 1,066 1 Bookcliff 1,250 1 Centennial Colorado Columbine 1,250 1 Executive Boardroom Horizon 1,250 1 Kokopelli 2,050 1 Mesa Monument 1,250 1 Mt. Garfield Telluride Gunnison , Hotel Rooms 273 Total Ballroom Space 5,000 / Guest Room 18.3 Total Meeting Space 11, Total Function Space 16, Ballroom Divisions 1 / 100 Guest Rooms 0.4 Meeting Room Divisions Total Divisions (including Ballroom) Source: Doubletree by Hilton Hotel Grand Junction, Cvent, Hunden Strategic Partners The Doubletree by Hilton Grand Junction has a Grand Ballroom with 5,000 square feet, which can hold approximately 300 people. It is among the largest ballrooms in the city. The Doubletree has 13 meeting rooms that total 11,668 square feet of meeting space, the most in the city. The Doubletree by Hilton Hotel Grand Junction has 273 guest rooms, which allows it to block the most number of hotel rooms for group in the market. In addition, it among the highest regarded hotel brands in Grand Junction, as just one step under a full-service Hilton flagged hotel. This property can both contribute to and be helped by an expanded TRCC donwtown. Mesa County Fairgrounds The Mesa County Fairgrounds is located 4.6 miles southeast of TRCC. The facility, like many fairgrounds, has lower quality finishes and is marketed to a different type of event than would typically utilize a convention center or arena, although there are some exceptions. Grand Junction Event Center Analysis Chapter 3 - Page 32

90 The following table shows the function space offered at the Mesa County Fairgrounds. Table 3-39 Mesa County Fairgrounds Function Space Facilities Total (SF) By Division (SF) Divisions Exhibit Space Community Building 5, ,000 2 Total Exhibit Space 5,000 Total Function Space 5,000 Source: Mesa County Fairgrounds, Cvent, Hunden Strategic Partners The Mesa County Fairgrounds offers 5,000 square feet of exhibit space that can host meetings, conferences, training seminars, weddings, birthdays and other special events in the Community Building for up to 300 guests. While flexible, this space will not compete with the Two Rivers Convention Center due to differences in quality and amenities. Courtyard Grand Junction The Courtyard Grand Junction, built in 2006, is located 4.6 miles northeast of the Two Rivers Convention Center on I-70, approximately one mile from Grand Junction Regional Airport. It is one of the best branded hotels in Grand Junction. The following table shows the total function space at the Courtyard Grand Junction. Grand Junction Event Center Analysis Chapter 3 - Page 33

91 Table 3-40 Courtyard Grand Junction Function Space Facilities Total (SF) By Division (SF) Divisions Meeting Room Facilities Merlot 3,422 2 Syrah Cabernet Riesling ,806 5 Hotel Rooms 136 Total Meeting Space 4,806 / Guest Room 35.3 Total Function Space 4, Meeting Room Divisions 5 / 100 Guest Rooms 3.7 Total Divisions Source: Courtyard Grand Junction, Cvent, Hunden Strategic Partners The Courtyard Grand Junction provides four meeting rooms with a combined total of 4,806 square feet of meeting space. The Merlot Room, the largest space, can be divided into two rooms. These facilities can accommodate up to 300 attendees. The Courtyard Grand Junction has 136 guest rooms, which does not provide it the ability to block a large number of guest rooms for groups relative to larger hotels in Grand Junction. Regional Convention Centers HSP looked at facilities within 300 miles of Grand Junction that contained at least 15,000 square feet of total function space. There are no large or significant event venues between Salt Lake City and Grand Junction. Therefore, the analysis focused on central and western Colorado, mainly along I-25 and I-70. The following table summarizes competitive event and meeting facilities in the region by total function space, sorted by distance from Grand Junction, not including Denver facilities. Denver facilities are profiled in a separate table. Grand Junction Event Center Analysis Chapter 3 - Page 34

92 Facility Table 3-41 Grand Junction Regional Meeting Facilties Distance from GJ City Total Function Space Exhibit Space Ballroom Space Meeting Room Space Hotel Rooms The Westin Snowmass 129 Snowmass 27, ,823 16, Vail Cascade Resort 147 Vail 22, ,392 10, Manor Vail Lodge 149 Vail 17, ,635 10, Copper Mountain Resort 169 Copper Mountain 27, ,776 19, Keystone Resort and Conference Center 184 Keystone 50, ,500 9,108 1,200 Beaver Run Resort and Conference Center 186 Breckenridge 24, ,378 9, Sheraton Steamboat Resort 200 Steamboat Springs 19, ,300 13, Omni Interlocken Hotel 251 Broomfield 28, ,216 15, The Inverness Hotel and Conference Center 259 Englewood 20, ,400 14, Pueblo Convention Center 285 Pueblo 21,100 16, ,900 0 Embassy Suites by Hilton Loveland Hotel 290 Loveland 75, ,000 39, The Broadmoor 291 Colorado Springs 116, ,647 27, Colorado Springs Event Center 293 Colorado Springs 42,000 42, Cheyenne Mountain Resort 293 Colorado Springs 33, , Average ,593 29,100 22,097 17, Two Rivers Convention Center Grand Junction 22, ,600 4, Source: CVENT, Hunden Strategic Partners The closest seven facilities are in resort areas primarily known as ski resorts, although ski resorts are becoming more popular for summer events and travel as well and offer competitive rates. These range from 129 to 200 miles from Grand Junction. There are other resorts located north and south of Denver. The largest regional non-denver facility is the Broadmoor in Colorado Springs, with 116,569 square feet of function space. The following figure shows the competitive regional meeting facilities. Grand Junction Event Center Analysis Chapter 3 - Page 35

93 Figure 3-5 As the figure shows, these venues are all located east of Grand Junction primarily along I-25 and I-70. Resorts Due to their unique locations and high quality meeting spaces, resorts are attractive meeting and event destinations for a variety of organizations. There are 12 resort properties in the region, each with more than 15,000 square feet of function space. The properties range in size from 17,261 square feet at the Manor Vail Lodge in Vail to 116,569 square feet at the Broadmoor in Colorado Springs. While none of these seven properties offers any dedicated exhibition space, the Keystone Resort Ballrooms can be used for exhibitions of up to x10 booths. The Broadmoor provides over 88,000 square feet of ballroom space in four ballrooms with 12 divisions. The Embassy Suites by Hilton Loveland Hotel has 36,000 square feet of ballroom space in two ballrooms. The Front Range Ballroom, the larger ballroom, has 28,800 square feet. The other nine venues average approximately 9,600 square feet each of ballroom space, which is nearly half of the Grand Junction Event Center Analysis Chapter 3 - Page 36

94 ballroom space at the Two Rivers Convention Center. All of these venues offer two to almost ten times the meeting space available at TRCC. The Embassy Suites by Hilton Loveland Hotel provides the most at 39,600 square feet in ten rooms with numerous divisions. These resort properties offer 90 rooms at the Manor Vail Lodge and up to 1,200 guest rooms at the Keystone Resort & Conference Center. Event & Convention Centers outside of Denver There are two event or convention centers in the region that house at least 15,000 square feet of total function space, the Pueblo Convention Center and the Colorado Springs Event Center. The Pueblo Convention Center is located 285 miles east and south of Grand Junction along I-25. The Colorado Event Center is located 293 miles east of the Two River Convention Center, also on I-25. Both of these venues offer exhibit space. The Colorado Springs Event Center has the most with 42,000 square feet of exhibit space. These venues do not have dedicated ballroom space, although the Pueblo facility has been planning an expansion to add ballroom space for several years. Only the Pueblo Convention Center has meeting space, with 4,900 square feet in four meeting rooms. The Colorado Springs Event Center hosts many consumer and trade shows with the ability to accommodate x10 booths. Denver Area Facilities There are 13 venues in the Denver Area that have more than 15,000 square feet of total function space. Denver is located 243 miles east and north of Grand Junction. These venues primarily consist of large hotels and the Colorado Convention Center. Groups in the immediate area, unless they are state associations that need to rotate around the state, tend to choose local facilities for their meetings. The largest facility, the Colorado Convention Center, is geared to host major national conventions and is generally too large to focus on statewide events that would compete with Grand Junction. The center, built in 1990 and renovated/expanded in 2004, is located in downtown Denver, and features 579,000 square feet of exhibit space in six halls on one level. The convention center has two ballroom spaces: The Mile High Ballroom with 47,700 square feet with 18 divisions and the Four Seasons Ballroom with 35,000 square feet. The Colorado Convention Center has 63 meeting rooms with over 91,500 square feet of space on a single level. Single rooms are as small as 800 square feet and combinations of rooms can create up to 10,000 square feet in a single room. The meeting rooms can host local meetings, company training sessions, award banquets and reunions. In 2008 the convention center was the host of the Democratic National Convention. Surrounding the Colorado Convention Center are more than 7,000 walkable hotel rooms and 300 restaurants. The other 12 venues in Denver are much smaller than the Colorado Convention Center, ranging in size from 18,612 square feet at the Doubletree by Hilton Denver to more 95,000 square feet at the Sheraton Denver Downtown in total function space. The Sheraton Denver Downtown has the most ballroom space, 48,700 square feet, spread among three ballrooms. The Plaza Ballroom, with 28,000 square feet, is the largest of the three and has six divisions. The Sheraton Denver Downtown also has the most meeting space of these properties with 46,332 square feet in 41 rooms. The Crowne Plaza can host groups up to 5,000 and the Sheraton Denver Downtown can host up to 3,000. The Denver Hyatt was developed with 1,100 rooms and serves as the primary convention headquarters hotel for the convention center. It also features massive ballrooms, like the Sheraton. Grand Junction Event Center Analysis Chapter 3 - Page 37

95 Conclusion This chapter shows the competitive situation facing meeting and event facilities, locally, regionally and nationally. There are very few event venues in Grand Junction and the venues in the region are at least 120 miles from Grand Junction. There are currently few venues in the western Colorado market that can offer large exhibit space, ballrooms and meeting rooms. As the only regional economic center in western Colorado, Grand Junction has the opportunity to lure more events with a more complete meetings package, which must include more exhibit space, better quality ballroom space and more breakout meeting rooms. The recommendations in this report will allow the TRCC and adjoining arena to be that complex that can do a much better job of attracting and accommodating more types of events. Grand Junction Event Center Analysis Chapter 3 - Page 38

96 TABLE OF CONTENTS Executive Summary Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Profile of Two Rivers Convention Center and Avalon Theatre Economic and Demographic Analysis of Grand Junction Convention Industry Trends; Meetings Market Analysis Hotel Market and Trends Analysis Sports and Entertainment Market Analysis Small and Mid-Sized Arena Trends Case Studies and Comparable Market Metrics Recommendations, Drawings, Budget Governance Analysis Demand and Financial Projections Economic, Fiscal and Employment Impact Analysis

97 HOTEL MARKET AND TRENDS ANALYSIS This chapter includes a review of national hotel trends as well as an in-depth analysis of the Grand Junction hotel market. National Hotel Market Trends National hotel market trends are important to the development prospects of any hotel project, whether it involves macro supply and demand issues, amenity trends, financing or other trends impacting the industry. The following table shows selected characteristics of the U.S. lodging industry from 1992 through 2015 year to date. Grand Junction Event Center Analysis Chapter 4 - Page 2

98 Year Occupancy Change Table 4-1 National Lodging Industry Annual Summary Average Daily Rate Change Revenue per Available Room Change % -- $ $ % 1.9% $ % $ % % 2.5% $ % $ % % 0.6% $ % $ % % -0.2% $ % $ % % -0.8% $ % $ % % -1.1% $ % $ % % -1.1% $ % $ % % 0.6% $ % $ % % -5.8% $ % $ % % -1.3% $ % $ % % 0.3% $ % $ % % 3.5% $ % $ % % 2.9% $ % $ % % 1.7% $ % $ % % -0.2% $ % $ % % -5.8% $ % $ % % -9.8% $ % $ % % 5.7% $ % $ % % 4.3% $ % $ % % 2.2% $ % $ % % 1.5% $ % $ % % 4.3% $ % $ % % 0.9% $ % $ % Avg. Annual Growth Rate 0.31% 3.14% 3.52% Source: Smith Travel Research, HSP Occupancy peaked at an all-time high of 65.6 percent in The occupancy has not reached a value that high since It steadily decreased to 59.0 percent following 9/11 and then rose again to peak at 64.2 percent in The latest recession is the most severe recorded in the hotel industry post-depression. Occupancy decreased to 54.5 percent, a 15 percent (nearly ten percentage point) decline. Average daily rate peaked at $20.01 in Occupancy started to increase in 2010 and rates began to increase as well. Performance in 2012 showed continued improvement, with occupancy at 61.4 percent, a 2.2 percent increase from 2011 and a $ average daily rate, four percent higher than Data from 2013 and 2014 shows continued improvement of the average daily rate over the 2012 figure saw significant growth in all area trends from the 2014-year. The figure below shows the above data in graph form, highlighting the annual change in performance. Grand Junction Event Center Analysis Chapter 4 - Page 3

99 Figure 4-1 Performance in 2014 was much improved from the drastic decline in As the above graph indicates, from 1996 through 1999, and again in 2007 and 2008, even when occupancy declines, average daily rate can increase. This speaks to the concept of maximum practical occupancy. At a certain average occupancy, there are enough sold-out dates and enough demand pressure to raise prices. The following chart shows the trend of the U.S. hotel room supply between January 2009 and January Grand Junction Event Center Analysis Chapter 4 - Page 4

100 Figure 4-2 Supply of U.S Hotel Rooms 5,050,000 5,000,000 5,004,715' 4,950,000 4,939,707' 4,900,000 4,850,000 4,800,000 4,836,929' 4,882,667' 4,866,548' 4,900,027' 4,750,000 4,700,000 4,708,504' Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Source: Smith Travel Research As demonstrated, the U.S. supply of hotel rooms has increased from approximately 4.7 million rooms in January of 2009 to more than 5 million rooms in January of Of the seven years shown, the only decrease in hotel rooms in the U.S. hotel market was between 2011 and This growth rate was less than one percent per year, which was outpaced by demand growth and is why occupancy has increased and rates followed. Grand Junction Event Center Analysis Chapter 4 - Page 5

101 The following table shows the number of existing hotel rooms, rooms under construction and rooms in the active pipeline as of June 2015, sorted by chain scale. Preliminary Existing Supply Year Over Year Percent Change Table 4-2 U.S. Active Pipeline by Chain Scale As of June 30, 2015 Rooms Under Construction Year Over Year Percent Change Total Active Pipeline Year Over Year Percent Change Chain Scale Luxury 107, % 5, % 10, % Upper Upscale 577, % 13, % 34, % Upscale 644, % 46, % 126, % Upper Midscale 881, % 38, % 139, % Midscale 476, % 4, % 26, % Economy 781, % % 3, % Unaffiliated 1,536, % 18, % 83, % Total 5,004, % 128, % 426, % Source: Smith Travel Research Between June 2014 and June 2015, the hotel industry increased its total supply for the fourth consecutive year, this time by nearly one percent (more than 45,000 rooms). Among the chain scale segments, the upscale segment expanded the most during 2014/2015, growing by 3.9 percent over the previous year. As of the end of June 2015, there are more than 128,700 hotel rooms under construction and over 426,000 rooms in the active development pipeline of 3,511 projects. The total active pipeline data includes projects in planning, final planning and under construction but not those in the pre-planning stage. The in planning stage is defined as projects where an architect or engineer have been selected and plans are in process where initial approvals have typically been granted. Final planning is defined as the stage where the project has gone out for bids or construction is expected to begin with four months. Pre-planning is defined as the period before an architect has been selected. Grand Junction Event Center Analysis Chapter 4 - Page 6

102 The following table shows the existing supply of rooms, rooms under construction and the year over year percent change of the top ten hotel markets. Market Table 4-3 Top Ten US Markets by Rooms in the Construction Phase Existing Supply In Construction May 2015 In Construction May 2014 Year over Year Change New Construction as % of Existing New York, New York 114,216 13,300 14,461-8% 12% Houston, Texas 77,495 6,946 3, % 9% Las Vegas, Nevada 168,598 3,929 0 N/A 2% Miami/Hialeah, Florida 50,389 3,557 2,884 23% 7% Los Angeles-Long Beach, California 97,566 3,515 2,385 47% 4% Chicago, Illinois 110,617 3,370 2,005 68% 3% Washington, DC 107,910 2,665 2,080 28% 2% Anaheim/Santa Ana, California 54,880 2, % 5% Dallas, Texas 79,239 2,315 1,929 20% 3% Seattle, Washington 41,727 2,134 1,889 13% 5% Source: Smith Travel Research New York City reported the largest number of rooms under construction as of May 2015, while Las Vegas reported the largest existing supply. The Houston, Las Vegas, Miami/Hialeah, Los Angeles-Long Beach and Chicago markets all reported more than 3,000 rooms under construction, while all markets in the top ten reported more than 2,000 rooms in construction. Anaheim/Santa Ana experienced the largest percentage increase in rooms under construction, with a year-over-year percent change of nearly 1175 percent. Development and Financing The hotel development pipeline had been robust until 2008, when the credit crisis hit and real estate across all sectors declined. This has made credit more expensive, and the combination of lack of funds and poor market performance essentially stopped new developments in Since 2009 credit has loosened for hotels and more loans were made beginning in 2012 for new hotels. Currently the market is extremely strong and funding (both equity and debt) is widely available. Demand outpaced supply for so many years during the recession and has continued to outpace supply growth since, such that new hotel development continues to be feasible in many markets. The loan-to-value ratio (LTV) is an important measure of the amount of risk banks are willing to take on real estate investments. Historically, hotels have exhibited a higher risk level in the eyes of lenders and have required a substantial equity investment. However, cookie-cutter branded prototype projects at interstate intersections, which are very predictable to bankers in terms of safety and profitability have achieved loan-tovalue rates of up to 90 percent. As the performance of hotels has improved, banks are comfortable approving higher loan amounts relative to the value of the project. At its peak in 2005, the LTV was nearly 70.6 percent on average. It decreased to 60 percent in 2008 and has been slowly recovering since that time, reaching closer to 70 to 75 percent in Grand Junction Event Center Analysis Chapter 4 - Page 7

103 Transactions Capitalization rates (cap rates) are a measure of risk and reward. The higher the cap rate, the riskier the market expects an investment to be and the higher the possible reward expected. To determine value, appraisers, buyers and sellers use net operating income divided by the cap rate. A hotel with $1 million in net operating income and a ten percent cap rate would have a value of $10 million. However, using a five percent cap rate would give a value of $20 million. During the height of the hotel buying frenzy in 2005 and 2006, some hotels were sold at effective cap rates lower than five percent, leading to extraordinary values. Cap rates for hotels have historically been in the 8 to 12 percent range for most markets, except in markets like New York, San Francisco, Boston and Hawaii. The average cap rate was below ten percent in 2005 and 2007 and below nine percent in 2006, leading to record sales prices and intense transaction activity. Some transactions included cap rates as low as three percent during the height of the hotel financing and construction boom of 2005 to The rates then increased substantially during the recession, lowering valuations and the ability to obtain loans. The higher the cap rate, the lower the valuation of the hotel and with the market-wide increase in cap rates, hotel transaction activity ceased for about three years, with the exception of foreclosed hotels. The following table shows historical capitalization rates by chain scale. Table 4-4 Capitalization Rates From Sales Transactions Property Type Average Range Average Range Average Range Average Range Full Service Including Luxury 6.7%.05% % 6.2% 2.9% - 7.9% 5.8% 1.5% % 6.1% 0.05% % Select Service and Extended Stay 7.8% 3.2% % 7.4% 2.5% % 7.4% 4.0% % 7.7% 3.2% % Limited Service 9.0%.03% % 9.2% 5.4% % 9.3% 3.7% % 9.5% 0.03% % Source: HVS, Hunden Strategic Partners Between 2009 and 2011, overall cap rates for full service hotels decreased from 8.95 percent to 7.5 percent. While from 2011 to 2012, rates increased from nearly seven percent to over eight percent. Between 2013 and 2014 full service cap rates have risen to 6.7 percent, select service followed with an increase to 7.8 percent and limited service fell to nine percent on average. The above capitalization rates are based on historical net income at the time of sale divided by the sales price. In riskier markets, cap rates are higher. For Chandler and the WHP area, the cap rate would be dependent upon the quality of the hotel product being built, the brand, the existing market conditions (which are currently excellent) and the cap rates of similar projects. Development Costs The following table shows the hotel development costs for the various quality segments of hotels for 2014/15. These figures are critical when considering which type of hotel to develop. Since the data is sorted and averaged by HVS prior to appearing in the table, the totals do not match the medians and averages for each type of property. Grand Junction Event Center Analysis Chapter 4 - Page 8

