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Home My WebLink AboutLTAC 2015-06-22 Agenda PacketCity of Tukwila 6200 Southcenter Boulevard • Tukwila, Washington 98188 Jim Haggerton, Mayor AGENDA Lodging Tax Advisory Committee June 22, 2015 Noon to 1:30 PM Starfire Sports Complex 14800 Starfire Way, Tukwila, WA Special Meeting Notes: Prior to the meeting Ben Oliver, GM of Starfire Sports, and the newest member to the lodging tax advisory board will provide an optional tour of the facility. The tour starts at 11:15. Come see home of soccer in the Pacific Northwest and training ground for your Seattle Sounders, S2, and Sounders Women! Please RSVP to Brandon Miles by 4:30 PM on Friday, June 19th Lunch will be available at 11:45. 1. Welcome and Introductions Chair Kruller 2. Approval of Agenda (ACTION ITEM) Committee Members 3. Approval of Minutes (ACTION ITEM) Committee Members 4. SSRTA Transition Katherine Kertzman Phone: 206- 433 -1800 • City Hall Fax: 206 - 433.1833 • www: tukwilawa.gov 5. Economic Development Update a. SSRTA Supply and Demand Forecast b. Northwest Arena c. Washington Place d. Holiday Inn Express e. Southcenter Pedestrian Bridge f. Family Fun Center Expansion g. Transit Center Ribbon Cutting i. June 29th, 10 A.M. h. Round 1 i. http: / /www.roundlusa.com/ i. Transit Planning Updates i. Sound Transit and ST3 1. Boeing Access Road 2. 1 -405 High Capacity Transit (HCT) ii. King County Metro Long Range Plan Derek Speck, Brandon Miles, and Katherine Kertzman 6. Southcenter Marketing Partnership Brandon Miles 7. Tukwila Lodging Tax, Admission Tax, and Sales Tax Collections Brandon Miles 8. Seattle Southside Annual Report Katherine Kertzman 9. Smith Travel Report Katherine Kertzman 10. Regional Fire Authority Update Derek Speck 11. Banner Update Brandon Miles 12. Roundtable 13. Adjourn Phone: 206- 433 -1800 • City Hall Fax: 206 - 433.1833 • www:tukwllawa.gov DRAFT City of Tukwila Lodging Tax Advisory Committee Friday, February 20th, 2015 12:00 p.m. — 1:30 p.m. Location: DoubleTree Suites by Hilton 16500 Southcenter Pkwy, Seattle, WA 98188 Tukwila, WA, 98188 Committee Members Present: Council President Kate Kruller, Jim Davis, Carol Kolson Absent: Mayor Jim Haggerton, Miesa Berry, Maureen Huffman, Mike Bush, Kelly McMeekin Staff Present: Katherine Kertzman, Tourism & Marketing Program Manager; Kristina Thorne, Visitor Services Specialist; Ashley Comar, Marketing Communications Coordinator; Meagan McGuire, Business Relations Coordinator; Derek Speck, Economic Development Administrator; David Cline, City Administrator; Brandon Miles, Economic Development Liaison. Guest Present: Andrew Opatkiewicz, S2, General Manager Meeting Duration: 12:09pm — 1:31 pm 1. Welcome and Introductions Council President Kate Kruller brought the meeting to order with around the room introductions and distribution of a sign in sheet. 2. Approval of the 08/27/14 Minutes and 02/20/15 Agenda Council President Kruller asked for a motion to approve the 08/27/14 Lodging Tax Advisory Committee minutes and 02/20/15 agenda. Brandon Miles clarified the quorum requirements for the Committee since LTAC has had three members resign. Establishing a quorum is based on the number of seated members. The three vacant positions are not counted towards the number of seated members. Determining a quorum is thus based on having three (Kruller, Davis and Kolson) of the six seated members attend the meeting. Carol Kolson made the motion to approve the minutes and agenda and Jim Davis seconded. No discussion, all in favor MOTION PASSED. 3. Sounders FC2 Andrew Opatkiewicz described team history and emphasized the special atmosphere created at Starfire. Home games are estimated to drive traffic and business to area. S2 values a positive fan experience and will keep ticket prices $6 -$15. Estimated attendance to be 3,000 per home game. 4. 787 Run Brandon Miles shared preliminary details of proposed 787 run from Westfield Southcenter to Museum of Flight in partnership with Seattle Sports Commission. Discussion of race housing followed. 5. Smith Travel Research and Lodging Tax Reports Katherine Kertzman detailed the reports, stating 2014 was the most successful year on record. Jim Davis elaborated need for shoulder season weekend business. Council President Kruller asked about 2014 success attributes. Discussion followed. 6. 2015 Funding Requests Council President Kruller opened with Tukwila's funding request. Miles explained the goal is to expand the fan experience and requested $6,500 for street pole event banners in the City of Tukwila entertainment district. Jim Davis motioned to approve and Carol Kolson seconded. All in favor. MOTION PASSED. 7. Seattle Southside Regional Tourism Authority (SSRTA) Kertzman, in place of Maureen Huffman, updated the committee on the details to date for the SSRTA progress. 8. MarCom Vacation Planner Ashley Comar presented the new edition of the vacation planner and detailed the publication's projected reach. 9. Destination Sales and Services Meagan McGuire shared details about group leads and discussion followed. 10. Southcenter Marketing Partnership Brandon Miles announced relaunching of the City's Southcenter Marketing Partnership with the goal to strengthen /increase day tourist spending. He hopes the program will move forward in the spring. 