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WHITE
PAPER

THE FUTURE OF THE SACRAMENTO

CONVENTION CENTER / THEATER DISTRICT
March 2016

TABLE OF CONTENTS
INTRODUCTION ................................................................................................................. 1
THE CASE FOR CONVENTION CENTER EXPANSION ................................................... 2
The Path to Success is Conventional ....................................................................... 2
THE CASE FOR COMMUNITY CENTER THEATER TRANSFORMATION ....................... 3
Setting the Stage Literally and Figuratively ........................................................... 3
Funding .................................................................................................................... 4
Sacramento 2030 General Plan ............................................................................... 5
PROPOSED SACRAMENTO CONVENTION CENTER/THEATER DISTRICT DESIGN ... 6
Proposed Meeting Space Design ............................................................................. 7
Open Space Conceptual Plan .................................................................................. 7
CONVENTION CENTER MARKET VALIDATION .............................................................. 8
Summary of Competitive Exhibit Space National Conventions & Tradeshows ...... 8
Summary of Exhibit Space Demand National Conventions & Tradeshows ........... 9
Summary of Meeting Space Demand National Conventions & Tradeshows ......... 9
Summary of Ballroom Space Demand National Conventions & Tradeshows ...... 10
Likelihood of Using the Sacramento Convention Center ........................................ 10
Image Assessment of Sacramento as a Convention Destination ........................... 11
DRIVING THE ECONOMY ................................................................................................ 12
Citywide Economic Engine ..................................................................................... 12
Impacts of a Convention Center/Theater District .................................................... 12
Visitor Spending ..................................................................................................... 12
Job Growth ............................................................................................................. 13
Sacramento County Hospitality Industry Travel Impacts: 2012-2014 ..................... 13
Sacramento International Airport Economic Contributions ..................................... 13
SACRAMENTO TRANSIENT OCCUPANCY TAX ............................................................ 14
TOT Contributions to General Fund ....................................................................... 14
Impacts of 1996 Convention Center Expansion...................................................... 14
PROPOSED DOWNTOWN HOTEL DEVELOPMENT ...................................................... 15
Convention Center Hotel Development .................................................................. 16
Outlook for Hotel Success ...................................................................................... 16

INTRODUCTION
The simple truth is that the Sacramento Convention Center (SCC) and the Community Center
Theater (CCT) are at a historic crossroads. Over the last 20 years, the SCC has made no major
physical improvements and like the SCC, the CCT has been neglected for several years as well.
Over the same period, cities like San Diego, Anaheim, San Jose, Phoenix, Long Beach, San
Francisco, as well as many other cities around the nation, have made significant investments in
their convention centers and theaters.
The Sacramento Convention & Visitors Bureau (SCVB) recognizes that the SCC is a significant
economic engine for the Sacramento region and we wholeheartedly agree that the CCT is also
a vital part of this communitys economic future. In line with that sentiment, we also believe that
we must think even bigger than just the transformation of these two venues if the goal is to
create opportunities that will shape our city for decades to come.
The real opportunity in maximizing the value of these venues rests in marrying the hundreds of
millions of dollars in economic impact thats produced annually by the SCC to the quality of life
and cultural juggernaut that should exist within the walls of the CCT.
Connecting the CCT and the SCC presents this community with an opportunity to transform our
theater that erases the current theaters shortcomings, expands the Convention Center to grow
the Citys tax base, and tie them together with the Memorial Auditorium, Wells Fargo Pavilion
and the surrounding restaurants and hotels to create a Convention Center/Theater District.
Thats the comprehensive downtown that so many have envisioned for so many years: a K
Street Mall with deep anchors on the east and west ends and bustling activity of commerce and
entertainment in between.
In an effort to learn the best options for transformation for the theater, we engaged several out-ofmarket experts and internationally renowned architects. Their conclusion was unanimous: a
transformation of the current CCT and the SCC offers Sacramento the opportunity to capitalize on
a downtown location, one thats supported by decades of infrastructure, to create a Convention
Center/Theater District that would be supported and enjoyed by local residents and visitors.
A transformed CCT will put Sacramento on the forefront of the regions art venues. ADA issues
will be resolved, the acoustics will be modernized and, steel and glass will create a new exterior
with a lush visual of Capitol Park. Simply put, it will look, feel and operate like a brand new theater.
If our elected officials determine that a transformation of the CCT and expansion of the SCC is
warranted, the resulting Convention Center/Theater District presents the opportunity to build a
modern-day product that offers this community a visionary solution to our performing arts future,
while expanding a building that attracts hundreds of millions of outside dollars annually directly
benefitting the residents of Sacramento. Further, utilizing existing buildings with existing
surrounding infrastructure to meet market demands is a fiscally responsible route to grow our
community assets while creating the best return on investments for our public stakeholders.
The accompanying study drills more deeply into the analysis that the SCVB believes validates
the case for developing a Convention Center/Theater District that will modernize and leverage
economic impact opportunities for decades to come, while significantly enhancing the quality of
life experiences for residents. We hope you find the study informative and were looking forward
to hearing your comments. You can share those with Steve Hammond, SCVB President and
CEO, at shammond@visitsacramento.com.

