Hunden Presentation - Phase One

EXECUTIVE SUMMARY Introduction Located on the Clark Fork of the Columbia River in West Central Montana, Missoula is the county seat of Missoula County, as well as the regional center of economic, entertainment, tourism and education activity for Western Montana. Despite its position as a regional center, the city does not have a modern public assembly facility whose primary mission is to generate event activity – such as concerts, trade shows, conventions, family shows, and sporting events – for the city and region.

Missoula is the second largest city in the State of Montana (after the City of Billings), with an estimated 2008 population of 107,320 in its Metropolitan Statistical Area, and has the largest television market in the state covering a base population of 340,000 and maximum population of nearly 450,000, when considering the reach of the NBC affiliate. Being the center of a regional media market is key to an events facility as it will readily receive local media attention and serve as a medium for event advertising and promotion.

The figure below shows the region and television market covered by Missoula.

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Figure 1 -1

Missoula is the home of the main campus of the University of Montana, a member of the Big Sky Conference, whose athletic teams are known as the Grizzlies or Lady Griz. The campus has an enrollment of approximately 14,000 students with 800 faculty and staff.

Because of its location in a lush valley formed by a former glacial lake that cause the winters to be milder than most of the rest of the state, Missoula is known as the “Garden City�. Missoula is a prime tourist destination for fishing, hiking, camping, cycling, rafting and other outdoor activities due to its location in the northern Rocky Mountains on the Clark Fork, near the Blackfoot and Bitterroot Rivers and within three and a half hours of both the Glacier and Yellowstone National Parks, as well as numerous state and federal wilderness and recreation areas. In addition Missoula

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also supports a number of cultural and entertainment activities, which draw people to the City, including the Art museum of Missoula, the Children’ Theatre and the International Wildlife Film Festival as well as college athletic and minor league professional sports events.

Although the City of Missoula has a number of venues to accommodate various activities and events, a need for a multi-purpose event center has long been believed to exist. Currently, Missoula has a variety of venues such as: 

The County Fairgrounds

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The University’s Adams and University Centers

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Wilma Theater

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Florence Building Governor’s Room

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Various hotel conference facilities, and

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Several outdoor facilities.

However, these venues have their particular limitations, such as limited space, scheduling conflicts, and lack of adaptability for more than one type of event or activity, which could make a multi-purpose event center a strong complement to the existing array of venues in Missoula. Existing facilities are either not suited to host such events or have a combination of restricted availability and function space configurations (the Adams Center at the University of Montana) that do not allow Missoula to maximize its ability to host events. While the University has been performing a great service for the community by providing availability for events and promoting various offerings, it ultimately has a primary mission of serving student athletic and other needs of the university.

With this in mind, the Missoula Area Economic Development Corporation (MAEDC) and Missoula Area Chamber of Commerce (MACC) spearheaded an effort to assess the feasibility and economic impact of an all events exposition center to serve the Missoula area. Hunden Strategic Partners, a firm specializing in such public assembly facility feasibility studies, was retained to conduct a study, broken into two phases.

The first phase sough to establish the viability of the concept and the overall opportunity and need for such a facility.

Having substantially completed Phase I, HSP believes that a multi-purpose events center is an economic development opportunity worth investigating further due to an apparent need, the ability to recapture lost economic and event activity currently flowing to other facilities and communities (including those out of state), and as a key component to its role as a regional and media center. The second phase of work will refine the recommendations related to the facility and site, project demand and financial activity associated with the recommended facility, estimate the range of capital and operating support necessary to develop the facility, analyze the funding options, and project the ongoing economic, fiscal and employment impact of the facility.

The components of Phase I and Phase II appear below:

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Phase I 

Task 1 – Kickoff, Project Orientation, Initial Fieldwork

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Task 2 – Economic, Demographic and Tourism Analysis

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Task 3 – Meeting/Convention Industry Analysis & Trends

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Task 4 – Concert/Sports/Ticketed Event Industry Analysis & Trends

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Task 5 – Interviews and Survey Work

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Task 6 – Site Analysis

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Task 7 – Analysis of Comparable and Competitive Facilities

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Task 8 – Hotel Analysis

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Task 9 – Feasibility Recommendations

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Task 10 – Needs Assessment of Physical Requirements

Because the results of Phase I to date appear promising and a facility is recommended, the tasks in Phase II are set to commence.

Phase II 

Task 11 – Demand Projections

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Task 12 – Financial Projections

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Task 13 – Development Cost and Financing Analysis

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Task 14 – Economic, Fiscal and Employment Impact Analysis

Additional tasks may include an analysis governance, ownership and management.

and

recommendations

related

to

Summary of Initial Recommendations Based on the analysis to-date, Missoula is a logical location for a regional events facility. The facility should not act as a single facility type, such as an arena, but be multi-purpose in nature to host a variety of event types. Larger markets can support single-purpose facilities, but a multi-purpose facility is best for Missoula’s regional market.

Discussion of Strengths, Weaknesses, Opportunities and Threats. When considering the idea to develop a multi-use events center or any other business plan, the interested parties need to analyze the proposal in a clear and rational manner.

One method used to evaluate a business plan is the “SWOT analysis,” a technique that applies critical thinking to four areas. The method evaluates the proposal by considering the strengths, weaknesses, opportunities and threats of the plan.

HSP has used the “SWOT analysis” to evaluate the proposed events center, drawing on the facts surrounding the proposal, the City of Missoula and the surrounding

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community, the existing facilities in the city, the facilities that may be considered as competitors in the region, and events centers throughout the United States that would be considered comparable examples to the proposed facility. The application of that analysis is as follows:

Strengths (Existing attributes that are helpful to building an events facility.) 

Quality of Life. The city and the region have an excellent quality of life, with an educated populace, a large and well-known university presence, beautiful surroundings, a thriving music and performance scene, and unlimited possibilities for outdoor activities.

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Committed and Interested Leadership. A committed civic, community and business leadership within the city of Missoula is forward-thinking and acts in the best interests of Missoula and the area.

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Positive and Supportive University of Montana Leadership. The University of Montana has a good relationship with the City of Missoula and the region, and the leadership of the university is supportive of the proposed multi-use events center. This is critical given that their arena, the Adams Center, is the only other similar facility in Missoula.

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Community Interest. Interviews within the Missoula community reveal a great deal of support for projects that will enhance the city and area, including a possible multi-use events center. This was true even of professionals whose business included potentially competing with a new facility.

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Population Base. While the population of the Missoula Metropolitan Statistical Area is approximately 100,000, the regional population, those who live within 150 miles of the city, is over 300,000, and the media reach is approximately 450,000. The population of the local and regional areas has grown over the last ten years and continues to increase at a rate greater than the state or nation. This increasing population provides a growing base of businesses and individuals who would attend functions and events at a new events center. The increasing business base provides expanded opportunities for sponsorship, advertising and special event usage.