11. New Business & Announcements Derek Speck shared City of Tukwila construction updates. Kristina Thorne reported on Westfield Visitor Center activities. Meeting Adjourns: 1:12pm lila SOUTHSIDE ,P2I Regional Tourism Authority New Supply and Demand Forecast With record occupancy and high room prices, the past two years have been the best of times for hotel owners and operators, particularly in the central urban areas in King County. Naturally, this strong performance has attracted the interest of developers. No one questions the need for some new capacity, but the extent of the pending expansion of supply is disquieting. Eighteen new hotels are under construction in the tri- county area, and dozens more are pending or proposed. Even with strong growth in demand, the new competition will put downward pressure on occupancy rates and room prices for the next several years. We look for the market to reach a trough in 2017 or 2018, with the next peak anticipated around 2022. In Tukwila, a 139 -room Home2 Suites by Hilton is being developed several blocks south of Southcenter Mall. Opening in June 2015, it will be the first hotel in the region to carry this midscale extended -stay brand. A few blocks away, the mixed -use Washington Place development (formerly Circuit City) will include a 189 -room hotel, opening in 2017. At least one additional limited service property in Tukwila has been proposed for development. Ariel Development has announced plans for a 150 -room Hyatt Place in SeaTac. The hotel will be located near the southwest corner of Angle Lake, replacing an existing office building. At least two other sites near the airport have been proposed for hotel development, flag and room totals have not been announced yet. To the south, the 225 -room Four Points by Sheraton is under construction in Des Moines. That city hosted a formal ground breaking in mid -2011, but the actual start of construction was delayed. The hotel now is expected to open in the latter half of 2015. The projects identified above total 703 not counting the 2 additional proposed undisclosed projects in SeaTac. The 500ish additional rooms that was mentioned at the May 20th Tourism Networking Meeting, does not include the Home2 Suites or Four Points by Sheraton currently under construction, as they are known and opening this year. This 500ish estimate references projects going through the permitting process now. Another nearby anticipated project in Renton includes a full service Southport Hotel with 353 rooms expected to open in 2017. May 2015 Market Performance YTD 2016 Market Forecast Room Occupancy: Increase 6.4% Decline Average Room Rate: Increase 4.5% Increase RevPar: Increase 11.1°% Flat Excerpted from "Kidder Mathews Seattle Hotel Market Report" 4th Quarter 2014 and "Smith Travel Research" reports, May 2015 June 3, 2015 Kidder Mathews Market Forecast Room Occupancy Estimated Projected 2014 2015 H1 Average Room Rate Daily RevPAR Market Up Close Hotel occupancy rates have peaked in most of the region, and are near all -time highs in and near the central business districts of Seattle and Bellevue. In most markets, room prices have recovered to pre- recession levels, with recent rate growth at a moderate pace. Hotel sale activity has accelerated since the recession, and now averages over one significant transaction per month. While most of the recent purchases involved budget and midscale properties, there were also two sales of luxury hotels at record prices. Four new hotels were completed during 2014, 11 are expected to open during the coming year, and numerous additional projects are pending or planned. In some markets, increases in supply are likely to outpace growth in demand, driving down occupancy rates. • Real Estate Market Review Pacific Northwest Seattle Hotel 4th Quarter 2014 With record occupancy and high room prices, the past two years have been the best of times for hotel owners and operators, particularly in the central urban areas. Naturally, this strong performance has attracted the interest of developers. No one questions the need for some new capacity, but the extent of the pending expansion of supply is disquieting. Eighteen new hotels are under construction in the tri- county area, and dozens more are pending or proposed. Even with strong growth in demand, the new competition will put downward pressure on occupancy rates and room prices for the next several years. We look for the market to reach a trough in 2017 or 2018, with the next peak anticipated around 2022. HOTEL PERFORMANCE During 2014, Kidder Mathews completed hotel appraisals in nearly 30 lodging markets throughout the Pacific Northwest. The results discussed below reflect the performance of selected Washington submarkets. Measures of demand include the market occupancy rate, the market average room rate, and revenue per available room. Estimates for 2014 were extrapolated from year -to -date results and adjusted for seasonality. The highest rates of occupancy were reported for Seattle's South Lake Union neighborhood, for upscale hotels near SeaTac Airport, and for the Issaquah /Eastgate submarket. In each case, the average occupancy rates for both 2013 and 2014 were nearly 80 %. Occupancy was also strong in Downtown Bellevue and East Vancouver. Rates were somewhat lower in South King County, Pierce County, and Thurston County. Hotels in and near Bremerton reported very low occupancy, due primarily to reduced demand from the Puget Sound Naval Shipyard. Continued, page 2 4th Quarter 201411 Area Review Hotel Performance Market Tier Bellevue CBD Bellingham Bremerton Federal Way Fife Issaquah /Eastgate Kennewick Kent /Southcenter Moses Lake Olympia/Tumwater Pasco Pullman SeaTac SeaTac South Lake Union Spokane Tukwila North Vancouver East Walla Walla Yakima/Union Gap Sample Average Room Occupancy Average Room Rate Daily RevPAR 2013 2014(Est) Change 2013 2014(Est) Change 2013 2014(Est) Change Overall 76% 75% -1.3% $161 $176 9.3% $122 $132 7.9% Overall 75% 66% -12.0% $110 $111 0.9% $83 $73 -11.2% Budget 41 % 43% 4.9% $77 $79 2.6% $32 $34 7.6% Overall 57% 58% 1.8% $95 $98 3.2% $54 $57 5.0% Budget 59% 60% 1.7% $48 $50 4.2% $28 $30 5.9% Overall 77% 78% 1.3% $133 $143 7.5% $102 $112 8.9% Overall 63% 62% -1.6% $85 $87 2.4% $54 $54 0.7% Midscale 70% 71% 1.4% $115 $117 1.7% $81 $83 3.2% Overall 50% 53% 6.0% $87 $88 1.1% $44 $47 7.2% Midscale 60% 60% 0.0% $96 $98 2.1% $58 $59 2.1% Midscale 52% 53% 1.9% $55 $57 3.6% $29 $30 5.6% Overall 64% 63% -1.6% $105 $109 3.8% $67 $69 2.2% Upscale 78% 78% 0.0% $117 $122 4.3% $91 $95 4.3% Budget 65% 70% 7.7% $64 $69 7.8% $42 $48 16.1% Upscale 79% 80% 1.3% $155 $159 2.6% $122 $127 3.9% Upscale 66% 67% 