Proposed Headquarters Hotel Feasibility and Impact Analysis HVS Ernest N. Morial Convention Center New Orleans, Louisiana August 21, 2018 Agenda Discussion of Proposed Omni Hotel Project 1. Hotel Market and Feasiblity Analysis 2. Proposed Approach to Financing 3. Impact on MCC Demand 4. Economic and Fiscal Impact August 21, 2018 HVS Convention Sports and Entertainment Consulting DISCUSSION PURPOSES ONLY Hotel Market and Feasibility Analysis Research Potential Methodology Competitive Hotels Economic Indicators Competitive Set Analysis Induced Demand Occupancy Estimates ' Unaccommodated Demand Proposed Headquarters Occupancy and ADR Forecasts by Market Hotel Market Penetration Segment Room Supply Changes Inflation and Market Comparable Hotel Estimate of Proposed Operating Data Headquarters Hotel Growth Assumptions Financial Operations Feasibility Analysis using Discounted Cash Flows HVS Convention Sports and Entertainment Consulting August 21, 2018 FOR DISCUSSION PURPOSES ONLY District Site Map Proposed Building Program Guest Rooms Indoor Meeting & Banquet Facilities 30,000 Bal lroom 20,020 Bal lroom 15,010 Meeting 34,873 Convention Center District redevelopment project HVS Convention Sports and Entertainment Consulting FOR DISCUSSION PURPOSES ONLY Square Feet Grand Bal lroom Total August 21, 2018 1,200 '99,903 The Competitive Set The PrimarY Competitors .. '-f ' Number 9 Hotel superctomeV Qflean's 9' TneHom« D«poi^ Outlet (icHp-J )0R HOFFMAN TRIANGLE » ALGIERS POINT Five Primary Competitors FEOE Newton SI WHITNEY ' > >e5fri MCOONOUOH CENTRAL CITY * Ej /■ Mardf Gras W FAUBOURG LIVAUDAIS f9 Bucei' Manston Q Hilton New Orleans Riverside 1,622 100% 1,622 Hyatt Regency New Orleans 1,193 100% 1,193 Marriott New Orleans 1,333 100% 1,333 331 100% 331 1,110 100% 1,110 5,589 100% 5,589 7,512 47% 3,525 13,101 70% 9,114 New Orleans Downtown Marriott at the Convention Center Sheraton New Orleans 2 ' 1 i FISCHER t 1 Lafayetie Cemetofy No 1 DEVELOPME NElGHBORHt Puriria*^ i Totals/Ave rages 27 Secondary Competitors 32 Primary & Secondary Competitors Total/Weighted tSST \ Wolmart Supercenter V Sources: STRandHVS ,V T* Mipdsa^2Gt9G9oe^ ' TemofUte R^ertBrn^esior . f ? 9 9 Proposed Hndquvtm NotBi Hilton New Orirans (Uvenide 9 9 New Orteom Oowntown Marriotl at the Convention Center Sheraton New Orleam HY«ti Retenqr New Orleam Marriott New Muns August 21, 2018 Count S 9? Ofleans Monal. theNaiionaiQ Room Rooms Q S WWII Museum" of Weighted Level % Mefc«de«-Benx A . . Competitive HVS Convention Sports and Entertainment Consulting FOR DiSCUSSION PURPOSES ONLY ADR, RevPAR, and Occupancy Ten-year Trends $200 100% $180 90% $160 80% $140 70% $120 60% $100 50% $80 40% $60 30% ADR Occupancy RevPAR $40 20% $20 10% $0 0% 2008 August 21, 2018 2009 2010 2011 2012 2013 2014 HVS Convention Sports and Entertainment Consulting FOR DISCUSSION PURPOSES ONLY 2015 2016 2017 Historical Performance of the Competitive Hotels Available Annual Year Occupied Annual Room Annual Change Room Nights Change Annual ADR % Occ Change Change Nights 2008 4,345,325 2,737,936 63.0% 153.57 2009 4,345,325 2,751,694 63.3% 143.46 2010 4,340,663 3,106,457 71.6% 144.62 2011* 4,446,671 3,139,137 70.6% 153.06 2012 4,763,042 3,401,596 71.4% 166.61 2013 4,781,227 3,395,640 71.0% 178.58 2014 4,782,170 3,499,623 73.2% 182.67 2015 4,786,406 3,552,119 2016 4,790,260 3,555,809 74.2% 187.39 2017 4,781,980 3,587,116 75.0% 187.45 I I 74.2% Hyatt Hotel reopens. August 21, 2018 HVS Convention Sports and Entertainment Consulting FOR DISCUSSION PURPOSES ONLY I 185.51 I I Room Count and Occupancy Room Count c Secondary Competitors 3,525 Hilton New Orleans Riverside 1,622 Marriott New Orleans 1,333 Hyatt Regency