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Easy Automobile Access. Interstate 90 gives drivers easy access to the City of Missoula from many of the regional population centers, including the cities of central and eastern Montana, as well as the Spokane, Washington and Coeur d’Alene, Idaho metropolitan area to the west.

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Downtown Redevelopment. Downtown Missoula has seen improvement based on private investment and public leadership. A vibrant downtown consists of popular restaurants, shops and clubs, providing a more visible face of the city and drawing more visitors from the surrounding areas.

This helps the community as a whole and proves to visitors that it is serious about a vision for itself, regardless of where the events center is located.

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Hotels in Missoula. Recent additions to the number of hotels in the West Reserve-Interstate 90 interchange area, as well as strong and successful established hotels in and near downtown, creates a block of hotel rooms in the city that can support events in Missoula.

Weaknesses (Existing attributes that may hurt the success of an events center.) 

Air Access. The Missoula International Airport provides regional and national access to the city, with over 500,000 passengers traveling through the airport in the past year. However, the cost of airfare and the relative lack of direct flights compared to other airports in the Mountain West combine to have a negative impact on travel to Missoula for those interested in hosting an event here. This suggests that the events center will need to rely primarily on drive-in based business, such as concerts, family shows, consumer shows and state-oriented events.

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Present Lack of Events in Missoula. Due to lack of facilities in the Missoula area promoters have not considered the city a prime location for a variety of events, including family shows and major concerts. The Adams Center at the University of Montana holds some events and concerts but that facility’s major focus is the university programs, especially team sports. This is more of a challenge to overcome than a long-term weakness.

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Current Lack of Event Marketing. Missoula has had no need to actively market the existing facilities for events because of the lack of availability of facilities. Again, this is a challenge to be overcome with funding and expertise and does not present a long-term weakness.

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Event Planners’ Lack of Knowledge of Missoula. Many of the meeting planners and promoters surveyed expressed limited knowledge of Missoula, both the existing facilities of the city and the offerings of the city and region generally. This will require a strong, long-term marketing and sales effort to overcome.

Opportunities (external conditions that will help the operations of an events center.)

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Lack of Current Facilities. The city (and region) has only limited event facilities, and those that exist cannot accommodate the number and size of events that would consider Missoula. The Adams Center, the only large facility that could host large events, has date conflicts with University of Montana sports and other events. It must first serve the student population and only then can consider other opportunities.

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Lack of Regional Newer Facilities of Similar Capacity. While the state and region have several facilities that will compete for events, no new or modern mixed-use events center exists in the region. The closest events centers to Missoula are the Butte Arena in Butte, Montana, which was built in 1952, the Four Seasons Arena at the Great Falls, Montana, ExpoPark, built in 1979, and the Spokane Arena, built in 1995. Of these facilities, only the Spokane Arena was constructed in the last two decades, although

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the other facilities have had several renovations. The lack of newer facilities provides the proposed events center with an opportunity to offer state-of-the-art and modern amenities that groups and events seek.

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Stronger Local CVB Provides More Marketing Possibilities. The Missoula Convention and Visitors Bureau recently has benefited from the Tourist BID that will provide for greater funding for the organization. The result is a stronger organization that will be able to partner with a new events center that would promote events in Missoula and at the events center.

Threats (External conditions that are a threat to a new events center.) 

U.S. Economy and Weaker Demand. The U.S. economy has been in recession, which hurts demand for events. However, by the time such a facility opens, the economy will have likely rebounded.

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Competition from New Venues. A new facility has advantages over the older regional facilities but would lose the advantages and gain a major competitor if another city within the region develops a new events center or other facility. Coeur d’Alene, Idaho, is considering development of a new multi-use arena, with a completed study released in March, 2009, recommending such a facility in that city. A similar facility study is underway in Pocatello, Idaho.

Based on the SWOT analysis and the findings in this report, HSP recommends the following initial components for the proposed multi-use events center, as shown in the table below.

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Ta b le 1 -1

Initial Recommendations Multi-Purpose Events Facility Arena Component 6,300 - 7,000 Retractable Seats Exposition Component 35,000 SF using Arena Floor 25,000 SF Additional Adjacent Floor 60,000 SF Total Column-Free Space Ballroom & Meeting Component 9,000 SF Divisible Conference/Ballroom 4,000 SF Other Meeting Rooms 13,000 SF Total Meeting Rooms Other Components Full-Service Kitchen Concession Stands Green Room Dressing Rooms (4) Lobby & Pre-Function Areas Locker Rooms (2 Large/2 Small) Source: HSP

The initial recommendations will be refined as Phase I moves into Phase II, however the following facilities are recommended: an arena with 6,300 to 7,000 retractable seats that opens into a large expo space, additional exposition space to accommodate consumer and trade shows of up to 60,000 square feet and a conference center/ballroom component. Additional components and amenities to serve the facility’s users are also recommended. Not explicitly stated but suggested are adjacent or included restaurants to generate and retain activity before and after events.

Area Economic and Demographic Implications Economic and demographic trends are some of the best indicators of success for a multipurpose events facility.

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Population The following table shows the population characteristics of the state, MSA, County and City.

Ta b le 1 -2

Missoula, Montana MSA, and State Population and Growth Rates Population United States State of Montana Missoula MSA Missoula County City of Missoula City Pop. As % of MSA

1990 248,709,873 799,065 78,687 78,687 42,918 54.5%

2000 281,421,906 902,190 95,802 95,799 57,053 59.6%

2008 299,389,484 967,440 107,320 107,320 68,202 63.6%

Percent Change 2000-2008 6.0% 6.7% 10.7% 10.7% 16.3%

Source: U.S. Census Bureau, HSP

The State of Montana experienced strong population growth from 1990 to 2008, increasing by 21 percent (over 150,000 people), more than double the rate of the nation as a whole. This growth suggests the area has a positive quality of life and reputation for luring new residents.

Regional Access Missoula, Montana is located in western Montana about 30 miles from the state’s western border. Interstate 90, a major east-west corridor connecting Washington to Massachusetts, runs through Missoula.

The Missoula airport hosts several national carriers including Alaska Airlines/Horizon Air, Allegiant Air, Northwest Airlines/Compass Air, Delta Connection and United Airlines. There were 564,922 passengers that utilized the airport in 2007.

The Mountain Line is a fairly comprehensive public transportation system that consists of 12 bus routes. The system links the airport, the university and various points of interest in the city.

Income Residents’ effective buying income helps to demonstrate the amount of disposable income that is available locally. Considered a bulk measurement of market potential, EBI indicates the ability to buy, and is essential for selecting, comparing, and grouping markets. Markets with higher EBI are important for multipurpose facilities because the local population often attends and/or hosts events in these facilities. The higher the EBI, the more likely the population is to use a facility.

