R-98-04-23-10B5 - 4/23/1998Mayor
Charles Culpepper
Mayor Pro-tem
Earl Palmer
Council Members
Robert Stluka
Rod Morgan
Rick Stewart
Martha Chavez
Jimmy Joseph
City Manager
Robert L Bennert Jr.
City Attorney
Stephan L Sheets
CITY OF ROUND ROCK
May 21, 1998
Mr. Steve Spickard
Senior Vice President
Economics Research Associates
388 Market Street, Suite 1580
San Francisco, CA 94111
221 East Main Street
Round Rock, Texas 78664
512 -218 -5400
Re: Proposal No. 35963 for Economic Consulting Services.
Dear Mr. Spickard:
The Round Rock City Council approved Resolution No. R- 98- 04 -23-
10B5 at their regularly scheduled meeting on April 23, 1998.
Enclosed is a copy of the resolution and original contract for your files.
If you have any questions, please do not hesitate to contact David
Kautz at 218 -5430.
Sincerely,
Joanne Land
Assistant City Manager/
City Secretary
Enclosures
Fax: 512- 218 -7097
1- 800- 735 -2989 TDD 1. 800. 735 -2988 VOiee
APR -17 -99 16:49 FROM:ERA SF ID:4159595274
ERA
Economics Research Associate$
Facsimile
Date: April 17, 1998
To: David Kautz
FAX: 512/218 -5442
From: Steve Spickard
RE Revision to the Standard Addendum
CC
Number of pages including cover 2
sheet:
Message
Attached you will find the revised version of ERA's Standard Proposal
Addendum with the language you requested.
388 Market Street Suite 1580 San Francisco, CA 94111
415.956.8152 FAX 415.956.5274 www,erast.com /eras( ERA is affiliated with Drivers aortas
Les Angeles San Franeisco San Diego Chicago Washington DC London
PAGE 1/2
Pg-tc,
ERA
Economics Research Associates
ERA
Economics Research Associates
Final Report
PROJECTION OF HOTEL TAX REVENUE TO
THE CITY OF ROUND ROCK, TEXAS
Prepared for
THE CITY OF ROUND ROCK, TEXAS
Submitted by
Economics Research Associates
February 16, 1999
ERA Project No. 12981
388 Market Street Suite 1580
San Francisco, CA 04111 fan is affiliated with Drivers Jonas
415.958.8152 FAX 415.956.8174 www erast.cam /erasf
Los Angeles San Francisco San Diego
Chicago Dallas Washington DC London
TABLE OF CONTENTS
Section Page
GENERAL LIMITING CONDITIONS
I INTRODUCTION I- 1
II EXECUTIVE SUMMARY II- 1
Regional Demographic, Economic, and Hotel Trends II- 1
Planned Economic Development Projects, City of Round Rock II- 2
City o f Round Rock Hotel Market II- 3
Projections of Hotel Tax Revenue to the City of Round Rock II- 5
III ANALYSIS OF REGIONAL SOCIO- ECONOMIC TRENDS III- 1
Socio- Economic Trends in the Austin -San Marcos MSA III- 1
Williamson County III- 4
IV SOCIO- ECONOMIC TRENDS IN ROUND ROCK AND
PROJECTIONS OF HOTEL TAX REVENUE TO THE CITY IV- 1
Analysis of Socio- Economic Trends in the City of Round Rock IV- 1
Projections of Hotel Tax Revenue to the City of Round Rock IV- 7
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POPULATION PROJECTIONS, AUSTIN -SAN MARCOS MSA
EMPLOYMENT TRENDS, AUSTIN -SAN MARCOS MSA
TREND IN UNEMPLOYMEN RATES, AUSTIN -SAN MARCOS MSA
TREND IN GROSS SALES, ALL MAJOR INDUSTRIES, AUSTIN -SAN
MARCOS MSA
III- 5 BUILDING PERMIT TRENDS, AUSTIN MSA
III- 6 TOURISM TRENDS FOR THE CITY OF AUSTIN
III- 7 AIRPORT ARRIVALS/DEPARTURES, AUSTIN
III- 8 HOTEL MARKET TRENDS, AUSTIN MSA
III- 9 TOP NATIONAL HOTEL MARKETS, SUPPLY AND DEMAND, 1997
III -10 OVERVIEW OF AUSTIN HOTEL MARKET, 1996/1997
III -11 POPULATION PROJECTIONS, WILLIAMSON COUNTY
1II -12 EMPLOYMENT TRENDS, WILLIAMSON COUNTY
III -13 TREND IN UNEMPLOYMENT RATES, WILLIAMSON COUNTY
LIST OF TABLES
II1 -14 TREND IN GROSS SALES, ALL MAJOR INDUSTRIES, WILLIAMSON
COUNTY
III -15 BUILDING PERMIT TRENDS, WILLIAMSON COUNTY
III -16 HOTEL MARKET TRENDS, WILLIAMSON COUNTY
IV- 1 TREND IN GROSS SALES, ALL MAJOR INDUSTRIES, CITY OF ROUND
ROCK
IV- 2 CORPORATE LOCATIONS/EXPANSIONS, CITY OF ROUND ROCK
ii
Table
IV- 3
IV- 4
LIST OF TABLES
MAJOR EMPLOYERS WITHIN A 15- MINUTE DRIVE OF DOWNTOWN
ROUND ROCK
SELECTED ECONOMIC DEVELOPMENT PROJECTS, CITY OF ROUND
ROCK
IV- 5 TRAFFIC COUNTS ON I -35 IN ROUND ROCK
IV- 6 HOTEL MARKET TRENDS, ROUND ROCK
IV- 7 CITY OF ROUND ROCK, HOTEL/MOTEL BED TAX RECEIPTS
IV- 8 CHARACTERISTICS OF HOTELS IN ROUND ROCK
IV- 9 OVERVIEW OF PROPOSED HOTELS IN ROUND ROCK
IV -10 ANALYSIS OF POPULATION, EMPLOYMENT AND ROOMNIGHT
TRENDS
IV -11 PROJECTIONS OF HOTEL BED TAX REVENUE TO THE CITY OF ROUND
ROCK
iii
LIST OF FIGURES
Figure
I- 1 LOCATION OF THE CITY OF ROUND ROCK
III- 1 TOTAL JOBS IN THE AUSTIN — SAN MARCOS MSA
III- 2 HOTEL ROOMNIGHTS AND REVENUES, AUSTIN — SAN MARCOS MSA
III- 3 TOTAL JOBS IN WILLIAMSON COUNTY
IV- 1 HOTEL ROOMNIGHTS AND REVENUES, ROUND ROCK
IV- 2 PROJECTIONS OF POPULATION AND EMPLOYMENT: AUSTIN -SAN
MARCOS MSA
IV- 3 HISTORICL AND PROJECTED HOTEL ROOMNIGHT DEMAND
IV- 4 ROUND ROCK HOTEL MARKET: HISTORICAL AND PROJECTED
PERFORMANCE
iv
GENERAL LIMITING CONDITIONS
Every reasonable effort has been made in order that the data contained in this study reflect the most
accurate and timely information possible and it has been derived from sources believed to be reliable.
This study is based on estimates, assumptions, and other information developed by Economics Research
Associates from its independent research effort, general knowledge of the hotel industry, and consultation
with representatives of the City of Round Rock. No responsibility is assumed for inaccuracies in
reporting by the client or representatives, or any other sources used in preparing or presenting this study.
This report is based on regional economic and demographic information that was current as of June 1998.
In addition, for data pertaining to the characteristics of hotels in Round Rock, and other information
pertaining to economic development projects in the City of Round Rock, this information was current as
of January 1999. Economics Research Associates has no responsibility to update or revise this report
subsequent to this date.
This study evaluates the effect of various factors, both present and anticipated in the future, which may
have an effect on future hotel tax revenues to the City of Round Rock, Texas. The projected lodging tax
revenues are influenced by many factors which cannot be foreseen. Many other significant influencing
factors may be unpredictable and unquantifiable, which would include weather, the general state of the
economy, continued strength of the area's key employers, a recession, technological changes, changing
competitive situations, changing visitation patterns, or possibly an over -built hotel market at some future
time, unforeseen construction problems or delays with respect to planned hotels, management strength in
developing and operating hotels, and the ability to attract new hotel business to the area. Unless expressly
identified, such other significant influencing factors have not been considered by ERA in the preparation
of this study and calculation of future hotel tax revenues to the City of Round Rock. Under differing
scenarios, these other significant influencing factors can have either positive or negative effects on
projected hotel tax revenues.
The scope of this study consisted primarily of evaluating secondary data sources supplemented by
interviews with representatives of management of existing hotels, the proponents of planned and proposed
hotels, and representatives of major employers in Round Rock. Although such information is deemed
reliable, no independent attempt has been made by ERA to verify the factual basis of the information
provided and ERA makes no assurance as to the accuracy of such information.
No warranty or representation is made by Economics Research Associates that any of tax revenue
projections contained in this study will actually be achieved. Projections are based on estimating the
likelihood of future events and will probably differ from actual results; and these differences can be
material.
Possession of this study does not carry with it the right of publication thereof or to use the name
Economics Research Associates in any manner without first obtaining the prior written consent of
Economics Research Associates. No abstracting, excerpting or summarization of this study may be made
without first obtaining the prior written consent of Economics Research Associates. This report is not to
be used in conjunction with any public or private offering of securities or any other purpose where it may
be relied upon to any degree by any person other than the client without first obtaining the prior written
consent of Economics Research Associates. This study may not be used for purposes other than that for
which it is prepared or for which prior written consent has first been obtained from Economics Research
Associates.
This study is qualified in its entirety, and should be considered in light of these limitations, conditions,
and considerations.
Section I
INTRODUCTION
The City of Round Rock, Texas retained Economics Research Associates (ERA) to
conduct an independent analysis of the hotel market in Round Rock, and to project the future
annual hotel bed tax revenue stream which could flow to the City. If this revenue stream appears
sufficiently large, the City intends on issuing a revenue bond in order to capitalize on the future
value. As shown on Figure I -1, the City of Round Rock is located in Central Texas in
Williamson County in the Austin — San Marcos Metropolitan Statistical Area (MSA).
In April 1998, the City of Round Rock retained ERA to study the local hotel market and a
key component of this research effort was the collection and analysis of economic and
demographic statistics. In most cases, the most current annual data pertained to year -end 1997
and the following demographic and economic factors were analyzed:
• Population
• Employment
• Major Company Openings
• Building Permits
• Gross Sales In All Major Industries
• Tourism Statistics
• Airport Arrivals
• Traffic Counts on I -35
• Hotel Revenues and Roomnights
The above information was evaluated at three geographic levels:
1. Austin — San Marcos MSA
2. Williamson County
3. Round Rock
Economics Research Associates I -1
Figure I -1
LOCATION OF THE CITY OF ROUND ROCK
Source: Map produced by the City of Round Rock Chamber of Commerce
In addition, ERA also conducted interviews with several different economic interest groups
in the area, including:
• Operators of existing hotel properties in the Round Rock and North Austin areas,
• Proponents of new hotels currently being planned or under construction in the City of
Round Rock, and,
• Major employers in Round Rock.
In December 1998, the City of Round Rock retained ERA to conduct a market update of
the first study. Since the year 1998 was not complete, and regional economic and demographic
data pertaining to year -end 1998 was not yet available, ERA's market update concentrated on the
following:
• The latest status of various economic development projects in the City of Round
Rock.
• The updated operating characteristics of existing hotels in Round Rock.
• An assessment of the three new hotels that opened in Round Rock the later part of
1998.
• The latest status of various planned and proposed hotels in Round Rock.
ERA's findings and conclusions regarding the basis of the hotel bed tax revenue
projections are summarized in the following Section II, and are presented in further detail in
subsequent sections of this report.
Economics Research Associates I -2
Section II
EXECUTIVE SUMMARY
The City of Round Rock, Texas retained Economics Research Associates (ERA) to
conduct an independent analysis of the hotel market in Round Rock, and to project the future
annual hotel bed tax revenue stream which could flow to the City. If this revenue stream appears
sufficiently large, the City intends on issuing a revenue bond in order to capitalize on the future
value. The City of Round Rock is situated within Williamson County which is part of the Austin
— San Marcos MSA (metropolitan statistical area).
REGIONAL DEMOGRAPHIC, ECONOMIC, AND HOTEL TRENDS
An important part of ERA's research effort was the analysis of demographic, economic,
and hotel growth trends for: 1) the Austin — San Marcos MSA, 2) Williamson County, and 3) the
City of Round Rock. As shown below, a key observation is that while historical growth in the
Austin — San Marcos MSA has been significant in recent years, in Williamson County, and in
Round Rock in particular, the rates of growth have been, and are expected to be, even higher:
• Projected average annual compound growth, population, 1998 - 2008:
— Austin — San Marcos MSA: 2.1 percent
— Williamson County: 4.4 percent
• Average annual compound growth, gross sales in all major industries, 1987 - 1997:
— Austin — San Marcos MSA: 10.1 percent
— Williamson County: 13.5 percent
• Average annual compound employment growth, 1990 to 1997:
— Austin — San Marcos MSA: 5.6 percent
— Williamson County: 8.1 percent
— Round Rock: over 16 percent (addition of over 13,000 jobs since 1991 associated
with new capital investment of over $400 million).
Economics Research Associates 11-1
• Average annual compound growth, annual hotel rooms revenue, 1987 — 1997:
— Austin — San Marcos MSA: 13.5 percent
— Williamson County: 14.8 percent
— City of Round Rock: 17.6 percent
It is important to note that a key assumption incorporated into this analysis is that
Williamson County, and the City of Round Rock in particular, will continue to be a major and
growing node of future economic growth in the Austin — San Marcos MSA.
PLANNED ECONOMIC DEVELOPMENT PROJECTS, CITY OF ROUND ROCK
According to the Round Rock Chamber of Commerce, there are numerous planned
economic development projects in the City of Round Rock. It is impossible to predict which of
these projects will actually be built (if any), or the ultimate size, scale and timing of the facilities
that are built; however, it is useful to note that the following projects are proposed:
— Dell Computer: possible 550,000 square foot expansion to be completed in 1999
with estimated job creation of about 2,000.
La Frontera: planned development of a 328 -acre mixed -use development on a site
located on the west side of I -35 just north of FM 1325 (just west and across the
interstate from Dell Computer). According to a representative of 35/45 Investors,
L.P., general partner for the project, principal components of the proposed
development would possibly include a "power center" consisting of major anchor
stores, a 16- screen movie theater, numerous restaurants, and a 300 -room full -
service hotel.
- City of Round Rock Convention Center Complex: there is currently a proposal to
build a convention center complex on a site located adjacent to Old Settlers Park
on Highway 79 in Round Rock. Two key components of the proposed project are
a convention center with approximately 10,000 square feet of meeting / exhibition
space and a 7,500 -seat minor - league professional baseball stadium. If built, the
stadium would accommodate the Round Rock Express, a AA affiliate of the
Major League Baseball Houston Astros organization. The scheduled opening
date for the complex is April 2000 and the Express would be scheduled to play 70
home games between April and September of each year. Nolan Ryan, a native
Economics Research Associates II -2
Factor
Period Covered
Average Annual
Compound Growth
Rate
Hotel Roomnights
1987 through 1997
12.9 percent
Hotel Rooms Revenue
1987 through 1997
17.6 percent
Hotel Taxes, City of Round Rock
1988 through 1998
17.5 percent
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Economics Research Associates
Texan and recent inductee into the Major League Baseball Hall of Fame, would
have an ownership interest in the team. It should be noted that ERA cannot
predict whether or not this facility will actually be built. Also, ERA's hotel tax
projections did not consider any new hotel business this project might potentially
attract to Round Rock in the future.
- Cypress Semiconductor: construction of a $350 million project is proposed to
begin in the fourth quarter of 1999.
— Trend Technologies: A 62,000 square foot expansion is underway and, if
completed, is planned to open in March 1999.
Security Capital: planned development of a 240,000 square foot facility with a
scheduled completion in the summer of 1999.
CITY OF ROUND ROCK HOTEL MARKET
Indicators of Growth
As shown below, the hotel market in the City of Round Rock has experienced significant
growth over the last ten years (a roomnight is defined as the rental of one hotel room for one
night):
Source: Tourism Division, Texas Department of Economic Development, City of Round Rock
II -3
Hotel Name
1997
1998
%Increase
Number of Rooms
404
404
0
Average Occupancy
65.9%
67.9%
3.0%
Average Daily Room Rate
$59.33
$60.70
2.3%
Hotel Name
# of Rooms
Opening Date
Baymont
93
7/16/98
Marriott Courtyard
113
8/21/98
Crossland
124
12/21/98
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Approximate Aggregate Operating Performance of Hotels in Round Rock as of June 30, 1998
The following is a two -year comparison of the approximate aggregate operating
performance for hotels located in the City of Round Rock as of June 30, 1998 (for cash reporting
purposes, the end of the City's fiscal year):
It should be noted that not included in the above are the following new hotels that opened
in Round Rock after June 30, 1998, and were therefore not accounted for during the City's fiscal
year 1998:
Interviews with Major Employers in Round Rock Regarding Hotel Utilization
Based on personal interviews conducted with representatives of major employers in the
City of Round Rock, it was reported to ERA that several major employers in Round Rock are
significant generators of hotel demand, and they expect this demand to increase along with
expected economic growth. However, there is currently significant `leakage" of hotel
roomnights outside of Round Rock to, primarily, hotels located in the North Austin / Airport
area. It was further reported that the major employers would prefer to house their people in
Round Rock, if possible, because convenience is important, and if new, more upscale hotels with
more meeting space were opened in Round Rock, they would likely utilize them with less
"leakage" of hotel roomnights out of Round Rock as a result.
Economics Research Associates
Source: Economics Research Associates
I1-4
Assumed Changes to Hotel Supply, City of Round Rock, 1999 to 2005
ERA investigated the status of proposed hotels in Round Rock through a variety of
sources including the City of Round Rock Planning Department and individual proponents for
the projects. For a variety of reasons, it is impossible to predict which hotels, if any, will be
built, or the size, scale, and timing of the property. In addition, it is possible that, even for hotels
currently under construction, they may not open as planned.
ERA is aware of at least seven hotels which are proposed in Round Rock. Collectively,
they account for 981 rooms. It is important to note that, for purposes of this analysis, ERA has
incorporated the assumption that only those hotels currently under construction -- the 100 -room
Wingate Inn, the 96 -room Marriott Residence Inn, and the 122 -room Hilton Garden Inn -- will
actually enter the market over the 1999 to 2005 projection period. This represents 318 rooms out
of the 918 rooms proposed (35 percent). hi addition, ERA incorporated the assumption that in
fiscal year 2000, approximately 100 rooms in older, less competitive properties will be taken out
of service.
PROJECTIONS OF HOTEL TAX REVENUE TO THE CITY OF ROUND ROCK
Overview of Methodology
ERA's approach to projecting hotel tax revenues to the City of Round Rock included the
analysis of two major elements: 1) historical and projected hotel demand, and 2) historical and
projected hotel supply. On the demand side, ERA developed a methodology which considered
the historical and projected relationship in the Austin — San Marcos MSA between population
and employment growth, and hotel roomnights. A key assumption incorporated into the analysis
was that, over the 1999 to 2005 time period, a significant portion of the net new regional
roomnights will be captured in Round Rock.
Other assumptions are as follows:
• Hotel rooms in Round Rock are subject to a 13 percent hotel occupancy tax with
seven percent accruing to the City of Round Rock and six percent accruing to the
State.
• Round Rock will continue to capture, at least, its fair share of the market for limited
service hotels.
Economics Research Associates II-5
Fiscal
Year
# Hotel
Rooms 1/
Average
Occupancy
Average
Room Rate
Hotel Tax
Revenues
1998 2/
404
67.9%
$60.70
$434,355
1999
930
60.6%
$57.09
$616,261
2000
942
64.8%
$61.39
$915,710
2001
942
66.4%
$65.07
$1,039,635
2002
942
68.0%
$68.24
$1,117,362
2003
942
69.4%
$70.28
$1,173,900
2004
942
70.8%
$72.39
$1,233,300
2005
942
72.2%
$74.56
$1,295,705
Hotel Name
# Rooms
Assumed Opening Date
Wingate
100
March 1, 1999
Marriott Residence Inn
96
June 1, 1999
Hilton Garden Inn
122
November 1, 1999
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• The new hotel developments already under construction will open as planned;
however, for purposes of this analysis and the projections contained herein, other
proposed hotels, such as a full- service hotel at La Frontera, have not been included.
The following is an overview of the hotels assumed to enter the Round Rock hotel
market:
• In fiscal year 2000, the supply of hotel rooms in Round Rock will decrease by about
100 rooms.
• For the most part, the new hotels expected to open in Round Rock will be more
upscale than the existing hotels, therefore, average daily room rates will tend to rise
accordingly.
Projection of Hotel Taxes to the City of Round Rock
The following is a summary of ERA's projections of hotel tax revenue to the City of
Round Rock over the 1999 to 2005 time period:
1/ End of the year room counts
2/ Approximate occupancy and rate data for 1998 is shown for comparative purposes only
Economics Research Associates
II -6
follows:
A graph of historical and projected hotel roomnights in the City of Round Rock is as
000 000
250.000
e zao 000
Y
150000
t 100.000
50000
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Snurcc Icaas Department of Econonuc Development 0ounam Div's., for hnroncal clau and Econonucs Research Assocusea for prolec mns
Economics Research Associates 11 -7
Table 111 -1
POPULATION PROJECTIONS. AUSTIN - SAN MARCOS MSA
Projected Percent
Year Population Change
1990 846,227
1991 870,046 2.8%
1992 889,685 23%
1993 910,539 2.3%
1994 933,073 2.5%
1995 956,003 2.5%
1996 976,603 2.2%
1997 998,633 2.3%
1998 1,020,133 2.2%
1999 1,041,455 2.1%
2000 1,064,677 2.2%
2001 1,088,209 2.2%
2002 1,1 1 1,661 2.2%
2003 1,134,838 2.1%
2004 1,158,025 2.0%
2005 1,181,131 2.0%
2006 1,204,441 2.0%
2007 1,227,612 1.9%
2008 1,251,570 2.0%
2009 1,276,212 2.0%
2010 1,301,430 2.0%
2011 1,326,853 2.0%
2012 1,352,520 1.9%
2013 1,378,512 1.9%
2014 1,405,539 2.0%
2015 1,433,472 2.0%
2016 1,462,369 2.0%
2017 1,491,498 2.0%
2018 1,521,831 2.0%
2019 1,552,976 2.0%
2020 1,584,215 2.0%
2021 1,615,261 2.0%
2022 1,645,897 1.9%
2023 1,677,373 1.9%
2024 1,709,469 1.9"/
2025 1,742,065 1.9%
2026 1,774,765 L9%
2027 1,807,039 1.8%
2028 1,839,910 1.8%
2029 1,873,414 1.8%
2030 1,907,642 1.8%
Source: John Sharp, Comptroller of Public Accounts
(Winter 1997 -1998 County Population Forecast)
M• MIIIMM N - •• -- M IM I NM WI
Table III -2
EMPLOYMENT TRENDS, AUSTIN - SAN MARCOS MSA
Avg. Annual
Economic Forecast 3/ Compound
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Growth Ratc
Construction 12,259 13,384 15,286 18,400 22,660 25,105 28,297 29,600 30,900 31,800 11.17%
Manufacturing 49,863 53,939 55,514 59,595 62,609 66,659 72,884 75,700 78,400 80,800 5.51%
TCPU 1/ 12,504 13,402 13,742 14,895 15,244 15,603 17,319 18,600 19,700 20,500 5.65%
Trade 83,884 83,703 88,636 94,845 103,080 110,860 116,518 121,300 126,600 131,700 5.14%
FIRE 2/ 23,382 23,386 24,099 25,864 27,576 27,280 28,122 29,800 30,700 31,400 3.33%
Services 93,511 99,209 105,515 115,600 122,801 134,172 141,502 161,500 170,400 179,000 7.48%
Government 111,185 114,433 116,790 121,216 125,158 128,481 125,533 127,700 130,000 132,300 1.95%
SUBTOTAL 386,588 401,456 419,582 450,415 479,128 508,160 530,175 564,200 586,700 607,500 5.15%
Agriculture 2,328 2,577 2,868 3,151 3,456 3,866 4,262 NA NA NA 8.82%
Mining 1,109 1,200 1,118 968 936 1,029 1,129 NA NA NA -1.24%
Other - - 10 23 16 20 NA NA NA
1/ Transportation, communications, public utilities
2/ Finance, Insurance, Real Estate
3/ Angelou Economic Advisors, Inc.
Source: Texas Workforce Commission and State Comptroller of Public Accounts
INN NM t• g OM MN i— i NM i ti M — 11= E 11.
650,000
600,000
550,000
500,000
450,000
400,000
350,000
Figure 111 -1
Total Jobs in Austin MSA
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Source: Texas Workforce Commission and State Comptroller of Public Accounts
Table I11 -3
TREND IN UNEMPLOYMENT RATES
AUSTIN - SAN MARCOS MSA
Unemployment Rate
1988 6.1%
1989 5.5%
1990 4.9%
1991 4.5%
1992 4.6%
1993 4.0%
1994 3.6%
1995 3.3%
1996 3.0%
1997 3.1%
Source: Texas Workforce Connnission and State
Comptroller of Public Accounts
Population Trends (Table III -1)
Section III
ANALYSIS OF REGIONAL SOCIO - ECONOMIC TRENDS
In this section, ERA presents an examination of demographic and economic trends in the
greater Austin area. An analysis of the Austin — San Marcos MSA is presented first and this is
followed by an analysis of Williamson County. (An analysis of the Round Rock area is
presented in the following section). The primary objective of this analysis is to assess trends in
population and economic growth in the greater Austin region as background information for
assessing the potential for economic and hotel growth in Round Rock.
SOCIO- ECONOMIC TRENDS IN THE AUSTIN — SAN MARCOS MSA
According to the Texas State Comptroller of Public Accounts:
• The population for the Austin — San Marcos MSA in 1998 was about one million
people (1,020,133).
• Over the 1990 to 1998 time period, the MSA population grew by 173,906 people.
This equates to an average annual compound growth rate of about 2.4 percent.
• Over the 1998 to 2008 time period, the MSA population is projected to grow by
231,437 people. This equates to an average annual compound growth rate of about
2.1 percent.
• Over the 2008 to 2030 time period, the MSA population is projected to grow by a rate
of 1.8 percent to 2 percent.
Employment Trends (Table 111-2, Table 111-3, and Figure III -1)
• According to the Texas Workforce Commission and the State Comptroller of Public
Accounts, total non - agricultural employment in the Austin — San Marcos MSA
increased from 386,588 jobs in 1990 to 530,175 jobs in 1996. This represented an
average annual compound growth rate of about 5.4 percent.
• For 1999, total non - agricultural employment in the MSA was estimated by Angelou
Economic Advisors, Inc. at 607,500 jobs. As compared to the 1996 job counts, this
Economics Research Associates I1I -1
Employment
Category
Average Annual
Compound Growth
Rate
Construction
11.2%
Services
7.5%
TCPU 1/
5.7%
Manufacturing
5.5%
Trade
5.1%
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represents an estimated increase of 77,325 jobs and equates to an average annual
compound growth rate of about 4.6 percent. (Angelou Economic Advisors, Inc. is a
economic consulting firm based in Austin).
• When combining the above mentioned data sources, it is apparent that over the 1990
to 1999 time period, the sectors of the MSA economy with the highest projected
growth rates are as follows:
1/ Transportation, communications, public utilities
Gross Sales, All Major Industries (Table III -4)
• According to the Texas Workforce Commission and the State Comptroller of Public
Accounts, the unemployment rate in the Austin — San Marcos MSA has generally
declined from 6.1 percent in 1988 to 3.1 percent in 1997.
According to the Texas State Comptroller of Public Accounts:
• Gross sales in all major industries in the Austin — San Marcos MSA increased from
about $11.7 billion in 1986 to $30.1 billion in 1997 — an increase of $18.4 billion.
• This represents an average annual compound growth rate of about 9.3 percent.
Economics Research Associates 11I -2
Table 111 -4
TREND IN GROSS SALES, ALL MAJOR INDUSTRIES,
AUSTIN - SAN MARCOS MSA
Gross Sales,
All Major
Industries
1986 $11,650,230,707
1987 $11,832,414,005
1988 $12,020,711,855
1989 $12,996,810,422
1990 $14,081,077,819
1991 $15,448,669,100
1992 $17,318,167,981
1993 $19,217,871,110
1994 $21,758,381,397
1995 $25,009,787,750
1996 $27,269,792,682
1997 $30,960,016,584
Avg. Annual
Compound
Growth Rate 9.29%
Source: Comptroller of Public Accounts, Research Division
Residential Building Permit Trends (Table 111 -5)
According to the Real Estate Center at Texas A &M University and the U.S. Bureau of
Census:
• The number of residential building permits in the greater Austin area increased from
1,962 in 1990 to 13,617 in 1997.
• The value of residential building permits increased from about S228.4 million in 1990
to 81.1 billion in 1997.
Tourism Trends (Table 111-6)
According to the Austin Convention and Visitors Bureau:
• Annual visitation to the City of Austin has increased from about 6.1 million people in
1991 to 16 million in 1998.
• This equates to an average annual compound growth rate of about 14.8 percent.
Airport Arrivals / Departures (Table 111-7)
According to the Department of Aviation for the City of Austin:
• Total arrivals and departures at the Robert Mueller International Airport increased
from about 4.3 million in 1990 to about 5.9 million in 1997. This equates to an
average annual compound growth rate of about 4.7 percent.
• The new Austin Bergstrom International Airport is scheduled to open in the southern
part of Austin in May 1999. With 25 gates, as compared to 16 gates at the current
airport, annual arrivals and departures are projected to increase at an annual
compound growth rate of 4.5 percent to 5 percent.
