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Revitalising the Convention _ Exhibition Industry in Sydney

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					   Prepared By



                    Revitalising the
                     Convention &
                 Exhibition Industry
                          in Sydney




February
2007
Table of Contents


      1. Executive Summary

      2. Nature of the Assignment

      3. Convention, Exhibitions, and Tourism Trends

      4. Primary Sydney Venues

      5. Analysis of SCEC Demand

      6. Australian and Regional Competition

      7. Industry Participant Surveys and Interviews

      8. Demand Forecast

      9.   Expansion Options

      10. Management, Marketing and Sales

      11. Assumptions and Limiting Conditions

           Appendix - Definitions
11. Executive Summary

1.1 PURPOSE AND METHOD

The Property Council of Australia and the Tourism & Transport Forum engaged HVS
International to estimate Sydney’s market demand potential and to recommend
approaches to facility development and expansion that would best meet future
exhibition and conference demand. This executive summary highlights key findings
of the study. For a complete understanding of the research, analysis, conclusions,
and recommendations the reader should refer to the full report.

Through a methodology that involved:

   •   Assessment of exhibition and convention industry trends,

   •   Market Area Analysis,

   •   Assessment of convention and exhibition venues in Sydney,

   •   Analysis of competition, and

   •   Surveys and interviews of industry participants,

HVS assessed the event demand potential for Sydney as a convention and
exhibition destination.

1.2 MARKET POSITION

   •   Sydney’s destination appeal is unrivalled in Australia. This fact is confirmed
       by tourism data presented in our market area overview, a comparative
       review of tourism infrastructure, and input from exhibit event planners and
       conference organisers. Sydney also has much to offer international event
       planners and attendees, although accessibility as a long-haul destination
       hinders its ability to penetrate some international markets. Important
       factors influencing destination appeal include:

          o   Most hotel capacity

          o   Superior quality of lodging

          o   Most air access

          o   Best entertainment venues
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           o    Physical attractiveness

           o    Preferred climate

   •   Sydney ranks second to Melbourne in venue capacity, and Sydney has
       average venue quality

   •   Sydney is the highest cost destination in Australia, including the costs of
       venues and surrounding amenities

   •   New South Wales has lost market share of exhibition events to Victoria and
       Queensland. In the early part of this decade, New South Wales held a
       market share of over one-third of all events. Currently, New South Wales
       remains the leading destination for exhibition events in Australia; with a 28
       percent market share according to the most recently available data from the
       Exhibition and Events Association of Australia (see Table 1-1). As current
       trends continue, Victoria will overtake New South Wales.

           Table 1-1
           Location of Australian Exhibition Events by State and Territory in 2003

           State/Territory                                  Number                   % of Total

           New South Wales                                     84                      28%
           Victoria                                            75                      25%
           Queensland                                          57                      19%
           Western Australia                                   33                      11%
           Australian Capital Territory                        24                       8%
           Southern Australia                                  21                       7%
           Tasmania                                             6                       2%
           Source: EEAA


1.3 QUALITY, CAPACITY, AND UTILISATION OF EXISTING VENUES

HVS staff inspected all the major non-hotel venues in Sydney that host meetings,
conferences, conventions, tradeshows, consumer shows, and other local events
and gathered data on their physical plant and operations. Five venues have
significant exhibition hall capacity. See Table 1-2.




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Table 1-2
Capacities of Venues in Sydney
                                                      Exhibition Space       Function Space Ratio of Function
Facility Name
                                                            (m2)                  (m2)            Space
Sydney Convention & Exhibition Centre                        27,200               9,800                 36%

Sydney Show grounds at Sydney Olympic Park                   14,400               9,000                 63%

Rosehill Gardens                                             4,000                3,425                 86%

Playbill Venues at Moore Park                                9,700                1,476                 15%

Australian Technology Park                                   6,900                2,300                 33%
Sources: Respective Venue


    •    The Sydney Convention and Exhibition Centre (“SCEC”) is the largest and
         primary venue, hosting most of the large exhibition and convention events
         in Sydney. With 27,200 m2 of exhibition space, it has excellent access to
         the supportive convention tourism infrastructure of Darling Harbour and the
         central business district. However, due to its age the SCEC does not meet
         many current industry standards. Exhibition halls are too small for many
         events and inefficient in their operations. Convention space lacks an
         adequate mix and divisibility of breakout space. The ballroom is poorly
         configured, and the plenary hall lacks divisibility and staging capacities.

    •    Despite the fact that the design of the Sydney Convention & Exhibition
         Centre creates some significant operational limitations, it is currently
         operating at its maximum practical occupancy. Given the lack of demand for
         space during the holiday seasons and inevitable gaps between start dates
         and ends of events, increasing occupancy over current levels is not feasible.
         See Figure 1-1.

             Figure 1-1
             SCEC Exhibit Hall Occupancy by Month 1997-2005

                            Conventions & Tradeshows           Consumer Shows             Other
                100%

                90%
                                                                                  83%
                80%                                                         76%
                                                       69%            70%
                70%                             66%            65%
                60%                                                                       57%
                              55% 55%
                                          53%
                50%

                40%

                30%
                       24%
                                                                                                20%
                20%

                10%

                 0%
                       Jan    Feb   Mar   Apr   May    Jun     Jul    Aug   Sep   Oct     Nov     Dec

             Sources: SCEC & HVS International




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   •   Over the past four years, annual exhibit hall occupancy at the SCEC has
       ranged from 63 to 72 percent, which is exceedingly high. Exhibit hall
       occupancies of approximately 50 percent strike a better balance between
       the need for revenue producing activity in the building and providing
       enough available dates and space during peak periods to accommodate
       most demand. Since 1997, the average exhibit hall occupancy has exceeded
       50 percent in ten out of twelve months of the year. Of greater concern is
       that occupancy in the peak months of March and October is dominated by
       consumer show activity rather than conventions and tradeshows that have
       higher state economic impact.

   •   Lost business reports indicate that date and space conflicts are the primary
       reason for lost business at the facility. The SCEC provided monthly data on
       business that was lost during the period January 2003 through July 2006
       (554 events). The SCEC data demonstrates a significant amount of lost
       business (approximately 40 events per year) can be attributed to a lack of
       adequate exhibit and function space and available dates. The data also
       indicate that the level of lost business is growing even before the full impact
       of an improved Melbourne venue is felt. National competitors are already
       the leading source of lost business and the improvement in Melbourne is
       likely to increase their capture of potential SCEC business.

   •   HVS estimates that the SCEC could recapture 50 to 75 percent of the
       business it currently looses to space and date conflicts if the facility were
       expanded, which would result in an increase of exhibit use of between 16 to
       32 percent. In addition, 12 existing events are under-served such that
       organisers are not able to rent the desired amount of space. If an expansion
       were sufficient to accommodate the growth of existing events, exhibit hall
       utilisation could increase by an additional 8 to 10 percent. Clearly, the SCEC
       has an immediate and urgent need for expansion.

   •   The Showgrounds, with 14,400 m2 of exhibition space, is the second largest
       venue in Sydney, serving approximately 30 national tradeshows and local
       consumer shows each year. Historical the Showgrounds has served as and
       agricultural and equestrian events centre and as such, it is not a purpose
       built exhibition venue. Although its exhibit hall occupancies are substantially
       lower than the SCEC’s, expansion and improvement of this venue would
       allow it to serve a broader range of consumer and tradeshow events and
       become a much more important source of desperately needed supply.

   •   Other venues in Sydney host relatively small events and offer no significant
       potential for expansion.

1.4 COMPETITION

Although Sydney has more overall exhibition space than any other Australian city,
it currently ranks second to Melbourne with respect to amount of contiguous
exhibition space available in its primary venue (see Figure 1-2).




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           Figure 1-2
           Comparison of Exhibition Hall Capacity of Primary Venues in Australian Cities

             Melbourne ECC

                Sydney CEC

               Brisbane CEC

                 Sydney RAS

                    Perth CEC

                 Adelaide CC

              Gold Coast CC

                    Cairns CC

               Canbera NCC

                                -   5,000    10,000   15,000   20,000   25,000   30,000    35,000

           Source: Respective Venues


Sydney is soon to lose its status as home to the premier convention venue in
Australia to the Melbourne Exhibition and Convention Centre (“MCEC”), which is
currently undergoing a $370 million renovation and expansion. This project, which
will be completed in 2008, includes a new plenary hall with a capacity of 5,000
people and a compliment of 50 meeting rooms with approximately 5,000 m2 of
function space. A connected hotel is also in development. The renovation and
expansion of the MCEC convention centre will create an integrated hotel,
convention, and exhibition centre that will be the largest and most flexible
convention and exhibition facility in Australia. Once the renovation and expansion
of the convention centre is complete, the overall MCEC’s capacity will exceed that
of the Sydney Convention and Exhibition Centre.

The Queensland Government has recently authorised the further study of a major
expansion of the Brisbane Convention & Exhibitions Centre, which would add
eleven meeting rooms, foyer space, and banqueting facilities. This $100 million
expansion is targeted at increasing Brisbane’s share of national and international
conventions, in direct competition to Sydney and other Australian cities.

The improvements underway in Melbourne, Brisbane, and also Darwin; and the
increased marketing and sales efforts associated with these developments will
result in a significant erosion of Sydney’s market share of national and
international conventions unless action is taken to counter these competitive
threats.

Internationally, a new casino resort venue in Macau as well as expansions and
improvements to existing venues will increase competition for conventions and
tradeshows that rotate through the Asia-Pacific region.




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Executive Summary                                                          Page 1-6




1.5 SYDNEY’S DEMAND POTENTIAL

To estimate Sydney’s demand potential, HVS relied on the market area overview,
analysis of industry trends, historical demand for existing venues, the analysis of
competition, analysis of lost business reports, event organiser surveys, and
professional conference organiser interviews. For the purpose of keeping the focus
of this analysis on large scale events, “demand” is defined as the events,
attendance, and space utilisation in major existing venues or in proposed new and
expanded venues in Sydney. As such, the HVS demand projections represent a
subset the entire MICE industry in Sydney.

Using historical demand as a starting point derived event demand projections using
a specific set of assumptions for each type of event. The rationale for each
assumption is described in detail in the full report. HVS constructed two demand
scenarios.

   •   Baseline Scenario - Assumes that there are no significant new exhibition
       facilities or expansions in the market.

   •   Unconstrained Scenario - Assumes that new facility development and/or
       expansion increases the supply of exhibit space sufficiently to satisfy
       existing levels of non-accommodated demand and also future growth.

Figure 1-3 shows the actual number of major exhibition events in Sydney in 2006
and estimated event from 2007 through 2016 under the two scenarios. In the
unconstrained scenario the number of events increases in 2009 because HVS
assumes for the purposes of this report, that new or expanded facilities are
implemented in this year.




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Executive Summary                                                                                    Page 1-7




           Figure 1-3
           Estimated Conventions with Exhibitions and Tradeshow Events at Major Venues
                           Baseline scenario                   Unconstrained Demand
            120


            100


             80


             60


             40


             20


               0
                    2006    2007   2008   2009   2010   2011    2012   2013   2014    2015   2016

           Source: HVS International


The estimated annual number of conventions with exhibitions and tradeshows
stabilises (in 2009) at 82 in the baseline scenario, reflecting the anticipated decline
in Sydney’s market share. HVS anticipates a decline in the number of events from
current year levels due existing lack of capacity and increased competition from
other Australian cities. In the unconstrained scenario the number of events
increases dramatically along with the assumed facility improvements in 2009. The
number of conventions with exhibitions and tradeshows stabilises at just over 100
events by 2012 in the unconstrained scenario, a 23 percent increase over the
baseline scenario.

Figure 1-4 shows the estimated attendance growth for all types of events,
including both exhibit and non-exhibit events, in the unconstrained scenario for all
venues in Sydney.




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Executive Summary                                                                                        Page 1-8




           Figure 1-4
           Attendance Growth in Unconstrained Scenario (Exhibit and Non-Exhibit Events)
                                 Local                 National               International
                        1.4

                        1.2

                        1.0

                        0.8
             Millions




                        0.6

                        0.4

                        0.2

                        0.0
                          2006   2007    2008   2009   2010   2011   2012   2013   2014   2015   2016

           Source: HVS International


The unconstrained scenario anticipates growth in all three geographic segments.
With more available space the number of events, the size of average attendance,
and the amount of floor area utilised in Sydney could all grow. This growth would
be generated by the expansion of existing events, the recovery of lost business,
and an increase penetration of the national and international markets that would
follow the development of a state-of-the-art convention and exhibition venue.

1.6 SITE ANALYSIS

Working with client representatives and by review of numerous potential expansion
sites, HVS identified four sites that had sufficient capacity and suitable locations to
satisfy future demand. See Table 1-3.




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Executive Summary                                                                                                  Page 1-9




Table 1-3
Summary of Site Options (total recommended space, existing and new)
                              Barangaroo (East                                                        Sydney Showgrounds
  Type of Space                                      SCEC Expansion             Glebe Island
                              Darling Harbour)                                                            Expansion**


  Exhibition Halls (m2)       30,000 to 40,000            37,000                   40,000                    40,000



  Function Space* (m2)        15,000 to 20,000            15,000              10,000 to 15,000               15,000


                                3,000 in one                5,500
  Plenary Hall Seating                                                              none                      none
                                divisible hall         in three halls

                            500 to 750 proximate                             Seek nearby hotel        Seek nearby additional
  Hotel Development                                        none
                                hotel rooms                                    development              hotel development

                               Iconic building,                             Light, water taxi, rail    Design primarily for
                                                     Upgrade existing
                              green technology,                            connection to Darling        consumer shows,
  Other Considerations                             facilities and improve
                                50% parkland,                             Harbour, continue SCEC         continue SCEC
                                                           flexibility
                            commercial land uses                                 operation                 Operation
*Includes meeting, ballroom, and plenary halls
**Complements Barangaroo and SCEC expansion scenarios
Source: HVS International


The approach to development on each site or a combination of sites was designed
to meet building programme requirements necessary to accommodate the demand
projected in the unconstrained scenario. These sites are discussed below.

