IF YOU BUILD IT, WILL THEY COME?
A summary and perspective of the last 10 years
Presented at the IEDC Conference at Tempe, Arizona, January 19, 2005 By David A. Wilcox, FAICP, Senior Vice President
INTRODUCTION
It has been 10 years since we began this annual winter conference topic. IEDC asked that ERA provide a summary of growth and change in the many types of mass attraction facilities and their activity volumes during the past 10 years. This presentation is a synopsis of data and trends which ERA continuously refreshes in our many practice groups.
Sports
Expansion/relocation of major league franchises:
baseball/football/basketball/hockey/soccer)
--6 major moves during past 10 years
--9 new expansion teams, with hockey adding 5
New or expanded/renovated venues:
--Major league baseball—15 of the 30 facilities
--National football league—20 of the 31 facilities
--National basketball league—18 of the 29 facilities
--National hockey league—14 additional, including 9 at
NBA facilities (now challenged by the 2004/05 “lockout”)
--Major league soccer—3 new facilities
Multi sport facilities for major leagues being replaced with
single-sport facilities
Minor league sports:
--Expanding into 2nd and 3rd tier markets
--Hockey and arena football have grown substantially
--Minor league baseball demand for stadiums across the
board from rookie leagues to AAA to independent leagues
College and university sports facilities growth at probably 5
times the professional leagues facilities growth
Nobody ever expected the growth of NASCAR! This is the
truly hot mass attraction activity, with major growth ahead
Youth sports grow—and absorb more and more family time;
and new sports are arriving—including LaCross
Convention Centers
This week’s big news—the Brookings Institution report by
Professor Heywood Sanders entitled “Space Available:
The Realities of Convention Centers as Economic
Development Strategy”. Available on line at
www.brookings.edu/metro
I recommend you read it/digest it/and figure out your
continuing strategy
The U.S. has seen the addition of a 50% increase in overall
floor space during the past 14 years—up by 20.5 million
square feet to more than 60.9 million square feet
There are multiple trends in the recovering convention
demand market which may yield relatively flat growth, even
though 44 new or expanded convention centers are now in
planning or construction
The report also questions the “next steps” development
scenarios which have led to mass subsidies for huge adjacent
convention center hotels, including even direct city
ownership and development initiatives
This is a wake up call
Hotels and Districts
The massing of huge operators (Starwood/Marriott/Cendant/etc.)
The massing of marketing and reservation systems
The explosion of “two star” hotel properties across America
Where is your closest “full service” hotel (having a “round
the clock” kitchen)?
Hotel business growth projections for 2005 by PKF are
positive:
--About 3% increase in room occupancies over 2004
--Roughly 5% increase in average daily rate from 2004
Existing hotel property purchase prices have picked up
recently according to Cushman-Wakefield analyses
We have recovered in most markets from September 11, 2001
Greatest challenge in many regions continues to be the
recovery of the central city/downtown hotels
From Cineplexes to Megaplexes—An Up and Down Ride
Movie screens rose 61%, adding 14,000 screens to total
37,000 screens between 1988 and 2000. 1995 marked the
introduction of stadium-style seating.
Movie screens and sites then fell, with net loss of 300 sites
and 1,100 screens between 1999 and 2003.
Actual site closures and screens going dark was much greater
as new capacities were built.
A dozen movie chains went bankrupt, with some emerging
through successful repositioning
The 10 top cinema chains now hold 53% of all screens, at
30% of all sites across the U.S.
Digital movie projection has been stalled for the last 5 years
Megaplexes have been core components of “urban
entertainment centers” and “life style/village centers”
Movie attendance shrank by 4% in 2003 from prior year, but
has rebounded back in 2004 toward 1.60 billion attendees
Taking Charge in Downtowns and Districts
The rapid growth of business improvement districts, focused
on branding, marketing, “clean and safe”, and evolving tenant
mixes
Transforming “old redevelopment” to “new
places”—adaptively using existing infrastructure and
available buildings and streetscapes previously installed
Vertical mixed use is coming back as the hot housing
investment
Transit oriented development (TOD) works, but usually takes
a long time to verify market demand and deliver results
Colleges and Community Colleges—Evolving Gems
Here are the truly huge players in all communities
Their growth has been incredible—with facilities following
Working with the community colleges (and their programs
and facilities) for small and medium sized cities is a win-win
situation
The rise of State university and college branch campuses has
brought opportunities for events/uses/programming not
previously anticipated
Flexible meetings/sports/performance halls are the gems
Museums
The numbers of new, expanded, and refreshed museums
across North America during the past 10 years are amazing
There are now 16,000 museums in the U.S., drawing 650
million visitors annually, a 60% increase in attendance since
1997. Some of this growth is due to refocusing on local and
regional visitation after 9/11/2001.