Hotel Market Trends (Tables 111-8 through III -10 and Figure 111-2)
• According to the Tourism Division of the Texas Department of Economic
Development, the number of hotel roomnights in the MSA increased from about 2.4
million in 1987 to about 3.8 million in 1997. This represents an average annual
compound growth rate of about 4.6 percent.
Economics Research Associates 111-3
I W I - IM M - - - - - I IM
Table 111 -5
BUILDING PERMIT TRENDS, AUSTIN MSA
Single Family Bldg. Permits Multi - Family Bldg. Permits
Number Value Number Value
1990 1,916 $226,662,800
1991 2,994 $317,064,600
1992 4,641 $457,602,600
1993 6,369 $689,125,800
1994 6,250 $663,750,000
1995 7,435 $769,522,500
1996 10,095 $1,049,880,000
1997 8,456 $882,806,400
46 $1,697,400
228 $7,022,400
1,030 $20,394,000
2,174 $60,002,400
4,518 $155,871,000
6,330 $236,109,000
6,982 $259,032,200
5,161 $217,278,100
Single Family + Multi- Family
Number Value
1,962 $228,360,200
3,222 $324,087,000
5,671 $477,996,600
8,543 $749,128,200
10,768 $819,621,000
13,765 $1,005,631,500
17,077 $1,308,912,200
13,617 $1,100,084,500
Non - Residential
Number Value ($0001
583 $85,468,966
573 $68,899,812
553 $57,031,996
895 $372,069,400
965 $233,512,630
859 $260,190,241
NA NA
NA NA
Source: Real Estate Center at Texas A &M University and U.S. Bureau of Census
Table III -6
TOURISM TRENDS FOR THE CITY OF AUSTIN
Annual Visitation to Austin
by Leisure Travelers 1/
Year # Visitors 2/
1991 6,100,000
1992 NA
1993 6,300,000
1994 7,100,000
1995 8,700,000
1996 10,300,000
1997 14,000,000
1998 16,000,000
Avg. Annual
Compound
Growth Rate
1991 - 1998
14.77%
1/ According to the Austin Convention and Visitors Bureau, leisure travelers constitute about two- thirds of visitation
2/ Based on national survey of 25,000 people conducted monthly regarding travel behavior
Source: DK Shiflett and Associates Limited and the Austin Convention and Visitors Bureau
Table III -7
AIRPORT ARRIVALS / DEPARTURES, AUSTIN
Robert Mueller International Airport
Number of gates 16
Arrivals Departures Total
1990 2,137,073 2,140,860 4,277,933
1991 2,052,097 2,054,310 4,106,407
1992 2,181,962 2,187,790 4,369,752
1993 2,323,769 2,324,696 4,648,465
1994 2,550,132 2,550,011 5,100,143
1995 2,676,240 2,668,447 5,344,687
1996 2,838,008 2,853,225 5,691,233
1997 2,946,752 2,957,553 5,904,305
Average Annual
Compound Growth, 1990 - 1997 4.71%
Austin Bergstrom International Airport
Planned Opening
Number of gates
Projected Annual Compound Growth
in Arrivals / Departures 4.5% - 5%
May -99
25
Source: Department of Aviation, City of Austin
Table 1I1 -8
HOTEL MARKET TRENDS, AUSTIN MSA
Annual Room -
Revenue Nights 1/
Year ($000) f000)
1987 $114,551 2,409.4
1988 $115,966 2,327.4
1989 $132,591 2,526.1
1990 $145,550 2,688.6
1991 $160,131 2,812.6
1992 $137,250 2,303.9
1993 $204,011 3,210.6
1994 $227,610 3,393.7
1995 $254,987 3,514.3
1996 $272,072 3,501.1
1997 $301,729 3,786.9
Average
Annual
Compound
Growth 10.17% 4.63%
1/ A roomnight is defined as the rental of one hotel room for one night
Source: Texas Department of Economic Development, Tourism Division
EN r IM M rl r MTh r — — — -- M r —
4,000.0
3,800.0
3,600.0
3,400.0
3,200.0
3,000.0
2,800.0
2,600.0
2,400.0
2,200.0
2,000.0
Figure 111 -2
Austin MSA
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 199/
MN Room- Nights (000)
+Annual Revenue ($000)
Source: Tourism Division, Texas Department of Economic Development
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0
Table III -9
TOP NATIONAL HOTEL MARKETS, SUPPLY AND DEMAND, 1997
Top Demand Growth Markets, 1997 Top Supply Growth Markets, 1997
Omaha, Neb. 9.2% Omaha, Neb. 12.1%
Chattanooga, Tenn. 9.1% Atlanta, Ga. 9.7%
Southern Texas 9.1% Mississippi 9.0%
Houston, Texas 8.9% Western Kentucky 9.0%
North Dakota 8.6% Austin, Texas 8.7%
Rhode Island 8.2% Ft. Worth / Arlington, Tx 8.5%
Austin, Texas 7.6% Salt Lake City, Ut 8.1%
Santa Barbara, Ca. 7.4% Tucson, Az 8.1%
Denver, Co. 7.1% Kansas City, Mo. - Kan. 8.0%
Maine 6.9% Dallas, Texas 8.0%
Source: Smith Travel Research, Hotel & Motel Management, 4/6/98
MI MN MO NM NM I - - -- MN == i
Table III -10
OVERVIEW OF AUSTIN HOTEL MARKET, 1996 / 1997 1/
Occupancy Average Daily Rate RevPAR (Rev. Per Avail. Room)
1996 1997 Change 1996 1997 Change 1996 1997 Change
Austin, Total 73.4% 74.6% 1.2% $73.65 $78.01 5.9% $54.05 $58.16 7.6%
Central Bus. District 70.7% 74.5% 3.7% $92.53 $98.38 6.3% $66.45 $73.25 11.9%
North /Airport Area 72.7% 72.7% -0.1% $64.16 $65.93 2.8% $46.66 $47.90 2.7%
Northwest Austin 81.6% 79.8% -1.8% $89.81 $90.22 0.5% $73.28 $72.00 -1.7%
South Austin 73.4% 75.2% 1.9% $61.40 $66.32 8.0% $45.04 $49.90 10.8%
1/ Data includes information from 155 participating properties with 21,988 rooms
Source: PKF Consulting / Hospitality Advisory Services
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• The Tourism Division also reports that over the 1987 to 1997 time period, annual
rooms revenue in the MSA grew at an average annual compound growth rate of 10.2
percent (as compared to 4.6 percent for roomnights).
• According to Smith Travel Research, a national compiler of hotel operating statistics,
for the year ending 1997, the City of Austin was ranked among the top 10 markets in
the U.S. in terms of hotel demand growth (7` and hotel supply growth (5`
• According to PKF Consulting, a leading travel industry consulting firm, the following
is a comparison of key hotel operating indicators for hotels in the City of Austin,
1996 versus 1997:
WILLIAMSON COUNTY
1/ Revenue per available room (reflects both occupancy and average room ra e)
As mentioned, the City of Round Rock is located in Williamson County (which is part of
the Austin — San Marcos MSA). In the following paragraphs, ERA presents an overview of
demographic and economic trends for Williamson County.
Population Trends (Table 111-11)
According to the State Comptroller of Public Accounts:
• The population in Williamson County in 1998 was nearly 207,000 (206,868).
• Over the 1990 to 1998 time period, population growth in Williamson County was
67,317 people.
• Over the 1990 to 1998 time period, the population in Williamson County grew at an
annual compound growth rate of about 5 percent.
Economics Research Associates 111-4
1996
1997
%Increase
Occupancy
73.4%
74.6%
1.6%
Average Rate
$73.65
578.01
5.9%
RevPar 1/
554.05
$58.16
7.6%
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• The Tourism Division also reports that over the 1987 to 1997 time period, annual
rooms revenue in the MSA grew at an average annual compound growth rate of 10.2
percent (as compared to 4.6 percent for roomnights).
• According to Smith Travel Research, a national compiler of hotel operating statistics,
for the year ending 1997, the City of Austin was ranked among the top 10 markets in
the U.S. in terms of hotel demand growth (7` and hotel supply growth (5`
• According to PKF Consulting, a leading travel industry consulting firm, the following
is a comparison of key hotel operating indicators for hotels in the City of Austin,
1996 versus 1997:
WILLIAMSON COUNTY
1/ Revenue per available room (reflects both occupancy and average room ra e)
As mentioned, the City of Round Rock is located in Williamson County (which is part of
the Austin — San Marcos MSA). In the following paragraphs, ERA presents an overview of
demographic and economic trends for Williamson County.
Population Trends (Table 111-11)
According to the State Comptroller of Public Accounts:
• The population in Williamson County in 1998 was nearly 207,000 (206,868).
• Over the 1990 to 1998 time period, population growth in Williamson County was
67,317 people.
• Over the 1990 to 1998 time period, the population in Williamson County grew at an
annual compound growth rate of about 5 percent.
Economics Research Associates 111-4
Table III-11
POPULATION PROJECTIONS. WILLIAMSON COUNTY
Projected Percent
Year Population Change
1990 139,551
1991 147,262 5.5%
1992 154,822 5.l%
1993 162,923 5.2%
1994 171,387 5.2%
1995 180.008 5.0%
1996 188,525 4.7%
1997 197,605 4.8%
1998 206,868 4.7%
1999 216,358 4.6%
2000 226,318 4.6%
2001 236,795 4.6%
2002 247,554 4.5%
2003 258,512 4A%
2004 269,683 4.3%
2005 281,125 4.2%
2006 292,886 4.2%
2007 304,910 4.1%
2008 317,398 4.1%
2009 330,346 4,1%
2010 343,755 4.1%
2011 357,650 4.0%
2012 371,874 4.0%
2013 386,542 3.9%
2014 401,769 3.9%
2015 417,602 3.9%
2016 433,912 3.9%
2017 450,650 3.9%
2018 468,061 3.9%
2019 486,076 3.8%
2020 504,508 3.8%
2021 523,156 3.7%
2022 542,032 3.6%
2023 561,493 3.6%
2024 581,586 3.6%
2025 602,122 3.5%
2026 623,052 3.5%
2027 644,254 3.4%
2028 665,972 3.4%
2029 688,396 3.4%
2030 711,493 3.4%
Source: John Sharp, Comptroller of Public Accounts
(Winter 1997 -1998 County Population Forecast)
Construction
10.6%
Services
8.8%
Trade
8.6%
Government
5.5%
FIRE 1/
3.8%
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• Over the 1998 to 2008 time period, the population in Williamson County is projected
to increase to 317,398. This represents a projected increase of 110,530 people and
equates to an average annual compound growth rate of about 4.4 percent.
• Over the 2008 to 2030 time period, the population of Williamson County is projected
to increase at an average annual compound growth rate of about 3.7 percent.
Employment Trends (Table 111 -12, Table 111 -13, and Figure 111 -3)
According to the Texas Workforce Commission and the State Comptroller of Public
Accounts:
• By the end of the third quarter in 1997, non - agricultural employment in Williamson
County was 51,547.
• From year -end 1987 through the third quarter of 1997, the number of non - agricultural
jobs in Williamson County more than doubled — from 25,243 in 1987 to 51,547 by
the end of the third quarter 1997. This represented an average annual compound
growth rate of about 7.6 percent.
• Over the 1987 to third quarter 1997 time period, the following were the non-
agricultural employment sectors in Williamson County exhibiting the highest average
annual compound growth rates:
1/ Finance, Insurance, Real Estate
• The unemployment rate in Williamson County declined from 6.0 percent in 1988 to
2.0 percent in 1996. In 1997, the unemployment rate was 2.2 percent.
Economics Research Associates III -
I - - - -- I I OM MI O IMMNIE
Table 111 -12
EMPLOYMENT TRENDS, WILLIAMSON COUNTY
Avg. Annual
3rd Qtr Compound
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Growth Rate
Agriculture 274 281 289 274 348 406 397 490 539 526 786 11.40%
Mining 349 257 226 192 218 212 221 217 331 420 427 2.09%
Construction 1,762 1,466 1,647 1,624 1,791 2,133 2,319 2,736 3,350 4,083 4,708 1 0.60%
Manufacturing 4,167 4,757 5,100 5,412 5,549 6,061 6,534 6,951 7,903 8,554 8,913 8.10%
TCPU 1/ 787 732 720 643 619 631 596 965 669 706 755 -0.42%
Trade 6,309 6,714 6,683 6,998 7,819 8,376 9,039 10,259 11,368 12,859 14,099 8.59%
FIRE 2/ 1,270 1,148 1,055 1,019 766 802 928 1,716 1,719 1,723 1,824 3.78%
Services 4,865 4,613 5,246 5,801 6,041 6,469 7,444 8,173 8,734 9,850 11,083 8.80%
Government 5,734 5,910 6,323 6,602 6,910 7,285 7,837 8,498 9,097 9,660 9,704 5.54%
Other
- 34
Total 25,517 25,878 27,289 28,565 30,061 32,375 35,315 40,005 43,710 48,381 52,333 7.64%
1/ Transponation, communications, public utilities
2/ Finance, Insurance, Real Estate
Source: Texas Workforce Commission and State Comptroller of Public Accounts
MN MMOIIN MO NM NM M MN IIIIMM=
55,000
50,000
45,000
40,000
35,000
30,000
25,000
20,000
Figure 111 -3
Total Jobs in Williamson County
Source: Texas Workforce Commission and State Comptroller of Public Accounts
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
Table III -13
TREND IN UNEMPLOYMENT RATES
WILLIAMSON COUNTY
Unemployment Rate
1988 6.0%
1989 4.9%
1990 4.3%
1991 3.5%
1992 3A%
1993 2.9%
1994 2.3%
1995 2.3%
1996 2.0%
1997 2.2%
Source: Texas Worlcforce Commission and State
Comptroller of Public Accounts
Gross Sales, All Major Industries (Table III -14)
According to the State Comptroller of Public Accounts:
• Gross sales in all major industries in Williamson County increased from about $1.1
billion (S1,099,508,376) in 1986 to nearly $4.3 billion ($4,277,705,396) by 1997.
• This represented an increase of nearly $3.2 billion ($3,178,197,020) over the last 11
years and equates to an average annual compound growth rate of about 13.2 percent.
Building Permit Trends (Table III -15)
According to the Real Estate Center at Texas A &M University and the U.S. Bureau of
Census:
• The number of residential building permits in Williamson County increased from 174
in 1990 to 3,532 in 1997.
• The value of residential building permits in Williamson County increased from about
$13.7 million in 1990 to about $327.4 million in 1997.
Hotel Market Trends (Table III -16)
According to the Tourism Division of the Texas Department of Economic Development:
• The number of hotel roomnights in Williamson County increased from 74,300 in
1987 to 180,700 in 1997. This represented an increase of 106,400 roomnights over
the ten -year period and equates to an average annual compound growth rate of about
9.3 percent.
• Annual hotel rooms revenue in Williamson County increased from $2,571,000 in
1987 to $10,228,000 in 1997. This represented an increase of $7,657,000 over the
ten -year period and equates to an average annual compound growth rate of about 14.8
percent.
Economics Research Associates III -6
Table III -14
TREND IN GROSS SALES, ALL MAJOR INDUSTRIES,
WILLIAMSON COUNTY
Gross Sales,
All Major
Industries
1986 $1,099,508,376
1987 $1,210,084,368
1988 $1,075,109,737
1989 $1,235,119,557
1990 $1,397,066,502
1991 $1,471,980,979
1992 $1,732,015,285
1993 $1,979,554,645
1994 $2,222,424,489
1995 $2,860,356,963
1996 $3,465,151,286
1997 $4,277,705,396
Avg. Annual
Compound
Growth Rate 13.15%
Source: Comptroller of Public Accounts, Research Division
I OM = NM E NM MI r I I I M - - -- OM MO NM
Table 111 -15
BUILDING PERMIT TRENDS, WILLIAMSON COUNTY
Single Family Bldg. Permits Multi - Family Bld¢. Permits Single Family+ Multi- Family Non- Residential
Number Value Number Value Number Value Number Value ($000)
1990 174 $13,711,200 0 $0 174 $13,711,200 80 $573,360
1991 380 $29,488,000 4 $120,000 384 $29,608,000 80 $126,880
1992 767 $58,522,100 0 $0 767 $58,522,100 86 $334,884
1993 1,397 $116,649,500 64 $1,696,000 1,461 $118,345,500 157 $4,757,728
1994 1,537 $153,853,700 340 $11,118,000 1,877 $164,971,700 196 $5,114,816
1995 2,816 $271,462,400 570 $31,293,000 3,386 $302,755,400 149 $13,344,291
1996 3,685 $376,238,500 925 $38,387,500 4,610 $414,626,000 NA NA
1997 3,063 5308,444,100 469 $18,947,600 3,532 $327,391,700 NA NA
Source: Real Estate Center at Texas A &M University and U.S. Bureau of Census
Table III -16
HOTEL MARKET TRENDS, WILLIAMSON COUNTY
Annual Room -
Revenue Nights
Year ($000) (000)
1987 $2,571 74.3
1988 $2,494 66.8
1989 $2,961 75
1990 $3,440 84.1
1991 $3,670 87.4
1992 $4,210 100.5
1993 $4,767 105.7
1994 $4,188 88
1995 $6,785 123.6
1996 $7,586 129.7
1997 $10,228 180.7
Average
Annual
Compound
Growth 14.81%
9.29%
Source: Texas Department of Economic Development, Tourism Division
Section IV
SOCIO- ECONOMIC TRENDS IN ROUND ROCK AND
PROJECTIONS OF HOTEL TAX REVENUE TO THE CITY
In this section, ERA first presents an overview of socio - economic trends in the City of
Round Rock. The section concludes with an analysis of the local hotel market and ERA's
projections for hotel bed tax revenue to the City of Round Rock over the 1999 to 2005 time
period.
ANALYSIS OF SOCIO- ECONOMIC TRENDS IN THE CITY OF ROUND ROCK
Trend in Gross Sales, All Major Industries (Table IV -1)
According to the Texas State Comptroller of Public Accounts:
• Over the 1986 to 1997 time period, gross sales in all major industries in the City of
Round Rock grew from about 5389 million in 1986 ($338,946,394) to about $2.4
billion in 1997 (52,379,282,692).
• This represents an increase of nearly $2 billion ($1,990,336,298) over the last 11
years and equates to an average annual compound growth rate of about 17.9 percent.
Employment Trends in the City of Round Rock (Table IV -2 through IV -4)
According to the Round Rock Chamber of Commerce:
• Over the 1991 to 1998 time period, 60 companies have either located to, or expanded
their operations, in the City of Round Rock. The total new capital investment in the
City over the 1991 to 1998 time period is estimated by the Chamber of Commerce at
over $400 million
• Of the approximate 20,000 jobs in Round Rock through 1998, about 13,235 jobs
(two - thirds) have been created over the 1991 through 1998 time period.
• The top ten employers within an approximate 15 minute drive time of downtown
Round Rock are as follows:
Economics Research Associates IV -1
Table IV -I
TREND IN GROSS SALES, ALL MAJOR INDUSTRIES
CITY OF ROUND ROCK
Gross Sales,
All Major
Industries
1986 $388,946,394
1987 $494,692,532
1988 $365,630,786
1989 $484,024,851
1990 $576,647,921
1991 $639,653,938
1992 $786,188,732
1993 $814,047,661
1994 $1,016,384,702
1995 $1,514,203,095
1996 $1,870,601,970
1997 $2,379,282,692
Avg. Annual
Compound
Growth Rate 17.90%
Source: Comptroller of Public Accounts, Research Division
Table IV -2
CORPORATE LOCATIONS / EXPANSIONS
CITY OF ROUND ROCK
Approx.
Locations / 9 Jobs Capital
Expansions Created Investment
1991 8 620 $10 Million
1992 7 380 $9 Million
1993 1/ 7 2.650 $25 Million
1993 / 1994 2/ 3 1,800 $30 Million
1994 / 1995 2/ 12 2,485 $150 Million
1995 / 1996 2/ 10 1,065 $75 Million
1996 / 1997 2/ 7 2,335 $77 Million
1997 / 1998 3/ 6 1,900 $30 Million
60 13,235 $406 Million
1/ 9 -month period January through September
2/ October through September
3/ October through May 20
Source: Round Rock Chamber of Commerce
Table IV-3
MAJOR EMPLOYERS WITHIN A t5- MINUTE DRIVE OF DOWNTOWN ROUND ROCK
ompany Name
Dell Computers
Abbott Laboratories
State Farm Insurance
Earners Insurance
Sears TeleSery
IBM
Intermedics Orthopedics
AMP Packaging
Wayne- Dresser
Tellalabs
Westinghouse / TECO
Michael Angelo's Gourmet Foods
Cypress Semiconductor
Sysco Foods
Columbia Medical Center
City of Round Rock
Trend Technologies
DuPont Photomask
Rolm
McNeil Consumer Products 1/
TN Technologies
Moll Industries
Austin White Lime
Texas Crushed Stone
Weed Instrument
Cintas Corporation
Paradigm Metals
Prudential Overall Supply
Preferred Stamping
MagRabbit
TECO Technology
Centex Machining
Infolab
Mission Industries
Photronics
, Featherlife Building Products
Micro-Bac International
Insync
1st Tech Molding
Enviroquip
Precision Laser Cuts
Texas Heat Treating
Textek Plastics
company Type
Computers
Intravaneous Solutions
Insurance
Regional Headquarters
Technical Cell Center
Computers
Prosthesis Manufacturer
Computer Equipment
Electronic Pump Controls
Communications
Motors
Italian Food
Semiconductors
Food Distributor
Health Care
Government
Medical Fabrication
Photomasks
Telecommunications
Tylenol
Electronic Measurement
Injection Molding
Limestone Quarry
Crushed Limestone
Sensors
Uniform Laundry
Metal Fabrication
Garment Laundry
Metal Fabrication
Software
Monitors
Medical Equipment
Medical Equipment
Garment Laundry
Photomasks
Building Materials
Bio- Remediation Products
Gas Flow Devices
Plastic Injection Molding
Wastewater Treatment
Metal Fabrication
Metal Heat Treating
Injection Molding
1/ Announcement in 12/98 that this facility will be phased out by 2002
Source: Round Rock Chamber of Commerce
Employees
8,000
1,600
1,000
893
750
700
700
600
476
470
440
425
395
387
350
310
250
250
200
171
165
160
145
140
125
100
100
100
90
75
65
50
45
45
45
40
40
35
30
30
30
30
39
20,082
Table IV -4
SELECTED ECONOMIC DEVELOPMENT PROJECTS, CITY OF ROUND ROCK
Company Name
Dell Computers
Trend Technologies
Sears TeleSery
Cypress Semiconductor
La Frontera
Office / Warehouse project
Security Capital
CIDCO
Estimated
Comments (sf = square feet) Job Creation
Early '98: 240,000 sf expansion to Bldg # 2 1,600
Mid '98: construction 350,000 sf building 1,000
Early '99: construction 200,000 sf building 1 000
3,600
Approximate # Employees, Mid 1998 8,000
Approximate # Employees, End 1999 10,000
120,000 sf facility recently 200 - 300,
completed in August 1998 800 in 3 -5 years
62,000 sf expansion underway,
completion expected in March 1999 Unknown
120,000 square foot facility 750
Fab 5 Project construction to begin in the 350
4th quarter 1999, 8350 million project
Planned 328 -acre mixed -use development
including Power Center with major regional
anchor stores, 16 screen cinema, numerous
restaurants, and 300 -room full - service hotel
1st Tech Molding Expansion in Corridor Park 75
Armstrong Moving & Storage Completed new facility / relocated operations 75
JennPac International leased 12,000 sf facility 25
OPUS South broken ground on 60,000 sf Class A
office project, 15,000 sf pre - leased Unknown
Leased 50,000 sf of total 100,000 sf to two 50
companies: TD Industries and Texas
Quality Machining and Fabrication
office / warehouse facilities, 240,000 sf,
scheduled completion summer 1999,
may attract a Dell supplier that would
occupy 133,000 sf of space
leased 57,000 sf; however, corp. mgt.
has decided to close distribution facility
and sub -lease this space
Unknown
50
Unknown
Source: Round Rock Chamber of Commerce
Company Name
Approximate # of
Employees
Dell Computers
8,000
Abbott Laboratories
1,600
State Farm Insurance
1,000
Farmers Insur.- ce
893
Sears TeleSery
750
IBM
700
Intermedics Orthopedics
700
AMP Packaging
600
Wayne- Dresser
476
Tellalabs
470
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• There are numerous planned economic development projects in the City of Round
Rock (Table IV -4). It is impossible to predict which of these projects will actually be
built (if any), or the ultimate size, scale and timing of the facilities that are built;
however, it is useful to note that the following projects are proposed:
- Dell Computers: possible 550,000 square foot expansion to be completed in 1999
with estimated job creation of about 2,000.
— La Frontera: Developer's Diversified REIT (DDR) of Cleveland, Ohio in
partnership with Bemdt Interests of Dallas have announced the planned
development of a 328 -acre mixed -use development on a site located on the west
side of I -35 just north of FM 1325 (just west and across the interstate from Dell
Computer). According to a representative of 35/45 Investors, L.P., general
partner for the project, the developer has proposed to have the land annexed by
the City of Round Rock. In addition, principal components of the proposed
development would possibly include a "power center" consisting of major anchor
stores, a 16- screen movie theater, numerous restaurants, and a 300 -room full-
Economics Research Associates 1V -2
service hotel. It was further stated that accessibility to the project would be
improved if the planned Mopac / Loop 1 road extension out of north Austin
towards Round Rock, and the planned SR 45 east / west connector (connecting
the Mopac extension and 1 -35) proceed as planned. These possible road
improvements are discussed in more detail below.
City of Round Rock Convention Center Complex: there is currently a proposal to
build a convention center complex on a site located adjacent to Old Settlers Park
on Highway 79 in Round Rock. Two key components of the proposed project are
a convention center with approximately 10,000 square feet of meeting / exhibition
space and a 7,500 -seat minor - league professional baseball stadium. If built, the
stadium would accommodate the Round Rock Express, a AA affiliate of the
Major League Baseball Houston Astros organization. The scheduled opening
date for the complex is April 2000 and the Express would be scheduled to play 70
home games between April and September of each year. Nolan Ryan, a native
Texan and recent inductee into the Major League Baseball Hall of Fame, would
have an ownership interest in the team. It should be noted that ERA cannot
predict whether or not this facility will actually be built. Also, ERA's hotel tax
projections did not consider any new hotel business this project might potentially
attract to Round Rock in the future.
- Cypress Semiconductor: construction of a $350 million project is proposed to
begin in the fourth quarter of 1999.
- Trend Technologies: A 62,000 square foot expansion is underway and, if
completed, is planned to open in March 1999.
- Security Capital: planned development of a 240,000 square foot facility with a
scheduled completion in the summer of 1999.
Traffic Counts on 1-35 and Planned Road Improvements in Round Rock (Table IV -5)
• According to the Austin Transportation Study and the Texas Department of
Transportation, the increase in traffic counts on I -35 in Round Rock was as follows:
— I -35 at FM 1325: increase of 81,860 in 1988 to 121,000 in 1996 (increase of 48
percent).
Economics Research Associates IV-3
= r - MN MN NM - N OM NM ! MO MI NM - MI NM MI I
Table IV -5
TRAFFIC COUNTS ON 1 -35 IN ROUND ROCK
11-35 at F.M. 1325
Average
Annual
Compound
1980 1984 1988 1992 1996 Growth
36,000 65,050 81,860 100,400 121,000 7.87%
Average
Annual
Compound
1990 1993 1994 1995 1996 Growth
I -35 at RM 620 - McNeil Road 84,000 92,000 114,000 116,000 125,000 6.85%
Source: Austin Transportation Study and Texas Department of Transportation
— I -35 at RM 620 / McNeil Road: increase of 84,000 in 1990 to 125,000 in 1996
(increase of 49 percent)
As mentioned, there is a proposal to build what is generally called the Mopac / Loop 1
extension which would connect north Austin and Round Rock. The Mopac / Loop 1 extension is
proposed to terminate near the La Frontera site and also proposed is a short east -west connector
(SR 45) which would connect the Mopac extension to 1 -35. As mentioned, ERA can not predict
whether or not this project will actually move forward.
It should also be noted that there is a proposal to build a 90 -mile bypass road (State
Highway 130) which would link Georgetown in the north to the new Austin Bergstrom
International Airport in the south. If built, this road would pass through the eastern edge of
Round Rock. According to a representative of the Department of Transportation, the State
Highway 130 bypass is a medium to long -range project and it is possible that work on this
project could begin by the year 2005. It should be noted that, for purposes of this report, ERA
has incorporated the assumption that State Highway 130 does not open during the 1995 to 2005
projection period.
Hotel Market Trends, City of Round Rock (Table IV -6, Table IV-7, and Figure IV -1)
According to the Tourism Division of the Texas Department of Economic Development:
• Annual hotel roomnights in the City of Round Rock increased from 30,300 in 1987 to
102,000 in 1997. This represents an increase of 71,700 roomnights over the ten -year
period and equates to an average annual compound growth rate of about 12.9 percent.
• Annual hotel rooms revenue in the City of Round Rock increased from $1,181,000 in
1987 to $5,953,000 in 1997. This represents an increase of about $4,772,000 over the
ten -year period and equates to an average annual compound growth rate of about 17.6
percent.
According to the City of Round Rock:
• Annual hotel tax revenues to the City increased from $85,061 in fiscal year 1988 to
$434,355 in fiscal year 1998. This increase of $349,294 over the ten -year period
equates to an average annual compound growth rate of about 17.7 percent.
