Convention Center Expansion Analysis San Diego Convention Center

Convention, Sports & EntertainmentFacilities ConsultingChicago, IllinoisEvent planners also weigh some destination selection criteria as more importantthan others.Availability of FunctionSpaceWhile event planners rank San Diego as the best convention destination, the SDCChas less available function space than most of its competitors. The SDCC currentlysupports convention activity by providing 525,701 square feet of contiguousexhibition space, two ballrooms with a total of 81,661 square feet, 122,400 squarefeet of meeting space and the 90,000 square foot Sails Pavilion. The figure belowshows how the SDCC ranks among its competitors with respect to the total amountof available function space4.FIGURE 4TOTAL FUNCTION SPACE (SQUARE FEET)Chi ca goOrl a ndoLa s Vega sAtl a ntaNew Orl eansSan Fra nci s coAna hei mWa s hi ngtonLos Angel esPhoeni xPhi l a del phi aDenverSan DiegoSea ttl eBos tonAvera 816,091779,679707,4231,345,660Function space includes exhibit halls, ballrooms, meeting rooms, and other rentablefloor areas. Approved expansions have been added to existing spaces.4April 11, 2017Expansion AnalysisSan Diego Convention Center6

Convention, Sports & EntertainmentFacilities ConsultingChicago, IllinoisAVAILABLE EXHIBIT SPACE (SQUARE FEET)Chi ca goOrl a ndoLa s Vega sAtl a ntaNew Orl eansAna hei mSan Fra nci s coLos Angel esWa s hi ngtonPhi l a del phi aPhoeni xDenverSan DiegoBos tonSea ttl eAvera 1516,000455,7001,033,144BALLROOM AND MEETING SPACE (SQUARE FEET)Chi ca goOrl a ndoSan Fra nci s coNew Orl eansAtl a ntaSea ttl ePhoeni xDenverLa s Vega sAna hei mSan DiegoBos tonPhi l a del phi aWa s hi ngtonLos Angel esAvera 131,289306,516Despite being a highly desirable meeting destination, San Diego lags many of itscompetitors in all categories of function space.Three competitors on the West Coast are expanding—the Washington StateConvention Center in Seattle, the Moscone Center in San Francisco, and the AnaheimConvention Center in Anaheim.April 11, 2017Expansion AnalysisSan Diego Convention Center7

Convention, Sports & EntertainmentFacilities ConsultingChicago, IllinoisFIGURE 5TOTAL FUNCTION SPACEOF EXPANDING WEST COAST VENUESExistingExpansionWashington State Convention CenterAnaheim Conveniton CenterSan Diego Convention CenterMoscone Center05001,0001,500Thousands of Square FeetSeattle will nearly double its building size with the addition of 322,500 square feet(250,000 exhibit, 60,000 ballroom, and 125,000 meeting). Moscone is adding140,000 square feet of exhibition space to make North and South buildingscontiguous, a 60,000 square feet ballroom, and additional meeting rooms. TheAnaheim Convention Center is adding 200,000 square feet of flexible“multipurpose” space across two levels. The bottom level will be contiguous withexisting exhibit space, and the top level will be a carpeted, column-less space thatfunctions as ballroom or meeting space.WHAT BUILDING PROGRAM WOULD ALLOW THE SDCC TO MAXIMIZE ITS DEMAND POTENTIAL?Building ProgramRecommendationsAs we will demonstrate in our demand analysis, the expansion of the SDCC needs tomeet the dual goals of 1) accommodating larger events that occupy the entirebuilding and 2) increasing capacity to host simultaneous events that occupy part ofthe building. Most events that generate significant lodging demand require acombination of exhibition, ballroom, and meeting spaces. The current capacity onlyallows for two simultaneous mid-sized events. The expansion should provide thefunction space for as many as three simultaneous events and overall capacity toretain and attract large events that occupy the entire building.The figure below shows the amounts of function space in the SDCC.April 11, 2017Expansion AnalysisSan Diego Convention Center8

Convention, Sports & EntertainmentFacilities ConsultingChicago, IllinoisFIGURE 6CURRENT BUILDING PROGRAMFunction SpaceExhibit HallsAB1B2CDEFGHFloor Area 0864,842Total Exhibit Hall525,701Sail Area90,000Ballroom 1ABCDEF10,57310,6075,2914,5084,5085,294Total Ballroom 140,781Ballroom 2ABCD13,1006,9506,95013,706Total Ballroom 240,706Meeting RoomsUpper Le ve l Wes tUpper Le ve l Ea s tMezza ni ne Le ve l36,42859,68022,651Total Meeting Rooms118,759TOTAL FUNCTION SPACE815,947Source: SDCCApril 11, 2017Expansion AnalysisSan Diego Convention Center9