Perhaps the most covered urban cultural attractions in the
media (MOMA—NYC; Tacoma’s Glass museum;
Cincinnati’s Underground Railroad museum)
The legacy across America of the Louisiana Purchase and the
Corps of Discovery (Lewis and Clark)
Museums are changing with the continuing rise of
participatory experience attractions
The rise of excellence in Native American cultural museums
and grounds
The huge challenge ahead—sustained operational funding
Theme Parks
U.S. theme park industry has matured during the 1990s
Ownership has become more consolidated—dominated by
mega park operators
Operators initiated branded international operations which
has been a key driver for new investment and increasing
attendance levels
Look for recent 2004 attractions attendance numbers in the
December 2004 issue of Amusement Business magazine
(“AB”), which ERA helped produce. It’s a huge data bank.
During the past 10 years there have been 6 new theme parks
built in the U.S.
--3 mega parks—2 in Orlando and 1 in Southern California
(Disney and Universal)
--3 regional parks
Since 1990, only 16 new theme parks have been developed in
North America and all but 4 of these generating more than 1
million annual attendees
The vast majority of recent theme park development has
occurred in 2 key year-round markets: Central Florida and
Southern California
There are presently 115 theme parks in North America—one
half of these parks generate annual attendance of over 1
million
The industry suffered during the recent recession and after
September 11 terror attacks as consumers became more
reluctant to travel. Currently the industry is in a rebound
position—2004 attendance was up almost 4% and continued
growth is expected in 2005
ERA/AB research indicates that the top 50 parks in U.S.
Theme park industry had 169.1 million visitors in 2004
compared to 162.7 million in 2003
Although overall growth in attendance at North American
mega, major, and regional parks combined has been modest
over the past several years (average 0.7% per year), this
growth has been driven primarily by the addition of three
new mega parks: Disney’s Animal Kingdom (1998) and
Universal’s Island of Adventure (1999), both in Orlando, and
recently Disney’s California Adventure (2001) in Southern
California
The opening of these parks accounts for the majority of
growth in total theme park annual attendance
Resorts and Golf
Golf
--Market has softened
--Demand plateaued, and in some areas declined
--Overbuilding ended in the late 1990s
--Municipal golf facilities demand is down 10% to 15% from
mid 1990s to late 1990s
--Modest market price courses remain successful at
$45/weekday to $65/weekend, with golf cart
--Peripheral real estate development has been and continues
as the principal support for new urban area courses
--Every course is enduring the higher cost of water
Resorts
--Must have adjacent golf
--Used to generate 2.5 rounds of play per room stay, now
down 75% to 80% of that demand, or 2 rounds of
play/room
--Resort hotels have continued relatively successfully,
however, with more coming
--Evolving changes in the real estate models for resorts
+"Branded" time shares are doing well (Marriott as an
example)
+"Fractionals" (1/4 to 1/6 to 1/8 ownerships) are picking
up (Ritz Carlton model)
+"Condo" hotels have been around as a model—and are
now rapidly coming into the marketplace
Horse Racing Tracks and Developments
Mostly very old tracks
Decline in daily attendance during the racing season-by 60%
or more over the past 30 years
Campaigns to introduce slot machines are winning and losing
approval state by state
“New models” for race tracks are emerging:
--Year around training and operations
--Smaller seating capacities—which can be quadrupled with
temporary seats for major events (example: recent Breeders
Cup at Lone Star in Texas which drew 52,000+)
--Magna Entertainment is pursuing the “new model”
--Magna also is planning adjacent year-round urban
entertainment/retail/hotel developments in the larger
properties
--The Dixon Downs concept is emerging
Native American Casinos—Mass Growth Since the Mid 1990s!
Now capturing $15 billion in tribal “win” revenues annually
More than 200 locations across the U.S.
Depends on where the tribes are
Huge growth in the West (California/Arizona/New Mexico/
Oregon/Washington)
Midwest (Wisconsin/Michigan) and New York/Connecticut
growth
Second and third rounds of adding resort hotels at 400 to 600
rooms per expansion
Focusing successfully on the “drive in” market
Coming to the metropolitan urban region where you live
“ Tag End”—Impacts We Need to Consider
Sociodemographics
--Population growth
--Dispersed/peripheral “spread outs”
--We are becoming a consumer and services economy
--We all “own” more debt!!! Which will require more
affordable travel/entertainment/culture/sports!!
Challenges new and ahead
--Aging transportation infrastructure (and lesser funding)
--Tougher fights for subsidies/inducements to build
--Vehicle fuel costs
--Transformation of airlines/flight services
--Everything will be on IPODS or cell phones!!
--Affordable home entertainment equipment and broadcast
services
--Next roles for the evolving Ticketmaster monopoly
--Clear Channel control of booking live acts
--We meet/confer/chat/watch on the internet
Thanks to all the ERA staff who helped pull these trends together for the IEDC Conference, and thanks to Amusement Business and to PKF for good hard numbers.
archive announcements