Economics Research Associates 11
Table IV -6
HOTEL MARKET TRENDS, ROUND ROCK
Annual Room -
Revenue Nights
Year ($000) (000)
1987 $1,181 30,3
1988 $1,274 30.6
1989 $1,480 32.8
1990 $1,617 33.7
1991 $1,628 33.1
1992 $1,753 37.7
1993 $2,306 46.6
1994 $2,031 37.6
1995 $3,064 50.6
1996 $3,447 52.5
1997 $5,953 102.0
Average
Annual
Compound
Growth 17.56%
12.91%
Source: Texas Department of Economic Development, Tourism Division
Table IV -7
CITY OF ROUND ROCK, HOTEL / MOTEL BED TAX RECEIPTS
(Bed Tax Rate of 7% to City of Round Rock)
Bed Tax Annual
Receipts 1/ Growth
1988 $85,061
1989 $101,030 19%
1990 $100,349 -1%
1991 $110,854 10%
1992 $122,537 11%
1993 $143,709 17%
1994 $170,400 19%
1995 $204,555 20%
1996 $235,565 15%
1997 $339,592 44%
1998 8434,355 28%
Average Annual
Compound Growth 17.71%
1/ Reflects hotel operations for fiscal years ending September 30 (reflects cash receipts through June 30 of each year)
Source: City of Round Rock
MI NM WI MINI I= NM 1•11 I•11 MIII MIN•
110
100 —
90 —
80 —
70
60 —
50
40 —
30 —
20
Figure IV -1
Round Rock
Room- Nights (000)
�— Annual Revenue ($000)
Source: Tourism Division, Texas Department of Economic Development
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
• It should be noted that the fiscal year for the City of Round Rock ends September 30;
however, hotel tax revenues pertain to the period ending June 30 (there is a three
month lag time to allow for revenue collection and reporting).
Interviews with Major Employers in Round Rock Regarding the Regional Hotel Market
In May 1998, ERA conducted personal interviews with representatives of the major
employers in Round Rock. Key areas of inquiry were current use of hotels in the region, current
satisfaction level with hotels used, anticipated hotel demand in the future, and anticipated use of
new hotels that might open in Round Rock in the near future (for example, the Marriott
Courtyard, the Marriott Residence Inn, the Hilton Garden Inn, and a possible full - service hotel).
ERA conducted interviews with representatives of the following companies:
• Dell Computer;
• Cypress Semiconductor;
• Wayne- Dresser;
• Sysco Foods;
• DuPont Photomask; and
• McNeil Consumer Products.
It was reported to ERA that major employers in Round Rock such as Dell and Wayne -
Dresser are significant generators of hotel demand, and this demand is expected to increase along
with expected economic growth. However, there is currently significant "leakage" of hotel
roomnights outside of Round Rock to, primarily, hotels located in the North Austin / Airport
area. This "leakage" is due, in part, to the general perception that, for the most part, the limited
service mid - market hotels in Round Rock are generally not the type of hotels preferred by many
of the employees of the companies. Limited service hotels generally do not offer full food and
beverage facilities and meeting space is typically quite limited. Employers report that they
would prefer to house their people in Round Rock, if possible, because convenience is important,
and if new, more upscale hotels with more meeting space were opened in Round Rock, they
would likely utilize them with less "leakage" of hotel roomnights out of Round Rock as a result.
Economics Research Associates IV -5
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Characteristics of Hotels in Round Rock (Table IV -8)
Table IV -8 presents a summary of the characteristics of hotels in Round Rock. Not
shown is the three -room St. Charles Bed & Breakfast or the Pinnacle Suites, which is an
apartment complex where units are sometimes rented out as hotel rooms on an extended stay
basis (and hotel tax revenue is generated). As shown, information presented includes property
name, date opened, location, operator, number of rooms, and range of rack room rates.
In May 1998, ERA conducted physical property inspections at all the hotels in Round
Rock. In addition, at the same time, ERA conducted interviews with managers of the individual
hotel properties. Among other things, key areas of inquiry were trends in occupancy, average
daily room rate, and market mix for each property. (Market mix refers to a hotel's market
segmentation, for example, the mix of corporate, leisure, and other business on an average
annual, seasonal, and daily basis). In addition, in January 1999, as part of a market update, ERA
re- contacted the hotel managers in order to obtain the year -end 1998 figures for average annual
occupancy and average daily room rate. (Although this information is deemed reliable, no
independent attempt has been made by ERA to verify the factual basis of the information
provided and ERA makes no assurance as to the accuracy of such information).
The estimated individual hotel operating information for 1997 and 1998 was incorporated
into a computer spreadsheet model and was used as a starting point for projecting hotel bed tax
revenue in the future. (As part of its analysis, ERA compared the individual property
information to total hotel bed tax receipt information as reported by the City of Round Rock).
The following is a summary of the approximate aggregate hotel operating information for 1997
and 1998:
Source: Economics Research Associates
Economics Research Associates IV -
1997
1998
% Increase
Number of Rooms
404
404
0
Average Occupancy
65.9%
67.9%
3.0%
Average Daily Room Rate
$59.33
$60.70
2.3%
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Characteristics of Hotels in Round Rock (Table IV -8)
Table IV -8 presents a summary of the characteristics of hotels in Round Rock. Not
shown is the three -room St. Charles Bed & Breakfast or the Pinnacle Suites, which is an
apartment complex where units are sometimes rented out as hotel rooms on an extended stay
basis (and hotel tax revenue is generated). As shown, information presented includes property
name, date opened, location, operator, number of rooms, and range of rack room rates.
In May 1998, ERA conducted physical property inspections at all the hotels in Round
Rock. In addition, at the same time, ERA conducted interviews with managers of the individual
hotel properties. Among other things, key areas of inquiry were trends in occupancy, average
daily room rate, and market mix for each property. (Market mix refers to a hotel's market
segmentation, for example, the mix of corporate, leisure, and other business on an average
annual, seasonal, and daily basis). In addition, in January 1999, as part of a market update, ERA
re- contacted the hotel managers in order to obtain the year -end 1998 figures for average annual
occupancy and average daily room rate. (Although this information is deemed reliable, no
independent attempt has been made by ERA to verify the factual basis of the information
provided and ERA makes no assurance as to the accuracy of such information).
The estimated individual hotel operating information for 1997 and 1998 was incorporated
into a computer spreadsheet model and was used as a starting point for projecting hotel bed tax
revenue in the future. (As part of its analysis, ERA compared the individual property
information to total hotel bed tax receipt information as reported by the City of Round Rock).
The following is a summary of the approximate aggregate hotel operating information for 1997
and 1998:
Source: Economics Research Associates
Economics Research Associates IV -
I M — — i M E M i — N I N — i — all ® MI
Table IV -8
CHARACTERISTICS OF HOTELS IN ROUND ROCK
NA= Not Available
Date Number Approx. Market Segmentation Range of Posted
Property Name Opened Location Operator Rooms Corporate Highway SMERF 1/ Rack Room Rates
Ramada Limited 1973 1400 North IH -35 Ramada Limited 62 29% 21% 50% $58 - $74
La Quinta 1984 2004 North IH -35 Trinity Ventures 116 80% 10% 10% $69 - $82
Sleep Inn 9/20/96 1990 North IH-35 Boulevard Hotel 107 35% 55% 10% $69 - $79
Best Western 11/4/96 1851 North 111-35 Sudar Majmudar 67 40% 30% 30% $59 - $79
Rodeway Inn 11/15/96 1802 North 11 Suren Suthar 49 20% 40% 40% $65 - $125
Baymont 7/16/98 150 Parker Levtex Hotel 93 NA NA NA $52 - $69
Marriott Courtyard 8/21/98 2700 Hoppe Trail Wilrock Inc. 113 NA NA NA 589
Crossland 12/21/98 555 South IH -35 Extended Stay 124 NA NA NA $39 - $54
I/ Social, military, education, religious, and fraternal (miscellaneous category)
2/ According to general managers at individual properties
Source: General Managers of Individual Properties and the City of Round Rock
Hotel Name
# of Rooms
Opening Date
Baymont
93
7/16/98
Marriott Courtyard
113
8/21/98
Crossland
124
12/21/98
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It should be noted that not included in the above are the following new hotels that opened in
Round Rock after June 30, 1998, and were therefore not accounted for during the City's fiscal
year 1998:
In terms of average daily room rate for the three new hotels to open in fiscal year 1999,
ERA has incorporated the assumption that the Marriott Courtyard would achieve an average rate
above the market average, the rate at the Baymont would be similar to the market average, and
the average rate at the Crossland would be below the market average.
In terms of annual occupancy for fiscal year 1999, reflecting both an increase in hotel
supply and the fact that it is the first year of operation for the new hotels, ERA incorporated the
assumption that all of the new hotels would achieve an average annual occupancy below the
1998 market average.
New and Proposed Hotels in the City of Round Rock (Table IV 9)
ERA investigated the status of proposed hotels in Round Rock through a variety of
sources including the City of Round Rock Planning Department and individual proponents for
the projects. As mentioned, for a variety of reasons, it is impossible to predict which hotels, if
any, will be built, or the size, scale, and timing of the property. In addition, it is possible that,
even for hotels currently under construction, they may not open as planned.
As shown on Table IV -9, ERA is aware of at least seven hotels which are proposed in
Round Rock. Collectively, they account for 981 rooms. It is important to note that, for purposes
of this analysis, ERA has incorporated the assumption that only those hotels currently under
construction — the 100 -room Wingate Inn, the 96 -room Marriott Residence Inn, and the 122 -
room Hilton Garden lnn, will actually enter the market over the 1999 to 2005 projection period.
It is possible, of course, that other hotels may open during this time frame as well, for example,
Economics Research Associates IV -7
r - - - r - - - - - MI ! I
Table IV -9
OVERVIEW OF PROPOSED HOTELS IN ROUND ROCK
Developers
Targeted
Hotel Name Hotel Type Location # Rooms Project Status Opening Date
Wingate Inn Limited Service, Mid - Market 1209 N. I.H. 35 100 Under Constniction 1- Mar -99
Marriott Residence Inn Limited Service, Suite Product 2505 S I.H. 35 96 Under Construction 1- Jun -99
Hilton Garden Inn Limited Service, Upscale FM 3406 & I.H. 35 122 Under Construction I - Nov -99
Comfort Suites Limited Service, Mid - Market LH. 35 & 620 62 Pending Review 1- Nov -99
Marriott Spring Hills Suites Suite Product 2960 Hoppe Trail 106 Proposed Unknown
Unknown Full- Service, Upscale IH 35 & FM 1325 (La Frontera) 300 Proposed 1- Jan -01
Unknown Limited Service Resters Crossing / IH 35 195 Proposed Unknown
Source: City of Round Rock, Planning Department, Individual Developers
the 300 -room full- service hotel proposed at the La Frontera mixed -use project; however, as
mentioned, for purposes of this analysis, it is assumed that, other than the three hotels currently
under construction, no other hotel will enter the Round Rock market over the 1999 to 2005 time
period.
PROJECTIONS OF HOTEL TAX REVENUE TO THE CITY OF ROUND ROCK
ERA's approach to projecting hotel tax revenues to the City of Round Rock included the
analysis of two major elements: 1) historical and projected hotel demand, and 2) historical and
projected hotel supply. On the demand side, a key observation is that while historical growth in
the Austin — San Marcos MSA has been significant in recent years, in Williamson County, and in
Round Rock in particular, the rates of growth have been, and are expected to be, even higher.
The following are key observations in support of that conclusion:
• Projected average annual compound growth, population, 1998 - 2008:
Austin — San Marcos MSA: 2.1 percent
- Williamson County: 4.4 percent
• Average annual compound growth, gross sales in all major industries, 1987 - 1997:
— Austin — San Marcos MSA: 10.1 percent
— Williamson County: 13.5 percent
• Average annual compound employment growth, 1990 to 1997:
- Austin — San Marcos MSA: 5.6 percent
- Williamson County: 8.1 percent
Round Rock: over 16 percent (addition of over 13,000 jobs since 1991 associated
with new capital investment of over $400 million).
• Average annual compound growth, annual hotel rooms revenue, 1987 — 1997:
— Austin — San Marcos MSA: 13.5 percent
— Williamson County: 14.8 percent
- City of Round Rock: 17.6 percent
Economics Research Associates IV -8
A key assumption incorporated into this analysis is that Williamson County, and the City
of Round Rock in particular, will continue to be a major and growing node of future economic
growth in the Austin — San Marcos MSA. It is further assumed that this growth will translate
into growth in hotel demand. This assumption is supported by the following:
• Dell Computer serves as an "anchor" for the community.
• If the Mopac / Loop 1 and SR 45 road extensions (connecting North Austin and
Round Rock) proceed as planned, there will be additional road capacity between
Round Rock and Austin.
• There are several major economic development projects proposed in the City of
Round Rock, such as La Frontera, and if some of these projects move forward, there
will likely be significant additional economic growth in the community.
• There is a general perception in the region that the political climate in Round Rock is
"pro- growth."
In the following paragraphs, ERA presents its projections for hotel tax revenue to the
City of Round Rock. It should be noted that the actual performance of hotel operations and
estimates of the resulting tax may differ substantially and materially from the projections for
many reasons as the result of both foreseen and unforeseen events. A partial list includes:
changes in the national or local economy, changes in the local political climate regarding growth,
significant changes in the hotel market, significant changes to hotel supply, inability of
management to complete high quality hotel developments in a timely manner, technological
changes that reduce the need for corporate and other meetings, ineffective hotel marketing or
operation, and changes in hotel management. It is important to note that all projections are
inherently imprecise. This is especially true as projections are made further into the future.
Accordingly, there can be no assurance that any of the projected results shown in this report will
actually be achieved.
Overview of Methodology
As shown on Table IV -10, ERA projected hotel taxes to the City of Round Rock over the
1999 to 2005 time period utilizing a demand -based methodology that considered the following:
1. Historical and projected population trends for the Austin — San Marcos MSA (Figure
IV -2)
Economics Research Associates IV -9
M - - - - - MI - - - - - M - - - - - MI
Table lV -10
ANALYSIS OF POPULATION, EMPLOYMENT, AND ROOMNIGHT TRENDS
Austin • San Marcos MSA and the City of Round Rock
Austin MSA Population
Austin MSA Non-Ag. Employment
Labor Force Participation Rate
Austin MSA Hotel Room- Nights (000)
Ratio of Roomnights per Job
Estimated Austin MSA Roomnights (000)
1990 L91 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
846,227 870,046 889,685 910,539 933,073 956,003 976,603 998,633 1,020,133 1,041,455 1,064,677 1,088,209 1,111,601 1,134,838 1,158,020 1,181,131
Progected by Economicu Research ,Associates
386,380 401,456 419,582 450,415 479,128
46% 46% 47% 49% 51%
2,689 2,813 2,304 3,211 3,394
6.95 7.01 5.49 7.13 7.08
53% 54%
3,514 3,501 3,787
6.92 6.60 6.70
New MSA Roomnights after 1997 (000)
Round Rock Hotel Roomnights (000) 34 33 38 47 38 53
Round Rock Hotel Roomnights (000, FYR 9/30) I N m
ew Round Rock Ruanights after 1997 (000)
ew Round Rock Roomnighls as a Percent
f new Austin - San Marcos MSA Roomnights
508,160 530,175 565,500 587.900 608,700
57% 58% 58%
82
617,513 631,161 655,880 669,554 694,815 708,679
5811 5896 5991 59% 605, 60%
Projected by Economics Research Associates
6.89 0.89 6.89 6 89 6 89 6.89 6.89 6 89
Factor of 6.89 is the calculated average for the previous live years
4,051 4,194 4,255 4,349 4,519 4,613 4,767 4,883
264 407 468 562 732 826 1,000 1,096
Projected by Economics Research Associates
100 154 213 228 234 230 243 248
18 72 131 147 152 197 162 167
7% 18% 28% 2654 21% 19% 16% 151/4
Source: various except for material expressely sourced 10 Economics Research Associates
MI MO N — — — — — — NM WI I OM NM I
1,400.000
1,200,000
1,
800,000
600,000
400.000
200,000
Projections of Population and Employment: Austin -San Marcos MSA
Source: 'Texas Comptroller of I ubfic Accounts, "texas Worklincc Commission
Figure 1V - 2
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
t Austin MSA Population
--- Austin MSA Non -Ag. Employment
2. Historical and projected employment trends in the Austin — San Marcos MSA (also
Figure IV -2)
3. The historical and projected relationship between employment levels and hotel
roomnights in the Austin — San Marcos MSA (Table IV -10 with the resulting
roomnight trend in Figure IV -3).
4. Projected roomnights in Round Rock as a percentage of projected roomnights for the
MSA, as a test of reasonableness for the Round Rock projections (Table IV -10)
5. A projected roomnight capture by hotels in Round Rock that is consistent with both
the anticipated supply of new rooms and the regional demand for lodging (Figure IV-
3).
An overview of the methodology presented on Table IV -10 is as follows:
• The analysis begins with projections for population in the Austin — San Marcos MSA
(as reported by the Comptroller of Public Accounts)
• When examining the historical relationship between non - agriculture employment and
population, it is apparent that there is a fairly stable relationship. For example, over
the 1995 to 1997 time period, total non - agricultural employment in the MSA,
expressed as a percentage of the MSA population, ranged from 53 to 57 percent (this
means that over half of the population had jobs). For the 1999 to 2005 projection
period, ERA incorporated the assumption that the jobs to population percentage will
continue to increase, but at a decreasing rate, from 58 to 60 percent in the Austin —
San Marcos MSA.
• It is also apparent that there is a fairly stable relationship between hotel roomnights
and total non - agricultural employment. For example, over the last five years, the
number of hotel roomnights per job in the MSA ranged from 6.6 to 7.1. For the 1995
to 2005 period, ERA projected a roomnights to job ratio of 6.89.
• Hotel roomnights in the Austin — San Marcos MSA were then projected to the year
2005 based on the assumed relationship between population, non - agricultural
employment, and hotel roomnights. As can be seen, total MSA roomnights are
projected to range from about 4.2 million in 1999 to nearly 4.9 million in 2005. This
compares to the reported figure of nearly 3.8 million roomnights in 1997.
Economics Research Associates W -10
■� M — lip IMO NM — — lit EI UM I I= I
0
°0 4,000
w
6,000
5,000
z
E
8 3,000
rc
m
c
c
c
E 2,000
1,000
Figure IV -3
Historical and Projected Hotel Room -Night Demand
+Austin MSA Hotel Room - Nights (000)
Historical
Projected
• • • • --•
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
t Round Rock Hotel Roomnights (000)
Source: Texas Department of Economic Development, Tourism Division for historical data and Economics Research Associates for projections
Hotel Name
# Rooms
Assumed Opening Date
Wingate
100
March 1, 1999
Marriott Residence Inn
96
June 1, 1999
Hilton Garden Inn
122
November 1, 1999
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• New incremental, or marginal, roomnights for the MSA to the year 2005 are also
shown on the table. As shown, incremental roomnights in the MSA are projected to
range from 407,000 in 1999 to nearly 1,1 million in 2005. As mentioned, this
projection is based on the assumed relationship between population, employment, and
roomnights (as discussed above).
• ERA concludes that Williamson County, and the City of Round Rock in particular,
will continue to be a major and growing node of future economic growth in the
Austin — San Marcos MSA, and that the City of Round Rock will capture a significant
portion of the MSA's hotel growth.
Assumptions Pertaining to the Hotel Tax Projection:
• Hotel rooms in Round Rock are subject to a 13 percent hotel occupancy tax with
seven percent accruing to the City of Round Rock and six percent accruing to the
State. According to the City, subject to a majority vote of the residents of Round
Rock, an additional two percent could be added to the City's share; however, it
should be noted that, under current state law, this possible revenue source could not
be used for the proposed City of Round Rock Convention Center Complex project.
Therefore, this analysis and all projections contained herein are based on the present
allocation of the hotel occupancy tax.
• Round Rock will continue to capture, at least, its fair share of the market for limited
service hotels.
• The new hotel developments already under construction will open as planned;
however, for purposes of this analysis and the projections contained herein, other
proposed hotels, such as a full- service hotel at La Frontera, have not been included.
The following is an overview of the hotels assumed to enter the Round Rock hotel
market:
Economics Research Associates
IV -11
• As mentioned, it is impossible to predict which hotels, if any, will actually enter the
market, or their timing or number of rooms. In addition, it is impossible to predict
which hotels, if any, might exit the market, or their exit timing and number of rooms.
It should be noted; however, that ERA has incorporated the assumption that, starting
in fiscal year 2000, the supply of hotel rooms in Round Rock will decrease by about
100 rooms. This scenario could pertain to either 100 Less rooms being developed than
originally assumed, or the exit of about 100 rooms from the market.
• The following hotel tax projections include modest increases in hotels' average room
rates due to inflation and real growth in average room rates.
Projection of Hotel Taxes to the City of Round Rock (Table IV -11)
Table IV -11 presents the hotel tax projection to the City of Round Rock over the 1999 to
2005 time period. The following are key observations:
• ERA's model for fiscal years 1997 and 1998 is presented for comparative purposes.
As mentioned, this model was created based on interviews with managers of the
existing hotels in Round Rock and actual hotel tax revenues as reported by the City of
Round Rock,
• In fiscal year 1999, the end -of -the -year room count in the city is projected to increase
from 404 to 930. Corresponding to the projected increase in hotel room supply, it is
projected that the overall average occupancy and average room rate for the market
will decline. Average annual occupancy is assumed to decline from 67.9 percent to
60.6 percent, a decrease of about 11 percent (or a decline of 7.3 points of occupancy),
and the average daily room rate is assumed to decline from $60.70 to $57.09, a
decline of $3.61, or about six percent. This calculation was based on a projected
decrease in average occupancy and average daily rates at existing hotels, and assumed
first -year average occupancy and average daily rates at the new hotels. For fiscal year
1999, hotel tax revenues to the City of Round Rock are projected at $616,261.
• In fiscal year 2000, it is assumed that the Hilton Garden Inn hotel opens; however,
with about 100 hotel rooms assumed to exit the market, the net change in hotel supply
is 12 rooms. For fiscal year 2000, hotel tax revenues to the City of Round Rock are
projected at $915,710.
Economics Research Associates IV -
MIINIIM NM M MN MOM=
Table IV -11
PROJECTIONS OF HOTEL BED TAX REVENUE TO THE CITY OF ROUND ROCK
Fiscal Years Ending September 30 11
Anticpated End -of -Year Room Count
Roomnights Available
Change
Projected Roomnights
Change
Average Occupancy
Change
Overall Average Room Rate
Change
Rooms Revenue
Change
Hotel Taxes to City of Round Rock 3/
Change
Actual Hotel Tax Revenue to City 4/
Historical 2/
1997 1998
404 404
123,986 147,460
19%
81,707 100,178
23%
65.9% 67.9%
3.1%
$59.33 $60.70
2.3%
$4,847,339 $6,080,697
25.4%
$339,314 $425,649
25.4%
$339,592 $434,355
1999 2000 2001 2002 2003 2004 2005
930 942 942 942 942 942 942
254,380 328,701 343,830 343,830 343,830 343,830 343,830
73% 29% 5% 0% 0% 0% 0%
154,198 213,093 228,231 233,929 238,607 243,379 248,247
54% 38% 7% 2% 2% 2% 2%
60.6% 64.8% 66.4% 68.0% 69.4% 70.8% 72.2%
- 10.8% 6.9% 2.4% 2.5% 2.0% 2.0% 2.0%
$57.09 861.39 565.07 568.24 $70.28 572.39 574.56
-5.9% 7.5% 6.0% 4.9% 3% 3% 3%
$8,803,726 $13,081,578 $14,851,927 $15,962,311 $16,770,004 $17,618,567 518,510,066
44.8% 48.6% 13.5% 7.5% 5.1°% 5.1% 5.1%
$616,261 $915,710 $1,039,635 $1,117,362 $1,173,900 $1,233,300 $1,295,705
44.8% 48.6% 13.5% 7.5% 5.1% 5.1% 5.1%
1/ Reflects cash receipts to the City of Round Rock for the year -end tune period ending June 30
2/ Presented for comparative purposes, hotel occupancy and average daily room rate information is approximate
3/ Based on 7 percent tax rate to the City of Round Rock
4/ City of Round Rock (account number 71 -(10- 000 -4123)
Source: Economics Research Associates
• For the remaining 2001 to 2005 period, the number of hotel rooms is projected to
remain constant and, reflecting gradual increases in occupancy and average daily
room rate, hotel tax revenues to the City of Round Rock are projected to range from
$1,039,635 to $1,295,705.
• The projected increase in hotel roomnights in the City of Round Rock is shown
graphically on Figure IV -
Economics Research Associates IV -13
i i — — -- MN I MI NM NM M M — I I NM
300,000
250,000
200,000
150,000
100,000
50,000
Figure IV -4
Round Rock Hotel Market: Historical and Projected Performance
Historical �D
Projected
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: Texas Department of Economic Development, Tourism Division for historical data and Economics Research Associates for projections
ERA
Economics Research Associates
December 15, 1998
Mr. David Kautz
City of Round Rock
City Hall
221 East Main Street
Round Rock, Texas 78664
RE: ERA Project No. 12698, Phase II Authorization
Dear Mr. Kautz:
Economics Research Associates (ERA) is pleased to submit this scope of
work and authorization letter for economic consulting services to expand our
previous "Memorandum Report: Hotel Occupancy Tax Revenue Projections"
submitted June 4, 1998 to the City of Round Rock. We understand the City of
Round Rock intends to use the new and expanded report in support of an offering of
public revenue bonds, issued to finance the development of a stadium to house a
minor league baseball team.
PROPOSED PHASE II SCOPE OF WORK
The work will be conducted in four tasks which will produce the full diligent
reporting required for inclusion in a public offering document.
Task 1: Prepare a Draft Full Report for an Official Statement. ERA
will develop a format, based on previous ERA reports for similar purposes,
for a report that will optimally support the desired bond offering. The
information collected in the memorandum report, with appropriate updates
as necessary, will be used as the basis for writing a full tax revenue
projection report. A complete draft of the report will be presented to ERA's
securities attomey for review.
388 Market Street Suite 1580 San Francisco, CA 94111
415 956.8152 FAX 415.956 5274 www.erasf.com /erasf [114 is affiliated with Drivers Jonas
Los Angeles San Francisco San Diego Chicago Washington DC Landon
ERA
Mr. David Kautz
ERA Project No. 12698
Phase II Authorization
December 15, 1998
Page 2
Task 2: Legal Review of ERA's Draft Report. Lance Jon Kimmel of the
law offices of Richman, Lawrence, Mann, Chizever and Phillips will be
retained to review and comment on ERA's draft report
Task 3: Revise and Submit a Substantially Final Report.. Our previous
experience tells us this will be an iterative process. Working with the ERA's
attorney, ERA will revise the report as necessary and submit a substantially
final report that we believe will be suitable for inclusion in the Official
Statement for the bond offering. This report would culminate in the hotel
occupancy tax revenue projection, as did our .Tune 4 Memorandum Report.
ERA would not produce the bond service table for the offering.
Task 4: Work with the City's Advisors. ERA and its attorney will then be
prepared to respond to questions and concerns from the City and its financial
advisors. ERA will not prepare a synopsis or summary of its report for
inclusion in the Official Statement, but ERA will review and comment upon
any such disclosure which is included in the body of the Official Statement.
Task 5: Potential Expansion of Scope. ERA will entertain any request to
expand the work product for additional fees if so requested by the City.
BUDGET REQUIREMENTS AND SCHEDULE
For the first four tasks in the scope of work described above, ERA proposes
a fixed fee of $10,000 for professional time. This is the same $10,000 for the Phase
II work envisioned back in April. Out -of- pocket expenses for travel, subsistence
and data costs would be billed in addition at cost plus ten percent. An additional
expense to the City would be the cost of legal review by ERA's attorneys in Task 2,
but we anticipate this will be under $5,500, and will not exceed $5,500 plus out -of-
pocket expenses without further authorization from the client. For a schedule of
payments, ERA proposes a payment of $5,000 upon authorization to proceed with
the study. The second $5,000 plus expenses and attomeys fees would be invoiced at
the conclusion of the study with submittal of the final report. We expect the
assignment to take four to six weeks including attorney review time.
ERA
ACCEPTANCE
This assignment may be initiated by retum of one countersigned copy of this
proposal, along with the initial payment. The client has the option of terminating
the study at any time with only the costs incurred to date being due and payable.
Other routine contract provisions of ERA are included in the attached Proposal
Addendum. You will note, however, regarding the consent clause (second
paragraph) in the Proposal Addendum that ERA is fully aware that the City intends
to use this report in conjunction with a public offering of debt securities, and we are
prepared to cooperate, as evidenced by our additional language noting that our
consent to such use will not be unreasonably withheld.
Thank you for the opportunity to submit this proposal. If we can provide
any other information, please do not hesitate to call. We look forward to being of
further assistance to the City of Round Rock.
Respectfully submitted,
Steven E. Spickard,
Senior Vice President
SES:mbp
Attachment: Proposal Adde mum
Phase II Accepted by:
e. 17 NA A, A(,c-I
Mr. David Kautz
ERA Project No. 12698
Phase II Authorization
December 15, 1998
Page 3
Date: f2 / 1 Qg
ERA
PROPOSAL ADDENDUM
It is understood by the client that Economics Research Associates (ERA) can make no guarantees
concerning the recommendations that will result from the proposed assignment, since these
recommendations must be based upon facts discovered by ERA during the course of the study and
those conditions existing as of the date of the report. To protect you and other clients, and to
ensure that the research results of ERA's work will continue to be accepted as objective and
impartial by the business community, it is understood that our fee for the undertaking of this
project is in no way dependent upon the specific conclusions reached or the nature of the advice
given by us in our report to you.
It is agreed by the client that the report is not to be used in conjunction with any public or private
offering of debt or equity securities without prior written consent. Such consent would not be
unreasonably withheld.
It is further agreed that the client will indemnify ERA against any losses, claims, damages and
liabilities under federal and state securities laws which may arise as a result of statements or
omissions in public or private offerings of securities.
It is agreed by the client that payment for the services of ERA is due upon receipt of the invoice;
that full payment is due upon receipt of the completed report; and that ERA has the nght to
withhold delivery of the final report pending receipt of any overdue payments.