1.5% $117 $120 2.6% $77 $80 4.1% Budget 62% 64% 3.2% $70 $73 4.3% $43 $47 7.6% Midscale 76% 74% -2.6% $94 $97 3.2% $71 $72 0.5% Midscale 59% 59% 0.0% $107 $111 3.7% $63 $65 3.7% Overall 46% 48% 4.3% $66 $68 3.0% $30 $33 7.5% 64% 64% 0.5% $98 $102 3.8% $65 $67 4.1% In the eastern half of the state, occupancy rates were moderate in Spokane and Kennewick, and relatively low in Yakima, Moses Lake, and Pasco. Most of these communities benefit from a modest base of business travel and seasonal sporting events, but they do not attract summer tourism to the same extent as larger urban areas. During the recession, many hotels offered significant discounts, drawing guests away from what had been more affordable alternatives. With occupancy now at or above pre- recession levels, property managers have become more aggressive, raising rack rates and limiting discounts. For 2014, we estimate that room prices increased by 7% to 9% in the urban markets, and by 2% to 4% in outlying areas. Among the markets surveyed, growth in daily RevPAR averaged just over 4 %. The recent experience of the Bellingham market is instructive. In 2013, hotels in that city achieved very strong performance. But while demand continued to increase during 2014, the opening of two new hotels put downward pressure on both occupancy and revenue. With three more hotels presently under construction and at least two others proposed, a significant reduction in the market occupancy rate is anticipated. The Bellingham experience may soon be repeated in Seattle and Bellevue, where several new hotels are under construction and many more are planned. These popular urban areas are particularly vulnerable to overbuilding, the consequences of which include lower rates of occupancy and stagnant or declining room prices. In peripheral markets, where new development may be limited to one or two hotels, the impact should be less severe. 2 I Seattle Hotel Real Estate Market Review HOTEL DEVELOPMENT With market performance improving and debt financing more readily available, hotel development in and near Seattle is accelerating. Three new hotels opened in the tri- county area during 2013, and four were completed in 2014. At year -end, 18 hotels were under construction and over 30 additional projects were proposed. Seattle Strong occupancy and rising prices have made Seattle a high - profile target for hotel developers. Areas of particular interest include the central business district and South Lake Union. Ariel Development is nearing completion on the 172 -room Hyatt House Space Needle, just east of Seattle Center. Hyatt House is an upscale select service brand that caters to both transient and long -term guests. A few blocks away, Kimpton Hotels is converting a vintage apartment building into a 97 -room boutique hotel. Construction has commenced on several mixed -use projects that include a lodging component. These include a 222 -room Hilton Garden Inn in Hi117, a 142 -room Hotel Indigo in Portola Tower, a 184 -room SLS Hotel at 5th & Columbia, a 158 -room Thompson Hotel at 1st & Stewart, and a 278 -room Embassy Suites just north of Century Link Field. Two extended stay hotels are under construction outside the CBD. The 130 -room Staybridge Suites will be the newest hotel in the Fremont/ Wallingford neighborhood. Work also is underway on a 165 -room Residence Inn in the University District. Hotel Development Property Name Best Western Plus Homewood Suites Location Arlington Lynnwood Type Opening Limited Service Apr -14 Extended Stay May -14 Rooms 100 165 Hampton Inn & Suites Everett Limited Service Jul -14 122 Hampton Inn & Suites Marriott Hotel Four Points Bellevue Bellevue Des Moines Limited Service Full Service Full Service Dec -14 2015 2015 128 378 225 Courtyard Everett Select Service 2015 156 Homewood Suites Cedarbrook Lodge Addition Calhoun Hotel Staybridge Suites Residence Inn Hyatt House Hilton Garden Inn (Hi117) Home2 Suites Thompson Hotel Issaquah SeaTac Seattle Seattle Seattle Seattle Seattle Tukwila Seattle Extended Stay Conference Boutique Extended Stay Extended Stay Extended Stay Select Service Extended Stay Boutique 2015 2015 2015 2015 2015 2015 2015 2015 2016 123 63 97 130 165 172 222 139 158 SLS Hotel (5th & Columbia) Seattle Full Service 2016 184 Lincoln Square Two Bellevue Full Service 2017 245 Southport Hotel Renton Full Service 2017 353 Embassy Suites Seattle Full Service 2017 278 Hotel Indigo (Potala Tower) Seattle Boutique 2017 142 Washington Place Hotel Tukwila Nearly a dozen other hotels are proposed for sites in or near Downtown Seattle. The most ambitious proposal is for development of a mixed -use project with 1,680 guestrooms, apartments, restaurants, and retail space. The timing of construction could be influenced by permitting issues and by a potential expansion of the nearby state convention center. South King County The owners of Cedarbrook Lodge in SeaTac are nearing completion on a 63 -room addition to the upscale conference hotel, bringing its room count to 167. To the south, the 225 -room Four Points by Sheraton is under construction in Des Moines. That city hosted a formal ground breaking in mid -2011, but the actual start of construction was delayed. The hotel now is expected to open in the latter half of 2015. In Tukwila, a 139 -room Home2 Suites by Hilton is being developed several blocks south of Southcenter Mall. Opening in early 2015, it will be the first hotel in the region to carry this midscale extended -stay brand. A few blocks away, the mixed -use Washington Place development will include a 189 -room hotel, opening in 2017. Ariel Development has announced plans for a 150 -room Hyatt Place in SeaTac. The hotel will be located near the southwest corner of Angle Lake, replacing an existing office building. At least two other sites near the airport have been proposed for hotel development. In addition, the Port of Seattle is studying the potential for a new hotel on the airport grounds, adjacent to the terminal. Full Service 