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Effective Buying Income data is shown in the following table.

Ta b le 1 -3 Effective Buying Income (EBI) 2008

Total EBI (000) Median Household EBI

Missoula MSA

State of Montana

United States

$5,051,860,000

85,068,372,500

$6,300,794,040

$35,988

$35,281

$41,792

25.8% 17.9% 27.4%

23.8% 18.2% 26.1%

24.5% 20.0% 30.5%

% of Households

by EBI Group $20,000 - $34,999 $35,000 - $49,999 $50,000 & Over

Source: Sales and Marketing Management, HSP

While the Missoula County median EBI is less than the U.S. as a whole, it is higher than the state average. Also, because the Missoula media market includes multiple counties, it is important to note that total EBI and median EBI are higher for the media market. The following table shows the EBI for Montana’s ten most populated counties.

Ta b le 1 -4 Average Household EBI for the Top 10 Most Populous Counties in Montana

Rank 1 2 3 4 5 6 7 8 9 10

Top 10 Counties Yellowstone County Missoula County Flathead County Gallatin County Cascade County Lewis and Clark County Ravalli County Silver Bow County Lake County Lincoln County Average

Population 140,487 102,924 88,137 84,398 79,194 60,309 41,565 32,572 29,119 19,356 67,806

Total EBI $2,700,980,000 $1,880,112,500 $1,642,620,000 $1,687,512,500 $1,410,290,000 $1,159,495,000 $781,580,000 $585,720,000 $448,360,000 $279,477,500 1,257,614,750

Average Houshold EBI $37,413 $35,988 $37,178 $40,462 $34,726 $38,429 $35,679 $33,456 $30,770 $28,711 35,281

Source: Sales and Marketing Management, HSP

Two of the top ten most populous counties in Montana are part of the Missoula area: Missoula Count and Ravalli County. Missoula County has the second highest total EBI for the region with nearly $2 million. The median household EBI for Missoula County is about $36,000, higher than the average for the top ten counties.

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The table below shows the area’s largest employers.

Ta b le 1 -5

Missoula Area Top Employers Industry

Number of Employees

Community Medical Center Missoula County Public Schools Plum Creek Timber St. Patrick Hospital University of Montana

Health Care Education Manufacturing Health Care Education

1000+ 1000+ 1000+ 1000+ 1000+

DirecTV Missoula County Smurfit-Stone Container Corp.

US Forest Service Wal-Mart Albertonson's City of Missoula Opportunity Resources Stimpson Lumber Company Village Health Care Costco Jim Palmer Trucking Missoula Developmental Service Corp.

Missoula Family YMCA Roseburg Forest Products Safeway Food & Drug The Good Food Store The Missoulian Watkins & Shepherd Trucking Western Montana Clinic

Service Government Manufacturing Government Retail Food Government Service Construction Health Care Retail Transportation Service Recreation Manufacturing Food Food Media Transportation Health Care

500 - 999 500 - 999 500 - 999 500 - 999 500 - 999 250 - 499 250 - 499 250 - 499 250 - 499 250 - 499 100 - 249 100 - 249 100 - 249 100 - 249 100 - 249 100 - 249 100 - 249 100 - 249 100 - 249 100 - 249

Company

Source: Missoula Chamber of Commerce, HSP

The largest employers in Missoula include the Community Medical Center, Missoula County Public Schools, Plum Creek Timber, St. Patrick Hospital and the University of Montana, each with over 1,000 employees. A strong and diverse base of employers is critical to support for a public infrastructure amenity like an arena or multipurpose center. These employers can host events and provide support via sponsorships and advertising.

Perhaps the largest economic entity in the region is the University of Montana. The table below profiles the University of Montana.

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Ta b le 1 -6

University of Montana Location: 2007-08 Enrollment: Affiliation: Programs: Faculty/Student Ratio: Founded: Campus:

Missoula, Montana 13,858 (11,799 undegrad) Public Institution Coed undergraduate, graduate and doctorate schools 1:24 1893 220 acres, 50 acedemic and residential buildings

Source: Univeristy of Montana, HSP

The University of Montana is a state run, public school with nearly 14,000 students and 800 faculty and staff. The university offers undergraduate, graduate and doctorate degrees. It is a major force in the community and brings thousands in for sports events. It also provides the only major public assembly facilities in the region.

HSP reviewed other cities with universities in mid- to small-sized markets to understand if public assembly facilities had been developed in those markets beyond the existing university facilities. The table below shows the results.

Ta b le 1 -7 Comparable University Cities Media Market Population

MSA Population

Median EBI

931,052

561,505

$45,711

N/A*

489,762

$39,836

Eugene, OR

597,066

346,560

$35,424

Boulder, CO

N/A*

293,161

847,411

College Station, TX Athens, GA

Event Center (NonUniversity) Alliant Energy Center of Dane County

Number of Seats

RBC Center

18,680

Lane Events Center

3,600

$50,880

University of Oregon University of Colorado at Boulder

N/A

N/A

208,460

$45,365

University of Vermont

Memorial Auditorium

2,500

N/A*

207,425

$32,273

Texas A&M University

Building Convention Center

N/A

N/A*

189,264

$32,996

Classic Center

3,200

Columbia, MO

449,968

164,283

$37,003

University of Georgia University of MissouriColumbia

Columbia Expo Center

N/A

Missoula, MT

445,523

107,320

$35,988

University of Montana

N/A

N/A

Charlottesville, VA

224,356

194,391

$44,518

N/A

N/A

Mankato, MN

130,039

92,428

$40,044

Alltel Center Arena

8,100

Boone, NC

N/A*

45,196

$34,233

N/A

N/A

Brookings, SD

N/A*

29,668

$39,206

University of Virginia Minnesota State UniversityMankato Appalachian State University South Dakota State University

Swiftel Center

3,500

City Madison, WI Chapel Hill, NC

Burlington, VT

Institution University of WisconsinMadison University of North Carolina at Chapel Hill

10,230

*Suburb or City Within a Larger Metro Area Source: Sales and Marketing Management, US Census, HSP

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Of the cities identified, most hosted public assembly facilities beyond what was offered at the university, including those with smaller markets.

The next table shows the communities that Missoula often competes with for companies, jobs, talent and general economic development opportunities. The list includes some smaller, prosperous cities with easy access to outdoor activities.

These cities are experiencing a high degree of growth and maintain a strong regional economic base. Each has a local university or college that provides a solid backbone for the community.

