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SDUT: Hotel industry study critical of Chargers stadium plan

Discussion in 'Chargers Fan Forum' started by Blue Bolt, Aug 10, 2016.

  1. Blue Bolt

    Blue Bolt Persona Non Grata

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    Hotel industry study critical of Chargers stadium plan
    Report says financial return doesn’t justify hotel tax increase
    By Lori Weisberg | 5:45 p.m. Aug. 10, 2016 | Updated, 7:32 p.m.

    The Chargers’ plan for a downtown stadium-convention center will not generate enough meeting business to justify an increase in the hotel tax, concludes a new study funded by the tourism industry.

    The analysis, which was prepared by a Chicago-based consulting firm and released on Wednesday, is at odds with rosier predictions by Chargers consultants who also have looked at the financial impact of a convention center built as part of a stadium.

    The Chargers are asking voters this November to increase the hotel room tax from 12.5 percent to 16.5 percent to help pay for an estimated $1.8 billion stadium and adjoining convention center development that would be located east of Petco Park.

    The proposed center, the study says, holds only limited appeal to meeting planners and would generate just $2.3 million more a year in additional hotel tax revenue, compared to what it estimates are the $67 million in annual public costs for both construction and operation of the project.

    “If you weigh the investment required to generate that impact, it doesn't add up,” said Thomas Hazinski, managing director of HVS, a sports and entertainment facilities consulting firm hired by San Diego’s hotelier-run Tourism Marketing District. “There’s a big gap between what you're investing and what you’re getting back, and it really doesn't move San Diego forward in a significant way as a convention destination and we know that San Diego is facility-constrained.”

    Hotel owners and tourism industry leaders continue to push for an expansion of the city’s bayfront convention center, although the project has long been stalled because the financing plan relied on a hotelier-approved hotel tax increase that was ruled unconstitutional.

    The Chargers, who will soon be releasing their consultants’ formal analysis of the convention center portion of the project, were immediately critical of the report’s conclusions.

    “The results of this study were pre-determined from the outset by a few highly self- interested hotel owners who have once again wasted taxpayer money on a misbegotten effort to justify a contiguous convention center expansion that has already been struck down by the courts and that is unlikely to be built,” Chargers adviser Fred Maas said in an emailed statement.

    The Tourism Marketing District board, which oversees the expenditure of revenues raised via a 2 percent surcharge on hotel stays, commissioned the study in June to determine what benefits, if any, would be realized from a hybrid stadium-convention complex.

    “We’re in charge of the marketing of the city of San Diego, and we need to know if this facility would help the marketing and to what degree,” said board chairman Bill Evans. “It appears now that some of the assumptions the Chargers are using to promote the project are not the same that HVS has come up with.

    “We were careful not to prejudice the consultants. We did not tell them what we wanted the report to be.”

    The board of the marketing district, which spent $30,000 on the study, will be meeting soon to decide how to proceed, but Evans emphasized that it is not permitted to take positions on political issues, including ballot initiatives.

    The HVS report finds little to like about the Chargers’ convention center proposal, basing its conclusions on interviews with meeting planners, existing research on convention business and similar convention center and stadium developments.

    Among its conclusions:

    -- Conventions that are too large to fit within the existing center will not use it in combination with the stadium’s convention facility

    -- Exhibit space in the Chargers’ project would only meet the needs of 30 percent of San Diego’s convention events.

    -- The project would be a competitor with the existing center, potentially reducing occupancy there.

    -- Because of its smaller size, limited availability during football season, and “event planner dissatisfaction with the plan,” the center would attract an estimated 69,000 new room nights per year. That is significantly less than the 124,000 room nights projected in a study last year that analyzed the economic potential of a convention center annex. That study was commissioned by the Convention Center Corp.

    The Chargers’ economic development consultant has projected a much different financial reward, estimating in a preliminary analysis that its project would eventually generate 200,000 additional room nights a year -- enough demand to support 800 new hotel rooms downtown.