In the event any invoice is not paid within 30 days after rendering of the invoice it shall commence
bearing interest on the date the invoice was rendered at the rate of 18 percent per annum (or such
lesser rate as may be the maximum interest permissible under applicable law) and the client agrees
to pay all accrued interest, together with the charges for services rendered as provided for in this
agreement. In addition, should an unpaid invoice be referred to our attorneys for collection, the
client agrees to pay their reasonable fee for such work, as well as any costs of suit which may be
incurred.
It is further agreed by the client that the report will be presented to third parties in its entirety and
that no abstracting of the report will be made without first obtaining the permission of ERA.
It is understood by ERA that the findings of this report are the propnetary property of the client
and they will not be made available to any other organization or individual without the consent of
the client.
This proposal will remain in force for a period of 60 days from the date shown hereon.
ERA
Economics Research Associates
December 15, 1998
Mr. David Kautz
City of Round Rock
City Hall
221 East Main Street
Round Rock, Texas 78664
RE: ERA Project No. 12698, Phase II Authorization
Dear Mr. Kautz:
Economics Research Associates (ERA) is pleased to submit this scope of
work and authorization letter for economic consulting services to expand our
previous "Memorandum Report: Hotel Occupancy Tax Revenue Projections"
submitted June 4, 1998 to the City of Round Rock. We understand the City of
Round Rock intends to use the new and expanded report in support of an offering of
public revenue bonds, issued to finance the development of a stadium to house a
minor league baseball team.
PROPOSED PHASE II SCOPE OF WORK
The work will be conducted in four tasks which will produce the full diligent
reporting required for inclusion in a public offering document.
Task 1: Prepare a Draft Full Report for an Official Statement. ERA
will develop a format, based on previous ERA reports for similar purposes,
for a report that will optimally support the desired bond offering. The
information collected in the memorandum report, with appropriate updates
as necessary, will be used as the basis for writing a full tax revenue
projection report. A complete draft of the report will be presented to ERA's
securities attorney for review.
388 Market Street Suite 1580 San Francisco, CA 94111
415.958.8152 FAX 415.956.5274 www.erasr.com /erasf Ean is affiliated w,tr. Drivers loes
Los Angeles San Francisco San Diego Chicago Washington DC London
ERA
Mr. David Kautz
ERA Project No. 12698
Phase II Authorization
December 15, 1998
Page 2
Task 2: Legal Review of ERA's Draft Report. Lance Jon Kimmel of the
law offices of Richman, Lawrence, Mann, Chizever and Phillips will be
retained to review and comment on ERA's draft report
Task 3: Revise and Submit a Substantially Final Report.. Our previous
experience tells us this will be an iterative process. Working with the ERA's
attorney, ERA will revise the report as necessary and submit a substantially
final report that we believe will be suitable for inclusion in the Official
Statement for the bond offering. This report would culminate in the hotel
occupancy tax revenue projection, as did our June 4 Memorandum Report.
ERA would not produce the bond service table for the offering.
Task 4: Work with the City's Advisors. ERA and its attorney will then be
prepared to respond to questions and concerns from the City and its financial
advisors. ERA will not prepare a synopsis or summary of its report for
inclusion in the Official Statement, but ERA will review and comment upon
any such disclosure which is included in the body of the Official Statement.
Task 5: Potential Expansion of Scope. ERA will entertain any request to
expand the work product for additional fees if so requested by the City.
BUDGET REQUIREMENTS AND SCHEDULE
For the first four tasks in the scope of work described above, ERA proposes
a fixed fee of $10,000 for professional time. This is the same $10,000 for the Phase
I1 work envisioned back in April. Out -of- pocket expenses for travel, subsistence
and data costs would be billed in addition at cost plus ten percent. An additional
expense to the City would be the cost of legal review by ERA's attorneys in Task 2,
but we anticipate this will be under $5,500, and will not exceed $5,500 plus out -of-
pocket expenses without further authorization from the client. For a schedule of
payments, ERA proposes a payment of $5,000 upon authorization to proceed with
the study. The second $5,000 plus expenses and attorneys fees would be invoiced at
the conclusion of the study with submittal of the final report. We expect the
assignment to take four to six weeks including attorney review time.
ERA
ACCEPTANCE
This assignment may be initiated by retum of one countersigned copy of this
proposal, along with the initial payment. The client has the option of terminating
the study at any time with only the costs incurred to date being due and payable.
Other routine contract provisions of ERA are included in the attached Proposal
Addendum. You will note, however, regarding the consent clause (second
paragraph) in the Proposal Addendum that ERA is fully aware that the City intends
to use this report in conjunction with apublic offering of debt securities, and we are
prepared to cooperate, as evidenced by our additional language noting that our
consent to such use will not be unreasonably withheld.
Thank you for the opportunity to submit this proposal. If we can provide
any other information, please do not hesitate to call. We look forward to being of
further assistance to the City of Round Rock.
Respectfully submitted,
Steven E. Spickard
Senior Vice President
SES:mbp
Attachment: Proposal Adde, s um
Phase II Accepted by:
L• do
0 aap<
Mr. David Kautz
ERA Project No. 12698
Phase II Authorization
December 15, 1998
Page 3
Date: 12/i7/9g
ERA
PROPOSAL ADDENDUM
It is understood by the client that Economics Research Associates (ERA) can make no guarantees
concerning the recommendations that will result from the proposed assignment, since these
recommendations must be based upon facts discovered by ERA during the course of the study and
those conditions existing as of the date of the report. To protect you and other clients, and to
ensure that the research results of ERA's work will continue to be accepted as objective and
impartial by the business community, it is understood that our fee for the undertaking of this
project is in no way dependent upon the specific conclusions reached or the nature of the advice
given by us in our report to you.
It is agreed by the client that the report is not to be used in conjunction with any public or private
offering of debt or equity securities without prior written consent. Such consent would not be
unreasonably withheld.
It is further agreed that the client will indemnify ERA against any losses, claims, damages and
liabilities under federal and state securities laws which may arise as a result of statements or
omissions in public or private offerings of securities.
It is agreed by the client that payment for the services of ERA is due upon receipt of the invoice;
that full payment is due upon receipt of the completed report; and that ERA has the right to
withhold delivery of the final report pending receipt of any overdue payments.
In the event any invoice is not paid within 30 days after rendering of the invoice it shall commence
bearing interest on the date the invoice was rendered at the rate of 18 percent per annum (or such
lesser rate as may be the maximum interest permissible under applicable law) and the client agrees
to pay all accrued interest, together with the charges for services rendered as provided for in this
agreement. In addition, should an unpaid invoice be referred to our attorneys for collection, the
client agrees to pay their reasonable fee for such work, as well as any costs of suit which may be
incurred.
It is further agreed by the client that the report will be presented to third parties in its entirety and
that no abstracting of the report will be made without first obtaining the permission of ERA.
It is understood by ERA that the findings of this report are the proprietary property of the client
and they will not be made available to any other organization or individual without the consent of
the client.
This proposal will remain in force for a period of 60 days from the date shown hereon.
ERA
Economics Research Associates
December 15, 1998
Mr. David Kautz
City of Round Rock
City Hall
221 East Main Street
Round Rock, Texas 78664
RE: ERA Project No. 12698, Proposal to Update Hotel Market Research
Dear Mr. Kautz:
Economics Research Associates (ERA) is pleased to submit this proposal for
economic consulting services to update our previous "Memorandum Report: Hotel
Occupancy Tax Revenue Projections" submitted June 4, 1998 to the City of Round
Rock. We understand the City of Round Rock intends to use the new and expanded
report in support of an offering of public revenue bonds, issued to finance the
development of a stadium to house a minor league baseball team.
ERA's original proposal dated April 8, 1998 envisioned rapid progress from
the initial memorandum report to the more complete bond - offering document,
specifically a time period less than two months between study efforts. Because six
months have now elapsed since the submittal of the memorandum report, we feel it
is necessary to resurvey some of the market and spot check some of the information
used to make hotel occupancy tax revenue projections. As a consequence, a scope
of work and fee is presented below for a necessary update of ERA work.
PROPOSED PHASE II SCOPE OF WORK
The work would be conducted in a single task. This task would update the
market information, making revisions to the revenue projections as necessary.
388 Market Street Suite 1580 San Francisco. CA 94111
415.956.8152 FAX 415 956.5274 ww . erast. co mieras 1 ERA is affiliated Witt, Drivers lanes
Los Angeles San Francisco San Diego Chicago Washington DC London
ERA
ERA will then re- interview by phone a sampling of:
ACCEPTANCE
Mr. David Kautz
ERA Project No, 12698
Update of Hotel Market Research
December 15, 1998
Page 2
Task 1: Selectively Update Local Round Rock Hotel Market
Information. ERA would initiate the new work with a meeting with the
client group in the City of Round Rock, if you are available the afternoon of
Monday, December 14 We will review the information the City has
gathered on the various hotel projects, and discuss the research needs for the
bond offering.
• Operators and owners of existing hotel properties in the Round Rock and
North Austin areas,
• Proponents of new hotels currently being planned or under construction
in the city, and
• The two largest employers in Round Rock, Dell and Wayne- Dresser.
To the extent warranted by the new information, ERA will revise our hotel
occupancy tax revenue projections.
BUDGET REQUIREMENTS AND SCHEDULE
For the update task in the scope of work proposed above, ERA proposes a
fixed fee of $5,000 for professional time. Out -of- pocket expenses for travel,
subsistence and data costs would be billed in addition at cost plus ten percent. For a
schedule of payments, ERA proposes a payment of $2,500 upon authorization to
proceed with the study. The second $2,500 plus expenses would be invoiced at the
conclusion of the study with submittal of the final report.
This assignment may be initiated by return of one countersigned copy of this
proposal, along with the initial payment. The client has the option of terminating
the study at any time with only the costs incurred to date being due and payable.
Other routine contract provisions of ERA are included in the attached Proposal
Addendum. You will note, however, regarding the consent clause (second
paragraph) in the Proposal Addendum that ERA is fully aware that the City intends
to use this report in conjunction with a public offering of debt securities, and we are
ERA
prepared to cooperate, as evidenced by our additional language noting that our
consent to such use will not be unreasonably withheld.
Thank you for the opportunity to submit this proposal. If we can provide
any other information, please do not hesitate to call. We look forward to being of
further assistance to the City of Round Rock.
Respectfully submitted,
Steven E. Spickard
Senior Vice President
SES:mbp
Attachment: Proposal Addendum
Update Task Accepted by:
C 1 7 y N
Mr. David Kautz
ERA Project No. 12698
Update of Hotel Market Research
December 15, 1998
Page 3
Date: 1 2 / /vp
t
ERA
PROPOSAL ADDENDUM
It is understood by the client that Economics Research Associates (ERA) can make no guarantees
concerning the recommendations that will result from the proposed assignment, since these
recommendations must be based upon facts discovered by ERA during the course of the study and
those conditions existing as of the date of the report. To protect you and other clients, and to
ensure that the research results of ERA's work will continue to be accepted as objective and
impartial by the business community, it is understood that our fee for the undertaking of this
project is in no way dependent upon the specific conclusions reached or the nature of the advice
given by us in our report to you.
It is agreed by the client that the report is not to be used in conjunction with any public or private
offering of debt or equity securities without prior written consent. Such consent would not be
unreasonably withheld.
It is further agreed that the client will indemnify ERA against any losses, claims, damages and
liabilities under federal and state securities laws which may arise as a result of statements or
omissions in public or private offerings of securities.
It is agreed by the client that payment for the services of ERA is due upon receipt of the invoice;
that full payment is due upon receipt of the completed report; and that ERA has the right to
withhold delivery of the final report pending receipt of any overdue payments.
In the event any invoice is not paid within 30 days after rendering of the invoice it shall commence
bearing interest on the date the invoice was rendered at the rate of 18 percent per annum (or such
lesser rate as may be the maximum interest permissible under applicable law) and the client agrees
to pay all accrued interest, together with the charges for services rendered as provided for in this
agreement. In addition, should an unpaid invoice be referred to our attomeys for collection, the
client agrees to pay their reasonable fee for such work, as well as any costs of suit which may be
incurred.
It is further agreed by the client that the report will be presented to third parties in its entirety and
that no abstracting of the report will be made without first obtaining the permission of ERA.
It is understood by ERA that the findings of this report are the proprietary property of the client
and they will not be made available to any other organization or individual without the consent of
the client.
This proposal will remain in force for a period of 60 days from the date shown hereon.
ERA
Economics Research Associates
December 15, 1998
Mr. David Kautz
City of Round Rock
City Hall
221 East Main Street
Round Rock, Texas 78664
RE: ERA Project No. 12698, Proposal to Update Hotel Market Research
Dear Mr. Kautz:
Economics Research Associates (ERA) is pleased to submit this proposal for
economic consulting services to update our previous "Memorandum Report: Hotel
Occupancy Tax Revenue Projections" submitted June 4, 1998 to the City of Round
Rock. We understand the City of Round Rock intends to use the new and expanded
report in support of an offering of public revenue bonds, issued to finance the
development of a stadium to house a minor league baseball team.
ERA's original proposal dated April 8, 1998 envisioned rapid progress from
the initial memorandum report to the more complete bond - offering document,
specifically a time period less than two months between study efforts. Because six
months have now elapsed since the submittal of the memorandum report, we feel it
is necessary to resurvey some of the market and spot check some of the information
used to make hotel occupancy tax revenue projections. As a consequence, a scope
of work and fee is presented below for a necessary update of ERA work.
PROPOSED PHASE II SCOPE OF WORK
The work would be conducted in a single task. This task would update the
market information, making revisions to the revenue projections as necessary.
388 Market Street Suite 1580 San Francisco, CA 94111
415.956.8152 FAX 415.956.5274 www.erasf.com/erasf ERA is affiliated wish Drivers Jonas
Los Angeles San Francisco San Diego Chicago Washington DC London
ERA
ERA will then re- interview by phone a sampling of:
ACCEPTANCE
Mr. David Kautz
ERA Project No. 12698
Update of Hotel Market Research
December 15, 1998
Page 2
Task 1: Selectively Update Local Round Rock Hotel Market
Information. ERA would initiate the new work with a meeting with the
client group in the City of Round Rock, if you are available the afternoon of
Monday, December 14` We will review the information the City has
gathered on the various hotel projects, and discuss the research needs for the
bond offering.
• Operators and owners of existing hotel properties in the Round Rock and
North Austin areas,
• Proponents of new hotels currently being planned or under construction
in the city, and
• The two largest employers in Round Rock, Dell and Wayne- Dresser.
To the extent warranted by the new information, ERA will revise our hotel
occupancy tax revenue projections.
BUDGET REQUIREMENTS AND SCHEDULE
For the update task in the scope of work proposed above, ERA proposes a
fixed fee of $5,000 for professional time. Out -of- pocket expenses for travel,
subsistence and data costs would be billed in addition at cost plus ten percent. For a
schedule of payments, ERA proposes a payment of $2,500 upon authorization to
proceed with the study. The second $2,500 plus expenses would be invoiced at the
conclusion of the study with submittal of the final report.
This assignment may be initiated by retum of one countersigned copy of this
proposal, along with the initial payment. The client has the option of terminating
the study at any time with only the costs incurred to date being due and payable.
Other routine contract provisions of ERA are included in the attached Proposal
Addendum. You will note, however, regarding the consent clause (second
paragraph) in the Proposal Addendum that ERA is fully aware that the City intends
to use this report in conjunction with a public offering of debt securities, and we are
ERA
prepared to cooperate, as evidenced by our additional language noting that our
consent to such use will not be unreasonably withheld.
Thank you for the opportunity to submit this proposal. If we can provide
any other information, please do not hesitate to call. We look forward to being of
further assistance to the City of Round Rock.
Respectfully submitted,
ten E. Spi and
Senior Vice President
SES:mbp
Attachment: Proposal Addendum
Update Task Accepted by:
c, 'Cy MAN ac,F2
Mr. David Kautz
ERA Project No. 12698
Update of Hotel Market Research
December 15, 1998
Page 3
Date: /21 /7 / fo°
ERA
PROPOSAL ADDENDUM
It is understood by the client that Econotnics Research Associates (ERA) can make no guarantees
concerning the recommendations that will result from the proposed assignment, since these
recommendations must be based upon facts discovered by ERA during the course of the study and
those conditions existing as of the date of the report. To protect you and other clients, and to
ensure that the research results of ERA's work will continue to be accepted as objective and
impartial by the business community, it is understood that our fee for the undertaking of this
project is in no way dependent upon the specific conclusions reached or the nature of the advice
given by us in our report to you
It is agreed by the client that the report is not to be used in conjunction with any public or private
offering of debt or equity securities without prior written consent. Such consent would not be
unreasonably withheld.
It is further agreed that the client will indemnify ERA against any losses, claims, damages and
liabilities under federal and state securities laws which may arise as a result of statements or
omissions in public or private offerings of securities.
It is agreed by the client that payment for the services of ERA is due upon receipt of the invoice;
that full payment is due upon receipt of the completed report; and that ERA has the right to
withhold delivery of the fmal report pending receipt of any overdue payments.
In the event any invoice is not paid within 30 days after rendering of the invoice it shall commence
bearing interest on the date the invoice was rendered at the rate of 18 percent per annum (or such
lesser rate as may be the maximum interest permissible under applicable law) and the client agrees
to pay all accrued interest, together with the charges for services rendered as provided for in this
agreement. In addition, should an unpaid invoice be referred to our attorneys for collection, the
client agrees to pay their reasonable fee for such work, as well as any costs of suit which may be
incurred.
It is further agreed by the client that the report will be presented to third parties in its entirety and
that no abstracting of the report will be made without first obtaining the permission of ERA.
It is understood by ERA that the findings of this report are the proprietary property of the client
and they will not be made available to any other organization or individual without the consent of
the client.
This proposal will remain in force for a period of 60 days from the date shown hereon.
ERA
Economics Research Associates
Final Report
PROJECTION OF HOTEL TAX REVENUE TO
THE CITY OF ROUND ROCK, TEXAS
Prepared for
THE CITY OF ROUND ROCK, TEXAS
Submitted by
Economics Research Associates
February 4, 1999
ERA Project No. 12981
388 M arket Srree:t Suite 1580
San Francisco, CA 94111 ERA is attrliatea with Drivers Jonas
ell 5.356.8153 FAX 415 906 02 /a weee. , e as /eras]
Los Angeles San Francisco San Diego
Chicago Dallas Washington DC London
TABLE OF CONTENTS
Section Pa
GENERAL LIMITING CONDITIONS
I INTRODUCTION I- 1
II EXECUTIVE SUMMARY II- 1
Regional Demographic, Economic, and Hotel Trends II- 1
Planned Economic Development Projects, City of Round Rock II- 2
City of Round Rock Hotel Market II- 3
Projections of Hotel Tax Revenue to the City of Round Rock II- 5
III ANALYSIS OF REGIONAL SOCIO- ECONOMIC TRENDS III- 1
Socio- Economic Trends in the Austin -San Marcos MSA III- 1
Williamson County III- 4
IV SOCIO- ECONOMIC TRENDS IN ROUND ROCK AND
PROJECTIONS OF HOTEL TAX REVENUE TO THE CITY IV- 1
Analysis of Socio- Economic Trends in the City of Round Rock IV- 1
Projections of Hotel Tax Revenue to the City of Round Rock IV- 7
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LIST OF TABLES
POPULATION PROJECTIONS, AUSTIN -SAN MARCOS MSA
EMPLOYMENT TRENDS, AUSTIN-SAN MARCOS MSA
TREND IN UNEMPLOYMEN RATES, AUSTIN-SAN MARCOS MSA
TREND IN GROSS SALES, ALL MAJOR INDUSTRIES, AUSTIN -SAN
MARCOS MSA
III- 5 BUILDING PERMIT TRENDS, AUSTIN MSA
III- 6 TOURISM TRENDS FOR THE CITY OF AUSTIN
III- 7 AIRPORT ARRIVALS /DEPARTURES, AUSTIN
III- 8 HOTEL MARKET TRENDS, AUSTIN MSA
III- 9 TOP NATIONAL HOTEL MARKETS, SUPPLY AND DEMAND, 1997
III -10 OVERVIEW OF AUSTIN HOTEL MARKET, 1996/1997
111 -11 POPULATION PROJECTIONS, WILLIAMSON COUNTY
III -12 EMPLOYMENT TRENDS, WILLIAMSON COUNTY
III -13 TREND IN UNEMPLOYMENT RATES, WILLIAMSON COUNTY
III -14 TREND IN GROSS SALES, ALL MAJOR INDUSTRIES, WILLIAMSON
COUNTY
III -15 BUILDING PERMIT TRENDS, WILLIAMSON COUNTY
III -16 HOTEL MARKET TRENDS, WILLIAMSON COUNTY
IV- 1 TREND IN GROSS SALES, ALL MAJOR INDUSTRIES, CITY OF ROUND
ROCK
IV- 2 CORPORATE LOCATIONS/EXPANSIONS, CITY OF ROUND ROCK
ii
Table
LIST OF TABLES
IV- 3 MAJOR EMPLOYERS WITHIN A 15- MINUTE DRIVE OF DOWNTOWN
ROUND ROCK
IV- 4 SELECTED ECONOMIC DEVELOPMENT PROJECTS, CITY OF ROUND
ROCK
IV- 5 TRAFFIC COUNTS ON 1 -35 IN ROUND ROCK
IV- 6 HOTEL MARKET TRENDS, ROUND ROCK
IV- 7 CITY OF ROUND ROCK, HOTEL/MOTEL BED TAX RECEIPTS
IV- 8 CHARACTERISTICS OF HOTELS IN ROUND ROCK
IV- 9 OVERVIEW OF PROPOSED HOTELS IN ROUND ROCK
IV -10 ANALYSIS OF POPULATION, EMPLOYMENT AND ROOMNIGHT
TRENDS
IV -11 PROJECTIONS OF HOTEL BED TAX REVENUE TO THE CITY OF ROUND
ROCK
iii
LIST OF FIGURES
Figure
I- 1 LOCATION OF THE CITY OF ROUND ROCK
III- 1 TOTAL JOBS IN THE AUSTIN — SAN MARCOS MSA
III- 2 HOTEL ROOMNIGHTS AND REVENUES, AUSTIN — SAN MARCOS MSA
III- 3 TOTAL JOBS IN WILLIAMSON COUNTY
IV- 1 HOTEL ROOMNIGHTS AND REVENUES, ROUND ROCK
IV- 2 PROJECTIONS OF POPULATION AND EMPLOYMENT: AUSTIN-SAN
MARCOS MSA
IV- 3 HISTORICL AND PROJECTED HOTEL ROOMNIGHT DEMAND
IV- 4 ROUND ROCK HOTEL MARKET: HISTORICAL AND PROJECTED
PERFORMANCE
iv
GENERAL LIMITING CONDITIONS
Every reasonable effort has been made in order that the data contained in this study reflect the most
accurate and timely information possible and it has been derived from sources believed to be reliable.
This study is based on estimates, assumptions, and other information developed by Economics Research
Associates from its independent research effort, general knowledge of the hotel industry, and consultation
with representatives of the City of Round Rock. No responsibility is assumed for inaccuracies in
reporting by the client or representatives, or any other sources used in preparing or presenting this study.
This report is based on regional economic and demographic information that was current as of June 1998.
In addition, for data pertaining to the characteristics of hotels in Round Rock, and other information
pertaining to economic development projects in the City of Round Rock, this information was current as
of January 1999. Economics Research Associates has no responsibility to update or revise this report
subsequent to this date.
This study evaluates the effect of various factors, both present and anticipated in the future, which may
have an effect on future hotel tax revenues to the City of Round Rock, Texas. The projected lodging tax
revenues are influenced by many factors which cannot be foreseen. Many other significant influencing
factors may be unpredictable and unquantifiable, which would include weather, the general state of the
economy, continued strength of the area's key employers, a recession, technological changes, changing
competitive situations, changing visitation patterns, or possibly an over -built hotel market at some future
time, unforeseen construction problems or delays with respect to planned hotels, management strength in
developing and operating hotels, and the ability to attract new hotel business to the area. Unless expressly
identified, such other significant influencing factors have not been considered by ERA in the preparation
of this study and calculation of future hotel tax revenues to the City of Round Rock. Under differing
scenarios, these other significant influencing factors can have either positive or negative effects on
projected hotel tax revenues.
The scope of this study consisted primarily of evaluating secondary data sources supplemented by
interviews with representatives of management of existing hotels, the proponents of planned and proposed
hotels, and representatives of major employers in Round Rock. Although such information is deemed
reliable, no independent attempt has been made by ERA to verify the factual basis of the information
provided and ERA makes no assurance as to the accuracy of such information.
No warranty or representation is made by Economics Research Associates that any of tax revenue
projections contained in this study will actually be achieved. Projections are based on estimating the
likelihood of future events and will probably differ from actual results; and these differences can be
material.
Possession of this study does not carry with it the right of publication thereof or to use the name
Economics Research Associates in any manner without first obtaining the prior written consent of
Economics Research Associates. No abstracting, excerpting or summarization of this study may be made
without first obtaining the prior written consent of Economics Research Associates. This report is not to
be used in conjunction with any public or private offering of securities or any other purpose where it may
be relied upon to any degree by any person other than the client without first obtaining the prior written
consent of Economics Research Associates. This study may not be used for purposes other than that for
which it is prepared or for which prior written consent has first been obtained from Economics Research
Associates.
This study is qualified in its entirety, and should be considered in light of these limitations, conditions,
and considerations.
Section I
INTRODUCTION
The City of Round Rock, Texas retained Economics Research Associates (ERA) to
conduct an independent analysis of the hotel market in Round Rock, and to project the future
annual hotel bed tax revenue stream which could flow to the City. If this revenue stream appears
sufficiently large, the City intends on issuing a revenue bond in order to capitalize on the future
value. As shown on Figure I -1, the City of Round Rock is located in Central Texas in
Williamson County in the Austin — San Marcos Metropolitan Statistical Area (MSA).
In April 1998, the City of Round Rock retained ERA to study the local hotel market and a
key component of this research effort was the collection and analysis of economic and
demographic statistics. In most cases, the most current annual data pertained to year -end 1997
and the following demographic and economic factors were analyzed:
• Population
• Employment
• Major Company Openings
• Building Permits
• Gross Sales In All Major Industries
• Tourism Statistics
• Airport Arrivals
• Traffic Counts on I -35
• Hotel Revenues and Roomnights
The above information was evaluated at three geographic levels:
1. Austin — San Marcos MSA
2. Williamson County
3. Round Rock
Economics Research Associates I -1
Figure I -1
LOCATION OF THE CITY OF ROUND ROCK
Source: Map produced by the City of Round Rock Chamber of Commerce
In addition, ERA also conducted interviews with several different economic interest groups
in the area, including:
• Operators of existing hotel properties in the Round Rock and North Austin areas,
• Proponents of new hotels currently being planned or under construction in the City of
Round Rock, and,
• Major employers in Round Rock.
In December 1998, the City of Round Rock retained ERA to conduct a market update of
the first study. Since the year 1998 was not complete, and regional economic and demographic
data pertaining to year -end 1998 was not yet available, ERA's market update concentrated on the
following_
• The latest status of various economic development projects in the City of Round
Rock.
• The updated operating characteristics of existing hotels in Round Rock.
• An assessment of the three new hotels that opened in Round Rock the later part of
1998.
• The latest status of various planned and proposed hotels in Round Rock.
ERA's findings and conclusions regarding the basis of the hotel bed tax revenue
projections are summarized in the following Section II, and are presented in further detail in
subsequent sections of this report.
Economics Research Associates I -2
Section II
EXECUTIVE SUMMARY
The City of Round Rock, Texas retained Economics Research Associates (ERA) to
conduct an independent analysis of the hotel market in Round Rock, and to project the future
annual hotel bed tax revenue stream which could flow to the City. If this revenue stream appears
sufficiently large, the City intends on issuing a revenue bond in order to capitalize on the future
value. The City of Round Rock is situated within Williamson County which is part of the Austin
— San Marcos MSA (metropolitan statistical area).
REGIONAL DEMOGRAPHIC, ECONOMIC, AND HOTEL TRENDS
An important part of ERA's research effort was the analysis of demographic, economic,
and hotel growth trends for: 1) the Austin — San Marcos MSA, 2) Williamson County, and 3) the
City of Round Rock. As shown below, a key observation is that while historical growth in the
Austin — San Marcos MSA has been significant in recent years, in Williamson County, and in
Round Rock in particular, the rates of growth have been, and are expected to be, even higher:
• Projected average annual compound growth, population, 1998 - 2008:
— Austin — San Marcos MSA: 2.1 percent
— Williamson County: 4.4 percent
• Average annual compound growth, gross sa in all major industries, 1987 - 1997:
— Austin — San Marcos MSA: 10.1 percent
— Williamson County: 13.5 percent
• Average annual compound employment growth, 1990 to 1997:
— Austin — San Marcos MSA: 5.6 percent
- Williamson County: 8.1 percent
— Round Rock: over 16 percent (addition of over 13,000 jobs since 1991 associated
with new capital investment of over $400 million)
Economics Research Associates II -
• Average annual compound growth, annual hotel rooms revenue, 1987 — 1997:
- Austin — San Marcos MSA: 13.5 percent
— Williamson County: 14.8 percent
— City of Round Rock: 17.6 percent
It is important to note that a key assumption incorporated into this analysis is that
Williamson County, and the City of Round Rock in particular, will continue to be a major and
growing node of future economic growth in the Austin — San Marcos MSA.
PLANNED ECONOMIC DEVELOPMENT PROJECTS, CITY OF ROUND ROCK
According to the Round Rock Chamber of Commerce, there are numerous planned
economic development projects in the City of Round Rock. It is impossible to predict which of
these projects will actually be built (if any), or the ultimate size, scale and timing of the facilities
that are built; however, it is useful to note that the following projects are proposed:
— Dell Computer: possible 550,000 square foot expansion to be completed in 1999
with estimated job creation of about 2,000.