Ta b le 1 -8 Competitive Cities for Economic Development Media Market Population

MSA Population

Median EBI

1,079,675

462,677

38,016

Colorado Springs, CO

875,625

617,714

$45,086

Boise, ID

701,850

599,753

$42,261

Tri-Cities, WA

639,568

235,841

Missoula, MT

445,523

Billings, MT Bend, OR

Event Center (NonUniversity)

Number of Seats

Gonzaga University University of Colorado at Colorado Springs

Spokane Arena

6,147

World Arena

8,500

Qwest Arena

5,500

$44,193

Boise State University Washington State UniversityTri Cities

Toyota Center

12,000

107,320

$35,988

University of Montana

N/A

N/A

265,368

152,005

$37,340

Metrapark

9,200

159,560

158,456

$41,695

Montana State University Oregon State UniversityCascades Campus

N/A

N/A

Prescott, AZ

N/A*

215,503

$37,219

Prescott College

Tim's Toyota Center

5,100

College Station, TX

N/A*

207,425

$32,273

Texas A&M University

Building Convention Center

N/A

Flagstaff, AZ

N/A*

128,558

$40,214

Northern Arizona University

N/A

N/A

City Spokane, WA

Institution

*Suburb or City Within a Larger Metro Area Source: Sales and Marketing Management, US Census, HSP

Local events facilities have been able to benefit from the growth and regional interest in these towns. They are competitive with cities within their region because they offer both natural, scenic beauty and the necessary facilities and lodging to host concerts, sporting events, conventions, conferences and other events. As is shown, Missoula is one of the few markets in the competitive set without an event center beyond the university.

Multi-Purpose Events Center Market Context The concept of a multi-purpose events center is somewhat unique to regional centers like Missoula. That is, in the spread out Mountain West and in such places as the Plains, regional centers serve much larger populations than their immediate metro area for shopping, dining, entertainment, sports, transportation and other activities.

While the local population is relatively small, the area and population served by its assets is larger than what is considered in other areas of the country. So facilities have been developed to serve these demographic characteristics. Larger markets

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typically support multiple venues with specific uses, such as performing arts centers, convention centers and fixed-seat arenas, accompanied by headquarter hotels.

Smaller communities can also support such single-purpose facilities, but these are often large suburbs of major metro areas that capitalize on the surrounding area market of one million or more residents. In both cases, the investment in singlepurpose facilities can be large, and it is not unusual to have a budget of $40 million or more for each. All but the hotel component generally necessitate nearly 100 percent public funding (and the hotel often requires a significant public investment) because such facilities generate economic activity for the community, but do not run at an operating profit level that supports debt service. So for a community to fund these distinct facilities, the minimum investment is $120 million plus any hotel investments and annual operating subsidies. This is generally too large for a smaller market to consider.

So for a small to mid-sized regional market center like Missoula, the concept of a multi-purpose events center is logical as it combines the majority of components of the three facility types into one, more efficient public assembly facility. It can host most of the event types of the three distinct facility types (except certain performing arts events better left to theaters), but at a total cost more supportable by a smaller market. While the cost of the recommended facility has not been estimated in Phase I, it will be less than half of the cost of building three separate facilities and the cost can range considerably based on quality and amenities.

The big picture analysis must consider two primary factors: supply and demand. On the supply side, are there facilities locally or nearby that are adequately hosting the events that would or could be hosted by an all-events facility? If not, what are the gaps in the market supply? What are the causes of this supply gap? In terms of demand, a population base and the character of that population base create event demand for all manner of events. For example, a large, lesser-educated, poor population will not support event demand that a smaller, more educated and wealthier population base will. Missoula is home to a high-quality workforce, is generally well-educated due largely to the long-term impact of the University of Montana, and residents already support and attend events within and outside of the Missoula market.

There is also geography to consider, especially in the mountain west. How far does one have to travel, often with family, to participate in or attend an event? In the case of Missoula, families often travel three or more hours to state youth athletic events and two hours for entertainment and other offerings in Spokane. This represents a direct cost to families and others for travel for youth sports on an ongoing basis. It also represents leakage, or lost opportunity to capture economic activity by those who would come to Missoula for events. On the supply side, while the Adams Center provides options for arena usage and other activities, the availability is limited by their calendar, which ultimately must serve the student population. It also limits the ability of the community to host non-university arenabased sports teams (except the hockey team that plays out of the Fairgrounds). So while the Adams Center does an admirable job of serving the community (even hosting concerts fairly regularly), it cannot be available for the range of events and date needs of events that could come to Missoula and thus keep economic activity in

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the region. Beyond the Adams Center, there is no events facility of high quality within the region. The best set of facilities in the state is in Billings, a significant drive. Closer, but across state lines is the other set of premium facilities, in Spokane.

Considering that Missoula acts as the center of economic, tourism, media and other activity for a market of nearly 450,000, the public assembly facility offerings are lacking. The community appears to be losing not only events to other facilities, but also economic activity from the local population that travels outside the area for events. Comparable communities with universities have developed multi-purpose facilities and have found success. The comparable communities often become competitive with Missoula when companies are conducting site searches. As such, developing a multi-purpose event center in Missoula will help economic development officials attract and retain companies and talent in the region.

Given the supply, demand and lost opportunity factors at play in Missoula, a multipurpose events facility is indicated.

Meeting, Tradeshow & Convention Trends While the focus of the multi-purpose events center is not as a convention or conference center, many multi-purpose event facilities serve as excellent venues for trade shows, consumer shows, conventions, major receptions and other events often associated with convention centers. Because the proposed center will have a large column-free floor as well as meeting rooms and a potential ballroom, it can serve as a regional center for many types of convention center-related events. The following is a brief summary of the most likely event types at a multi-purpose event center in Missoula and trends impacting these events.

Consumer Shows. These business-to-consumer shows are generally ticketed, weekend events featuring a specific theme and dealers for that theme. Consumers pay a general admission price and have access to dealers and the opportunity to purchase or sample goods. Gun and knife, auto, bridal, home and garden, and boat/RV shows are all popular types of consumer shows. These generally occur during the colder months and therefore are excellent to fill in gaps when conventions and conferences are not as likely. These also provide a significant amount of rent to the facility but usually not many room nights, in contrast to certain convention events that may generate many room nights, but very little rent. Consumer shows generally require 45,000 square feet or more of space, but can be accommodated in smaller spaces. Large spaces are necessary in order to accommodate the large exhibits and product space (especially for RVs, boats and cars). Consumer shows have not lost their appeal over time and in fact appear as robust a market segment as ever. There is interest in a new venue for such shows in Missoula and the market currently has unaccommodated demand in this area.

Trade Shows. Trade shows are industry-specific shows designed for business to business sales and provide an opportunity for in-person interaction, demonstrations and customer appreciation activities. Examples of such shows include farm/ranch shows and food shows and nearly all require large, flat-floor spaces with few columns so large exhibits can be set up, space which a facility in Missoula would provide.