2017 189 East King County A 128 -room Hampton Inn & Suites opened in December 2014 on a site just east of 1 -405 and the Bellevue CBD. A few blocks to the west, completion of a 378 -room full service Marriott Hotel is scheduled for March 2015. A 245 -room upscale hotel is proposed as part of Lincoln Square Two, a mixed -use project with lodging, office, and residential components. The complex broke ground in late 2014 and is scheduled for completion in 2017. The same developer may construct a luxury boutique hotel at the southeast corner of Bellevue Square. Several blocks to the east, the developers of Washington Square hope to include a hotel as one component of that project. A 122 -room Homewood Suites is under construction at the I -90 /SR -900 interchange in Issaquah, adjacent to an existing Hilton Garden Inn. A 145 -room SpringHill Suites is proposed nearer Downtown Issaquah. The Snoqualmie Tribe is considering development of a 20 -story hotel near their popular casino. An 85 -room limited service hotel is proposed for a commercial site in North Bend. Snohomish County Three new Snohomish County hotels were completed in 2014. The 100 - room Best Western Plus, located in a commercial district of Arlington, opened in April. The following month, the 165 -room Homewood Suites opened in Lynnwood on a site just north of Alderwood Mall. In July, a 100 -room Hampton Inn & Suites opened in Downtown Everett. kiddermathews.com 4th Quarter 2014 1 3 RE Kidder Mathews kiddermathews.com Offices Seattle 206.296.9600 Bellevue 425.454.7040 South Seattle 206.248.7300 Tacoma 253.722.1400 Olympia 360.705.2800 Portland 503.221.9900 San Francisco 415.229.8888 Redwood Shores 650.769.3600 Silicon Valley 408.970.9400 Contact Jeffrey S. Lyon, CCIM, SIOR Chairman & CEO 206.296.9600 jlyon @kiddermathews.com The information in this report was composed by the Kidder Mathews Valuation Advisory Group. John D. Gordon, MAI Valuation Advisory Group 425.454.7040 jgordon@kiddermathews.com Hotel Transactions Property Name Motif Seattle Hotel 1000 Residence Inn Quality Inn Ramada Hotel Red Lion Hotel Holiday Inn (dba Ramada) Comfort Inn Liberty Inn King Oscar Motel (dba Quality) King Oscar Motel Super 8 Motel (dba Red Lion) Travelodge Best Western Econo Lodge Location Year Built Sale Date Sale Price Rooms $ /Room Seattle 1973 Jun -14 $130,700,000 319 $409,718 Seattle 2006 Jul -14 $62,000,000 120 $516,667 Redmond 1998 Aug -14 $49,326,595 180 $274,037 Seattle 1959 Nov -14 $19,000,000 159 $119,497 Tukwila 1986 Feb -14 $12,000,000 146 $82,192 Renton 1966 Jul -14 $8,872,500 224 $39,609 Kent 1987 May -14 $8,100,000 125 $64,800 Federal Way 1998 Jul -14 $7,300,000 117 $62,393 Dupont 2004 Oct -14 $6,950,000 72 $96,528 Pacific 1998 Oct -14 $6,220,000 120 $51,833 Tacoma 1992 Jun -14 $5,800,000 221 $26,244 Federal Way 1982 Oct -14 $4,415,000 90 $49,056 Tukwila 1979 Oct -14 $4,200,000 72 $58,333 Lakewood 1965 Mar -14 $4,000,000 78 $51,282 Federal Way 1998 Jul -14 $2,350,000 45 $52,222 A 156 -room Courtyard by Marriott is under construction in the Everett CBD. In Downtown Bothell, the conversion of the former Anderson School to a McMenamin's hotel and restaurant is awaiting completion of the financing package. Several parcels in Arlington and Marysville have recently been considered for hotel development. Pierce County The most recent additions to the lodging supply in Pierce County were the 116 -room Hampton Inn & Suites in Dupont and the 163 -room Holiday Inn Express in Downtown Tacoma, both of which opened during 2013. In November 2014, the Tacoma City Council authorized execution of a development agreement for a proposed mixed -use project near the convention center, to include a 300 -room hotel, apartments, and retail space. The planned conversion of the former Elks Lodge to a McMenamin's hotel is expected to proceed when financing is secured. Two hotels have been proposed as part of a comprehensive mixed -use development along the Thea Foss Waterway. The mixed -use Point Ruston development likely will include a 175 -room Silver Cloud Inn. HOTEL TRANSACTIONS During the first eleven months of 2014, and excluding national portfolios, there were 15 sales of hotels in King, Pierce, and Snohomish Counties at prices exceeding $2MM. By comparison, there were 11 such sales in 2008, 3 in 2009, 5 in 2010, 9 in 2011, 15 in 2012, and 9 in 2013. Two sales of luxury hotels in Downtown Seattle set new records for this region. Motif Seattle, a 319 -room full service property, was purchased in June for $130.7MM, the highest price ever paid for a Pacific Northwest hotel. In July, the 120 -room Hotel 1000 sold for $62.0MM; its price per guestroom, $517,000, was by far the highest on record. The Residence Inn at Redmond Town Center sold in August for $49.3MM, or $274,000 /room. The 180 -room hotel caters to upscale guests on extended stays. A similar Residence Inn in Downtown Bellevue was purchased in 2013 for $73.2MM, or $317,000 /room. There were six mid - market transactions during the year. The 159 -room Quality Inn near Seattle Center was purchased for $19.0MM. The Ramada Hotel in Tukwila, a 146 -room property with a vacant restaurant shell, sold for $12.0MM. Sales in the $7MM to $9MM range included the Red Lion Hotel in Renton, the Holiday Inn (now a Ramada Inn) in Kent, the Comfort Inn in Federal Way, and the Liberty Inn in Dupont. There also were six significant sales of budget properties. Two Pierce County hotels carrying the King Oscar brand were sold for about $6MM apiece; one subsequently was reflagged as a Quality Inn. The Super 8 Motel in Federal Way was purchased for $4.4MM and rebranded as a Red Lion. Other budget sales included the Travelodge in Tukwila, the Best Western in Lakewood, and the Econo Lodge in Federal Way. Among the budget hotels, sale prices ranged from $26,000 /room to $58,000 /room, and from $53 /s.f. to $224/s.f. For transactions involving midscale properties, the ranges were $40,000 /room to $120,000 /room, and $50 /s.f. to $269/s.f. For the three sales at the top of the market, prices ranged from $274,000 /room to $517,000/ room, and from $309 /s.f. to $479/s.f. This information supplied herein is from sources we deem reliable. It is provided without any representation, warranty or guarantee, expressed or implied as to its accuracy. Prospective Buyer or Tenant should conduct an independent investigation and verification of all matters deemed to be material, including, but not limited to, statements of income and expenses. CONSULT YOUR ATTORNEY, ACCOUNTANT, OR OTHER PROFESSIONAL ADVISOR. 