104 Table / 2015 Hotel Development Cost Survey Per-Room Averages Land Building and Site Improvements Soft Costs FF&E Pre-Opening & Working Capital Total Budget/Economy Hotels Average from Budgets $13,500 $63,400 $6,600 $8,800 $3,500 $86,900 Allocation 13% 69% 7% 11% 1% Midscale Hotels w/o F&B Average from Budgets $16,900 $81,100 $12,300 $11,100 $4,300 $117,800 Allocation 12% 68% 8% 11% 3% Extended Stay Hotels Average from Budgets $15,400 $88,000 $12,800 $15,400 $3,800 $162,200 Allocation 11% 68% 9% 12% 2% Midscale Hotels W/ F&B Average from Budgets $16,800 $95,600 $15,000 $15,300 $4,300 $155,300 Allocation 16% 63% 11% 11% 3% Full-Service Hotels Average from Budgets $38,100 $193,600 $14,600 $28,400 $17,200 $334,900 Allocation 12% 67% 10% 10% 4% Luxury and Resorts Average from Budgets $121,700 $392,600 $94,200 $62,500 $23,900 $705,100 Allocation 17% 60% 14% 10% 4% Source: HVS Costs per room vary drastically depending on the chain scale, from a budgeted average of $86,900 for economy properties up to $705,100 for luxury properties. For most developments, the question is whether or not the average daily rate is greater than the cost per room to build. A good rule of the thumb in the industry is that the average daily rate multiplied by 1,000 will give a developer a sense of what cost of hotel the market will support. So for example, a hotel expected to perform at $125 per night on average could be developed for $125,000 per room. Largest Hotel Groups One of the continuing trends of the past decade has been the growth of hotel companies to create and expand brands into every niche, including extended stay, boutique, fractional and the like. These companies typically do not own their hotels, but brand them and provide the support, advertising, group sales and other services for the hotel owners for a fee. The table following shows the top 10 hotel groups in the world by number of rooms. Grand Junction Event Center Analysis Chapter 4 - Page 9

105 Table 4-6 Top Ten Global Hotel Groups by Room Count - As of January 2014 Rank Company Brand Examples Hotels Rooms Rooms/Hotel 1 InterContinental Hotels Group Holiday Inn, Holiday Inn Express 4, , Hilton Worldwide Hiton Garden Inn, Hampton Inn, DoubleTree 4, , Marriott International Ritz Carlton, Marriott, Courtyard 3, , Wyndham Hotel Group Wyndham Hotels, Wingate, Days Inn 7, , Choice Hotels International Comfort Inn, Quality, Econo Lodge 6, , Accor Sofitel, Novotel, ibis 3, , Starwood Hotels & Resorts Sheraton, W Hotels, Westin 1, , Best Western Best Western Premier, Vīb, Best Western 4, , Home Inns Home Inn, Yitel, Motel 168 2, , Carlson Rezidor Hotel Group Radisson, Park Plaza, Club Carlson 1, , ,425 4,708, Source: MKG Hospitality, HSP, various hotel brand websites As shown, InterContinental Hotels Group, owner of Holiday Inn and Holiday Inn Express brands, was the largest group in the world, with nearly 4,700 hotels and nearly 687,000 rooms. Hilton Worldwide hotel group was a close second by number of rooms with nearly 679,000. However, with the impending merger of Marriott and Starwood, the new entity will be the largest hotel company in the world with more than one million hotel rooms in more than 5,000 hotels. The brands with the largest and smallest hotels on average are Starwood Hotels & Resorts and Best Western with 292 and 78 rooms per hotel, respectively. Collectively, these top ten hotel groups account for over 4.7 million hotel rooms across the globe and they have an average hotel size of 142 rooms. Other Trends of Note Several other trends have been occurring in the industry over the past several years. These include: Brands Multiply. Worldwide, the expansion of brands continues to change the face of the competitive environment. Eager to show earnings and market share for Wall Street, major brands compete fiercely. Using multiple brand products clustered in the same corporate structure, proprietary reservation systems and corporate programs work in tandem to drive business. Comparing profit potential of a brand to one without a brand is becoming a serious exercise for hotel owners. At the same time, the proliferation of brands means fewer independents that struggle for fair share using price as the preferred strategy. Boutique Brands. This seemingly incongruous phrase is a trend occurring in the industry. The largest brands have run out of market segments to fill, so they are seeking the last bastion of the industry: independent boutique hotels. By creating a boutique collection that can benefit from (and provide distribution to) the primary brand family, both the hotel and brands can prosper. For example, with all traditional niches covered, Marriott has now entered the boutique market with the Autograph Collection. These hotels are not owned or operated by Marriott and do not even carry a Marriott brand, per se, but use the Marriott reservation system to route travelers to these formerly independent hotels. Guests get their Marriott points and some expectation of high quality. Hilton has also entered the boutique market with a new brand called Canopy and a new collection of formerly independent upscale hotels called the Curio Collection. Intercontinental Grand Junction Event Center Analysis Chapter 4 - Page 10

106 Hotel Group has just purchased boutique hotel company Kimpton, expanding their profile beyond Intercontinental and Holiday Inns. Starwood has just launched the Tribute brand, which is basically the same type of boutique hotel collection as Curio and Autograph. Shared Spaces and Home/Apartment Rentals. The advent of AirBnB has transformed the lodging industry in the past few years, much as Uber and Lyft have done with the hired car industry. Home and apartment rentals through VRBO, Homeaway, AirBnB add inventory to many compressed and expensive markets. In some places like San Francisco, Silicon Valley and New York, residents rent their homes to travelers in order to pay the rising cost of rent. High rates of hotel occupancy and rising rates have made these options viable for travelers and residents. There have been consequences for both the affordable housing market and the hotel market, although these are generally only material in extremely expensive markets or when there is a major event (like a Super Bowl). Global Travel and the Impact of Energy Prices and Economic Conditions. The large fluctuations in oil and fuel costs have a continual impact on travel and will continue to be a major factor in the coming years. Green Policies. Requirements, both by law and the guests, on businesses enforcing green practices are becoming tougher to comply and are even becoming a demand driver. Ecoconsciousness is a popular trend among new generations and, suddenly, energy systems, insulation, produce origin and even amenities become differentiation factors. Hotels can capitalize on the environmentally sensitive customers by adapting sustainability practices such as Element by Starwood has done. Distribution. The increase in booking travel via the Internet has been a major trend in the industry for more than a decade, with a majority of booking research done online and more than one-third of revenue booked online. This has brought transparency and increased competition to the market and all players with a solid Internet and distribution strategy are able to compete effectively. As third party websites, smartphones and available applications are rapidly becoming a key factor in every travel stage by easing access to planning and booking tools that ease the customers experience. Travelers expect a more informed and collaborative travel experience, especially driven by the evolving smartphone functionality. Hotel companies are creating property-specific websites to differentiate each property and reach more markets and traveler segments than a corporate single format website. Technology. The rapid advance of technology means hotels have to continually keep up with the expectations of their guests. With multiple wireless devices, guests expect a high-speed wireless network throughout the hotel that will allow them to use their smartphones, tablets and laptops without connectivity issues. In-room movies via Lodgenet can now be controlled via an application on a guest s smartphone. Many hotels have begun to introduce in-room ipads that allow concierge services, room service, check out, entertainment and other items to be taken care of directly from the device. Social Media, Crowd-Rating and Mobile Connectivity. The rise of social media and userbased ratings has had a direct impact on hotel decision-making. Sites like Trip Advisor allow users to rate and castigate hotels directly on the website, which allows potential customers to determine if they will choose that hotel. Hotels have to be incredibly proactive and reactive to comments posted on Twitter, Facebook and ratings sites, including online travel agencies. Grand Junction Event Center Analysis Chapter 4 - Page 11

107 Approximately one in three business travelers have rated an establishment. Mobile connectivity, as mentioned above, has become a crucial factor in a travelers experience. Mobile-friendly websites and mobile applications are the most used medium for corporate travelers, 70 percent, to check in to flights and/or hotels, while one in four hotel queries come from a mobile device. Demographics. Two major demographic shifts marked the beginning of positive growth in the hotel business. The first is both baby boomers and millennials as the target market for their luxury consumption. The baby boomer generation became a target audience due to the amount of disposable income and nest egg capital allowing them to travel in large numbers for the next decade. Millennials are the second demographic group tapped as an up-and-coming luxury consumer group affecting the industry and being targeted by the industry itself with marketing strategies that are different from its preceding groups. Millennials are drawn to entertainment, technology and accessibility. Secondly, the BRIC economies, (Brazil, Russia, India and China) have exploded in their economic power over the past several years. This has led to a massive increase in the middle classes in these nations and these populations are traveling in increasing numbers. GRAND JUNCTION MARKET HOTEL SUPPLY For overall understanding and comparability of the Grand Junction hotel market, HSP gathered and analyzed the hotel room supply, beginning with the Grand Junction metro area market. The following figure shows the supply of hotels in Grand Junction. Grand Junction Event Center Analysis Chapter 4 - Page 12

108 Figure 4-3 A majority of these properties are easily accessible to travelers via Interstate 70. A small cluster of the hotels is located near Colorado Mesa University, another is located in Downtown Grand Junction, and another is off of Interstate 70, close to the Grand Junction Regional Airport. The following table displays all hotels within four miles of the Hampton Inn Grand Junction Downtown, sorted by chain scale.! Grand Junction Event Center Analysis Chapter 4 - Page 13

109 Table 4-7 Grand Junction Hotels Property Name Distance Rooms Chain Scale Open Date Knights Inn Grand Junction Economy Jan-09 Value Place Grand Junction Economy Sep-14 Days Inn Grand Junction Economy Jun-74 Travelodge Grand Junction Economy Jun-68 Super 8 Grand Junction Economy Mar-82 Econo Lodge Grand Junction Economy Jul-11 Americas Best Value Inn Horizon Inn Economy Jun-78 Motel 6 Grand Junction Economy Sep-78 Prospector Motel Indep -- Timbers Motel Indep Jun-55 Frontier Motor Lodge Indep -- Ipswich Inn Indep -- El Palomino Motel Indep -- Mesa Inn Indep Apr-84 Affordable Inn Indep Jun-72 Grand Vista Hotel Indep Jun-82 Candlewood Suites Grand Junction Northwest 3 97 Midscale Jun-11 Quality Inn Grand Junction Midscale Jun-81 La Quinta Inns & Suites Grand Junction Midscale Feb-98 Ramada Grand Junction Midscale Jun-75 Hampton Inn Grand Junction 0 80 Upper Midscale Jul-03 Fairfield Inn Grand Junction Downtown Historic Main Street Upper Midscale Jul-00 Holiday Inn Express & Suites Grand Junction Upper Midscale Jun-02 Clarion Inn Grand Junction Upper Midscale May-66 Comfort Inn Grand Junction Upper Midscale Jul-94 Holiday Inn & Suites Grand Junction Airport Upper Midscale Jun-09 Springhill Suites Grand Junction Downtown Historic Main Street Upscale Jun-11 Doubletree Grand Junction Upscale Jun-83 Courtyard Grand Junction Upscale Jun-07 Residence Inn Grand Junction Upscale Feb-07 Source: STR There are a total of 30 hotels and 2,896 rooms within four miles of the Hampton Inn Grand Junction. The two largest hotels total just over 500 rooms, or about 17 percent of the total local rooms. About 26 percent of the hotels in this area were built within the last ten years. The Value Place Grand Junction is the newest of these hotels, which opened in September Closest in age behind the Value Place is the Econo Lodge Grand Junction, which opened in July Just a month before that, both the Springhill Suites Grand Junction Downtown Historic Main Street and the Candlewood Suites Grand Junction Northwest opened as well. The table below shows the hotel market breakdown in Grand Junction by market class. Grand Junction Event Center Analysis Chapter 4 - Page 14

110 Table 4-8 Lodging Summary: Grand Junction Class Rooms % of Total Rooms per Avg. Opening Avg. Age Hotels Rooms Hotel Year in Years Upper Upscale 0 0% Upscale % Nov Upper Midscale % Jan Midscale % Mar Economy / Independent 1,193 41% Feb Total / Average 2, % Dec Source: Smith Travel Research, Hunden Strategic Partners There are 30 properties providing 2,896 rooms within four of the five market classes. There are no hotels in the Upper Upscale class (full-service hotels like Hilton, Marriott, Westin), meaning that the Grand Junction area also does not have any luxury hotels (e.g. Four Seasons, Ritz Carlton). Four hotels in this market make up the Upscale class, totaling 498 rooms. The largest market class by a wide margin is the Economy/Independent class, encompassing 41 percent with 1,193 rooms. The next largest class is Upper Midscale. With six hotels and 721 rooms, the Upper Midscale class accounts for 25 percent of the total rooms in the Grand Junction market. While the Economy/Independent class holds the highest number of rooms, the hotels are the smallest (75 rooms) and oldest (31 years), on average. The concentration of older, smaller, lesser quality hotels weighs the market down. A newer, larger, more full-service branded hotel downtown near the TRCC would enhance the market significantly and would make the TRCC and proposed arena/event center more attractive. However, without enhanced meeting facilities as recommended in this report there will not be support to add higher quality, larger hotels downtown. GRAND JUNCTION COMPETITIVE SET HOTELS In order to best understand the hotel market that influences how event planners for the TRCC and potential arena/event center view the opportunity to host events in Grand Junction, HSP profiled selected hotels in the area. The primary factors considered were location, quality, amenities, size and brand. Planners and promoters generally seek branded (not independent) higher quality, full-service properties for their meetings, conventions delegates and promoters seek the same for their artists, VIPs and upscale branded properties for their road crews. One of the concerns for Grand Junction is the lack of such higher quality or full-service hotels. However, downtown has three excellent hotels directly across the street from the TRCC and proposed event center. These will accommodate the needs of many of the potential guests. However, there will still be a longer-term need for a larger, higher quality, higher branded hotel nearby within walking distance if possible to attract the events that could fit in the renovated TRCC. For groups that require larger room blocks for their attendees, the ability to block at least 100 rooms in a hotel is key. In order to accomplish this, a hotel typically would need at least 150 rooms. This leaves rooms for the higher spending corporate transient guests to still be accommodated. A larger hotel of 180 to 200 rooms would make Grand Junction even more competitive for group business. The Doubletree, shown in the next table, is the only hotel that can accommodate large groups. Grand Junction Event Center Analysis Chapter 4 - Page 15

111 The following table shows a summary of the hotels in the Grand Junction competitive set. Table 4-9 Grand Junction Competitive Hotel Set Property Name Distance from TR Rooms Chain Scale Open Date Hampton Inn Grand Junction 0 80 Upper Midscale Jul-03 Fairfield Inn Grand Junction Downtown Historic Main Street Upper Midscale Jul-00 Springhill Suites Grand Junction Downtown Historic Main Street Upscale Jun-11 Holiday Inn Express & Suites Grand Junction Upper Midscale Jun-02 Candlewood Suites Grand Junction Northwest 3 97 Midscale Jun-11 Doubletree Grand Junction Upscale Jun-83 Courtyard Grand Junction Upscale Jun-07 Residence Inn Grand Junction Upscale Feb-07 Total/Average May-03 Source: STR There are eight hotels in the Grand Junction competitive set, totaling 949 rooms. The largest property is the 273-room Doubletree Grand Junction, located 3.5 miles from the Two Rivers Convention Center. The average age of the competitive set hotels is 13 years. The following figure shows the hotels in the competitive set. Grand Junction Event Center Analysis Chapter 4 - Page 16

112 Figure 4-4 Three hotels are located within a tenth of a mile of the Two Rivers Convention Center, while the remaining five are all approximately three to four miles away. The only competitive hotel opened in the last five years is the 100-room Springhill Suites. Accommodated Demand and Competitive Set Performance HSP used Smith Travel Research data to analyze the competitive hotel set. The following table shows the performance data for the Grand Junction competitive set of hotels from 2010 through December of Grand Junction Event Center Analysis Chapter 4 - Page 17

113 Table 4-10 Historical Supply, Demand, Occupancy, ADR, and RevPar for Competitive Hotels Year Annual Avg. Available Rooms Available Room Nights % Change Room Nights Sold % Change % Occ. % Change ADR % Change RevPar % Change , , $ $ , % 199, % % $ % $ % , % 228, % % $ % $ % , % 227, % % $ % $ % , % 240, % % $ % $ % 2015 YTD (December) , % 242, % % $ % $ % Projected , % 252, % % $ % $ % CAGR* ( ) 6.5% 6.5% % % % % -- *Compound Annual Growth Rate Sources: Smith Travel Research, Hunden Strategic Partners Demand for room nights in the selected hotel set has increased every year between 2010 and 2015 except Over this period demand for room nights decreased from 2012 to 2013 by 1,000 rooms, but 2014 saw a positive increase of more than 13,000 and 2015 saw an increase of almost 2,000. Occupancy has stayed at a steady level through the past six years, averaging at 66.6 percent occupancy. The occupancy rate is at the threshold, approximately 66 percent, where developers start to consider potential new hotel developments. As the occupancy continues to improve, the market will have more unmet demand, which will help support and validate more hotel rooms being added to the market. This concept will be discussed further in this chapter. The average daily rate decreased from 2010 to 2011 from $ to $101.06, and it stayed within the $101 range through As the strength of occupancy provided support for rate increases in 2015, the ADR through December was already running just over four percent higher than the same period for the prior year. Revenue per available room (RevPAR) saw a substantial percent increase between 2014 and 2015, just over a ten percent change. The benefit of the increased ADR level is that it supports not only new hotel growth, but also a higher quality of hotel than previously built. Rates and occupancies are highly dependent upon seasonality, but the compression of strength in all seasons is leading to the market s ability to support new development of select service hotels and potentially full-service hotels, depending upon the amenities provided. The following figure shows the supply and demand trends for the selected set. Grand Junction Event Center Analysis Chapter 4 - Page 18

114 Figure 4-5 The competitive set has a consistent seasonality trend. The average monthly room night demand has remained fairly constant over the last five years with few additional hotels being introduced to the market or expansions of the existing supply. Grand Junction Event Center Analysis Chapter 4 - Page 19

115 The following figure shows the room revenue changes by month (year-over-year). Figure 4-6 Any data point greater than zero is a positive indicator for the competitive set. As shown, the competitive set s room revenue, beginning in April of 2011 through January of 2013 hit its peak at over 25 percent in From 2013 to 2015, the room revenue fluctuated predominately between -5 percent and 10 percent. Overall, the revenue trend has been positive. Grand Junction Event Center Analysis Chapter 4 - Page 20