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These shows generate solid rent for a building and significant room nights for a community. Currently there is unaccommodated demand for these types of shows in Missoula and a new venue would be expected to induce several to the market annually.

Conventions & Conferences. While not the focus of this facility, it would have the opportunity to host conventions and conferences for state associations and other groups. The benefit of the large flat floor space is the ability to set up a number of booths for conventions and conferences with exhibits. The key to hosting a convention or conference successfully is meeting the demands of planners, who expect a good hotel package with a large, full-service hotel as a headquarters hotel.

Ease of transportation of attendees is key and planners also favor locations with numerous non-convention activities, which Missoula provides especially in terms of outdoor options.

Assemblies. Many religious and sales/marketing groups require an assembly format for their major events, where a number of speakers can communicate to a large crowd all in one place. A special events center in Missoula would serve this market well.

Banquets and Special Events. Again, these are not the primary reason to build a facility such as Missoula is considering, however it can serve to host many types of special events as well as large banquets that are too large for the existing venues in the region. This could include the annual Chamber luncheon, major holiday gatherings, large receptions and reunions. Beyond the local hotels and limited calendar options at the university facilities, events have no options for major special events in a quality setting.

Overall, the city, region and state lack high quality function space for the event types discussed above. With a new multi-purpose facility in Missoula, as well as a solid hotel package, Missoula can recapture the market demand currently unaccommodated by existing facilities.

Concert, Arena Sports & Other Event Trends Arena development for communities and markets comparable to Missoula has been increasing 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, and in the suburban areas of major metropolitan areas.

The market provides many reasons to consider an arena in Missoula, for winter sports, concerts and other events, as well due to the strength of the community and the potential that exists because over 300,000 people reside within a 100-mile radius.

Nationally smaller (less than 10,000 seats) arenas have become more popular than major large arenas, especially those that are not related to a large NCAA D-I

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basketball program or new NBA arena. The following table lists the arenas with less than 10,000 seating capacity that have opened since 2003.

Ta b le 1 -9 New Arenas Since 2003 With Less than 10,000 Seating Capacity Facility Name Pro Sports/Municipal Use Budweiser Events Center Comcast Arena at Everett Events Center Dodge Arena Orleans Arena Ford Arena Tyson Events Center American Bank Center Stockton Events Center Chevrolet Centre US Cellular Arena Broomfield Event Center Rio Rancho Events Center Tim's Toyota Center Greater Wenatchee Regional Events Center Kent Events Center Lucas County Arena

MSA

2007 MSA Population (000s)

Tenant(s)

# of Permanent Seats

# of Luxury Suites

# of Club Seats

Annual Naming Rights

Estimated Cost (millions)

Opened/ Expected Opening 2003

Fort Collins - Loveland, CO

269

CHL, NWBL

5,211

24

777

$75,000

$25.0

Seattle - Tacoma - Bellevue, WA

3,168

af2, WHL

8,250

20

750

$740,000

$63.0

2003

McAllen - Edinburg - Mission, TX Las Vegas - Paradise, NV Beaumont - Port Arthur, TX Sioux City, IA-NE Corpus Christi, TX Stockton-Lodi, CA Youngstown-Warren, OH Bloomington-Normal, IL Denver-Boulder-Greeley, CO Albuquerque, NM Prescott, AZ

657 1,649 383 143 410 649 596 158 2,326 781 190

af2, CHL ECHL ECHL, NIFL USHL, NIFL CHL, Texas A&M-CC af2, ECHL, MISL CHL UHL, UIFL CHL af2, CHL CHL

5,500 7,000 8,200 10,000 6,000 10,000 5,700 7,000 6,000 6,500 5,100

25 22 15 27 11 24 24 24 25 26 20

500 220 750 0 302 500 500 700 900 500 500

$200,000 -$250,000 $200,000 n/a -$200,000 n/a --n/a

$20.0 $150.0 $70.0 $28.1 $50.0 $45.0 $41.0 $37.0 $45.0 $43.0 $24.0

2003 2003 2003 2003 2004 2005 2005 2006 2006 2006 2006

Wenatchee, WA

107

NAHL, AIFA

5,000

yes

yes

--

$45.0

2008

Seattle-Tacoma-Bellevue, WA Toledo, OH

3,309 651

CHL ECHL

7,500 8,000

n/a 20

n/a n/a

---

$68.0 $105.0

2009 2009

5,413

Univ. of Miami

7,000

25

0

n/a

$48.0

2003

456

Gonzaga

6,000

0

0

--

$25.0

2004

Waterloo-Cedar Falls, IA

163

Univ. of Northern Iowa

7,000

0

0

$4M total

$20.0

2006

Cincinnati-Middletown, OH-KY-IN Charleston-North Charleston, SC Springfield, MO Dover, DE Albany, GA

2,134 630 420 152 164

Northern KY Univ.

Coll. of Charleston Drury Univ.

Delaware State Aurburn

9,000 5,000 4,000 9,000 9,600

12 0 yes 24 12

0 0 0 700 450

$6M total $2M total $6M total ---

$64.0 $36.0 $12.0 $60.0 $92.5

2008 2008 2009 2009 2010

*

College-Led Arenas BankUnited Center McCarthey Athletic Center McLeod Center Bank of Kentucky Arena Carolina First Center O'Reilly Family Event Center Delaware Civic Center Auburn Arena

Miami-Fort Lauderdale-Pompano Beach, FL Spokane, WA

* Includes hotel and casino.

Source: US Census Bureau, Venues Today, Revenues from Sports Venues, individual facilities

As the table shows, markets of various sizes have built and are planning sports and entertainment facilities, although many of the markets listed above are significantly smaller than the Valparaiso metro area. The arenas shown in the table range in size from 4,000 to 10,000 seats, and most have a significant supply of premium seating, although specific offerings of some planned facilities are not yet available. While some of these facilities are still in the planning phase or under construction, they demonstrate what each market feels is an appropriate venue, and presumably the level of premium seating it can support, given its market characteristics.

Competitive Supply and Market Demand Analysis HSP has completed a review of the competitive supply in the local area and region as well as the demand that is accommodated at those facilities. Based on interviews, we have also established an understanding of the unaccommodated demand that currently is not occurring in Missoula or its competitive supply.

The following map shows the regional competitors’ locations.

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Figure 1 -2

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The following table summarizes the regional competition, in descending order of seating capacity.

Ta b le 1 -10 Missoula Events Center Regional Competitors Date Opened

Seating Capacity

Arena Floor Space (Sq. Ft.)

Total Exhibit Space (Sq. Ft.)

