Title
Economic and Fiscal Impact Analysis of Phoenix Convention Center Expansion Project
Description
This report provides information on the Economic and Fiscal Impact Analysis Update on the Phoenix Convention Center expansion, performed by the Arizona Auditor General, to the Economic Development and Housing Subcommittee.
THIS ITEM IS FOR INFORMATION ONLY.
Report
Summary
In 2003, the State of Arizona and the City of Phoenix agreed to jointly fund the $600 million expansion of the Phoenix Convention Center (PCC). Economic activity from conventions and events benefits not only the City of Phoenix but the entire state. The expansion project tripled the size of the existing facilities allowing the PCC to compete for a significantly larger share of the national convention and trade show market. Construction began in 2004 with completion of Phase I in August of 2006, and completion of the full expansion in December of 2008. Today, the PCC continues to be ranked as one of the top convention center venues in the country.
By statute, the Arizona Auditor General is required to conduct an annual assessment of the value of direct, indirect, and induced economic activity resulting from regional and national conventions and trade shows held at the PCC. The estimates of economic activity provide the basis for estimates of new revenues to the State General Fund from income, sales, and other taxes generated by the expansion of the PCC. The net fiscal impact to the State General Fund is derived from gross revenues, plus construction impacts; less total distributions by the State to support the expansion project.
Between 2009 and 2022, the PCC hosted 813 qualified events. These events represent more than 2.9 million convention attendees and more than 8 million occupied hotel room nights. In addition, the estimated direct spending impact by attendees, event organizers, and exhibitors during this period is $2.9 billion. Attachment A provides a detailed summary of events, attendance, and hotel room nights by year and compares actual performance to a "no-build" scenario in which the PCC did not expand. Since 2009, the total economic impact to the State General Fund from this activity is $251.9 million. Conversely, the State distributed $244.9 million in debt service payments resulting in a net positive impact to the State General Fund as a result of the expansion of the PCC.
In March 2020, the COVID-19 outbreak became a global health pandemic. At the time of the outbreak, the PCC was on pace to host a record number of citywide convention groups in 2020. Restrictions were implemented for large gatherings across the country impacting the ability of meeting planners and associations to hold conventions and trade shows. Declarations and guidance from federal, state, and local government agencies as well as public health agencies resulted in cancellations and postponements of contracted events including meetings, conventions, trade shows and theater events at the PCC. Despite the negative impacts of the pandemic on the visitor industry, the expansion of PCC has continued to generate net positive revenues to the State General Fund.
Since that time, the meetings industry and the PCC have experienced a rapid recovery. Strong convention booking activity at the PCC has continued in 2023 and the pace of future convention bookings through 2027 remains ahead of historic averages. This is a strong indicator that demand is robust and that Phoenix continues to be a top-tier destination for meetings and conventions.
Department
Responsible Department
This item is submitted by Deputy City Manager John Chan and the Phoenix Convention Center.