— La Frontera: planned development of a 328 -acre mixed -use development on a site
located on the west side of I -35 just north of FM 1325 (just west and across the
interstate from Dell Computer). According to a representative of 35/45 Investors,
L.P., general partner for the project, principal components of the proposed
development would possibly include a "power center" consisting of major anchor
stores, a 16- screen movie theater, numerous restaurants, and a 300 -room full -
service hotel.
— Cypress Semiconductor: construction of a 5350 million project is proposed to
begin in the fourth quarter of 1999.
— Trend Technologies: A 62,000 square foot expansion is underway and, if
completed, is planned to open in March 1999.
— Security Capital: planned development of a 240,000 square foot facility with a
scheduled completion in the summer of 1999.
Economics Research Associates II -2
Factor
Period Covered
Average Annual
Compound Growth
Rate
Hotel Roomnights
1987 through 1997
12.9 percent
Hotel Rooms Revenue
1987 through 1997
17.6 percent
Hotel Taxes, City of Round Rock
1988 through 1998
17.5 percent
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CITY OF ROUND ROCK HOTEL MARKET
Indicators of Growth
As shown below, the hotel market in the City of Round Rock has experienced significant
growth over the last ten years:
Source: Tourism Division, Texas Department of Economic Development, City of Round Rock
Approximate Aggregate Operating Performance of Hotels in Round Rock as of June 30, 1998
The following is a two -year comparison of the approximate aggregate operating
performance for hotels located in the City of Round Rock as of June 30, 1998 (for cash reporting
purposes, the end of the City's fiscal year):
Source: Economics Research Associates
It should be noted that not included in the above are the following new hotels that opened
in Round Rock after June 30, 1998, and were therefore not accounted for during the City's fiscal
year 1998:
Economics Research Associates I1 -3
1997
1998
% Increase
Number of Rooms
404
404
0
Average Occupancy
65.9%
67.9%
3.0%
Average Daily Room Rate
$59.33
$60.70
2.3%
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CITY OF ROUND ROCK HOTEL MARKET
Indicators of Growth
As shown below, the hotel market in the City of Round Rock has experienced significant
growth over the last ten years:
Source: Tourism Division, Texas Department of Economic Development, City of Round Rock
Approximate Aggregate Operating Performance of Hotels in Round Rock as of June 30, 1998
The following is a two -year comparison of the approximate aggregate operating
performance for hotels located in the City of Round Rock as of June 30, 1998 (for cash reporting
purposes, the end of the City's fiscal year):
Source: Economics Research Associates
It should be noted that not included in the above are the following new hotels that opened
in Round Rock after June 30, 1998, and were therefore not accounted for during the City's fiscal
year 1998:
Economics Research Associates I1 -3
Hotel Name
# of Rooms
Opening Date
Baymont
93
7/16/98
Marriott Courtyard
113
8/21/98
Crossland
124
12/21/98
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Interviews with Major Employers in Round Rock Regarding Hotel Utilization
Based on personal interviews conducted with representatives of major employers in the
City of Round Rock, it was reported to ERA that several major employers in Round Rock are
significant generators of hotel demand, and they expect this demand to increase along with
expected economic growth. However, there is currently significant "leakage" of hotel
roomnights outside of Round Rock to, primarily, hotels located in the North Austin / Airport
area. It was further reported that the major employers would prefer to house their people in
Round Rock, if possible, because convenience is important, and if new, more upscale hotels with
more meeting space were opened in Round Rock, they would likely utilize them with less
"leakage" of hotel roomnights out of Round Rock as a result.
Assumed Changes to Hotel Supply, City of Round Rock, 1999 to 2005
ERA investigated the status of proposed hotels in Round Rock through a variety of
sources including the City of Round Rock Planning Department and individual proponents for
the projects. For a variety of reasons, it is impossible to predict which hotels, if any, will be
built, or the size, scale, and timing of the property. In addition, it is possible that, even for hotels
currently under construction, they may not open as planned.
ERA is aware of at least seven hotels which are proposed in Round Rock. Collectively,
they account for 981 rooms. It is important to note that, for purposes of this analysis, ERA has
incorporated the assumption that only those hotels currently under construction -- the 100 -room
Wingate Inn, the 96 -room Marriott Residence Inn, and the 122 -room Hilton Garden Inn -- will
actually enter the market over the 1999 to 2005 projection period. This represents 318 rooms out
of the 918 rooms proposed (35 percent). In addition, ERA incorporated the assumption that in
fiscal year 2000, approximately 100 rooms in older, less competitive properties will be taken out
of service.
Economics Research Associates 11
Hotel Name
# Rooms
Assumed Opening Date
Wingate
100
March 1, 1999
Marriott Residence Inn
96
June 1, 1999
Hilton Garden Inn
122
November 1, 1999
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PROJECTIONS OF HOTEL TAX REVENUE TO THE CITY OF ROUND ROCK
ERA's approach to projecting hotel tax revenues to the City of Round Rock included the
analysis of two major elements: 1) historical and projected hotel demand, and 2) historical and
projected hotel supply. On the demand side, ERA developed a methodology which considered
the historical and projected relationship in the Austin — San Marcos MSA between population
and employment growth, and hotel roomnights. A key assumption incorporated into the analysis
was that, over the 1999 to 2005 time period, a significant portion of the net new regional
roomnights will be captured in Round Rock.
Other assumptions are as follows:
• Hotel rooms in Round Rock are subject to a 13 percent hotel occupancy tax with
seven percent accruing to the City of Round Rock and six percent accruing to the
State.
• Round Rock will continue to capture, at least, its fair share of the market for limited
service hotels.
• The new hotel developments already under construction will open as planned;
however, other proposed hotels, such as a full- service hotel at La Frontera, are
assumed not to enter the market. The following is an overview of the hotels assumed
to enter the Round Rock hotel market:
• In fiscal year 2000, the supply of hotel rooms in Round Rock will decrease by about
100 rooms.
• For the most part, the new hotels expected to open in Round Rock will be more
upscale than the existing hotels, therefore, average daily room rates will tend to rise
accordingly.
Economics Research Associates H -5
Fiscal
Year
# Hotel
Rooms 1/
Average
Occupancy
Average
Room Rate
Hotel Tax
Revenues
1998 2/
404
67.9%
$60.70
S426,669
1999
930
60.6%
$57.09
$616,261
2000
942
64.8%
$61.39
S915,710
2001
942
66.4%
$65.07
$1,039,635
2002
942
68.0%
$68.24
$1,117,362
2003
942
69.4%
$70.28
$1,173,900
2004
942
70.8%
$72.39
$1,233,300
2005
942
72.2%
$74.56
$1,295,705
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Projection of Hotel Taxes to the City of Round Rock
The following is a summary of ERA's projections of hotel tax revenue to the City of
Round Rock over the 1999 to 2005 time period:
A graph of historical and projected hotel roomnights in the City of Round Rock is as
follows:
0 200.000
300.000
250000
2
8 150.000
E '00000
50 000
1/ End of the year room counts
2/ Approximate data for 1998 is shown for comparative purposes only
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source' Texas Deparm,cnl of Economic Dcoolopmem. Tourism D00s,on for histoncal data an Economics Research Associates for protections
Economics Research Associates 1I -6
Population Trends (Table III -1)
Section III
ANALYSIS OF REGIONAL SOCIO- ECONOMIC TRENDS
In this section, ERA presents an examination of demographic and economic trends in the
greater Austin area. An analysis of the Austin — San Marcos MSA is presented first and this is
followed by an analysis of Williamson County. (An analysis of the Round Rock area is
presented in the following section). The primary objective of this analysis is to assess trends in
population and economic growth in the greater Austin region as background information for
assessing the potential for economic and hotel growth in Round Rock.
SOCIO - ECONOMIC TRENDS IN THE AUSTIN — SAN MARCOS MSA
According to the Texas State Comptroller of Public Accounts:
• The population for the Austin — San Marcos MSA in 1998 was about one million
people (1,020,133).
• Over the 1990 to 1998 time period, the MSA population grew by 173,906 people.
This equates to an average annual compound growth rate of about 2.4 percent.
• Over the 1998 to 2008 time period, the MSA population is projected to grow by
231,437 people. This equates to an average annual compound growth rate of about
2.1 percent.
• Over the 2008 to 2030 time period, the MSA population is projected to grow by a rate
of 1.8 percent to 2 percent.
Employment Trends (Table 111-2, Table 111-3, and Figure III -1)
• According to the Texas Workforce Commission and the State Comptroller of Public
Accounts, total non - agricultural employment in the Austin — San Marcos MSA
increased from 386,588 jobs in 1990 to 530,175 jobs in 1996. This represented an
average annual compound growth rate of about 5.4 percent.
• For 1999, total non - agricultural employment in the MSA was estimated by Angelou
Economic Advisors, Inc. at 607,500 jobs. As compared to the 1996 job counts, this
Economics Research Associates III -1
Table 111 -1
POPULATION PROJECTIONS, AUSTIN - SAN MARCOS MSA
Projected Percent
Year Population Change
1990 846,227
1991 870,046 2.8%
1992 889,685 2.3%
1993 910,539 2.3%
1994 933,073 2.5%
1995 956,003 2.5%
1996 976,603 2.2%
1997 998,633 2.3%
1998 1,020,133 2.2%
1999 1,041,455 2.1%
2000 1,064,677 2.2%
2001 1,088,209 2.2%
2002 1,111,661 2.2%
2003 1,134,838 2.1%
2004 1,158,025 2.0%
2005 1,181,131 2.0%
2006 1,204,441 2.0%
2007 1,227,612 1.9%
2008 1,251,570 2.0%
2009 1,276,212 2.0%
2010 1,301,430 2.0%
2011 1,326,853 2.0%
2012 1,352,520 1.9%
2013 1,378,512 1.9%
2014 1,405,539 2.0%
2015 1,433,472 2.0%
2016 1,462,369 2.0%
2017 1,491,498 2.0%
2018 1,521,831 2.0%
2019 1,552,976 2.0%
2020 1,584,215 2.0%
2021 1,615,261 2.0%
2022 1,645, 897 1.9%
2023 1,677,373 1.9%
2024 1,709,469 1.9%
2025 1,742,065 1.9%
2026 1,774,765 1.9%
2027 1,807,039 1.8%
2028 1,839,910 1.8%
2029 1,873,414 1.8%
2030 1,907,642 1.8%
Source: John Sharp, Comptroller of Public Accounts
(Winter 1997 -1998 County Population Forecast)
INN I MI - - = i NM = i NM M MI I Ma NM ME OM i
Table III -2
EMPLOYMENT TRENDS, AUSTIN - SAN MARCOS MSA
Avg. Annual
Economic Forecast 3/ Compound
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Growth Rate
Construction 12,259 13,384 15,286 18,400 22,660 25,105 28,297 29,600 30,900 31,800 11.17%
Manufacturing 49,863 53,939 55,514 59,595 62,609 66,659 72,884 75,700 78,400 80,800 5.51%
TCPU I/ 12,504 13,402 13,742 14,895 15,244 15,603 17,319 18,600 19,700 20,500 5.65%
Trade 83,884 83,703 88,636 94,845 103,080 110,860 116,518 121,300 126,600 131,700 5.14%
FIRE 2/ 23,382 23,386 24,099 25,864 27,576 27,280 28,122 29,800 30,700 31,400 3.33%
Services 93,511 99,209 105,515 115,600 122,801 134,172 141,502 161,500 170,400 179,000 7.48%
Government 111,185 114,433 116,790 121,216 125,158 128,481 125,533 127,700 130,000 132,300 1.95%
SUBTOTAL 386,588 401,456 419,582 450,415 479,128 508,160 530,175 564,200 586,700 607,500 5.15%
Agriculture 2,328 2,577 2,868 3,151 3,456 3,866 4,262 NA NA NA 8.82%
Mining 1,109 1,200 1,118 968 936 1,029 1,129 NA NA NA -1,24%
e ther - - - 23 16 20 NA NA NA
I/ Transportation, communications, public utilities
2/ Finance, Insurance, Real Estate
3/ Angelou Economic Advisors, Inc.
Source: Texas Workforce Commission and State Comptroller of Public Accounts
ME Ma r EN NM il= MN MN I M MN NM = r— MI ME MI =
650,000
600,000
550,000
500,000
450,000
400,000
350,000
Figure 111 -1
Total Jobs in Austin MSA
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Source: Texas Workforce Commission and State Comptroller of Public Accounts
Table I1I -3
TREND IN UNEMPLOYMENT RATES
AUSTIN - SAN MARCOS MSA
Unemployment Rate
1988 6.1%
1989 5.5%
1990 4.9%
1991 4.5%
1992 4.6%
1993 4.0%
1994 3.6%
1995 33%
1996 3.0
1997 3.1%
Source: Texas Workforce Commission and State
Comptroller of Public Accounts
Employment
Category
Average Annual
Compound Growth
Rate
Construction
11.2%
Services
7.5%
TCPU 1/
5.7%
Manufacturing
5.5%
Trade
5.1%
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represents an estimated increase of 77,325 jobs and equates to an average annual
compound growth rate of about 4.6 percent. (Angelou Economic Advisors, Inc. is a
economic consulting firm based in Austin).
• When combining the above mentioned data sources, it is apparent that over the 1990
to 1999 time period, the sectors of the MSA economy with the highest projected
growth rates are as follows:
Gross Sales, All Major Industries (Table III -4)
1/ Transportation, communications, public utilities
• According to the Texas Workforce Commission and the State Comptroller of Public
Accounts, the unemployment rate in the Austin — San Marcos MSA has generally
declined from 6.1 percent in 1988 to 3.1 percent in 1997.
According to the Texas State Comptroller of Public Accounts:
• Gross sales in all major industries in the Austin — San Marcos MSA increased from
about $11.7 billion in 1986 to $30.1 billion in 1997 — an increase of $18.4 billion.
• This represents an average annual compound growth rate of about 9.3 percent.
1
1
Economics Research Associates III -
Table II1-4
TREND IN GROSS SALES, ALL MAJOR INDUSTRIES,
AUSTIN - SAN MARCOS MSA
Gross Sales,
All Major
Industries
1986 $11,650,230,707
1987 $11,832,414,005
1988 $12,020,711,855
1989 $12,996,810,422
1990 $14,081,077,819
1991 $15,448,669,100
1992 $17,318,167,981
1993 $19,217,871,110
1994 $21,758,381,397
1995 $25,009,787,750
1996 $27,269,792,682
1997 $30,960,016,584
Avg. Annual
Compound
Growth Rate 9.29%
Source: Comptroller of public Accounts, Research Division
Residential Building Permit Trends (Table 111 -5)
According to the Real Estate Center at Texas A &M University and the U.S. Bureau of
Census:
• The number of residential building permits in the greater Austin area increased from
1,962 in 1990 to 13,617 in 1997.
• The value of residential building permits increased from about $228.4 million in 1990
to $1.1 billion in 1997.
Tourism Trends (Table 111 -6)
According to the Austin Convention and Visitors Bureau:
• Annual visitation to the City of Austin has increased from about 6.1 million people in
1991 to 16 million in 1998.
• This equates to an average annual compound growth rate of about 14.8 percent.
Airport Arrivals /Departures (Table 111 -7)
According to the Department of Aviation for the City of Austin:
• Total arrivals and departures at the Robert Mueller International Airport increased
from about 4.3 million in 1990 to about 5.9 million in 1997. This equates to an
average annual compound growth rate of about 4.7 percent.
• The new Austin Bergstrom International Airport is scheduled to open in the southern
part of Austin in May 1999. With 25 gates, as compared to 16 gates at the current
airport, annual arrivals and departures are projected to increase at an annual
compound growth rate of 4.5 percent to 5 percent.
Hotel Market Trends (Tables 111 -8 through 111 -10 and Figure 111 -2)
• According to the Tourism Division of the Texas Department of Economic
Development, the number of hotel roomnights in the MSA increased from about 2.4
million in 1987 to about 3.8 million in 1997. This represents an average annual
compound growth rate of about 4.6 percent.
Economics Research Associates III -3
! MI= ! ! ! ! ! ! ! !MI= ! ! ! ! ! !
Table 111 -5
BUILDING PERMIT TRENDS, AUSTIN MSA
Single Family Bldg. Permits Multi- Family Bldg. Permits Single Family + Multi - Fancily Non - Residential
Number Value Number Value Number Value Number Value ($000)
1990 1,916 $226,662,800 46 $1,697,400 1,962 $228,360,200 583 $85,468,966
1991 2,994 $317,064,600 228 $7,022,400 3,222 $324,087,000 573 $68,899,812
1992 4,641 $457,602,600 1,030 $20,394,000 5,671 $477,996,600 553 $57,031,996
1993 6,369 $689,125,800 2,174 $60,002,400 8,543 $749,128,200 895 $372,069,400
1994 6,250 $663,750,000 4,518 $155,871,000 10,768 $819,621,000 965 $233,512,630
1995 7,435 $769,522,500 6,330 $236,109,000 13,765 $1,005,631,500 859 $260,190,241
1996 10,095 51,049,880,000 6,982 $259,032,200 17,077 $1,308,912,200 NA NA
1997 8,456 $882,806,400 5,161 5217,278,100 13,617 51,100,084,500 NA NA
Source: Real Estate Center at Texas A &M University and U.S. Bureau of Census
Table II1 -6
TOURISM TRENDS FOR THE CITY OF AUSTIN
Annual Visitation to Austin
by Leisure Travelers 1/
Year # Visitors 2/
1991 6,100,000
1992 NA
1993 6,300,000
1994 7,100,000
1995 8,700,000
1996 10,300,000
1997 14,000,000
1998 16,000,000
Avg. Annual
Compound
Growth Rate
1991 - 1998
14.77%
1/ According to the Austin Convention and Visitors Bureau, leisure travelers constitute about two- thirds of visitation
2/ Based on national survey of 25,000 people conducted monthly regarding travel behavior
Source: DK Shiflett and Associates Limited and the Austin Convention and Visitors Bureau
Table 1II -7
AIRPORT ARRIVALS / DEPARTURES, AUSTIN
Robert Mueller International Airport
Number of gates 16
Arrivals Departures Total
1990 2,137,073 2,140,860 4,277,933
1991 2,052,097 2,054,310 4,106,407
1992 2,181,962 2,187,790 4,369,752
1993 2,323,769 2,324,696 4,648,465
1994 2,550,132 2,550,011 5,100,143
1995 2,676,240 2,668,447 5,344,687
1996 2,838,008 2,853,225 5,691,233
1997 2,946,752 2,957,553 5,904,305
Average Annual
Compound Growth, 1990 - 1997 4.71%
Planned Ope
Number of gates
Austin Bergstrom International Airport
8
May -99
Projected Annual Compound Growth
in Arrivals / Departures 4.5% - 5%
25
Source: Department of Aviation, City of Austin
Table 111-8
HOTEL MARKET TRENDS, AUSTIN MSA
Annual Room -
Revenue Nights
Year ($000) (000)
1987 $114,551 2,409.4
1988 $115,966 2,327.4
1989 $132,591 2,526.1
1990 $145,550 2,688.6
1991 $160,131 2,812.6
1992 $137,250 2,303.9
1993 $204,011 3,210.6
1994 $227,610 3,393.7
1995 $254,987 3,514.3
1996 $272,072 3,501.1
1997 $301,729 3,786.9
Average
Annual
Compound
Growth 10.17% 4.63%
Source: Texas Department of Economic Development, Tourism Division
E — — i MN NE MN — In E ME NM = N On OM NM I i
4,000.0
3,800.0 —
3,600.0 —
3,400.0 —
3,200.0 —
3,000.0 —
2,800.0 —
2,600.0
2,400.0
2,200.0
2,000.0
Figure 111 -2
Austin MSA
•
1 1 I 1 +
1
1987 1988 1989 1990 1991 1992
MIN Room- Nights (000)
t Annual Revenue ($000)
1993 1994 1995 1996 1997
Source: Tourism Division, Texas Department of Economic Development
$350,000
$300,000
- $250,000
$200 000
$150,000
$100,000
$50,000
$0
Table 1II -9
TOP NATIONAL HOTEL MARKETS, SUPPLY AND DEMAND, 1997
Top Demand Growth Markets 1997 Top Supply Growth Markets, 1997
Omaha, Neb. 9.2% Omaha, Neb. 12.1%
Chattanooga, Tenn. 9.1% Atlanta, Ga. 9.7%
Southern Texas 9.1% Mississippi 9.0%
Houston, Texas 8.9% Western Kentucky 9.0%
North Dakota 8.6% Austin, Texas 8.7%
Rhode Island 8.2% Ft. Worth / Arlington, Tx 8.5%
Austin, Texas 7.6% Salt Lake City, Ut 8.1%
Santa Barbara, Ca. 7.4% Tucson, Az 8.1%
Denver, Co. 7.1% Kansas City, Mo. - Kan. 8.0%
Maine 6.9% Dallas, Texas 8.0%
Source: Smith Travel Research, Hotel & Motel Management, 4/6/98
MN N• NM MI MI O M M MN MI I -- - M OM= OM
Table III -10
OVERVIEW OF AUSTIN HOTEL MARKET, 1996 / 1997 1/
Austin. Total
Source: PKF Consulting / Hospitality Advisory Services
Occupancy Average Daily Rate RevPAR (Rev. Per Avail. Room)
1996 1997 Change 1996 1997 Change 1996 1997 Change
73.4% 74.6% 1.2% $73.65 $78.01 5.9% $54.05 $58.16 7.6%
Central Bus. District 70.7% 74.5% 3.7% $92.53 $98.38 6.3% $66.45 $73.25 11.9%
North l Airport Area 72.7% 72.7% -0.1% $64.16 $ 65.93 2.8% $46.66 $47.90 2.7%
Northwest Austin 81,6% 79.8% -1.8% $89.81 $90.22 0.5% $73.28 $72.00 -l.7%
South Austin 73.4% 75.2% 1.9% $61.40 $66.32 8.0% $45.04 $49.90 10.8%
1/ Data includes information from 155 participating properties with 21,988 rooms
1
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• The Tourism Division also reports that over the 1987 to 1997 time period, annual
rooms revenue in the MSA grew at an average annual compound growth rate of 10.2
percent (as compared to 4.6 percent for roomnights).
• According to Smith Travel Research, a national compiler of hotel operating statistics,
for the year ending 1997, the City of Austin was ranked among the top 10 markets in
the U.S. in terms of hotel demand growth (7` and hotel supply growth (5
• According to PKF Consulting, a leading travel industry consulting firm, the following
is a comparison of key hotel operating indicators for hotels in the City of Austin,
1996 versus 1997:
WILLIAMSON COUNTY
1/ Revenue per available room (reflects both occupancy and average room ra e)
As mentioned, the City of Round Rock is located in Williamson County (which is part of
the Austin — San Marcos MSA). In the following paragraphs, ERA presents an overview of
demographic and economic trends for Williamson County.
Population Trends (Table III -11)
According to the State Comptroller of Public Accounts:
• The population in Williamson County in 1998 was nearly 207,000 (206,868).
• Over the 1990 to 1998 time period, population growth in Williamson County was
67,317 people.
• Over the 1990 to 1998 time period, the population in Williamson County grew at an
annual compound growth rate of about 5 percent.
Economics Research Associates 111-4
1996
1997
% Increase
Occupancy
73.4%
74.6%
1.6%
Average Rate
$73.65
$78.01
5.9%
RevPar 1/
$54.05
$58.16
7.6%
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• The Tourism Division also reports that over the 1987 to 1997 time period, annual
rooms revenue in the MSA grew at an average annual compound growth rate of 10.2
percent (as compared to 4.6 percent for roomnights).
• According to Smith Travel Research, a national compiler of hotel operating statistics,
for the year ending 1997, the City of Austin was ranked among the top 10 markets in
the U.S. in terms of hotel demand growth (7` and hotel supply growth (5
• According to PKF Consulting, a leading travel industry consulting firm, the following
is a comparison of key hotel operating indicators for hotels in the City of Austin,
1996 versus 1997:
WILLIAMSON COUNTY
1/ Revenue per available room (reflects both occupancy and average room ra e)
As mentioned, the City of Round Rock is located in Williamson County (which is part of
the Austin — San Marcos MSA). In the following paragraphs, ERA presents an overview of
demographic and economic trends for Williamson County.
Population Trends (Table III -11)
According to the State Comptroller of Public Accounts:
• The population in Williamson County in 1998 was nearly 207,000 (206,868).
• Over the 1990 to 1998 time period, population growth in Williamson County was
67,317 people.
• Over the 1990 to 1998 time period, the population in Williamson County grew at an
annual compound growth rate of about 5 percent.
Economics Research Associates 111-4
Table 111 -I l
POPULATION PROJECTIONS, WILLIAMSON COUNTY
Projected Percent
Year Population Change
1990 139,551
1991 147,262 5.5%
1992 154,822 5.1%
1993 162,923 5.2%
1994 171,387 5.2%
1995 180,008 5.0%
1996 188,525 4.7%
1997 197,605 4.8%
1998 206,868 4.7%
1999 216,358 4.6%
2000 226,318 4.6%
2001 236,795 4.6%
2002 247,554 4.5%
2003 258,512 4.4%
2004 269,683 4.3%
2005 281,125 4.2%
2006 292,886 4.2%
2007 304,910 4.1%
2008 317,398 4.1%
2009 330,346 4.1%
2010 343,755 4.1%
2011 357,650 4.0%
2012 371,874 4.0%
2013 386,542 3.9%
2014 401,769 3.9%
2015 417,602 3.9%
2016 433,912 3.9%
2017 450,650 3.9%
2018 468,061 3.9%
2019 486,076 3.8%
2020 504,508 3.8%
2021 523,156 3.7%
2022 542,032 3.6%
2023 561,493 3.6%
2024 581,586 3.6%
2025 602,122 3.5%
2026 623,052 3.5%
2027 644,254 3.4%
2028 665,972 3.4%
2029 688,396 3.4%
2030 711,493 3.4%
Source: John Sharp, Comptroller of Public Accounts
(Winter 1997 -1998 County Population Forecast)
Construction
10.6%
Services
8.8%
Trade
8.6%
Government
5.5%
FIRE 1/
3.8%
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• Over the 1998 to 2008 time period, the population in Williamson County is projected
to increase to 317,398. This represents a projected increase of 110,530 people and
equates to an average annual compound growth rate of about 4.4 percent.
• Over the 2008 to 2030 time period, the population of Williamson County is projected
to increase at an average annual compound growth rate of about 3.7 percent.
Employment Trends (Table 111 -12, Table 111 -13, and Figure 111 -3)
According to the Texas Workforce Commission and the State Comptroller of Public
Accounts:
• By the end of the third quarter in 1997, non - agricultural employment in Williamson
County was 51,547.
• From year -end 1987 through the third quarter of 1997, the number of non - agricultural
jobs in Williamson County more than doubled — from 25,243 in 1987 to 51,547 by
the end of the third quarter 1997. This represented an average annual compound
growth rate of about 7.6 percent.
• Over the 1987 to third quarter 1997 time period, the following were the non-
agricultural employment sectors in Williamson County exhibiting the highest average
annual compound growth rates:
1/ Finance, Insurance, Real Estate
• The unemployment rate in Williamson County declined from 6.0 percent in 1988 to
2.0 percent in 1996. In 1997, the unemployment rate was 2.2 percent.
Economics Research Associates II1 -5
MO OM MN MI NM OM a O -- •■ MI MI I NM I NM IIIII
Table 111 -12
EMPLOYMENT TRENDS, WILLIAMSON COUNTY
Avg_ Annual
3rd Qtr Compound
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Growth Rate
Agriculture 274 281 289 274 348 406 397 490 539 526 786 11.40%
Mining 349 257 226 192 218 212 221 217 331 420 427 2.09%
Construction 1,762 1,466 1,647 1,624 1,791 2,133 2,319 2,736 3,350 4,083 4,708 10.60%
Manufacturing 4,167 4,757 5,100 5,412 5,549 6,061 6,534 6,951 7,903 8,554 8,913 8.10%
ITCPU 1/ 787 732 720 643 619 631 596 965 669 706 755 -0.42%
Trade 6,309 6,714 6,683 6,998 7,819 8,376 9,039 10,259 11,368 12,859 14,099 8.59%
FIRE 2/ 1,270 1,148 1,055 1,019 766 802 928 1,716 1,719 1,723 1,824 3.78%
Services 4,865 4,613 5,246 5,801 6,041 6,469 7,444 8,173 8,734 9,850 11,083 8.80%
Govemment 5,734 5,910 6,323 6,602 6,910 7,285 7,837 8,498 9,097 9,660 9,704 5.54
Other - - - - - - - 34
Total 25,517 25,878 27,289 28,565 30,061 32,375 35,315 40,005 43,710 48,381 52,333 7.64%
I/ Transportation, communications, public utilities
2/ Finance, Insurance, Real Estate
Source: Texas Workforce Commission and State Comptroller of Public Accounts
NM E - -- NE NM MN M — I— ! I I I — NE I
55,000
50,000
45,000
40,000
35,000
30,000
25,000
20,000
Figure 111 -3
Total Jobs in Williamson County
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
Source: Texas Workforce Conurussion and State Comptroller of Public Accounts
Table I1I -13
TREND IN UNEMPLOYMENT RATES
WILLIAMSON COUNTY
Unemployment Rate
1988 6.0%
1989 4.9%
1990 43%
1991 3.5%
1992 3.4%
1993 2.9%
1994 23%
1995 23%
1996 2A%
1997 2.2%
Source: Texas Workforce Commission and State
Comptroller of Public Accounts
Gross Sales, All Major Industries (Table III -14)
According to the State Comptroller of Public Accounts:
• Gross sales in all major industries in Williamson County increased from about $1.1
billion ($1,099,508,376) in 1986 to nearly $4.3 billion ($4,277,705,396) by 1997.
• This represented an increase of nearly $3.2 billion ($3,178,197,020) over the last 11
years and equates to an average annual compound growth rate of about 13.2 percent.
