MCCA Moving Forward Brochure

Moving Forward The Top 5 Campaign

Launched in 2009 by Governor Patrick, Mayor Menino, and the Massachusetts Convention Center Authority, the Top 5 campaign is the next step in Massachusetts’ ongoing drive to rank among the top five meetings and conventions destinations in North America.

The goal of Top 5 is to significantly increase the amount of economic impact, revenue, jobs, and new business that major conventions deliver to Boston and the Commonwealth, while continuing to nurture Massachusetts’ role as a top destination for international meetings.

Since the Boston Convention & Exhibition Center (BCEC) opened in 2004, the city has consistently ranked among the top 10 convention destinations in North America. By the end of 2014, Boston will have hosted close to 2,400 conventions, generating $5.3 billion in economic activity.

Despite its success, Boston faces challenges. There are not enough hotel rooms near the BCEC, and not enough room in the building to meet the demands of shows expanding in size and attendance. Millions of dollars in revenue and economic activity are at stake, both in the loss of loyal customers and in missed opportunities for growth.

Top 5 is our response to these challenges. After a year and a half of research and deliberation, the Convention Partnership—an independent 27-member group of local stakeholders, elected officials and other leaders—recommended a strategy to increase the number of hotel rooms and expand the BCEC to both grow the business we can bring to Massachusetts and increase our share of the $263 billion meetings industry. The course of action is clear; all we need are the resources and determination to make it a reality.

Growing our convention business means growing our economy, creating new jobs, and bringing more revenue to the Commonwealth today, and into the future. Three years of analysis and discussions have ended on a positive trajectory, and now is the time to act. Please support this important effort to make Massachusetts a top five convention destination in North America.

James E. Rooney Executive Director, MCCA

Michelle A. Shell Board Chair

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Where we are With the opening of the BCEC in 2004, Boston and Massachusetts became one of the most desired and successful convention destinations in North America, continually ranking in the top ten. The initial investment of $850 million to build the BCEC has seen a return of billions of dollars in economic activity and thousands of jobs for the Commonwealth and its residents.

In 2011, the BCEC and the Hynes Convention Center were each awarded the rare “Gold Standard” in excellence by the International Association of Congress Centres, making them only the 4th and 5th convention centers in North America to receive this honor. With only 20 “Gold Standard” convention centers in the world—and Boston the only city with two of them—the awards are a testament to the MCCA’s unwavering commitment to excellence.

Boston is the only city in the world with two Gold Standard convention centers.

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Our success can also be measured in our ability to draw important conventions focused on industries that drive the Boston and Massachusetts economies such as life sciences, medical research, technology, and education. Exposing our leadership in these industries to an ever-changing international audience fulfills an important part of the Commonwealth’s overall economic development strategy.

$1.1 billion

$865 million

in spending just on food and beverage

in shopping in and around Boston

5.3

$

Economic impact: 2004–2014

billion 5.4 million

More than 5,300 jobs

970,000

hotel room nights

supported by the Massachusetts conventions and meeting industry

taxi rides

10 years of results Source: MCCA financial reports

$850 million

Original Investment in the BCEC

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Our role in a major industry The United States convention and meeting industry annually hosts 1.8 million meetings, creating $263 billion in economic activity and supporting 6.3 million jobs. Overall, the meeting and convention industry in the United States supports more jobs than the automobile industry, and in Massachusetts, hospitality is the fourth largest private employer. Boston is already a major player in this industry and our market share is growing.

From 2000–2010, Boston’s share of the convention and event market grew 25%.

25% 19%

Las Vegas

6%

New York City

1% 2%

San Diego San Francisco

$263

Boston

Washington DC 16% 17% Chicago

billion

32% Orlando

Annual amount of economic activity generated by the convention and meeting industry in the US. Source: PricewaterhouseCoopers 2011 report

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Source: Center for Exhibition Industry Research

55%

New Orleans

The Massachusetts Convention Center Authority is facing two major obstacles to continued success:

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2

Boston does not have enough hotel rooms to strongly compete against other major convention destinations.

Boston’s exhibit hall is among the smallest of the Top 10 convention destinations in North America.

While there are only 1,700 hotel rooms within walking distance of the BCEC, our competitor cities have an average of 8,000 rooms within walking distance. As a result, in Boston some events are paying more than $1 million to have their attendees bused from hotels around Copley Square to the BCEC. It’s a cost convention organizers don’t bear in other cities, and a competitive disadvantage for Boston.

While Boston has been ranked in the Top 10 convention destinations since 2004, the amount of exhibit space at the BCEC ranks the building as the 25th largest in North America. Large events that want to come to Boston cannot be accommodated in the available space; we cannot host large, overlapping events; and growing events that are loyal to Boston need more room.

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18

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Number of major events MCCA competed for and lost annually, on average over concerns about the lack of hotel rooms near the BCEC, high hotel room rates and lack of exhibit space at the BCEC.

Lost business Examples of lost business due to insufficient hotel supply and/or lack of exhibit space

Studies have shown that the BCEC needs about 4,000 nearby hotel rooms—twice the existing supply—to achieve its maximum performance potential. In the meantime, the city is losing

needed revenue and visitor spending dollars.