116 The following figure shows the Revenue Per Available Room (RevPAR), which is the product of occupancy and rate. Figure 4-7 The black line above shows the 12-month moving average. The figure above shows RevPAR fluctuating seasonally between April of 2010 and July of As shown, the 12-month moving average has increased little from 2010 to 2015, fluctuating from under $70 to $75. The following figure displays the seasonality of occupancy for January 2015 through December Figure 4-8 In terms of occupancy, May is the busiest month, averaging 83.0 percent. June, August and September average approximately between 81 to 82 percent while July averages 78.6 percent. January is the slowest Grand Junction Event Center Analysis Chapter 4 - Page 21

117 month of the year at 45.9 percent occupancy. The seasonality is similar to most northern and central markets where rates are lower in the winter months and then increase during the summer months. The Grand Junction market peaks during the summer season. The following figure shows the seasonality of rate. Figure 4-9 Prices are highest during the summer and fall seasons, while the rate during the winter is considerably lower. The average daily rate peaks in May at $109. From September, the ADR decreases through December to the lowest rate of the year, approximately $93. Through the spring it slowly increases as May approaches and as the summer months attract more visitors. The following figure shows the seasonality of RevPAR (revenue per available room), which is the product of rate and occupancy, and suggests overall revenue per room. Grand Junction Event Center Analysis Chapter 4 - Page 22

118 Figure 4-10 As with the other performance indicators, RevPAR data is consistent with the analysis of the prior graphs. RevPAR is highest during May through September when rate and occupancy are high or at their peaks. The following figure shows the occupancy by day of the week during the 12 months ending December Figure 4-11 Occupancy is consistently strong throughout the weekdays and into the weekend, suggesting strong corporate and other weekday visitation, as well as weekend leisure tourism. Occupancy is lowest on Sunday nights, which is typical for all markets. However, Sunday occupancy would be increased with a stronger Grand Junction Event Center Analysis Chapter 4 - Page 23

119 convention business. Groups typically start their conventions and conferences on a Saturday or Sunday and go through Monday or Tuesday. This allows them to negotiate for better hotel rates, knowing that hotels are eager to fill more vacant Sunday and Monday rooms. A stronger TRCC would help fill hotel rooms on these two nights especially. The following figure shows the average daily rate by day of week. Figure 4-12 Similar to occupancy, rates are essentially flat for all days with a slight increase in the middle of the week. While average rates fluctuate minimally, maximum rates for this market are high Thursday through Saturday. Unaccommodated Demand Unaccommodated demand is defined as demand that would have been captured by the market but for a lack of available or quality rooms. This demand is therefore deferred to later dates, accepts lesser-preferred accommodations, moves just outside the competitive set, moves its business to another area, or cancels plans altogether. Therefore, as new properties are added to the market, it is expected that this demand will be accommodated by the new supply, suggesting that when new hotels are added, they do not cannibalize existing market demand, but accommodate previously unaccommodated demand. While it is not possible to accurately predict all unaccommodated demand, a decent figure can be inferred from occupancy data. The following table shows the occupancy by day of the week per month for the twelve months following January Days of the week with occupancy between 75 and 80 percent are shown in yellow, suggesting mild displacement and unaccommodated demand, while orange shows days with 80 to 90 percent occupancy, suggesting very likely displacement. Days in red are for times when occupancy was beyond 90 percent for the set, suggesting near-certain displacement. Grand Junction Event Center Analysis Chapter 4 - Page 24

120 Table 4-11 Occupancy Percent by Day of Week by Month - January December 2015 Sunday Monday Tuesday Wednesday Thursday Friday Saturday Avg Jan % 49.7% 58.6% 57.5% 45.9% 42.5% 39.1% 46.5% Feb % 50.5% 65.5% 67.7% 61.6% 57.7% 53.3% 55.8% Mar % 60.0% 66.9% 67.1% 62.7% 68.6% 61.8% 61.2% Apr % 68.8% 77.9% 75.7% 72.5% 73.1% 64.0% 68.0% May % 81.9% 91.9% 91.7% 84.0% 88.4% 85.1% 84.5% Jun % 77.3% 83.8% 86.1% 86.6% 88.0% 93.6% 84.8% Jul % 86.6% 93.5% 88.6% 84.5% 82.9% 82.4% 84.1% Aug % 81.1% 88.5% 90.0% 86.6% 86.4% 89.8% 84.1% Sep % 79.5% 85.7% 88.3% 90.6% 93.3% 97.4% 86.8% Oct % 70.7% 79.8% 81.7% 77.0% 77.8% 72.7% 73.9% Nov % 58.4% 62.5% 62.9% 60.4% 60.7% 58.0% 57.1% Dec % 51.6% 56.7% 56.6% 57.9% 54.6% 53.2% 52.5% Average 53.2% 68.0% 75.9% 76.2% 72.5% 72.8% 70.9% Sources: Smith Travel Research Each cell is an average of four specific dates, for example Wednesdays in May average 91.7 percent occupancy, suggesting that there are likely some days at 100 percent occupancy. As shown, Monday through Saturday occupancy in May and September 2015 were highest. The summer season, May through September, show average occupancy percent values between 84 and 87 percent. This is the most successful and most popular season in Grand Junction and it suggests many sellouts. This pushes demand to other properties. For any new hotel, it will participate at a likely higher level of occupancy than the existing set, as it will be the newest and best quality in the market. The following table shows the ADR by day of the week per month from January 2015 to December The yellow cells represent ADR values from dollars, the orange cells represent values from dollars and the red cells are all values above 115 dollars. Grand Junction Event Center Analysis Chapter 4 - Page 25

121 Table 4-12 ADR by Day of Week by Month - January Decemebr 2015 Sunday Monday Tuesday Wednesday Thursday Friday Saturday Avg Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Sources: Smith Travel Research The highest average daily rates occur on Friday s and Saturday s in May, June and September, followed closely by Tuesday s and Wednesday s throughout the summer. The winter months, like most markets, are lower, averaging between $92 and $96 between November and March. The day of the week with the lowest ADR is Sunday with an average of $ The following figure shows the estimate of unaccommodated room nights over the past five years for the competitive set of hotels only. Figure 4-13 Grand Junction Event Center Analysis Chapter 4 - Page 26

122 As previously mentioned, an unaccommodated room night is a night when a traveler seeking accommodations within the market must either cancel their stay or settle for accommodations of lesser quality because the desired facilities have no vacancies. The number of estimated unaccommodated room nights is determined in any month when occupancy is higher than 66 percent. Based on the prior table, there are sellouts at the competitive set hotels during the weekend and over select weekdays. When rooms sell out or nearly do so, rates can be increased and the viability of new hotels is more likely. Based on HSP estimates, the number of unaccommodated room nights for the competitive set peaked in 2014 with a little over 15,146 rooms. Any new hotel room inventory that enters the market over the next few years is likely to absorb much of the unaccommodated demand. Also, the new properties are likely to capture room nights from the lower quality properties because travelers have a tendency to flock to quality, especially considering the age of the current hotel set. Conclusions The hotel market in Grand Junction is primarily composed of small, economy and independent facilities. The largest hotel in this market is the 273-room Upscale class Doubletree Grand Junction. Built in 1983, this hotel is the market leader in terms of size and is among the best in terms of quality, however it is not located downtown near the TRCC, where meeting planners want walkable hotel rooms. Tourist and business travelers do not have a wide variety of options within the market for an upscale accommodation. The market is dominated by economy-sized hotels and motels, Grand Junction does not offer high quality accommodations for outside visitors. The development of the Springhill Suites Grand Junction Downtown Historic Main Street, Courtyard Grand Junction and the Residence Inn Grand Junction, which are less than ten years old, has been a major boon for Grand Junction and downtown. They have enhanced the competitiveness and urban fabric of downtown and the area in general. The remaining hotels are between 20 and 30 years old. The market is in need of a hotel class face-lift. A new, high quality hotel could accommodate a high volume of unmet demand and lost occupancy in the Grand Junction area, especially a larger, higher quality branded hotel of at least 150 rooms (and better if as many as 200 rooms) downtown within walking distance of the TRCC. HSP s view of the hotel market, both in terms of supply and demand, is that it could benefit from the addition of an Upper hotel to accommodate market, as well as increased demand from a new arena and expanded convention center. Such a hotel would help raise rates in the market, would help attract larger and higher spending groups and would make a new event center/arena more attractive to artists who expect high quality accommodations. Grand Junction Event Center Analysis Chapter 4 - Page 27

123 TABLE OF CONTENTS Executive Summary Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Profile of Two Rivers Convention Center and Avalon Theatre Economic and Demographic Analysis of Grand Junction Convention Industry Trends; Meetings Market Analysis Hotel Market and Trends Analysis Small and Mid-Sized Arena Trends Sports and Entertainment Market Analysis Case Studies and Comparable Market Metrics Recommendations, Drawings, Budget Governance Analysis Demand and Financial Projections Economic, Fiscal and Employment Impact Analysis Grand Junction Event Center Analysis Chapter 5 - Page 1

124 SMALL & MID-SIZED ARENA TRENDS Arena or event center development for communities and markets comparable to Grand Junction has increased in the last decade for a variety of reasons. For small markets with or without a university, small arenas provide an opportunity to host sports teams, concerts, family and ice shows, community events, trade shows and conventions. Events for smaller arenas continue to be developed. These events can find success in small metropolitan areas. The Arena Industry in the United States The nationwide trend to build new sports and entertainment facilities in recent years has impacted markets large and small. The majority of large metropolitan areas with major professional sports franchises have opened new arenas in the last ten to 15 years and even small markets with minor-league sports teams have done the same. In addition to hosting sports events, the venues are also typically multipurpose facilities that can accommodate events such as concerts, family shows and other community-oriented events. Depending on a facility s orientation and a market s needs, it can also be used for events such as meetings, conventions and trade and consumer shows. The advent of amenities such as luxury suites, club seating, private restaurant areas and others have created new, potentially lucrative revenue streams for facility owners, although these are not always present in facilities especially if there is not anchor sports tenant. In addition, naming rights and expanded sponsorship programs have also significantly increased opportunities for facility-based revenues. These facilities have often been developed in markets or near markets with larger existing arenas. There are a number of mid-sized markets with multiple arenas of varying sizes that focus on different market opportunities. Some of these include Boise, Idaho; Omaha, Nebraska; the Tri-Cities in Nebraska; Albuquerque, New Mexico; and three facilities in Maine/New Hampshire. Many others, however, are located in smaller markets that are the largest economic center in a larger geographic region, such as Grand Junction. In order for a facility to have the ability to generate these revenue streams, it is sometimes helpful, but not always, for it to have one or more full-time tenants, such as a college or a professional sports franchise. A professional basketball or hockey team, for example, provides a facility with approximately 40 or more guaranteed event dates. A men s or women s collegiate basketball program will generally play approximately 15 to 20 home games per season and a volleyball program can add another 10 to 15 home matches. In addition, the revenues generated from premium seating, luxury suites, naming rights and other sponsorships are heavily dependent on the existence of one or more sports tenants. These sporting events allow customers and advertising partners with regular access to a venue and a schedule of annually repeating, relatively high-profile events for entertaining clients and friends, rewarding employees and maintaining a strong local presence. Facilities without an anchor tenant can generate similar revenue streams, but not to the extent of a facility with an anchor tenant. Because of the availability of these new revenues, facilities can now be partially financed through projectbased revenues such as naming rights and long-term commitments for premium seating and/or Grand Junction Event Center Analysis Chapter 5 - Page 2

125 sponsorships rather than purely through general obligation bonds, municipal property tax revenue or outside sources of university revenues or borrowing. However, these revenues are often not sufficient to entirely finance and operate a project such as an arena. As a result, facility development typically still involves other forms of private investment or contributions and public assistance, such as land contributions, dedicated tax revenue or fees, property tax abatement, individual and corporate giving, or others. This section describes relevant aspects of the arena industry as they relate to the Grand Junction market, including a review of recent and planned arena construction, discussion of event types and their characteristics and others. Many university arenas are not used for non-university events, therefore both university and non-university facilities are discussed. Recent and Planned Arena Development in the U.S. The following table summarizes a sample of smaller arena projects (defined as having 10,000 or fewer seats) that have opened since Other projects have been built or are in various stages of planning, but this table lists a representative set of facilities that have been completed. This table will begin to demonstrate the size and type of facilities that are being built, as well as the markets that are expected to support them, their tenants and their offerings. Grand Junction Event Center Analysis Chapter 5 - Page 3

126 Facility Name MSA Table 5-1 New Arenas Since 2003 with Less Than 10,000-seat Capacity 2010 MSA Population (000s) Tenant(s) # of Permanent Seats # of Luxury Suites # of Club Seats Annual Naming Rights Term (Years) Total Naming rights Estimated Cost (millions) Opened/ Expected Opening Pro Sports/Municipal Use Allentown Arena Allentown, PA AHL 8, $ Cross Insurance Center Bangor, ME None 8, n/a $200, $3,000,000 $ Cedar Park Center Austin, TX 1,783.5 AHL, NBADL 6, ShoWare Center Seattle-Tacoma-Bellevue, WA 3,309.0 WHL, WFTDA 7, $317, $3,175,000 $ Huntington Center Toledo, OH ECHL 8, n/a $300,000 7 $2,100,000 $ Town Toyota Center Wenatchee, WA NAHL,IFL 5, $200,000 5 $1,000,000 $ US Cellular Arena Bloomington-Normal, IL MISL 7, $345,000 6 $2,070,000 $ stBANK Center Denver-Boulder-Greeley, CO 3,090.0 None 6, Not Disclosed $ Santa Ana Star Center Albuquerque, NM NAHL, IFL 6, $500,000 5 $2,500,000 $ Tim's Toyota Center Prescott, AZ CHL, AIF 5, $175, $1,750,000 $ Stockton Events Center Stockton-Lodi, CA ECHL, AIF 10, $ Covelli Centre Youngstown-Warren, OH USHL, WFTDA 5, $120,000 3 $360,000 $ American Bank Center Corpus Christi, TX Budweiser Events Center Comcast Arena at Everett Events Center State Farm Arena Fort Collins - Loveland, CO Seattle - Tacoma - Bellevue, WA McAllen - Edinburg - Mission, TX Texas A&M-CC, NAHL, LSFL 6, Not Disclosed $ ECHL, IFL 5, $75, $1,500,000 $ ,168.0 WHL, NLL, RDCL 8, $740, $7,400,000 $ Orleans Arena Las Vegas - Paradise, NV 1,649.0 Ford Arena Beaumont - Port Arthur, TX CHL, D-League, LSFL ECHL,WCC, WAC, LFL, PASL-Pro 5, $200,000 5 $1,000,000 $ , $150.0 * ABA 8, $250,000 5 $1,250,000 $ Tyson Events Center Sioux City, IA-NE USHL, APFL 10, $200, $4,000,000 $ Average 1, , $278,654 9 $2,392,692 $ College-Led Arenas University of South Dakota Vermillion, SD 10.5 SECU Arena Baltimore-Columbia- Towson MD Univ. of South Dakota 6, $ ,710.5 Towson University 5, $ Trojan Arena Troy, AL 18.0 Troy 5, $ College Park Center at UTA Dallas-Fort Worth- Arlington, TX 6,526.5 Xavier Univ. of Louisiana Arena New Orleans, LA 1,024.6 Compton Family Center South Bend-Mishawaka, IN-MI Stroh Center Toledo, OH Grand Canyon University Arena Phoenix-Mesa- Scottsdale, AZ Univ. Texas - Arlington Xavier Univ. of Louisiana 5, , $ , $ Univ. of Notre Dame 5, Bowling Green State Univ. 5, $7,700,000 Major Gift Major Gift -- $ $7,700,000 $ ,192.8 Grand Canyon Univ. 5,000 yes yes $ Auburn Arena Albany, GA Aurburn 9, $ O'Reilly Family Event Center Springfield, MO Drury Univ. 4,000 yes 0 $6,000,000 Bank of Kentucky Arena TD Arena Cincinnati-Middletown, OH-KY-IN Charleston-North Charleston, SC McLeod Center Waterloo-Cedar Falls, IA Major Gift $6,000,000 $ ,134.0 Northern KY Univ. 9, $6,000,000 $ Coll. of Charleston 5, $100,000 6 $600,000 $ Univ. of Northern Iowa 7, $4,000,000 McCarthey Athletic Center Spokane, WA Gonzaga 6, BankUnited Center Miami-Fort Lauderdale- Pompano Beach, FL Major Gift Major Gift 5,413.0 Univ. of Miami 7, $4,000,000 $ $ Not Disclosed $ Average 1, , $4,450,000 8 $4,860,000 $ * Includes hotel and casino. Source: US Census Bureau, Venues Today, Revenues from Sports Venues, Individual Facilities Grand Junction Event Center Analysis Chapter 5 - Page 4

127 As the table shows, markets of various sizes have built sports and entertainment facilities. The arenas shown in the table range in size from 4,000 to 10,000 seats and most have premium seating and suites. These facilities demonstrate what each market feels are an appropriate venue, given its market characteristics. All but the 1stBANK Center in Colorado have at least one sports tenant, including collegiate and minor league teams. The number of suites averages 22 and the number of club seats averages 548 for non-collegiate facilities. Naming rights revenue per year averaged nearly $300,000. Naming rights for collegiate venues are often a one-time gift provided upfront by a donor tied to the university. Entertainment Events Concerts and Family Shows Aside from sporting events and conventions/meetings, other primary uses of arenas are for entertainment events such as concerts and family shows. The section below profiles these entertainment events and their characteristics as they relate to Grand Junction. Concert and Event Trends Concerts can be a major source of revenue for an arena. Arenas today are often designed and operated as much as music venues as sports venues. Because of recent consolidation in the music industry, a few large event promoters generally control the concert industry and the availability of acts. As a result, it is wise for management of an independent arena to explore forming a strong alliance with at least one key promoter, depending on the local/regional competitive landscape. This type of arrangement would not have to be exclusive and the arena would be able to contract with all interested promoters. Further, the facility itself could also promote, or co-promote with another organization, certain events (by taking on some of the risk and funding some upfront expenses in exchange for a higher share of event revenues) to keep a vibrant calendar going. The following table shows the revenue breakdown for the concert and music promotion industry. Table 5-2 Event Type Percentage of Industry Revenue Industry Revenue (millions) Live Music Concerts 58.1% $13,305 Theater and Opera Performances 15.6% $3,572 Non-franchise Sporting Events 14.6% $3,343 Fairs, Pageants, Ethnic Festivals, Other 8.6% $1,969 Symphony and Classical Music Concerts 1.7% $389 Dance Performances 1.0% $229 Public Appearances and Speeches 0.4% $92 Total 100% $22,900 Source: IBISWorld Concert & Event Promotion Industry - Products & Services Segmentation As shown, live music concerts are the largest touring segment in the industry. Live music concerts are responsible for $13.3 billion, nearly 60 percent of the industry s total revenue. Theater and opera Grand Junction Event Center Analysis Chapter 5 - Page 5