Convention, Sports & EntertainmentFacilities ConsultingChicago, IllinoisThe following figure shows the occupancy of the SDCC from 2013 through 2016 asmeasured by the average percentage of days each type of space is used per year.FIGURE 7OCCUPANCY BY TYPE OF SPACE80%70%60%50%40%30%20%Exhibit HallsSail AreaBallrooomsMeeting Rooms10%0%FY2012FY2013FY2014FY2015FY2016Source: SDCCGiven the seasonal nature of convention business, the lack of event demand duringholiday periods, and inevitable gaps between events, 70% is the maximum practicaloccupancy of exhibition hall space. The SDCC achieved that level of occupancy infiscal year 2015. The ballrooms are the most frequently used space and exceed 70%occupancy. The 90,000-square foot Sail Area has had the lowest level of occupancyprimarily due to its inflexibility and technical limitations.Exhibit Hall CapacityApril 11, 2017Exhibit space of 525,000 limits the SDCC’s ability to accommodate events. The figurebelow shows the distribution of exhibit hall space requirements for nationalorganizations.Expansion AnalysisSan Diego Convention Center10

Convention, Sports & EntertainmentFacilities ConsultingChicago, Illinois1,400Event Planner Need1,200Current SDCC Capacity1,000Expanded %50%45%40%35%30%25%20%15%10%5%00%Exhibit Hall Floor Area (thousands of sf)FIGURE 8DISTRIBUTION OF EXHIBIT SPACE NEED BY NATIONAL ORGANIZATIONSPercent of event plannersSource: CSL Event Planner SurveyThe existing SDCC exhibition space can meet the requirements of approximately91% of national events. But as a premier convention destination, San Diego couldcapture a subset of large groups that require more than 525,000 square feet ofexhibition space. Exhibit hall capacity of 735,000 contiguous square feet of spacewould allow the SDCC to capture 96% of the market. This 5% increase is critical tothe SDCC because it is necessary to retain some existing events and to attract eventsthat increase room night impact. While a 5% increase in market share may seemsmall, the attendance and room night impact of a single new large event could begreater than many smaller events.Ballroom CapacityWith two ballrooms, the SDCC currently has capacity to host two simultaneousevents that require a combination of exhibit, ballroom, and meeting space. The two41,000-square foot ballrooms have a capacity for approximately 2,100 persons in abanquet setting, which is too small for many events. Average attendance for eventsis approximately 6,700 persons, and many events require a banquet setting for4,000 to 5,000 persons. Currently, exhibit hall space is required to accommodateassemblies and large banquet events.Convention demand is highly seasonal. To increase its capacity to absorb availabledemand during peak seasons, the SDCC needs capacity to accommodate threesimultaneous events. A third ballroom would support the banquet requirements ofhigh impact convention events that require exhibit, ballroom, and meeting space.April 11, 2017Expansion AnalysisSan Diego Convention Center11