Richard Hill
SCVB Board Chair

Tony Giannoni
SCVB Infrastructure Committee Chair
1

THE CASE FOR CONVENTION CENTER EXPANSION

The Path to Success is Conventional
The Sacramento Convention Center (SCC) is at a tipping point of its shelf life. For many years, we
have watched competitors like San Jose, Long Beach and Los Angeles expand and renovate their
facilities, enlarging the gap between what amenities we and our competitors have to offer.
Sacramento has worked hard to stay competitive but this gap is beginning to inhibit our ability to
book business, potentially costing the City and its small businesses millions of dollars in revenue.
Because of the growing competition, in 2012 the Sacramento
Convention & Visitors Bureau (SCVB) sought the services of
a qualified consulting firm to prepare a Market Analysis for a
convention center expansion. The SCVB took this initiative
because there was an assumption that an expanded facility
would allow the SCVB to be more successful in booking
additional conventions and generate a more robust economic
impact. After issuing an RFP and completing an exhaustive
search, the SCVB contracted with Convention, Sports & Leisure
(CS&L) to perform an analysis that would vet the validity of the
SCVBs assumption. The research conducted as part of the Study included analysis of historical
SCC operations, extensive surveys of event planners, thorough analysis of competitive destinations
and facilities, analysis of industry trends that would impact the project, and an overview of
conditions in Sacramento that could impact the viability of potential future facility development. This
White Paper presents their research, analysis and findings (pages 8-10) and is intended to assist
the City staff, the SCVB, the performing arts groups and other interested parties in evaluating a
variety of issues pertaining to potential convention facility development. According to CS&Ls onsite review of the SCC, they are convinced that there are significant opportunities to retrofit and
expand areas within the facility to help address the convention centers shortcomings. Based on
these findings, the SCVB conducted another extensive national search for a creative architectural
firm. Of the six qualified responses to our detailed RFP, Kansas City-based Populous Group, LLC,
a highly qualified and respected international convention center architect, became the clear choice
due to their recent projects in San Jose, Los Angeles and main stadiums for the Sydney and
London Olympics, as well as other expansions around the globe. Populous was contracted to
complete a thorough planning effort aimed at smart growth expansion, while converting the many
existing SCC spaces that are clearly underutilized or poorly integrated into the overall complex.
Note that this proposal does not assume, as convention center proposals in other cities have, that a
dramatic physical upgrade alone is enough to take full advantage of our existing convention center
and associated business opportunities. Instead, it builds on a data-driven, customer-focused,
rational approach to the new demands of the convention delegate, which affirms that the future
viability of urban convention centers is their opportunity to be a key element within the urban core.
This is made possible if convention guests and local residents are connected in a blended
environment that maximizes the qualities of a vibrant convention center thats inter-twined with
entertainment options, great restaurants and public open spaces. To achieve this, Populous
design calls for the creation of a Convention Center/Theater District that significantly enhances the
opportunities that visitors and local residents are looking for. The expanded convention center,
coupled with a renovated theater, maximizes the use of the architects footprint and would also work
in concert with each other to emphasize a spirit of place that provides a better customer experience
and a more efficient and cost-effective operational strategy for both facilities and the City of
Sacramento.
Additionally, Populous determined that an expanded transit system will provide improved access
throughout the downtown core, connecting the new Golden 1 Center, West Sacramento and future
expansion to the Sacramento Airport. By connecting the Convention Center/Theater District and the
Golden 1 Center as the two bookends of the J-K-L corridor, the SCC and the renovated CCT will be
in a unique position to become more powerful assets in the Sacramento economy.
2

THE CASE FOR COMMUNITY CENTER THEATER

TRANSFORMATION
Setting the Stage Literally and Figuratively
Now that City staff has returned to working on the potential transformation of the existing CCT, the
City Manager has signaled his interest in finding a plan that will ensure the future success of the
CCT and the SCC. In mid-January 2016, the City Manager traveled to Phoenix, accompanied by a
team of City staff and the SCVB, to tour the Phoenix Symphony Hall which has recently gone
through a transformation similar to the one being considered in Sacramento.
The Phoenix Symphony Hall and the CCT were
designed by the same architect and they look
largely the same. The City of Phoenix has
transformed their similarly aging facility by
connecting it seamlessly to their convention
center, upgrading the interior with a beautiful new
configuration and design, and making significant
changes in its artist and patron amenities including
acoustic upgrades. They are making plans now to
retrofit the hall with a technologically superior
acoustic treatment which will dramatically improve
the quality of sound and the user experience.
This acoustic retrofit technology can currently be experienced and evaluated at the Sound Box in
San Francisco (http://www.meyersound.com/news/2015/soundbox/) and the leadership of the
Phoenix Symphony Hall and other users of their theater have demonstrated that such a system
has made their existing building viable for many years to come. Like our engineers, those in
Phoenix determined that the bones of their building were solid, negating the need to start over
in a less desirable location. While the exterior of their building still appears very much like the
concrete bunker look we experience here, they have stained theirs and landscaped it to reflect
its desert setting and there is no community demand or plan to change it.
On the other hand, the option exists to dramatically
change and expand the exterior configuration and
aesthetics of the existing CCT. If that plan is funded
properly, the building has the potential to be the
iconic theater venue that Sacramento requires to
complement the historic renaissance that is currently
taking place throughout the downtown core. In fact,
many who have been close to the planning process
believe that some of the artists renderings of
potential exterior designs for the CCT suggest that it could become the truly momentous presence
sought by the Mayor as he explored the possibility of a new building on an alternate site. The design
plan presented by Populous calls for a ballroom to be built above the theater which could become
that iconic visual that the City is looking for, however, there will be much more input and dialogue
before the new CCT plans are agreed upon and finalized.
There is clearly a sense of urgency in the performing arts community to address its shortcomings.
The transformation concept has caused some concern about whether the theater should be
completely closed for the transformation, or should the construction be done in phases between
performing arts seasons. Three local performing arts organizations dependent on the CCT
strongly advocate for an immediate update of current construction documents to reflect the fullest
possible transformation of the facility. In addition they make the case that while exterior
refinements can begin immediately and continue uninterrupted until completion; the interior
transformation must be phased in over several seasons to ensure there are no interruptions in
their currently scheduled performances.
3