Distance from Missoula (Miles)

Spokane Arena Rimrock Auto Arena, MetraPark MSU Brick Breeden Fieldhouse Butte Arena Four Seasons Arena, ExpoPark Belgrade Special Events Center

1995 1975 1956 1952 1979 1996

12,210 10,000 8,900 6,250 5,434 4,800

32,000 30,000 38,000 19,623 33,000 n/a

41,500 50,000 50,000 29,623 53,000 n/a

196 343 202 119 204 194

Average

1976

7,932

30,525

44,825

210

Location Spokane, WA Billings, MT Bozeman, MT Butte, MT Great Falls, MT Belgrade, MT

Facility

Source: Various Facilities, HSP

The largest regional competitor is the Spokane Arena, with a seating capacity of 12,210. The Spokane Arena is part of the Spokane Public Facilities District project in downtown Spokane, which includes the Performing Arts Center and the Spokane Convention Center. The facility has an arena football af2 team and a minor league hockey team as tenants, and it also hosts concerts, family shows and other events.

The highest attendance in 2008 was for hockey, but the highest revenue gross came from family shows.

The largest facility in Montana is the Rimrock Auto Arena in Billings, Montana, part of the MetraPark complex. The arena has a seating capacity of 10,000 with an arena floor space of 32,000 square feet and a total exhibit space of 50,000 square feet.

The facility holds many sports events, as well as being a central part of the nine-day Montana Fair that is held at the MetraPark. The facility can hold events that need exhibit space that exceeds the arena floor and the additional space in the building, because it can use the other facilities in the MetraPark adjacent to the facility.

The Rimrock Auto Arena 2009 calendar lists a total of 29 events in 2009, with a total of 60 event-days, not including set-up and take-down. The event-days include the nine-day Montana Fair, with concerts and rodeos that take place during the fair.

Additionally the arena hosted seven home games and two playoff games for the Billings Outlaws, of the Indoor Football League. Including the football games, but no practices or other football events in the facility, the Rimrock Auto Arena scheduled 69 event-days for 2009.

Montana State University, in Bozeman, Montana, has several facilities that host events. The major competitive facility is the Brick Breeden Fieldhouse, the home of the university men’s and women’s basketball teams. The facility has a seating capacity of 8,900 with an arena floor space of 38,000 square feet and a total event space of 50,000 square feet. The main mission of the fieldhouse is to foster and support university and student events, but the facility also hosts non-university events such as concerts and sports tournaments. The university has renovated the fieldhouse so that it has a theater configuration for large performances, called

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“Theatre at the Brick.” This use of large curtains and movable stage seats 3,300 and hosts theater events such as the “Broadway in Bozeman” series.

The consolidated City-County of Butte-Silver Bow, Montana, owns the Butte Civic Center. Built in 1952 and renovated several times since construction, the Butte Civic Center can seat 6,250 for basketball and 5,100 for ice events. The arena floor has 19,623 square feet of space and has an attached “Annex” that has 10,000 square feet of space additionally. The facility is projecting a total of 84 event-days in 2009 for the civic center, with 25 days of sports and 25 days of consumer shows leading the event categories.

The Four Seasons Arena is located in the Montana ExpoPark, the Montana state fairgrounds site in Great Falls, Montana. The arena has a seating capacity of 5,434 with an arena floor space of 33,000 square feet and a total event space of 53,000 square feet. The facility hosts sporting events, concerts and trade shows.

The Belgrade Special Events Center is an arena that hosts many high school regional and state competitions and tournaments. The Belgrade School System opened the facility in 1996, and it seats 4,800 for basketball and other like events. The facility also holds community and other school-related events but does not appear to market actively for private events, concerts or trade shows.

Other facilities that have event space include outdoor and fairground arenas such as the Kalispell Arena, the outdoor arenas at the MetroPark in Billings and the ExpoPark in Great Falls and the fairgrounds at Coeur d’ Alene, Idaho. Certain hotels in the region have event space, including the Hilton Garden Inns in both Billings and Kalispell, the Billings Hotel and Convention Center, and the Coeur d’ Alene Resort in Coeur d’ Alene, Idaho, as well as several hotels in Spokane, Washington.

One possibility that Missoula must consider is that Coeur d’ Alene, Idaho, is in the process of considering development of a multi-use events center. That city, which is 160 miles northeast of Missoula on Interstate 90, has completed a study that recommended a 6,000-seat sports and events arena for many of the same considerations and conditions that exist in Missoula. Such facility, if built, would be a primary competitor to a proposed Missoula events center, offering many of the same amenities, meeting space and arena availability. However, it would not be as convenient for the bulk of the Missoula media market nor would it compete for state association and sports tournament activity. Pocatello, Idaho is also studying a new arena, which if built, would be a secondary threat to Missoula.

Demand Each of the competitive facilities listed above has several types of events that use the facility. Several facilities have anchor tenants, including ice hockey minor league professional teams and arena football teams. Most competitive facilities in the region also work with promoters to bring family shows, concerts and other events to the area. With the events that each facility hosts, demand clearly exists for extensive use of the proposed facility.

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A new Missoula events center could likely capture many event types that utilize competitive facilities as well as host events not currently occurring in the region.

High school sports in Montana have several winter tournaments that use regional facilities. Several facilities, including the MetraPark Rimrock Auto Arena and the Butte Civic Center, host regular season high school basketball games as well as holiday tournaments and conference and regional championships. The Montana High School Association determines the state tournaments two years in advance, based on location, cost and availability. Missoula would have major consideration for the tournaments, but scheduling concerns hamper the Adams Center from bidding on the tournaments.

The following table is a list of the winter state tournaments that the MHSA has scheduled from 2004 through 2011.

Ta b le 1 -11

Montana High School Association 2004-2011 State Tournaments By Location Location Billings MetraPark Butte Civic Center Belgrade Special Events Center Great Falls (Four Seasons Arena) Hamilton High School Bozeman (MSU Field House) Miles City (Custer Co. High School) Missoula (Adams Center) Shelby High School Total

Tournaments 17 14 11 9 8 3 1 1 1 65

Source: MHSA, HSP

The Billings MetraPark has scheduled the most tournaments, a total of 17, of which eight are all-class state wrestling tournament. For state basketball tournaments, the 6,250-seat Butte Civic center has scheduled the most events, with the 4,800-seat Belgrade Special Events Center hosting almost as many. Both have hosted an average of more than one tournament per year. Within that time period the Adams Center in Missoula has hosted only one tournament.

Another popular event type for the regional facilities is the rodeo. The Professional Rodeo Cowboys Association (PRCA) is the largest organization that manages and promotes rodeos throughout North America. The PRCA promotes the Missoula Stampede, the annual rodeo that occurs during the fair, as well as more than 500 professional rodeos throughout the year.

The following table is a summary of the rodeos throughout the country that the PRCA sponsors.

