Economic Development Department San Diego Tourism Marketing District FY2020 Report of Activities and Supplemental Funding Request Economic Development & Intergovernmental Relations Committee Meeting of April 11, 2019 – Item 2
Economic Development TMD Overview Renewed effective January 1, 2013 Modified effective September 1, 2016 • Elimination of lodging businesses/assessment <70 rooms • No separate categories of benefit or assessment • Updated Activities and Funding Guidelines New Operating Agreement effective November 1, 2016 2 2
Economic Development Tourism Outlook Influential Economic Indicators • Strong fundamentals, but market correction expected and policy uncertainty exists o Labor market and consumer spending strength o Business indicators showing signs of possible weakness • New hotel supply growth • Drive-market constraints Moderate Growth Projected • Occupancy levels o 78% in 2019 to 77% in 2020 o Note: Demand is being outpaced by Supply growth • Average Daily (room) Rate (ADR) o +2.5% to $169.57 in 2019 and +2.5% to $173.81 in 2020 • Revenue per Available Room (RevPAR) o $132.23 in 2019 to $133.91 in 2020 3 3
Economic Development FY2020 Available Funds Source $ Projected Assessments $ 41,040,340 Projected Interest & Penalties $ 160,000 Projected FY19 cfwd – non-Litigation $ 4,276,339 Projected FY19 cfwd (mod) –Litigation Reserve $ 1,000,000 Total $ 46,476,679 Litigation Reserve FY19 cfwd (A/B) $ 21,000,000 4 4
Economic Development FY2020 Recommended Allocations Non-TMD Entity / Purpose Allocation Funds SD Tourism Authority Base $ 39,202,838 $ 4,507,056 ANOC World Beach Games $ 500,000 $ 24,020,035 California Police Athletic Federation $ 75,000 $ 457,100 California State Games $ 175,000 $ 517,400 Pro Am Beach Soccer $ 30,000 $ 56,200 San Diego Bay Wine & Food Festival $ 74,500 $ 896,500 San Diego Bayfair - Thunderboats $ 95,000 $ 380,000 San Diego Brewers Guild $ 31,000 $ 99,000 San Diego Bowl Game Assoc. – Holiday Bowl $ 410,000 $ 8,640,269 San Diego Crew Classic - Spring $ 195,000 $ 854,000 San Diego Surf Cup – Thanksgiving Challenge $ 40,000 $ 80,000 USA Ultimate Frisbee $ 30,000 $ 81,150 Wonderfront $ 500,000 $ 9,810,499 TOTAL $ 41,358,338 $ 50,338,309 5 5
Economic Development FY2020 Other Recommended Allocations Purpose Allocation Opportunity/Catastrophe $ 1,995,187 City & SDTMD Administration $ 2,123,154 Litigation Reserve (modified district) $ 1,000,000 Total $ 46,476,679 6 6
Economic Development FY2020 Program Highlights - SDTA* Target ROI overall 21.7 to 1 Grow Market Share within Competitive Set Cities** 16.19% in 2019 • Maintain NEW single-property group room nights 461,000 in FY19 • Book 800,000 Convention Center-related room nights in FY20 for future years *Subject to updating and SDTA Board approval ** Western Region Competitive Set - source: Smith Travel Research 7 7
Economic Development FY2020 Program Highlights – Other Entities (1 of 4) ANOC World Beach Games - $500,000 Room Nights: 35,275 • Target ROI overall: 14.5 to 1 • Event: International beach and watersports competition • California Police Athletic Federation - $75,000 Room Nights: 6,241 • Target ROI overall: 15.7 to 1 • Event: United States Police & Fire Championships • California State Games - $175,000 Room Nights: 17,500 • Target ROI overall: 16.8 to 1 • Event: Youth Summer and Winter sports competitions • 8 8
Economic Development FY2020 Program Highlights – Other Entities (2 of 4) ProAm Beach Soccer - $30,000 Room Nights: 1,600 • Target ROI overall: 8.5 to 1 • Event: International beach soccer competition. • San Diego Bay Wine + Food Festival - $74,500 Room Nights: 2,640 • Target ROI overall: 8.0 to 1 • Event: A week of culinary events highlighting the City’s • growing culinary tourism industry. San Diego Bayfair/Thunderboats Unlimited - $95,000 Room Nights: 16,033 • Target ROI overall: 35.3 to 1 • Event: Performance boat racing on Mission Bay • 9 9
Economic Development FY2020 Program Highlights – Other Entities (3 of 4) San Diego Bowl Game Association – Holiday Bowl - $410,000 Room Nights: 15,000 • Target ROI overall: 5.8 to 1 • Event: Holiday Bowl featuring teams from Pac-12 and Big Ten • San Diego Brewers Guild - $31,000 Room Nights: 775 • Target ROI overall: 5.7 to 1 • Event: Craft beer festival highlighting San Diego as the “Capital of Craft”. • San Diego Crew Classic – Spring - $195,000 Room Nights: 8,024 • Target ROI overall: 7.4 to 1 • Event: Collegiate, high school, open/alumni, masters rowing • events in spring; kicking off US rowing season. 10 10
Economic Development FY2020 Program Highlights – Other Entities (4 of 4) San Diego Surf Cup – Thanksgiving Challenge - $40,000 Room Nights: 7,700 • Target ROI overall: 31.8 to 1 • Event: Established youth soccer tournament spanning • three days of Thanksgiving weekend USA Ultimate Frisbee - $30,000 Room Nights: 3,000 • Target ROI overall: 15.0 to 1 • Event: National championship competition. • Wonderfront - $500,000 Room Nights: 18,000 • Target ROI overall: 7.9 to 1 • Event: Music, arts, culinary and cultural festival. • 11 11
Economic Development FY2020 Supplemental Request from Litigation Reserve (A/B)* Purpose Allocation SD Tourism Authority $ 6,999,332 National Cable Broadcast Advertising • Digital Advertising and Family Audience Campaigns • Measuring Effectiveness – Room Nights and ROI - TNS/OmniTrack SDTA FY20 base body of work ~ 4.5 million Supplemental funding ~ 0.6 million Combined room nights ~ 5.1 million Combined Program ROI ~ 21 to 1. TNS/OmniTrack methodology - verifies effectiveness of both programs of work. *Requires Third Amendment to Operating Agreement (Litigation Reserve and Withholding Schedule) 12 12
Economic Development Highlights of FY2020 Supplemental Request Digital Advertising and Family Audience Campaigns - $3,810,312 Digital advertising is highly targeted and efficient direct marketing • “Always-on” Content showcasing San Diego’s diverse amenities will be distributed across a variety of media • outlets Continued partnership with Trip Advisor, the world’s largest travel site • The family audience will be targeted with specific messaging and through media partnerships to combat • the “been there/done that” and Anaheim/Star Wars Land launch National Advertising, Cable Broadcast - $3,189,020 Television advertising will shift from 9 spot markets to a national cable buy increasing San Diego’s • audience five times to nearly 200 million TNS/OmniTrak ROI Study shows combination of television and digital are the most efficient in converting • consumers to travel to San Diego 13 13
Economic Development Summary of Requested Actions • Approve FY2020 Annual Report of Activities and associated expenditures. • Approve FY2020 Supplemental Funding Request and associated expenditures and Third Amendment to Operating Agreement. • Authorize processing of any outstanding FY2019 reimbursements in FY2020 and associated expenditures, and cost recovery of City administration expenses for auditing and administration of prior TMD Funds. 14 14
Economic Development Questions 15 15
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