Since it is an older building, it is likely that there will be unforeseen discoveries as interior
construction evolves discoveries that could extend a shutdown period with potentially
disastrous consequences for local performing arts. The local performing arts organizations are
just now beginning to recover from near collapse during the extended recession. California
Musical Theatre is currently operating with nearly 90 percent capacity audiences, the new
POPS series is helping to re-build the Symphonys base and the Nutcracker continues to
undergird the budget of the still struggling Sacramento Ballet.
There is no disagreement that the CCT is in desperate need of a transformation; however there
are two lines of thought on how and when the construction of that transformation should take
place. The performing arts organizations are advocating for a phased construction time line on
the interior of the theater and they believe they would have a difficult time remaining viable if the
CCT were shut down for even a year.
While the City Manager clearly understands the concerns and needs of the arts organizations, a
phased approach to construction would generate significant additional costs to the project so
the City Manager wants to explore other potential opportunities that would reduce the length of
construction, scale back costs and present a more cost-effective approach that will maximize
ROI for the public and stakeholders while still meeting the needs of the arts organizations.
As noted, the theater is an older building and it is likely that there will be unforeseen discoveries
that could extend a shutdown period causing adverse consequences. To not be prepared for
those potential consequences by exploring other opportunities for an alternative venue is
irresponsible and would be harmful to the arts organizations. One potential plan could include
some modest renovation to the Memorial Auditorium that would accommodate Broadway Shows
that need more modest stage sets and fewer space requirements.
However, there is still a lot of work ahead and before any construction plan is developed and
agreed upon, the City needs to engage an owners representative; rescope the project; identify
the associated time and cost estimates; and program the project to be inclusive of both the CCT
and SCC.

Funding
During the evaluation/planning process for the Convention Center/Theater District
transformation/expansion, the SCVB retained Tim Youmans of Economic & Planning Systems,
who worked with Brian Larson of Halo Hospitality Group, LLC (SCVB Board Member and
Infrastructure Committee Co-Chair) in 2012-2013 on evaluating the Transient Occupancy Tax
(TOT) revenue stream and the possibility of using that stream in the future as part of the
financing of the next transformation/expansion. Youmans and Larson developed the basic
structure of a financing plan which was originally reviewed by City staff. The City staff has that
analysis and is currently in the process of fully vetting all funding options.
Sacramentos local performing arts organizations, which depend on the continued use of the
CCT, including the California Musical Theatre, the Sacramento Opera/Philharmonic, the
Sacramento Ballet, the Sacramento Choral Society and Orchestra, and the Sacramento
Speakers Series are urging the fullest possible transformation of the facility which is perfectly
positioned adjacent to the SCC and would be a major component of the foundation of the
Convention Center/Theater District.
The CCT has collected in excess of $4,000,000 in facilities fees as surcharges on ticket sales,
and the City has already spent much of that on design and construction documents to prepare for
a partial transformation of the existing CCT in its current downtown location. Cost estimate work
has already been approved by the City Council and there should be enough remaining funds to
upgrade the current plans to reflect the complete transformation the City is looking for.
4

Earlier analysis for transformation of the existing facility has established that the bones of the
building are sound and the location is perfect as its entry faade faces the State Capitol. The
CCT has also become a vital component of restaurants and other local commerce and, when
transformed along with the SCC, the two facilities will become iconic anchors at the East end of
the K Street promenade extending west to the new Golden 1 Center and riverfront development.
While the risk has been minimized in some quarters, some are still very concerned that the CCT
could be shut down for failure to comply with ADA issues since the preparations for external
remediation, in particular, were stalled during the exploration of a new performing arts theater.
Current designs for the transformation of the CCT would alleviate any further concerns about
ADA compliance but renovations should commence as soon as possible to mitigate any
potential risk in this regard.
A majority of the SCC and CCT funding would be generated by the sale of new TOT bonds. The
current bond payments from the 1996 bonding for the Convention Center Expansion expire in
approximately 2021. The new TOT bonds will provide the backbone of financing for further
development and construction of the Convention Center/Theater District, possibly supplemented
by new markets tax credits, infrastructure grants/loans, and other financial sources. The project
would be completed in phases based on keeping portions of the CCT and SCC open during
construction, cost efficiency, and other factors.
The timing of each phase would be driven by the timing of the retirement of the 1996
Convention Center Bond, as well as the growth of gross TOT, which grew 46% in the five years
following the 1996 expansion. The enhanced TOT collections would service additional tranches
of bonds for construction as it progresses. Construction could commence earlier than the
expiration of the current bonds in 2021 using any number of financial mechanisms originally
identified by Economic & Planning Systems and Halo Hospitality Group. These financial
mechanisms are currently being reevaluated by the City Treasurers office.

