FY2018 San Diego Tourism Marketing District Report of Activities Economic Development Department FY2018 San Diego Tourism Marketing District Report of Activities Economic Development & Intergovernmental Relations Committee Meeting of April 20, 2017 – Item ____

TMD Overview Renewed effective January 1, 2013 (Part I) Economic Development TMD Overview Renewed effective January 1, 2013 (Part I) Modified effective September 1, 2016 (Part II) 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

Tourism Outlook Moderate growth is projected in FY2018: Economic Development Tourism Outlook Moderate growth is projected in FY2018: Occupancy levels forecasting 0.8% growth in calendar year (CY) 2017 and 0.4% growth in CY 2018. Average daily room rate growth in +3.3% in CY 2017 and +3.6% in CY 2018. Influential economic indicators: Suggest reason for greater optimism Uncertainty in both domestic and international markets Slowing Chinese economic growth Undefined policies of the new Trump administration. Continued strength of the US dollar Unresolved drive-market constraints (I-5 corridor congestion and San Diego’s inability to match competitor’s growth in attractions) Source: Tourism Economics San Diego Travel Forecast, December 2016

FY18 Available Funds Source $ Projected Assessments $ 36,855,968 Economic Development FY18 Available Funds Source $ Projected Assessments $ 36,855,968 Projected Interest & Penalties $ 160,000 Projected FY17-Part II cfwd – non Litigation $ 3,058,608 Total $ 40,074,576 Projected FY17-Part I Cfwd – Litigation Reserve $ 29,700,000 Required FY17-Part I required carryforward $ 29,000,000 Activity occurring June through May 2018 with payments remitted July through June

FY18 – Recommended Allocations Economic Development FY18 – Recommended Allocations Non-TMD Entity / Purpose Allocation Funds SD Tourism Authority Base $ 31,987,785 -- SDTA/SD Sports Alliance Sponsorships $ 739,700 -- Total SDTA $ 32,727,485 $ 4,452,483 California Police Athletic Federation $ 50,000 $ 141,500 California State Games $ 150,000 $ 500,000 California State Games – USA Masters Games $ 150,000 $ 1,014,500 Century Club - Farmers Insurance Open $ 100,000 $ 808,625 Extreme Sailing $ 400,000 $ 600,000 San Diego Bayfair - Thunderboats $ 95,000 $ 301,000 San Diego Bowl Game Association $ 300,000 $ 1,000,000 San Diego Brewers Guild – Beer Week $ 74,900 $ 40,100 San Diego Crew Classic $ 200,000 $ 1,050,000 TOTAL $ 34,247,385 $ 9,908,208

FY18 – Recommended Allocations cont. Economic Development FY18 – Recommended Allocations cont. Purpose Allocation Destination Marketing Master Plan $ 37,500 Opportunity/Catastrophe $ 2,692,262 City & SDTMD Administration $ 2,097,429 Litigation Reserve $ 1,000,000 Total $ 40,075,576

FY18 – SDTA Program Highlights* Economic Development FY18 – SDTA Program Highlights* Target ROI overall 21.5 to 1 Increase hotel occupancy: 77.1% in 2017 to 77.4% in 2018 Increase average daily room rate (ADR): 159.30 in 2017 to $165.00 in 2018 Increase revenue per available hotel room (RevPAR): $122.82 in 2017 to $127.71 in 2018 *Subject to updating and SDTA Board approval

FY18 – SDTA Program Highlights* (Cont.) Economic Development FY18 – SDTA Program Highlights* (Cont.) Increase Market Share 16.2% in 2017 to 16.3% in 2018 Of Six Western Region Competitive Set Cities (source: Smith Travel Research (STR)) Increase NEW single-property group room nights: 410,000 in FY16 to 420,000 in FY18 Book 860,000 Convention Center related room nights in FY18 for future years *Subject to updating and SDTA Board approval

FY18 – Program Highlights cont. Economic Development FY18 – Program Highlights cont. California Police Athletic Federation - $50,000 Room Nights: 11,118 Target ROI overall: 35.5 to 1 Event: United States Police & Fire Championships California State Games - $150,000 Room Nights: 17,500 Target ROI overall: 16.9 to 1 Event: Youth Summer and Winter sports competitions California State Games – USA Masters Games - $150,000 Room Nights: 10,000 Target ROI overall: 9.7 to 1 Event: Adult competition in 20+ sports

FY18 – Program Highlights cont. Economic Development FY18 – Program Highlights cont. Century Club of San Diego - $100,000 Room Nights: 42,571 Target ROI overall: 68.2 to 1 Event: Farmers Insurance Open professional golf tournament Extreme Sailing - $400,000 Room Nights: 10,000 Target ROI overall: 4.0 to 1 Event: International high-speed sailing competition on San Diego Bay San Diego Bayfair/Thunderboats Unlimited - $95,000 Room Nights: 16,511 Target ROI overall: 27.8 to 1 Event: Performance boat racing on Mission Bay

FY18 – Program Highlights cont. Economic Development FY18 – Program Highlights cont. San Diego Bowl Game Association - $300,000 Room Nights: 24,572 Target ROI overall: 13.1 to 1 Event: Holiday Bowl featuring teams from Pac-12 and Big Ten San Diego Brewers Guild - $74,900 Room Nights: 8,000 Target ROI overall: 17.1 to 1 Event: San Diego Beer Week festival showcasing San Diego beers San Diego Crew Classic - $200,000 Room Nights: 11,500 Target ROI overall: 9.2 to 1 Event: Collegiate, high school, open/alumni, masters rowing events in spring; kicking off US rowing season.

FY18 Supplemental Request Economic Development FY18 Supplemental Request Source $ FY17- Part I Litigation Reserve $ 3,000,000 Entity / Purpose Allocation SD Tourism Authority $ 3,000,000 China Market Development $ 1,000,000 Los Angeles Leisure Market stimulus $ 1,000,000 Balboa Park Co-op Marketing Program $ 1,000,000 *Requires amendment to Operating Agreement (Litigation Reserve and Withholding Schedule) Activity occurring June through August 2016 with payments remitted July through September

Highlights of Supplemental Request Economic Development Highlights of Supplemental Request China Market Development $ 1,000,000 Growth potential & Chinese visitors stay longer and spend more No direct flights to San Diego Lack of awareness of San Diego SDTA marketing plan to increase San Diego share of market. Los Angeles Leisure Market stimulus $ 1,000,000 Decline in LA visits due to reduced co-op advertising Reverse trend through targeted TV media spend next Spring in L.A. Past experience suggests a 48:1 ROI ==> + $5 million in TOT collections Balboa Park Co-op Program $ 1,000,000 First year of 3-year / $3 million marketing program advertising, public relations, social media, web and content management. Collaborative effort led by SDTA with City of San Diego, Balboa Park Cultural Partnership, Balboa Park Conservancy, Friends of Balboa Park, and individual park institutions, including the Zoo and Comic-Con Museum of Popular Culture. Leveraging funds from Legler Benbough Foundation.

Summary of Requested Actions Economic Development Summary of Requested Actions Approve FY2018 Report of Activities and associated expenditures Approve FY2018 Supplemental Funding Request and associated expenditures and First Amendment to Operating Agreement Authorize processing of any outstanding FY2017 reimbursements in FY2018 and associated expenditures

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