    •     Barangaroo (East Darling Harbour) is the only remaining site proximate to
          the central business district that has capacity for significant new convention
          and exhibition centre development. The Barangaroo Site is 22 hectares with
          1.4 km of shoreline. Surrounding land uses include the historic
          neighbourhoods of Millers Point, and the Rocks. The building programme
          recommended for Barangaroo does not envision that this convention and
          exhibition centre would be designed to accommodate convention and trade
          shows but not large consumer shows that can be located elsewhere in
          Sydney. A preliminary concept plan created by Skidmore, Owings and
          Merrill LLP for the purposes of this study, shows that through the use of
          best practices in green roof design the site has capacity for:

                      An iconic convention centre structure;

                      40,000 m2 of exhibition hall space and associated ballroom, meeting
                      rooms, and parking;

                      A plan that is consistent with the Government’s terms of reference
                      including the provision for 50 percent green space; and

                      Approximately the same amounts of commercial development and
                      other land uses envisioned in the current site plan.

    •     SCEC Expansion - Expansion and improvement of the SCEC has been
          discussed for several years and management of the SCEC has proposed a




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Executive Summary                                                           Page 1-10




       redevelopment plan. The expansion option proposed herein is consistent
       with the general outlines of that plan as described to HVS by SCEC
       management. The management plan was developed without consideration
       of any other venue expansion in Sydney. HVS offers an alternative building
       programme plan that assumes the Sydney Showgrounds would also be
       expanded as a consumer show venue.

   •   Glebe Island is located immediately west of the central business district and
       proximate to the Balmain Peninsula. The area forms a crescent around
       White Bay. The primary asset of the site is its size and ability to
       accommodate a large venue, as well as future expansion of that venue. The
       Anzac Bridge connects the site to the central business district and Darling
       Harbour, but pedestrian connections to tourism amenities are not currently
       available. Consequently, the site is more suitable for a consumer show
       venue than a venue that is primarily devoted to conventions.

       For this reason, HVS recommends that any exhibition centre development
       on this site would involve the continued operation of the SCEC. A 40,000 m2
       exhibition space could accommodate the demand for the largest consumer
       shows in the market today. Future expansion of 20,000 m2 may be
       necessary to support growth in future demand and a master plan should
       provide for that expansion. As a consumer show and local tradeshow venue,
       the amount of necessary meeting and ballroom space is less than what
       would be required in a convention centre. HVS recommends 10,000 m2 of
       breakout space, but does not see the need for a theatre venue as long as
       the SCEC remains in operation.

   •   The Sydney Showgrounds is currently the secondary exhibition venue in
       Sydney, hosting approximately 30 trade and consumer shows each year.
       Despite the inadequacy of current facilities, existing event demand has
       demonstrated that the Showgrounds site is viable for local exhibitions. Its
       primary advantages are its location in the centre of the Sydney metro area,
       excellent transportation access, and availability of parking. For this reason,
       HVS recommends expansion and improvement of the Sydney Showgrounds
       to serve the local consumer and tradeshow market. This expansion should
       take place in addition to convention centre development in the central city
       area.

       The Showgrounds expansion plan would roughly double the amount of
       exhibit space, bringing the total to approximately 29,000 m2 (excluding the
       Dome of 7,200 m2 which is multi-purpose space). HVS’s recommendations
       for building programme development at the Sydney Showgrounds are
       intended to provide a framework for a development that will support market
       demand for local trade and consumer shows as well as enhance the
       vibrancy of the Sydney Olympic Park Precinct. The design of the venue
       should allow for the separation of truck loading and attendee access to the
       building. HVS recommends replacement of the existing exhibit halls, which
       would also afford the opportunity to provide state-of-the art halls that
       create efficiencies for exhibitors and other users. The Dome could be
       maintained and serve as an anchor for the architecture of the rest of the




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Executive Summary                                                           Page 1-11




       building. The concept presented above is just one of many ways to achieve
       the necessary amounts of highly functional space and supports the overall
       development of the Precinct. Further physical planning work will be needed
       to consider future expansion alternatives and to determine the optimal
       approach to achieving the recommended building programme.

1.7 RANKING OF SITES

To evaluate the relative strengths and weaknesses of the four alternative
development sites discussed above, HVS considered 22 criteria related to site
capacity, location, availability of supporting infrastructure, financial, and other
considerations. Each concept was rated on a scale of one to three.

While a certain level of objectivity can be achieved in rating the development
options based on each of these criteria, the relative importance of each criterion
will differ depending on the viewpoint of the observer. For example, a convention
event planner will be more concerned with the proximity of lodging than would a
consumer show organiser. For this reason, HVS created a system of rating each
criterion in importance on a scale of one to five, with one being of least importance
and five being of greatest importance. For each criteria, the rating (1 to 3) was
multiplied by the importance of the criteria (1 to 5). The sum of the ratings
provides an overall score for each plan. These scores can then be ranked.

HVS created two different rankings assuming the perspective of: 1) an organiser of
local exhibition events and 2) a national and international tradeshow and
convention organiser. The results of these weighted rankings are compared to an
un-weighted ranking in Table 1-4.




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Executive Summary                                                                             Page 1-12




           Table 1-4
           Ranking of Expansion Options
                                                                         Weighted for:
                          Site Alternative          Unweighted
                                                                 Exhibitions    Conventions

           Score
                Barangaroo (EDH)                       183          192              247
                SCEC Expansion                         153          161              208
                Glebe Island at White Bay              147          175              180
                Sydney Showground Expansion            156          181              199
           Rank
                Barangaroo (EDH)                        1            1                   1
                SCEC Expansion                          3            4                   2
                Glebe Island at White Bay               4            3                   4
                Sydney Showground Expansion             2            2                   3
           Strength of Rank (compared to average)
                Barangaroo (EDH)                      115%         108%             118%
                SCEC Expansion                         96%          91%             100%
                Glebe Island at White Bay              92%          99%             86%
                Sydney Showground Expansion            98%         102%             95%
           Source: HVS


Barangaroo emerges as the top ranked development approach in all rankings. The
Sydney Showground expansion ranks second highest with respect to exhibitions
but third behind the SCEC expansion for conventions. The strength of each ranking
was assessed by comparing the score of a development approach to the average
score for all approaches. Here, Barangaroo shows the greatest advantage as
convention venue, scoring 18 percentage points higher than the second ranked
SCEC plan. The Glebe Island exhibition plan demonstrates the weakest overall
rankings.

1.8 PREFERRED EXPANSION OPTION

The analysis in this report demonstrates that significant investment in convention
and tradeshow infrastructure is necessary to maintain and improve Sydney’s
position in the national and international event markets. The overall combined
approach to development should attempt to create the maximum economic benefit
to the State. HVS identified three options expansion as shown in Table 1-5.




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Table 1-5
Evaluation of Expansion Options
                                                                   Site Utilisation
                            Barangaroo                   SCEC                    Showgrounds                   Glebe Island


                     Iconic convention and
                                               Reuse for highest and best Expand showgrounds with
   Option 1             exhibition centre                                                                No convention or exhibition
                                              land use (commercial, hotel, state-of-the-art consumer
   Preferred      development consistent with                                                                centre development
                                                      retail, etc. )       oriented exhibition venue
                    existing land use plans




                                                 Expand SCEC exhibition
                                                                            Expand showgrounds with
                   No convention or exhibition    halls, increase meeting                                No convention or exhibition
    Option 2                                                                 state-of-the-art consumer
                      centre development           space, and improve                                        centre development
                                                                             oriented exhibition venue
                                                          flexibility




                                                                                                            New state-of-the-art
                                                 Add meeting space and      No convention or exhibition      consumer oriented
                   No convention or exhibition
    Option 3                                   improve SCEC flexibility and   centre development or     exhibition venue with master
                      centre development
                                                      functionality                 expansion            plan for future convention
                                                                                                          uses and adjacent hotels


Source: HVS International


Option 1 is highly preferred because this approach is the only one that has
potential to place Sydney in the undisputed lead in the Australian market and
reassert itself as a premier destination in the international MICE market. Every
effort should be made to achieve governmental approval of this plan before
consideration of secondary alternatives.

The efficiency of simultaneous operation of a central city site and the Showgrounds
could be improved by a coordinated management and/or booking policy gives
priority to convention and tradeshow events in the central city and local consumer
show events at the Showgrounds.

1.9 APPROACH TO VENUE MANAGEMENT, MARKETING, & SALES

Interviews with Professional Conference Organisers (“PCOs”) indicate serious
concern regarding the future of convention and conference business in Sydney.
Foremost among their concerns is the relative lack of funding for conference sales
and marketing in Sydney, which is confirmed by an Association of Australian
Convention Bureau (AACB) funding survey. The heavy funding burden placed on
the local hospitality industry in Sydney leaves less capacity for individual
organisers, hotels, and PCOs to conduct their own marketing activities. Further,
some of the PCOs expressed a concern that the limited sales and marketing
resources that are available are not always utilised as effectively as they could be.
Some respondents reported that the current efforts lack focus and that an
increased emphasis on competing for specific major events with incentives was
needed. The general consensus was that while Sydney could take for granted high
levels of interest in holding events here, they cannot continue to allow individual
event decision makers to feel as though Sydney was taking them for granted.




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Compared to Melbourne, Sydney’s primary competitor, marketing efforts are poorly
funded as shown in Table 1-6.

           Table 1-6
           Comparison of Melbourne and Sydney CVB Funding
                                                              Melbourne
                                                                                                SCVB
                                                                CVB

           State Governement 1                                     $4.5                         $2.3

           Convention Centre                                       $1.5                         $0.3

           Private 2                                               $1.9                         $3.1

           TOTAL FUNDING                                           $7.9                         $5.7
           1State Government funding is recent and effective for 2006/07
           2Private sector funding information comes from a 2005 comparison study by the AACB
           Source: SCVB.


Annual public funding of the Sydney Convention and Visitors Bureau is $2.2 million
less than the public funding for the Melbourne Convention and Visitors Bureau. This
causes the SCVB to rely more heavily on private sources, but these private sources
are not sufficient to provide overall competitive levels of funding and are inefficient
to raise and maintain.

A comprehensive model for distribution of the overall Sydney convention tourism
product provided a basis for the following recommendations:

           o    Expand the bid processing by the SCVB with more emphasis on
                national events;

           o    Establish a method of joint oversight of the bookings at major
                venues in Sydney;

           o    Increase overall levels of funding to effectively compete with
                Melbourne and other Australian destinations;

           o    Decreased reliance in private funding sources should accompany an
                increase in public resources;

           o    Establish processes to effectively coordinate convention tourism
                distribution channels.

Sydney and New South Wales are at a crossroads where the choices made today
regarding public investment in the convention and exhibition industry will
determine whether Sydney can build on its historic role as the premier destination
in Australia, or relinquish that role to its competitors. Industry participants and
government representatives need to reach consensus on the optimal approach to
development and initiate a master planning process that leads to timely
development of convention and exhibition venues.




                                                                                                       12-Feb-07
2. Nature of the Assignment

2.1. PURPOSE

Historically, Sydney has been the premier convention and exhibition destination in
Australia and an international congress destination. Now it is faced with increasing
competition from convention and exhibition centres in Australia and Southeast
Asia. Most industry participants believe that existing facilities, in particular the
Sydney Convention and Exhibition Centre (“SCEC”), do not have capacity to
accommodate either many events that have previously taken place in Sydney or
the expected market growth.

In response to these circumstances, the Property Council of Australia and the
Tourism & Transport Forum engaged HVS International to estimate Sydney’s
market demand potential and to recommend approaches to facility development
and expansion that would best meet future demand. The aim of the study is to
determine the need for additional convention and exhibition space in Sydney from
2007 - 2016. This study should not be considered a feasibility analysis. Rather, it
provides a road map for improving Sydney’s long-term market share and fortifying
its premier position as the leading event destination in Australia.

2.2. SCOPE OF STUDY

Most of the industry research in this report focuses on convention and tradeshow
venues and the business organisations that use these venues. Hotel venues with
conference and exhibition space were intentionally excluded from this analysis in
order to keep the focus on venues that were typically developed primarily with
public funding. Venues and event organisers are only part of a complex array of
organisations that produce, distribute, and consume the convention tourism
product. HVS gathered available information from all major industry participants to
identify and quantify the supply and demand for the convention tourism product in
Sydney.

2.3. METHODOLOGY

The methods used to arrive at our recommendations for improvements to Sydney’s
convention and exhibition industry are depicted in Figure 1-1. Key analytical tasks
included:

   •   A review of convention and exhibition industry trends and an assessment of
       their implications for Sydney;

   •   A market area overview that details selected elements that are particularly
       relevant to Sydney as an event destination;
Nature of the Assignment                                                                     Page 2-2




    •   A review of existing convention and exhibition venues in Sydney, including a
        detailed assessment of the Sydney Convention and Exhibition Centre;

    •   A review of competing convention and exhibition venues in Australia and
        the Asia Pacific region;

    •   Interviews with key industry participants including venue managers, SCVB
        representatives, PCOs and event organisers.

            Figure 1-1
            Analytical Tasks and Methodology

              Australian                                   Event Demand
             Market Trends                                  Projections

              Market Area
               Overview
                                          Number of                         Exhibit Hall
                                                               Attendance
             Assessment of                 Events                           Occupancy
             Sydney Venues

               Competitor
                Analysis                                                    Approaches to
                                               Site Analysis                 Expansion
                Industry
               Participant
              Interviews &                               Management &
                Surveys                                    Marketing
                                                        Recommendations
            Source: HVS International


Based on the information provided in the previous analytical steps, HVS projected
the convention and exhibition demand potential for Sydney under two scenarios:

    1) baseline demand, where existing venues remain unchanged, and

    2) unconstrained demand, where new venue construction and/or expansion
    provides sufficient space to fully accommodate demand.

HVS uses three metrics to measure demand:

    •   The number of events by type;

    •   The number of attendees and delegates to events;

    •   Exhibit hall occupancy as measured in occupied square metre days.

With this understanding of building floor area requirements, HVS recommended
building programmes for four possible sites and analysed each site based on a
detailed set of criteria and various weighting schemes that indicate suitability for
convention and exhibition space development.




                                                                                            12-Feb-07
Nature of the Assignment                                             Page 2-3




Finally, HVS formulated a set of recommendations regarding future management
and marketing of the expanded venues.