Sacramento 2030 General Plan

On March 3, 2009, the City of Sacramento adopted the 2030 General Plan to guide the Citys
decision-making, growth and development for the next 20 years. In 2005, the City Council
adopted Vision and Guiding Principles, creating the framework for the new plan. Over the next
four years, the plan was shaped through an extensive outreach process that engaged residents,
businesses and developers.
During that process, the convention and tourism industry was recognized for creating thousands
of well-paying jobs, stimulating fresh revenue streams for hundreds of locally-owned
businesses, and helping generate sales tax and TOT for the City and County general funds
which are reinvested into improving our neighborhoods, parks, and city infrastructure while
supporting police, fire and first responders.
As a result of the input from the hospitality industry focus group, the Citys General Plan
reaffirmed the importance of increasing revenue and creating jobs through the reuse of existing
assets of infrastructure and public facilities to increase revenues and jobs, while maintaining
important qualities of community character. These public policy objectives in the 2030 General
Plan clearly support a convention center expansion and theater transformation. Collectively
they would present a great opportunity to improve the Citys quality of life offerings, reshape its
economy, and enhance its role as a great place to convene and do business.

PROPOSED SACRAMENTO CONVENTION CENTER/

THEATER DISTRICT DESIGN
A very important goal for the proposed design is to provide superior functionality that accounts
for the future needs of the SCC and CCT. That functionality requires spaces that are flexible,
adaptable, and versatile. The Populous design team identified trends in the meetings industry
and responded with a design proposal that positions the SCC as a formidable west coast
convention destination which is enhanced by its connectivity to the CCT. Throughout the
proposed Convention Center/Theater District, internal and external circulation through both
facilities, with an emphasis on the flexibility of the meeting spaces, allow for use of the theater
by convention center clients when the performing arts groups arent utilizing the building.
Having access to seasonal use of the theater will assist in addressing a long-term need for the
convention center business of the future while better utilizing the CCT during down times.
In addition to the important matters of functionality, the Convention Center/Theater Districts
civic prominence will be key to its success. The design proposal aims to create a fluid
connectivity with a civic presence that promotes further development of a connected urban core.
Design inspirations were drawn to take advantage of the continuity of meeting and exhibit space
to ensure ease of access.
The core programming elements of the expansion and modernization proposal, as submitted by
the Populous team, include expanding the total exhibit space to 200,000 square feet; the
creation of a new 50,000-square-foot grand ballroom located above the theater; a net total of
approximately 50,000 square feet of flexible, prime meeting room space, all easily accessible
from any area in the SCC; and a proposed, on-site, 350-400 room headquarter hotel.

All of these program elements are essential to elevate the SCCs space inventory to levels that
can attract and capture more market share by accommodating larger conventions. The addition
of a second main entrance on 15th Street, with adjoining food outlets, will also allow the SCC to
simultaneously host multiple large-scale events. The additional space inventory being asked for
by our clients, combined with the modern design and superior functionality and flexibility,
positions Sacramento to not only grow its convention business, but will elevate its standing as a
first-rate convention destination locally, regionally and nationally.
The expanded and renovated exhibit and meeting space will be designed to easily divide into
smaller space formats, as well as combine with the other spaces in the SCC to accommodate
multiple, concurrent events. By combining the primary exhibit space with the additional meeting
and ballroom space, the SCC will be positioned to offer two simultaneous meeting packages
with two separate entrances, each of which would cater to the requirements of small, medium
and large convention and tradeshow groups.
6

Proposed Meeting Space Design

A ballroom proposed in one architects design to be built above the theater, would be an entirely
unique, first-of-its-kind facility in the region. As conceived, the ballroom will become one of the
most stunning event venues in the region, with spectacular views of Capitol Park. This 50,000
square-foot space will showcase Capitol Park while providing additional pre-function space for a
variety of full-scale events, including weddings and social gatherings that would mostly be used
by Sacramento residents. The ballroom could also be used as part of the SCC meeting room
inventory when not utilized by the CCT. From a pragmatic perspective, the addition of the new
ballroom could be customized to accommodate any configuration desired by the convention
industry, while serving a wide variety of uses for theater patrons and the public. This space will
create new, significant revenue streams for the City and the performing arts groups while
expanding the use and improving the functionality between the SCC and CCT.