4 I Seattle Hotel Real Estate Market Review PART\ ER PROGRESS PROSPER "THE WHOLE IS GREATER THAN THE SUM OF ITS PARTS" - Aristotle 2015 Annual Re port SETTLE im SOUTHSIDE WELCOME Dear Seattle Southside Supporters, Travel is a primary driver of our economy and adds jobs faster than other industries. According to U.S. Travel Association's travel industry research, projections point to continued good news and better trends ahead. Following a landmark year in nearly every sector of the local travel and tourism industry, Seattle Southside advanced notable momentum for the local economy in 2014. Last year we experienced nearly 80 percent hotel occupancy. Hotel development is accelerating in Seattle Southside. With more than 500 additional hotel rooms being added to the local market, it will add an estimated $15.5 million in hotel revenue, produce nearly half a million dollars in local hotel tax revenue and assessments and generate an additional $57 million in economic impact. 2 - 2015 Annual Report In Seattle Southside, 2014 marked the creation of our Tourism Promotion Area. Unanimously ratified by all three city councils late last year, this long- awaited tourism marketing fund will, finally, allow the region to readily compete for increased visitation with an emphasis on the weekend shoulder season. Our appreciation and gratitude go to the 39 Seattle Southside hotels that stepped forward and agreed to impose a $2 per occupied room night assessment and pool these resources to aggressively market our destination. With funding and partnership support, Seattle Southside Regional Tourism Authority will continue to build on the success of 2014 as we head into a year teeming with opportunities for everyone to prosper. Sincerely, Katherine Kertzman Executive Director Seattle Southside Regional Tourism Authority "The City of Des Moines is an enormous supporter of Seattle Southside's mission to promote tourism to our region. We believe it is a great economic development supporter that enhances the lives of our residents." - Mayor Dave Kaplan City of Des Moines "Tukwila strives to create a balance in addressing the needs of its residential community and the environment with the challenges of maintaining and enhancing a vibrant development climate. Working with Seattle Southside makes this balance more attainable." - Mayor Jim Haggerton City of Tukwila "Tourism is vital to our City's economic well- being. It provides jobs, tax revenues and supports many of our small businesses. As a partner of Seattle Southside, we understand the importance and strength of a coordinated and professional regional effort." - Mayor Mia Gregerson City of Sea Tac SeattleSouthside.com - 3 Are PARTNER SEATTLE SOUTHSIDE MISSION STATEMENT To position Seattle Southside as a destination of choice for leisure, group and business travelers while enhancing the image, confidence and economic strength of the community. As the official destination marketing organization of the cities of SeaTac, Tukwila and Des Moines, Seattle Southside provides leadership and services to competitively market the destination. This function helps create jobs, grow tax revenue and improve quality of life for residents and businesses. Statewide Partnerships In 2011, Washington State lost the state tourism office. However, the statewide industry coalesced to create the Washington Tourism Alliance (WTA), which now assumes the critical role of destination marketer. WTA procured the state marketing assets, deployed a statewide marketing team and is now working to develop a long -term funding solution. Continued support of WTA will be critical in 2015 and 2016. 4 - 2015 Annual Report Regional Partnerships In June 2015, more than 235,000 people will visit the Pacific Northwest for the U.S. Open Championship. This is the USGA's largest of the 13 championship series events. The estimated economic impact to the region is $150 million. In addition, 4,500 volunteers will work tirelessly to help make this event truly impeccable. Associate Partnerships Recognizing that overnight visitors in paid accommodations stay longer and spend more than day trippers, Seattle Southside works in partnership with hoteliers and other businesses to target key markets with no costly membership dues. Working closely with travel and tourism related businesses and the media, Seattle Southside continues to grow new business from the dynamic growth in the meetings and conventions segment as a result of the improving economy. Partnership with Seattle Southside provides a connection to the lucrative business, group and leisure travel markets. Opportunities are readily available to network with other businesses, make contact with and advertise directly to visitors and groups to help build awareness for your business. SeattleSouthside.com - 5 TOURISM DEVELOPMENT PROGRESS Seattle Southside provides key leadership and helps build integrated marketing initiatives and resources critical in connecting and motivating key visitor segments. Planning & F� Due to the efforts of many individuals, the Seattle Southside Tourism Promotion Area (TPA) was created in 2014. SeaTac City Council members voted on October 14, 2014, to establish the Seattle Southside TPA and charter the newly created Seattle Southside Regional Tourism Authority (RTA), a public corporation and separate legal entity, which will manage increased funding and tourism promotion activities for the cities of Des Moines, SeaTac and Tukwila. With $2 collected per occupied room night, this assessment will increase Seattle Southside's budget by an estimated 3 million additional dollars. 