                                                                    12-Feb-07
3. Convention, Exhibition and Tourism
    Trends

3.1 PURPOSE AND SCOPE

The purpose of this section is to describe international and Australian convention and
exhibition industry trends that are likely to affect the level of business in Sydney.
Trends in the growth of the number of events, attendance, and supply of convention
and exposition facilities serve as indicators of the size and strength of the industry as
well as the level of competition for events.

The convention industry data provided in this section relies on the following data
sources:

        A Business Strategies Group report sponsored by UFI (a Global Association of
        the Exhibition Industry),

        Data collected by the International Congress and Convention Association
        (“ICCA”), and

        Information included in The National Business Events Study: An Evaluation of
        the Australian Business Events Sector.

This analysis of industry trends focuses on two areas of the meetings, incentive,
convention, and exhibition markets that are directly relevant to larger convention and
exhibition centres: 1) The market for large national exhibitions that are focused in
Australia; and 2) International conventions and meetings that use convention centre
and plenary hall spaces.

3.2 UNDERSTANDING CONVENTION TOURISM

Convention tourism consumers include the businesses and associations organising the
events, as well as delegates and attendees. Suppliers include the venues, hotel
accommodations, transportation providers, and a myriad of other tourism attractions
that delegates enjoy before, during and after the event. Exhibitors play a dual role of
producing a component of the product, the exhibition itself, and consuming other
components of the product such as exhibit space and lodging. The primary role of
venue management and marketing & sales organisations is to foster the relationships
among these industry participants.
Convention, Exhibition and Tourism Trends                                          Page 3-2




Smith and Garnham (Journal of Convention and Event Tourism, 2006, Vol. 8 No. 1)
offer a model for distribution of the convention product that describes the complex
relationship between multiple suppliers and consumers of the convention tourism
product. This model identifies the types and modes of distribution channels, or the
means by which consumers and producers are brought together. See Figure 3-1.

Figure 3-1
Distributing the Convention Tourism Product




Source: Journal of Convention & Event Tourism, Vol.1 2006, Smith and Garnham


A variety of intermediaries bring together the producers and consumers of the
convention tourism product. These intermediaries include:

          Associations and event organisers – are the representatives of the business
          entities or industry groups that create the convention or exhibition event. Reed
          Exhibitions is an example of an event organiser that works on behalf of a
          variety of business industries. For example, the Gift and Homewares
          Association organises exclusively on behalf of their industry.




                                                                                12-Feb-07
Convention, Exhibition and Tourism Trends                                        Page 3-3




        In-house organisers – some larger associations and business organisations
        form in-house groups to create events for their industry (e.g. Nike).

        Professional Conference Organisers (“PCOs”) – provide event sponsors with
        knowledge of and relationships with the local market participants. They
        organise the details of the events; and negotiate with venue management,
        hotels, transportation providers, and providers of pre- and post-event tourism
        activities. HVS conducted a survey of PCOs that are active in the Sydney
        market; the results of this survey are described in Section 6 of this report.

        Inbound Operations – sometimes called Destination Management Companies
        (“DMCs”), function to provide transportation services and organise other
        tourism activities. Their role in the distribution chain can be performed by or
        overlap with the PCO role, but their services tend to be more highly specialised
        than PCOs.

        Travel Agents – book transportation, lodging, auto rental, and otherwise
        arrange the details of the visit on behalf of delegates and attendees.

        Online Booking – is a growing form of electronic intermediation that supplants
        the role of the travel agent, and to some extent the PCOs and DMCs.

Smith and Garnham have also identified that distribution channels can offer bundled
services (such as group hotel bookings and group tours) or provide independent
services that are initiated by individuals attending the events. The National Business
Events Study 2006, which evaluated the Australian Business Events Sector, identified
a growing trend toward the use of independent intermediaries. As an example, only 43
percent of delegates use the bundled services of the conference organisers to book
accommodations and most use direct channels such as a direct hotel reservation, a
travel agent, or the internet. This trend toward the use of individualised and
independent distribution channels has important implications for the approach to
marketing and sales of the destination.

The strength of Sydney as a business tourism destination is dependent on the
effectiveness of these distribution channels as well as on the quality of the product in
the destination. In addition to evaluating the various venues in Sydney, HVS assessed
the role of the Sydney Convention and Visitors Bureau, venue management and other
tourism promotion organisations as facilitators of the private distribution channels that
deliver Sydney’s convention tourism product.

3.3 SUCCESSFUL DESTINATIONS

The successful convention and tradeshow destinations generally show the following
attributes:




                                                                               12-Feb-07
Convention, Exhibition and Tourism Trends                                         Page 3-4




        •   relatively well-developed economies and cultural sectors that are open to
            the outside world;

        •   availability of advanced convention and exhibition facilities and the services
            related to providing events; and

        •   effective and well funded public and private event organisers and marketing
            organisations.

Sydney clearly excels at the first attribute, but may need to improve its standing on
the succeeding two based on its recent decline in relative market share. The
significant investment Melbourne is currently making in its convention capabilities and
rapid growth in competitive supply in Asia and Australia stand as additional threats to
future event demand in Sydney. Resort destinations in Queensland, a new centre
Darwin, and potential expansion in Brisbane have potential to dilute market share for
national events in more established markets like Sydney. New and expanded venues
in Asia (particularly in Macau) have increased the competition for international and
pan-pacific events and placed increasing emphasis on offering modern, spacious, and
attractive event venues.

3.4 AUSTRALIAN EXHIBITION INDUSTRY

Australia is characterised by smaller venues than its Asian counterparts, with eleven
major venues having an average of approximately 12,000 square metres of exhibition
space, approximately one-third the size of the average Asian venue. The aggregate
supply of exhibition space in primary venues in eleven Australian cities is shown
Figure 3-2.




                                                                                12-Feb-07
Convention, Exhibition and Tourism Trends                                      Page 3-5




            Figure 3-2
            Australian Exhibition Space in Primary Venues (thousand of m2)


             140


             120


             100


              80


              60


              40


              20


                0
                    2000 2001 2002 2003 2004 2005 2006 2007 2008e 2009e

            Source: HVS International


Growth in exhibition space has been flat since 2004 when the Gold Coast and Perth
venues added nearly 20,000 m2 of space to the market. The new Melbourne Exhibition
& Convention Centre is scheduled to open in 2008 replacing the existing convention
centre with a hotel and function space attached to the existing 30,000 m2 of exhibit
space. Also in mid-2008, a new convention and exhibition centre is planned to open in
Darwin with a 1,500 seat plenary hall and 4,200 m2 of exhibition space. Beyond 2009,
new space is likely to be added in Canberra and the Gold Coast through expansions of
existing venues.

Table 3-1 ranks exhibition venues in Australia by size.




                                                                             12-Feb-07
Convention, Exhibition and Tourism Trends                                                                         Page 3-6




            Table 3-1
            Australian Venues Ranked by Amount of Exhibition Space
                                                                                                   Exhibition
             Venue                                                                 Year Open
                                                                                                   Space (m2)
             Melbourne Exhibition and Convention Centre*                              1996           30,000

             Sydney Convention & Exhibition Centre                                    1988           27,200

             Brisbane Convention & Exhibition Centre                                  1995           24,088

             Perth Convention Exhibition Centre                                       2004           16,650

             Adelaide Convention Centre                                               1987           10,077

             Darwin Convention and Exhibition Centre                                  2008            4,200

             Cairns Convention Centre                                                 1996            3,190

             Gold Coast Convention Centre                                             2004            3,106

             National Convention Centre (Canberra)                                    1989            2,400
            * Excludes 7,300 m2 of exhibition space in the existing MCC which will be displaced by the new
            development. 8,800 m2 of foyer space will also be available for light exhibition in the new MECC.
            Source: Respective Venues


Melbourne is ranked first, with Sydney a close second; however, only 25,000 m2 of
the 27, 000 m2 of the Sydney exhibit halls are contiguous, which reduces flexibility,
compared to the 30,000 m2 of contiguous space in Melbourne. In addition, the planed
foyer space in the new MECC will provide 8,800 m2 of space for light exhibits. Brisbane
is ranked third with 24,000 m2 of exhibition space, and Perth is fourth with nearly
17,000 m2.

3.4.1 Australian Exhibition Events

Using Exhibition and Events Association of Australia (“EEAA”) data, the National
Business Events Study analysed 300 “large” exhibitions (a precise definition of large
events is not included in the report.). Table 3-2 shows a breakdown of these events
by type for the year 2003, the most recent available data.




                                                                                                                12-Feb-07
Convention, Exhibition and Tourism Trends                                                                   Page 3-7




Table 3-2
Australian Exhibition Events, Attendance and Exhibitors in 2003
                                     Number of Events                       Average Attendance             Average
Events by Type
                                   Number        % of Total        Trade          Public         Total    Exhibitors

Trade                                     102        34%           12,206           0            12,206      528

Trade and Public                           24        8%            5,381          19,483         24,864     1,012

Public                                    120        40%             0            26,501         26,501      493

Convention Related                         54        18%           4,176          2,615          6,791       679
Source: EEAA Exhibitor Survey and National Business Events Study



          •    Thirty four percent of the events are tradeshows, with an average of
               12,200 attendees and 528 exhibitors producing a ratio of 23 visitors for
               each exhibitor.

          •    Forty percent of the events are public events with an average of 26,500
               attendees and 493 exhibitors; a ratio of 54 attendees for each exhibitor.

          •    Trade and public events are similar in size to public events but have a
               higher proportion of exhibitors.

          •    Fifty-four conventions also used substantial amounts of exhibition space,
               with an average attendance of nearly 7,000.

EEAA also categorised these events by the geographic scope of their advertising
media. Figure 3-3 shows a breakdown by region.




                                                                                                          12-Feb-07
Convention, Exhibition and Tourism Trends                                                                          Page 3-8




            Figure 3-3
            Geographic Scope of Events

                                              Local
                                               12%




                         International                                             National
                              23%                                                   41%




                                                   State-Wide
                                                      24%


            Source: EEAA Exhibitor Survey and National Business Events Study


3.4.2 Location of Exhibition Events

Table 3-3 shows the location of exhibition events in 2003.

            Table 3-3
            Location of Australian Exhibition Events by State and Territory in 2003
             State/Territory                                              Number              Percent of total

             New South Wales                                                   84                  28%

             Victoria                                                          75                  25%

             Queensland                                                        57                  19%

             Western Australia                                                 33                  11%

             Australian Capital Territory                                      24                   8%

             Southern Australia                                                21                   7%

             Tasmania                                                          6                    2%
            Source: EEAA Exhibitor Survey and National Business Events Study


Due to the location of the largest exhibition centres in Sydney and Melbourne, the
majority of events occurred in their respective states in 2003. New South Wales tops
the ranking with 28 percent of the events, and Victoria is a close second with 25
percent of the events. Noteworthy, however, is that New South Wales’ share of events
has slipped from 36 percent in 2002 and more recently available booking data from




                                                                                                                 12-Feb-07
Convention, Exhibition and Tourism Trends                                      Page 3-9




the SCEC and other Australian centres indicate that this is an ongoing shift in market
penetration of the respective states.

3.5 INTERNATIONAL CONGRESS AND CONVENTION TRENDS

A second component of the MICE market, and perhaps more important to Sydney and
its larger convention facilities, is the convention and congress segment. Governments
target these events as a first priority because of their higher economic impact.

The International Congress and Convention Association (“ICCA”) collects information
on the international meetings market, key excerpts of which are presented in the
following tables. In order to be included in ICCA’s database events must meet the
following criteria:

        •   The event must occur on a regular basis,

        •   It must attract between 50 and 10,000 attendees, and

        •   The event must rotate between a minimum of three different countries.

ICCA’s database includes approximately 80 percent of the estimated 14,000 events
organised regularly that meet the preceding criteria.

3.5.1 Overview of Meetings by Continent

The ICCA database of events tracks the number of events by the continent where they
occurred. Figure 3-4 shows the market share per continent by number of meetings.




                                                                             12-Feb-07
Convention, Exhibition and Tourism Trends                                   Page 3-10




            Figure 3-4
            Market Share per Continent by Number of Meetings

                                                        Africa
                                            Australia
                                                         2%
                                              4%
                                Latin America
                                      7%


                          North
                         America
                          10%


                                                                 Europe
                                                                  58%
                       Asia/Middle
                          East
                          18%




            Source: ICCA 2005


According to the ICCA database, Australia is capturing four percent of international
meetings. Most of the events in the ICCA database were held in Europe, while the
Asia/Pacific region ranked second with 18 percent of the events.

3.5.2 Meetings by Country and City

Table 3-4 shows the number of international meetings held per country.




                                                                           12-Feb-07
Convention, Exhibition and Tourism Trends                                           Page 3-11




            Table 3-4
            Number of Meetings per Country
                                                                     Number of
                       Rank                  Country                 Meetings
                                                                   1996    2005
                       1           U.S.A.                          360     376
                       2           Germany                         199     320
                       3           Spain                           139     275
                       4           United Kingdom                  203     270
                       5           France                          196     240
                       6           Netherlands                     163     197
                       7           Italy                           169     196
                       8           Australia                       126     164
                       9           Austria                         102     157
                       10          Switzerland                      80     151
                       11          Japan                           146     142
                       12          Brazil                           36     142
                       13          Sweden                           93     134
                       14          China-P.R.                       50     129
                       15          Singapore                        33     125
                       Total                                       2,095   3,018
                                               Source: ICCA 2005


The United States holds 376 meetings out of the total sample of 3,018, while Australia
(with 164 events) ranks 8th among the list of countries where events were held. The
total number of meetings in Australia and in the world as a whole is substantially
greater in 2005 than 2006; however, the number of meetings in Australia has not
grown as fast the number in the rest of the world. Figure 3-5 shows the percent
change in the number of events by year for Australia and the rest of the world.




                                                                                   12-Feb-07
Convention, Exhibition and Tourism Trends                                                        Page 3-12




            Figure 3-5
            Percent Change in the Number of International Meetings (1997 through 2005)

              50%


              40%
                                                                Australia       World
              30%


              20%


              10%


               0%


             -10%
                        1
             -20%

                     1997       1998   1999    2000     2001     2002    2003     2004   2005
             -30%

            Source: ICCA 2005


While the rest of the world has demonstrated consistent growth except for 2001,
Australia’s performance has been more erratic with a large increase associated with
the 2000 Olympics and large decreases in 2001, in the aftermath of the terrorist’s
attacks. Overall Australia grew at an average rate of 3.0 percent over the past ten
years, while the number of meetings in the rest of the world grew at 5.1 percent.

