San Diego Tourism Marketing District FY2020 Report of Activities and Supplemental Funding Request

Economic Development Department

Economic Development & Intergovernmental Relations CommitteeMeeting of April 11, 2019 – Item 2

Economic Development

TMD OverviewRenewed 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

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Economic Development

Tourism OutlookInfluential Economic Indicators

• Strong fundamentals, but market correction expected and policy uncertainty existso Labor market and consumer spending strengtho 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

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Economic Development

FY2020 Available FundsSource $Projected Assessments $ 41,040,340Projected Interest & Penalties $ 160,000Projected FY19 cfwd – non-Litigation $ 4,276,339Projected FY19 cfwd (mod) –Litigation Reserve $ 1,000,000Total $ 46,476,679

Litigation Reserve FY19 cfwd (A/B) $ 21,000,000

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Economic Development

FY2020 Recommended Allocations Non-TMDEntity / Purpose Allocation FundsSD Tourism Authority Base $ 39,202,838 $ 4,507,056ANOC World Beach Games $ 500,000 $ 24,020,035California Police Athletic Federation $ 75,000 $ 457,100California State Games $ 175,000 $ 517,400Pro Am Beach Soccer $ 30,000 $ 56,200San Diego Bay Wine & Food Festival $ 74,500 $ 896,500San Diego Bayfair - Thunderboats $ 95,000 $ 380,000San Diego Brewers Guild $ 31,000 $ 99,000San Diego Bowl Game Assoc. – Holiday Bowl $ 410,000 $ 8,640,269San Diego Crew Classic - Spring $ 195,000 $ 854,000San Diego Surf Cup – Thanksgiving Challenge $ 40,000 $ 80,000USA Ultimate Frisbee $ 30,000 $ 81,150Wonderfront $ 500,000 $ 9,810,499TOTAL $ 41,358,338 $ 50,338,309

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Economic Development

FY2020 Other Recommended AllocationsPurpose AllocationOpportunity/Catastrophe $ 1,995,187City & SDTMD Administration $ 2,123,154Litigation Reserve (modified district) $ 1,000,000Total $ 46,476,679

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Economic Development

FY2020 Program Highlights - SDTA*

Target ROI overall 21.7 to 1Grow 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

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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

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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

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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.

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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.

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Economic Development

FY2020 Supplemental Request from Litigation Reserve (A/B)*Purpose AllocationSD Tourism Authority $ 6,999,332• National Cable Broadcast Advertising• Digital Advertising and Family Audience Campaigns

Measuring Effectiveness – Room Nights and ROI - TNS/OmniTrackSDTA FY20 base body of work ~ 4.5 millionSupplemental funding ~ 0.6 millionCombined room nights ~ 5.1 millionCombined 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)

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Economic Development

Highlights of FY2020 Supplemental RequestDigital 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

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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.

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Economic Development

Questions

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