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Ta b le 1 -12

Professional Rodeo Cowboys Association Rodeos Oct. 2008-Sept. 2009 Month Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Total

Rodeos 21 6 2 19 23 25 25 48 96 124 106 65 560

Montana Rodeos 1 0 0 1 0 0 0 0 5 11 8 3 29

Rodeos in Northwest* 1 1 0 1 1 0 1 2 11 31 25 14 88

*Washington, Oregon, Idaho, Montana and Wyoming Source: PRCA, HSP

The PRCA conducts 560 events throughout the year, many of which are during the winter months. However, only two rodeos occur in Montana from October through May. Seven events occur in the northwestern states of Washington, Oregon, Idaho, Montana and Wyoming throughout that time period, and several others occur in Canada. Demand exists for an indoor rodeo in Missoula if a facility existed.

Comparable Facilities 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 Missoula. 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 Missoula.

HSP has reviewed a number of facilities and discusses them as well as implications below.

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Ta b le 1 -13 Missoula Events Center Comparable Facility Summary Location

MSA Population

Year Open

Seating Capacity*

Event Space (Sq. Ft.)**

Brookings, SD Grand Island, NE Rochester, MN Mankato, MN Boise, ID

29,688 70,694 182,924 92,498 599,753

2001 2006 1938 1995 1997

3,500 6,000 5,200 5,280 5,300

42,577 38,000 68,830 38,880 58,247

195,111

1987

5,056

49,307

Facility Swiftel Center Heartland Events Center Mayo Civic Center Alltel Center Qwest Arena Average *Seating Capacity for Sports **Exhibit and Meeting Room Space Source: Specific Facilities, HSP

The average MSA population is nearly 200,000, but Boise, Idaho, skews the population average with almost 600,000 in its MSA. Without Boise the average population is 94,000 for the comparable facility locations. The average year built is 1987, seating capacity for sporting events is 5,056, and event space is nearly 50,000 square feet.

The City of Brookings, South Dakota, with a Micropolitan Statistical Area population of 29,688, developed the Swiftel Center in 2001. The Swiftel Center is a multipurpose events center that consists of an arena with a seating capacity of 3,500 for sports and up to 7,000 for concerts, as well as meeting space of a 6,800 square foot banquet room and three meeting rooms. The facility competes with the arena at the major university in the city, South Dakota State’s Frost Arena. The Swiftel Center has been so successful that the city has decided to expand it to attract larger trade shows and meetings by developing a ballroom and more meeting rooms.

The City of Grand Island, Nebraska, in cooperation with the Fonner Park Racetrack, developed the Heartland Events Center, which opened in 2006. Grand Island has a Micropolitan Statistical Area population of 70,694, which includes Hall County and two adjacent counties. The facility consists of Eihusen Arena, with 6,000 seating capacity for sports and 7,000 for concerts, and a flat floor area of 20,909 square feet, as well as the Bosselman Conference Center, with 8,000 square feet of space.

The facility competes with the Viaero Event Center in Kearney, Nebraska, fifty miles west of Grand Island, as well as the events facilities in Lincoln, including those at the University of Nebraska, located 100 miles east of the city. The facility has been a catalyst for the city to develop and recruit the new state fairgrounds adjacent to the Heartland Events Center.

The Mayo Civic Center in Rochester, Minnesota, is an important facility for the city and the area. Rochester has a Metropolitan Statistical Area population of 182,924, the third largest city in the state behind Minneapolis and St. Paul. The Mayo Civic Center consists of Taylor Arena, which has a seating capacity of 5,200 for sports events and 7,200 for some concerts. The facility also has an exhibit hall with 25,200 square feet of space, a 4,294 square-foot ballroom, and nine meeting rooms that total 14,294 square feet. The Mayo Civic Center began in 1938 but has been renovated several times, including a major renovation in 2001. In 2008, there were

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379 events that took place with over 314,000 attendees. Concerts and entertainment events boasted the highest number of visitors with nearly 130,000 attendees and generated over $775,000.

The Alltel Center in Mankato, Minnesota, is a major competitor of the Mayo Civic Center, and of the Swiftel Center in Brookings, South Dakota 150 miles west of Mankato. Home of Minnesota State University-Mankato, a university with approximately 15,000 students, Mankato is 85 miles southwest of Minneapolis-St. Paul and has a Micropolitan Statistical Area population of 92,498. The Alltel Center, opened in 1995, has the seating capacity of 5,280 for sports and up to 7,300 for some concerts, with 20,909 square feet of flat floor space on the arena floor. The facility also has ballroom space of 13,290 square feet and six meeting rooms with a total of 4,681 square feet of space. The facility, which the City of Mankato owns and operates, is a major venue for concerts, meetings, banquets and other events in the city. It competes with the Taylor Center at Minnesota State University, which opened in 2000 and hosts the university basketball, volleyball and other sports teams, as well has holding concerts and graduations.

The Qwest Arena, in Boise, Idaho, should be considered a comparable facility for a potential events center in Missoula as well as a possible regional competitor. Boise, Idaho, has a Metropolitan Statistical Area population of 599,753, by far the largest population base of the comparable facilities in this report. The Boise City-Nampa area is approximately 400 miles from Missoula along a non-interstate route, or 600 miles by interstate. That distance makes the Qwest Center less of a competitor than the other regional competitors mentioned above.

An investment group, Block 22, LLC, developed the Qwest Arena as well as the attached Grove Hotel. The arena seats 5,300 for sports and increases to up to 6,800 for center-stage concerts. The arena has 39 suites and 1,100 club seats. The arena floor has 22,247 square feet of flat floor space, and the Grove Hotel has over 36,000 square feet of meeting space with 22 meeting rooms of various sizes.

Interview and Survey Results HSP conducted a number of group and individual interviews with stakeholders and potential users of a multi-purpose facility. In addition, HSP and Tradeshow Week conducted a survey of regional and national planners, producers and other potential users to understand their desire to host an event in Missoula and the facility that would induce them to do so. The results of these efforts are discussed in summary below.

Missoula has clearly not been a major destination for planners of major events, which is not surprising given that it has no dedicated non-university event facility.

Despite this, a majority of the consumer show and trade show planners responding to the survey had a very positive view of Missoula. Trade show and consumer show planners showed interest in holding events in Missoula if a facility existed to meet their needs, and those planners needed at least 60,000 square feet of total space for their events. The great majority of the planners stressed the importance of a facility within walking distance of a hotel and restaurant options. Individual comments

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ranged from the need for kitchen amenities and better air access to the request for good unloading and loading access at the facility.

HSP has conducted extensive interviews, both in-person and by telephone, with persons and groups interested in Missoula, the proposed arena, tourism in Montana, and competitive and comparable arenas. Based on these interviews, the following comments should be noted:



Almost everyone that HSP interviewed had a positive view of a possible events center in Missoula.



The University of Montana is very supportive of a new events center.