128 performances and non-franchise sporting events that are growing segments are responsible for $3.6 billion and $3.3 billion in industry revenue respectively. Live music concerts - The Concert and Event Promotion industry promotes different events, including dance performances, sporting events and concerts. Live music concerts generate the majority of industry revenue: an estimated 58.1 percent. Events in this segment include live music performances at clubs, music theaters, arenas and amphitheaters, as well as local and regional music festivals. Events can range in size from an attendance of fewer than 500 people to more than 100,000. As a proportion of industry revenue, this industry segment has experienced slight increases during the five years. The number and popularity of club and theater-level concerts has risen in line with consumers' increasing use of the Internet as a tool for music discovery. Non-franchise sporting events Non-franchise sports, such as boxing matches and rodeos, are estimated to bring in about 14.6 percent of industry revenue in Sporting events tend to be less price-sensitive than arts related events. Moreover, sporting teams can perform using the same equipment at every show (e.g. an ice hockey rink or basketball court), which also lowers the cost of staging a performance. Theatrical performances - Theatrical performances, such as plays, musicals and operas, account for an estimated 15.6 percent of industry revenue. Demand for this segment has declined slightly over the past five years due to declines in gifts, donations and grants supporting performing arts. Other events include state fairs, agricultural fairs, pageants and all other festivals and events that are not related to sports or performing arts. Typically, to initiate live entertainment events or tours, booking agents directly contract with performers to represent them for defined periods. Booking agents then contact promoters, who will contract with them or directly with performers to arrange events and tours. Booking agents generally receive fixed or percentage fees from performers for their services. Promoters earn revenue primarily from the sale of tickets, as well as percentages of revenue from concessions and ancillary services. Promoters pay the performers under one of several different formulas, which may include fixed guarantees, percentages of ticket sales or the greater of guaranteed amounts or profit sharing payments based on total ticket revenue. Admission Fees - Nearly half of industry revenue (47.3 percent) is received from admission fees to the events promoted. As stated above, venues typically share revenue from ticket sales under a number of different formulas, including a fixed percentage of box-office receipts, profit collected over artist guarantees or through ticketing or facilities fees included in ticket prices. The proportion of industry revenue collected by promoters through ticket sales has fallen from 53.3 percent of industry revenue in This decline can be attributed to promoters expanding their revenue streams to include receipts from the sale of concessions, merchandise and ancillary services. Food and Beverage - Food, beverage and merchandise sales have grown as a proportion of industry revenue over the five years to 2012 to make up about 15.8 percent of industry revenue. Revenue from these operations generally has a higher profit margin than revenue from other services. Therefore, fluctuations in these revenue streams can have notable impacts on operating income. Grand Junction Event Center Analysis Chapter 5 - Page 6

129 Advertising and Sponsorships - Advertising and corporate sponsorship deals generate about 12.7 percent of total industry revenue. Common advertising and sponsorship deals include signage and promotional programs, venue naming rights, on-site representation and the sale of online ad space. Contributions, gifts and grants also make up a significant proportion of industry revenue, particularly for establishments that operate as nonprofits. While this segment comprises 8.2 percent of total industry revenue, the proportion is closer to 40 percent for taxexempt establishments. For the vast majority of these contributions, $9 of every $10 comes from the private sector. Government programs, such as the National Endowment for the Arts, provide additional funding opportunities. The industry has also been helped by the popularity of other touring events that are typically considered to be concerts, although many could also be called family shows. Other positives for the industry include the continued growth in the theater and club-level event segment and increasing per-head ancillary spending. Music theaters that typically have a capacity of between 1,000 and 6,500 people and clubs with capacities of less than 1,000 have grown increasingly popular over the past five years. Events held at these venues are considerably more affordable to attend on average than their arena and amphitheater counterparts, making them attractive to consumers who find attending larger events too expensive given the current economic conditions. Additionally, there are more theater and club-level acts touring successfully than ever before, with the Internet helping expand the public's ability to discover new music and artists. A national tour can typically include 25 to 75 performances and most arena concerts are held from the fall to spring. In the summer, most concerts take place in amphitheaters and other outdoor venues, particularly in recent years with the growing popularity of music festivals in the U.S. The most popular, well-established acts that once toured only large stadiums are now filling arenas and amphitheaters for multiple shows to smaller audiences. While stadium tours and limited stadium performances will continue to be staged, even groups like the Rolling Stones, Billy Joel, Elton John and U2 are also booking performances at smaller arenas and amphitheaters. The table below shows the market segmentation for the concert and music promotion industry. Table 5-3 Demographic Type Market Percentage Industry Revenue (millions) Men ages 21 to % $6,626 Women ages 21 to % $6,099 Women ages 46 and older 12.6% $3,163 Men ages 46 and older 12.1% $3,037 Corporations 10.0% $2,510 Men ages 20 and younger 7.5% $1,883 Women ages 20 and younger 7.1% $1,782 Total 100% $25,100 Source: IBISWorld 2015 Concert & Event Promotion Industry - Market Segmentation Grand Junction Event Center Analysis Chapter 5 - Page 7

130 The Concert and Event Promotion industry targets very diverse audiences depending on the scale and type of event. Performances range from those of child entertainers, such as Disney on Ice, to classical symphonies by philharmonic orchestras that are more popular with older generations. The bulk of events (live music concerts and sporting events) target men and women aged 21 to 45. This age demographic makes up 50 percent of the target market and is responsible for more than $12 billion of industry revenue. Over the last decade, this segment has remained consistent because this age group is most consistently employed and thus, has the disposable income to spend on industry events. Additionally, the number of attendees older than 45 has increased slightly over the past five years as more touring artists and events have appealed to this demographic, which tends to have more disposable income and available leisure time. Men and women between the ages of 21 and 45 account for 26.4 percent and 24.3 percent of the visitors to the average performing arts venue. Combined, this age group accounts for more than half of the industry s market. The corporate market is primarily associated with the largest establishments in the industry, those facilities with premiums seating and entertainment areas such as stadiums and arenas. The size of events can range from large festivals hosting upwards of 100,000 attendees to local community events with fewer than 500 attendees. Corporate support for this industry is usually in the form of purchasing premium seating, luxury suites or sponsoring events. Corporate interest is most often directed toward large sporting events, sponsorship of music concerts, tours and major arts festivals within the industry. Domestic economic conditions generally influence corporate support. Secondary and Tertiary Markets for Concerts Secondary and tertiary markets have demonstrated that they can sustain a robust concert business. Recent years have been excellent for secondary markets, with such top acts as Cher, the Eagles and many others playing a number of venues in smaller markets. According to industry sources, many acts are finding that they do not reach all their fans by only playing major markets. While smaller markets typically have smaller capacity facilities and are less likely to support high-ticket prices, tour managers like to add smaller-market dates to touring schedules if they offer a stopover between larger markets. Grand Junction offers this opportunity. Instead of the road crew spending the night halfway between Denver and Salt Lake City, they can generate revenue on that stopover with a smaller arena show. In addition, the trend to tour more, as well as the construction of new small facilities across the country, has also helped to attract concerts to small markets. In recent years, a number of popular touring concerts performed in smaller arenas throughout the country. For the most part, these acts would not be expected to sell out a large sized arena, particularly for multiple dates, and would therefore be more likely to book a smaller arena. But in other cases, major acts have also performed in small facilities in smaller markets, as previously described. The following information provides examples of recent tours that are relevant to this discussion. An example of a major act that can sell out 20,000-seat arenas but also plays smaller venues is the Foo Fighters. Their recent tours included NBA/NHL arenas as well as 5,000- to 10,000-seat arenas such as Wachovia Arena in Wilkes-Barre, PA; the Glens Falls (NY) Civic Center; the Mid-America Center in Council Bluffs, IA; and the Pensacola Civic Center. With ticket prices from $23 to $55, shows at the Mid-America Center and Pensacola Civic Center generated more than $300,000 in gross ticket sales. Grand Junction Event Center Analysis Chapter 5 - Page 8

131 As discussed, there are a variety of non-sports events that play in smaller arenas. The key then is to have a competitive niche within the overall regional market and a strong management company that can book strong acts. Family Shows Family shows generally are not as great a revenue producer for facilities as top concerts, but they have shown notable growth in the past few years. Tickets for family shows typically cost less than concerts in order to entice families to attend. Yet what family shows may lack in revenue, they more than make up for in reliable year-round bookings, as the touring schedules are more consistent than those of concerts. Further, family shows can agree to long-term booking arrangements with a facility and commonly hold several performances over multiple consecutive days. However, like the concert industry, most of the larger family shows are controlled by a small group of companies. The following table shows the various companies and family show productions across the country. Table Family Events Productions Company # of US Touring Units # of US Shows Average Ticket Price AEG Themestar LLC $15.50 Monster X Tour 1 27 $17.50 Feld Entertainment 11 5,000+ $20-$25 Harlem Globetrotters $29.00 HIT Entertainment 4 NA $10-$39 Koba Entertainment $25.00 NETworks Presentations $40-$240 Dreamworks Theatricals/Broadway Across America 30+ 4,000 $89.00 S2BN Entertainment 1 NA $40.00 Stars on Ice, an IMG Production 1 50 $48.00 VEE Corporation 6 1,600 $10-$35 World Wrestling Entertainment $42.00 Source: Venues Today, Various Organizations In addition to the companies listed above, other organizations also produce dirt-show events, such as various types of rodeos and other events. In general, family shows are more willing to play smaller markets than are other live events such as concerts. Ringling Bros. recently introduced a one-ring event for smaller markets and facilities and the Harlem Globetrotters occasionally play in high school gyms. The events listed above typically play in a wide range of markets and facilities, including smaller markets such as Grand Junction. For example, DreamWorks Theatricals will make stops in a number of NBA and NHL arenas, in addition to small facilities. An additional category of events is non-university and non-tenant sporting events, similar to concerts and family shows, there is also often overlap between what can be considered a sporting event and a family show. For example, professional wrestling or a motorsports event can be categorized as either. Other Grand Junction Event Center Analysis Chapter 5 - Page 9

132 sporting events that would not be considered family shows, such as a high school game or tournament, could also be held in a new arena. Minor League Sports As previously stated, many event/arena facilities are home to professional sports tenants. These tenants are critical for filling the schedule on a regular basis and giving companies a reason to spend more on naming rights, premium seating and other sponsorship opportunities. This section discusses minor leagues that can be housed in small to mid-sized arenas. The following table summarizes the characteristics of numerous minor leagues that would play in a midsized arena, including their average attendance and seating capacity, average market size, presence of premium seating, season, geography and availability of new or expansion franchises. Grand Junction Event Center Analysis Chapter 5 - Page 10

133 Table 5-5 Potential Minor League Opportunities for Arenas League Teams Capacity Range Geography League Status Regional Teams Basketball NBA D-League 16 3,200 to 19,000 Nationwide League is expanding None ABA to 12,800 Nationwide Annual expansions, relocations and teams folding Denver, CO PBL 11 1,000 to 12,000 Upper Midwest Slow Expansion None Indoor Football AFL 17 10,500 to 23,000 Nationwide IFL 16 2,100 to 11,100 Nationwide Reconstituted after collapse in 2009 Annual expansions, relocations and teams folding None Fort Collins, CO AIFA 9 4,800 to 10,500 Nationwide but Midwest Questionable, league not stable Pueblo, CO APFL 8 1,000 to 8,000 Western Midwest CIFL 6 2,500 to 14,800 Primarily Midwest Hockey AHL 30 4,800 to 20,500 Nationwide Annual expansions or relocations Annual expansions, relocations or league transfers No expansion planned; relocation possible None None None CHL 14 4,800 to 17,000 Midwest and Southwest Expansion and relocation is possible None ECHL 20 3,900 to 13,700 Nationwide Soccer Expansion and relocation is possible Windsor, CO MISL to 12,500 Mid-Atlantic and Midwest Folded but reestablished in 2009 None PASL-Pro 12 1,500 to 10,050 Midwest, Southwest, Mexico and Canada Annual expansions, relocations or league transfers Denver, CO (2), Monument, CO Lacrosse NLL 9 6,500 to 21,500 East, Midwest, West and Canada Recent contraction Denver, CO Source: Revenues from Sports Venues, HSP Basketball. Professional basketball has several minor league options. In 2002 the NBA formed its own minor league, the National Basketball Development League, or the D-League. The NBA Development Grand Junction Event Center Analysis Chapter 5 - Page 11

134 League, the D-League, started with eight teams in 2002, and for the season the league has 18 teams. The goal of the NBA is to have a farm team for each NBA franchise, however not all have an affiliation. Other basketball leagues include the Premier Basketball League, a new league as of the season, and the American Basketball Association, an existing league. The ABA has a team in Denver Colorado, the Colorado Kings. Football. Arena football is another sport that has a minor league using arenas for games. The Arena Football League (AFL) plays in larger arenas and recently folded and reconstituted. The AFL franchises play in larger arenas, with average capacity of over 17,000 seats. Arena football has other minor leagues that are in constant state of change, developing and dissolving. Currently there are two leagues that have relative stability: the Indoor Football League (IFL), a new name for two leagues that have merged (the former Intense Football League and United Indoor Football), the American Indoor Football League, which was re-launched in 2012, and the Champions Professional Indoor Football League, which began play in Currently, the IFL has team in Fort Collins, CO and the AIFA has a team Pueblo, CO. One issue that a proposed minor league indoor football program would face is the cost of development and yearly operations of the team. Each league charges a franchise fee for joining the league, but the fees vary from a low of $10,000 for the APFL to $300,000 for the IFL league. The initial startup costs, including the field turf, goalposts, nets and player equipment, would make the first year the most expensive. Yearly operations costs vary as well, with more than fifty percent of the costs going to player salaries and worker s compensation insurance. Also included in the cost is the annual franchise fee that the league charges to pay for administrative costs. The IFL estimates that the yearly budget for its team average $420,000 per year per team. The APFL does not pay its players but provides equipment, transportation and health insurance for those who do not have it through other means. Therefore, the yearly budget for each team is much less, averaging approximately $150,000 per year. Soccer & Lacrosse. Other possible indoor sports are indoor soccer and indoor lacrosse. The latest indoor soccer league, the Major Indoor Soccer League, folded in 2008 and reconstituted in 2009 as Professional Arena Soccer League. In March 2014, a merging of the MISL and PASL formed the MASL with 23 teams playing in its inaugural season in Of the 23 teams, three are based in Mexico, currently MASL has two teams in Denver, CO and one in Monument, CO. Indoor lacrosse, primarily played in the northeast and Canada, has one professional league, the National Lacrosse League (NLL) whose teams generally are in larger markets. The NLL currently has a team in Denver. Based on the above discussion, Grand Junction would definitely want to seek a minor league team as a major tenant to supplement the use of the facility. Having both a hockey and basketball tenant would be ideal, although it would pose some calendar/scheduling issues, as their seasons overlap. Several reasons exist to recruit a minor league team to the proposed Project, but the most important would be to create and maintain a consistent revenue stream and activity for the facility. When considering a minor league team, several factors should be considered, as follows: Grand Junction Event Center Analysis Chapter 5 - Page 12

135 History of Stability of Leagues and Teams. If a league is stable and has teams that have existed for several years, those teams are viable and would have a better revenue stream that insures use and revenue to the facility. Except for the NBA D-League, basketball leagues and teams do not have a record of stability. Arena and indoor football has some stability, but may not have a franchise available. Other indoor football leagues have a less attractive history of stability. Community Interest. A major factor in determining whether to recruit a minor league team is interest in the community for that team. Without community support attendance will be low and the team would be unsuccessful. Arena Size Requirements. Certain minor leagues have seating capacity requirements or floor area requirements that a developer must consider. Arena football requires a field area that is larger than some basketball-only arenas. Based on the above, and other factors set forth in the description of the minor leagues, it appears that the best minor league options for a facility in Grand Junction would be hockey (ECHL) and potentially an NBA-D League basketball. Industry Metrics In 2010, IAVM released a benchmarking survey report that provides valuable insights into where a 5,000- to 7,500-seat venue may be positioned in relation to the industry. The survey also inquired as to the nature of facility ownership and management. Results were broken out into three different groupings based on size. This was determined by the operational differences between large, medium and small-sized arenas. The groups included facilities with over 12,000 seats, those with 7,500 to 12,000 seats and those with less than 7,500 seats. The following table provides insights into arena operations regarding capacity, attendance and events. All Facilities Table 5-6 Less than 7,500 Seats 7,500 to 12,000 Seats More than 12,000 Seats Maximum approved occupancy capacity 12,255 6,788 10,519 18,580 Annual number of attendees (000s) ,109.3 Number of event days Annual number of events/clients Nummber of fixed seats, including suites 10,083 4,773 8,437 16,933 Number of accessible seats Number of courtside seats Total of number of suites Premium seating is available 59% 43% 47% 83% Standing room only is permitted 44% 52% 37% 42% Source: IAVM Benchmarking Survery Report 2010 Capacity, Attendance & Events at Surveyed Arenas Grand Junction Event Center Analysis Chapter 5 - Page 13

136 As shown, the proposed Grand Junction Project would mostly compare to the smaller sized venues. Venues with seating capacities less than 7,500 averaged an annual attendance of approximately 173,000 and 76 total events, averaging roughly 2,300 visitors per event. It is important to note that, even with small seating capacities, 43 percent of arenas have premium seating adding critical revenue the bottom line. Also of note is that a full season of a tenant team, like basketball, was considered one event in this survey. So the 76 average total events represented 76 unique events. Smaller arenas had more events on average than larger venues. The 2013 IAVM Operating Expense and Revenues survey took place in the spring of 2014 and consisted of 58 total arenas. These included 19 small arenas (up to 7,500 seats), 19 medium arenas (7,501 12,000) and 13 large arenas (over 12,000). 44 of the arenas surveyed are publicly owned and 14 are privately owned, while 26 are publicly managed and 32 are managed by a separate company or non-profit. The following table summarizes the arenas gross revenue metrics per seat, attendee, and event day in Table Arena Gross Revenue Metrics Category Per Seat Per Attendee Per Event Day Ticket Sales & Box Office Fees $93.19 $2.38 $10,847 Total Food & Beverage $ $4.02 $19,058 Merchandise/Novelty Sales $32.80 $0.76 $2,967 Event Facility Rent $80.34 $2.19 $6,165 Event Day Suite Rental $14.76 $0.29 $535 Utility Services $6.37 $0.12 $535 Advertising/Sponsors/Sponsorship Fees $45.54 $0.77 $3,339 Equipment Rental $7.65 $0.19 $637 Total Event Labor - Total $59.86 $1.35 $5,214 Event Labor - Guest Services $17.51 $0.45 $1,491 Event Labor - Security $17.13 $0.46 $1,795 Seat/Suite License Fees $79.49 $2.18 $18,608 Maintenance/Facility Fees $24.16 $0.65 $2,375 Source: IAVM As the table shows, the primary revenue generator for these arenas is food and beverage, followed by ticket sales, event facility rentals and seat and suite license fees. Implications Arena and multipurpose event center development for mid-sized metropolitan markets and suburban areas of major markets have been increasing in the last decade for a variety of reasons. Smaller venues provide an opportunity to host the size of events that make financial sense for many market sizes, including performing arts, concerts, family shows and community events, not to mention trade shows and conventions. Many of these events that tour the U.S. have no opportunity between Denver and Salt Lake City. Producers of these events can often make more money in a smaller venue than a larger one as rental Grand Junction Event Center Analysis Chapter 5 - Page 14

137 and other deal components are more favorable. Also, acts and teams like to play in facilities that are similar in size to the audience. Most performers or teams do not like to play within a large facility that is only partially filled. More content (events, performing acts, etc.) has been developed to tour these smaller venues. Grand Junction should be able to host a number of concerts, family shows and other events and should be able to induce new events to the market and accommodate other events that currently are not being optimally accommodated at other venues currently. Grand Junction Event Center Analysis Chapter 5 - Page 15

138 TABLE OF CONTENTS Executive Summary Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Profile of Two Rivers Convention Center and Avalon Theatre Economic and Demographic Analysis of Grand Junction Convention Industry Trends; Meetings Market Analysis Hotel Market and Trends Analysis Small and Mid-Sized Arena Trends Sports and Entertainment Market Analysis Case Studies and Comparable Market Metrics Recommendations, Drawings, Budget Governance Analysis Demand and Financial Projections Economic, Fiscal and Employment Impact Analysis Grand Junction Event Center Analysis Chapter 6 - Page 1