3.5.3 Overview of Participants

The average number of participants per meeting per year from 1995 to 2005 has
declined, as shown in Figure 3-6.




                                                                                                12-Feb-07
Convention, Exhibition and Tourism Trends                                                      Page 3-13




            Figure 3-6
            Average Number of Participants per Year 1996-2005
             1000

                                                     842
                       758            778
               800              743           729               728
                                                                      699
                                                                            672   670   651

               600



               400



               200



                 0
                      1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

            Source: ICCA 2005


After reaching a peak average of 842 participants per event in 2000, the average
number of participants declined to a low point of 672 in 2003. Over the next two
years, the average continued to decline to 670 and 651 participants in 2004 and 2005
respectively.

3.6 THE EXHIBITION INDUSTRY IN THE ASIA PACIFIC REGION

The SCEC and other Australian venues compete with Asian venues for international
tradeshows and conventions that rotate throughout the Asia Pacific region. Primary
Asian competitors include:

         The Kuala Lumpur Convention Centre,

         The Hong Kong Convention Centre, and

         The Suntec Singapore.

The preceding venues are currently the most prevalent Asian competitors for rotating
conventions and tradeshows. However, numerous venues in Asia have the potential to
compete for individual events and a current boom in convention centre construction in
China has the potential to significantly increase this regional competition for events.
Consequently, awareness of the overall trends in the supply of and demand for space
in the Asia Pacific region is important to assessing the prospect of future international
tradeshow and convention business in Australia.




                                                                                              12-Feb-07
Convention, Exhibition and Tourism Trends                                                                       Page 3-14




Asia and Australia currently have 3.7 million square metres of indoor function space in
112 venues. The amount of available indoor function space at exhibition facilities by
host country is shown in Table 3-5.

            Table 3-5
            Indoor Function Space of Exhibition Facilities in Asia
                                                                SQM of Indoor
                                          Number of
             Country                                             Exhibition   Percent of Total
                                           Venues
                                                                  Space*
             China                             56                  2,202,090                   60.0%
             Japan                             12                    396,034                   10.8%
             India                             10                    244,623                    6.7%
             South Korea                        5                    127,206                    3.5%
             Thailand                           4                    186,666                    5.1%
             Taiwan                             3                    97,710                     2.7%
             Hong Kong                          3                    132,100                    3.6%
             Singapore                          2                    81,000                     2.2%
             Indonesia                          2                    11,835                     0.3%
             Malaysia                           2                    49,244                     1.3%
             Pakistan                           1                     6,690                     0.2%
             Phillipines                        1                     8,300                     0.2%
             Vietnam                            1                     7,134                     0.2%
             Australia                         10                    118,022                    3.2%

             Total                             112                  3,668,654
            **Available Space in 2005
            Sources: Business Strategies Group Ltd. for all countries except Australia which is based on HVS
            International research on primary venues in ten cities.


China has the largest amount of available indoor function space (2.2 million square
metres) and the most facilities in Asia (56). The second-ranked country in the region
is Japan, with 396,034 square metres of exhibit space in 12 facilities. Due to its
historic role as Asia’s premier centre of trade and the availability of high-quality
exhibition space, Hong Kong has been the most successful producer of tradeshows in
Asia. The Hong Kong Convention and Exhibition Centre is undergoing expansion and
the newly opened Asia World Expo near the Hong Kong airport has recently doubled
its amount of exhibition space. Considering the size of its population and economy,
Australia has a relatively large number of convention centres and exhibition floor area.




                                                                                                               12-Feb-07
Convention, Exhibition and Tourism Trends                                                  Page 3-15




The mainland Chinese market is currently focused primarily on domestic tradeshows,
sourcing Chinese products to the rest of the world, and trade fairs that do not rotate
outside their host region. Similarly, the Japanese market has a primary focus on
domestic events. Consequently the growth in supply and demand in the rest of Asia is
likely to have the most impact on Australia and Sydney’s capacity to attract
international events.

3.6.1 Growth of the Supply of Exhibition Space

Figure 3-7 indicates the historical and projected growth of tradeshow venues in
Mainland China, Japan and the rest of Asia.

            Figure 3-7
            Historical & Projected Growth of Tradeshow Venues in Asia

                                        Mainland China      Other Asia     Japan

               2,500,000



               2,000,000



               1,500,000



               1,000,000



                 500,000



                          0
                                    2004             2005               2006       2007


            Source: Business Strategies Group Ltd.


China has experienced the most rapid growth, due primarily to a rush of government-
sponsored projects that came on line over the past five years. This rapid growth in
space has outpaced the growth in the number of and size of tradeshows and, as a
result, the utilisation of exhibit space in China is reported to have declined. More
relevant to Sydney is the significant growth in the rest of Asia, as expansions in Hong
Kong and a new venue in Macau opening in 2007 are likely to introduce new
competition for international events.




                                                                                          12-Feb-07
Convention, Exhibition and Tourism Trends                                                         Page 3-16




3.6.2 Demand for Exhibition Space in Asia

The demand for events can be measured by the amount of net square metres sold
each year. Event organisers typically rent exhibition halls from the tradeshow venue
operator; the amount of space rented by the organisers is referred to as the gross
area of the exhibition. The event organiser in turn leases booth space to exhibitors,
the amount of which is called the net area or net square metres of the exhibition.

The number of events, net area sold, and the average net area of events by country
are shown in Table 3-6.

            Table 3-6
            Net Square Metres of Exhibition Space Sold in Asia in 2004

                                                                  Net Area Sold   Average Size
              Country                       Number of Events
                                                                      (sqm)          (sqm)

              China                                  555            3,551,500        6,399

              Japan                                  476            2,107,000        4,426

              Korea                                  141             509,000         3,610

              Hong Kong                               56             501,000         8,946

              India                                  130             427,500         3,288

              Taiwan                                  47             301,250         6,410

              Thailand                                65             191,750         2,950

              Singapore                               53             179,250         3,382

              Indonesia                               56             123,250         2,201

              Philippines                             62             120,250         1,940

              Malaysia                                41             110,250         2,689

              Pakistan                                17                 38,000      2,235

              Vietnam                                 48                 28,250       589

              Total/Average                          1,747          8,188,250        3,774
            Source: Business Strategies Group Ltd.


China dominates the Asian market in number of events and total net square metres
sold. No specific tradeshow industry dominates the market in China; however, the
engineering, manufacturing, furniture, household items, and toys industries each
lease 7 to 10 percent of net exhibition area in China.

Japan has the second-largest number of events and net area sold, but this market is
dominated by domestic tradeshows, which are unlikely to migrate to other locations.




                                                                                                 12-Feb-07
Convention, Exhibition and Tourism Trends                                     Page 3-17




Thus, tradeshow venues in Japan are not positioned as primary direct competitors to
Sydney.

3.7 CONCLUSION

Considering the size of its economy, Australia has a relatively large amount of
convention and exhibition infrastructure. The majority of events in Australia are
domestic; however, approximately one fourth of the events have an international
component. Sydney is facing increased competition from both domestic and regional
sources.

        •   In the domestic market, new and improved venues are providing increased
            competition and soon Victoria is likely to overtake New South Wales as the
            premier location of convention and exhibition events.

        •   The number of international meetings has shown strong growth over the
            past decade, but Australia has grown at a slower rate.

        •   The amount of available exhibition space in the rest of Asia has grown
            dramatically, while Australia has shown little growth.

        •   In the context of dynamic and growing national and international markets,
            Sydney has been comparatively stagnant in the number of events it has
            attracted and has done little over the past decade to improve or expand
            existing venues.




                                                                             12-Feb-07
4. Primary Sydney Venues

4.1. SCOPE OF VENUE ANALYSIS

HVS identified five venues in Sydney may have potential to host significant
conventions and exhibitions and to some extent, compete with each other. This
section presents an overview of these venues, with the objective of describing the
amount available space and the character of the venues. HVS has inspected each
of these venues in the course of its research and sought data from all regarding
their respective operations.

   •   Sydney Convention and Exhibition Centre – the largest venue in Sydney;
       located in Darling Harbour and the primary location of national and
       international conventions, tradeshows, and exhibitions.

   •   Sydney Showgrounds at Sydney Olympic Park – the second largest venue
       in Sydney; oriented more toward local trade and consumer shows.

   •   Rosehill Gardens – a tertiary venue located on the grounds of the Sydney
       Turf Club; serves small, local exhibitions and social events.

   •   Australian Technology Park – a tertiary venue located in an historic building
       in Eveleigh; suitable for small exhibitions and conferences.

   •   Playbill Venues at Moore Park – a tertiary venue located in the Moore Park
       entertainment district; offers three small exhibit pavilions along with other
       meeting spaces.

In order to keep the focus of this report on the supply and demand for larger
venues developed most often with support from the public sector, HVS has chosen
to consider only “stand-alone” venues, excluding from its analysis the many hotel
properties in Sydney that also accommodate MICE business. While hotels often
compete with stand-alone venues for certain types of conference business and
local social events, this report is concerned only with the ability of the hotel supply
to support the stand-alone venues by providing lodging for convention and
tradeshow attendees.

The demand profiles of the SCEC and Sydney Showgrounds, generated through
detailed analysis of events, attendance, and exhibit hall utilisation, are key inputs
into the projection of future event demand.
Primary Sydney Venues                                                      Page 4-2




4.2. SYDNEY CONVENTION AND EXHBITION CENTRE

The Sydney Convention and Exhibition Centre (SCEC), one of Australia’s largest
meeting facilities, is the primary venue in Sydney. It hosts both national and
international business events. Located on Darling Harbour, the SCEC’s proximity to
the central business district is its primary asset, as shown in the photo below.

           Figure 4-1
           SCEC and Sydney Central Business District




While the SCEC is owned by the Sydney Harbour Foreshore Authority and the
Darling Harbour Convention and Exhibition Pty Ltd. (both entities of the New South
Wales Government) is responsible for its daily operation. The SCEC is managed
privately by the Convention Centre Management Pty Ltd (CCM), which in turn is
owned jointly by the hotel group Accor Asia Pacific and the Compass Group.

When the SCEC opened in 1988, the five exhibition halls, each with 5,000 m2 of
gross floor area, were linked via internal corridor under the highway overpass to
the convention centre building. In 1999, the connection between the Exhibition
Centre and the Bayside Convention Centre was enhanced due to an expanded
building (the Parkside Convention Centre) that added 2,200 m2 of exhibition space
along with other meeting and breakout space. Currently, the SCEC has 27,200 m2
of exhibition space in six halls, 30 meeting rooms, two auditoriums, and a banquet
hall able to accommodate 1,000 people.

The SCEC is currently investing $6 million in a capital improvements programme
that is aimed at updating and improving the appearance of the property. This
programme involves carpet replacement, the purchase of art, and other
improvement necessary to maintain the quality of the property. The improvement
programme does not involve the addition of space or significant improvement of
functional capabilities.




                                                                         12-Feb-07
         Primary Sydney Venues                                                         Page 4-3




         4.2.1. Precinct Infrastructure

         Figure 4-2 illustrates much of the supporting infrastructure in the area, including
         the Harbourside retail development, Star City Casino, the Australian National
         Maritime Museum, the Powerhouse Museum, the IMAX Theatre, and the Sydney
         Aquarium. Within short walking distance is the Sydney Entertainment Centre, a
         12,500 seat arena venue sometimes used for plenary session for large conventions
         at the SCEC.

Figure 4-2
Darling Harbour Map




         4.2.2. Transportation Access

         The commercial centre of the business district is a ten-minute walk from the SCEC.
         The Metro Monorail, which has a convention centre stop, connects the SCEC to
         many of the downtown hotels and restaurants. SCEC management reports that the
         Metro Monorail is highly utilised by convention and tradeshow attendees. A
         separate light-rail transportation system originating in Lilyfield in the Western part
         of the City has convention centre and exhibition hall stops and connects the SCEC
         to Chinatown and the Sydney Central Station, the central rail terminal that serves
         the entire metro area.




                                                                                      12-Feb-07
Primary Sydney Venues                                                      Page 4-4




Vehicular transportation is viable from Darling Drive on the west side of the SCEC.
An attendee drop area is located between the convention centre and the exhibit
halls. Truck access for loading the exhibit halls is also on the west side of the
building, with the loading docks facing Darling Drive. While the exhibition hall
loading is functional with each hall having its own dock, exhibition organisers
report some dissatisfaction with the efficiency of truck access. The auto access to
the venue for attendees on the same side of the building as the loading docks has
somewhat of a “back-door feel,” since the more active pedestrian access to the
building is on the east side.

Sydney Airport is located 20 minutes from the SCEC. Sydney Airport is Australia’s
busiest airport; approximately half of all international passengers to Australia
arrive and depart from Sydney. Domestically, 25 percent of airline passengers in
Australia have some type of passenger movement involving a connection with
Sydney Airport. Total passengers at Sydney Airport have steadily increased
throughout the past decade. From 1995 to 2005, passenger movements have
increased by 4.3 percent annually. Preliminary passenger totals for 2006 show a
modest increase in total passengers at Sydney Airport from 2005. Continued
increase in international travel and domestic travel throughout Australia suggests
Sydney Airport will continue to experience growth in total passenger volume in
years to come.

The SCEC is served by its own Exhibition Centre Carpark, which can accommodate
900 cars, and the Wilson Entertainment Carpark just to the south of the exhibition
halls, which has a 1,900 car capacity. Approximately 5,000 spaces are available in
the Darling Harbour District.

4.2.3. Hotel Infrastructure

Thirty lodging properties in the Darling Harbour and central business district that
support the SCEC are shown in the table below (See Table 4-1).