Building Permit Trends (Table III -15)
According to the Real Estate Center at Texas A &M University and the U.S. Bureau of
Census:
• The number of residential building permits in Williamson County increased from 174
in 1990 to 3,532 in 1997.
• The value of residential building permits in Williamson County increased from about
$13.7 million in 1990 to about $327.4 million in 1997.
Hotel Market Trends (Table III -16)
According to the Tourism Division of the Texas Department of Economic Development:
• The number of hotel roomnights in Williamson County increased from 74,300 in
1987 to 180,700 in 1997. This represented an increase of 106,400 roomnights over
the ten -year period and equates to an average annual compound growth rate of about
9.3 percent.
• Annual hotel rooms revenue in Williamson County increased from $2,571,000 in
1987 to $10,228,000 in 1997. This represented an increase of $7,657,000 over the
ten -year period and equates to an average annual compound growth rate of about 14.8
percent.
Economics Research Associates II1 -6
Table I11 -14
TREND IN GROSS SALES. ALL MAJOR INDUSTRIES,
WILLIAMSON COUNTY
Gross Sales,
All Major
Industries
1986 $1,099,508,376
1987 $1,210,084,368
1988 $1,075,109,737
1989 $1,235,119,557
1990 $1,397,066,502
1991 $1,471,980,979
1992 $1,732,015,285
1993 $1,979,554,645
1994 $2,222,424,489
1995 $2,860,356,963
1996 $3,465,151,286
1997 $4,277.705,396
Avg. Annual
Compound
Growth Rate 13.15%
Source: Comptroller of public Accounts, Research Division
i OM MI MI IMO MN I i M OM MO MI MN M r MN MN I M
Table III -15
BUILDING PERMIT TRENDS, WILLIAMSON COUNTY
Single Family Bldg. Permits Multi - Family Bldg. Permits Single Family + Multi - Family Non- Residential
Number Value Number Value Number Value Number Value (5000)
1990 174 $13,711,200 0 $0 174 $13,711,200 80 5573,360
1991 380 529,488,000 4 $120,000 384 $29,608,000 80 5126,880
1992 767 $58,522,100 0 50 767 $58,522,100 86 $334,884
1993 1,397 $116,649,500 64 $1,696,000 1,461 $118,345,500 157 54,757,728
1994 1,537 $153,853,700 340 $11,118,000 1,877 8164,971,700 196 55,114,816
1995 2,816 $271,462,400 570 $31,293,000 3,386 $302,755,400 149 $13,344,291
1996 3,685 $376,238,500 925 $38,387,500 4,610 $414,626,000 NA NA
1997 3,063 $308,444,100 469 $18,947,600 3,532 $327,391,700 NA NA
Source: Real Estate Center at Texas A &M University and U.S. Bureau of Census
Table III -16
HOTEL MARKET TRENDS, WILLIAMSON COUNTY
Annual Room -
Revenue Nights
Year (5000) (000)
1987 $2,571 74.3
1988 $2,494 66.8
1989 $2,961 75
1990 $3,440 84.1
1991 $3,670 87.4
1992 $4,210 100.5
1993 $4,767 105.7
1994 $4,188 88
1995 $6,785 123.6
1996 $7,586 129.7
1997 $10,228 180.7
Average
Annual
Compound
Growth 14.81%
9.29%
Source: Texas Department of Economic Development, Tourism Division
Section IV
SOCIO- ECONOMIC TRENDS IN ROUND ROCK AND
PROJECTIONS OF HOTEL TAX REVENUE TO THE CITY
In this section, ERA first presents an overview of socio- economic trends in the City of
Round Rock. The section concludes with an analysis of the local hotel market and ERA's
projections for hotel bed tax revenue to the City of Round Rock over the 1999 to 2005 time
period.
ANALYSIS OF SOCIO- ECONOMIC TRENDS IN THE CITY OF ROUND ROCK
Trend in Gross Sales, All Major Industries (Table IV -I)
According to the Texas State Comptroller of Public Accounts:
• Over the 1986 to 1997 time period, gross sales in all major industries in the City of
Round Rock grew from about 8389 million in 1986 (8338,946,394) to about $2.4
billion in 1997 ($2,379,282,692).
• This represents an increase of nearly $2 billion ($1,990,336,298) over the last 11
years and equates to an average annual compound growth rate of about 17.9 percent.
Employment Trends in the City of Round Rock (Table IV -2 through IV-4)
According to the Round Rock Chamber of Commerce:
• Over the 1991 to 1998 time period, 60 companies have either located to, or expanded
their operations, in the City of Round Rock. The total new capital investment in the
City over the 1991 to 1998 time period is estimated by the Chamber of Commerce at
over $400 million.
• Of the approximate 20,000 jobs in Round Rock through 1998, about 13,235 jobs
(two - thirds) have been created over the 1991 through 1998 time period.
• The top ten employers within an approximate 15 minute drive time of downtown
Round Rock are as follows:
Economics Research Associates IV -1
Table IV -I
TREND IN GROSS SALES, ALL MAJOR INDUSTRIES
CITY OF ROUND ROCK
Gross Sales,
All Major
Industries
1986 $388,946,394
1987 $494,692,532
1988 $365,630,786
1989 $484,024,851
1990 $576,647,921
1991 $639,653,938
1992 $786,188,732
1993 $814,047,661
1994 $1,016,384,702
1995 $1,514,203,095
1996 $1,870,601,970
1997 $2,379,282,692
Avg. Annual
Compound
Growth Rate 17.90
Source: Comptroller of Public Accounts, Research Division
Table IV -2
CORPORATE LOCATIONS / EXPANSIONS
CITY OF ROUND ROCK
Approx.
Locations / # Jobs Capital
Expansions Created Investment
1991 8 620 $10 Million
1992 7 380 $9 Million
1993 1/ 7 2.650 $25 Million
1993 / 1994 2/ 3 1,800 $30 Million
1994 / 1995 2/ 12 2,485 $150 Million
1995 / 1996 2/ 10 1,065 $75 Million
1996 / 1997 2/ 7 2,335 $77 Million
1997 / 1998 3/ 6 1 900 $30 Million
60 13,235 $406 Million
1/ 9 -month period January through September
2/ October through September
3/ October through May 20
Source: Round Rock Charnber of Commerce
Table IV -3
MAJOR EMPLOYERS WITHIN A 15- MINUTE DRIVE OF DOWNTOWN ROUND ROCK
ompany Name
Dell Computers
Abbott Laboratories
State Fami Insurance
Famers Insurance
Sears TeleSery
IBM
Intermedics Orthopedics
AMP Packaging
Wayne- Dresser
Tellalabs
Westinghouse / TECO
Michael Angeles Gourmet Foods
Cypress Semiconductor
Sysco Foods
Columbia Medical Center
City of Round Rock
Trend Technologies
DuPont Photomask
Rolm
McNeil Consumer Products 1/
TN Technologies
Moll Industries
Austin White Lime
Texas Crushed Stone
Weed Instrument
Cintas Corporation
Paradigm Metals
Prudential Overall Supply
Preferred Stamping
MagRabbit
TECO Technology
Centex Machining
Infolab
Mission Industries
Photronics
Featherlife Building Products
Micro -Bac International
Insync
1st Tech Molding
Enviroquip
Precision Laser Cuts
Texas Heat Treating
Textek Plastics
Company Type
Computers
Intravaneous Solutions
Insurance
Regional Headquarters
Technical Cell Center
Computers
Prosthesis Manufacturer
Computer Equipment
Electronic Pump Controls
Communications
Motors
Italian Food
Semiconductors
Food Distributor
Health Care
Govemment
Medical Fabrication
Photomasks
Telecommunications
Tylenol
Electronic Measurement
Injection Molding
Limestone Quarry
Crushed Limestone
Sensors
Uniform Laundry
Metal Fabrication
Garment Laundry
Metal Fabrication
Software
Monitors
Medical Equipment
Medical Equipment
Garment Laundry
Photomasks
Building Materials
Bio- Remediation Products
Gas Flow Devices
Plastic Injection Molding
Wastewater Treatment
Metal Fabrication
Metal Heat Treating
Injection Molding
1/ Announcement in 12/98 that this facility will be phased out by 2002
Source: Round Rock Chamber of Commerce
Employees
8,000
1,600
1,000
893
750
700
700
600
476
470
440
425
395
387
350
310
250
250
200
171
165
160
145
140
125
100
100
100
90
75
65
50
45
45
45
40
40
35
30
30
30
30
20,082
Table lV -4
SELECTED ECONOMIC DEVELOPMENT PROJECTS, CITY OF ROUND ROCK
Company Name
Dell Computers
Trend Technologies
62,000 sf expansion underway,
completion expected in March 1999 Unknown
Sears TeleSery 120,000 square foot facility 750
Cypress Semiconductor Fab 5 Project construction to begin in the 350
4th quarter 1999, $350 million project
La Frontera
Office / Warehouse project
Security Capital
CIDCO
Estimated
Comments (sf= square feet) Job Creation
Early '98: 240,000 sf expansion to Bldg. # 2 1,600
Mid '98: construction 350,000 sf building 1,000
Early '99: construction 200,000 sf building 1 000
3,600
Approximate # Employees, Mid 1998 8,000
Approximate # Employees, End 1999 10,000
120,000 sf facility recently 200 - 300,
completed in August 1998 800 in 3 -5 years
Planned 328 -acre mixed -use development
including Power Center with major regional
anchor stores, 16 screen cinema, numerous
restaurants, and 300 -room full- service hotel
1st Tech Molding Expansion in Corridor Park 75
Armstrong Moving & Storage Completed new facility / relocated operations 75
JemPac International leased 12,000 sf facility 25
OPUS South broken ground on 60,000 sf Class A
office project, 15,000 sf pre- leased Unknown
Leased 50,000 sf of total 100,000 sf to two 50
companies: TD Industries and Texas
Quality Machining and Fabrication
office / warehouse facilities, 240,000 sf,
scheduled completion summer 1999,
may attract a Dell supplier that would
occupy 133,000 sf of space
leased 57,000 sf; however, corp. mgt.
has decided to close distribution facility
and sub -lease this space
Unknown
50
Unknown
Source: Round Rock Chamber of Commerce
Company Name
Approximate # of
Employees
Dell Computers
8,000
Abbott Laboratories
1,600
State Farm Insurance
1,000
Farmers Insurance
893
Sears TeleSery
750
IBM
700
Intermedics Orthopedics
700
AMP Packaging
600
Wayne- Dresser
476
Tellalabs
470
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
• There are numerous planned economic development projects in the City of Round
Rock (Table IV -4). It is impossible to predict which of these projects will actually be
built (if any), or the ultimate size, scale and timing of the facilities that are built;
however, it is useful to note that the following projects are proposed:
— Dell Computers: possible 550,000 square foot expansion to be completed in 1999
with estimated job creation of about 2,000.
- La Frontera: Developer's Diversified REIT (DDR) of Cleveland, Ohio in
partnership with Berndt Interests of Dallas have announced the planned
development of a 328 -acre mixed -use development on a site located on the west
side of I -35 just north of FM 1325 (just west and across the interstate from Dell
Computer). According to a representative of 35/45 Investors, L.P., general
partner for the project, the developer has proposed to have the land annexed by
the City of Round Rock. In addition, principal components of the proposed
development would possibly include a "power center" consisting of major anchor
stores, a 16 -screen movie theater, numerous restaurants, and a 300 -room full-
Economics Research Associates 1V-2
service hotel. It was further stated that accessibility to the project would be
improved if the planned Mopac / Loop 1 road extension out of north Austin
towards Round Rock, and the planned SR 45 east / west connector (connecting
the Mopac extension and I -35) proceed as planned. These possible road
improvements are discussed in more detail below.
— Cypress Semiconductor: construction of a S350 million project is proposed to
begin in the fourth quarter of 1999.
Trend Technologies: A 62,000 square foot expansion is underway and, if
completed, is planned to open in March 1999.
— Security Capital: planned development of a 240,000 square foot facility with a
scheduled completion in the summer of 1999.
Traffic Counts on 1-35 and Planned Road Improvements in Round Rock (Table IV -5)
• According to the Austin Transportation Study and the Texas Department of
Transportation, the increase in traffic counts on I -35 in Round Rock was as follows:
— I -35 at FM 1325: increase of 81,860 in 1988 to 121,000 in 1996 (increase of 48
percent).
— I -35 at RM 620 / McNeil Road: increase of 84,000 in 1990 to 125,000 in 1996
(increase of 49 percent)
As mentioned, there is a proposal to build what is generally called the Mopac / Loop 1
extension which would connect north Austin and Round Rock. The Mopac / Loop 1 extension is
proposed to terminate near the La Frontera site and also proposed is a short east -west connector
(SR 45) which would connect the Mopac extension to I -35. As mentioned, ERA can not predict
whether or not this project will actually move forward.
It should also be noted that there is a proposal to build a 90 -mile bypass road (State
Highway 130) which would link Georgetown in the north to the new Austin Bergstrom
International Airport in the south. If built, this road would pass through the eastern edge of
Round Rock. According to a representative of the Department of Transportation, the State
Highway 130 bypass is a medium to long -range project and it is possible that work on this
project could begin by the year 2005. It should be noted that, for purposes of this report, ERA
Economics Research Associates IV -3
NM MI MI MN MI I MN N ME NM NM M - -- MN M I
Table IV -5
TRAFFIC COUNTS ON I -35 IN ROUND ROCK
I -35 at F.M. 1325
Average
Annual
Compound
1980 1984 1988 1992 1996 Growth
36,000 65,050 81,860 100,400 121,000 7.87%
Average
Annual
Compound
1990 1993 1994 1995 1996 Growth
1 -35 at RM 620 - McNeil Road 84,000 92,000 114,000 116,000 125,000 6.85%
Source: Austin Transportation Study and Texas Department of Transportation
has incorporated the assumption that State Highway 130 does not open during the 1995 to 2005
projection period.
Hotel Market Trends, City of Round Rock (Table IV -6, Table IV -7, and Figure IV -1)
According to the Tourism Division of the Texas Department of Economic Development:
• Annual hotel roomnights in the City of Round Rock increased from 30,300 in 1987 to
102,000 in 1997. This represents an increase of 71,700 roomnights over the ten -year
period and equates to an average annual compound growth rate of about 12.9 percent.
• Annual hotel rooms revenue in the City of Round Rock increased from $1,181,000 in
1987 to $5,953,000 in 1997. This represents an increase of about $4,772,000 over the
ten -year period and equates to an average annual compound growth rate of about 17.6
percent.
According to the City of Round Rock:
• Annual hotel tax revenues to the City increased from $85,061 in fiscal year 1988 to
$426,699 in fiscal year 1998. This increase of $341,608 over the ten -year period
equates to an average annual compound growth rate of about 17.5 percent.
• It should be noted that the fiscal year for the City of Round Rock ends September 30;
however, hotel tax revenues pertain to the period ending June 30 (there is a three
month lag time to allow for revenue collection and reporting).
Interviews with Major Employers in Round Rock Regarding the Regional Hotel Market
In May 1998, ERA conducted personal interviews with representatives of the major
employers in Round Rock. Key areas of inquiry were current use of hotels in the region, current
satisfaction level with hotels used, anticipated hotel demand in the future, and anticipated use of
new hotels that might open in Round Rock in the near future (for example, the Marriott
Courtyard, the Marriott Residence Inn, the Hilton Garden Inn, and a possible full- service hotel).
ERA conducted interviews with representatives of the following companies:
• Dell Computer;
• Cypress Semiconductor;
• Wayne - Dresser;
Economics Research Associates IV-4
Table IV -6
HOTEL MARKET TRENDS, ROUND ROCK
Annual Room -
Revenue Nights
Year (8000) (000)
1987 $1,181 30.3
1988 $1,274 30.6
1989 $1,480 32.8
1990 $1,617 33.7
1991 $1,628 33.1
1992 $1,753 37.7
1993 $2,306 46,6
1994 $2,031 37.6
1995 $3,064 50.6
1996 $3,447 52.5
1997 $5,953 102.0
Average
Annual
Compound
Growth 17.56%
12.91%
Source: Texas Department of Economic Development, Tourism Division
1M M MN N — M - - -- MI M I MS OM NM MN
110
90 —
80 —
70 —
60 —
50 —
40 —
30 —
20 4
1987
Figure IV -1
Round Rock
I 1 i
1988 1989 1990 1991 1992 1993 1994 1995 1996
—Room- Nights (000)
—0—Annual Revenue ($000)
Source: Tourism Division, Texas Department of Economic Development
1997
$7,000
$6,000
$ 5,00 0
$4,000
$3,000
$2,000
81,000
$0
Table IV -7
CITY OF ROUND ROCK, HOTEL / MOTEL BED TAX RECEIPTS
(Bed Tax Rate of 7% to City of Round Rock)
Bed Tax Annual
Receipts 1/ Growth
1988 $85,061
1989 $101,030 19%
1990 $100,349 -I%
1991 $110,854 10%
1992 $122,537 11%
1993 $143,709 17%
1994 $170,400 19%
1995 $204,555 20%
1996 $235,565 15%
1997 $339,592 44%
1998 $426,669 26%
Average Annual
Compound Growth 17.50%
1/ Reflects hotel operations for fiscal years ending September 30 (reflects cash receipts through June 30 of each year)
Source: City of Round Rock
• Sysco Foods;
• DuPont Photomask; and
• McNeil Consumer Products.
It was reported to ERA that major employers in Round Rock such as Dell and Wayne -
Dresser are significant generators of hotel demand, and this demand is expected to increase along
with expected economic growth. However, there is currently significant "leakage" of hotel
roomnights outside of Round Rock to, primarily, hotels located in the North Austin / Airport
area. This "leakage" is due, in part, to the general perception that, for the most part, the limited
service mid - market hotels in Round Rock are generally not the type of hotels preferred by many
of the employees of the companies. Limited service hotels generally do not offer full food and
beverage facilities and meeting space is typically quite limited. Employers report that they
would prefer to house their people in Round Rock, if possible, because convenience is important,
and if new, more upscale hotels with more meeting space were opened in Round Rock, they
would likely utilize them with less "leakage" of hotel roomnights out of Round Rock as a result.
Characteristics of Hotels in Round Rock (Table IV -8)
Table IV -8 presents a summary of the characteristics of hotels in Round Rock. Not
shown is the three -room St. Charles Bed & Breakfast or the Pinnacle Suites which is an
apartment complex where units are sometimes rented out as hotel rooms on an extended stay
basis (and hotel tax revenue is generated). As shown, information presented includes property
name, date opened, location, operator, number of rooms, and range of rack room rates.
In May 1998, ERA conducted physical property inspections at all the hotels in Round
Rock. In addition, at the same time, ERA conducted interviews with managers of the individual
hotel properties. Among other things, key areas of inquiry were trends in occupancy, average
daily room rate, and market mix for each property. (Market mix refers to a hotel's market
segmentation, for example, the mix of corporate, leisure, and other business on an average
annual, seasonal, and daily basis). In addition, in January 1999, as part of a market update, ERA
re- contacted the hotel managers in order to obtain the year -end 1998 figures for average annual
occupancy and average daily room rate. (Although this information is deemed reliable, no
independent attempt has been made by ERA to verify the factual basis of the information
provided and ERA makes no assurance as to the accuracy of such information).
Economics Research Associates IV -5
M - - - - - - - - - - - - MI M I E MI OM
Table IV -8
CHARACTERISTICS OF HOTELS IN ROUND ROCK
NA = Not Available
Date Number Approx. Market Segmentation Range of Posted
PropertvName ened Location Operator Rooms Corporate Highway SMERF 1/ Rack Rooni Rates
Ramada Limited 1973 1400 North IH -35 Ramada Limited 62 29% 21% 50% $58 - $74
La Quinta 1984 2004 North IH -35 Trinity Ventures 116 80% 10% 10% $69 - $82
Sleep Inn 9/20/96 1990 North I1-1-35 Boulevard Hotel 107 35% 55% 10% $69 - $79
Best Western 11/4/96 1851 North 11-1-35 Sudar Majmudar 67 40% 30% 30% $59 - $79
Rodeway Inn 11/15/96 1802 North 1H -35 Suren Suthar 49 20% 40% 40% $65 - $125
Baymont 7/16/98 150 Parker Levtex Hotel 93 NA NA NA $52 - $69
Marriott Courtyard 8/21/98 2700 Hoppe Trail Wilrock Inc. 113 NA NA NA $89
Crossland 12/21/98 555 South I1 Extended Stay 124 NA NA NA $39 - $54
1/ Social, military, education, religious, and fratemal (miscellaneous category)
2/ According to general managers at individual properties
Source: General Managers of Individual Properties and the City of Round Rock
Hotel Name
1997
1998
% Increase
Number of Rooms
404
404
0
Average Occupancy
65.9%
67.9%
3.0%
Average Daily Room Rate
$59.33
$60.70
2.3%
Hotel Name
# of Rooms
Opening Date
Baymont
93
7/16/98
Marriott Courtyard
113
8/21/98
Crossland
124
12/21/98
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
The estimated individual hotel operating information for 1997 and 1998 was incorporated
into a computer spreadsheet model and was used as a starting point for projecting hotel bed tax
revenue in the future. (As part of its analysis, ERA compared the individual property
information to total hotel bed tax receipt information as reported by the City of Round Rock).
The following is a summary of the approximate aggregate hotel operating information for 1997
and 1998:
Source: Economics Research Associates
It should be noted that not included in the above are the following new hotels that opened in
Round Rock after June 30, 1998, and were therefore not accounted for during the City's fiscal
year 1998:
In terms of average daily room rate for the three new hotels to open in fiscal year 1999,
ERA has incorporated the assumption that the Marriott Courtyard would achieve an average rate
above the market average, the rate at the Baymont would be similar to the market average, and
the average rate at the Crossland would be below the market average.
In terms of annual occupancy for fiscal year 1999, reflecting both an increase in hotel
supply and the fact that it is the first year of operation for the new hotels, ERA incorporated the
Economics Research Associates IV -6
assumption that all of the new hotels would achieve an average annual occupancy below the
1998 market average.
New and Proposed Hotels in the City of Round Rock (Table IV -9)
ERA investigated the status of proposed hotels in Round Rock through a variety of
sources including the City of Round Rock Planning Department and individual proponents for
the projects. As mentioned, for a variety of reasons, it is impossible to predict which hotels, if
any, will be built, or the size, scale, and timing of the property. In addition, it is possible that,
even for hotels currently under construction, they may not open as planned.
As shown on Table IV -9, ERA is aware of at least seven hotels which are proposed in
Round Rock. Collectively, they account for 981 rooms. It is important to note that, for purposes
of this analysis, ERA has incorporated the assumption that only those hotels currently under
construction — the 100 -room Wingate Inn, the 96 -room Marriott Residence Inn, and the 122 -
room Hilton Garden Inn, will actually enter the market over the 1999 to 2005 projection period.
It is possible, of course, that other hotels may open during this time frame as well, for example,
the 300 -room full- service hotel proposed at the La Frontera mixed -use project; however, as
mentioned, for purposes of this analysis, it is assumed that, other than the three hotels currently
under construction, no other hotel will enter the Round Rock market over the 1999 to 2005 time
period.
PROJECTIONS OF HOTEL TAX REVENUE TO THE CITY OF ROUND ROCK
ERA's approach to projecting hotel tax revenues to the City of Round Rock included the
analysis of two major elements: 1) historical and projected hotel demand, and 2) historical and
projected hotel supply. On the demand side, a key observation is that while historical growth in
the Austin — San Marcos MSA has been significant in recent years, in Williamson County, and in
Round Rock in particular, the rates of growth have been, and are expected to be, even higher.
The following are key observations in support of that conclusion:
• Projected average annual compound growth, population, 1998 - 2008:
— Austin — San Marcos MSA: 2.1 percent
— Williamson County: 4.4 percent
• Average annual compound growth, gross sales in all major industries, 1987 - 1997:
Economics Research Associates IV -7
OM MB - - -- NM r- r- NM MI MI MO t- ME MI
Table IV -9
OVERVIEW OF PROPOSED HOTELS IN ROUND ROCK
Developers
Targeted
Hotel Name Hotel Type Location 6 Rooms Project Status Opening Date
Wingate Inn Limited Service, Mid - Market 1209 N. LH. 35 100 Under Construction l- Mar -99
Marriott Residence Inn Limited Service, Suite Product 2505 S I.H. 35 96 Under Construction I- Jun -99
Hilton Garden Inn Limited Service, Upscale FM 3406 & I.H. 35 122 Under Construction 1- Nov -99
Comfort Suites Limited Service, Mid - Market I.H. 35 & 620 62 Pending Review 1- Nov -99
Marriott Spring Hills Suites Suite Product 2960 Hoppe Trail 106 Proposed Unknown
Unknown FuII- Service, Upscale 11,1 35 & FM 1325 (La Frontera) 300 Proposed I- Jan -01
Unknown Limited Service Hesters Crossing / 1H 35 195 Proposed Unknown
Source: City of Round Rock, Planning Department, Individual Developers
— Austin — San Marcos MSA: 10.1 percent
— Williamson County: 13.5 percent
• Average annual compound employment growth, 1990 to 1997:
— Austin — San Marcos MSA: 5.6 percent
— Williamson County: 8.1 percent
— Round Rock: over 16 percent (addition of over 13,000 jobs since 1991 associated
with new capital investment of over 5400 million).
• Average annual compound growth, annual hotel rooms revenue, 1987 — 1997:
— Austin — San Marcos MSA: 13.5 percent
Williamson County: 14.8 percent
— City of Round Rock: 17.6 percent
A key assumption incorporated into this analysis is that Williamson County, and the City
of Round Rock in particular, will continue to be a major and growing node of future economic
growth in the Austin — San Marcos MSA. It is further assumed that this growth will translate
into growth in hotel demand. This assumption is supported by the following:
• Dell Computer serves as an "anchor" for the community.
• If the Mopac / Loop 1 and SR 45 road extensions (connecting North Austin and
Round Rock) proceed as planned, there will be additional road capacity between
Round Rock and Austin.
• There are several major economic development projects proposed in the City of
Round Rock, such as La Frontera, and if some of these projects move forward, there
will likely be significant additional economic growth in the community.
• There is a general perception in the region that the political climate in Round Rock is
"pro- growth."
In the following paragraphs, ERA presents its projections for hotel tax revenue to the
City of Round Rock. It should be noted that the actual performance of hotel operations and
estimates of the resulting tax may differ substantially and materially from the projections for
many reasons as the result of both foreseen and unforeseen events. A partial List includes:
Economics Research Associates IV -8
changes in the national or local economy, changes in the local political climate regarding growth,
significant changes in the hotel market, significant changes to hotel supply, inability of
management to complete high quality hotel developments in a timely manner, technological
changes that reduce the need for corporate and other meetings, ineffective hotel marketing or
operation, and changes in hotel management. It is important to note that all projections are
inherently imprecise. This is especially true as projections are made further into the future.
Accordingly, there can be no assurance that any of the projected results shown in this report will
actually be achieved.
Overview of Methodology
As shown on Table IV -10, ERA projected hotel taxes to the City of Round Rock over the
1999 to 2005 time period utilizing a demand -based methodology that considered the following:
1. Historical and projected population trends for the Austin — San Marcos MSA (Figure
IV -2)
2. Historical and projected employment trends in the Austin — San Marcos MSA (also
Figure IV -2)
3. The historical and projected relationship between employment levels and hotel
roomnights in the Austin — San Marcos MSA (Table IV -10 with the resulting
roomnight trend in Figure IV -3).
4. Projected roomnights in Round Rock as a percentage of projected roomnights for the
MSA, as a test of reasonableness for the Round Rock projections (Table IV -10)
5. A projected roomnight capture by hotels in Round Rock that is consistent with both
the anticipated supply of new rooms and the regional demand for lodging (Figure IV-
3).
An overview of the methodology presented on Table IV -10 is as follows:
• The analysis begins with projections for population in the Austin — San Marcos MSA
(as reported by the Comptroller of Public Accounts)
• When examining the historical relationship between non - agriculture employment and
population, it is apparent that there is a fairly stable relationship. For example, over
the 1995 to 1997 time period, total non - agricultural employment in the MSA,
expressed as a percentage of the MSA population, ranged from 53 to 57 percent (this
Economics Research Associates W -9
■I = M I MI 71 OM r NM MI w MI - EN MI all E NM MI
Table IV -10
ANALYSIS 01' POPULATION, EMPLOYMENT, AND ROOMNIGHT TRENDS
Austin - San Marcos MSA and the City of Round Rock
Austin MSA Population
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
846,227 870,046 889,685 910,539 933,073 956,003 976,603 998,633 1,020,133 1,041,455 1,064,677 1,088,209 1,111,661 1,134,838 1,158,025 1,181,131
Projected by Economics Research Associates
Austin MSA Non -Ag. Employment 386,588 401,456 419,582 450,415 479,128 508,160 530.175 565,500
Labor Force Participation Rate 46% 46% 47% 49% 51% 53% 54% 57%
Austin MSA Hole] Room - Nights (000) 2,689 2,813 2,304 3,211 3,394 3,514 3,501 3,787
Ratio of Roomnights per Job 6.95 7.01 5.49 7.13 7.08 6.92 6.60 6.70
Estimated Austin MSA Roomnights (000)
New MSA Roomnights after 8997 (000)
Round Rock Hotel Roomnights (000) 34 33 38 47 38 53
Round Rock Hotel Roomnights (000, FYE 9/30)
New Round Rock Romonights after 1997 (000)
New Round Rock Roomnighls as a Percent
of new Austin - San Marcos MSA Roomnights
82
587,900 608,700
58% 58%
617,513 631,161 655,880 669,554 694,815 708,679
58% 58% 59 59% 60% 60%
Projected by Economics Research Associates
6.89 6.89 6.89 6.89 6.89 6.89 6.89 6.89
Factor of6.89 is dre calculated average for the previous five years
4,051 4,194 4,255 4,349 4,519 4,613 4,787 4,883
264 407 968 562 732 826 1,000 1,096
Projected by Economics Research Associates
100 154 213 228 234 239 243 248
18 72 131 147 152 157 162 167
7% 18% 28% 26% 21% 19% 16% 15;4
Source. various except for material expressely sourced to Economics Research Associates
MS I= r E — — IN E I I• NM NM NM I• • Ir UM NM MI
1,400,000
1200,000
1,000,000
800,000
600.000
400,000
200,000
Figure IV -2
Projections of Population and Employment: Austin -San Marcos MSA
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
tio Icxas ('omptrollcr of Public Accounts;' I'cxas Workforce Commission
— 4—Austin MSA Population
— a— Austin MSA Non -Ag. Employment J`
In IN MI s OM = MN M OM I NE = OM MN OM = MI
0
°0 4
c
2
E
c
6,000
5,000
a 3,000
2,000
1-
1,000
Figure IV -3
Historical and Projected Hotel Room -Night Demand
Historical
Projected
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
-+- Austin MSA Hotel Room - Nights (000) —II—Round Rock Hotel Roomnights (000)
Source: Texas Department of Economic Development, Tourism Division for historical data and Economics Research Associates for projections
means that over half of the population had jobs). For the 1999 to 2005 projection
period, ERA incorporated the assumption that the jobs to population percentage will
continue to increase, but at a decreasing rate, from 58 to 60 percent in the Austin —
San Marcos MSA.
