Chargers: Raising hotel tax will generate $750M in revenue

Posted at 7:15 AM, Aug 24, 2016
and last updated 2016-08-24 16:41:48-04
SAN DIEGO -- After a bruising couple of weeks that saw three critical reports come out on the Chargers' plan to build a stadium and convention center annex in downtown San Diego, the team went on the offense Wednesday by releasing its own team-commissioned economic study on the proposal.
The Chargers independent study determined that increasing the hotel room tax will bring in more than $750 million revenue over the stadium’s first 10 years of operation. The study was conducted by Hunden Strategic Partners, a real estate consulting firm. 
The study further concluded that putting a stadium downtown would attract two million more hotel room nights over that 10-year span. 
“HSP’s analysis shows that the downtown project would have a major positive economic impact on the City of San Diego’s hotels and the overall local economy,” the Chargers said in a news release. 
The Chargers are putting their plans before voters in November as Measure C, which sets out a financial and land-use framework for the project. It needs 66 percent approval to pass because it would increase San Diego's hotel room tax.
The city of San Diego's Tourism Marketing District, the financial consultant Public Resources Advisory Group and the San Diego County Taxpayers Association each issued reports contending that the Chargers' plan for paying for construction and operations of the facility doesn't add up.
Those reports were balanced somewhat by a fiscal analysis from the city's Independent Budget Analyst's office, which suggested that an increase in the city's hotel room tax would likely raise enough money to pay for the public contribution to the estimated $1.8 billion project, but only if the team's estimates hold up.
But like the taxpayers' group, the IBA cautioned that the city's general fund -- which pays for basic services like public safety and libraries -- would be put at risk if revenue projections are overly optimistic. The IBA issued its fiscal analysis of Measure C on Monday.
According to the Chargers, the team's consultants determined demand, and projected impacts and benefits associated with the project, including greater attendance, more room nights and higher hotel rates.
The Chargers, who've wanted a new stadium for about 15 years, have proposed to build the facility in the East Village near Petco Park. The team and National Football League would contribute $650 million and the public would add the rest by raising the hotel room tax to 16.5 percent -- from the current 10.5 percent plus 2 percent tourism marketing fee.
The Chargers have agreed to play in the new facility for 30 years if Measure C passes. If it doesn't, the team has an option to join the Rams as the second tenant of a future stadium in Inglewood in Los Angeles County.
Read the Chargers full news release regarding the study below:
A new independent economic study has determined that the downtown convention center and stadium created by Measure C will result in a significant positive impact on San Diego’s convention and hotel industry, with more than $750 million in new hotel room revenue over the first 10 years of operation.
The study was conducted over the last four months by Hunden Strategic Partners, the leading destination real estate consulting and advisory firm, and was commissioned by Conventional Wisdom, the leading assembly facility programming and management consulting firm
Based on HSP’s analysis of the national and San Diego convention markets, the performance of the existing San Diego Convention Center, meeting planner interviews, and economic trend analysis, the following conclusions have been reached:
More than 200,000 San Diego Hotel Room Nights Annually. Based on the HSP analysis, the downtown project will induce and retain more than 2,000,000 new hotel room nights for City of San Diego hotels in the first 10 years of operation and average approximately 225,000 room nights per year by stabilization. Most of these additional hotel room nights will be due to new conventions and other groups coming to San Diego that currently are not able to be accommodated. Others will be due to the impact of Chargers home games, major concerts and other sporting events to be scheduled. In total, San Diego hotel room revenue is expected to increase by more than $750 million over the first 10 years.
Event Demand Leads to Major ADR (Average Daily Rate) Increases. Strong demand that pushes occupancy and rates higher and ripples out to surrounding areas generated by large events will increase hotel room revenue by nearly $200 million over the first 10-year period. 
Major Hotel Tax Revenue Increase. HSP expects hotel tax revenue of more than $125 million over the first 10 years solely due to the downtown project.
Hundreds of New Events. The downtown project is expected to be available for non-NFL events 95 percent of days per year, leading to more than 100 events per year, nearly all of which will be new to the City of San Diego, except existing NFL and college bowl games.
Hundreds of Thousands of Attendees. HSP estimates that the downtown project’s events will attract more than 200,000 non-sports and entertainment attendees per year and more than 900,000 total attendees per year. 
In conclusion, HSP’s analysis shows that the downtown project would have a major positive economic impact on the City of San Diego’s hotels and the overall local economy.