6 - 2015 Annual Report With these additional funds, as well as lodging tax dollars, Seattle Southside will be able to increase tourism promotion, expand product development, increase its focus on advocacy and support for statewide tourism marketing, enhance destination development and awareness and expand a heightened level of sales and visitor services. The Seattle Southside RTA is governed by a board of directors appointed by the City of SeaTac. Board Chair: Maureen Huffman General Manager Embassy Suites Seattle - Tacoma International Airport Vice Chair: Sanjay Mahajan General Manager Radisson Hotel Seattle Airport Secretary: David Sullivan General Manager Cedarbrook Lodge Treasurer: Barbara Brunetti General Manager Ramada Tukwila Members: Barry Baxter General Manager Home2 Suites by Hilton Ken Stockdale General Manager Crowne Plaza Seattle Airport Frank Welton Area General Manager Seattle /Northwest Hilton Worldwide Sales & Marketing Committee Co- Chairs: Ken Stockdale Crowne Plaza Seattle Airport David Sullivan Cedarbrook Lodge Research P Pg.por4ing r�onomic Imper* Seattle Southside Conversion Study In partnership with H2R Market Research, Seattle Southside completed a conversion study to determine the overall reach of Seattle Southside in its ability to attract leisure visitors to the region. O Key takeaways: Over the past three years, 60 percent of those who inquired to Seattle Southside ultimately visited. The H2R Industry Norm is 33 percent for destinations across the U.S. These visitors who inquired stay longer when they visit and spend more than the average visitor to Seattle Southside. SeattleSouthside.com - 7 Weekday PROGRESS Research Continu Smith Travel Research In 2014, additional reports were purchased from STR and cross - referenced with other data to provide objective, trend -based analysis and empirical data about the local lodging industry. Key takeaways: Shoulder season weekends offer the best opportunity to increase visitation and economic impact. Sundays generate the lowest occupancy and average daily rate with revenue per available room averaging only $60.30 by year end. Based on this evidence, the Seattle Southside Regional Tourism Authority is dedicated to creating new campaigns to stimulate growth and encourage leisure travelers to stay one more day 'frti"business travelers to arrive one day earlier. 8 - 2015 Annual Report Staff Develop..., Today's destination leaders are charged with collaboratively defining a community vision for tourism in a high - stakes, hyper- competitive, constantly changing global marketplace. To better prepare Seattle Southside's leaders for the evolving marketplace and emerging business trends, staff set a strategic goal of enhancing knowledge and leadership skills to add value to the organization. In 2014, Katherine Kertzman earned a Certification in Destination Management Executive (CDME) from Destination Marketing Association International (DMAI). Ashley Comar, Meagan McGuire and Kristina Thorne earned certifications as Professionals in Destination Management (PDM) from DMAI. With market performance improving and debt financing more readily available, hotel development is accelerating in Seattle Southside. The 260 -room Crowne Plaza Seattle Airport, formerly Holiday Inn Seattle Airport, underwent a significant $9 million renovation. A $16 million expansion at Cedarbrook Lodge increased capacity by 60 percent. Also included in the expansion is a new 3,350- square -foot spa, an outdoor heated whirlpool and additional parking spaces. Ariel Development announced plans for a 150 -room Hyatt Place in SeaTac. Located near Angle Lake, this $25 million development is expected to be completed in 2016. Home2 Suites by Hilton is slated to open in Tukwila in June 2015 with 139 rooms. A 140 -room Residence Inn by Marriott will be developed on Angle Lake, likely in 2017. The $45 million, eight -story Artemis Hotel is wrapping up construction in Des Moines. The 238 -room hotel complex, hospitality and entertainment facility is expected to be open in 2015 and carry a Sheraton flag. A 19 -story Washington Place hotel and residential tower will be constructed in Tukwila. The 418,000- square -foot, $120 million tower will include 370 market -rate apartments, a 189 -room business -class hotel and a 90 -seat restaurant. SeattleSouthside.com - 9 PROGRESS MARKETING & COMMUNICATIONS The marketing and communications department promotes Seattle Southside as the perfect destination for practical travelers through implementation of consistent, targeted, proactive, cost - effective marketing and media programs. 1. Demand Generation — Increase hotel occupancy through compelling domestic marketing programs. Attract more groups, leisure travelers and business travelers. 2. Perception— Continue heightening awareness about Seattle Southside as a destination and generate positive perceptions. 3. Interaction — Enhance engagement on Seattle Southside website and social networks. 10 - 2015 Annual Report Redesign of the Seattle Southside Travel Planner resulted in a visually stunning magazine promoting Seattle Southside as an ideal tourist destination. With many lifestyle articles and vivacious photography showcasing the region, this updated marketing piece will be an even stronger call to action for potential visitors. The Travel Planner is distributed through requests received online, over the phone, at trade shows, partner locations and Visitor Centers. SDI I- TL[ r'Y ating ^nifty is rceptir►nc Seattle Southside conducted a scaled back branding campaign and focused heavily on introducing the Seattle Southside Visitor Center at Westfield Southcenter. This campaign significantly increased awareness about the Visitor Center and directed thousands of visitors to the new location. Through outreach, interviews and media coordination, including a cover story in the Puget Sound Business Journal, more than 90 million impressions were received, resulting in thousands of dollars' worth of positive press coverage. rligitc 1 AIMtte:aras- ihi,rtrt� SeattleSouthside.com received the most web visits ever in 2014. Unique visits to the website increased 8.5 percent. Currently a digital conversion study is underway to evaluate the effectiveness of the website. Social media continues to be an important communication facet and, in 2014, Seattle Southside's engagement increased more than 5 percent. 