139 LOCAL & REGIONAL ARENA SPORTS & ENTERTAINMENT MARKET ANALYSIS In order to project the performance of a new sports and entertainment arena in Grand Junction, it is important to understand the supply of the local and regional market. HSP analyzed the competitive supply of athletic facilities and performance/entertainment venues, both in Grand Junction and region, to determine if any gaps in the market exist. Local Athletic & Entertainment Facilities HSP evaluated the local sports and entertainment venues to determine both the supply of local facilities for events as well as the existing demand for arena events to determine how a downtown arena could impact the Grand Junction market. The facilities were determined by their location, facility components, quality and discussions with local and regional sport and entertainment organizations. The following table summarizes the sports and entertainment venues in Grand Junction, sorted by capacity. Table 6-1 Grand Junction Sports and Entertainment Facilities Facility Location Year Opened Seats Ralph Stocker Stadium / Suplizio Field N 12th St ,000 Avalon Theater 645 Main St ,046 Glacier Ice Arena 2515 Riverside Pkwy Mesa Theater 538 Main St Robinson Theater - Moss Performing Arts Center 1100 North Ave Carolyn Love Recital Hall - Moss Performing Arts Center 1100 North Ave Average ,139 *Under renovation Source: Various facilities, Hunden Strategic Partners The following map shows the sports and entertainment venues in the Grand Junction metro area. Grand Junction Event Center Analysis Chapter 6 - Page 2

140 Figure 6-1 As shown in the figure and table, Grand Junction s sports and entertainment options include a football and baseball stadium, university facilities, an ice arena and two theaters. Ralph Stocker Stadium / Suplizio Field The premiere outdoor athletics venue in Grand Junction, Ralph Stocker Stadium, built in 1949, is a football stadium located at North 12 th Street in Grand Junction, 1.7 miles north of downtown. Ralph Stocker Stadium is home to the Colorado Mesa University Mavericks Football Team, District 51 High School Football and the Grand Junction Gladiators, a semi-pro minor league football league. The stadium also hosts local events, track & field and local and college commencement ceremonies. In 2011, the stadium had an $8.6 million renovation that included TV-ready lights, expanded seating areas, a new press box, luxury suites, a concourse, restrooms and concession stands. The addition of the lights has allowed the football team to host night games when it has cooled down from the daily heat of the early fall in western Colorado. Grand Junction Event Center Analysis Chapter 6 - Page 3

141 The following figure shows the Ralph Stocker Stadium. Figure 6-2 Owned and operated by the City of Grand Junction, the stadium currently has a maximum seating capacity of 8,000 for football. Located on the opposite side of the press box from Ralph Stocker Stadium is Suplizio Field. Opened in 1949, Suplizio Field is an 8,000-seat baseball stadium that is the home of the Grand Junction Rockies of the Pioneer League. The 2011 renovation of the facility included the replacement of the original concrete bleachers along the first base line and the expansion of the dugouts to major league specifications. The following figure shows Suplizio Field. Grand Junction Event Center Analysis Chapter 6 - Page 4

142 Figure 6-3 In addition to the Rockies, Suplizio Field is the primary home for Colorado Mesa University and local high school baseball. The facility has been the host of the Junior College World Series for 58 years. This event also generates significant activity at the Two Rivers Convention Center for the awards banquet. The following table summarizes the total and average attendance for the Grand Junction Rockies since their first year in Table 6-2 Grand Junction Rockies Attendance Category Total Attendance 101,496 87,436 81,382 74,794 # of Games Average 2,671 2,363 2,200 2,137 Source: MILB As shown, average attendance has decreased slightly every year for the last four years. Conversations with Rockies management indicated that the improved and expanded luxury club area is consistently booked for Grand Junction Event Center Analysis Chapter 6 - Page 5

143 games as well as variety of special events and the organization would like to offer more premium options in the future, if possible. Avalon Theater The Avalon Theater is a 1,046-seat performing arts theater located in downtown Grand Junction, one-half mile east of Two Rivers Convention Center in the Downtown Shopping Park. Built in 1923 by local publishing giant Walter Walker, the theater is home to independent and foreign film series, as well as dance, theatrical, lecture and variety shows, along with private functions. The following figure shows the inside of the Avalon Theater. Figure 6-4 This facility has been profiled in more detail in Chapter 1 of this report. Glacier Ice Arena Glacier Ice Arena, built in 1999, is located at 2515 Riverside Parkway, 1.6 miles northwest of the Two Rivers Convention Center in Grand Junction. The arena is a multi-service ice-skating facility that contains a Grand Junction Event Center Analysis Chapter 6 - Page 6

144 regulation NHL size sheet of ice, 750 seats, locker rooms, snack bar, arcade and party rooms. The facility offers ice-skating, hockey leagues, figure skating, broom-ball and hosts birthday parties. Glacier Ice Arena is home to the Glacier Yeti s, part of the Rocky Mountain Junior Hockey League, the Colorado Mesa University Mavericks Hockey Team-, Division III hockey and several youth and adult hockey leagues. The following figure shows Glacier Ice Arena. Figure 6-5 Conversations with facility management indicated that there would be support for a new downtown arena and user groups would be interested in utilizing available ice-time for games and tournaments if possible. Mesa Theater Mesa Theater, built in 1909, is located at 538 Main Street in Grand Junction, 0.3 miles east of the Two Rivers Convention Center. This venue features a main theater with a flat floor for standing crowds of approximately 200 and a downstairs bar with patio. The main theater hosts a diverse line up of concerts, while the club hosts college night on Thursday nights. Ticket prices range from $8 - $30, depending on the act. There are also VIP areas for rent for up to 15 people. The main theater is currently going through a renovation. Moss Performing Arts Center The Moss Performing Arts Center, built in 2012, is located at 1100 North Avenue on the campus of Colorado Mesa University, 1.7 miles northeast of the TRCC in Grand Junction. The performing arts center houses the dance, music and theater departments for the university. The Moss Performing Arts Center is home to: Grand Junction Event Center Analysis Chapter 6 - Page 7

145 William S. Robinson Theatre, Carolyn Love Recital Hall, Walter Walker Reception Area, Mesa Experimental Theatre, A design studio, Numerous music practice rooms, Smart technology classrooms and A dance studio with panoramic views of the Grand Valley. The following figure shows the Moss Performing Arts Center. Figure 6-6 The William S. Robinson Theater is a 600-seat theater that presents four main stage performances each school year. These shows range from light comedies to musicals to classics. The Robinson Theater also hosts dance recitals, musical performances and smaller shows. The Carolyn Love Recital Hall is a 300-seat venue that hosts 40 student and faculty performances a year. While the Moss Performing Arts Center is a high quality facility that offers a variety of spaces and amenities, the theater s affiliation and commitment to university events ensures that the opportunities for other shows and performers is limited. Implications The local sports and entertainment market in Grand Junction lacks a large, multipurpose indoor venue for sports, shows, concerts and community events. Capacity is limited to smaller events and there are no facilities with the technical capabilities to host larger touring acts. Facilities like the Avalon Theatre and Grand Junction Event Center Analysis Chapter 6 - Page 8

146 Suplizio Field accommodate their unique events and user groups, but indoor sports, as well as touring shows and artists, cannot currently perform in the Grand Junction. Regional Athletic and Entertainment Grand Junction s sport, concert and family show facility competition comes from venues throughout the states of Colorado and Utah. The venues shown on the following table have been identified as the most directly competitive facilities in the region, not including the immediate Denver area. Denver is not considered, as it has numerous facilities of its own that attract major acts and accommodate large crowds locally. The purpose of this analysis is to understand what opportunities may exist for Grand Junction to pull from markets outside of Denver and compete effectively across a wide swath of territory. The primary Denver facilities are the Pepsi Center and the Broomfield Events Center. Table 6-3 Regional Sports and Entertainment Facilities Seating Capacity Facility City Distance Year Opened Basketball Hockey Concert/Theater Peaks Ice Arena Provo , Main Performance Hall - Covey Center for the Arts Provo UCCU Events Center Orem , ,500 Main Stage - SCERA Center for the Arts Orem Maverik Center West Valley City ,500 10,100 12,000 Vivint Smart Home Arena Salt Lake City ,911 14,000 20,000 Jeanne Wagner Theater - Rose Wagner Performing Arts Center Salt Lake City Sangre de Cristo Arts Center Theater Pueblo Pueblo Plaza Ice Arena Pueblo Pueblo Memorial Hall Pueblo ,600 Budweiser Events Center Loveland ,289 7,200 Moby Arena Fort Collins , Pikes Peak Center Colorado Springs ,989 Broadmoor World Arena Colorado Springs ,099 7,750 9,000 Average ,551 6,707 5,674 Source: Various facilities, Hunden Strategic Partners The following figure shows the map of the locations of the sports and entertainment venues in the region around Grand Junction. Grand Junction Event Center Analysis Chapter 6 - Page 9

147 Figure 6-7 As the map shows, the venues are primarily located along I-15 in Utah and I-25 in Colorado, all more than 225 miles from Grand Junction. Colorado There are seven sports and entertainment facilities in Colorado, outside of Denver, located from Pueblo to Fort Collins along I-25. Four are sports and three are entertainment venues, however two of the sports venues also host concerts. The Sangre de Cristo Arts Center Theater, built in 1972, is located in Pueblo 285 miles southeast of Grand Junction. The theater seats 500 and hosts a variety of touring groups showcasing ballet, music, acrobatics and theater. This theater is home to the Sangre de Cristo Ballet and the Children s Playhouse Theater. Pueblo Ice Arena, opened in 1975, is located in Pueblo is a 39,800-square foot facility that contains an NHL-sized rink with seating for 800. The arena offers public skating, figure skating, hockey classes and hockey leagues. Pueblo Ice Arena also has a concession stand, four locker rooms and two party rooms. Grand Junction Event Center Analysis Chapter 6 - Page 10

148 Utah Pueblo Memorial Hall, built in 1919, is also located in Pueblo, seats 1,600 in an ornate theater that highlights late 19 th century and early 20 th century auditorium design. The theater features an operational pipe organ with approximately 5,000 pipes. Pueblo Memorial Hall hosts community arts, theater and music performances, dance and organ recitals, television and radio broadcasts, and touring ensembles. The Budweiser Events Center, built in 2003, is located in Loveland, 291 miles northeast of Grand Junction. The event center seats 5,289 for hockey games and 7,200 for concerts with premium seating options. The Budweiser Events Center is home to the Colorado Eagles and Colorado Crush Hockey Teams and hosts concerts, family shows and other events. The Moby Arena, opened in 1966, is located in Fort Collins 305 miles northeast of Grand Junction. Moby Arena is owned by Colorado State University and is home to the Colorado State Ram s men s basketball and women s volleyball teams. The arena sits 8,745 for basketball and volleyball games. The facility was renovated in 2001, when it replaced more than 23,000 square feet of hardwood on the arena floor of the whale-shaped arena. The Pikes Peak Center, built in 1982, is located 313 miles east of Grand Junction in Colorado Springs. The Pikes Peak Center hosts the Broadway Across America Series and the Colorado Springs Philharmonic in the 1,989-seat theater. Broadmoor World Arena, opened in 1989, is located 316 miles east of Two Rivers Convention Center is Colorado Springs. The arena can seat 8,099 for basketball games, 7,750 for hockey games and 9,000 for concerts. The Broadmoor Arena hosts a diverse variety of family shows, concerts, comedy and sporting events. This arena is home of the Colorado College Tigers Hockey and the Broadmoor Skating Club. There are seven sport and entertainment facilities in Utah located from Provo to Salt Lake City along I-15. Four are sports and three are entertainment venues, with three of the sports venues also hosting concerts. The Peaks Ice Arena, built in 1998, is located 239 miles northwest of Grand Junction in Provo. Peaks Ice Arena has two sheets of ice with a seating capacity of 2,300. In 2002, the arena added two indoor turf fields. Peaks Ice Arena offers public skating, youth and adult hockey leagues and lessons for figure and hockey skating. The Main Performance Hall at the Covey Center for the Arts, opened in 2007, is located in Provo with seating for 670. The performance hall hosts musical and theatrical events and concerts. The Covey Center for the Arts also contains experimental theater space, art galleries and dance studios. UCCU Events Center, opened in 1996, is located 244 miles northwest of Grand Junction in Orem on the campus of Utah Valley University. The UCCU Events Center seats 8,500 and is home to the Division I Wolverines Athletics. The center hosts headlining concerts, family shows, trade shows, expos, conventions, dances, basketball and other athletic events. Utah Community Credit Union purchased the naming rights in Main Stage - SCERA Center for the Arts, opened in 1941, is located in Orem is a 453-seat theater. The Main Stage hosts plays, musicals, puppet shows, movies and classes. Grand Junction Event Center Analysis Chapter 6 - Page 11

149 Maverik Center, built in 1997, is located 279 miles northwest of Two Rivers Convention Center in West Valley City. The Maverik Center is a multi-purpose arena with seating for 12,500 for basketball games, 10,100 for hockey games and 12,000 for concerts. This venue is home to the Utah Grizzlies Hockey Team. The Maverik Center hosts headlining concerts, family shows, corporate events, banquets, conferences, meetings, trade shows and receptions. The center offers premium seating and breakout rooms. Vivint Smart Home Arena, built in 1991, is located 282 miles northwest of TRCC in Salt Lake City recently just changed its name from the EnergySolutions Arena. Vivint Smart Home Arena is home to the Utah Jazz of the NBA. The arena seats 19,911 for basketball games, 14,000 for hockey games and 20,000 for concerts. Vivint Smart Home Arena hosts ice shows, concerts, comedians and family shows in addition to basketball and hockey games. Jeanne Wagner Theatre- Rose Wagner Performing Arts Center, opened in 1997, is located in downtown Salt Lake City. The Jeanne Wagner Theatre seats 501 and is home to several performing arts organizations hosting their events and the Sundance Film Festival. Implications The region around Grand Junction does not feature any sizeable sports or entertainment venues within 200 miles. All the regional competitive venues are located in central Colorado or western Utah. This signifies a definite void of sports and entertainment facilities in western Colorado, suggesting an opportunity for an event center development in Grand Junction. Potential Tenants and Event Demand Minor League Sports As previously stated, many event/arena facilities have professional sports tenants. This section discusses the two most likely tenants. HSP does not believe that the Grand Junction market will be able to easily support more than one anchor team/franchise, but both are profiled here. The most likely tenant is an East Coast Hockey League team. The second most likely tenant is an NBA-D League team affiliated with the Denver Nuggets. However, the basketball franchise may be better suited to an arena closer to Denver, such as the Broomfield Events Center or the Budweiser Event Center in Loveland. However, given the strong existing line-up there, the D League could end up in Fort Collins or Colorado Springs, depending on the arena s ability to provide what the NBA D-League team requires. ECHL The ECHL, is a mid-level professional ice hockey league based in Princeton, New Jersey that features 28 teams throughout the United States and Canada. One tier below the AHL, the ECHL and AHL are the only minor leagues recognized by the collective bargaining agreement between the NHL and National Hockey League Players Association, meaning that any entry-level NHL player designated for assignment must Grand Junction Event Center Analysis Chapter 6 - Page 12

150 report to a club in either the AHL or ECHL. Founded in 1988, the ECHL season consists of 72 games and typically begins in October and ends in April. The following figure shows a map of the ECHL teams. Figure 6-8 As shown, ECHL teams are currently concentrated in the Midwest and east coast. Due to these geographical anomalies, the league has been forced to use unbalanced conferences and divisions, resulting in varied playoff formats and limited inter-conference play. At the 2012 ECHL Board of Governor s meeting, the Board elected to put an emphasis on adding teams to the western conference and balancing out the geographical layout of the league. Initially, the focus was on Reno, Nevada, which has been considered as an expansion location since the 2003 merger between the ECHL and WCHL, but efforts to establish a team in Reno have been thwarted by failed attempts to find or build a suitable arena. The following table summarizes the markets and facilities in the Western divisions of the ECHL. Grand Junction Event Center Analysis Chapter 6 - Page 13

151 Table 6-4 Western ECHL Arena Summary Facility Location MSA Population Budweiser Event Center Loveland, CO 305,525 CenuryLink Arena Boise, ID 616,561 Rushmore Plaza Civic Center Rapid City, SD 135,193 Maverik Center West Valley City, UT 1,124,197 Allen Event Center Allen, TX 6,371,773 Silverstein Eye Centers Arena Independence, MO 2,411,635 BOK Center Tulsa, OK 946,962 Intrust Bank Arena Wichita, KS 625,526 Average -- 1,567,172 Source: Various Facilities, Pollstar, Hunden Strategic Partners Hockey Capacity 5,289 5,002 5,132 10,100 6,275 5,800 17,096 13,450 8,518 Year Opened Cost (millions) Suites 2003 $ $ $ $ $ $ $ $ $ As the table shows, other than Rapid City, these venues are primarily located in markets larger than Grand Junction s. The minimum capacity for these venues in 5,000 seats and the drivable market is greater than 150,000. All but one facility was built in the last 20 years. The following table summarizes ECHL attendance for the season. Grand Junction Event Center Analysis Chapter 6 - Page 14

152 Table 6-5 ECHL Attendance Team Location Total Attendance Games Ontario Reign" Ontairio, CA 280, Fort Wayne Komets Fort Wayne, IN 261, Toledo Walleye Toledo, OH 231, Orlando Solar Bears Orlando, FL 223, Tulsa Oilers Tulsa, OK 197, Missouri Mavericks Independence, MO 191, Colorado Eagles Windsor, CO 190, Florida Everblades Estero, FL 187, Evansville Icemen Evansville, IN 180, Wichita Thunder Witchita, KS 180, Gwinnett (Atlanta) Gladiators Duluth, GA 177, Utah Grizzlies West Valley City, UT 177, Bakersfield Condors* Bakersfield, CA 172, Stockton Thunder" Stockton, CA 166, Alaska Aces Anchorage, AK 157, Cincinnati Cyclones Cincinnati, OH 156, Reading Royals Reading, PA 150, Allen Americans Allen, TX 147, Idaho Steelheads Boise, ID 15, South Carolina Stingrays North Charleston, SC 143, Quad City Mallards Moline, IL 140, Rapid City Rush Rapid City, SD 138, Indy Fuel Indianapolis, IN 133, Greenville Swamp Rabbits Greenville, SC 130, Kalamazoo Wings Kalamzoo, MI 97, Brampton Beast Brampton, ON 92, Elmira Jackals Elmira, NY 92, Wheeling Nailers Wheeling, WV 89, League 4,505,201 1,008 Average Attendance 7,802 7,277 6,440 6,209 5,479 5,317 5,289 5,205 5,019 5,007 4,927 4,919 4,799 4,621 4,367 4,342 4,192 4,096 4,030 3,979 3,913 3,856 3,720 3,619 2,703 2,572 2,557 2,499 4,598 *No longer in ECHL Source: ECHL, Hunden Strategic Partners As the table shows, teams averaged approximately 4,600 attendees per game throughout the 36 home games in last season. Average attendance ranged from 2,500 in Wheeling, West Virginia to more than 7,800 in Ontario, Canada. HSP met with and interviewed representatives from the ECHL, including the commissioner and a current team owner in Boise, Idaho (Larry Leasure). Interviews with Larry Leasure regarding the ECHL opportunities indicated the following: He currently owns the license for the dormant franchise in Reno that could potentially move to Grand Junction. Other ECHL options are available as well. The ECHL is absolutely interested in having a team in the Grand Junction market. Grand Junction Event Center Analysis Chapter 6 - Page 15