Economic Impact Event name (In millions) In addition, Boston needs more economically priced, limited-service hotels to offer different American Society for price points. The MCCA is currently working on M the construction of two mid-priced hotels near the Therapeutic Radiology BCEC to meet this need, which is growing. and Oncology

$25.5

American Academy of Dermatology

$26.3M

American Heart Association

$32.2M

Microsoft Worldwide Partners Conference

$35.1M

Air Conditioning Heating & Refrigeration Expo

$54.9M

From January 2007 to March 2013, the MCCA lost 112 events and 1.6 million associated hotel room nights due to insufficient hotel supply, representing a loss of almost $1.2 billion in economic impact.

Studies show that the BCEC needs three times as many nearby hotel rooms to reach its potential.

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What event planners are saying:

Susan Melnicove ASIS International Years in Industry: 38

Ken McAvoy Reed Exhibitions Years in Industry: 12

It is critical to us that the building expand. Our show will not fit in the current structure and if we are to consider Boston as a site for our most important event, the building must be larger to accommodate our meeting.

We are very much looking forward to coming to Boston and to making it part of our regular rotation.

Boston remains one of our ‘cities of choice’ for our events. Location is a very important factor, but a key component is the ‘package’ of hotels and exhibit space near the BCEC. We must also mention that the staff of the BCEC and Advantage Boston are outstanding and always perform above and beyond the competition. This is another ‘key’ factor in our decision.

Hotel Room Nights: 35,000 Attendees: 25,000 Economic Impact: $30.87M Tax Revenues: $1.86M

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Penny Arcade Expo East 2013 Hotel Room Nights: 8,876 Economic Impact: $19.98M Tax Revenues: $970,000

Lenay Gore American Public Transportation Association Years in Industry: 25+

With the need for over 600,000 gross square feet of exhibit space and a floor load that could support rail cars, APTA needs an expansion of your facility to accommodate our show. We would love to have Boston in our East Coast rotation. Additional hotel inventory would help in our decision making process as well.

Hotel Room Nights: 5,000 Attendees: 15,000 Economic Impact: $11.47M Tax Revenues: $560,000

146

Years of experience is represented in the sample below.

Janet Skorepa American Urological Association Years in Industry: 23

Robin R. Preston National School Boards Association Years in Industry: 20

Robbi Lycett Biotechnology Industry Organization Years in Industry: 28

The AUA’s meeting is increasing in size due to its expanding educational offerings to urologists.

Without the BCEC expansion, I’m afraid we will not be able to return to Boston in the future. In addition, we are currently in need of additional ballroom space and meeting room space for 2017.

The BCEC is already a firstclass facility. An expansion would take it to the next level. In terms of space, it would allow groups to host large general sessions within a ballroom setting as opposed to placing it in one of the exhibit halls. Overall, an expansion would not only be good for show organizers but also convention attendees.

We have successfully held our BIO International Convention in Boston three times in 2000, 2007 and 2012.

We experienced growth and a very successful event in 2012.

We would like to rotate into Boston in the future, but this is proving difficult with the current size of the BCEC and limited hotel rooms in the city.

Hotel Room Nights: 49,780 Attendees: 17,500 Economic Impact: $32.74M Tax Revenues: $2.18M

Hotel Room Nights: 33,300 Attendees: 13,000 Economic Impact $22.70M Tax Revenues: $1.49M

Hotel Room Nights: 41,200 Attendees: 15,500 Economic Impact: $27.72M Tax Revenues: $1.83M

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Potential for growth The Top 5 campaign presents a coherent and viable strategy to overcome these challenges. Meeting the needs of important conventions and allowing the BCEC to serve simultaneous meetings will allow Boston to build on the momentum we’ve achieved as a successful convention destination and see a larger return on the Commonwealth’s investment. Economic activity, tourism, jobs, and economic development will all increase, as will Boston’s role in the international meetings industry.

$184

million

Average yearly economic impact lost due to insufficient exhibition space and hotel room capacity 10

Fully implementing Top 5 will make Boston much more competitive while delivering significant economic benefits to Massachusetts. In concrete terms, our goal is to expand our infrastructure so that: • More large-scale conventions will be able to come to Boston and more mid-sized conventions will be able to fill the Hynes Convention Center • The BCEC can be used more efficiently by hosting overlapping events • New hotel-related tax revenues can be generated for Boston and the Commonwealth The mid-priced hotels will generate more than $6 million in revenue annually in property tax, sales tax, income tax, and hotel occupancy tax The new headquarters hotel will generate approximately $26 million in revenue annually in property tax, sales tax, income tax, and hotel occupancy tax • 4,700 construction jobs and 2,100 permanent jobs will be created