Open Space Conceptual Plan

Just as important to consider are the spaces and
places located between and around the two newly
transformed venues. The design creates a
collaboration between the Convention Center/Theater
District, rather than just two stand-alone buildings.
Exterior spaces, including a collection of unique paths,
art work and open space will create an active and
flexible outdoor setting throughout the landscaped
areas in the Convention Center/Theater District and
along adjacent streets that provide a bicycle and
pedestrian-friendly experience. These open spaces
naturally complement the increased programming made
possible by expanding and modernizing the buildings. The open space design is also intended
to create vibrant and flexible public spaces that will activate the surrounding area and local
businesses. The renovated CCT along with its new overhead ballroom would also become the
most publicly visible and iconic component of the new Convention Center/Theater District.
The proposed design also improves the integration between the Convention Center/Theater
District and the larger urban experience at the east end of K Street. The removal of the existing
SCC meeting rooms that currently impede foot traffic on K Street between 13th and 14th streets
will create a direct pedestrian link that will reconnect the downtown with midtown. Redesigned
loading and service vehicle access would also create a safe pedestrian environment and easier
access to the SCC and CCT.

Moreover, site circulation also prioritizes the multiple modes of access to the Convention
Center/Theater District via proposed street car, light rail, local and regional bus routes, and
bicycle and pedestrian routes. The ultimate result will be an active, urban Convention
Center/Theater District that embraces a multi-modal environment.
7

CONVENTION CENTER MARKET VALIDATION

The SCVB commissioned CS&L to evaluate the market viability of an expanded convention
center in downtown Sacramento. As part of this study, they provided a thorough overview of
competing facilities and conducted a series of focus groups of current users, meeting planners
and decision-makers to secure feedback concerning the performance of the current facility, and
what improvements and amenities are needed. The focus groups were also asked to identify
what additional exhibit and meeting space, amenities, and ballroom capacity would be needed
to maximize the SCCs ability to attract more business.
Throughout this report weve examined several reasons why the SCC needs to be expanded
but the most compelling arguments have been made by the SCCs clients and potential new
customers. The following graphs and commentary are a recap of that analysis.

Summary of Competitive Exhibit Space National Conventions & Tradeshows

Despite its very positive booking pace, the SCC could be even more productive in attracting
conventions, meetings and corporate events if our facilities were more comparable in size with our
competition. Sacramento should expect more the SCC is an established asset, which could
serve as a long-term economic engine for the entire region if expanded to remain competitive.

Cities like San Francisco and Anaheim are currently under construction with expansion projects.
San Diego is expected to resolve political and legal debates and move forward with its own
expansion project. The convention center investments made by other West Coast cities, most
notably San Jose and Long Beach, Sacramentos most frequent competitors, should cause
alarm in Sacramento because these facilities were already larger than Sacramento and they are
simply moving the bar that much higher.
For the SCC to fill a more fitting role in the local economy and to better compete with peer cities,
it must address a shortage of facilities, infrastructure and state of the art technology required by
the contemporary convention and event planning industry. Without these improvements, not
only will the convention industrys economic impact growth be inhibited, but we are at risk of
losing current clients that have outgrown our current space. Weve been able to meet those
growing needs by being creative with flex space but our clients will eventually leave for the
newer and larger facilities being offered by the competition if we stand pat.
8

Summary of Exhibit Space Demand National Conventions & Tradeshows

Average = 88,200
Median = 75,000

- - - - - - SCC (1) - - - - - - - - - - - - - - - - - - - - - -

The existing exhibit space can accommodate about 85 percent of the current event demand
specific to Sacramento. To reach 95 percent capture, a total of 200,000 square feet of exhibit
space would be needed. This space increase would generate a potential 10 percent increase in
capture rate. An increase in exhibit space would also maximize convention bookings by allowing
for multiple overlapping events, in addition to very large events.
(1) Represents the total amount of exhibit space currently available at the SCC.

Summary of Meeting Space Demand National Conventions & Tradeshows

The existing SCC meeting space only accommodates 40-45 percent of event demand specific to
Sacramento. The current inventory of meeting space is even more of a limiting factor to booking
conventions compared to exhibit space. Significant increases in meeting space would be needed to
accommodate a large majority of event demand.
(1) Represents the total amount of meeting space currently available at the SCC.
Note: Data includes all organizations with a potential interest in the Sacramento Convention Center.
Source: CSL Interviews

Summary of Ballroom Space Demand National Conventions & Tradeshows

Average = 21,400
Median = 15,000

- - - - - - -SCC (1) - - - - - - - - - - - - - - - - - - -

Convention center ballrooms are often used for general sessions, presentations, food functions
and other events. Approximately 85 percent of the meeting planners interviewed with an
interest in the SCC require a ballroom for their event(s). The existing SCC ballroom space can
accommodate approximately 65 percent of event demand specific to Sacramento so additional
meeting space would be needed to accommodate event demand. Exhibit space can be used
occasionally for large general session/food functions.
(1) Represents the largest contiguous ballroom space currently available at the SCC.
Note: Data includes all organizations with a potential interest in the Sacramento Convention Center.
Source: CSL Interviews

Likelihood of Using the Sacramento Convention Center

The CS&L Study also asked current convention center users about their likelihood of using the
convention center in the future. Event planners that have used the SCC in the past said they
are very likely to use or consider using it again in the future. This base of potential repeat
business is imperative in supporting future expansion. This data also indicates support for the
desirability of the Sacramento convention package.
10

