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Key Market Study for Tucson's Proposed Convention Hotel Criticized:
Expert Cites Math Errors, Inconsistencies in its Analysis

By Rob O'Dell, The Arizona Daily Star, TucsonMcClatchy-Tribune Regional News

July 12, 2010 --The market study predicting success for a new downtown convention hotel is so filled with errors that the future of the $190 million hotel is in question, said members of the Tucson City Council and the Rio Nuevo Board.

The HVS Convention, Sports and Entertainment study -- the critical document on which all projections for the hotel's viability are based -- has obvious mathematical and factual errors and inconsistencies, Heywood Sanders, a professor of public administration at the University of Texas-San Antonio, said in a breakfast presentation Thursday at Old Pueblo Grille. The presentation followed an appearance before the City Council, arranged by Councilman Steve Kozachik.

Mistakes or inconsistencies noted by Sanders:

  • In the body of the report -- analyzing the prospects for the hotel -- the numbers of people attending conventions and trade shows, as well as the total attendance of the Tucson Convention Center in 2007 and 2008, are dramatically overstated when compared with the actual supporting data attached at the end of the report. For example, the number of conventioneers in 2008 is 17 times as large in the analysis as in the appendix. And total attendance is 108 percent more in 2007 and 112 percent more in 2008.
  • The report says that the gem show was not held at the Tucson Convention Center in 2008. It was.
  • Errors in basic arithmetic are made, including in a passage in which five trade shows and five conventions add up to 12 shows.
  • An assumption is made that Convention Center attendees who stayed at the hotel would stay for 2.4 days, while an HVS report for the city of Phoenix's convention hotel assumed convention guests would stay for only 1.2 nights.

Tom Hazinski, HVS' managing director, said, "Sanders has a history of incomplete use of numbers and distortions, which is why he has no credibility in the industry."

Hazinski said he relied on the TCC for his data, and said there is a discrepancy in the number of events because the larger figure includes arena events and internal meetings.

The report is critical to plans to the build the hotel because all of the other studies of the hotel accept the HVS numbers uncritically, including the study of the hotel's economic impact and the capital plan that would be used to sell the project to the bond market.

"The HVS study is the foundation for everything else," said Rio Nuevo Board member Alan Willenbrock, who attended the breakfast meeting.

All the projections on how full the hotel will be, how much money it will bring in and how much tax revenue it will generate come from the HVS study, Willenbrock said. The Rio Nuevo Board could get in legal trouble if it sell bonds based on a report that's questionable.

"You really have to question the validity of what's in there," Willenbrock said of the report. "I don't see how you can come to any other conclusion."

Stephen Moffett, president for hospitality at Garfield Traub, the hotel's developer, also expressed concerns about the discrepancies.

"It does raise questions about the validity of the study," Moffett told the crowd at the breakfast meeting. "I'm concerned about the mistakes in the numbers."

He also said, "It's not my job to review the HVS report." He said Hazinski should come to Tucson and explain his numbers.

Moffett later backed off from his comments and said he didn't think the errors compromised the report or made it inaccurate.

Kozachik, who has been critical of the hotel and Moffett, seized on Moffett's original comments, saying Moffett finally was expressing the same sentiments that Kozachik has been voicing for months.

"It's nice to have him on board and singing the same tune," Kozachik said, adding that usually his comments leave Moffett "out cussing in the parking lot" rather than agreeing with him.

Kozachik said the city and Rio Nuevo need to rewrite the script of the hotel plans, "especially if the developer doesn't believe his own study. How can you possibly come to us and sell us on his concept if he doesn't believe the cornerstone of his own data?"

The HVS report showed the new downtown convention hotel would make money because it would have 69 percent room occupancy at $163 a night.

The HVS study included assumptions that most or all of the projects from the 2000 Rio Nuevo master plan will need to be completed, along with the modern streetcar and a Convention Center expansion, for the hotel to meet the 69 percent occupancy rate.

HVS later amended that to say only "progress" needs to be made downtown to meet those projections.

Willenbrock said he was most concerned about the assumption that those staying at the Convention Center would linger twice as long as those in Phoenix. "Conspiracy theorists will say they picked that number to produce an end result," Willenbrock said.

Mayor Bob Walkup said he wasn't concerned about the numbers in the report.

The city needs to be prudent and ensure the math is right and everyone understands the numbers, Walkup said. "This is part of the normal process of due diligence," he said.

Contact reporter Rob O'Dell at 573-4346 or rodell@azstarnet.com

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To see more of The Arizona Daily Star, or to subscribe to the newspaper, go to http://www.azstarnet.com.

Copyright (c) 2010, The Arizona Daily Star, Tucson

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