153 Grand Junction is viewed as an attractive potential destination partially due to ECHL s emphasis on expanding the league to the west. Grand Junction will offer travel distance benefits. A city does not need to have a physical facility before a deal can be struck with a team. ECHL needs a completed study and a commitment from city leadership. Conversations with Brian McKenna, the commissioner of the ECHL, indicated the following: Geography, size and demographics are the primary components that the ECHL evaluates in a potential city. Any new city or team would need to be approved by every other owner in the league Necessary arena attributes include: Minimum of 5,000 seats Adequate dressing rooms Luxury suites and premium seating options Modern audio/visual equipment and scoreboard Safe and well-lit parking and access/environment Local radio and TV coverage is a key component when selecting cities for relocation. NBA - League The NBA D-League, is the National Basketball Association's minor league basketball organization. The D- League started with eight teams in the fall of In March 2005, started to develop into a true minor league farm system, with each NBA D-League team affiliated with one or more NBA teams. At the conclusion of the NBA season, 33 percent of NBA players had spent time in the NBA D-League, up from 23 percent in There are currently 19 teams in the league and all are affiliated with an NBA team. The most recent affiliation was the Fort Wayne Mad Ants with the Indiana Pacers. Some data points to note for the league generally and when an NBA D-League team shares an arena with a more popular hockey team can include: The basketball team s home games would be likely held on Tuesdays, Thursday, Fridays, Saturdays, and Sundays, although the team could struggle to get prime weekend dates if hockey has preference. Teams can average lower attendance than hockey generally, although it varies. NBA D-League teams typically prefer a 4,000- to 5,000-seat venue. That is the direction the D- League is heading. Most D-League teams are in smaller, newer arenas. A facility s ability to broadcast games is very important. A new arena would allow the house the be full and present will on televion, and ESPN broadcasts some games. The Denver Nuggets could be an opportunity for an affiliated NBA D-League team, although it is not clear if the Grand Junction market could support two minor league teams. The ECHL has expressed a desire to be Grand Junction Event Center Analysis Chapter 6 - Page 16

154 in the market and there appears to be an appetite by the market for the ECHL. As a result, HSP is assuming this tenant in its models and not an NBA D-League tenant. Feld Entertainment Feld Entertainment is a worldwide leader in producing and presenting live touring family entertainment. Their productions, which attract more than 30 million spectators each year, have occurred in more than 75 countries on six continents. Their productions include events such as Monster Jam, Monster Energy Supercross, Disney on Ice and Disney Live. Interviews with representatives of Feld Entertainment revealed the following: A Grand Junction venue would be very attractive. There are few transitions cities to get between east and west coasts and new facilities are always attractive. This allows the tour to come through the area, make some money, and continue east or west to larger markets. Grand Junction would likely not be a big money-maker for Feld, but it would help to expose the brand and fill the market gap and route between Denver and Salt Lake City. Advertising would be much cheaper than Denver and Salt Lake City, which is attractive. Shows typically run Thursday through Sunday. Feld would likely bring two to three family shows and possibly a motor show, but the circus would be difficult as it needs a larger venue. A new Grand Junction facility would likely get more events in its first year due to the honeymoon phase. Independent Producers/Private Management In conversations with independent show producers and private arena managers, it was stated that a new smaller arena downtown could attract more concerts and events than those that are being held in the market today. There are a number of circuits or event types that tour the country in these smaller arenas. Such arenas are the fastest growing type of venue and tours are specifically designed for these, both physically and financially. With such a facility, Grand Junction would be viewed as a destination. Local Business Survey Hunden Strategic Partners conducted a survey of local businesses to gauge the interest in a new downtown event center as well as determine the quantity and quality of premium seating and sponsorship options that can be supported by the local community. This survey was distributed from the Downtown Grand Junction and the Grand Junction Chamber databases. Overall, there were 45 responses. While the results are not scientific, they do provide insight into the potential of Grand Junction as it relates to supporting a downtown event center, The following figure shows survey responses by type of organization. Grand Junction Event Center Analysis Chapter 6 - Page 17

155 Figure 6-9 As shown, Owners accounted for more than 64 percent of total respondents, followed by Other Executive Management, which accounted for 19 percent. President/CEO were the third most common type of respondent with 11.9 percent and at 4.8 percent was catch-all category, other. The figure below shows if respondents organization is located locally in Grand Junction. Figure 6-10 Grand Junction Event Center Analysis Chapter 6 - Page 18

156 Of the 45 respondents, 95.2 percent surveyed that their organization is headquartered locally in Grand Junction, while the balance of 4.8 percent are not locally headquartered and indicated that they are headquartered in St. Louis, MO and Denver, CO. The following figure shows the respondents number of employees based in Grand Junction area. Figure 6-11 As shown in the figure, 61.9 percent of the respondents indicated that less than ten employees in their respective organizations are located in Grand Junction. The second highest response was employees at 16.7 percent, followed by at 11.9 percent, with the balance accounting for employees and 101 through 500 employees. The following figure shows the respondents total annual revenue for their organization. Grand Junction Event Center Analysis Chapter 6 - Page 19

157 Figure percent of the respondents surveyed indicated that their organizations annual revenue is less than $1 million, followed by $1 million- $10 million at 34.1 percent. The following figure shows if the respondents organization advertises, sponsors, or partners with any local venues. Figure 6-13 Grand Junction Event Center Analysis Chapter 6 - Page 20

158 The majority of respondents, 61 percent, indicated that their organization does advertise, sponsor or partner with local venues. The following figure shows what venues the respondents marketing and advertising dollars went towards. Figure 6-14 Which venues do you advertise, sponsor, or partner with? 2 CMU 2 6 Avalon Art Center Little Leagues 3 Juco Public Radio 4 5 Source: Hunden Strategic Partners The most common venue that respondents advertise, sponsor or partner with was Colorado Mesa University (CMU) at six responses, followed closely behind at five responses by the Avalon. The following figure shows respondents interest level in sponsorship opportunities for a new downtown arena. Respondents were asked to rank on a scale from one to four, one being not at all interested and four being absolutely interested. Grand Junction Event Center Analysis Chapter 6 - Page 21

159 Figure 6-15 As the figures shows, in-arena signage rated the highest at 2.06, followed by club seats and loge seats at 1.88 and 1.78 rating, respectively. Premium seats rated at a 1.76 rating, luxury suites at 1.61 and minor entitlement rights followed at a 1.42 rating. The following figure shows how much money annually the respondents are budgeting for marketing and advertising. Grand Junction Event Center Analysis Chapter 6 - Page 22

160 Figure 6-16 Of the 45 respondents surveyed, nine indicated that their organization s marketing and advertising budgets are $5,001-$15,000, followed by less than $5,000, $15,001-$25,000 and $50,000-$100,000 each having four respondents. The following figure shows where respondents are currently spending their marketing and advertising dollars. Grand Junction Event Center Analysis Chapter 6 - Page 23

161 Figure 6-17 As the figure shows, 66.7 percent of the respondents indicated that their organization is currently spending its marketing and advertising dollars on digital, followed by community outreach an print at 63.3 and 60.6 percent, respectively. Next, we have sponsorships/partnerships at 51.5 percent. Implications While the sample size is small, the survey results provide a broad picture of the interest level of local businesses in investment and partnership opportunities with a new downtown event center. Securing suite, club, premium seating and other sponsorship commitments is key to the financial success of any arena, and Grand Junction local businesses indicated that they are interested in those opportunities. These results were considered and factored into the recommendations and projections of this project. Conclusion Analysis of the local and regional sports and entertainment supply indicate that there is a sizeable gap in the market that is not currently being accommodated. There are no venues between Denver and Salt Lake City that are capable of hosting acts and touring shows and promoters stated that they are looking for convenient stops on their travel schedules between the Midwest and west coast. This support of a Grand Junction venue from these promoters, combined ECHL s attempt to balance the geography of their league out west, demonstrate that a Grand Junction Arena is would be an attractive destination for a variety of user groups. HSP also believes there is enough support from the local corporate community to support a modest number of suites, club seats and advertising/sponsor opportunities in a facility. Grand Junction Event Center Analysis Chapter 6 - Page 24

162 TABLE OF CONTENTS Executive Summary Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Profile of Two Rivers Convention Center and Avalon Theatre Economic and Demographic Analysis of Grand Junction Convention Industry Trends; Meetings Market Analysis Hotel Market and Trends Analysis Small and Mid-Sized Arena Trends Sports and Entertainment Market Analysis Case Studies and Comparable Market Metrics Recommendations, Drawings, Budget Governance Analysis Demand and Financial Projections Economic, Fiscal and Employment Impact Analysis Grand Junction Event Center Analysis Chapter 7 - Page 1

163 CASE STUDIES AND COMPARABLE MARKET METRICS There have been a number of new, smaller arenas built in the U.S over the past decade that offer similarities to the situation in Grand Junction. HSP sought out similarly sized and designed arenas in smaller markets that have been built or renovated in the past 15 years to determine how the market could support the facility. Comparable Arenas The purpose of investigating comparable facilities is two-fold. It is important to understand if and how such facilities have performed in similar markets and what implications their performance or physical program should have on what is recommended in Grand Junction. Also, investigating their demand history (attendance, event types and number of events) as well as specific line item revenue and expense detail provides a top-down and bottom-up approach to understanding how a similar facility could perform in Grand Junction. HSP has reviewed a number of facilities and discusses them as well as implications below. Table 7-1 Comparable Arena Summary Seating Capacity Facility Location MSA Population Basketball Ice Events Concert Year Opened/Renovated Cost (millions, 2016 dollars) Suites Club Seats Tenants Cross Insurance Arena Portland, ME 413,521 7,800 6,795 8, $ AHL, USLL General Motors Centre Oshawa, Ontario 356, ,180 7, $ OHL, CLax WFCU Center Windsor, Ontario 319, ,450 6, $ OHL, NBLC Budweiser Events Center Loveland, CO 270,382 5,400 5,350 7, $ ECHL, IFL Cross Insurance Center Bangor, ME 152,923 5, , $ NCAA Sanford Center Bemidji, MN* 45, , $ NCAA, IFL United Wireless Arena Dodge City, KS* 34,795 5,300 4,373 5, $ CPIFL Average 227,530 6,075 5,475 7, $ * County population used Source: Various Facilities, Pollstar, Hunden Strategic Partners The comparable facilities were chosen based on the facility size, design, local area demographics and year of original construction or major renovations. The cities where the facilities are located are cities with MSA populations between 34,000 and 415,000 people. The facilities were all built or renovated in the past 15 years and have hockey capacities ranging from 4,300 to 6,800. The Cross Insurance Arena in Portland, Maine is the largest of the comparable facilities with a concert seating capacity up to 8,795. The five other comparable facilities have concert capacities between 5,300 and 8,500 and basketball capacities between 5,300 and 5,800. Cross Insurance Arena Portland, Maine Cross Insurance Arena is a multi-purpose arena in Portland, Maine. Built in 1977 at a cost of $8 million, it is the home arena for the Portland Pirates of the American Hockey League. There are 6,733 permanent seats in the arena and it seats up to 8,795 for concerts. The facility, which is owned by Cumberland County and Grand Junction Event Center Analysis Chapter 7 - Page 2

164 operated by Spectra, consists of one deck rising 24 rows, 14 seats across at its widest and 30 separated sections around. The arena floor features 34,500 square feet of space, making it useful for trade shows and conventions, in addition to sports and concerts. The following figure shows the interior of the Arena during a Portland Pirates game. Figure 7-1 Arena trustees reached a ten-year agreement in 2014 with Cross Insurance Agency for the sale of the facility s naming rights for $2.5 million. The facility was renamed Cross Insurance Arena despite the fact that Cross Insurance also holds the naming rights to Bangor s Cross Insurance Center, which is located 130 miles away. In 1977, a group of local business leaders, elected officials, and community members initiated the project with the goal of bringing the nation s biggest entertainment stars to the citizens of Maine. Today, Cross Insurance Arena hosts acts from Elton John to Toby Keith and John Mayer, as well as unique family entertainment such as Disney on Ice and Sesame Street Live. The facility also hosts a variety of local events, such as state championship sports and high school graduations. The following table summarizes Cross Insurance Arena s 2014 events. Grand Junction Event Center Analysis Chapter 7 - Page 3

165 Table 7-2 Cross Insurance Arena Event Analysis Event Type Event Count Total Attendance Athletic 17 61,372 Graduation/Commencement 10 43,651 Show 7 35,038 Concert 7 27,322 Expo 2 4,500 Convention Private/Other 1 2,500 Motorsports 1 11,751 Home/Garden Show 1 10,000 Total ,434 Source: Cross Insurance Center Athletic events accounted for 31 percent of the total annual 2014 attendance at the facility, which was 196,434. This can largely be contributed to the Portland Pirates. Graduation/Commencement and shows were the second and third most common event types held at the facility; with 22.2 and 17.8 percent of the total attendance, respectively. The facility held one home and garden show in 2014, the Annual Maine Home Remodeling and Garden Show, with 10,000 visitors. Other large-scale events included the Monster X Tour and Cirque Du Soleil-Varekai. These events attracted crowds of 11,751 and 14,173 respectively. In October 2010, a task force voted to fund renovations costing to $27 to $29 million. The renovations included additional premium seating, as well as upgrades to the locker rooms, an increased number of restrooms, and other improvements. The renovations added more than 34,000 square feet to the building. It required approval by both the civic center board and approval of a bond issue by county voters. County voters approved the bond in November 2011 and renovations began after the hockey season. Following completion of the Pirates season, the arena closed for a second renovation phase. All renovations were completed by February of Location within the Community. The arena is located near the heart of the downtown area, which allows for many of the surface and other parking facilities to be used after hours for arena events. The figure below shows the location of the facility. Grand Junction Event Center Analysis Chapter 7 - Page 4

166 Figure 7-2 As is shown, there are no major new parking developments specifically for the arena. General Motors Centre, Oshawa, Ontario Opened in 2006, General Motors Centre is a $45 million, 5,180-seat arena located in Oshawa, Ontario, an exurban community located approximately 27 miles east of Toronto. The arena, owned by the City of Oshawa, includes 258 standing room only seats, 23 private suites and 4 group/party suites. Since its opening in 2006, the arena has hosted hundreds of events including concerts, sporting events, public ice skating, family entertainment, all star games, curling, professional wrestling and community activities. Spectra provides the Arena with full-service management. The figure below shows the exterior of General Motors Centre in Oshawa, Ontario. Grand Junction Event Center Analysis Chapter 7 - Page 5

167 Figure 7-3 The Arena has served as the venue for big-name concerts and entertainment shows, including Elton John, Mötley Crüe, KISS, Cirque du Soleil, Tom Jones, Tim Allen, Alan Jackson, Disney Live, Jeff Dunham, John Mellencamp and professional wrestling. The following figure shows the Arena set up for a hockey game. Grand Junction Event Center Analysis Chapter 7 - Page 6

168 Figure 7-4 In 2007, the General Motors Centre welcomed its first sports team tenant The Oshawa Generals, a junior hockey team in the Ontario Hockey League (OHL). Currently, the General Motors Centre also is home to the Durham TurfDogs, a Canadian professional indoor lacrosse team, while also hosting the 2015 Pan American Games for boxing and weightlifting. The following table shows the facility s 2014 operating income. Grand Junction Event Center Analysis Chapter 7 - Page 7

169 Table 7-3 General Motors Centre 2014 Income Statement Item 2014 Operating Income/Expense Income Naming Rights 73,005 Exclusivity Rights 44,855 Suite Revenue 313,815 Food and Beverage Revenue 154,100 Advertising 193,471 Fulfillment Fee (New Era Tickets) 30,000 Ice Rentals 814,307 Atm Surcharge 11,389 Interest and Dividends 28,497 Ticket Order Revenues 51,743 Pro Shop Sales 981 Room Rental Revenue 7,900 Miscellaneous 34,271 Suite Ticket Revenue 64,084 Facility Fee Revenue 145,981 Ticket Conv/Fee Revenue 306,008 Concessions 874,947 Suite & Show Catering 225,722 Restaurant 325,530 Parking 32,199 Total Operating Income 3,732,805 Expense Indirect Expenses Executive 169,696 Box Office 200,399 Finance 240,745 Events 112,929 Operations 1,512,188 Marketing 57,974 Group Sales 20,558 Coporate Sales 79,374 Food and Beverage 658,620 Ice Rental 278,060 Overhead Burden 642,241 Event Expenses 44,747 Total Operating Expenses 4,017,531 Net Operating Income (Loss) (284,726) Source: Spectra, Hunden Strategic Partners As the table shows, the facility experienced a net operating loss of $284,726 in The facility s primary income generators in 2014 were ice rentals and concessions, while the major expenses were operations and food and beverage. Grand Junction Event Center Analysis Chapter 7 - Page 8

170 Location and Location within the Community. Despite being located near Toronto, the facility serves a community that is nearly separate from the Toronto market, as it is located nearly 30 miles away. The map below shows the distance and separation from Toronto. Figure 7-5 Oshawa is located near the top right of the map and is as far to the outside of Toronto as Hamilton is to the west. There is a large area of undeveloped and non-populated area between the small city and the larger Toronto area. The next aerial shows the location of the arena in the community. Grand Junction Event Center Analysis Chapter 7 - Page 9

171 Figure 7-6 The General Motors Centre is location in the downtown area of this small city, approximately one block off of the main two streets, King and Bond Streets (similar to the proposed site in Grand Junction). WFCU Center Windsor, Ontario Opened in 2008, WFCU Centre is a $71 million, 6,450-seat arena located in Windsor, Ontario, across the Detroit River from Detroit, Michigan. The arena, owned by the City of Windsor, includes 6,450 seats, 670 premium club seats, 31 luxury private suites and two party suites. Since its opening in 2008, the arena has hosted hundreds of events including concerts, sporting events, public ice skating, family entertainment, all star games, curling, professional wrestling and community activities. Spectra manages the facility. The figure below shows the exterior of WFCU Center in Windsor, Ontario. Grand Junction Event Center Analysis Chapter 7 - Page 10

172 Figure 7-7 The Arena has served as the venue for big-name concerts and entertainment shows, including Carrie Underwood, Marianas Trench, Hedley, Neil Young, Elton John, Russell Peters, ZZ Top, Cirque Du Soleil, Michael Flatley s Lord of the Dance, Jeff Dunham, Harlem Globetrotters and Jerry Seinfeld. The following figure shows the Arena set up for a concert. Figure 7-8 Grand Junction Event Center Analysis Chapter 7 - Page 11

173 In 2008, the WFCU Center welcomed its first sports team tenant The Windsor Spitfires a junior hockey team in the Ontario Hockey League (OHL). In addition, WFCU Centre also is the home to the Windsor Express, a hockey team in the NBLC, since The following table shows the facility s 2014 operating income statement. ` Table 7-4 Windsor Family Credit Union Centre 2014 Income Statement Item 2014 Operating Income/Expense Income Direct Event Income 55,817 Suite Ticket Revenue 45,885 Surcharge Revenue 46,371 Ticket Conv Revenue 34,286 Advertising 31,346 Interest and Dividends 6,336 Ticket Order Charges 30,896 Miscellaneous Revenue 34,010 Total Operating Income 284,947 Expense Executive 102,226 Marketing 56,727 Finance 58,124 Box Office 133,232 Operations 42,839 Group Sales 19,442 Overhead 25,244 Total Operating Expenses 437,834 Net Operating Income (Loss) (152,887) Source: Spectra, Hunden Strategic Partners As the table shows, the Windsor Family Credit Union Centre experienced a net operating loss of $152,887 in Location relative to Downtown. This facility was developed as a redevelopment project on land that was part of a mostly industrial area and adjacent to a former factory. This location inhibits the impact the facility has on pre- and post-event spending on restaurants and other activities. It also minimized the economic and fiscal impact of the facility, as well as the utilization of shared parking. In this way, the facility serves as a host for hockey games and certain events, but does not act as an economic development tool like it would if it were located in a walkable, urban environment. The facility s location is shown below. Grand Junction Event Center Analysis Chapter 7 - Page 12

174 Figure 7-9 There is a mall located nearby to the south, but it is not easily walkable from the site. Budweiser Events Center Loveland, Colorado The Budweiser Events Center is a 7,200 seat multipurpose arena in Loveland, Colorado. Owned by Larimer County and operated by Spectra, the arena is the home of the Colorado Eagles Hockey Team, the Colorado Ice Indoor Football Team, and the Colorado Lightning Indoor Soccer Team. The venue offers 777 club seats and 24 luxury suites. Grand Junction Event Center Analysis Chapter 7 - Page 13