Current annual average

43

Potential annual average if Top 5 is fully implemented

Bull’s Eye Events*

61

44%

535,000

Room Nights

724,000

Convention & Event Attendees

47%

$532 Million

$29 Million

Economic Impact

Tax Benefits

* an event that books more than 1,000 hotel rooms

Bull’s Eye Events

786,000 877,000

21%

35%

41%

Room Nights

Convention & Event Attendees

$716 Million $41 Million

Economic Impact

Tax Benefits

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What needs to be done The Top 5 campaign will make Boston more competitive and allow the Commonwealth to build on its success in the conventions industry by:

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2

3

Increasing the number of hotel rooms within walking distance of the BCEC to meet current and future demand

Increasing the number of mid-price hotels available to price-conscious meeting and convention organizers and attendees

Encouraging the development of a second headquarters hotel of 1,000 or more rooms near the BCEC that will provide accommodations and amenities sought by major conventions

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5

6

Expanding the Westin Boston Waterfront by about 350 rooms

Expanding the BCEC’s exhibit space to approximately 800,000–850,000 square feet to accommodate more conventions and trade shows, potentially making the BCEC the 11th largest convention center in the United States Adding a second larger ballroom and new meeting rooms to the BCEC to meet demand and allow for overlapping events in the facility

Source: Massachusetts Convention Partnership Final Report 2011

Unleashing the potential of the Hynes With its proximity to some of the best dining and shopping in Boston, the John B. Hynes Veterans Memorial Convention Center remains one of the most popular meeting places for mid-sized events in North America. It’s an asset we value, and a critical component of our Top 5 campaign.

Creating more hotel rooms near the BCEC benefits the Hynes. The Hynes is directly connected to 3,100 hotel rooms via three headquarters hotels in Boston’s Back Bay, making it one of the most convenient and centrally located convention centers in America. However, when the BCEC hosts a large event, many of those nearby hotel rooms are booked

by BCEC event attendees, leaving the Hynes without available hotel rooms and unable to be sold.

By building more mid-priced and headquarters hotel rooms near the BCEC, the Hynes benefits, allowing seven to eight additional events to be held annually at the Hynes, and allowing simultaneous events to be held at the Hynes and the BCEC. That means greater economic impact for Boston and the Commonwealth, and allows both of Boston’s convention centers to flourish.

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What we have done so far The Top 5 campaign is already underway. Over the last year we have worked to develop a financial plan designed to bring the most economic benefit to the Commonwealth while requiring no new taxes or fees.

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Expanding our capacity

Working in collaboration with the state’s Executive Office of Administration and Finance (EOAF), as well as other experts in the field, officials at the MCCA have found a way to expand the BCEC— without increasing any fees or taxes—by making use of existing Convention Center Fund proceeds.

The Convention Center Fund, which is controlled and managed by EOA, was created to pay for the construction of the BCEC and ongoing bond payments and MCCA operations.

2

Accommodating our guests

The MCCA has entered into an agreement with a developer to build two mid-priced hotels to be run

by Starwood Hotels and Resorts Worldwide. Once operating, the hotel operator will pay rent to the MCCA and taxes to the city and state.

The new mid-priced hotels will create 370 construction jobs, 175 permanent jobs and generate approximately $6 million annually in property tax, sales tax, income tax, and hotel occupancy tax to the city and state.

When it comes to the 1,000-room headquarters hotels, major hotel developers and operators have demonstrated a strong interest in Boston. However, our recent analysis of similar projects across the nation indicates that the private sector won’t build such projects without some form of public support.

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18 # of 700+ room hotels built over the last decade in North America from 2002 to 2012

/

New mid-priced and headquarters hotels, and the expansion of the BCEC could create 4,700 construction jobs and 2,100 permanent jobs.

18* # of those hotels completed using 100% public financing or with public assistance

Factors that impact Boston’s ability to attract a privately financed headquarters hotel: Challenging development sites and high construction costs in Boston Complex project permitting and approval process Financing availability and required rate of return for investors

Now is the perfect time to expand the BCEC and construct a nearby headquarters hotel, as interest rates are at all-time lows.

* Source: STR (Smith Travel Research)

(Above) Architectural rendering of completed expansion project

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What you can do

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We ask that you read this document and ask follow up questions. Review the numbers and what they mean for both the MCCA and the Commonwealth.

2

Spread the word among your colleagues and friends.

Boston and Massachusetts need more jobs and economic development, and the convention center is an economic development engine for the state. This is an opportunity we cannot afford to miss.

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And finally, we ask for your support. Through careful execution and a commitment to excellence in customer service, we have made Massachusetts a major convention market. Now, we have an opportunity to solidify our leadership for years to come. The time to act is now. Whether you’re a state legislator or a community leader, a local businessman or hotelier, we ask that you make your voice heard and support this important effort.

To find out more about how Top 5 would benefit Massachusetts, visit massconvention.com

Massachusetts Convention Center Authority Massachusetts Convention Center Authority 415 Summer Street, Boston, Massachusetts 02210 415 Summer Street, Boston, Massachusetts 02210 t 617.954.2000 f 617.954.2299 t 617.954.2000 f 617.954.2299 | T5Boston.com massconvention.com | T5Boston.com massconvention.com /MassConvention /MassConvention @MassConvention @MassConvention massachusetts-convention-center-authority massachusetts-convention-center-authority

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