600,000 500,000 400,000 300,000 200,000 100,000 0 Unique Visits 2010 2011 2012 2013 2014 SeattleSouthside.com -11 PROGRESS BUSINESS fF \IFI 0PMENT Seattle Southside provides key leadership and helps build integrated marketing initiatives and resources critical in connecting and motivating key visitor segments. 1. Prospecting Opportunities & Acquiring Business — Establish Seattle Southside as a value- driven, quality destination for groups hosting events for 10 to 200 people, with an emphasis on increasing off -peak bookings. 2. Support Sales at Businesses and Hotels— Support the marketing and sales needs of Seattle Southside tourism businesses and hotel sales teams to convert opportunities to booked business. 3. Build Community with Similar Organizations —Build relationships with the regional tourism network to create awareness about Seattle Southside and take advantage of partnership opportunities. 12 - 2015 Annual Report Business development efforts contributed to room nights and meetings booked for 2014 and beyond. This was accomplished through sales efforts that included attending sales missions with 246 total appointments, including: Washington Society of Association Executives, National Tour Association, MPI Cascadia, Connect Marketplace, Collaborate Marketplace, Reunion Friendly Network, Go West Summit. Other activities ®included coordinating four familiarization trips with 43 tour operators and meeting planners and participating in 17 client site inspections. IR„ c•ss Support In 2014, Seattle Southside implemented Simpleview, a new customer relationship management (CRM) tool to better serve associates and clients, which is also used by other destination marketing organizations. This tool will allow better tracking for client leads, visitor requests, marketing and public relations activities and reports on ROI. L 1 It will eventually enable hotels and associates to go online to an extranet to add promotions, photos, respond to leads, etc. Go West Summit brought record - breaking numbers to the Seattle - Tacoma region with more than 600 attendees, 10,000 meetings and international exposure for the state. The triumph of regional partnership hosting Go West Summit put the Northwest on the international stage — preparing the region for the upcoming 2015 U.S. Open Championship. ti Seattle Southside participated in a delegation of 30 travel partners from around the state at the National Tour Association tradeshow in New Orleans. Staff took appointments with top - producing travel professionals at the show, which attracted tour operators and suppliers from all over the world. SeattleSouthside.com -13 i PROGRESS VISITOR SERVICES Seattle Southside strives to increase visitor spending through enhanced concierge services and engaging customer experience. Maintaining relationships with local community and stakeholders is important for increased cross - promotion opportunities. 1. Visitor Centers — Operation of two Visitor Centers providing personalized concierge assistance to visitors requesting services of Seattle Southside in person, by phone or email. 2. Local Businesses and Residents — Work with local industry businesses to promote and increase tourism spending. Build awareness within the local community. 3. Interns and Volunteers— Continue to build and nurture relationships with local community through universities and community colleges. 4. Seattle Southside Shuttle— Manage service and partnership. 14 - 2015 Annual Report Funded by the Tukwila lodging tax, the new Westfield Southcenter Visitor Center continues to engage travelers and local residents alike. In 2014, point - of- purchase ticket sales increased by 33 percent. Seattle Southside maintains its sustained focus on promoting the area as an ideal home base for travelers to explore the Pacific Northwest and being a tourist in your own backyard. Funded by SeaTac lodging dollars, the Seattle Southside Express shuttle offers free transport for SeaTac hotel guests to Westfield Southcenter Mall. This service has proven critical to building brand awareness and showcasing Seattle Southside as a remarkable home to many dining and shopping options. Dedicated to enhancing the guest experience and increasing visitor spending, a customer survey was implemented to capture customer expectations and spending. More than 27,000 hotel guests ride the shuttle annually. Seattle Southside continues to work with local and state educational institutions to facilitate student learning opportunities outside the classroom. Students interested in an exciting career in the field of travel and tourism, and looking to gain practical experience while developing relationships with leaders in the field, are offered paid internships that provide real - world work experience. Seattle Southside values investing in industry leaders of the future. SeattleSouthside.com - 15 rar 16 - 2015 Annual Report PROSPER OVERNIGHT VISITORS HOTEL NIGHTS DIRECTLY ATTRIBUTED TO SEATTLE SOUTHSIDE EFFORTS IN TRAVEL SPENDING HOSPITALITY EMPLOYEES IN STATE & LOCAL TAXES TOURISM SAVES THE AVERAGE HOUSEHOLD IN TAXES ANNUALLY SEATTI .E SOUTHSIDE TRAVEL TRENDS The preliminary 2014 impact estimates for Seattle Southside released from Dean Runyan and Associates documents the economic significance of the travel industry in the Seattle Southside. The research reveals travel spending in Seattle Southside increased by 9.5 percent. Earnings, employment and travel - generated tax receipts also increased significantly. This was the fourth consecutive year of strong growth in the Seattle Southside travel industry. SeattleSouthside.com - 17 Tax Receipts $ Millions Spending $ Millions Earnings $ Millions Employment Local State Total 2013 566.6 169.8 4,650 27.3 32.5 59.8 2014 620.3 184.1 4,840 30.3 35.5 65.8 % Change +9.5 +8.4 +4.1 +11.0 +9.3 +10.0 SeattleSouthside.com - 17 I AP- grAir PROSPER Lodging sales (in current dollars) exceeded $200 million in 2014, the highest seen since Dean Runyan and Associates have been reporting for Seattle Southside. $250 $200 0 $150 0 $100 0 0) •O J $50 $o 1 1 1 10 11 12 13 14p LODGING SALES (8 Million) 18 - 2015 Annual Report The charts below break out lodging sales and travel spending by city in Seattle Southside. Although Tukwila has the greatest estimated visitor spending, SeaTac has 70 percent of all lodging sales. However, its share of visitor - related sales in food services, entertainment and retail are comparatively smaller. Therefore Seattle Southside survives and thrives because of the regional partnerships working in conjunction between each city's strengths. Des Moines, $2.2 SeaTac, $146.4 LODGING SALES BY CITY Travelers who come to Seattle Southside tend to stay overnight in paid accommodations. And travelers who stay in commercial lodging typically spend more and have the greatest economic impact. Des Moines, $33.2 TRAVEL SPENDING BY CITY Eighty percent of all visitor nights in Seattle Southside are attributable to hotel /motel stays. This percentage is much greater than for King County and Washington State. Seattle Southside King County Washington State 0% 20% 40% 60% 80% 100% HOTEL /MOTEL VISITOR NIGHTS 2014p (Percentage of All Overnight) SeattleSouthside.com -19 Travel Party Day Trip Party Size Length of Stay Hotel, Motel $390 $922 2.1 2.4 Other Overnight $72 $266 2.0 3.7 All Overnight $339 $851 2.1 2.5 Des Moines, $33.2 TRAVEL SPENDING BY CITY Eighty percent of all visitor nights in Seattle Southside are attributable to hotel /motel stays. This percentage is much greater than for King County and Washington State. Seattle Southside King County Washington State 0% 20% 40% 60% 80% 100% HOTEL /MOTEL VISITOR NIGHTS 2014p (Percentage of All Overnight) SeattleSouthside.com -19 10110 The estimate of all overnight visitor - nights (the number of nights that all individual visitors stayed in Seattle Southside) is shown below. The overall trend in visitor volume corresponds to the trends in travel spending and related impacts. PROSPER Visitor air arrivals (domestic only) to Seattle- Tacoma International Airport have also increased for the fifth year in a row. rn 0 z 3.8 3.7 3.6 3.5 3.4 3.3 3.2 3.1 3.0 10 11 12 13 14p ALL OVERNIGHT PERSON - NIGHTS 20 - 2015 Annual Report Just five years ago the Seattle Southside hotel market lay in the depths of recession, with low rates of occupancy and declining revenue. The contrast with current market performance could not be more striking, as room prices rise and occupancy rates approach 80 percent. Seattle Southside is at the peak of what is typically an eight -to- ten -year cycle characterized by steady growth in demand and occasional surges in supply. Depending on the pace of construction, occupancy rates could reach a trough in 2017 or 2018, with the next peak expected around 2022. 5.5 C 0 E 5.0 0 0 4.5 4.0 1 10 11 12 13 14p VISITOR AIR ARRIVALS AT SEA -TAC AIRPORT (Domestic Fligths) As referenced earlier in the H2R Market Research Conversion Study, those travelers who receive information from Seattle Southside stay longer and spend more within the destination. They typically stay 3.54 nights and spend $1,007. Seattle Southside Interaction Average Traveler Visitor Spend $860 $880 $900 $920 $940 $960 $980 $1,000$1,020 Occupancy rates also are influenced by room process. During the recession, many hotels offered significant discounts, drawing guests away from what had been more affordable alternatives. With occupancy now above pre- recession levels, property managers have become more aggressive, raising rack rates and limiting discounts. 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Overall Percent Change 2014 ❑Occupancy •ADR ■RevPAR SeattleSouthside.com - 21 ffir PROSPER TOURISM RETURN ON INVESTMENT 2014 Year Performance Direct Spend Groups $1,997,486 Website Hotel /Packages Conversions $9,228,114 Visitor Center Fulfilment $12,662,018 Website Booking Engine $195,832 Visitor Center Reservations $153,235 Shuttle Riders Spend $4,074,300 TOTA L $28,310,985 *Note: Stats from Dean Runyan & Associates Travel Impact Report February 2015, 2002 Shuttle Survey and H2R Conversion Study 2014 Seattle Southside's 2014 budget: $1,524,154 -ieturn on investment: t1 : $16.br 22 - 2015 Annual Report LODGING TAX ADVISORY COMMITTEES City of Des MoineE Shamsur Bhuiyan - Marina Inn Tajinder Chahal - SeaTac Valu Inn Jill Andrews - Destination Des Moines To Be Appointed - Representing Des Moines City Council City of Tukvv ww- Kate Kruller - City Council President & Committee Chair Maureen Huffman - Embassy Suites Seattle Tacoma Intl. Airport Jim Davis - DoubleTree Guest Suites Miesa Berry - Homewood Suites by Hilton Kelly McMeekin - Albert Lee Appliances Ben Oliver - Starfire Sports Complex Carol Kolson - Southwest King County Chamber of Commerce Tony Anderson - City of SeaTac Deputy Mayor Jeff Bauknecht - The Museum of Flight Roger McCracken - McCracken & Associates Cathy Heiberg - Boysen & Boysen, LLC Frank Welton - DoubleTree & Hilton Hotels Wendy Morgan - Highline SeaTac Botanical Garden Tom Zett - Super 8 Caroline Curtis - Hotel Concepts BMI Hospitality Management SeattleSouthside.com - 23 SE/TTLEEh.V SOUTHSIDE • • 206.575.2489 1 3100 S. 176th St. Seattle, WA 98188 I SeattleSouthside.com k L SE,4TTL- SOUTHSIDE Ms Regional Tourism Authority Smith Travel Research April 2015 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Overall Percent Change 1 Year To Date Running 12 Months ❑Occupancy ❑ ADR ❑ RevPAR