Image Assessment of Sacramento as a Convention Destination

RRC Associates was hired by the SCVB to conduct a comprehensive study of meeting planners
and the meetings market in North America. A major component of the RRC Associates Custom
Study (RRC Study) is the evaluation of Sacramento on a set of image attributes, including a
detailed description of meeting planners preferences and their perceptions on the attributes of
the convention center. Meeting planners were also asked to evaluate Sacramentos strengths
and weaknesses against its set of competitive destinations on several other convention-specific
amenities.
In the chart below, the colored dots are the percentage of meeting planners associating a
positive travel consideration with Sacramento and competitive destinations. The RRC Study
respondents consistently rated Sacramento favorably because many of them have had the
opportunity to experience the destination. The telling parts of the chart are the attributes on
which the gaps from Sacramento to competitive destinations are large or small. These
represent areas in which Sacramento holds an advantage, or areas that need work to further
improve its image.
As the chart demonstrates, the RRC Study respondents hold a positive image of Sacramento
as a travel destination. Among Sacramentos clients, the destinations of Long Beach, Portland,
Reno and San Jose are most competitive with Sacramento on the following chart attributes:
wonderful climate, good outdoor recreation, scenic setting/scenery, good nightlife, and
good greening policies and practices. Sacramento indexes extremely well for logistical
attributes relating to costs and value, and there was a pronounced trend in the data that
suggests Sacramento excels in affordability, which is important to meeting planners
considering a destination to host their convention. Sacramento also indexes well as being
inexpensive to get to, having moderate food and lodging costs, and providing good value
for the money, three important factors when a meeting planner is considering the selection of
a convention destination. However, as stated in the CS&L interviews, Sacramento indexes
below the norm for attributes such as exhibit space and meeting rooms. These are the
attributes that will be the most positively impacted by the expansion of the convention center.

Source: RRC Associates / STR / Destination Meetings Assessment Program / Sacramento Special Report
11

DRIVING THE ECONOMY

Citywide Economic Engine
The impact of the convention center is maximized when out-of-town event attendees make
purchases in the city while attending an event at the facility. Therefore, the SCC also provides
significant benefits in terms of net new spending and associated employment, earnings, and tax
benefits. Expansion and enhancement of the SCC (along with increases in hotel inventory that will
be described later in this report) will also capture additional event activity and better accommodate
peak demand periods.
However, the economic impact of a convention
center is not measured solely within the confines
of the facility itself. The full financial gains ripple
beyond and into the hotels, restaurants, retail, and
small businesses throughout the City. Indeed,
almost all cities run their convention centers as
loss leaders and measure their true success by
the total revenues and jobs created citywide. The
financial return and positive gain to City revenues
is also made evident by the fact that major cities
throughout the country have recently committed to
convention center expansion projects. Just to name a few: San Francisco with a project budget of
$508 million; Anaheim with a project budget of $300 million; San Jose with a project budget of
$130 million; and even Monterey, a third-tier destination and competitor, is undergoing a $60
million transformation.

Impacts of a Convention Center/Theater District

The plan calling for the development of a Convention Center/Theater District is just one
component of a larger economic development strategy for the City of Sacramento. Although
there is no silver bullet to ensure the Citys place in the 21st century economy, a redesigned
and reinvented SCC and CCT can become a much more significant component of
Sacramentos long-term economic development strategy. Sacramentos proposed new hotels
would also benefit from the larger groups generated by an expanded convention center and the
City would realize additional sales and TOT.
Conversely, CS&L also considered the cost of inaction over the same span of time. In this
scenario, CS&L concluded that continuing to neglect the SCC by investing nothing into
expansion or improvement would precipitate competitive pressure that would erode bookings
and negatively impact revenue derived from TOT, business, parking and visitor spending.

Visitor Spending
As the capital of California and one of the worlds largest economies, Sacramento already benefits
from many of the fundamental elements necessary for a successful convention and tourism
industry. Moreover, Sacramentos charms go beyond matters of infrastructure and geography.
The 14.6 million visitors to the Gold Country Region/County of Sacramento spent $4.4 billion in
2015 and enjoyed a vibrant and growing city featuring great weather, affordable attractions,
dynamic art experiences, and a flourishing restaurant and entertainment scene.

Source: Dean Runyon Associates for Visit California

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Job Growth
In addition to the visitor spending, the leisure and hospitality industry is one of the largest and
fastest growing employment super-sectors in the Sacramento County economy, with total jobs
averaging 28,400 during the fiscal year 2014. Direct destination visitor spending totaled $3.4
billion and local tax receipts reached $89 million. Furthermore, the construction activity
associated with expanding and modernizing the SCC and CCT would also generate significant
full-time and part-time jobs for the duration of construction.
Creating a new and growing number of jobs at the SCC, CCT and its surrounding entertainment
and hospitality district, makes additional sense when considering the proximity of existing and
light rail, bus routes, and a potential street car line. These transit lines make it easier for diverse
populations from around the City, County and region to access this employment base and the
influx of new visitors, convention delegates and theater patrons will further enhance an already
vibrant and growing downtown.