• It is also apparent that there is a fairly stable relationship between hotel roomnights
and total non - agricultural employment. For example, over the last five years, the
number of hotel roonmights per job in the MSA ranged from 6.6 to 7.1. For the 1995
to 2005 period, ERA projected a roomnights to job ratio of 6.89.
• Hotel roomnights in the Austin — San Marcos MSA were then projected to the year
2005 based on the assumed relationship between population, non - agricultural
employment, and hotel roomnights. As can be seen, total MSA roomnights are
projected to range from about 4.2 million in 1999 to nearly 4.9 million in 2005. This
compares to the reported figure of nearly 3.8 million roomnights in 1997.
• New incremental, or marginal, roomnights for the MSA to the year 2005 are also
shown on the table. As shown, incremental roomnights in the MSA are projected to
range from 407,000 in 1999 to nearly 1.1 million in 2005. As mentioned, this
projection is based on the assumed relationship between population, employment, and
roomnights (as discussed above).
• ERA concludes that Williamson County, and the City of Round Rock in particular,
will continue to be a major and growing node of future economic growth in the
Austin — San Marcos MSA, and that the City of Round Rock will capture a significant
portion of the MSA's hotel growth.
Assumptions Pertaining to the Hotel Tax Projection:
• Hotel rooms in Round Rock are subject to a 13 percent hotel occupancy tax with
seven percent accruing to the City of Round Rock and six percent accruing to the
State. It should be noted that, subject to a majority vote of the residents of Round
Rock, an additional two percent could be added to the City's share; however, the
analysis does not incorporate this possibility.
• Round Rock will continue to capture, at least, its fair share of the market for limited
service hotels.
Economics Research Associates IV -10
Hotel Name
# Rooms
Assumed Opening Date
Wingate
100
March 1, 1999
Marriott Residence Inn
96
June 1, 1999
Hilton Garden Inn
122
November 1, 1999
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
• The new hotel developments already under construction will open as planned;
however, other proposed hotels, such as a full - service hotel at La Frontera, are
assumed not to enter the market. The following is an overview of the hotels assumed
to enter the Round Rock hotel market:
• As mentioned, it is impossible to predict which hotels, if any, will actually enter the
market, or their timing or number of rooms. In addition, it is impossible to predict
which hotels, if any, might exit the market, or their exit timing and number of rooms.
It should be noted; however, that ERA has incorporated the assumption that, starting
in fiscal year 2000, the supply of hotel rooms in Round Rock will decrease by about
100 rooms. This scenario could pertain to either 100 less rooms being developed than
originally assumed, or the exit of about 100 rooms from the market.
• The following hotel tax projections include modest increases in hotels' average room
rates due to inflation and real growth in average room rates.
Projection of Hotel Taxes to the City of Round Rock (Table IV -11)
Table IV -11 presents the hotel tax projection to the City of Round Rock over the 1999 to
2005 time period. The following are key observations:
• ERA's model for fiscal years 1997 and 1998 is presented for comparative purposes.
As mentioned, this model was created based on interviews with managers of the
existing hotels in Round Rock and actual hotel tax revenues as reported by the City of
Round Rock.
• In fiscal year 1999, the end -of -the -year room count in the city is projected to increase
from 404 to 930. Corresponding to the projected increase in hotel room supply, it is
projected that the overall average occupancy and average room rate for the market
Economics Research Associates IV-11
IMONIIM M E - - - - I - - - - - OM
Table 1V-11
PROJECTIONS OF HOTEL BED TAX REVENUE TO THE CITY OF ROUND ROCK
Anticpatcd End -of -Year Room Count
Roomnights Available
Change
Projected Roomnights
Change
Average Occupancy
Change
Overall Average Room Rate
Change
Rooms Revenue
Change
Hotel Taxes to City of Round Rock 3/
Change
Actual Hotel Tax Revenue to City 4/
Historical 2/
1997 1998
404 404
123,986 147,460
19%
81,707 100,178
23%
65.9% 67.9%
3.1%
$59.33 $60.70
2.3%
$4,847,339 $6,080,697
25.4%
$339,314 $425,649
25.4%
$339,592 $426,669
Fiscal Years Ending Septermber 30 1/
1999 2000 2001 2002 2003 2004 2005
930 942 942 942 942 942 942
254,380 328,701 343,830 343,830 343,830 343,830 343,830
73% 29% 5% 0% 0% 0% 0%
154,198 213,093 228,231 233,929 238,607 243,379 248,247
54% 38% 7% 2% 2% 2% 2%
60.6% 64.8% 66.4% 68.0% 69.4% 70.8% 72.2%
-10.8% 6.9% 2.4% 2.5% 2.0% 2.0% 2.0%
$57.09 $61.39 $65.07 868,24 870.28 $72,39 $74.56
-5.9% 7.5% 6.0% 4.9% 3% 3% 3%
88,803,726 $13,081,578 $14,851,927 $15,962,311 516,770,004 $17,618,567 $18,510,066
44.8% 48.6% 13.5% 7.5% 5.1% 5.1% 5.1%
8616,261 $915,710 81,039,635 81,117,362 $1,173,900 81,233,300 $1,295,705
44.8% 48.6% 13.5% 7.5% 5.1% 5.1% 5.1%
1/ Reflects cash receipts to the City of Round Rock for the year -end time period ending June 30
2/ Presented for comparative purposes, hotel occupancy and average daily room rate information is approximate
3/ Based on 7 percent tax rate to the City of Round Rock
4/ City of Round Rock (account number 71 -00 -000 -4123)
Source: Economics Research Associates
will decline. Average annual occupancy is assumed to decline from 67.9 percent to
60.6 percent, a decrease of about 11 percent (or a decline of 7.3 points of occupancy),
and the average daily room rate is assumed to decline from $60.70 to $57.09, a
decline of $3.61, or about six percent. For fiscal year 1999, hotel tax revenues to the
City of Round Rock are projected at $616,261.
• In fiscal year 2000, it is assumed that the Hilton Garden Inn hotel opens; however,
with about 100 hotel rooms assumed to exit the market, the net change in hotel supply
is 12 rooms. For fiscal year 2000, hotel tax revenues to the City of Round Rock are
projected at $915,710.
• For the remaining 2001 to 2005 period, the number of hotel rooms is projected to
remain constant and, reflecting gradual increases in occupancy and average daily
room rate, hotel tax revenues to the City of Round Rock are projected to range from
$1,039,635 to $1,295,705.
• The projected increase in hotel roomnights in the City of Round Rock is shown
graphically on Figure IV-4.
Economics Research Associates 1V -12
ME OM M M M EM NM MN iii EM N - - - - -• NM MI
0
300,000
250,000
c 200,000
0
'0
150,000
u
O
L
m
100,000
0
0
50,000
Figure IV -4
Round Rock Hotel Market: Historical and Projected Performance
Historical
Projected
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: Texas Department of Economic Development, Tourism Division for historical data and Economics Research Associates for projections
ERA
Economics Research Associates
Memorandum Report
Hotel Occupancy Tax
Revenue Projections
Prepared for the
City of Round Rock, Texas
Submitted by
Economics Research Associates
June 4, 1998
ERA Project No. 12698
38B Market Street Suite 1580
San Francisco, C/1 94111 ERA is affiliated with drivers Jonas
2 115.056.8152 FAX 415 956.5274 www.erast.com/erasr
Los Angeles San Francisco San Diego
Chicago Dallas Washington DC London
GENERAL LIMITING CONDITIONS
Every reasonable effort has been made in order that the data contained in this study reflect the most
accurate and timely information possible and it is believed to be reliable. This study is based on
estimates, assumptions and other information developed by Economics Research Associates from its
independent research effort, general knowledge of the industry and consultations with the Client and its
representatives. No responsibility is assumed for inaccuracies in reporting by the client, its agent and
representatives or any other data source used in preparing or presenting this study.
This report is based on information that was current as of June 5, 1998, and Economics Research
Associates has not undertaken any update of its research effort since these dates.
No warranty or representation is made by Economics Research Associates that any of the projected
values or results contained in this study will actually be achieved.
Possession of this study does not carry with it the right of publication thereof or to use the name of
"Economics Research Associates" in any manner without first obtaining the prior written consent of
Economics Research Associates. No abstracting, excerpting or summarization of this study may be
made without first obtaining the prior written consent of Economics Research Associates. This report
is not to be used in conjunction with any public or private offering of securities or any other purpose
where it may be relied upon to any degree by any person other than the client without first obtaining the
prior written consent of Economics Research Associates. This study may not be used for purposes
other than that for which it is prepared or for which prior written consent has first been obtained from
Economics Research Associates.
This study is qualified in its entirety by, and should be considered in light of, these limitations,
conditions and considerations.
INTRODUCTION
Memorandum Report
HOTEL OCCUPANCY TAX REVENUE PROJECTIONS
FOR THE CITY OF ROUND ROCK, TEXAS
The City of Round Rock is one of the most rapidly growing cities in the country. One
form this growth has taken is a rapid expansion in the supply of hotel rooms within the city's
limits. Hotel rooms in Round Rock are currently subject to a 13 percent hotel occupancy tax.
While six percent goes to the state, seven percent accrues to the City of Round Rock. The
law specifies that another two percent could be added to the City's share, but it would require
a vote of the people. The City's portion of the hotel occupancy tax is currently projected at
about $400,000 for the fiscal year ending September 30, 1998.
The City of Round Rock has retained Economics Research Associates (ERA) to
conduct an independent analysis of the hotel market in Round Rock, and to project the future
revenue stream which could tlow to the City from the hotel tax. If the future revenue stream
appears sufficiently large and reliable, the City may issue a bond to capitalize on this future
value.
The purpose of this memorandum report is to briefly present the "bottom line"
findings from ERA's research, analysis and revenue projections. If the City chooses to
proceed with a bond offering, ERA will then prepare a more detailed report.
METHODOLOGY
To arrive at projections of hotel tax revenues, ERA has conducted several forms of
research. At the outset, ERA has collected and analyzed economic and demographic
statistics describing the following:
• Population
• Employment
• Major Company Openings
• Building Permits
• Gross Sales In All Major Industries
Economics Research Associates 1
• Tourism Statistics
• Airport Arrivals / New Airport
• Traffic Counts I -35 / Status and Implications of Bypass (Highway 130)
• Hotel revenues and roomnights
All information has been evaluated at three geographic levels:
1. Austin — San Marcos MSA
2. Williamson County
3. Round Rock
ERA also conducted interviews with several different economic interest groups in the
area, including:
• Operators and owners of existing hotel properties in the Round Rock and North
Austin areas,
• Proponents of new hotels currently being planned or under construction in the
city, and
• Major employers in Round Rock.
The data and insights from all of the above sources were analyzed by ERA. Reasons
to be optimistic about the future growth of the Round Rock hotel market are noted below, as
well as reasons to be cautious. The projections of roomnight capture by the City's hotels and
the revenue it should produce for the City are then presented.
REASONS TO EXPECT INCREASED HOTEL REVENUES
ERA's research has determined there are many reasons to be optimistic about the
future growth potential for the hotel / motel market in Round Rock. These include:
• The section of I -35 through Round Rock is one of the most heavily traveled
corridors in the state.
• Population growth in Williamson County is expected to be significantly more
rapid (4.0 to 5.0 percent) than for the Austin -San Marcos MSA as a whole (2.0 to
2.5 percent).
• Employment has been growing at over 7.0 percent per year in Williamson County
over the last decade, and has grown at a very healthy rate of over 5.0 percent per
year throughout the metropolitan area.
Economics Research Associates 2
• The metropolitan Austin hotel market is among the top ten fastest growing in
supply and demand in the U.S. (1997) according to Smith Travel Research.
• Tourism to the Austin metro area has grown by over 11 percent per year in the
early 1990s.
• Air passenger volumes are growing at 4.5 to 5.0 percent per year, and are
expected to continue this growth pattern after the new Austin Bergstrom
International Airport opens in 1999.
• Over the last decade hotel revenues in the Austin metro area have grown at over
10.0 percent per year, and the number of occupied roomnights has grown over 4.5
percent per year. In Williamson County, these growth rates have been even more
rapid at over 14.5 percent and 9.0 percent respectively.
• Hotel occupancy rates in the Austin metro area have averaged over 73 percent for
the last two years.
• The entire Austin metro economy is growing at a healthy rate of over 8.5 percent
per year, measured in terms of the gross sales in all major industries. Williamson
County is attracting an increasing share of the metropolitan economic activity
(growing at over 12.0 percent per year over the past decade). By the same
measure, Round Rock's economy has been growing even faster, at over 17.0
percent per year.
• Over 13,000 new jobs have been created in Round Rock since 1991, associated
with new capital investment of over $400 million.
• Interviews with major employers in Round Rock indicate that companies such as
Dell and Wayne - Dresser are significant generators of hotel demand, and this
demand is expected to increase along with expected economic growth. However,
there is currently significant "leakage" of hotel demand outside of Round Rock to,
primarily, hotels located in the North Austin / Airport area. This "leakage" is due,
in part, to the fact that there is not currently a full- service hotel in Round Rock
and there is a general lack of meeting facilities in the local area. Employers report
that they would prefer to house their people in Round Rock, if possible, because
convenience is important, and if new hotels were opened in Round Rock, they
would likely utilize them with less "leakage" of hotel demand as a result.
• The local hotel market currently consists of limited service hotels only. All but
the La Quinta offer exterior rooms with exterior corridors.
POSSIBLE CONSTRAINTS TO INCREASED HOTEL REVENUES
Possible constraints to continued growth in the hotel market segment in Round Rock
include the following:
Economics Research Associates 3
• The segment of 1 -35 through Round Rock is one of the most congested in the
state. A proposed bypass route could divert potential hotel customers off of I -35
through Round Rock. (Such a bypass could also relieve I -35 congestion by
diverting primarily local commuters, making Round Rock more convenient for
out -of -area travelers.)
• There are many new lodging developments proposed in Round Rock and, if these
hotels are built as planned, a short -term oversupply situation could be created that
would exert a corresponding downward pressure on hotel average rates and
occupancy.
PROJECTION OF HOTEL OCCUPANCY TAX REVENUES
Overview of Methodology
As shown on Table 1, ERA projected hotel taxes to the City of Round Rock over the
1998 to 2005 time period utilizing a demand -based methodology that considered the
following:
1. Historical and projected population trends for the Austin — San Marcos MSA
(Figure 1)
2. Historical and projected employment trends in the Austin — San Marcos MSA
(also Figure 1)
3. The historical and projected relationship between employment levels and hotel
room - nights in the Austin — San Marcos MSA (Table 1 with the resulting room -
night trend in Figure 2).
4. Projected room - nights in Round Rock as a percentage of projected room - nights
for the MSA, as a test of reasonableness for the Round Rock projections (Tablel)
5. A projected room -night capture by hotels in Round Rock that is consistent with
both the anticipated supply of new rooms and the regional demand for lodging
(Figure 3).
A key conclusion of the analysis is that, over the 1998 to 2005 time period, projected
new room - nights in Round Rock are estimated to range from 10 to 30 percent of the
incremental increase in room - nights in the Austin — San Marcos MSA. It is ERA's opinion
that this conclusion is reasonable, and is consistent with the fact that, due to the existence and
growth of major employers such as Dell, and other technology related firms m the area,
Round Rock is a significant and growing node of employment within the Austin region.
Economics Research Associates 4
Table 1
ANALYSIS OF POPULATION, EMPLOYMENT, AND ROOMNIGHT TRENDS
Austin -San Marcos MSA and CO of Round Rock
Austin MSA Population 846,227 870,046 889,685- 910,539 933.073 956,003 976,603 998,633 1,020,133 1,041,455 1,064,677 1,088,209 1,111,661 1,134,838 1,158,025 1,181,131
Projected by Economics Reseach Associates
Austin MSA Noo-Ag. Employment 386,588 401,456 410,582 450,415
labor Form Paruapatim Rate 46% 46% 47% 49%
Austin MSA Hotel Room -Nights (000) 2,689 2,813 2,304 3,211
Ratio of Roomtights per Job 6.95 7.01 5.49 7.13
Estimated Austin MSA Rawmighlo (000)
New MSA Roormf4080 after 1997 (000)
Round Rock Hotel Roormighla (000) 34 33 38 47
Round Rock Howl Rootmiglus (000, FYE 9930)
New Round Rock Romtmighw after 8997 (000)
New Romd Rock Roomnights as a Parent
Percent of new Austin - Sao Marcos MSA Roomtighm
1990 1991 1992 1993 1 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
479,128 508,160 530,175 565,500 587,900 608,7011
51% 53% 54% 57%
3,394 3,514 3,501 3,787
7.08 692 660 6.70
38 51 53
82
58% 58%
617,513 631,161 655,880 669,554 694,815 708,679
58% 5890 59% 59% 60% 60%
Projected by Economics Research Associates
6.73 6.73 6.73 6.73 6 -73 673 673 6.73
3,959 4,099 4,159 4,251 4,417 4,509 4,679 4,773
173 313 372 464 630 722 893 986
Projected by Economics Research Associates
99 137 183 221 229 234 237 239
17 55 101 140 147 152 155 158
10% 18% 27% 30% 23% 21% 17% 16%
Source: Economics Research Associates 698
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
Figure 1
Projections of Population and Employment: Austin -San Marcos MSA
+Austin MSA Population
-41—Austin MSA Non -Ag. Employment
Source: Texas Comptroller of Public Accounts; Texas Workforce Commission; and Economics Research Associates.
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
0 4,000
rn
Z
E
°0 3,000
cc
6,000
5,000
1. c 2,000
1,000
Figure 2
Historical and Projected Hotel Room -Night Demand
Historical <---> Projected
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
— 4 MSA Hotel Room - Nights (000)
— Round Rock Hotel Roomnights (000)
Source: Texas Department of Economic Development, Tourism Division; and Economics Research Associates.
0
rc
300,000
250,000
c
Q
c 200,000
• C _
0
O
te 150,000
y V
h
L
en
E 100,
0
0
cc
50,000
Figure 3
Round Rock Hotel Market: Historical and Projected Performance
Historical Projected
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: Texas Department of Economic Development, Tourism Division; and Economics Research Associates Projections.
Hotel Name
# Rooms
Assumed Opening Date
Marriott Courtyard
113
August 15, 1998
Baymont
93
September 1, 1998
Marriott Residence Inn
96
January 1, 1999
Wingate
100
January 1, 1999
Full- Service Hotel
200
January 1, 2000
Assumptions Pertaining to the Round Rock Hotel Market
• Round Rock will continue to capture its fair share of the market for limited
service hotels.
• Round Rock will be able to support a new hotel in the full- service category.
• The new hotel developments already under construction will definitely open as
planned. In addition, a full- service hotel will also be added to the market. The
following is an overview of the hotels assumed to enter the Round Rock hotel
market:
• It is very important to note that, with a current hotel room inventory of about 400,
a total of about 900 hotel rooms are currently proposed in Round Rock. However,
for purposes of this analysis, ERA has incorporated the assumption that, over the
1998 to 2005 time period, the City's total hotel room supply increases by only 540
rooms (60 percent of the proposed room count) to a total of 944 rooms.
• The following hotel tax projections include modest increases in hotels' average
room rates due to inflation.
Projection of Hotel Taxes to the City of Round Rock
Table 2 presents the hotel tax projection to the City of Round Rock over the 1998 to
2005 time period. The following are key observations:
• For Fiscal Year ending 1998, hotel taxes to the City are projected at about
$421,000.
Economics Research Associates 5
Table 2
SUMMARY PROJECTIONS OF HOTEL BED TAXES TO THE CITY OF ROUND ROCK
Assumed End -of -the
Year Hotel Room Count 404 404 806 944 944 944 944 944 944
Roomnights Available
Change
Projected Roomnights
Change
Average Occupancy
Change
Overall Average Room Rate
Change
Rooms Revenue
Change
Hotel Taxes to Round Rock @7%
Change
Source: Economics Research Associates 6/98
1997 1998 1999 2000 2001 2002 2003 2004 2005
123,986 147,460 247,275 307,760 344,560 344,560 344.560 344,560 344,560
19% 68% 24% 12% 0% 0% 0% 0%
81,707 98,917 136,707 183,121 221,418 229,010 233,591 237,094 239,465
21% 38% 34% 21% 3% 2.0% 1.5% 1.0%
66% 67% 55% 60% 64% 66% 68% 69% 69%
2% -18% 8% 8% 3% 2% 1% 1%
559.47 $60.84 $53.19 $58.49 $64.96 $68.14 $70.87 $73.70 $76.65
2.3% -12.6% 10.0% 11.1% 4.9% 4.0% 4.0% 4.0%
$4,859,333 $6,018,301 $7,271,646 $10,710,340 $14,384,283 $15,604,121 $16,554,563 $17,473,858 $18,355,020
23.9% 20.8% 47.3% 34.3% 8.5% 6.1% 5.6% 5.0%
$340,153 5421,281 $509,015 $749,724 $1,006,900 $1,092,288 $1,158,819 $1,223,170 $1,284,851
23.9% 20.8% 47.3% 34.3% 8.5% 6.1% 5.6% 5.0%
• By the end of Fiscal Year 1999, the number of hotel rooms in the city is expected
to double from about 400 to 800. Corresponding with this significant increase in
hotel room supply, ERA projects that the overall average occupancy and average
room rate for the market will decline. (Occupancy: from 67 percent to 55
percent, average rate: from about $61 to $53).
• For Fiscal Year ending 1998, hotel taxes to the City are projected at about
$509,000.
• On January 1, 2000, it is assumed that a 200 -room full- service hotel opens in
Round Rock (it is only for about half of the fiscal year). For Fiscal Year 2000,
hotel taxes are projected at about $750,000.
• For Fiscal Year 2001, reflecting in part the second half of the first full year of
operation of the full- service hotel, hotel taxes are projected at about $1 million.
• For the years 2002 through 2005, it is assumed that the city's room count remains
stable and that any increases in hotel taxes are due to increased occupancies and
average rates of the existing hotels. By the year 2005, hotel taxes are projected at
nearly $1.3 million.
Economics Research Associates 6
Appendix A
AUSTIN -SAN MARCOS MSA
Economics Research Associates Appendices
Table A -1
POPULATION PROJECTIONS, AUSTIN - SAN MARCOS MSA
Projected Percent
Year Population Chance
1990 846227
1991 870,046 2.8%
1992 889,685 2.3%
1993 910,539 2.3%
1994 933,073 2.5%
1995 956,003 2.5%
1996 976,603 2.2%
1997 998,633 2.3%
1998 1,020,133 2.2%
1999 1,041,455 2.1%
2000 1,064,677 2.2%
2001 1,088,209 2291
2002 1.111.661 2.2%
2003 1,134,838 2.1%
2004 1,158,025 2.09
2005 1,181.131 2.0%
2006 1,204,441 2.0%
2007 1,227,612 1.9%
2008 1,251,570 2.0%
2009 1,276,212 2.0%
2010 1,301,430 2.0%
2011 1,326,853 2.0%
2012 1,352,520 1.9%
2013 1,378,512 1.9%
2014 1,405,539 2.0%
2015 1,433,472 2.0%
2016 1,462,369 2.0%
2017 1,491,498 2.0%
2018 1,521,831 2.0%
2019 1,552,976 2.0%
2020 1,584,215 2.0%
2021 1,615,261 2.0%
2022 1,645,897 1.9%
2023 1,677,373 1.9%
2024 1,709,469 1.9%
2025 1,742,065 1.9%
2026 1,774,765 1.9%
2027 1,807,039 1.8%
2028 1,839,910 1.8%
2029 1,873,414 1.8%
2030 1,907,642 1.8%
Source: John Sharp, Comptroller of Public Accounts
(Winter 1997 -1998 County Population Forecast)
Table A -2
EMPLOYMENT TRENDS, AUSTIN - SAN MARCOS MSA
Avg. Annual
Economic Forecast 3/ Compound
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Growth Rate
Construction 12,259 13,384 15,286 18,400 22,660 25,105 28,297 29,600 30,900 31,800 11.17%
Manufacturing 49,863 53,939 55,514 59,595 62,609 66,659 72,884 75,700 78,400 80,800 5.51%
TCPU 1/ 12,504 13,402 13,742 14,895 15,244 15,603 17,319 18,600 19,700 20,500 565%
Trade 83,884 83,703 88,636 94,845 103,080 110,860 116,518 121,300 126,600 131,700 5.14%
FIRE 2/ 23,382 23,386 24,099 25,864 27,576 27,280 28,122 29,800 30,700 31,400 3.33%
Services 93,511 99,209 105,515 115,600 122,801 134,172 141,502 161,500 170,400 179,000 7.48%
Government 111,185 114,433 116,790 121,216 125,158 128,481 125,533 127,700 130,000 132,300 1.95%
SUBTOTAL 386,588 401,456 419,582 450,415 479,128 508,160 530,175 564,200 586,700 607,500 5.15%
Agriculture 2,328 2,577 2,868 3,151 3,436 3,866 4,262 NA NA NA 8.82%
Mining 1,109 1,200 1,118 968 936 1,029 1,129 NA NA NA -1.24%
Other - - - 10 23 16 20 NA NA NA
1/ Transportation, communications, public u tihties
2/ Finance, Insurance, Real Estate
3/ Angelou Economic Advisors, Inc.
