HVS
205 W Randolph Street, Suite 1650
Chicago, Illinois 60606
Presented to:Convention Center Hotel - Finance Subcommittee
Economic Impact Analysis
May 18, 2010May 18, 2010
HVS
205 W Randolph Street, Suite 1650
Chicago, Illinois 60606 2
Overview
1. Does Lost Business = Demand Potential?
2. Substitution Effect (i.e. Displacement)
3. Estimate of Incremental Room Night Demand
4. Direct Spending Estimate
5. Spending Categories
6. Multiplier Effect
7. New Tax Revenues
HVS
205 W Randolph Street, Suite 1650
Chicago, Illinois 60606 3
Lost Business Analysis
Event Year Events Attendance Room Nights
2006 CYTotal Lost 218 549,635 997,620 Winnable 26 64,850 154,757 Citywides 15 53,250 128,340
2007 CYTotal Lost 195 558,391 814,710 Winnable 31 69,560 174,198 Citywides 15 55,600 141,643
2008 CYTotal Lost 206 623,075 906,642 Winnable 24 52,500 114,383 Citywides 15 43,600 96,164
2009 CYTotal Lost 235 793,070 1,061,154 Winnable 26 112,750 151,285 Citywides 16 99,800 120,705
Four-Year TotalsTotal Lost 854 2,524,171 3,780,126 Winnable 107 299,660 594,623 Citywides 61 252,250 486,852
Percent of Total 7.1% 10.0% 12.9%
Sources: HVS, Event Planners, KCCVA
HVS
205 W Randolph Street, Suite 1650
Chicago, Illinois 60606
Incremental Room Nights: Substitution Effect
• Lost Room Nights = 128,340
• Regression Coefficient = 1,279
• 15 Citywide Events
• 77 Event Days
• Incremental Room Nights = 98,494
4
HVS
205 W Randolph Street, Suite 1650
Chicago, Illinois 60606
Sources of New Spending
• Delegates = $311 per delegate per day
• Organizers = $142 per attendee
• Exhibiting Companies = $399 per attendee
5
HVS
205 W Randolph Street, Suite 1650
Chicago, Illinois 60606 6
Direct Spending Estimates
Summary of Direct Spending
Delegate Spending $ 32,100,000
Event Organizer Spending 9,000,000
Exhibiting Company Spending 25,200,000
Total Direct Spending $ 66,300,000
HVS
205 W Randolph Street, Suite 1650
Chicago, Illinois 60606
Direct Spending by Industry Category
7
Industry Amount % of Total
Retail Trade $ 5,878,268 8.9%
Transit / Ground Transportation 4,317,018 6.5%
Advertising Services 1,059,732 1.6%
Equipment Rental 3,561,599 5.4%
Professional / Technical Services 5,800,529 8.7%
Amusement / Recreation 931,699 1.4%
Sporting Events 107,841 0.2%
Accommodations 25,045,216 37.8%
Food and Beverage Places 14,322,394 21.6%
Facility Rentals 2,656,696 4.0%
Other Services 2,642,954 4.0%
Total Direct Spending $ 66,323,947 100.0%
Rounded $ 66,300,000 100.0%
HVS
205 W Randolph Street, Suite 1650
Chicago, Illinois 60606 8
Multipliers
Industry Output Earnings Jobs
Retail Trade 1.9532 0.4626 18.7296
Transit / Ground Transportation 2.1168 0.5923 31.0706
Advertising Services 1.7290 0.3669 9.3864
Equipment Rental 1.5981 0.2817 7.4741
Professional / Technical Services 1.7766 0.4481 10.6407
Amusement / Recreation 1.9304 0.5301 23.8269
Sporting Events 2.0823 0.6518 17.6330
Accommodations 1.8364 0.4682 20.1772
Food and Beverage Places 1.9981 0.5293 32.9038
Facility Rentals 1.7741 0.5328 21.8729
Other Services 1.9429 0.4542 17.5640
HVS
205 W Randolph Street, Suite 1650
Chicago, Illinois 60606
Total Economic Impacts
9
Industry Output Earnings Jobs
Retail Trade $ 11,481,433 $ 2,719,287 101.40
Transit / Ground Transportation 9,138,264 2,556,970 123.54
Advertising Services 1,832,277 388,816 9.16
Equipment Rental 5,691,791 1,003,302 24.52
Professional / Technical Services 10,305,220 2,599,217 56.85
Amusement / Recreation 1,798,552 493,894 20.45
Sporting Events 224,558 70,291 1.75
Accommodations 45,993,035 11,726,170 465.43
Food and Beverage Places 28,617,576 7,580,843 434.04
Facility Rentals 4,713,244 1,415,488 53.52
Other Services 5,134,995 1,200,430 42.75
Total Annual Impacts $ 124,930,945 $ 31,754,707 1,333.41
Rounded $ 124,900,000 $ 31,800,000 1,333
HVS
205 W Randolph Street, Suite 1650
Chicago, Illinois 60606
Sources of New Tax Revenues
10
Name of Tax1 Applicable Spending Categories
Tax Rates
% $
Convention & Tourism Tax Hotel Hotel 7.500%Convention & Tourism Tax Restaurant Meals 2.000%
Sales TaxHotel, Retail, Meals, Rentals 2.375%
Utilities Tax Gas and Electric 10.000%
Arena Fee
Accommodations Hotel $ 1.50
Rental Cars Car Rental $ 4.00
Aviation Department Charges
Auto Rental Concession Fee Car Rental 10.000%
Rental Car Facility Car Rental $ 3.00
Bus Transportation System Car Rental $ 2.10
Earnings Tax Employee Earnings 1.000%
1 Gaming taxes and user fees at ticketed events would be additional, but are considered insignificant.
Sources: City's Finance Department, Aviation Department, Entertainment Center District
HVS
205 W Randolph Street, Suite 1650
Chicago, Illinois 60606
Estimates of New Tax Revenues
11
Name of TaxSpending Estimate
Taxed UnitIncremental Tax
Revenue
Convention & Tourism Tax Hotel $ 45,993,035 Gross Sales $ 3,449,478
Convention & Tourism Tax Restaurant 28,617,576 Gross Sales 572,352
Sales Tax 105,635,342 Gross Sales 2,508,839
Utilities Tax1 2,623,550 Gross Sales 262,355
Arena Fee
Accommodations2 98,250 Room Nights 147,375
Rental Cars3 28,126 Rental Car Days 112,504
Aviation Department Charges
Auto Rental Concession Fee 1,406,296 Gross Sales 140,630
Rental Car Facility 28,126 Rental Car Days 84,378
Bus Transportation System 28,126 Rental Car Days 59,064
Earnings Tax 31,754,707 Earnings 317,547
Total Incremental Tax Impact $ 7,654,521
Total Incremental Tax Impact (Rounded) $ 7,700,000
1 Based on Annual Industry Accounts, Advanced Statistics on GDP, which indicate Utilities share of GDP is 2.1%.
2 Based on HVS forecast of incremental new room nights in a stable operating year.
3 HVS assumes a price of $50 per rental car day as the basis for tax calculations.
Sources: U.S. Bureau of Economic Analysis, City of Kansas City, HVS
HVS
205 W Randolph Street, Suite 1650
Chicago, Illinois 60606 12
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