Sacramento County Hospitality Industry Travel Impacts: 2012-2014

2012

2013

2014

Total Direct Travel Spending ($Million)

Destination Spending
Other Travel*

2,516
742

2,594
738

2,672
738

TOTAL DIRECT SPENDING

3,258

3,333

3,409

Industry Employment Generated by Travel Spending (Thousand Jobs)

Accom. & Food Svc
14.6
15.3
Arts, Entertain. & Rec.
7.0
7.0
Retail**
2.2
2.2
Ground Transportation
11.1
1.2
Visitor Air Transp.
0.3
0.3
Other Travel*
1.4
1.4

16.1
7.0
2.3
1.3
0.3
1.4

TOTAL DIRECT EMPLOYMENT

26.6

27.5

28.4

Government Revenue Generated by Travel Spending ($Million)

Local Tax Receipts
75
State Tax Receipts
141

82
148

89
150

TOTAL LOCAL & STATE

231

239

216

* Other Travel includes resident air travel and ground transportation impacts for travel to other California destinations,
travel arrangement and reservation services, and convention and trade show organizers.
** Retail includes gasoline.
Source: Dean Runyon Associates 2015 study for Visit California

Sacramento International Airport Economic Contributions

The Sacramento International Airport has also experienced significant growth. An estimated 9.6
million passengers traveled through Sacramento International Airport in 2015. That was an
increase of more than 636,000 passengers over 2014, a 7.1 percent increase. As of December
2015, the airport has reported 22 consecutive months of increased enplanements.
The average number of monthly seats was also up 5.6 percent from last year, with passenger
traffic outpacing the increase in available seats. This increase is significant because for every 3%
growth in number of airline seats to a destination, the seats translate to 1% growth in hotel
occupancy. Airport officials attribute the steady increase to carriers adding destinations and seat
capacity and continuing improvements in the regional economy. The airport has increased efforts
to proactively market Sacramento International Airport to incumbent and prospective carriers, and
has made great strides to identify and attract airlines to unserved and underserved nonstop
markets. Recent air service additions at Sacramento International Airport include nonstop service
to Boise, Chicago-OHare, Seattle, Mexico City and seasonal nonstop service to Boston.
Source: Sacramento International Airport Annual Report
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SACRAMENTO TRANSIENT OCCUPANCY TAX

TOT Contributions to General Fund
Fiscal Year

TOT

Growth

Notes

2014-2015

$23,810,447

+ 40.4%

This is up $2,365,996; 11.03% over FY2013-14

2009-2010

$16,983,781

- 1.5%

2004-2005

$17,238,134

+ 24.5%

1999-2000

$13,841,754

+ 46.0%

1994-1995

$9,477,000

N/A

Depth of recession

Year prior to expansion

Impacts of 1996 Convention Center Expansion

1. For fiscal year 2014-15, the TOT generated almost $24 million up 151% since the 1996
expansion of the SCC. This of course could grow at an even faster rate as the new
Convention Center/Theater District spawns new hotel development and attracts more visitors.
2. From 1993 to 1996, when the convention center expansion opened, the TOT grew from $8.6
million to $9.2 million.
3. In the following 5 years, the TOT grew to almost $16 million in 2001-02.
4. The 2001-02 recession caused the TOT to be flat over the next 3 years while the economy
recovered. However, the new expansion supported the expansion of Sacramento hotel room
supply from 6,500 to 7,800 rooms (22% growth), positioning the hotel industry (and thus TOT)
for significant growth once the economy had fully recovered from 9/11:

The Citizen Hotel, 2008, 198 Rms

Le Rivage Hotel, 2008, 100 Rms
Residence Inn Capitol Park, 2007, 235 Rms

Marriott Triplex Cal Expo, 2006, 156 Rms

Embassy Suites Sacramento, 2002, 242 Rms
Sheraton Grand Sacramento, 2001, 503 Rms

5. This new supply drove TOT from the $16 million level to a peak of $23.8 million in 2014-15.
6. Select service hotels run an average of .4 full-time employees per room, while full service
hotels run an average of .7 FTE per room. The above new hotels created approximately 886
new direct jobs and supported indirect jobs in suppliers, surrounding restaurants and other
amenities, etc.
7. The TOT has run an average of $20.3 million over the past 5 years, as compared with the
average of $9 million in the 5 years previous to the 1996 expansion.
8. At present, there are approximately 600 new hotel rooms in late planning or under construction.
9. The convention center expansion would support a new supply of this 600, plus an additional
1,000-1,500 rooms. Each new room would support downtown businesses and amenities by
generating an average of approximately 1 guest per night per new room (1 hotel room X
72% average occupancy X 1.35 guests per occupied room).
With the overall economic recovery, and with the particularly strong growth in the leisure and
hospitality job sector, TOT is now one of the General Funds fastest growing revenues up
over 38% during the last 10 years, while still collecting the same rate of 12% and despite the
intervening Great Recession.
From its earliest inception, and with the support of the hospitality industry, TOT has been used
to support tourism-related infrastructure and has been allocated towards SCC debt service.
Sacramento hotels, restaurants, and the tourism industry are in strong support of the convention
center expansion. Convention center upgrades have demonstrated time and again that an
improved and expanded convention center will significantly increase the number of out-of-town
guests and have a direct impact on the Citys taxes, most notably TOT.
Note, however, that this TOT growth does not include various property and other taxes that are
positively impacted by the convention industry, and does not break out the significant private
sector affects that will also be generated. These private sector impacts include the significant
hotel, restaurant, retail and other ancillary industry profits generated as a result of theater
performances and convention industry activity.
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PROPOSED DOWNTOWN HOTEL DEVELOPMENT