While the Adams Center has some similar space and amenities, that facility’s first priority is to the students and student-athletes of the university. A new events center would provide space and amenities that the university welcomes and may use.



Event promoters and producers suggest that hosting events in Missoula can be difficult due to current conditions. A new, efficient facility would be attractive for events.



Local, regional and state tourism organizations express the need for additional event and meeting space.



Many individuals interviewed expressed the need for a regional location for events that currently occur outside the region that require major travel and expense for the participants and spectators.

Hotel Market The hotel market is important as a support structure for event facilities, especially for conventions and tradeshows. HSP completed an analysis of the local hotel market and a summary of the results is shown below. The market has seen significant hotel investment of late, which has kept the overall level of quality high in the market.

The table below shows the competitive set of higher quality hotels in the market.

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Ta b le 1 -14

Missoula Hotel Market Hotel Holiday Inn Missoula Downtown @ The Park Doubletree Missoula Edgewater Hilton Garden Inn Missoula Ruby`s Inn & Conference Center Best Western Grant Creek Inn Hawthorn Suites by Wyndham Missoula Staybridge Suites Missoula Wingate By Wyndham Missoula Holiday Inn Express Missoula Riverside Courtyard Missoula Quality Inn & Conference Center Missoula La Quinta Inn Missoula Red Lion Missoula Inn Hampton Inn Missoula Sleep Inn Missoula Comfort Inn Missoula Total Average

Open Date

Rooms

Sep 1988 Jun 1997 Feb 2006 Nov 1994 Jun 1996 Feb 2009 Jul 2008 Jul 2003 May 1996 Dec 2005 Apr 2005 May 2007 Mar 1972 Feb 1996 Jan 1996 Jan 1996 -1999

200 171 146 126 126 101 101 100 95 92 81 80 76 61 59 52 1,667 104

Source: Smith Travel Research

There are 1,667 hotel rooms in the quality set of hotels, which is a healthy amount of rooms for the market size and this is attractive when considering hosting an event in Missoula. There are several hundred additional rooms in smaller, lesser quality hotels. While there are no very large full-service hotels, the analysis did not uncover a major gap in the size or quality of the room population in Missoula. The newest large hotel is the Hilton Garden Inn and it features a significant amount of function space for a hotel of its size.

The table below shows a summary of hotel performance over the last several years.

Ta b le 1 -15 Historical Supply, Demand, Occupancy, ADR, and RevPar for Competitive Hotels Year

Annual Avg. Available Rooms

2003 2004 2005 2006 2007 2008

1,178 1,228 1,236 1,454 1,452 1,516

2009 YTD (July) CAGR* (2003-2008)

-5.7%

Available Room Nights

% Change

Room Nights Sold

% Change

Occ.

% Change

ADR

% Change

RevPar

% Change

430,120 448,220 451,072 530,564 529,904 553,309

-4.2% 0.6% 17.6% -0.1% 4.4%

289,241 288,002 291,414 331,115 343,433 338,275

--0.4% 1.2% 13.6% 3.7% -1.5%

67.2% 64.3% 64.6% 62.4% 64.8% 61.1%

--4.4% 0.5% -3.4% 3.8% -5.7%

$71.49 $76.34 $81.02 $85.51 $92.95 $97.86

-6.8% 6.1% 5.5% 8.7% 5.3%

$48.08 $49.05 $52.34 $53.37 $60.24 $59.83

-2.0% 6.7% 2.0% 12.9% -0.7%

350,273

7.2%

196,639

1.9%

71.3%

-4.9%

$93.51

-2.5%

$52.49

-7.3%

--

3.4%

--

-1.8%

--

7.4%

--

4.9%

--

5.7%

*Compound Annual Growth Rate Sources: STR, HSP

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The supply of hotel rooms has outpaced room demand over the period, yet until the current recession, the hotels have performed well and the new, higher quality hotels have helped the market overall. Average daily rate has increased at an annual average rate of 7.4 percent, leading to revenue per available room growth of nearly five percent per year. While the current period is a difficult one, the market is generally healthy relative to the national economy and should rebound from its current slump by 2011.

The following figure shows the seasonality of demand.

Figure 1 -3

As would be expected for a market with a strong outdoor tourism market, the summer months are the strongest for the hotel sector. Multipurpose events facilities are often busiest during fall, winter and spring months, which is complimentary to the hotel market, which will have availability during these times of the year to host events at the events center.

Potential Site Analysis Depending upon the final physical program of the building, the footprint will range slightly, but will likely be near 100,000 square feet. With landscaping and sidewalks, etc., the acreage for the building and surrounding improvements is at minimum three acres and up to five acres. Assuming a 5,500-seat facility (as a mid-point) and 3.3 persons per car (also as a mid-point), there is a need for approximately 1,700 spaces, or approximately 14 acres in parking. Again, this is a mid-point and the facility may require as many as 2,000 spaces. For planning purposes, the facility site at this point should have a minimum of 20 acres, unless structured parking is planned.

Four potential site areas have been discussed and analyzed for an events center and these areas are shown below.

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Figure 1 -4

The following table is a matrix of the ranking of the possible sites for the facility.

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Ta b le 1 -16 Site Matrix and Ranking I-90 Sites by Reserve

I-90 Sites by Airport

Fairgrounds

Roundhouse/ Downtown

Critical Design Factors Adequate Site Area & Dimensions Ability to Expand Access - Attendees Access - Trucks Configuration Attendee Experience Visibility Safety & Security, including emergency access Relationship to Existing Buildings Subtotal

5 5 5 5 5 4 5 5 3 42

5 5 4 5 5 3 5 5 3 40

4 2 3 3 4 4 2 3 4 29

4 2 2 2 2 3 5 3 3 26

Site & Utility Factors Utility Infrastructure Environmental Quality Subtotal

5 4 9

5 5 10

5 5 10

4 1 5

Financial & Economic Factors Impact on Facility Performance Property Availability & Relative Costs Displacement & Relocation Development Costs Leverage Community Assets Ability to Induce Additional Developments Subtotal

5 5 5 5 4 4 28

4 5 5 5 3 4 26

4 5 4 4 4 4 25

3 2 3 2 3 3 16

Timing Factors Acquisition Timing Approvals Ownership Issues Subtotal

4 5 4 13

4 5 4 13

5 4 5 14

2 2 2 6

Grand Total (out of 100)

92

89

78

53

Source: HSP

Based on the initial review of site options, HSP recommends focusing on sites off of I-90 near West Reserve Street. Several sites should be in play to ensure a competitive and fair pricing process. Also, the development plan should include options for walk-able retail and restaurant activity onsite to create a complete experience that captures as much economic activity as possible before and after events. This will help to keep spending in Missoula.

Next Steps It is recommended that the analysis move into Phase II, while also refining the physical program to reflect market needs and opportunities.

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