    The team also has sought to debunk claims that it would be almost impossible to book conventions years in advance during the NFL season. The Chargers have said that the NFL has agreed to schedule away games on specific Sundays each month, along with the adjacent Monday and Thursday nights. The concession would theoretically allow convention planners to book events years in advance for 10 days each month during the season.

    Not really, says the HVS study.

    Larger conventions typically require an average of nine days of building occupancy, but most of the event blocks offered in the NFL’s proposed schedule are less than nine days, HVS said.

    “We analyzed this in great detail, plugged everything into a nine-season schedule for each year and found that these blocks of time are only available 43 percent of the time,” Hazinski said.

    The consultant also looked at a few existing examples of cities where stadiums have been adjacent to or connected to convention centers but found they did little to boost convention business.

    “The joint use of football stadiums and convention centers has been tried and largely failed in three cities - St. Louis, Indianapolis, and Atlanta, the report concludes. “The Indianapolis RCA Dome has been demolished and replaced with exhibition space. The Georgia Dome in Atlanta is slated for demolition after a replacement stadium is built.”

    The Chargers’ ballot measure recently got an endorsement from the San Diego Regional Chamber of Commerce, but also is facing opposition from various individuals, including San Diego council members Chris Cate and David Alvarez. Mayor Kevin Faulconer has yet to take a position.

    lori.weisberg@sduniontribune.com (619) 293-2251 Twitter: @loriweisberg
     
  2. Carlsbad_Bolt_Fan

    Carlsbad_Bolt_Fan Well-Known Member

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    [​IMG]
     
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  3. Pointyearedog

    Pointyearedog I only put idiots on ignore...

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    Darn it, Blue! This article has more than 7 paragraphs! Starting to remind me of someone else...
     
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  4. Blue Bolt

    Blue Bolt Persona Non Grata

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    One big difference...... I just copied and pasted. There's no way I'd spend the time to type all that blather, unlike a certain individual. ;)
     
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  5. Jesse Kemp

    Jesse Kemp BoltTalker

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    Also breaking, sky blue.
     
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  6. Chaincrusher

    Chaincrusher BoltTalker

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    Why will it cost $67M per year to maintain/operate the project after it is built? That seems like a crazy projection.

    Why is a tax that is paid for by visitors a bad thing for the citizens of San Diego?

    Why would 69,000 (even if the study is accepted as accurate) instead of 124,000 or 200,000 new hotel room nights be a bad thing for hoteliers? More business for them seems like a good thing.

    Why not eliminate the Tourism Marketing District Board and roll that 2% into the stadium project? Having such an entity seems like a waste of a lot of money. Or, in the alternative, the Board could exist (to the extent it does anything productive), but operate on a substantially reduced budget (say a quarter of a percent instead of 2 percent).

    Because I live in Texas, outside of my sentimental attachment to San Diego as the longstanding home of the Chargers, I have no dog in this fight, but some of the things contained in this article make no sense or should at least be further explained.
     
  7. HollywoodLeo

    HollywoodLeo Well-Known Member

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    So, a study ran by an industry who's customers would be taxed by the stadium proposal has concluded that the tax is not justifiable?

     
  8. HollywoodLeo

    HollywoodLeo Well-Known Member

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    I just ran a study and I have concluded that it is not justifiable to withhold taxes from my paycheck.

    I'm drafting my findings and sending them to Washington tomorrow.
     
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  9. woodeye

    woodeye Well-Known Member

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    LOL.
    I will never, ever be able to understand why anyone is reticent about the idea of making Super Bowls happen in San Diego.
     
  10. Blue Bolt

    Blue Bolt Persona Non Grata

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    That question would be better directed at the Spanos family. ;)
     
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  11. Blue Bolt

    Blue Bolt Persona Non Grata

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    New report harshly critical of Chargers' stadium plan
    By Jeffrey Siniard@JeffSiniard on Aug 11, 2016, 7:00a


    The San Diego Tourism Marketing District released a new report which is severely critical of the Chargers' Stadium Proposal.