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           Table 4-1
           Supportive Lodging Capacity
            No.*                           Name                             Room Count   Star Rating
              1      Star City (Hotel and Apartments)                          352           5.0
              2      Grand Mercure Apartments                                  121           4.5
              3      Ibis Hotel                                                256           3.0
              4      Novotel Sydney                                            525           4.5
              5      Goldsbrough Hotel & Apartments                            520           4.5
              6      Novotel Century                                           223           4.0
              7      Holiday Inn                                               304           4.0
              8      The Waldorf Apartment Hotel                               266           4.0
              9      Medina Grand                                              144           5.0
             10      Crowne Plaza Hotel                                        323           4.5
             11      Somerset                                                  119           4.5
             12      Four Points by Sheraton                                   631           4.0
             13      Medina Grand Harbourside Apartments                       114           5.0
             14      All Seasons Premier Menzies Hotel                         446           4.0
             15      The Wentworth                                             431           5.0
             16      Radisson Plaza Hotel                                      362           5.0
             17      ANA Harbour Grand Hotel                                   561           5.0
             18      Quay West                                                 132           5.0
             19      Four Seasons Hotel                                        531           5.0
             20      Renaissance Sydney Hotel                                  550           5.0
             21      Sir Stamford at Circular Quay                             105           5.0
             22      Hotel InterContinental                                    498           5.0
             23      The Westin Sydney                                         416           5.0
             24      Hilton Sydney                                             577           5.0
             25      Sheraton on the Park                                      557           5.0
             26      Sydney Marriott                                           241           5.0
             27      Travelodge Hotel                                          406           3.5
             28      Radisson Hotel and Suites                                 102           4.5
             29      Pacific International Apartments                          160           4.0
             30      Aaron's Hotel                                              93           3.0
                                                       TOTAL/AVERAGE          10,066         4.5
           * Number shows location on the previous map of Darling Harbour
           Source: Sydney Convention & Exhibition Centre


According to the SCEC, these 30 lodging properties support the SCEC by supplying
room blocks and accommodating delegates and exhibitors. These properties
include hotels and serviced apartments with a total over 10,000 rooms. The size of
the hotels ranges from 631 rooms at the Sheraton Four Points to 93 rooms at
Aaron’s Hotel, with an average room count of 336. The quality of the properties is
generally excellent, with all but three properties rated at a 4-star level or higher; a
highly supportive lodging supply.

4.2.4. Summary of SCEC Function Spaces

The quality, flexibility, and functionality of a convention and exhibition venue are
some of the most important criteria in determining site selection. A detailed
description of the SCEC, along with an evaluation of its capabilities, is presented in
Table 4-2.




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         Primary Sydney Venues                                                                                       Page 4-6




                        Table 4-2
                        Sydney Convention & Exhibition Centre Function Space Summary
                                                                                                 Capacity
                                                                Divis-             2
                                   Type of Space                          Area m
                                                                ibility
                                                                                       Theatre   Banquet    Class

                           Bayside Grand Hall                      1       2,500        1,460     1,550     720

                           Bayside Auditoria                       2        --          3,500       --       --

                           Bayside Breakouts                      17       3,770         --         --       --

                           Parkside Ballroom                       2       1,160        1,300     1,000     800

                           Parkside Auditorium                     1       1,000

                           Parkside Breakouts                     13       2,306         --         --       --

                           Parkside Exhibition Hall 6              1       2,200         --        870       --

                           Exhibition Halls 1 - 5                  5      25,000        3,000     2,000      --
                        Source: Sydney Convention & Exhibition Centre


         4.2.5. Exhibition Capacity and Functionality

         The SCEC consists of three separate but connected building structures:

               •    the exhibition centre event halls 1 through 5;

               •    the Parkside Convention Centre; and

               •    the Bayside Convention Centre. The following image shows the floor plans
                    of these three buildings.

Figure 4-3
SCEC – Exhibition Centre, Parkside, and Bayside Buildings




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The five original exhibition halls each measure 5,000 m2 in gross floor area and
although they are contiguous, their alignment is staggered. Consequently, the
divisibility of the halls is less flexible than in a state-of-the-art exhibition facility.
The exhibition halls are each divided by operable walls, but these walls can only be
used in 5,000 m2 increments without further operability, as opposed to a more
standard rectangular configuration with movable walls that can subdivide more
efficiently. Furthermore, required setbacks for exhibition stands within the halls
limits exhibition organisers in their efficient use of space. That is, the percentage of
floor area that can be sold to exhibitors is less than in a more standardised
rectangular hall.

In the 1999 expansion, a sixth exhibition hall was added in the lower level of the
Parkside building. Hall 6 has 2,200 m2 of floor area and its own loading dock, but
the limited capacity of the loading dock creates challenges for move-in and move-
out during simultaneous events. Unlike the other halls, it has permanent carpet
tiles and is more appropriate for light exhibitions associated with conventions. It
can also be used for large banquets.

The exhibition halls 1 through 5 are separated from the pre-function area by a
glass “storefront” wall. Pre-function areas are carpeted and adequate in width.
Glass exterior walls face the harbour side of the SCEC, providing views to the
active pedestrian side of the building. The glass design of the pre-function and
exhibition hall walls allows ambient light into exhibition halls one through five.
While this lighting may be favoured by some exhibit hall users, it presents an
obstacle to most others. Ambient light often obscures electronic displays and
otherwise interferes with the light preferences of exhibitors. Most exhibitors prefer
a visual separation between the pre-function areas and the exhibit halls. Motorised
blinds are used to diffuse sunlight, and on rare occasions exhibition organisers
cover the exhibit hall windows for security purposes.

Each exhibition hall is serviced by a separate loading dock so that each hall can be
loaded independently. The exhibit hall floors are designed to support heavy loads;
trucks can drive onto the floor to unload. However, loading dock capacity is
generally inadequate to handle a high volume of truck movements, and reliance on
a public roadway (Darling Drive) as a vehicle staging area presents traffic and
safety issues. The halls are fully air conditioned and provide access to fibre optics,
CAT 5 network, telecommunications, power, water and compressed air contained in
floor boxes. Ceiling heights are 10.5 to 14 metres. The air conditioning, ceiling
heights, and utilities meet standard industry expectations. Lounges on the second
level, which can be used as exhibitor offices or small breakout meeting rooms, look
out on each exhibition hall.

4.2.6. Convention Spaces

Conventions and tradeshows typically require varying types of spaces, including
plenary halls for general sessions, ballrooms for banquet events, meeting breakout
spaces, registration areas, and room for adequate pedestrian circulation. The
availability, location, quality, and flexibility of these spaces influence the appeal of
the centre and the efficiency in its operation.




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The following figures depict the floor plans of the SCEC, Parkside, and Bayside
convention facilities and show the relationships between the various types of
spaces.

           Figure 4-4
           Convention Facilities – Bayside Ground Level




           Figure 4-5
           Convention Facilities – Bayside Level 1




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Primary Sydney Venues                                       Page 4-9




           Figure 4-6
           Convention Facilities – Parkside Ground Level




           Figure 4-7
           Convention Facilities – Parkside Level 1




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4.2.7. Theatre Capacity

The largest plenary hall or theatre, with a capacity for 3,500 delegates, is located
in the Bayside Convention Centre. It sub-divides only once, into two theatres with
seating for 950 and 2,485. By current standards, it provides inferior flexibility and
does not allow the SCEC to adapt the size of its theatres to meet the wide range of
desired capacities or to host simultaneous sessions in various halls. While the stage
area is expansive, its functional capability is limited because it lacks any theatrical
or musical staging capacity. This factor limits the uses of the Bayside Auditorium
for other types of entertainment events, thereby reducing its overall revenue
productivity for the SCEC.

The seating is comfortable and well maintained, but the chairs lack flip-up desk
tops, which are often expected in a lecture hall setting. More recently built state-
of-the art plenary halls incorporate flexible seating systems that convert raked
seating into flat floor space for banquet halls or dinner theatre events. The SCEC
does not have this capability.

A second smaller theatre (Parkside Auditorium) seating 1,000 persons is located in
the Parkside Convention Centre. Although smaller than the main plenary hall, it
has some desirable features lacking in the large plenary hall, including foldaway
tables and a fly tower for scenery and props. The Parkside Auditorium walls do not
sub-divide.

4.2.8. Ballroom Capacity

The largest ballroom in the venue is the Bayside Grand Hall, with capacity for
1,550 in a banquet setting. It is a semi-circular hall with entrances on the straight
side of the hall and service corridors on the circular sides of the hall. Columns in
the Bayside Grand Hall can obstruct views and otherwise interfere with event set
up. The Grand Hall is not divisible, which is another important example of the
inflexibility that characterises the entire venue. Despite this limitation, the Grand
Hall is useful for banquet functions and smaller exhibitions that may accompany
convention events.

A second ball room with banquet capacity of 1,000 is located in the Parkside
Convention Centre. This hall divides into two sections with an operable wall, but
more optimally, a banquet hall of this size would divide in half and in thirds,
providing more flexibility. Two rear projection screens are fixed in place on each
side of the ballroom. Typically, movable audio visual equipment is preferred
because it allows the hall to be used in a wider variety of configurations.

4.2.9. Meeting Rooms

Thirty meeting rooms with a total of 6,076 m2 of floor area serve the SCEC. One
block of meeting rooms is clustered around the Bayside Auditorium and two large
meeting rooms are located in the Parkside Convention Centre. Like the exhibit
halls, the blocks of meeting rooms lack divisibility that would allow them to be
used in various combinations and sizes. As was evident during a tour of the facility,
small breakout sessions are often forced into large rooms with too much capacity.




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The inability to schedule simultaneous use of smaller blocks of space reduces the
usable capacity of the venue as compared to a state-of-the art convention centre.

4.2.10. Function Space Ratio

The ratio of function space to exhibition space is often used to assess efficiency of
a convention centre (i.e. the total meeting and ballroom area divided by exhibition
area). In the SCEC, the ratio is 36 percent. For venues that host a combination of
conventions and tradeshows as does the SCEC, a ratio of between 40 to 50 percent
is desirable. Increased amounts of more flexible function space would improve the
SCEC’s ability to schedule and host more simultaneous events.

4.2.11. Other SCEC Amenities

Other amenities in the venue include the Bayside Gallery, a multi-purpose function
space with panoramic views of the harbour, and the Bayside Terrace, a banquet
hall serving up to 200 persons that also offers stunning views of the city and
Darling Harbour. The overall setting for the SCEC is exceptional with its access to
the harbour and nearby dining and entertainment venues.




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4.3. SYDNEY SHOWGROUNDS AT SYDNEY OLYMPIC PARK

The Sydney Showgrounds (Showgrounds) at Sydney Olympic Park is a collection of
event facilities located about 30 minutes outside Sydney’s central business district.
The site is connected to downtown Sydney by rail service, with a station directly
adjacent to the Showground. The Royal Agricultural Society of NSW (RAS) leases
the Showground site from Sydney Olympic Park Authorities owned by NSW
Government and operates the event venues. RAS is a not for profit organisation
with a membership base of 13,000 people. In addition to managing the
Showgrounds, the RAS is responsible for conducting the Sydney Royal Easter Show
and the Sydney Royal Wine, Dairy and Fine Food Shows, as well as other activities
throughout the year.

           Figure 4-8
           Aerial View Sydney Showgrounds at Sydney Olympic Park




4.3.1. Description of the Showgrounds

The Showgrounds are well suited for public consumer shows, and local exhibitions,
because of its size and location in the geographic centre of the Sydney market
area. However; due to its history as an agricultural and equestrian venue and its
role in the 2000 Sydney Summer Olympics, the Showgrounds is not a purpose-
built exhibition and convention centre.

The Showgrounds offer a variety of venues with capacity to host large banquets for
4,000 people to intimate dinners of 20 people. In addition to mid-sized meeting
and boardrooms, the Showgrounds offers nearly 22,000 m2 of continuous clear-
span space combining the Dome and Exhibition Halls (See Table 4-3).
Consequently, its ability to serve the convention and exhibition industry is
somewhat limited.




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           Table 4-3
           Sydney Showgrounds Programme of Function Spaces
                                                         Area
            Venue                                                      Theatre   Banquet    Cocktail
                                                         (m2)
            The Clydesdale Pavillion                      965            80        150        300
            The Dome                                     7,200          5,000     4,000      6,000
            The Halls                                   14,400          7,200     6,000      7,200
            The Southee Complex                          1,360          1,000      800       1,500
            The Wynne Pavilion                            510           300        200        500
            The Howie Pavillion                          2,230          1,000      800       1,000
                                                                                        1
            Playfair Room                                 510           250       260         400
                                                                                        1
            Charley Room                                  440           250       250         350
            Jamison Room                                  370           220       1601        280
            The Badgery Pavillion                        2,540          1,500     1,000      1,800
           1 Banquet capacity allows for stage and small dance floor
           Source: Sydney Olympic Park Authority


The function spaces at Sydney Showgrounds are not integrated in a single venue.
The Dome and the Halls are connected, but the other pavilions and meeting areas
are spread out over the grounds. Thus, event planners that use the exhibit space
provided by the dome and halls cannot readily draw upon the other meeting areas
without requiring event attendees to leave the exhibition halls. Event planners are
reluctant to accept an event plan where meeting spaces are housed in separate
venues from the main show floor because the volume of traffic on the show floor is
a key element of the value events provide to exhibitors. If event attendees are
required to leave the dome and halls to access ancillary meetings, there is a risk
they may not return to the show floor, and these activities may actually reduce the
volume of people on the show floor rather than serve as additional attractions for
them. Thus, the Sydney Showgrounds has difficulty competing effectively with
venues that have integrated exhibit, ballroom, plenary, and meeting spaces all
contained within a single building.

The exhibition halls are equipped with utilities located in floor boxes. Recently, air
conditioning systems were installed but these systems reportedly provide less than
optimal climate control. Divisibility is limited, as the exhibition halls can only be
divided in half. Loading docks are plentiful; the halls are loaded from two sides, but
the loading areas cross over pre-function spaces that are small and wholly
inadequate. The overall design or the venue does not meet the standards of most
exhibition venues.

4.3.2. Showgrounds Event Profile

The Showground hosts a number of different types of events, including product
launches, corporate functions, large convention dinners, conferences, cocktail
parties, outdoor events, exhibitions, and concert performances. The Showground
hosts several recurring large consumer shows, including:




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       The ABC Gardening Show;

       The PGA Golf Show,

       Parents Babies & Children's Expo, and

       Gifts and Homewares Australia Show.

RAS provided HVS with annual event data on larger consumer and tradeshows
occurring at the Showground for 2004 and 2005 (see Table 4-4).