Convention, Sports & EntertainmentFacilities ConsultingChicago, IllinoisThe ballrooms in the adjacent Hilton and Marriott hotels are not available for thispurpose. Interviews with hotel managers revealed that their ballroom space isreserved primarily for in-house groups. Some of these in-house groups are eventsthat occur in conjunction with SDCC events.We recommend a new ballroom of up to 80,000 square feet—twice the size of theexisting ballrooms. This ballroom could accommodate a banquet with 4,500 to5,000 persons and free up exhibit space that is currently used for this size of event.Meeting SpaceExpansionThroughout the industry, meeting space needs have grown faster than exhibit orballroom space requirements. As industries diversify, the need for informationexchange among smaller groups has increased. This is particularly true for medicaland pharmaceutical industry events, which are key demand drivers for San Diego.Meeting space provides breakout space for larger conference and convention eventsand supports stand-alone meetings as well as food and beverage functions. Meetingroom blocks should maintain a separation of attendee and service access.The following figure shows the average floor area required by events that requirethe simultaneous use of exhibit, ballroom, and meeting space.FIGURE 9AVERAGE FLOOR AREAS USE IN SQUARE FOOT DAYS BY EVENT TYPEExhibit HallEvent TypeConventi ons (medi ca l )Conventi ons (non-medi ca l )Corpora te EventNa ti ona l Tra de ShowLoca l Tra de ShowCons umer ShowBallroomMeeting Spaceper eventper event% of ExhibitHallper event% of 18%3%2%High impact medical events use the largest proportions of ballroom (24%) andmeeting space (58%). Non-medical conventions also require substantial amounts ofballroom and meetings space. The addition of 111,000 square feet of meeting spacewould allow the SDCC to accommodate increasing meeting space demands.Coastal CommissionPlanApril 11, 2017In 2010, the San Diego Convention Center Corporation submitted a concept plan tothe Coastal Commission for approval for a Phase 3 Expansion of the ConventionCenter. In September 2012, the Port published an environmental impact report onthe expansion that included 220,150 square feet of exhibit hall space, 101,500square feet of meeting rooms, and a 78,470-square foot ballroom. Throughout theExpansion AnalysisSan Diego Convention Center12

Convention, Sports & EntertainmentFacilities ConsultingChicago, Illinoisfollowing year, the Port made its case to the Coastal Commission arguing thatassociated improvements from the project would increase public access andenjoyment of the coast. Despite a negative recommendation from staff, the Portmade its case directly to the Coastal Commission board, and on October 10, 2013,the 11 voting members ruled that the project did not deny or restrict access to thecoast or coastal amenities. This decision subsequently withstood a legal challenge.RENDERING OF THE COASTAL COMMISSION APPROVAL PLANSource: civitasinc.comBuilding ProgramSummaryApril 11, 2017The figure below compares the HVS recommendations with prior recommendationsand the plan approved by the Coastal Commission.Expansion AnalysisSan Diego Convention Center13

Convention, Sports & EntertainmentFacilities ConsultingChicago, IllinoisFIGURE 10COMPARISON WITH PRIOR RECOMMENDATIONSPrior RecommentationsFunction AreaExistingSDCCProposed ExpansionExhi bi t Ha l lBa l l roomsSa i l AreaMeeti ng Spa cesTotalTotal Floor AreasExhi bi t Ha l lBa l l roomsSa i l AreaMeeti ng Spa ,00090,000230,0001,215,000HVSCompared to the AECOM proposal, our recommendation places more emphasis onincreasing the amount of flexible ballroom space and less on meeting and exhibitionspace. If designed properly, sub-divisions of the ballroom may serve as breakoutmeeting space when needed. Compared to the plan approved by the CoastalCommission, our recommendation decreases the expansion of exhibit space by10,000 square feet with a corresponding increase in meeting space.The HVS expansion recommendation would dramatically improve the balance ofexhibit, ballroom, and meeting space in the SDCC. The figure below compares theSDCC ratio of function spaces to exhibit space to its competitors before and afterexpansion.April 11, 2017Expansion AnalysisSan Diego Convention Center14

Convention, Sports & EntertainmentFacilities ConsultingChicago, IllinoisFIGURE 11COMPARISON OF SDCC WITH PRIMARY COMPETITORS*VenueWa s hi ngton Sta te Conventi on a nd Tra de CenterMos cone Conventi on CenterSDCC with Proposed ExpansionPhoeni x Conventi on CenterErnes t N. Mori a l Conventi on CenterBos ton Conventi on & Exhi bi ti on CenterSan Diego Convention CenterCol ora do Conventi on CenterOra nge County Conventi on CenterPenns yl va ni a Conventi on CenterGeorgi a Worl d Congres s CenterMcCormi ck Pl a ceWa l ter E. Wa s hi ngton Conventi on CenterLos Angel es Conventi on CenterAna hei m Conventi on 12%21%16%17%14%10%Total Function Space *Includes proposed expansions of respective venues.The proposed expansion would move San Diego from a relatively low 33% to a 53%ratio of function space to exhibition space.Capacity for expansion of the SDCC on its current site is limited. The proposedexpansion of the SDCC provides the last opportunity for growth in the contiguousconvention center space in San Diego. Further concept planning by a qualifiedarchitectural and planning firm will be necessary to determine the configuration ofthe building program. During this concept planning process, every effort should bemade to maximize the amount of rentable function space and remain within theconstraints of the plan approved by the Coastal Commission.HOW MUCH WOULD AN SDCC EXPANSION INCREASE CONVENTION ACTIVITY IN SAN DIEGO?SDCC Event DemandAnalysisApril 11, 2017The San Diego Tourism Authority (“SDTA”) and SDCC book events into theconvention center. The SDTA is San Diego’s destination and convention marketingorganization and is primarily responsible for long-term bookings (18 months ormore in advance of the event). The SDCC is principally responsible for short-termbookings (18 months or less in advance of the event). The following figure showsthe number of annual short- and long-term booked events with correspondingattendance and room block size.Expansion AnalysisSan Diego Convention Center15