    That isn't a surprise.

    What is somewhat of a surprise is how little the report finds about the proposal which is worthwhile, even considering that the proposal includes additional convention center space.

    The report was completed by HVS Convention, Sports & Entertainment Facilities Consulting, and runs for 62 pages. I'd suggest everyone take the time to review the report, however, for the sake of everyone's sanity, we'll stick to some of the conclusions reached by the report.

    What did the Report Find?
    Here are some of conclusions the report reached which I think are interesting (from Pages 42 and 43):

    • Under the current proposal, the financing plan eliminates the existing 2% Tourism Marketing District assessment and replaces it with a guaranteed 1% and potential additional 1% after the previous year's expenses and operating costs have been satisfied. This could cut the TMD fund in half and hinder the ability to market and promote the city and convention center(s) - note that the legality of the TMD assessment is currently being challenged by attorney Cory Briggs.
    • The ownership arrangements and operating agreement between the Chargers and the building owners have not been determined, but they are critical to coordination of the marketing, sales and operating efforts.
    • The Chargers proposal suggests that a government entity, such as a joint powers authority, may be formed to own and operate the facility. However, the lodging industry or representatives from the Chargers may not be available to form part of this entity (with the city) due to conflicts of interest in the orientation of the facility operations. This legal complication could introduce further obstacles that prevent the project's progress.
    • The Stadium-Convention Center would reduce the level of operations at the SDCC by moving smaller events to the new venue. The financial impact on the SDCC needs to be evaluated.
    • A contiguous expansion of the SDCC will be necessary to maintain San Diego's prominent position in the convention center industry. The financing plan for the proposed Stadium-Convention Center needs to demonstrate the ability to fund a contiguous expansion of the SDCC (by the way, this was a crucial point made by the San Diego Chamber of Commerce when they endorsed the plan recently).
    • The estimate of potential positive impact on convention activity in San Diego is limited (69,000 room nights per year).
    • Event planners who plan large events do not believe that the proposed Stadium-Convention Center will meet their needs (this was the focus ofCouncilman Scott Sherman's study a few months ago)
    • The football season schedule proposed by the Chargers would severely limit the ability to book long-term events that generate significant room nights.
    • The proposed Stadium-Convention Center would primarily compete with the SDCC for short-term business and reduce the occupancy of the SDCC.
    • The lack of headquarters hotel, adjacent hotels, and the potential for hotel development surrounding the site of the proposed development presents challenges to event planners.
    What Do the Chargers Say About It?
    It would be an understatement to suggest the Chargers are critical of the reports findings, Here's Chargers' Special Advisor Fred Maas, by way of an email reply in Lori Weisberg's Union Tribune's story about the report:

    "The results of this study were pre-determined from the outset by a few highly self-interested hotel owners who have once again wasted taxpayer money on a misbegotten effort to justify a contiguous convention center expansion that has already been struck down by the courts and that is unlikely to be built"

    I'm speaking for myself here, but this statement by Maas sounds a little too much like Chargers' Special Counsel Mark Fabiani. In the interests of fostering amity, I would have been a little less aggressive.

    I'd also get my own report released. If I were calculating and devious, I might even stop playing pointless hardball with Joey Bosa, get him signed and into camp, and let that positive story overwhelm this one.

    Wrapping Up
    Stadium supporters will cavalierly dismiss the findings of the report in a manner similar to that used by Fred Maas.

    However, it's the most substantive look at the project since the study released earlier by Councilman Sherman, whose findings it corroborates. It also substantiates the claims of the hotel industry and supporters of a contiguous Convention Center expansion.

    The Chargers would be well-advised to release their own study, so that a side-by-side comparison can be undertaken.

    Until that time, we only have this report to work with, and therefore this report sets the terms of debate. Those terms are not favorable to the Chargers, or supporters of the project.
     
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