175 Figure 7-10 Constructed in 2003 at a cost of $28 million, the arena has hosted musical acts including David Bowie, Rod Stewart and ZZ Top, as well as comedian Larry the Cable Guy. The arena also hosts performances such as Ringling Bros Barnum & Bailey Circus, the Wiggles and Sesame Street Live. Located an hour from Denver and Cheyenne, The Budweiser Events Center is part of a larger 374,000- square foot fairground complex called the Ranch which is the official name of the new Larimer County Fairgrounds and Events Complex. Phase 1 of the project includes six buildings and roughly 150 acres of site work. The Ranch includes the Ranch-Way Feeds Indoor arena, two livestock pavilions, the First National Bank Exhibition Building, and the Thomas M. McKee Building. The Budweiser Events Center and Ranch has become a sports, entertainment and agricultural hub. The Budweiser Events Center is located 45 minutes north of the 1 st Bank Center in Broomfield, Colorado. Both venues attract the types of events that the Denver Pepsi Center is unwilling or unable to accommodate. Home of the Denver Roller Dolls and former home of the Rocky Mountain Rage, the 1 st Bank Center seats up to 7,500 patrons and typically hosts mid-sized concerts and family shows. The following table shows the breakdown of events at the facility from March of 2014 through February of Grand Junction Event Center Analysis Chapter 7 - Page 14

176 Table 7-5 Budweiser Event Center Event Analysis - March February 2015 Event Type Event Count Athletic 67 Show 9 Concert 8 Graduation 7 Rodeo/Horse Show 5 Expo 3 Motorsports 2 Religious 1 Total 102 Source: Budweiser Event Center As the table shows, the Budweiser Events Center hosted a total of 102 events in the calendar year, including 67 athletic events, nine shows, eight concerts and five rodeo and horse events. Banquets typically add additional events. For the calendar year of 2014, the Budweiser Events Center hosted 203 events in 2014, including 88 banquets, 14 family shows, 40 hockey games and 12 concerts. The Center had a total turnstile attendance of 304,000, 263,000 of which had purchased tickets. Hockey games had the highest average attendance at the Budweiser Events Center, more than 3,700 spectators per game, followed by graduations and concerts. Location relative to Downtown. The Budweiser Events Center is not located downtown as it is part of a larger fairgrounds complex that serves multiple stakeholder groups. It is, however, located along I-25, so has strong visibility. The figure below shows the facility. Grand Junction Event Center Analysis Chapter 7 - Page 15

177 Figure 7-11 The usage for fairgrounds events is one key reason the facility is not located downtown and this is not necessarily uncommon. The benefit is that multiple event types and usage. The challenge is the lack of surrounding walkable restaurants and other activities. Essentially, people come and go from events without much economic activity before or after. Downtown is completely out of the equation. From a development and construction perspective, even though the location is not ideal for economic impact, it is a higher quality facility built for many event types, unlike many fairgrounds buildings that are cheaper and pre-engineered. These inhibit this types of events that can be held onsite. Cross Insurance Center Bangor, Maine Cross insurance Center is a 5,800-seat multipurpose arena in Bangor, Maine. The arena, which is owned by the City of Bangor and operated by Spectra, seats 5,800 for basketball, 8,500 for concerts and features an attached 2,000-person convention center. Home of the University of Maine Blackbears, the Cross Insurance Center was built at a cost of $65 million. The following figure shows the arena configuration for the University of Maine basketball court. Grand Junction Event Center Analysis Chapter 7 - Page 16

178 Figure 7-12 The following figure shows the exterior of the arena. Figure 7-13 Originally, the Bangor Auditorium was a 5,900-seat arena that became a statewide icon by hosting the Maine Principals Association basketball tournament each February. In the early 2000 s, the city began discussing replacing the arena, and in May 2011 the city held a public referendum in which voters supported building new facilities to replace the Auditorium. The Cross Insurance Center officially opened on Labor Day Weekend of Grand Junction Event Center Analysis Chapter 7 - Page 17

179 The following table summarizes Cross Insurance Center s 2015 events. Table 7-6 Cross Insurance Center Event Analysis Event Type Event Count Percent Total Athletic % Show 5 6.8% Expo 4 5.4% Home/Garden Show 2 2.7% Convention 2 2.7% Boat/RV Show 1 1.4% Gameshow 1 1.4% Private/Other Event 1 1.4% Concert 1 1.4% Motorsports 1 1.4% Religious 1 1.4% Total % Source: Cross Insurance Center The University of Maine and John Bapst Memorial High School are responsible for a majority of the athletic activity that takes place at the Center. Between the two institutions they hold 51 sporting events each year at the facility, or 69 percent of all events. The facility also holds concerts, expos, conventions, home and garden and several other events. However, all other events combined only represent 26 percent of the total events held annually. The facility s main ballroom can sit 1,100 for dinner, host more than 85 trade show booths, or be split up into seven smaller rooms for individual events. The arena floor is not fitted with the equipment necessary for a hockey rink, but it is large enough to hold an NHL sized rink and could be retrofitted to hold a rink. Location relative to Downtown. The arena is not located downtown because it was developed on a site near the casino and interstate. Downtown is not a far drive, but is definitely not walkable. Any before and after activity is more likely spent at the casino, which has different benefits (and costs) for the community. It keeps spending from occurring downtown and helping other retail and restaurant businesses. Grand Junction Event Center Analysis Chapter 7 - Page 18

180 Figure 7-14 Grand Junction Event Center Analysis Chapter 7 - Page 19

181 Figure 7-15 The lack of connectivity to even the nearby casino and hotel facilities inhibits economic activity. Sanford Center Bemidji, MN Owned by the city of Bemidji and operated by Venuworks, the Sanford Center is a 4,700-seat multipurpose arena that opened in Located just outside of downtown Bemidji, the venue is located more than 200 miles north of Minneapolis. The $35 million facility is home to the Bemidji State Beavers of the NCAA and was the former home of the Minnesota Axeman of the indoor football league. The following figure shows the Sanford Center. Grand Junction Event Center Analysis Chapter 7 - Page 20

182 Figure 7-16 The arena is attached to the George W. Neilson Convention Center, which offers a 10,000-square foot ballroom and three meeting rooms. In total, the entire facility features 193,000 square feet of total space. The arena features 25 suites and is the home to a variety of events including hockey games, concerts, rodeos, conventions and graduation ceremonies. The following figure shows a hockey layout at the facility. Figure 7-17 The following table summarizes the facility s operating statement for Grand Junction Event Center Analysis Chapter 7 - Page 21

183 Table 7-7 Sanford Center Profit & Loss Report Item Ordinary Income/Expense Income Building Rent - Arena Building Rent - Meeting Rooms Facility Lease Suite Leases In-House Equipment Reimbursed Event Labor Reimbursed Expenses Other Box Office Fees Facility Fees Co-Promotional Revenue Merchandise Reimbursed Credit Card Fees Reimbursed Event Advertising Ticket Rebate Revenue Parking Revenue Vending & Pouring Revenues Interest Income 2014 Actual 106,396 75, ,877 17,961 42, , ,430 33, ,734 14,002 19,908 14,038 46,652 34, , Budget 86,330 52, ,340 8,000 29, ,952 82,748 5, ,611 37,500 20,118 17,166 44,569 25, , Signage & Sponsorships 444, ,984 Food & Beverage Sales Total Income Cost of Goods Sold Gross Profit 1,225,690 2,979, ,919 2,635, ,420 2,712, ,356 2,426,474 Expense Personnel Services 1,677,924 1,610,380 General and Administrative 35,929 46,012 Occupancy 483, ,616 Travel and Motor Vehicle 47,902 23,602 F&B Expenses 78,089 48,450 Services / Operations 325, ,601 Event Expenses 326, ,117 Cash Over / (Short) 2,725 0 Total Expense 2,978,418 2,775,778 Net Operating Income (342,960) (349,304) Source: Sanford Center As the table shows, the Sanford Center generated a net loss of $342,960 in The facility s total income, which was just under 3 million, was primarily generated though food and beverage sales and facility leases, in addition to reimbursed event labor. The major expense items for the arena were personnel services, operations and event expenses. Location relative to Downtown. The facility is not located downtown, but along the waterfront. As is shown in the figure below, there was an available site along the water in this uniquely situation community. Downtown sites were not as available. Grand Junction Event Center Analysis Chapter 7 - Page 22

184 Figure 7-18 As shown, the challenge is the lack of any easy or walkable pre- and post-event activities without driving. This is not ideal for drinking and driving and not ideal for downtown restaurants and other activities. Parking is plentiful, but the space the entire development takes up is much larger than necessary than if it had been built in an urban environment. United Wireless Arena Dodge City, KS Opened in 2011, United Wireless Arena is a 5,500-seat arena located in Dodge City, Kansas, approximately 333 miles west of Kansas City. The United Wireless Arena is a multi-purpose facility within an entertainment district in Southwest Kansas, alongside the Boot Hill Casino and Hampton Inn and Suites. The arena, owned by Dodge City and Ford County, has a floor that is 16,000 square feet. Since its opening in 2011, the arena has hosted hundreds of events including concerts, sporting events, public ice skating, family entertainment, motorsports, trade shows, rodeos, comedy tours and community activities. The Arena is also equipped with a multi room conference center. VenuWorks operates the Arena. The figure below shows the exterior of United Wireless Arena in Dodge City. Grand Junction Event Center Analysis Chapter 7 - Page 23

185 Figure 7-9 The Arena has served as the venue for big-name concerts and entertainment shows, including Miranda Lambert, Lynyrd Skynyrd, ZZ Top, Straight No Chaser, Eli Young Band, Mannheim Steamroller Christmas, Ringling Brothers and Barnum & Bailey Circus and Disney Live! The following figure shows the arena set up for a concert. Grand Junction Event Center Analysis Chapter 7 - Page 24

186 Figure 7-10 In 2014, the United Wireless Arena welcomed its first sports team tenant The Dodge City Law indoor football team. Their inaugural season started in February 2014 and extended through May. The Dodge City Law was honored as the CPIFL franchise of the year after their first successful season. The United Wireless Arena also offers a 7,000-square foot conference center. The conference center space is equipped with on-site food and beverage services. It has a capacity for 450 banquet seats and 900 lecture seats, a moveable wall system built in, IT support and production/audio-visual equipment on site. The Hampton Inn and Suites in Dodge City serves as the conference center hotel. The following table shows the operating performance of the facility. Grand Junction Event Center Analysis Chapter 7 - Page 25

187 Item Ordinary Income/Expense Income Facility Rent Revenue Ticket Revenue/Co-Pro Revenue Facility Fee/Ticket Rebate Ticket Office Revenue Concession Revenue Merchandise Revenue Catering Revenue Reimbursed Event Labor Reimbursed Contract Labor Reimbursed Expenses In-House Equipment Revenue Reimbursed Insurance Revenue Vending Income ATM Revenue Contractual Income Interest Income Ice Revenue Room Change Charge Revenue Table 7-8 United Wireless Arena Profit & Loss Report FY 2015 Actual 273, , ,875 4, ,940 15, ,150 14,400 91, ,800 18,200 10, , ,000 0 FY 2015 Budget 195, , ,428 1, ,030 13, ,078 39, , ,833 19,860 6,078 1, , , Total Income 2,790,833 2,897,844 Cost of Goods Sold 281, ,761 Gross Profit Expense Personnel Services General & Administrative Occupancy Travel and Motor Vehicle Event Expenses Food & Beverage Expense Services/Operations Total Expense Net Operating Income Source: United Wireless Center 2,509,260 2,577,083 1,183, , ,759 24, ,515 56, ,193 3,269,260 (760,000) 1,200,653 90, ,865 20, ,651 42, ,000 3,172,510 (595,427) United Wireless Arena generated an operating loss of $760,000 in The facility s total income, which was just under $2,800,000, was primarily generated through ticket revenue and catering/food and beverage revenue. The major expense items for the arena were personnel services and event expenses. Location relative to Downtown. This is another smaller community that developed an arena next to a casino. While there is some synergy between these demand generators, they impact would have been much bigger for the community had both been developed in the downtown area. There is simply nothing surrounding the developments that enhance the life of the community or the economy. There is nothing to support spending time and money before and after events. Grand Junction Event Center Analysis Chapter 7 - Page 26

188 Figure 7-19 Implications Communities develop arenas in many small markets and they can be successful, depending on the metrics used to measure success. Operating losses range from $150,000 to more than $800,000. However, the impact of the facility on the community can be far greater. For many communities, developing the arena is critical to keeping a team. For others, it is developed to enhance downtown. For yet others, it is developed as a synergistic facility for a casino. Many communities are short-sighted and often pennywise and pound-foolish when it comes to arena development. Many choose low-cost sites where massive surface parking can be developed. Yet in a downtown environment, those extra parking acres are unnecessary, as plentiful parking already exists that goes unused in the evenings. In addition, the impact of spending in an arena is minimal if the facility is developed in a non-synergistic setting. Money spent onsite goes to the promoter, the team or the talent and then leaves town. There is very little spending before and after. Restaurants and retailers are not supported or benefited in these easyin/easy-out environments. Truly, the benefits are few and fleeting when facilities are not developed in a downtown environment. Yet, if developed within walking distance to hotels, restaurants and retailers, these businesses are made more feasible from the consistent activity onsite and offsite. Also, if the facility is attached to a convention center, as proposed in Grand Junction, the convention center can benefit from more, better and larger events. Grand Junction Event Center Analysis Chapter 7 - Page 27

189 MARKET METRICS In addition to analyzing physically comparable arenas, HSP has also analyzed comparable markets that have supported similarly sized facilities. HSP analyzed these comparable markets to not only demonstrate that there are many examples of markets similar to Grand Junction supporting the development and operations of a mid-sized arena, but also to identify metrics that can be used and applied to the recommendations of capacity and premium seating options for a new downtown arena. For example, based on the number of businesses in the area, what does that imply for supportable premium seating? The tables below provide some insight. The following table summarizes the comparable markets, location, population characteristics and tenants. Table 7-9 Comparable Market Metrics Arena Name City State Country City Limit Population Metro Area Population Media or Drive- In Market* Rushmore Plaza Civic Center Rapid City SD USA 67, , ,010 Floyd L Maines Veterans Memorial Arena Binghamton NY USA 47, , ,990 WesBanco Arena Wheeling WV USA 28, , ,980 Town Toyota Center Wenatchee WA USA 31, , ,300 Scheels Arena Fargo ND USA 105, , ,030 Essar Centre Sault Ste Marie ON Canada 75,141 79, ,000 CN Centre Prince George BC Canada 71,273 88, ,000 Sandman Centre Kamloops BC Canada 85,678 98, ,000 Barrie Molson Centre Barrie ON Canada 136, , ,000 Glens Falls Civic Center Glens Falls NY USA 14, , ,890 Avg. w/o Grand Junction , , ,120 Grand Junction Actuals or Implied Grand Junction CO USA 59, , ,000 Actual Actual Actual Hockey Hockey Tenant League Rapid City Rush ECHL Binghamton Senators AHL Wheeling Nailers ECHL Wenatchee Wild NAHL Fargo Force USHL Sault Ste Marie Greyhounds OHL Prince George Cougars WHL Kamloops Blazers WHL Barrie Colts OHL Adirondack Flames AHL * For Grand Junction, Area is Drive-In Market Source: United States Census Bureau, Hunden Strategic Partners As the table shows, Grand Junction s population statistics are similar to the average of the comparable markets. The markets range in metro area size from just under 80,000 to approximately 250,000. The media markets are larger for all of the markets, ranging from 100,000 to more than 500,000 and averaging just under 300,000, which is the size of Grand Junction s media market. Every comparable market not only has a comparable arena, but also has a hockey tenant. The following figure illustrates the comparable markets and their locations. Grand Junction Event Center Analysis Chapter 7 - Page 28

190 Figure 7-20 As shown in the figure, the 11 comparable arena markets are located throughout the United States and Canada in mostly rural areas of the north and west. The following figure shows comparable market metrics for each market. Grand Junction Event Center Analysis Chapter 7 - Page 29

191 Table 7-10 Comparable Market Metrics Arena Name City Rushmore Plaza Civic Center Rapid City Floyd L Maines Veterans Memorial Arena Binghamton WesBanco Arena Wheeling Town Toyota Center Wenatchee Scheels Arena Fargo Essar Centre Sault Ste Marie CN Centre Prince George Sandman Centre Kamloops Barrie Molson Centre Barrie Glens Falls Civic Center Glens Falls Avg. w/o Grand Junction -- Grand Junction Actuals or Implied Grand Junction * For Grand Junction, Area is Drive-In Market Source: United States Census Bureau, Hunden Strategic Partners Year Opened Seats - Hockey/Ice Suites Suite Seats Other Premium Seats Seats/ 100 Metro Area Population Seats/100 Media Market or Drive-In Market , , , , , , , , , , , ,765 7,099 Implied Implied As indicated in the figure, the average year opened for the comparable arenas is 1991, with an average seat count of over 4,900. The average number of suites is 18 with an average of 271 total suite seats and an average of 296 other premium seating options. Based on the average seats/100 metro population of 3.9 and seats/100 media market or drive-in market of 2.3, the implied numbers for a new arena in Grand Juncition are shown. The table indicates that a new Grand Junction arena could support an implied number of 5,765 seats based off the metro population and 7,099 seats based off of the media or drive-in market. This is a greater number than is currently contemplated for the facility, so provides a sense of market cushion to support 5,000+/- seats. The following table shows additional market metrics related to premium seating. Grand Junction Event Center Analysis Chapter 7 - Page 30

192 Arena Name City Rushmore Plaza Civic Center Rapid City Floyd L Maines Veterans Memorial Arena Binghamton WesBanco Arena Wheeling Town Toyota Center Wenatchee Scheels Arena Fargo Essar Centre Sault Ste Marie CN Centre Prince George Sandman Centre Kamloops Barrie Molson Centre Barrie Glens Falls Civic Center Glens Falls Avg. w/o Grand Junction -- Grand Junction Actuals or Implied Grand Junction * For Grand Junction, Area is Drive-In Market Source: United States Census Bureau, Hunden Strategic Partners Table 7-11 Comparable Market Metrics # of Firms > 500 # of Employment in MSA , , , , ,641 n/a 31,135 n/a n/a n/a n/a n/a n/a , , ,883 Actual Actual Seats/100 Employed Suites/100 Firms 500+ Suite Seats/ 100 Firms 500+ Other Premium Seats/ 100 Firms n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 11.6 n/a n/a n/a , Implied Implied Implied Implied Because premium seating and suites are typically purchased by local or regional companies (or large nonprofits), the number of these in a community are a good metric to determine the number of premium seating opportunities that could be supported. The table shows the number of firms with over 500 employees, according to the US Census Bureau and how that relates to the number of suites and premium seats. The table also shows the number of seats per 100 employed persons in the community. As the table shows, the comparable markets average 304 firms with more than 500 employees, while Grand Junction is home to 371. The total employment in the MSA is 49,883 in Grand Junction, while the average of the comparable markets is 58,565. These figures result in a variety of metrics that imply a Grand Junction arena could support 4,549 seats, 28 suites, 406 total suite seats and 698 other premium seating options. These are helpful metrics showing that a facility can likely be supported with the number of seats, suites and club seats recommended due to the size of the local market. This does not count the regiona population, so the supportable number of seats is likely larger than the 4,549 implied by the average of this table. Implications This chapter presents a range of venues that all have similar characteristics that can be related to the objectives of the proposed event center. While differences are found between each facility, each venue s business model is focused on accommodating the needs of the community. Although these venues are located in smaller markets, the tenants and revenue-generating amenities are attracting interest from nonlocal events and visitors. Tenants provide a stable event schedule and help to supplement each facility s usage and financials. Newer venues integrating flexible function space are able to support and attract new groups and events, which generates positive and new economic impact on the city. In addition, maximizing revenue-generating features such as naming rights, sponsorships, premium seating and concessions in the venue not only benefits the Grand Junction Event Center Analysis Chapter 7 - Page 31