           Table 4-4
           Sydney Showgrounds Average Event Profile for 2004 and 2005
                                                                             Occupied
                                               Number of    Total                       Exhibit Hall
               Type of Event                                                  SQMD
                                                Events   Attendance                     Occupancy
                                                                             (millions)
               Consumer Shows                     15            198,567            1.5      19.0%
               Tradeshows                         14            73,020             0.9      12.0%
               Other                              2              2,910             0.0       0.4%
               TOTAL                              32            274,497            2.5      31.4%
           Source: Royal Agriculture Society


Consumer shows account for roughly half of the total number of events, but over
70 percent of attendance. Exhibit hall occupancies indicate that the Sydney
Showgrounds is operating below capacity. Given that the SCEC is operating well
above capacity and turning away events, it is clear that the Sydney Showgrounds
is not an adequate substitute for the SCEC and does not compete with SCEC. While
the supply of exhibition space at the Sydney Showgrounds is nominally available in
the market place, in practice it does not provided additional supply. Its inadequate
size, location away from the central business district, and lack of amenities in and
around the venue are all barriers to growing event demand, even though that
demand is present in the market place.

The majority of business at the Showgrounds is local as shown in Table 4-5.

           Table 4-5
           Sydney Showgrounds Event Characteristics (2004 and 2005)

                                                      National            Local          Overall

               Number of Events                         13                 18             30.5
               Percent of Events                        43%                57%           100%
               Event Length                             5.8                5.9             5.9
               Average Attendance                      5,305              11,110         8,714
               Average Floor Area (m2)                 10,674             15,343         13,432
           1Including move-in and move-out days
           Source: Royal Agricultural Society




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RAS has developed an expansion plan for the Showgrounds that calls for building a
second exhibition hall adjacent to the existing hall and dome. This second
exhibition hall would feature 15,000 m2 on the ground level and a lower level with
a 10,000 m2 500-car parking lot that can double as auxiliary exhibit space and
2,500 m2 of meeting space. One level below the auxiliary exhibit space and
meeting rooms would be an additional level of with another 10,000 m2 that
accommodates a 500 space car park.

An expanded Showgrounds venue would partially overlap the local consumer and
tradeshow market currently served by the SCEC. This expansion plan would
significantly increase the Showgrounds’ capacity to accommodate large tradeshows
and consumer shows and the additional meeting space would improve its ability to
host events with more of an emphasis on educational sessions, a growing trend in
the tradeshow industry. However, the expansion plan does not expand upon the
existing halls’ contiguous exhibit space; as the new and existing halls would be
separated by a concourse. As a result, the expansion may be more effective in
attracting simultaneous events than in accommodating events that require in
excess of 22,000 m2 of exhibit space, as event planners generally prefer to have all
of their exhibitors in a single, contiguous exhibit hall.




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4.4. ROSEHILL GARDENS

           Figure 4-9
           Exterior Rosehill Gardens




Rosehill Gardens, located near Parramatta on the grounds of the Sydney Turf Club,
features a 4,000 m2 exhibition hall, adjacent conference rooms, and outdoor event
spaces. The site is accessible via rail and ferry service and has 5,000 free parking
spots on site.

With a high ratio of meeting to exhibit space, Rosehill Gardens is particularly
appealing to small and mid-sized conferences that may have light exhibits. For
additional measurement and capacities please see Table 4-6.




                                                                           12-Feb-07
Primary Sydney Venues                                                                 Page 4-17




           Table 4-6
           Rosehill Gardens Programme of Function Spaces
                                          Area
            Room                             2        Theatre    Banquet   Cocktail
                                          (m )
            Lower Ground Floor
             Winner's Circle               840             300     300       800
            Ground Floor
             Exhibition Centre            4,000        2,000      2,000     2,000
             Hollywood                    1,700        1,000       500       600
             Churchill                    1,450            600     250       250
             Tulloch                      1,092            600     400       400
            Level 3
             Chantilly                     200             150     150       150
             Longchamps                    260             150     150       150
             Palms                         175             300     200       200
            Level 4
             Ascot                         575             300     500       300
             Epsom                         730             300     500       300
             Champagne                     185             350     300       250
            Level 5
             Baguette                      200             125     150       130
             Marscay                       200             125     150       130
           Source: Rosehill Gardens


With a divisible exhibit hall, the venue has the flexibility to host a variety of
different events. The non-uniform dimensions of the long, somewhat narrow hall
and the vertical circulation area divide the Churchill Downs and Hollywood Park
rooms, making it less appealing for exhibition events.

Due to the size and configuration of the exhibition hall as well as its location,
Rosehill Gardens does not directly compete with the SCEC for major national,
international or local convention and exhibition events.




                                                                                      12-Feb-07
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4.5. AUSTRALIAN TECHNOLOGY PARK

           Figure 4-10
           Exhibit Hall Australian Technology Park




The Australian Technology Park Conference Centre is located in Eveleigh and
features a 6,850 m2 exhibit hall and 2,277 m2 of meeting space. The centre offers
a 524-seat theatre and ten meeting rooms. As a test-bed for the more than 100
resident companies of Australian Technology Park, the ATP Conference Centre
hosts over 400 events per year.

Its comprehensive and convenient amenities include wireless electronic and video
conferencing equipment, contemporary landscaped grounds, security, parking and
the convenience of a location within 4km from Sydney’s central business district,
5km from Sydney Harbour, 8km from Sydney Airport and only 200m from Redfern
Railway Station, where all Sydney’s rail lines converge.

Although the Australian Technology Park Conference Centre is busy with small local
events, it lacks capacity necessary to compete with the SCEC. The small exhibition
hall with numerous columns does not meet the requirements of major exhibitions.
Expansion or renovations seem infeasible due the size of the surrounding site and
its Heritage status.




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4.6. PLAYBILL VENUES AT MOORE PARK

           Figure 4-11
           Moore Park Exterior




The Moore Park precinct is a collection of leisure and entertainment facilities and
amenities located approximately 10 minutes from downtown Sydney. A company
called Playbill Venues operates three event facilities in the park. For a summary of
the type and amount of function space at Moore Park’s three event venues see
Table 4-7.

           Table 4-7
           Moore Park Venues Function Space
                                                        2
                                                      m of Function Space
             Venue                                           Foyer /
                                              Exhibit                   Meeting
                                                            Courtyard
             Hordern Pavilion                 3,100           320           258
             Royal Hall of Industries         5,400            --           137
             Byron Kennedy Hall               1,250           650           111
             Total                            9,750           970           506
           Source: Moore Park


Hordern Pavilion - The Hordern Pavilion is a performance hall with retractable
seating that accommodates 3,500 people. A domed ceiling rises above the stage
and seating areas. Originally constructed in 1924, the Hordern Pavilion was
modified in 1972 to make it more versatile. Most of the columns were removed and
replaced with a new truss system, false ceilings were introduced and a bar and
ticketing boxes, together with a mezzanine corporate box area, were constructed.

Known primarily as a venue for rock music concerts, the facility has hosted a wide
variety of events, including:

       Live music,

       Film premieres,




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        Gala dinners,

        Product launches,

        Awards nights,

        Corporate parties, and

        Exhibitions.

4.7. CONCLUSIONS

This review of the existing venues in Sydney shows that:

    •   The SCEC does not have a peer or direct competitor in Sydney. The SCEC
        is the only venue in Sydney with sufficient capacity to serve the national
        and international convention and exhibition market. Other exhibition
        venues in Sydney do not offer an attractive alternative to event planners
        due to inadequacy of their size, location, and configuration.

    •   An expanded Showgrounds has potential to complement the SCEC by
        serving the consumer and local show market niche, thereby relieving
        pressure on the SCEC schedule during peak months of demand for national
        and international conventions and tradeshows.

    •   Smaller venues play an important role by hosting numerous local events
        that do not need large amounts of exhibition space. They too can
        complement the larger venues by incubating new events that could
        eventually grow to a size that requires a larger venue.




                                                                         12-Feb-07
5. Analysis of SCEC Demand

5.1 INTRODUCTION

Since the SCEC hosts the majority of large convention and exhibition events in
Sydney, analysis of its historical event demand provides an understanding of the
amount and type of event demand for Sydney as a whole. This section of the
report analyses the historical number of events, attendance, and utilisation of the
exhibition halls. HVS also quantified the amounts of lost business and
unaccommodated demand for the SCEC, culminating in estimates of the amounts
of business that could be recovered if the SCEC had increased capacity.

The organisation of historical event information provided by SCEC management,
along with the definitions provided in Section 2 of this report, dictate the
categorisation of event types used in the analysis of SCEC demand. The SCEC
hosts events that use exhibition space as well as meetings, conferences, banquets,
and other events that do not use exhibit space.

5.2 ANALYSIS OF SCEC EVENTS

The SCEC provided data for only one year on events that do not use exhibition
space (See Table 5-1).

          Table 5-1
          Non-Exhibition Events for the Year 2005

                                       Number of Average Total Event Avgerage    Total
           Data / Type of Event
                                        Events   Length     Days       Pax       Pax

           Meetings & Conferences
              International                 10      3        30        247       2,471
              National                     187      2        331       447      83,664
              Local                         19      1        19        491       9,322
           Sub-total                       216      2        380       442      95,457
           Social                          122      1        128       415      50,677
           Concert                          8       2        14       1,738     13,900
           Total                           346               656                160,034
          Source: SCEC


National and international events made up over half of the estimated attendance of
160,000 persons at non-exhibition events in 2005. These events attract business
tourists, and therefore have a higher economic impact on Sydney than local, social,
and concert events.
Analysis of SCEC Demand                                                                     Page 5-2




The SCEC provided ten years of historical data on their exhibition events through
June 2006. The remainder of our analysis of SCEC utilisation focuses on these
exhibition events. For the purposes of this study HVS used three metrics to
measure the accommodated historical event demand for events with exhibits: 1)
the number of events, 2) square metre days (area rented times the number of
days rented), and 3) attendance.

HVS classified exhibition events into conventions and tradeshows, consumer
shows, and other events. The categorisation serves to distinguish between the
different ways in which events use the events spaces in the SCEC. Conventions
and tradeshows typically use exhibit, meeting, and ballroom space while consumer
shows primarily use exhibition space. The delegates to conventions and
tradeshows also require the use of tourism amenities surrounding the SCEC such
as lodging, restaurant, retail, and entertainment, whereas local consumer show
attendees do not make extensive use of surrounding amenities.

5.2.1 Number of Events

Conventions and tradeshows show the most variability in number, while the level
of consumer shows and other events are more constant (See Figure 5-1).

           Figure 5-1
           Number of Exhibition Events by Year

                      Conventions & Tradeshows          Consumer Shows      Other
             140

             120

             100

              80

              60

              40

              20

                0
                     1997      1998      1999   2000   2001   2002   2003   2004    2005

            Source: SCEC & HVS International


The number of annual events has increased significantly over the past ten years,
from 88 in 1997 to a peak of 118 in 2004. Tradeshows and conventions make up
the largest share of events in every year.

However, when measured by the number of occupied square metre days,
consumer shows take up a higher proportion of exhibit hall occupancy than
conventions and tradeshows (See Figure 5-2).




                                                                                           12-Feb-07
Analysis of SCEC Demand                                                                          Page 5-3




           Figure 5-2
           Total Occupied Square Metre Days by Exhibition Event Category 1996-2005

                      Conventions & Tradeshows          Consumer Shows           Other
             8.0
                     Millions
             7.0

             6.0

             5.0

             4.0

             3.0

             2.0

             1.0

             0.0
                    1997      1998      1999   2000   2001    2002    2003     2004      2005
           Source: SCEC & HVS International


Occupied square metre days have trended upward from 1998 through 2005, with
conventions and tradeshows showing the greatest amount of variability.

5.2.2 Geographic Scope

The geographic scope of an event is indicative of its economic impact potential and
its propensity to generate overnight visitation and incremental spending.
International exhibition events, for example, tend to have the highest ratio of room
nights to attendees and the length of these events are typically the highest.

A breakdown of convention and tradeshow events by geographic scope shows, that
in every year, the majority of events and attendance are national (see Table 5-2).




                                                                                                12-Feb-07
           Analysis of SCEC Demand                                                                            Page 5-4




Table 5-2
Convention and Tradeshow Number of Events and Attendance by Origin of Demand

                                     1997   1998      1999    2000     2001     2002      2003      2004       2005

Number of Events
   National                           40     47        42         52    51       56        55        55         58
   International                      18     14        23         18    18       23        11        26         19
   Local                              2      3         5          2     2        5         2         2           4
Total                                 60     64        70         72    71       84        68        83         81
Average Attendance
   National                                       Not Available                 3,740     3,423     4,606      3,649
   International                                                                3,330     1,551     2,172      2,582
   Local                                                                        9,656     2,650     3,135      4,015
Overall Average                                                                 3,980     3,098     3,808      3,417
Total Attendance
   National                                       Not Available                209,417   188,292   253,320    211,632
   International                                                               76,580    17,060    56,469     49,065
   Local                                                                       48,282     5,300     6,270     16,060
Total                                                                          334,279   210,652   316,059    276,757
Source: SCEC and HVS International


           National conventions and tradeshows have the largest annual average attendance,
           ranging from 3,700 to 4,600. The annual average attendance at international
           events ranges from 1,500 to 3,300. Over the ten-year period analysed here,
           international events constituted 26% of events but only 18% of estimated
           attendance. The data clearly indicate that the SCEC primarily serves a national
           audience.

           5.2.3 Event Length and Exhibit Hall Utilisation

           The event length and average floor area also varies by the geographic scope of the
           events (seeTable 5-3).




                                                                                                             12-Feb-07
             Analysis of SCEC Demand                                                                                                         Page 5-5




Table 5-3
SCEC Conventions & Tradeshows by Scope, Average 1997-2005
Event Data / Type of Event        1997            1998     1999        2000          2001      2002          2003     2004         2005     Average
                       1
Average Event Length
  International                      7.5          6.0          7.5      6.4           6.2       7.3           7.8      6.8          7.4       7.0
  National                           5.3          5.6          5.8      5.1           5.0       5.0           4.9      5.4          5.3       5.3
  Local                              4.0          2.7          5.2      4.5           4.5       7.0           3.5      3.0          4.3       4.3
Total Event Days1
  International                      135          84           172      116          111        167           86       177          141       132
  National                           212          263          244      265          256        278          268       298          307       266
  Local                              8             8           26        9            9         35            7         6           17         14
  Total                              355          355          442      390          376        480          361       481          465       412
Average Floor Area (m2)
  International                  11,278          6,339     8,885       8,063         8,350     8,820         8,866    6,958        7,094     8,295
  National                       10,778          9,278     10,476      8,951         8,595     9,478         9,124    10,491       9,633     9,645
  Local                          16,250          5,000     12,115      8,444     10,978        7,297         7,857    7,500        10,247    9,521
1 Includes move in & move out days
Source: SCEC and HVS International


             International conventions and tradeshows have the highest average event length,
             but use the smallest amount of floor area. National conventions and tradeshows
             with exhibitions account for an average of approximately two thirds of the total
             occupied square metre days.