Source: Texas Workforce Commission and State Comptroller of Public Accounts
650,000
600,000
550,000
500,000
450,000
400,000
350,000
1990
1991
1992
Total Jobs in Austin MSA
1993
1994
1995
1996
1997
1998
1999
Table A -3
TREND IN UNEMPLOYMENT RATES
AUSTIN - SAN MARCOS MSA
Unemployment Rate
1988 6.1%
1989 5.5%
1990 4.9%
1991 4.5%
1992 4.6%
1993 4.0%
1994 3.6%
1995 3.3%
1996 3.0%
1997 3.1%
Source: Texas Workforce Commission and State
Comptroller of Public Accounts
Table A -4
TREND IN GROSS SALES, ALL MAJOR INDUSTRIES,
AUSTIN - SAN MARCOS MSA
Gross Sales,
All Major
Industries
1986 811,650,230,707
1987 $11,832,414,005
1988 $12,020,711,855
1989 512,996,810,422
1990 814,081,077,819
1991 815,448,669,100
1992 517,318,167,981
1993 819,217,871,110
1994 821,758,381,397
1995 825,009,787,750
1996 827,269,792,682
Avg. Annual
Compound
Growth Rate 8.88%
Source: Comptroller of Public Accounts, Research Division
Table A -5
BUILDING PERMIT TRENDS, AUSTIN MSA
SinMe Family Bldg. Permits Multi - Family Bldg. Permits Sina le Family + Multi-Family Non - Residential
Number Value Number Value Number Value Number Value ($000)
1990 1,916 5226,662,800 46 51,697,400 1,962 $228,360,200 583 $85,468,966
1991 2,994 5317,064,600 228 $7,022,400 3,222 5324,087,000 573 $68,899,812
1992 4,641 5457,602,600 1,030 520,394,000 5,671 5477,996,600 553 557,031,996
1993 6,369 5689,125,800 2,174 560,002,400 8,543 6749,128,200 895 $372,069,400
1994 6,250 5663,750,000 4,518 5155,871,000 10,768 $819,621,000 965 $233,512,630
1995 7,435 5769,522,500 6,330 5236,109,000 13,765 51,005,631,500 859 $260,190,241
1996 10,095 51,049,880,000 6,982 5259,032,200 17,077 51,308,912,200 NA NA
1997 8,456 $882,806,400 5,161 5217,278,100 13,617 $1,100,084,500 NA NA
Average Annual Compound Growth Rate 31.89% 25.1861 24.94%
Source: Real Estate Center at Texas A &M University and U.S. Bureau of Census
Table A -6
TOURISM TRENDS FOR THE CITY OF AUSTIN
Annual Visitation to Austin
by Leisure Travelers 1/
Year # Visitors 2/
1991 6,100,000
1992 NA
1993 6,300,000
1994 7,100,000
1995 8,700,000
1996 10,300,000
Avg. Annual
Compound
Growth Rate
1991 - 1996 11.05%
1/ According to the Austin Convention and Visitors Bureau, leisure travelers constitute about two - thirds of visitation
2/ Based on national survey of 25,000 people conducted monthly regarding travel behavior
Source: DK Shiflett and Associates Limited, 5/97 and the Austin Convention and Visitors Bureau
Table A -7
AIRPORT ARRIVALS / DEPARTURES, AUSTIN
Robert Mueller International Airport
Number of gates 16
Arrivals Departures Total
1990 2,137,073 2,140,860 4,277,933
1991 2,052,097 2,054,310 4,106,407
1992 2,181,962 2,187,790 4,369,752
1993 2,323,769 2,324,696 4,648,465
1994 2,550,132 2,550,011 5,100,143
1995 2,676,240 2,668,447 5,344,687
1996 2,838,008 2,853,225 5,691,233
1997 2,946,752 2,957,553 5,904,305
Average Annual
Compound Growth, 1990 - 1997 4.71%
Austin Bergstrom International Airport
Planned Opening
Number of gates
May -99
Projected Annual Compound Growth
hi Arrivals / Departures 4.5% - 5%
25
Source: Department of Aviation, City of Austin 5/98
Table A -8
HOTEL MARKET TRENDS, AUSTIN MSA
Annual Room -
Revenue Nights
Year ($000) iQfl
1987 $114,551 2,409.4
1988 8115,966 2,327.4
1989 $132,591 2,526.1
1990 5145,550 2,688.6
1991 5160,131 2,812.6
1992 8137,250 2,303.9
1993 $204,011 3,210.6
1994 $227,610 3,393.7
1995 $254,987 3,514.3
1996 8272,072 3,501.1
1997 5301,729 3,786.9
Average
Annual
Compound
Growth 10.17% 4.63%
Source: Texas Department of Economic Development, Tourism Division
4,000.0
3,800.0
3,600.0
3,400.0
3,200.0
3,000.0
2,800.0
2,600.0
2,400.0
2,200.0
2,000.0
1987
1988
1989
1990
1991
Austin MSA
1992
1993
1994
® Room- Nights (000)
t Annual Revenue ($000)
1995
1996
1997
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0
Table A -9
TOP NATIONAL HOTEL MARKETS, SUPPLY AND DEMAND, 1997
Top Demand Growth Markets, 1997 Top Supply Growth Markets, 1997
Omaha, Neb. 9.2% Omaha, Neb. 12.1%
Chattanooga, Tenn. 9.1% Atlanta, Ga. 9.7%
Southern Texas 9.1% Mississippi 9.0%
Houston, Texas 8.9% Western Kentucky 9.0%
North Dakota 8.6% Austin, Texas 8.7%
Rhode Island 8.2% Ft. Worth / Arlington, Tx 8.5%
Austin, Texas 7.6% Salt Lake City, Ut 8.1%
Santa Barbara, Ca. 7.4% Tucson, Az 8.1%
Denver, Co. 7.1% Kansas City, Mo. - Kan. 8.0%
Maine 6.9% Dallas, Texas 8.0%
Source: Smith Travel Research, Hotel & Motel Management, 4/6/98
Table A -10
OVERVIEW OF AUSTIN HOTEL MARKET, 1996 / 1997 1/
Austin, Total
Source: PKF Consulting / Hospitality Advisory Services
Occupancy Average Daily Rate RevPAR (Rev. Per Avail. Room)
1996 1997 Change 1996 1997 Change 1996 1997 Change
73.4% 74.6% 1.2% $73.65 $78.01 5.9% $54.05 $58.16 7.6%
Central Bus. District 70.7% 74.5% 3.7% $92.53 $98.38 6.3% $66.45 $73.25 11.9%
North / Airport Area 72.7% 72.7% -0.1% S64.16 $65.93 2.853 $46.66 $47.90 2.7%
Northwest Austin 81.6% 79.8% -1.8% $89.81 $90.22 0.57 $73.28 $72.00 -1.7%
South Austin 73.4% 75.2% 1.9% $61.40 $66.32 8.0% $45.04 $49.90 10.8%
1/ Data includes information from 155 participating properties with 21,988 rooms
Appendix B
WILLIAMSON COUNTY
Economics Research Associates Appendices
Table B -
POPULATION PROJECTIONS, WILLIAMSON COUNTY
Projected Percent
Year Population Chance
1990 139551
1991 147262 5.5%
1992 154,822 5.1%
1993 162,923 5.2%
1994 171,387 5.2%
1995 180,008 5.0%
1996 188,525 4.7%
1997 197,605 4.8%
1998 206,868 4.7%
1999 216,358 4.6%
2000 226,318 4.6%
2001 236,795 4.6%
2002 247,554 4.5%
2003 258,512 4.4%
2004 269,683 4.3%
2005 281,125 4.2%
2006 292,886 4.2%
2007 304,910 4.1%
2008 317,398 4.1%
2009 330,346 4.1%
2010 343,755 4.1%
2011 357,650 4.0%
2012 371.874 4.0%
2013 386,542 3.9%
2014 401,769 3.9%
2015 417,602 3.9%
2016 433,912 3.9%
2017 450,650 3.9%
2018 468,061 3.9%
2019 486,076 3.8%
2020 504,508 3.8%
2021 523,156 3.7%
2022 542,032 3.6%
2023 561,493 3.6%
2024 581,586 3.6%
2025 602,122 3.5%
2026 623,052 3.5%
2027 644,254 3.4%
2028 665,972 3.4%
2029 688,396 3.4%
2030 711,493 3.4%
Source: John Sharp, Comptroller of Public Accounts
(Winter 1997 -1998 County Population Forecast)
Table B -2
EMPLOYMENT TRENDS, WILLIAMSON COUNTY
Avg. Annual
3rd Qtr Compound
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Growth Rate
Agriculture 274 281 289 274 348 406 397 490 539 526 786 11.11%
Mining 349 257 226 192 218 212 221 217 331 420 427
Construction 1,762 1,466 1,647 1,624 1391 2,133 2,319 2736 3,350 4,083 4,708
Manufacturing 4,167 4,757 5,100 5,412 5,549 6,061 6,534 6,951 7,903 8,554 8,913
TCPU 1/ 787 732 720 643 619 631 596 965 669 706 755
Trade 6,309 6,714 6,683 6,998 7,819 8,376 9,039 10,259 11,368 12,859 14,099
FIRE 2/ 1,270 1,148 1,055 1,019 766 802 928 1,716 1,719 1.723 1,824
Services 4,865 4,613 5,246 5,801 6,041 6,469 7,444 8,173 8,734 9,850 11,083
Government 5,734 5,910 6,323 6,602 6,910 7,285 7,837 8,498 9,097 9,660 9,704
Other - - - - - - 34
Total 25,517 25,878 27,289 28,565 30,061 32,375 35,315 40,005 43,710 48,381 52,333
2.04%
10.33%
7.90%
-0.41%
8.37%
3.69%
8.58%
5.40%
7.45%
1/ Transportation, communications, public utilities
2/ Finance, Insurance, Real Estate
Source: Texas Workforce Commission and State Comptroller of Public Accounts
55,000
50,000
45,000
40,000
35,000
30,000
25,000
20,000
Total Jobs in Williamson County
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
Table B -3
TREND IN UNEMPLOYMENT RATES
WILLIAMSON COUNTY
Unemployment Rate
1988 6.0%
1989 4.9%
1990 4.3%
1991 3.5%
1992 3.4%
1993 2.9%
1994 2.3%
1995 2.3%
1996 2.0%
1997 2.2%
Source: Texas Workforce Commission and State
Comptroller of Public Accounts
Table B-4
TREND IN GROSS SALES, ALL MAJOR INDUSTRIES,
WILLIAMSON COUNTY
Gross Sales,
All Major
Industries
1986 81,099,508,376
1987 $1,210,084,368
1988 81,075,109,737
1989 S1,235,119,557
1990 $1,397,066,502
1991 $1,471,980,979
1992 $1,732,015,285
1993 $1,979,554,645
1994 $2,222,424,489
1995 $2,860,356,963
1996 $3,465,151,286
Avg. Annual
Compound
Growth Rate 12.16%
Source: Comptroller of Public Accounts, Research Division
Table B -5
BUILDING PERMIT TRENDS, WILLIAMSON COUNTY
Single Family Bide. Permits Multi- Family Bldg. Permits Single Family + Multi - Family Non- Residential
Number Value Number Value Number Value Number Value ($000)
1990 174 $13,711,200 0 $0 174 513,711,200 80 $573,360
1991 380 $29,488,000 4 $120,000 384 $29,608,000 80 $126,880
1992 767 $58,522,100 0 $0 767 $58,522,100 86 $334,884
1993 1,397 $116,649,500 64 $1,696,000 1461 $118,345,500 157 $4,757,728
1994 1,537 $153,853,700 340 $11,118,000 1877 5164,971,700 196 $5,114,816
1995 2,816 $271,462,400 570 $31,293,000 3386 $302,755,400 149 $13,344,291
1996 3,685 $376,238,500 925 $38,387,500 4610 $414,626,000 NA NA
1997 3,063 $308,444,100 469 $18,947,600 3532 $327,391,700 NA NA
verage Annual Compound Growth Ratc 53.74% 57.35% 87.66%
Source: Real Estate Center at Texas A&M University and U.S. Bureau of Census
Table B-6
HOTEL MARKET TRENDS, WILLIAMSON COUNTY
Annual Room -
Revenue Nights
Year (8000) (000)
1987 82,571 74.3
1988 82,494 66.8
1989 82,961 75
1990 83,440 84.1
1991 S3,670 87.4
1992 $4,210 100.5
1993 $4,767 105.7
1994 84,188 88
1995 $6,785 123.6
1996 87,586 129.7
1997 810,228 180.7
Average
Annual
Compound
Growth 14.51%
9.29%
Source: Texas Department of Economic Development, Tourism Division
Appendix C
ROUND ROCK
Economics Research Associates Appendices
Table C -1
CORPORATE LOCATIONS / EXPANSIONS
CITY OF ROUND ROCK
Approx.
Locations / # Jobs Capital
Expansions Created Investment
1991 8 620 $10 Million
1992 7 380 $9 Million
1993 1/ 7 2,650 S25 Million
1993 / 1994 2/ 3 1,800 S30 Million
1994 / 1995 2/ 12 2,485 $150 Million
1995 / 1996 2/ 10 1,065 $75 Million
1996 / 1997 2/ 7 2,335 $77 Million
1997 / 1998 3/ 6 1,900 $30 Million
60 13,235 $406 Million
1/ 9 -month period January through September
2/ October through September
3/ October through May 20
Source: Round Rock Chamber of Commerce
Table C -2
MAJOR EMPLOYERS WITHIN A 15- MINUTE DRIVE OF DOWNTOWN ROUND ROCK
Company Name
Dell Computers Computers 8,000
Abbott Laboratories Intravaneous Solutions 1,600
State Farm Insurance Insurance 1,000
Fusers Insurance Regional Headquarters 893
�M Computers 700
Intermedics Orthopedics Prosthesis Manufacturer 700
AMP Packing Computer Equipment 600
Wayne - Dresser Electronic Pump Controls 476
Tellalabs Communications 470
Westinghouse / TECO Motors 440
Michael Angelo's Gourmet Foods Italian Food 425
Cypress Semiconductor Semiconductors 395
Sysco Foods Food Distributor 387
Columbia Medical Center Health Care 350
City of Round Rock Government 310
DuPont Photomask Photomasks 250
,Rolm Telecommunications 200
l lvlcNeil Consumer Products Tylenol 171
TN Technologies Electronic Measurement 165
Mid -State Plastics Injection Molding 160
Austin White Lime Limestone Quarry 145
Texas Crushed Stone Crushed Limestone 140
Weed Instrument Sensors 125
Cintas Corporation Unifomr Laundry 100
Paradigm Metals Metal Fabrication 100
Prudential Overall Supply Garment Laundry 100
Preferred Stamping Metal Fabrication 90
MagRabbit Software 75
TECO Technology Monitors 65
Centex Machining Medical Equipment 50
Jnfolab Medical Equipment 45
Mission Industries Garment Laundry 45
Photronics Photomasks 45
Featherlife Building Products Building Materials 40
Micro-Bac International Bio- Remediation Products 40
nsync Gas Flow Devices 35
1st Tech Molding Plastic Injection Molding 30
,Enviroquip Wastewater Treatment 30
recision Laser Cuts Metal Fabrication 30
exas Heat Treating Metal Heat Treating 30
'Textek Plastics Injection Molding 30
19,082
Source: Round Rock Chamber of Commerce, 5/98
Company Type Employees
Table C -3
SELECTED ECONOMIC DEVELOPMENT PROJECTS
CITY OF ROUND ROCK
Expected
Company Name Comments Job Creation
Dell Computers Early '98: 240,000 sf expansion to Bldg. # 2 1,600
Mid '98: construction 350,000 sf building 1,000
Early '99: construction 200,000 sf building 1 000
3,600
Approximate # Employees, Mid 1998 8,000
Approximate # Employees, End 1999 10,000
Trend Technologies 120,000 sf facility under construction, 200 - 300,
completion expected August 1998 800 in 3 -5 years
CIDCO leased 57,000 sf 50
1st Tech Molding Expansion in Corridor Park 75
Armstrong Moving & Storage Completed new facility / relocated operations 75
JemPac International leased 12,000 sf facility 25
Cypress Semiconductor Fab 5 Project completion expected 4th
quarter 1999, $350 million project 350
OPUS South broken ground on 60,000 sf Class A
office project, 12,000 sf pre - leased NA
Office / Warehouse project l00,000sf under construction, completion
expected by end of 1998 NA
Security Capital office / warehouse facilities, 240,000 sf,
scheduled completion late 1998 NA
Source: Round Rock Chamber of Commerce
Table C -4
TREND IN GROSS SALES, ALL MAJOR INDUSTRIES
CITY OF ROUND ROCK
Gross Sales,
All Major
Industries
1986 $388,946,394
1987 $494,692,532
1988 8365,630,786
1989 8484,024,851
1990 $576,647,921
1991 S639,653,938
1992 8786,188,732
1993 8814,047,661
1994 81,016,384,702
1995 $1,514,203,095
1996 $1,870,601,970
Avg. Annual
Compound
Growth Rate 17.01%
Source: Comptroller of Public Accounts, Research Division
Table C -5
TRAFFIC COUNTS ON I -35 IN ROUND ROCK
1 -35 at F.M. 1325
Source: Austin Transportation Study and Texas Department of Transportation, 1996
Average
Annual
Compound
1980 1984 1988 1992 1996 Growth
36,000 65,050 81,860 100,400 121,000 7.87%
Average
Annual
Compound
1990 1993 1994 1995 1996 Growth
1-35 at RM 620 - McNeil Road 84,000 92,000 1 14,000 116,000 125,000 6.85%
Table C -6
HOTEL MARKET TRENDS, ROUND ROCK
Annual Room-
Revenue Nights
Year (8000) (000)
1987 $1,181 30.3
1988 81,274 30.6
1989 $1,480 32.8
1990 $1,617 33.7
1991 81,628 33.1
1992 81,753 37.7
1993 82,306 46.6
1994 82,031 37.6
1995 83,064 50.6
1996 83,447 52.5
1997 85,953 102
Average
Annual
Compound
Growth 17.56%
12.91%
Source: Texas Department of Economic Development, Tourism Division
110
100
90 —
80 —
70 —
60 —
50 —
40 —
1987 1988 1989 1990 1991
Round Rock
® Room- Nights (000)
—*--Annual Revenue ($000)
$7,000
Table C -7
CITY OF ROUND ROCK, HOTEL / MOTEL BED TAX RECEIPTS
(Bed Tax Rate of 7% to City of Round Rock)
Bed Tax Annual
Receipts 1/ Growth
1988 585,061
1989 5101,030 19%
1990 $100,349 1%
1991 $110,854 10%
1992 $122,537 11 %
1993 S143,709 17%
1994 $170,400 19%
1995 5204,555 20%
1996 5235,565 15%
1997 $339,592 44%
Average Annual
Compound Growth 16.63%
1/ Reflects hotel operations for fiscal years ending June 30
Source: City of Round Rock, 5/98
Table C -8
CHARACTERISTICS OF HOTELS IN ROUND ROCK
1997
Date Number Approx. Market Segmentation Annual Average
Property Name Opened Rooms Corporate Highway SMERF 1/ Occupancy Room Rate
ada Limited 1973 62 29% 21% 50% 53% $51
La Quints 1984 116 80% 10% l0% 84% $67
Best Western 11/4/96 67 40% 30% 30% 63% $62
Rodeway Inn 11/15/96 49 20% 40% 40% 46% $52
Jeep Inn 9/20/96 107 35% 55% 10% 61% $51
1/ Social, military, education, religious, and fraternal (miscellaneous category)
2/ According to general managers at individual properties
Source: General Managers of Individual Properties 5/98
Table C -9
ESTIMATED HOTEL DEMAND FROM DELL
Austin and Round Rock Facilities
Approximate # Employees,
Austin & Round Rock Facilities
Approximate # Roomnights
Greater Austin Area, 1997
Approximate # Roomnights, North
Austin / Round Rock Area, 1997
Projected # Roomnights, North
Austin / Round Rock Area, 1999
Roomnights, 1999
Source: Dell Hotel / Motel Meeting Administrator, 5/98
Approximate Roomnight Demand by Guest Type and Hotel Type
15,000
18,000
7,200
8,640
Full- Service Ltd. Service
Hotel Guest Type Total Hotels 1/ Hotels 2/
Training 20% 10% 10%
Job Candidates 30% 15% 15%
Relocations 10% 0% 10%
Group Travel 20% 20% 0%
Contractors / Vendors 10% 10% 0%
Clients of Dell 10% l0% 0%
100% 65% 35%
9640 5616 3024
Table C -10
ESTIMATED DEMAND FOR FULL- SERVICE HOTELS, SELECTED EMPLOYERS IN ROUND ROCK
Approximate
Annual
# Roomnight
Company Name Company Type Employees Demand
Dell Computer Manufacturer 8,000 7,200 1/
Wayne- Dresser Electronic Pump Controls 476 3,300
Sysco Foods Food Distributor 387 500
DuPont Photomask Photomasks 250 150
Cypress Semiconductor Semiconductors 395 65
McNeil Consumer Products Tylenol Manuf. 171 65
9,679 11,280
1/ North Austin / Round Rock Area
Source: Representatives of individual companies
Table C -11
OVERVIEW OF PROPOSED HOTELS IN ROUND ROCK
Targeted
Hotel Type #Rooms Project Status Opening Date
anion Residence Inn Limited Service, Suite Product 96 Under Construction Jan. 1999
Marriott Courtyard Lunited Service, Upscale 113 Under Construction 15- Aug -98
Wingate Limited Service, Mid -Market 100 Under Construction Jan. 1999
Baymont Lusted Service, Economy 93 Under Construction Sept. 1998
ull- Service Hotel Full- Service, Upscale 200 - 300 Proposed Jan. 2000
Hilton Garden Inn Limited Service, Upscale 123 Pending Review Oct. 1999
rossland Efficiency Studios Limted Service, Economy 124 Pending Review Jan. 1999
omfort Suites Limited Service, Mid -Market 62 Pending Review Jan. 1999
Hampton Inn Limited Service, Mid -Market Proposed NA
Hotel Name
Source: Individual hotel companies 6/98
RESOLUTION NO. R- 98- 04- 23 -10B5
WHEREAS, the City has a need for professional economic
consulting services for a hotel /motel demand study, and
WHEREAS, Economic Research Associates (ERA) has submitted an
agreement to provide the needed services, and
WHEREAS, the City Council desires to enter into said
agreement with Economic Research Associates (ERA), Now Therefore
BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK,
TEXAS,
That the Mayor is hereby authorized and directed to execute on
behalf of the City an agreement with Economic Research Associates
(ERA) for professional economic consulting services for a
hotel /motel demand study, a copy of said agreement being attached
hereto and incorporated herein for all purposes.
The City Council hereby finds and declares that written notice
of the date, hour, place and subject of the meeting at which this
Resolution was adopted was posted and that such meeting was open to
the public as required by law at all times during which this
Resolution and the subject matter hereof were discussed, considered
and formally acted upon, all as required by the Open Meetings Act,
Chapter 551, Texas Government Code, as amended, and the Act.
RESOLVED this 23rd day of April, 1998.
ATTEST:
N:\ NPOOCS \RBSDLUTI \RB0423BS.NPB /eeg
E LAND, City Secretary
CHARLES CULPEPPER, Mayor
City of Round Rock, Texas
ERA
Economics Research Associates
April 8, 1998
Mr. David Kautz
City of Round Rock
City Hall
221 East Main Street
Round Rock, Texas 78664
Dear Mr. Kautz:
ERA Proposal No. 35963
Economics Research Associates (ERA) is pleased to submit this proposal for
economic consulting services. We understand the City of Round Rock is one of the
most rapidly growing cities in the country. One aspect of this is the current pressure
on the City's inventory of 430 hotel rooms, which has driven occupancy rates up to
the range of 75 to 85 percent. Given these market conditions, another 500 or more
rooms are currently planned or already under construction.
Hotel/motel rooms in Round Rock are currently subject to a 13 percent hotel
tax. While six percent goes to the state, seven percent accrues to the City of Round
Rock. In theory, another two percent could be added to the City's share, but it
would require a vote of the people. The City's portion of the bed tax is currently
running approximately $400,000 per year. The City of Round Rock is interested in
having an independent projection done of the future revenue stream from the hotel
tax. If analysis of the market indicates that ongoing revenues from this source could
be significant, the City may then want to have a more formal report prepared that
could support a bond offering to be used for such potential public purposes as a new
minor league baseball park or a municipal civic center.
ERA QUALIFICATIONS
We are confident you will find ERA to be eminently qualified to conduct the
necessary analysis of the hotel market in Round Rock and in Northern Austin, and
to project the future revenue stream from the hotel tax. In 40 years of consulting
practice, ERA has completed over 12,500 assignments. Roughly half of our
388 Market Street Suite 1580 San Francisco, CA 94111
415 956.8152 FAX 415.956.5274 www.eiasf.corn /erasf ERA is affiliated with Drivers Jonas
Los Angeles San Francisco San Diego Chicago Dallas Washington DC London
ERA
Mr. David Kautz
ERA Proposal No. 35963
April 8, 1998
Page 2
domestic work has been for public agencies, and half for private development
interests. This unique mix of business have given us an ability to work effectively
within the public decision - making process, as well as giving us a firm understanding
of the business imperatives which make private development work. ERA has
extensive experience with both the analyses of hotel markets, and in the projection
of fiscal revenues for public agencies. Additional qualifications of ERA are
enclosed in the package containing the hard copy version of this proposal letter.
PROPOSED SCOPE OF WORK
In order to project the revenues that can be gained from the hotel tax, a
thorough analysis of the market for hotel rooms in Round Rock must first be
conducted. This will include not only an accounting of the forces influencing
demand for rooms in Round Rock, but also the influence of the hotel market in
Austin.
In many of the markets ERA has analyzed over the last 40 years, an
interesting phenomenon has recurred repeatedly with hotel/motel land uses. As
occupancy rates build beyond 75 percent, new operators and developers seek to
enter the market to expand supply. In hot markets, however, major hotel operators
will flock to the area, each attempting to stake out a flag for their position in that
market for the future. Developers and real estate owners, lured into a false sense of
security thinking they have a major operator with them, are all too eager to build the
products. As markets become overbuilt, occupancy rates and room rates come
down, and the real estate partners in the deal frequently go broke. The operators
remain, however, masking the difficulties in the market to the casual observer.
Thus, a pitfall Round Rock must avoid is the projection of hotel tax revenues based
upon a simple analysis of the number of rooms being developed. Only a full
understanding of the underlying market conditions will insure that projections can
actually be achieved from the dollar volume of gross room revenues flowing
through the inventory of available hotels and motels.
The work would proceed in two phases. The first conducting all market
analysis, making the revenue projections, and presenting the findings in a brief
memorandum to the City. The second phase would produce the full diligent
reporting required for inclusion in a public offering document.
ERA
Mr. David Kautz
ERA Proposal No. 35963
April 8, 1998
Page 3
Phase 1: Market Analysis and Revenue Projection
To conduct the Phase I analysis, ERA would undertake the following tasks:
Task 1: Kick -off meeting. Two ERA staff would fly to Round Rock to
meet with the client group in the City and initiate the project. On this initial
trip, ERA would begin the data collection effort of documenting the number
of rooms by price and quality within the respective market areas, and
collecting information on the demographics of growth, in both the residential
and employment sectors in the region.
Task 2: Interviews with Market Area Operators. ERA would interview
operators of existing hotels and motels in Round Rock, and some in the
northern area of Austin. ERA would also attempt to contact and interview
development proponents for some of the lodging projects that are currently
in the pipeline.
Task 3: Analyze Market Trends and Underlying Forces. ERA would
analyze employment growth, population growth, presence of a tourist
market, the influence of the convention and meetings market, and other
economic forces that affect the demand for hotel rooms. Analyzing the
existing and projected supply of future hotel rooms, ERA would project the
future demand for room nights in Round Rock. To the extent that an
oversupply situation may occur in the future, ERA would adjust projections
of achievable room rates and occupancy for those market conditions.
Task 4: Proiect City Revenue. From the analysis of the total market in
Round Rock, project the total room night demand and average daily rate to
be achieved in future years. Applying the seven percent City share to this
total volume, ERA would project the revenue accruing to Round Rock from
the hotel tax.
Task 5: Summarize Results for City. ERA would prepare a brief
memorandum report to the City of Round Rock, presenting the projections
from the analysis. ERA would discuss the results of the first phase of work
with the City in a conference call. If the City chose to then proceed with a
more formal report, ERA would initiate the second phase of work.
ERA
ACCEPTANCE
Mr. David Kautz
ERA Proposal No. 35963
April 8, 1998
Page 4
Phase II: Full Report for a Public Offering
In order to avoid having to resurvey the market, the second phase would
have to be initiated within two months of the conclusion of the first phase. ERA
could still do the second phase work later, however, additional costs of revised
research would be required. In a second phase, ERA would write the more fully
documented type of analysis required for an Official Statement in a bond offering.
ERA's work would have to be reviewed by ERA's attorneys, before being finalized.
BUDGET REQUIREMENTS
For the first phase of work, ERA proposes a fixed fee of $15,000 for
professional time. Out -of- pocket expenses for travel, subsistence and data costs
would be billed in addition at cost plus ten percent. We expect this assignment
would require two to three person trips to Round Rock during the course of the first
phase. For a schedule of payments, ERA proposes a payment of $7,500 upon
authorization to proceed with the study. The second $7,500 plus expenses would be
invoiced at the conclusion of the first phase with submittal of the memorandum
report.
The second phase, producing the full report for an Official Statement, would
require an additional professional time budget of $10,000 for ERA. An additional
expense to the City would be the cost of legal review by ERA's attorneys, but we
anticipate this will be well under $5,000. We do not anticipate the need for
additional travel for the second phase. If the second phase is initiated more than two
months after the first phase is completed, the costs will have to be renegotiated
based upon the need to update the research.
This assignment may be initiated by return of one countersigned copy of this
proposal, along with the initial payment. The client has the option of terminating
the study at any time with only the costs incurred to date being due and payable.
Other routine contract provisions of ERA are included in the attached Standard
Proposal Addendum.
ERA
Thank you for the opportunity to submit this proposal. If we can provide
any other information, please do not hesitate to call. We look forward to your
favorable consideration.
Respecfully submitted,
/7
Ste/yen E. Spickar
Senior Vice President
SES:mbp
Attachment: Proposal Adc1endum
Phase I Accepted by:
Mr. David Kautz
ERA Proposal No. 35963
April 8, 1998
Page 5
Date: /5
APR -17 -Se 1S:48 FROM:ERA SF
ERA
PROPOSAL ADDENDUM
ID.41S9S65274 PAGE 2/2
It is understood by the client that Economics Research Associates (ERA) can make no guarantnts
concerning the recommendations that will result from the proposed assignrrent, since these
recommendations mist be based upon facts discovered by ERA during the course of the study
and [hose conditions existing as of the date of the report To protect you and other clients, and to
ensure that the research results of ERA's work will continue to be accepted as objective and
impartial by the business community. it is understood that otrr fee for the undertaking of this
project is in no way dependent upon the specific conclusions reached or the nature of the advice
gi ven by us in our report to you.
It is agreed by the client that the report is not to be used in mnjuac[ion with any public or private
offering of debt or equity securities without prior written consent. Such consent would not be
unreasonably withheld
It is further agreed that the client will indemnify ERA against any losses, claims, damages and
liabilities under federal and state securities laws which may arise as a result of statements or
omissions in public or private offerings of securities.
It is agreed by the client that payment for the services of ERA is due upon receipt of the invoice;
that full payment is due upon receipt of the completed report; and that ERA has the right to
withhold delivery of the final report pending receipt of any overdue payments.
In the event any invoice is not paid within 30 days after rendering of the invoice it shall
commence bearing interest on the date the invoice was rendered at the rate of 18 percent per
annum (a such lesser rate as may be the maximum interest permissible under applicable law)
and the client agrees to pay all accrued interest. together with the charges for services rendered as
provided for in this agreement. In addition, should an unpaid invoice be referred to our attorneys
for collection, the client agrees to pay their reasonable fee for such work as well as any costs of
suit which may be incurred.
It is further her agreed by the client that the report will be presented LO third parties in its entirety and
that no abstracting of the report will be made without first obtaining the permission of ERA.
It is understood by ERA that the Endings of this repon are the proprietary property of the client
and they will not be made available to any other organization or individual without the consent of
the client.
This proposal will remain in face for a period of 60 days from the date shown hereon.
DATE: April 17, 1998
SUBJECT: City Council Meeting, April 23, 1998
ITEM: 10. B. 5. Consider a resolution authorizing the Mayor to execute an
agreement with Economics Research Associates for a
hotel /motel demand study.
The study is intended to provide information to the City on the local
hotel /motel industry and the potential of the hotel /motel bed tax
revenue stream. The study consists of two phases, with the first phase
determining the local industry outlook and the optional second phase
producing a full report, suitable for inclusion in a public offering
statement. The complete study (both phases) would cost $30,000 with
the first phase being $15,000. The study is fundable from existing
hotel /motel tax funds. Staff Resource Person: David Kautz, Finance
Director
Currently, 400 rooms are available in local motels and inns. More than 525 additional rooms are
planned or under construction in an additional 5 motels and inns. Due to the rapid and significant
changes in this local industry, it is important for the City to understand the economic realities tied
to this development.
The agreement is attached for consideration.