193 bottom line, but also provide opportunities to develop partnerships in the community. Although large market cities are developing single purpose venues, small market cities have the challenge of developing flexible multipurpose venues that can attract a variety of events, while keeping the setting intimate for spectators. The Project s success will depend on how well the facility s management and staff can meet the standards set by these comparable facilities. Not only do these venues offer insight into the usage and financial performance, they will also serve to benchmark industry competitive trends. For Grand Junction, a new facility should include the amenities expected by both users (bands, event coordinators, talent, teams, etc.) and visitors. In addition, the site for a facility has a big influence on how much the local economy is impacted by the facility. While not easily shown by internal operating statistics and expenses, the spending outside the facility and captured in the community is widely variable depending on the location. Easy in/out facilities are just that easy in and easy out. That means that people from outside of the community can come see an event and leave without spending time or money in the community. If it is a surface-parking oriented facility, then there is no walkability to and from restaurants, bars and retailers before or after events. There is no shared parking. There is no shared space with a hotel or convention complex. There is no synergy with anything surrounding it if there is nothing around it. If impact is to be created and captured, the facility must be placed in a location with other businesses within walking distance. As it relates to supportable seats, suites and premium seats, the comparable market metrics help dispel the concern that Grand Junction s market is too small to support an arena and its premium seating options. Based on the metrics, an arena of 5,000+ seats with hundreds of premium seating options is supportable. The recommended number of seats, suites and premium seats will be discussed in the following chapter. Grand Junction Event Center Analysis Chapter 7 - Page 32

194 TABLE OF CONTENTS Executive Summary Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Profile of Two Rivers Convention Center and Avalon Theatre Economic and Demographic Analysis of Grand Junction Convention Industry Trends; Meetings Market Analysis Hotel Market and Trends Analysis Small and Mid-Sized Arena Trends Sports and Entertainment Market Analysis Case Studies and Comparable Market Metrics Recommendations, Drawings, Budget Governance Analysis Demand and Financial Projections Economic, Fiscal and Employment Impact Analysis

195 RECOMMENDATIONS, DRAWINGS AND BUDGET The primary questions that HSP was requested to answer are: Is there enough potential activity and demand in the market to support the development of a new arena downtown? Would concerts, family shows and other events be attracted to play in a new facility in Grand Junction? Is there a realistic opportunity to attract an anchor tenant to such a facility? How much would the arena cost and would it need ongoing financial support beyond the initial development? Could combining management with the existing Two Rivers Convention Center and Avalon Theater benefit the arena project and the City? How would this ongoing arena activity benefit downtown and all of Grand Junction? What impacts are expected? What are the optimal governance options for the facility to ensure success? Is the downtown location attached to the Two Rivers Convention Center critical and if so, why? Many cities have used event facilities as activity and demand generators to enhance their downtowns and overall development efforts. The activity of arenas can generate consistent usage, which provides consistent nearby street-level activity for restaurants and bars and some retail. In relatively isolated economic centers like Grand Junction, they can also induce room nights in hotels, as people travel relatively long distances to see concerts and other events. It also provides downtown employees and residents a major activity center nearby to walk to after work and on weekends. Such facilities are also viewed as economic development assets that help communities attract businesses, businesses attract talented employees and talented employees invest their time and expand families in the local area. This virtuous cycle can be created from a new event center if executed smartly. Yet the facility itself must be able to generate enough events on the calendar to keep it operating without significant financial support. The benefit of the existing Two Rivers Convention Center (TRCC) and Avalon operation is that most of the staffing already exists to support the operation of a new arena attached to the TRCC. Based on HSP s analysis, the combined entity may see an operating deficit that is less after the arena is developed (and recommended renovation of the TRCC is completed). Revenues should increase at a rate greater than expenses, leading to an improved annual fiscal operating situation. If the arena is built by itself, many of the synergies would be lost. HSP met with key stakeholders, interviewed potential arena users/promoters/leagues, analyzed the competition, surveyed local businesses related to their support of premium seating, sponsorship and advertising, analyzed the market, investigated comparable situations, and worked with SCD to understand the development costs of the recommended approach as well as the state of art in arena design today. Existing Conditions and Critical Factors Based on HSP s analysis, the following was determined: Grand Junction Event Center Analysis Chapter 8 Page 2

196 The market, while relatively small locally, covers a large geographic area that encompasses a larger capture market that is attractive to concert and other event promoters. Given Grand Junction s location equidistant from Denver and Salt Lake City, it makes a logistically smart stopover arena for many acts, family shows and other events traveling between larger metro areas. The East Coast Hockey League (ECHL), including the commissioner and team owners, have expressed strong interest in locating a team in Grand Junction as soon as a new facility as ready, assuming the facility has at least 5,000 seats and premium seating opportunities. There are numerous examples of small markets similar in size to Grand Junction that have successfully developed and supported small arenas (many with hockey teams) over the past several decades. Many of these are located in the United States Mountain West, as well as northern lesser populated areas of the Midwest, Northeast and Canada. Grand Junction s downtown has enhanced its reputation as a fun, walkable city with more leisure time activities, at least in the warmer months via the development of an active retail, restaurant and bar scene, the renovation of the Avalon and the development of three compelling hotels. However, during the cold months, unless there is an event, the downtown still has a limited number of demand generators like an arena or event center. Most restaurants and retail businesses need that consistent year-round demand in order to survive successfully. Currently there are a number of vacant spaces that would be much more viable with more events throughout the year. Parking has been shown to be available during event periods (after business hours and on weekends, without negatively impacting parking for existing restaurants and retailers. The addition of an arena/event center attached to the TRCC will allow for combined operations and additional opportunities to attract larger convention and other events to both the TRCC and new arena (than if otherwise disconnected). The combined operations will engender cost savings and enhance revenue generation, likely lowering the current operating loss sustained by the TRCC and Avalon combined operation. The renovation and new meeting/ballroom components of the TRCC recommended will enhance its ability to host higher revenue ballroom events, conferences, corporate events, trainings and conventions. The development of the arena and renovation of the TRCC will likely induce the development of a fourth downtown hotel. This hotel should be a larger, full-service branded hotel relative to the existing downtown hotels. Such a hotel will induce more conventions, conferences and other events, in addition to what would be generated without such a hotel. The location of the arena in the downtown and adjoining the TRCC is critical for the operating success of the two facilities, as they can share staff and decrease overall staffing and financial losses. Also, the combined facility will allow for increased competitiveness for events, bringing more events downtown and into the hotels. Finally, there is already plentiful parking in the downtown area to support a new facility that will simultaneously help downtown businesses by having people park and walk by these businesses before and after events. The farthest that someone would need to park is minimal, under four blocks from the entrance of the facility. Additional wayfinding will help attendees find this plentiful parking nearby. This will also help the Grand Junction Event Center Analysis Chapter 8 Page 3

197 utilization of garages and lots that sit empty in the evenings. If an arena is developed by itself outside of downtown, both it and the TRCC will have operating losses, more parking will need to be developed and the competitiveness of both facilities will be diminished, lowering the economic impact to the point of reconsidering the efficacy of the project. HSP recommends the development of: An arena with a minimum of 5,000 seats, including suites and club seats. Renovation and improvement of the Two Rivers Convention Center. Combined, third-party management. Third party private management will likely enhance results. The following provides more explanation of the findings. SWOT Analysis This section presents HSP s analysis of the arena and event center situation and presents a recommendation for Grand Junction. A SWOT (Strengths, Weaknesses, Opportunities and Threats) Analysis was conducted leading up to these recommendations. A SWOT analysis identifies critical factors that will impact the Project s overall performance. It also suggests implications for the sizing and quality of the project given the current environment. Strengths and weaknesses are currently factors impacting the potential project as well as items inherent in the project or market, while opportunities and threats are potential and external factors impacting the success of the Project. This section provides recommendations on the size and quality of the Project based on HSP s review of the market and other factors. In addition, HSP s experience with similar projects and how they have performed played a role in our recommendations and projections. Strengths Strong Community Leadership. The City of Grand Junction s leadership both civic and political has demonstrated a commitment to stimulating redevelopment and reinvestment in the community, especially the downtown area. Downtown Strength and Authenticity. Downtown Grand Junction is an amazing and authentic place that has seen improvement based on private investment and public leadership. A vibrant downtown consists of popular restaurants, shops and entertainment, providing a more visible face to the city and drawing more visitors from the surrounding areas. This helps the community as a whole and proves to visitors, residents and business owners that it is serious about a vision for itself. When private interests see development occurring on a regular basis downtown, they have more confidence to invest as well. The success of the Avalon and so many restaurants and active retail have given downtown very compelling life. It is also one of the keys to attracting Millennials, retirees and other new residents to move to Grand Junction. Grand Junction Event Center Analysis Chapter 8 Page 4

198 Weaknesses Opportunities Strong Market Opportunity for Hockey, Concerts and Family Shows. Based on interviews and other market analysis, there will be many new events and potential tenants for the arena. The facility would fit a size range that is simply not available today and that is attractive to many potential events. Promoters were very enthusiastic about bringing events to an arena in Grand Junction due to its location between Denver and Salt Lake City. These events are literally already driving through Grand Junction now, and would enjoy the opportunity to stop, put on a show and generate revenue. This benefits them and benefits Grand Junction. The East Coast Hockey League (ECHL) is eager to establish a presence in a new arena in Grand Junction and the team would act as an anchor tenant, helping to generate significant revenue for the building. Net positive impact on the Two Rivers Convention Center. Connecting a new arena to a renovated TRCC would create an event complex that would be very competitive for many more types of events than it is today. The TRCC needs to be renovated as recommended in order to capture this new business. Connecting to the arena will allow for even more events to be attracted to the combined complex. Utilizing the same staff will reduce waste and operating losses. Access. Grand Junction s access off of I-70 give it easy access to markets both to the east and west. A market of more than 300,000 is available within a relatively short drive. Grand Junction, with the new complex, will be a much better location for this widespread market to attend an event versus having to drive to the Denver area or Salt Lake City. Business Community Support. The business community supports the development of an arena and is ready to partner with the facility to provide sponsorships and other investments that will help the financial viability of the enterprise. Growing Content for Small Arenas. There has been a boom in small and mid-sized arenas across the US for 15 years and there is specific content (family shows, concerts, etc.) that has been developed for this size venue. There are many more small and mid-sized venues across the U.S. than major arenas and so this provides the acts a steady stream of opportunity. A new facility would provide an opportunity for those acts to come to Grand Junction. Relatively Small Market. While the market is ideal in many ways, it also has a smaller population than many markets that support similar arenas. However, as HSP has determined, there are numerous examples of arenas in small markets (many smaller than Grand Junction) that have successfully supported hockey franchises and arenas. New Events for Grand Junction. Currently, there is no opportunity for major sports, concerts, family shows and other events to come to Grand Junction. There is also no opportunity for many conventions and conferences to come to the market. There simply is no facility able to accommodate them. These events have very special needs and a pre-engineered building without the technology and other amenities required by teams and promoters will not suffice. With the recommended improvements, the number of events and activity to the facilities and downtown will be immense compared to the few events coming downtown to the TRCC now. Grand Junction Event Center Analysis Chapter 8 Page 5

199 Threats Opportunity for Events Covered by Television. With a new facility, the community would have the opportunity to attract professional sports exhibition events that may be nationally televised, as well as collegiate and other major games that are also nationally televised. This will provide additional free positive press for the city that currently does not exist. When regional competitors play in the new facility, that will be covered on the news in the other markets. Catalytic Development. The proposed arena can serve as a catalytic development to retain and attract businesses, groups and visitors to downtown Grand Junction. An event center/arena can be the catalytic development that generates year-round activity to support the development of restaurants and other downtown businesses, as well as residential growth. Businesses and entrepreneurs notice when the city is aggressive and takes an active role in improving itself via public-private partnerships, key public investments and other quality of life enhancements. These create an environment where others are then more willing to invest time, money, talent and effort into a new business in downtown, move there as residents, or visit with their group. New conventions that would not consider the area now, may be swayed if the event facilities are expanded in such a way, more restaurants exist and the hotel package is larger. Economic, Fiscal and Employment Benefits. The Project will entice visitors to visit Grand Junction businesses, restaurants and meeting/event facilities. These visits result in increased downtown spending, and in turn, an improved local business environment, additional tax collections and an increased number of employment opportunities. The visibility that visitors will have of the downtown from the new arena will show off the community to a new population that may consider visiting again or even moving to the community. Currently, many people outside Grand Junction simply are not visiting as there are few places to hold events. Strong Relationship & Synergy with Neighboring Projects, Especially the Two Rivers Convention Center. A new arena project in Grand Junction will benefit and partner with the TRCC to attract events that currently cannot be housed in the facilities at the TRCC alone. Cost The cost of the project is not insignificant and will require a strong commitment from the public sector, along with private partner commitments for naming rights and other sponsorships. Locating the Project outside of Downtown or Unattached to the TRCC The arena will not succeed in terms of impact on the community if it is not attached to the TRCC downtown. It will be more expensive to build and parking will need to be built and paid for. Synergies with the TRCC will not occur, so the number of events will be lowered and expenses will be much higher. Both investments (arena and TRCC) should be made to generate the higher event and revenue levels and minimize the operating expenses. The operating losses at both facilities will be large if the two facilities are physically separated. In addition, pre- and post-event spending will be minimized if the arena is developed in an easy in/out location. By locating it downtown, the impact on the quality of life downtown and businesses will be dramatic. That same impact will simply not occur if the arena is not located within walking distance of the central business district. Grand Junction Event Center Analysis Chapter 8 Page 6

200 Implications and Recommendations As has been demonstrated in this report, the Grand Junction market, its citizens, and events would benefit from a venue that fits a sizing need that is not currently being offered. There are a number of events that will come to such a facility that are not currently considering Grand Junction as a destination. Location. Attached to the Two Rivers Convention Center in downtown Grand Junction in Scenario A and is detached and a bit outside of the core of downtown in Scenario B. The block directly to the south of the Two Rivers Convention Center (TRCC) is recommended, due primarily to its ability to connect to the TRCC, its proximity to existing nodes of activity and hotels, and its larger than typical size. The size allows the arena to have some attached loading opportunities. One of the primary purposes of this Project is to act as an economic development generator for downtown. Total Capacity. A facility with nearly 5,100 seats in a hockey configuration is recommended. Parking. A recent study completed for the City of Grand Junction to evaluate the existing downtown parking system determined that the private sector parking options currently offered will be able to support the downtown event center. Premium Seating. Premium seating supports the financial viability of the facility and provides local businesses and other organizations the opportunity to socialize with their stakeholders, clients and customers. Recommended premium seating includes: Five 16-seat suites with seven barstools each Twelve 12-seat suites with four barstools each Two party suites with 28 fixed seats and 13 barstools each 18 total loge suites with four seats and four barstools each Additional loge seating on the west and east ends Additional food and beverage opportunities are available at the premium seating level, with the lounge, loge and suites all featuring food and beverage before and during events. As is standard with all new facilities, a premium lounge/restaurant at the loge level is critical to attracting higher spending attendees and corporate users. In terms of support amenities, all the modern amenities, including locker rooms, offices, large and numerous restrooms and other support facilities are recommended. Connection to the Two Rivers Convention Center is recommended so that more events can be lured to a shared, larger facility than if the two were separated. Given the proximity of nearby hotels, the arena addition to the complex would make it quite impressive to meeting and event planners. Two Rivers Convention Center Renovations. The following table summarizes the recommended expansion of the function space at the Two River Convention Center. This is Scenario A. Grand Junction Event Center Analysis Chapter 8 Page 7

201 Table 8-1 Two Rivers Convention Center Existing Recommended Space Divisions Square Feet Divisions Square Feet Existing Multipurpose Room 3 18, Grand Ballroom (Improved from Existing) ,000 Junior Ballroom (Divisible to Meeting Rooms) ,000 Dedicated Meeting Rooms 6 4, ,500 Total 9 22, ,500 Source: Hunden Partners, Sink Combs Dethlefs As the table shows, recommendations include converting the existing multipurpose room into a sevendivision, 18,000 square foot Grand Ballroom. Divisibility of the space can be improved by adding a service corridor around the ballroom and inserting dividers, resulting in each end of the ballroom offering three divisions. The increase in total meeting room space to 12,500 square feet includes the addition of an 8,000 square foot junior ballroom that can also function as six divisible meeting rooms. Recommendations also include increased pre-function space, cleaned up under-area parking (lighting, paint, wayfinding), and a Main Street-facing pre-function area. If both projects are developed, it is likely that a full-service hotel will be built downtown to accommodate increased demand. Site Scenario A Based on the analysis, the best site is the block just south of the Two Rivers Convention Center. It will focus event activity downtown and leverage existing strengths, provide a unique and interesting site and walkable location and will be amongst other community assets. The following figure shows the overall site layout. Grand Junction Event Center Analysis Chapter 8 Page 8

202 Figure 8-1 The next figure shows a close up of the TRCC changes. Grand Junction Event Center Analysis Chapter 8 Page 9

203 Figure 8-2 The changes to the TRCC do not change the footprint as much as they change the effectiveness of the existing building, by reconfiguring it and enhancing sellable and other spaces. The following figure shows the first floor hockey layout. Grand Junction Event Center Analysis Chapter 8 Page 10

204 Figure 8-3 The following figure shows the second floor hockey layout. Grand Junction Event Center Analysis Chapter 8 Page 11

205 Figure 8-4 Many large event types can be held on the arena floor. The next figure shows a banquet table layout. Grand Junction Event Center Analysis Chapter 8 Page 12

206 Figure 8-5 The following figure shows a trade show layout. Grand Junction Event Center Analysis Chapter 8 Page 13

207 Figure 8-6 The following figure shows a football set-up. Grand Junction Event Center Analysis Chapter 8 Page 14

208 Figure 8-7 The following figure shows a boxing set-up. Grand Junction Event Center Analysis Chapter 8 Page 15

209 Figure 8-8 The following figure shows a center-stage layout. Grand Junction Event Center Analysis Chapter 8 Page 16

210 Figure 8-9 The following figure shows an end-stage layout. Grand Junction Event Center Analysis Chapter 8 Page 17

211 Figure 8-10 The following figure shows a football set-up. Grand Junction Event Center Analysis Chapter 8 Page 18

212 Figure 8-11 The following figure shows a rodeo layout. Grand Junction Event Center Analysis Chapter 8 Page 19

213 Figure 8-12 The following figures show examples of the types of spaces that would be found in the arena. The first is an end stage concert at a similar facility. Figure 8-13 The next figure shows the home team locker room for the new similar arena in Allentown, Pennsylvania. Grand Junction Event Center Analysis Chapter 8 Page 20

214 Figure 8-14 The next figure shows a standard suite. Figure 8-15 The next figure shows an arena football setup in the Allen Events Center. Grand Junction Event Center Analysis Chapter 8 Page 21

215 Figure 8-16 The next figure shows an example of a restaurant at the Allentown facility. Figure 8-17 The next figure shows the entry area of the Allen Event Center. Grand Junction Event Center Analysis Chapter 8 Page 22

216 Figure 8-18 The next figure shows a tradeshow on the event floor. Figure 8-19 Grand Junction Event Center Analysis Chapter 8 Page 23

217 The next figure shows suite level restrooms and public concourse restrooms. Figure 8-20 Figure 8-21 The next figure shows an example of a suite level bar. Grand Junction Event Center Analysis Chapter 8 Page 24

218 Figure 8-22 The final figure shows an example of a concourse at a small arena facility. Figure 8-23 The next chapter will show projections of performance at the recommended event center. Grand Junction Event Center Analysis Chapter 8 Page 25