Convention, Sports & EntertainmentFacilities ConsultingChicago, IllinoisFIGURE 12HISTORICAL AND FUTUREEVENT ACTIVITYFiscal 152782,000172808,403158824,276Booked events125932,818RoomBlock Size*731,531703,624690,588737,155843,699*Room block size is the total number of roomnights reserved for SDCC events in formal roomblock agreementsSource: SDCC and SDTAFor fiscal year 2017, the SDTA and SDCC booked events that require room blockswith a total of 840,000 room nights. The SDCC is home to several nationally andinternationally renowned events including San Diego Comic-Con International, theAmerican Society of Hematology, the Society for Neuroscience, the AmericanUrological Association, Cisco Live!, and the Esri User Conference.The following figure illustrates the five-year trends of events and room nightsbooked at the SDCC from 2013 through 2017.April 11, 2017Expansion AnalysisSan Diego Convention Center16

Convention, Sports & EntertainmentFacilities ConsultingChicago, IllinoisThousandsFIGURE 13EVENTS AND ROOM 52016Total AttendanceRoom Block SizeLinear (Total Attendance)Linear (Room Block Size)2017Source: SDCC and SDTARoom block size and attendance have continued to grow from 2013 and 2017, butattendance has grown slightly faster than the room blocks reserved toaccommodate attendees. This disparity in growth rates may reflect an increased useof alternative hotel booking channels such as on-line travel agencies and Airbnb.The following figure shows the peak room block distribution for events bookedbetween 2012 and 2016.April 11, 2017Expansion AnalysisSan Diego Convention Center17

Convention, Sports & EntertainmentFacilities ConsultingChicago, IllinoisNumber of Events (2012 through 2034)FIGURE 14PEAK ROOM NIGHT DISTRIBUTION350300250200150100500Peak Room Night RequirementsSource: SDCC and SDTAAs is typical in the industry, most convention center events are small, and some donot generate any room blocks. This demand pattern demonstrates the need to hostsimultaneous smaller events during peak event demand seasons. The expansionshould enable the SDCC to host three simultaneous mid-sized events that requirebetween 1,500 to 5,000 peak room nights.High Impact BusinessMedical and pharmaceutical industry conventions (“medical events”) are some ofthe most valuable events in terms of room night generation and visitor spending.The SDCC attracts a large share of these industry events. The following figurecompares the events and room block sizes for medical and non-medical conventionsbooked by the SDTA for the period 2012 to 2034.FIGURE 15MEDICAL AND NON-MEDICAL EVENTSEventsMedi ca l36%Non-Medi ca l64%Medi ca l47%Non-Medi ca l53%Room BlocksSource: SDTA events book between 2012 and 2034April 11, 2017Expansion AnalysisSan Diego Convention Center18

Convention, Sports & EntertainmentFacilities ConsultingChicago, IllinoisMedical events make up 36% of total long-term bookings, but nearly half (47%) ofroom nights. The following figure shows the average room nights generated by thetwo types of events.FIGURE 16MEDICAL AND NON-MEDICAL AVERAGE ROOM NIGHTS30,00025,00020,00015,00010,0005,0000Medical - Average room nightsNon-medical - Average room nightsSources: SDTA and HVSMedical events require simultaneous use of exhibit, ballroom, and meeting spaceand the meeting room requirements tend to be much more expansive than f

SAN DIEGO CONVENTION CENTER SAN DIEGO, CALIFORNIA SUBMITTED TO: EXISTING Mr. Brian Hughes San Diego Tourism Marketing District Corporation 8880 Rio San Diego Drive, Suite 800 San Diego, California, 92108 bhughes@sdtmd.org 1 (619) 209-6108 PREPARED BY: HVS Convention, Sports & Entertainment