             5.2.4 Seasonality

             Typical of most convention centres, the SCEC demonstrates a high degree of
             seasonality in the number of events (See Figure 5-3).

                             Figure 5-3
                             Seasonality of SCEC Events by Type 1997-2005

                                                Conventions & Tradeshows                    Consumer Shows             Other
                              15%

                                                                               12%            12%
                                                         11%           11%
                                                                                                                     10%
                              10%
                                                                 9%
                                                                                                       8%
                                                                                       8%
                                                  7%                                                           7%


                               5%
                                           4%
                                                                                                                              2%


                               0%
                                           Jan    Feb    Mar     Apr   May     Jun     Jul    Aug      Sep     Oct   Nov     Dec

                             Source: SCEC & HVS International




                                                                                                                                            12-Feb-07
Analysis of SCEC Demand                                                                                Page 5-6




The seasonal patterns of event demand show December and January as the only
months of weak demand. This seasonal pattern reflects the impact of holiday
seasons and a typical pattern of demand for convention and tradeshow events.

5.2.5 Exhibition Hall Occupancy

The seasonal pattern of the number events does not reflect the same pattern as
exhibit hall occupancy (See Figure 5-4). In several peak months, a small number
of events fully occupy the SCEC for long periods and generate high levels of
exhibition hall occupancy.

           Figure 5-4
           SCEC Exhibit Hall Occupancy by Month 1997-2005

                         Conventions & Tradeshows               Consumer Shows          Other
            100%

             90%
                                                                                  83%
             80%                                                            76%
                                                          69%         70%
             70%                                    66%         65%
             60%                                                                        57%
                            55% 55%
                                              53%
             50%

             40%

             30%
                     24%
                                                                                              20%
             20%

             10%

              0%
                     Jan    Feb     Mar       Apr   May   Jun   Jul   Aug   Sep   Oct   Nov     Dec

           Source: SCEC & HVS International


Unlike the number of events, exhibit hall occupancy peaks in October, as there is
more demand for space from both conventions and tradeshows and consumer
shows in this month than any other. January and December as holiday periods
have the most excess capacity, when there is the least amount of space used for
conventions and tradeshows and nearly the least used for consumer shows. All
other months of the year show exhibit hall capacities in excess of 50 percent.

5.2.6 Insufficient Exhibit Hall Capacity

Over the past four years annual exhibit hall occupancy has ranged from 63 to 72
percent, which are exceedingly high levels of occupancy. Given the lack of demand
for space during the holiday seasons and inevitable gaps between start dates and
ends of events, it is clear that the SCEC has reached its maximum practical levels
of occupancy. As illustrated by the yellow line of Figure 5-4, exhibit hall
occupancies of approximately 50 percent strike a better balance between the need
for revenue producing activity in the building and providing enough available dates
and space during peak periods to accommodate most demand. Of greater concern
is that occupancy in the peak months of March and October is dominated by




                                                                                                      12-Feb-07
Analysis of SCEC Demand                                                             Page 5-7




consumer show activity rather than higher economic impact convention and
tradeshow events.

5.3 SCEC LOST BUSINESS

The evidence for pent-up and unaccommodated demand for the SCEC shown in the
analysis of historical event patterns is reinforced by lost business data. The SCEC
provided monthly data on business that was lost during the period January 2003
through July 2006. Business is considered lost if an event organiser requested
space at the SCEC, but ultimately decided to not to hold the events at the SCEC.
The SCEC records cancellation of business that is lost or denied for events valued
at over $50,000. The data include business lost in the years 2003 through 2006 for
events seeking a place on the SCEC schedule for all future years. SCEC also
provided information on the reasons for lost business, and the amount of lost
revenue associated with each event (See Figure 5-5).

           Figure 5-5
           Lost Events in the Years 2003 through July 2006


                                                             153

                                               134                      137
                      130




                      2003                     2004          2005   2006 Jan-Jul
            Source: SCEC & HVS International


From 2003 to 2006, a total of 544 events have been lost, and the number lost
each year appears to be growing.

An estimated $103 million in lost SCEC revenue is associated with these events.
This revenue includes only the rental value of the events, that is, the space rental,
food and beverage and other service revenue generated by the SCEC. The much
greater loss of direct and indirect economic impact to Sydney as a whole,
generated by the spending of delegates, exhibitors, and show organisers is not
included.

Not only is the number of lost events growing, the amount of lost revenue
associated with those events appears to be increasing at an even faster rate (See
Figure 5-6).




                                                                                   12-Feb-07
Analysis of SCEC Demand                                                                  Page 5-8




           Figure 5-6
           Average Revenue Lost per Lost Business Event (thousands)

              Thousands                                                        $298.2



                                                                      $218.3


                                              $145.5   $154.2
                                $139.1


                 $80.7




                 2003            2004         2005      2006          2007     2008
           Source: SCEC & HVS International


The average rental revenue associated with lost business grew from approximately
$81,000 for 2003 lost events to nearly $300,000 per event for 2008 lost events.
Some of this growth in average lost revenue may be due to inflation of rates
charged by the SCEC, but this growth also reflects an increase in the size of events
that are being lost. Whatever the underlying causes may be, the negative financial
implications for New South Wales and the SCEC are becoming increasingly severe.

5.3.1 Reasons for Lost Business

HVS summarised the reasons for a total of 554 lost business events based on
information provided in SCEC monthly reports. Of these 554 events, 100 were
officially cancelled, and 86 were lost for unknown reasons. A breakdown of the
known reasons for lost business (not including cancellations) is shown in the chart
below.




                                                                                        12-Feb-07
Analysis of SCEC Demand                                                         Page 5-9




           Figure 5-7
           Reasons for Lost Business

                                               Lack
                                                of
                                              Hotels
                                  Location
                                                7%
                                  /Rotation
                                    10%



                                                               Date or Space
                                                                  Conflict
                      Cost (SCEC or                                 36%
                        Sydney)
                           21%




                                                       Other
                                                        26%



           Source: SCEC & HVS International


Date or space conflicts are the main reason for 36 percent of the lost business,
which includes the inability to book a sufficient amount of space in the SCEC on the
required dates. Nearly $20 million in revenue over this three and a half-year period
is associated with date or space conflicts. The cost of the SCEC, hotels, or of
Sydney as a destination was cited in 21 percent of known lost business, and $11.6
million in revenue is associated with this lost business. The location of the event or
required rotation to another city is responsible for 10 percent of lost business, and
the lack of hotel rooms has been the cause of 7 percent of lost business. Other
reasons include preference for other cities of venues, lack of local support for
events, and financial inducements provided by competing cities.

5.3.2 Competitors Winning Lost Business

The identity of the winning competitor is known for approximately half of the lost
business. HVS summarised the competition as international competitors, national
competitors, local venues, and hotels.

National competitors win the plurality of business from the SCEC (See figure 5-17).




                                                                               12-Feb-07
Analysis of SCEC Demand                                                     Page 5-10




           Figure 5-8
           Breakdown of Lost Revenue by Type of Competitor




                                     Hotel
                                     17%                        National
                                                               Competitor
                                                                  38%



                         Local
                       Competitor
                          21%




                                               International
                                                Competitor
                                                    24%


           Source: SCEC & HVS International


While 24 percent of business is lost to international competitors, 38 percent of
potential revenue is lost nationally. Of those national competitors, Melbourne is
cited for nearly forty percent of the events and Brisbane is cited for 20 percent of
the events. International competitors constitute 14 percent of the lost events and
24 percent of the lost revenue. Local competitors include facilities at the Sydney
Showgrounds and other venues in the Sydney Olympic Park, Rosehill Gardens,
Playbill Venues at Moore Park, and other local venues. Although business is lost
most frequently to hotels in and outside of Sydney (36 percent), only 17 percent of
the lost revenue is associated with this business, since the events are smaller than
convention centre based events.

5.3.3 Seasonality of Lost Business

The seasonality of lost business is important in considering the impact that an
expansion of available space would have on the ability to retain the lost business.
Overall, the lost business shows a high degree of seasonal variation that is similar
to the seasonal variation in accommodated business. The Figure 5-18 shows the
percentage of lost business in each month for all lost events and for date conflicts
only.




                                                                            12-Feb-07
Analysis of SCEC Demand                                                                             Page 5-11




           Figure 5-9
           Seasonality of Lost Business

                                  All Lost Business                   Date Conflicts Only
             25%


             20%


             15%


             10%



              5%


              0%
                     Jan    Feb     Mar       Apr   May   Jun   Jul   Aug   Sep   Oct   Nov   Dec

           Source: SCEC & HVS International


A relatively small percentage of business is lost business in January, April and
December, and business is lost most frequently in May. Business lost due to date
conflicts shows greater seasonal variation than all lost business. The data indicate
that expansion could significantly reduce the amount of lost business in nine
months of the years, the same months with relatively high exhibit hall occupancies.

5.3.4 SCEC Lost Business Conclusions

The SCEC data demonstrates a significant amount of lost business that can be
attributed to a lack of adequate exhibit and function space and available dates. The
data also indicate that the level of lost business is growing even before the full
impact of an improved Melbourne venue is felt. National competitors are already
the leading source of lost business, and the improvement in Melbourne is likely to
increase their capture of potential SCEC business.

While the SCEC will continue to operate in a competitive environment and always
loose some business, increased capacity would allow the SCEC to recover a
significant number of events. Using this history of lost business, HVS estimated a
range of lost business that could be recovered if adequate space were provided by
the SCEC. See Table 5-4.




                                                                                                    12-Feb-07
Analysis of SCEC Demand                                                                      Page 5-12




           Table 5-4
           Estimate of Recovery of Lost Business through Expansion
                                                                       Low         High
                                                                     Scenario    Scenario
            Number of Annual Events Lost Due to Date
                                                                        38          45
            Conflicts / Lack of Space

            Percent Recoverable with Expansion                         50%         75%

            Number of Potentially Recovered Events                      19          34

            Average Square Meter Days Per Event                       52,000      58,000

            Total Recoverable Square Meter Days                      988,000     1,972,000

            Existing Square Meter Days                               6,162,000   6,162,000

            Percent Potential Increase in Business                     16%         32%
           Source: SCEC & HVS International


Approximately 38 events have been lost per year, primarily due to a lack of space
or date conflicts. The number of lost events grew by 14 percent in 2005 and based
on year-to-date data for the first half of the year, lost business is likely to grow at
a higher rate in 2006. Considering this trend, HVS assumed that lost business due
to date conflicts could grow by 20 percent to 45 events per year. We further
assume that somewhere between 50 to 75 percent of date conflicts could be
resolved if adequate space were available in the SCEC. Based on the average
amount of square metre days rented per event, the SCEC could increase its level of
business between 1.0 and 2.2 million square metre days per year, a 16 to 32
percent growth in overall level of business.

5.4 SCEC PARTIALLY ACCOMMODATED DEMAND

Potential growth in business that does not appear in the lost business reports
relates to events that are currently underserved. The SCEC provided information
on 12 existing and recurring events in the SCEC that could grow if space were
available. Since information on these events is proprietary and confidential, HVS
cannot identify the names of the events. However, the event organisers have
requested between 87,000 to 109,000 m2 of additional space for existing events.
For an analysis of unaccommodated business and its current impact on the SCEC
see Table 5-5.




                                                                                             12-Feb-07
Analysis of SCEC Demand                                                                  Page 5-13




           Table 5-5
           Estimate of Partially Accommodated Demand in the SCEC
                                                                     Low       High
                                                                    Range     Range

            Number of Partially Accommodated Events                   12        12

            Desired increase of floor area (m2) per year*           87,000    109,000

            Average Event Length                                   6.5 days   6.5 days

            Unaccommodated square meter days                       566,000    709,000

            Accommodated square meter days (2005)                  7,145,000 7,145,000

            Potential Expansion of Existing Events                   8%        10%
           *Adjusted for the frequency of the event
           Source: SCEC & HVS International


Assuming the average event length is 6.5 days, the amount for additional space in
existing events could increase by 22,000 to 109,000 square metre days. If space
were available, the expansion of existing events in the SCEC would increase the
amount of exhibit hall use by 8 to 10 percent per year.

5.5 KEY FINDINGS

This detailed analysis of SCEC event demand reveals the following key issues
facing Sydney as a convention and exhibition destination:

   •   Demand for the Sydney is strong for all types of events.

   •   The SCEC is operating at a level of maximum practical occupancy rather
       than preferred lower levels of occupancy that would increase its efficiency
       and capacity to accommodate events.

   •   Due to the lack of capacity, the SCEC is loosing substantial amounts of
       business, which reduces the revenue of the venue and more importantly,
       causes significant loss of positive economic benefit to Sydney as a whole.

   •   As the only venue with sufficient capacity to host large exhibitions, SCEC is
       forced to play the dual role of supporting local consumer show events and
       national and international conventions and exhibitions. The primary mission
       of the SCEC to generate economic impact by attracting out-of-town
       visitation for Sydney is compromised by the necessity to host local
       consumer shows during peak periods of demand.

   •   Expansion alone would allow the SCEC to increase exhibition hall utilisation
       by 24 to 42 percent through the growth of existing events and the recovery
       of lost business.




                                                                                         12-Feb-07
6. Australian and Regional
    Competition

6.1 INTRODUCTION

The purpose of this section of the report is to assess Sydney’s competitive
position in the national and international convention and exhibition markets. HVS
compared Sydney to seven national destinations and their primary venues:

   •   Adelaide – Adelaide Convention Centre

   •   Brisbane – Brisbane Convention & Exhibition Centre

   •   Broadbeach (Queensland) – Gold Coast Convention & Exhibition Centre

   •   Cairns – Cairns Convention Centre

   •   Canberra – National Convention Centre

   •   Melbourne - Melbourne Exhibition & Convention Centre

   •   Perth – Perth Convention & Exhibition Centre

   •   Sydney – Sydney Convention & Exhibition Centre

This section of the report assesses the relative competitiveness of each of these
convention and exhibition centres using the destination choice criteria of event
planners.