New Orleans 1,193 Sheraton New Orleans 1,110 Marriott at the Convention Center 331 Occupancy Marriott New Orleans August 21, 2018 75- 80% Secondary Competitors 76% Sheraton New Orleans 75 -80% Hilton New Orleans Riverside 70-75% Marriott at the Convention Center 70-75% Hyatt Regency New Orleans 65-70% HVS Convention Sports and Entertainment Consulting FOR DISCUSSION PURPOSES ONLY Average Daily Rate and RevPAR ADR Hi lton New Orleans Riverside Secondary Competitors $190 - $200 $191 Hyatt Regency New Orleans $180 - $190 Ma rriott at the Convention Center $170 - $180 Marriott New Orleans $170- $180 Sheraton New Orleans $170- $180 RevPAR Secondary Competitors August 21, 2018 $145 Hilton New Orleans Riverside $140- $150 Marriott New Orleans $130- $140 Sheraton New Orleans $130- $140 Hyatt Regency New Orleans $125 - $130 Marriott at the Convention Center $125 - $130 HVS Convention Sports and Entertainment Consulting 10 FOR DISCUSSION PURPOSES ONLY Known New Hotel Supply iupplY i I Rooms Proposed Warehouse Convention Center Hotel 2019 215 Proposed Four Seasons World Trade Center* Proposed World War II Museum Hotel* 2019 2019 350 234 Proposed Hard Rock Hotel and Residences Proposed Virgin Hotel 2020 2020 350 225 Iota I 1,374 *Under construction A Eust 21 2018 ' Convention Sports and Entertainment Consulting FOR DISCUSSION PURPOSES ONLY 11 Induced Demand from Proposed Hotel (for a stabilized year) Total Induced Source of Induced Demand Room Nights Convention Center Net Meeting Space Proposed Hotel 50,000 172,225 Totals HVS Convention Sports and Entertainment Consulting August 21, 2018 122,225 FOR DISCUSSION PURPOSES ONLY Comparison of Projected Market to Proposed Hotel Occupancy Rate Average Daily Rate $250 $200 $150 $100 -- $50 - — SO 2023 2024 2025 2026 Competetlve Hotels August 21, 2018 2023 2024 2025 2026 ■ Proposed Hotel HVS Convention Sports and Entertainment Consulting FOR DISCUSSION PURPOSES ONLY 13 $000 %of Gross Operating Revenue Proposed Hotel Pro Forma $68,894 57.7% 38,290 32.1% Beverage 4,595 3.8% Other Operated Departments 6,126 5.1% Miscellaneous Income 1,532 1.3% $119,437 100% Rooms Food in a Stabilized Year of Operation (2026) Total Operating Revenues Departmental Expense* $15,846 23.0% 25,731 60.0% 2,451 40.0% Total Expenses $44,027 36.9% Departmental Income $75,410 63.1% Rooms Food & Beverage STVWISTlCS i;^jumber of RMnis Other Operated Departments izoo Oc(C0id Room NI Hfs' dccMlpancy :g ^ :Avefa ti^: Rg?f«R im nwfd Undistributed Operating Expense $7,643 6.4% Marketing 8,093 6.8% Prop. Operations 8i Maint. 4,121 3.5% Utilities 3,147 2.6% Info & Telecom Systems 1,199 1.0% 24,203 20.3% $51,207 42.9% $3,583 3.0% $47,624 39.9% Administrative & General Total Expense Gross House Profit Management Fee Income Before Non-Opr. inc.& Exp. Non-Operating Income & Expense Property Taxes $0 0.0% Insurance 1,049 0.9% Reserve for Replacement 4,777 4.0% $5,827 4.9% $41,797 35.0% Total Expense EBITDA Less Reserve August 21, 2018 ^Departmental expense ratios are calculated as a percentage of departmental revenue. 14 Hotel Valuation Assuming Conventional Financing Key Assumptions for Loan Rooms 1200 Loan-To-Value Ratio 65% Blended Yield Senior and Mezz. 5.00% Equity Yield 17.50% Transaction Costs for Sale 2.00% • Omni branded Hotel Sale End of Year • Brand managed • Conventional loan • 35% equity • No public investment The value of the project is below the expected cost of the facility assuming no cost to the land lease that property taxes will not be paid on the 10 Terminal Capitalization Rate 8.50% Total Property Yield 10.50% 'tsiimaigo l^'ni 'i ' wpening jlanMqry 4/ Mortgage Component $292,294,631 Equity Component 157,389,417 Total $449,684,047 