Improving room rates and occupancy over the past five
years have spurred a wave of new hotel development. At
least seven hotels are currently proposed or being
considered for the City of Sacramento. Our strong
occupancy downtown has caused ongoing interest on the
part of developers to add supply over the coming years,
and demand generators are certainly in alignment with
supply growth. Although its unclear exactly how many of
those proposed hotels will be built, there is a pent-up
demand for a new supply of hotel rooms that will help
offset the challenges of development. Anything that does
get built will be easily absorbed by the market and the
existing and planned hotels in proximity to the SCC are
critical to its success. After the 1996 expansion,
Sacramento doubled its downtown hotel room inventory,
yet all of that supply was absorbed by 2006.
The last surge of hotel development ended in 2007. The
local lodging industry was burdened with an abundance of
hotel construction just as the national economy was
heading into a recession, but all of those additional rooms
were absorbed by 2013. While it took a few years for the
industry to get back to profitability, in the past two years
Sacramentos hotel market has been on a huge upswing
and many of the larger hotels are experiencing record
growth.
Fiscal year occupancy rates for the top 14 Sacramento
convention hotels through November 2015 averaged
78.4%; up 3.3% from the same point in 2014 according to
the City of Sacramentos TOT collection report. Average
daily room rates for that same time frame were $137.50,
up 4.3%.
Three of the proposed new hotels are in downtown
Sacramento. Two are near the new Golden 1 Center and
will add 409 rooms combined. A 159-room Hyatt Centric
boutique hotel is proposed for the Hotel Marshall site at 7th
and L streets. And a 250-room Kimpton Hotel is planned
for construction at 5th and J streets. The third hotel will be
part of the Sacramento Commons project at 7th and N
streets and their plans call for 320 rooms. The Kimpton
Hotel and the Hyatt Centric will be among the very few fullservice hotels added in recent years. The last to open was
the Thunder Valley Casino Resort hotel in 2010 in Lincoln.
Rooms are typically scarce on a weekday in Sacramento
and construction of Golden 1 Center in downtown will only
add to that scarcity. There is a place for new hotels in
Sacramento because of the significant growth in demand,
and we will see an increase in demand from the new
Golden 1 Center, especially on weekends.

Kimpton Hotel
J Street (Between 5th and 6th)
250 Rooms
Projected Completion Date: 2017

Hyatt Centric
(Formerly Marshall Hotel)
7th and L Streets
159 Rooms
Projected Completion Date: 2018

Sacramento Commons Hotel

7th and N Streets
320 Rooms
Projected Completion Date: TBD

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Convention Center Hotel Development

Even with the additional room
inventory already planned for
the downtown, it is clear that
an expansion of the convention
center will necessitate the need
for more hotel rooms to the
downtown market. In particular,
an additional convention center
hotel adjacent to the convention
center would be ideal and should
be considered a fundamental
component of the Convention
Center/Theater District. The size
and scope of the hotel would be
driven by the final expansion plans
of the convention center.
Fortunately, at the Southwest corner of 15th and K streets is a street level parking lot that occupies
approximately one quarter block. That parcel is currently held by AKT Development interests.
Representatives of that organization have confirmed that in the event the convention center is
expanded to the size envisioned by the existing plans, they will be interested in proposing,
developing or assisting in developing a convention center full-service hotel on that site. Their
commitment is of course conditioned upon the actual approval and construction of the convention
center expansion as proposed. The hotel would consist of between 300 to 400 rooms, restaurant,
meeting space and other amenities associated with a full service hotel. A second floor walkway
connecting the hotel and the SCC would offer convenient and direct access between the two
venues. A nationally prominent hotel flag would further enhance the SCCs potential impact and
the entire Convention Center/Theater District.

Outlook for Hotel Success

PKF Hospitality research authored a hotel sector update in October 2015 that concluded that the
outlook for the drivers that are most important to the hotels remains very favorable. This is a
summary of PKFs outlook:
The Very Good will continue.
The fundamentals are solid across the vast majority of markets.
Elevated industry growth will persist comfortably through 2017 and likely beyond.
High occupancy levels will provide the leverage needed to achieve large real Average Daily
Rate (ADR) increases for the next two-three years.
Competition for building materials and labor will continue to present challenges for
developers in most markets. Below average hotel construction will be the result for the next
three years leading to limited new competition and continuing demand.
Above long-run average occupancy levels will lead to strong profit growth comfortably
through 2017.
Profit growth will mitigate the impact of increased interest rates on hotel cap rates.
It is a great time to be in the hotel business!
Source: PKF Hospitality Research, a CBRE Company, October 2015 Hotel Sector Update

16