Value per Room $374,737 hotel. j^sunripiipQS i\qng&^ The difference between the cost of the project and the value is primarily related to the amount of meeting space and higher quality desired in the public spaces. $425 thousand per Room $510,000,000 $475 thousand per Room $570,000,000 $525 thousand per Room $630,000,000 KQSsipiie f unoing ■jurpius j $425 thousand per Room $475 thousand per Room August 21, 2018 .hdineGaD ' inping uap ^ ^ $525 thousand per Room ($60,315,953) ($120,315,953) ($180,315,953) 15 Proposed Approach to Financing Au ust 21 2018 ' Convention Sports and Entertainment Consulting FOR DISCUSSION PURPOSES ONLY How Governments Finance Headquarters Hotel OwhereHip Option 1 Option 2 Private Public I Default Risk ; Cost of Funds i Final Ownership Debt, Equity, Public Subsidy Private (Equity Investor and 9% to 11% Private 4% to 6% Public 7% to 9% Public Lenders) Tax Exempt Debt plus Incentives Bondholders & or Credit Public Sponsor Enhancement r; ■ August 21, 2018 OptRiriS . Wi Non-Profit Tax Exempt Debt plus Incentives Bondholders 17 Proposed Financing Pian Estimated Sources and Uses of Funds($ millions) Non-profit ownership Tax-exempt debt Three tiers of debt Private placement of Proposed Sources Senior Bond Proceeds 7.00% $305 Mezzanine Bond Proceeds 8.50% 180 11.00% 107 2.00% 12 Subordinated Bond Proceeds Interest Earnings MCC Capita I Contribution 41 subordinate bonds Total Sources 40-year amortization Proposed Uses No MCC default risk Project Funding Reversion of hotel to MCC Reserve Accounts 43 after debt is repaid Capitalized Interest Working Capital 54 Issuance Costs Total Uses of Funds August 21, 2018 $533 9 7 $646 HVS Convention Sports and Entertainment Consulting FOR DISCUSSION PURPOSES ONLY 18 Estimate Value of Proposed Incentives in other Headquarter Hotel Financings Co$t Per Key Credit riyjcct 'Vyyii ciaiii j Incentive l\UUIII9 Enhancement . ....L:.:,:.:, . : [1 $milliens) 1 thbusaitds) ■",1 '-i % Portland Metro Hyatt Regency Oklahoma CityOmni Loews Kansas City Private No 2019 600 230 383 74 32% Private No 2020 600 235 392 85 36% Private No 2020 800 322 403 161 50% Omni Louisville Private No 2018 600 307 512 107 47% Omni Nashville Private No 2013 612 247 404 150 61% Omni Forth Worth Private No 2009 614 128 208 49 38% Marriott Marquis Chicago Public Yes 2017 1,205 450 373 50 11% Dallas Omni Public Yes 2011 1,001 500 500 100 20% Average 37% 173 27% New Orleans HQH August 21, 2018 No n-Profit No 2023 1,200 HVS Convention Sports and Entertainment Consulting FOR DISCUSSION PURPOSES ONLY 646 538 19 Estimate Value of Proposed Incentives % Of Proposed So Proposed Source Capital Contribution $36 Project Generated Room Taxes 76 Project Generated Sales Taxes Hotel Property Taxes 13 48 Total $174 Less Residual Value of Hotel ($36) Net Value of Incentives $137 27% 21% * Project cashflows discounted at blended cost of capital (8.8%). August 21, 2018 HVS Convention Sports and Entertainment Consulting 20 FOR DISCUSSION PURPOSES ONLY Impact on MCC Event Demand Historical Events 141 2014 August 21, 2018 2015 2016 HVS Convention Sports and Entertainment Consulting FOR DISCUSSION PURPOSES ONLY 134 134 2017 2018 22 Historical Event Attendance 890,412 906,788 2017 2018 830,140 652,603 2014 August 21, 2018 623,300 2015 2016 HVS Convention Sports and Entertainment Consulting 23 FOR DISCUSSION PURPOSES ONLY Historical Room Block Commitments 772,051 719.442 713.689 729.363 2017 2018 665,343 2014 August 21, 2018 2015 2016 HVS Convention Sports and Entertainment Consulting 24 FOR DISCUSSION PURPOSES ONLY Event Seasonality(2013- 2018) 14% 12% 10% 8% 6% 4% % of Total Attendance 2% % of Total Room Nghts 0% 5: August 21, 2018 .