6.2 EVENT PLANNER DESTINATION CHOICE CRITERIA

In the convention and exhibition industry, a small number of people make
destination selection decisions for many. Consequently, understanding the
competitive position of Sydney requires an understanding of the criteria that
event planners use to make their planning decisions. In 2005, the Sustainable
Tourism Cooperative Research Centre sponsored the National Business Events
Study: An Evaluation of the Australian Business Events Sector, which included a
comprehensive survey of meeting and conference organisers. Over 160 event
planners responded to the survey. They were asked to rate the level of
importance of destination selection criteria on a scale of one to five, with one
indicating low influence and five indicating high influence.
Australian and Regional Competition                                                    Page 6-2




The figure below shows the average rating of the importance of 14 different
destination selection criteria for meeting and convention planners.

            Figure 6-1
            Meeting and Convention Planner Destination Choice Criteria

                      Suitability of Venue

                 Local Host Organisation

               Quality & Range of Venues

               Previous Event Held in City

                               Air Access

                           Size of Market

                    Public Transportation

                Quality & Range of Hotels

                 Support of CVB/Tourism

                Range of Social Activities

                                Referrals

                Cosmopolitan Destination

                                  Climate

                           Safety/Security

                                             0.0   1.0   2.0       3.0   4.0   5.0

            Source: The National Business Events Study


Suitability of venues and support from local host organisations rank the highest in
importance for meeting and convention planners. Suitability of venue implies that
the venue has physical capacity and the necessary amenities to service the
events. So, in addition to available floor area, event planners consider the
functionality of the venues (e.g. ease of loading) and the level of services such as
the quality of food and beverage service. Previous experience and air access also
rank high in importance.

The chart below summarises the National Business Study data on exhibition
organiser destination choice.




                                                                                     12-Feb-07
Australian and Regional Competition                                                                                      Page 6-3




            Figure 6-2
            Exhibition Organiser Destination Choice Criteria

                    Relevance of Local Market

                      Exhibition Infrastructure

              Availability of Suitable Facililites

                               Previous Events

                         Access to Destination

                                   Travel Times

                        Availability of Lodging

                            Destination Appeal

                            Safety and Security

                    Cosmopolitan Destination

                                       Referrals

                                                     0.0   0.5   1.0   1.5   2.0   2.5   3.0   3.5   4.0   4.5   5.0

            Source: The National Business Events Study


Exhibition organisers have different priorities than meeting and convention
planners, which reflect the fundamental purpose of exhibitions as trade and sales
events rather than information and social exchanges. Exhibition organisers
depend more heavily on the local economy to support events. Therefore, market
size, income, demographics, and business presence are key criteria and
distinguish destinations.

The suitability of venues is an important criterion shared by all types of event
planners; however, the definition of suitability is not the same. Exhibition
organisers need, first and foremost, flexible and functional exhibition space.
Meeting and convention organisers require a mix of plenary, breakout, and
exhibition space.

HVS has organised this analysis of the competitive environment to focus on these
event planner selection criteria, with the goal of evaluating how effectively
Sydney and its venues compete for convention and exhibition business.

6.3 COMPARATIVE ANALYSIS OF NATIONAL COMPETITION

Seven primary venues in Australia compete for business with convention and
exhibition centres in Sydney. The following table lists these primary venues and
summarises key characteristics of convention and exhibition destinations.




                                                                                                                       12-Feb-07
Australian and Regional Competition                                                                       Page 6-4




Table 6-1
Competitive Australian Cities
                                                                                        Revenue
                                                   Metro                 Average                     Gross State
                                                             Inner City               Passengers
  City                  Primary Venue           Population              Room Rate                      Product
                                                            Hotel Rooms                2004-2005
                                                 (millions)              in 2005                      (billions)
                                                                                       (millions)

  Adelaide        Adelaide Convention Centre       1.1         4,246       $113.19        5.4           60.7

                    Brisbane Convention &
  Brisbane                                         1.8         6,487       $128.49        15.4          168.9
                       Exhibition Centre

  Cairns           Cairns Convention Centre        0.2           0         $110.83        3.6           168.9

  Broadbeach        Gold Coast Convention
                                                   0.4          na           na           3.1           168.9
  (Queensland)             Centre
                    Melbourne Exhibition &
  Melbourne                                        3.6         8,453       $133.97        20.3          228.2
                      Convention Centre
                  National Convention Centre
  Canberra                                         0.3         4,910       $110.64        2.5           19.1
                          (Canberra)
                  Perth Convention Exhibition
  Perth                                            1.4         2,590       $96.20         6.5           107.9
                            Centre
                     Sydney Convention &
  Sydney                                           4.2         9,975       $195.69        27.9          310.1
                       Exhibition Centre

  Average National Competitors                     1.6         5,237       $127.00        10.6          154.1

Sources: Australian Bureau of Statistics, HVS International, and Bureau of Transport and Regional Economics




As the most populous metro area, Sydney is commonly thought of as the First
City of Australia. Its population of 4.2 million is more than twice the size of the
average of its domestic competition. Melbourne follows as a close second with a
population of approximately 3.6 million persons. While not directly correlated with
convention and exhibition demand, population serves as a proxy for the capacity
to host large exhibitions. Consumer shows and, to a lesser extent, tradeshows
rely on the local population for attendance. Clearly, Sydney and Melbourne have
the most capacity in this regard, with Brisbane and Perth following in more
distant third and fourth places respectively.

The availability of lodging is a key element of tourism infrastructure that supports
convention and tradeshow business. The availability of a sufficient number of
hotel rooms is an absolute requirement of event planners. The price of hotel
rooms also influences choice, which is determined by the supply and demand
relationships in the larger hotel market. Melbourne, Sydney, and Brisbane offer
the most metro area hotel rooms. Sydney has the largest hotel supply, but also
the highest average room rates in Australia. While Sydney’s relatively high room
rates indicate a healthy lodging market with strong business and tourism
demand, the relative high average room rate also creates a disadvantage with
respect to attracting price sensitive convention and tradeshow business.

Sydney enjoys the best air access of any city in Australia. In fiscal year 2004-05,
Sydney had 27.9 million revenue passengers as compared to 20.3 million in
Melbourne, which had the second most passenger movements. This advantage is
more pronounced with respect to international flights where Sydney has more




                                                                                                      12-Feb-07
Australian and Regional Competition                                                                  Page 6-5




than twice as many international revenue passengers as Melbourne (9.3 million to
4.1 million). Passenger activity in Australia has grown at an average rate of 5.9
percent per year for the past ten years.

New South Wales has the largest economy of all the Australian states,
approximately twice the average, and 35 percent larger than Victoria. Given the
relative size of its state economy, it follows that Sydney should have the
strongest market for local tradeshows, consumer shows and other events that
rely on local business and attendees.

As the primary urban centre in New South Wales, Sydney enjoys the most
domestic tourism traffic of all the States and Territories in Australia. Queensland
attracts the next highest number of domestic tourists to its coastal resort areas
and this tourism infrastructure also supports convention and tradeshow activity in
Brisbane, Cairns, and Gold Coast. Melbourne has average levels of tourism,
reflecting its status as primarily as a business rather than tourism destination.

6.3.1 Exhibition Hall Capacity

The suitability of a venue is the most important of the event planner decision
criteria, as nearly 70 percent of meeting and convention organisers and near 50
percent of exhibition organisers ranked the suitability of the venue as having a
high level of influence on their selection. The supply of space or the size of a
venue is most often measured by its exhibition hall capacity. The following chart
compares the exhibit hall capacity of the competitive Australian convention and
exhibition centres.

            Figure 6-3
                                    2
            Exhibit Hall Capacity (m )


              Melbourne ECC

                 Sydney CEC

                Brisbane CEC

                 Sydney RAS

                   Perth CEC

                  Adelaide CC

               Gold Coast CC

                   Cairns CC

                Canberra NCC

                                -    5,000   10,000   15,000   20,000   25,000   30,000   35,000

            Source: Respective Facilities


The Melbourne Exhibition and Convention Centre has the largest exhibition hall
capacity with 30,000 m2, followed by the SCEC with 27,200 m2. Brisbane




                                                                                                   12-Feb-07
Australian and Regional Competition                                          Page 6-6




Convention and Exhibition Centre and the Sydney RAS facility also have capacity
to host large events with 24,100 m2 and 21,600 m2 respectively. Perth is the fifth
venue in Australia that hosts rotating trade shows. The remaining venues do not
have sufficient capacity to effectively compete for large tradeshows.
Consequently, their business is oriented primarily toward smaller convention,
tradeshows, meetings, and local events that do not require large amounts of
exhibition space.

Other key characteristics that distinguish convention and exhibition facilities and
in part, determine their market niche include:

        Flexibility or divisibility of exhibition space

        Exhibition hall loading capacity

        Plenary hall or theatre seating capacity and divisibility

        Number of breakout meeting rooms

        Proximity of a headquarters hotel property

        Adequacy of foyer or pre-function areas

        Ease of transportation access

        Car parking capacity

        Overall quality and architectural distinction

        Service quality

6.3.2 Hotel Capacity

Comparative data the number of inner city hotel rooms provides the best
measure of the extent to which each destination has a supportive lodging supply
(See Figure 6-4).




                                                                          12-Feb-07
Australian and Regional Competition                                                        Page 6-7




            Figure 6-4
            Number of Inner City Hotel Rooms in Peer Markets


                 Sydney

             Melbourne

                  Cairns

               Brisbane

               Canberra

               Adelaide

                 Darwin

                   Perth

                           0      2,000   4,000     6,000      8,000   10,000   12,000
            Source: HVS International


Sydney has the highest number of quality hotels, by far, providing guests with a
wide range of accommodation from budget to five-star. By comparison,
Melbourne has approximately 800 fewer inner city rooms than Sydney but
substantially more that most other competitors. The proximity of rooms to
convention and exhibition venues is also an important consideration, and in this
regard Sydney is superior to its competitors.

The amount of investment in lodging infrastructure in Sydney indicates a high
level of private sector participation in the convention and exhibition industry.
Hotel owners and operators rely on the SCEC to induce a significant portion of
their group demand.

6.3.3 Peer Hotel Market Occupancy and ARR

The chart below illustrates the achieved occupancy levels in Sydney and peer
markets in 2005.




                                                                                         12-Feb-07
Australian and Regional Competition                                              Page 6-8




            Figure 6-5
            Hotel Occupancy Rates in Peer Markets

                 Brisbane

                     Perth

               Melbourne

                   Sydney

                 Adelaide                              F




                    Cairns

                   Darwin

                 Canberra

                             0%         20%           40%   60%   80%   100%
            Source: Australian Bureau of Statistics


Although Sydney has the most hotel rooms, it does not have the highest annual
occupancy rate. The 2005 average annual hotel occupancy rate was 75.7 percent,
below the level of its three primary competitors—Melbourne, Perth and Brisbane.
Not only does Sydney’s have more total room capacity, it currently has a slight
advantage with respect to the availability of rooms.

The following chart shows the average room rate (ARR) for the peer markets.




                                                                               12-Feb-07
Australian and Regional Competition                                                 Page 6-9




            Figure 6-6
            Average Room Rate in Peer Markets

                   Sydney

               Melbourne

                 Brisbane

                 Adelaide

                   Darwin

                    Cairns

                Canberra

                     Perth

                             $0         $50           $100   $150   $200   $250
            Source: Australian Bureau of Statistics


Exhibitor and attendee cost is an important consideration to event organisers,
and the cost of lodging is a significant component of that cost. Sydney is at a
disadvantage in this regard, with the highest average room rate among the peer
markets ($196 in 2005). However, the average room rate is also a reflection of
the value of the destination and higher rates contribute to a vibrant hotel market.
The higher room rates in Sydney also hold the promise of more growth in hotel
capacity as new hotel development projects are likely to be more feasible than in
the lower priced peer markets.

6.3.4 Accessibility

Airline access and capacity is critical to Sydney’s attractiveness as a convention
destination, particularly from long haul markets. Sydney Airport remains
Australia’s busiest airport, with over 47 percent of international passenger traffic
arriving or departing at Sydney and 24 percent of Australia’s domestic airline
passenger movements involving a connection with Sydney. Table 6-2 shows the
top ten domestic tourism destinations in Australia, the number of overnight trips,
share of all domestic trips, and average nights in the region.




                                                                                  12-Feb-07
Australian and Regional Competition                                                            Page 6-10




            Table 6-2
            Air Service Data and Nights in Region
                                                               Share of All
                                                Overnight                       Avg. Nights
             Market Area                                        Domestic
                                                Trips (000)                      in Region
                                                              Overnight Trips

             Sydney, NSW                            4,614          8.6%             3.0
             Melbourne, VIC                         3,955          7.4%             3.3
             Brisbane, QLD                          3,125          5.8%             3.5
             Gold Coast, QLD                        3,031          5.7%             4.9
             North Coast, NSW                      2,731           5.1%             4.1
             Sunshine Coast, QLD                    2,484          4.6%             4.0
             South Coast, NSW                       2,052          3.8%             4.0
             Perth, WA                              2,041          3.8%             4.4
             Hunter, NSW                            1,654          3.1%             4.1
             Australia's South West, WA             1,623          3.0%             2.8
                     1
             Total                                 53,477
            1
             Includes destinations outside of the top ten
            Source: Australian Airports Association


Sydney is the most popular domestic tourist destination in Australia and
accommodates 8.6 percent of all domestic overnight trips in the country. Sydney
is, in many respects, the cultural heart and international identity of Australia. The
slightly shorter average stay in Sydney is likely the result of a higher proportion
of business travellers than other coastal markets that have a higher proportion of
leisure to business travellers. Melbourne and Brisbane follow Sydney as the
leading urban destinations. Coastal destinations that offer beaches, tropical
climates, and other environmental attractions follow in the list.

Sydney Airport experienced a continued expansion of international services in
2005/06 including Emirate’s second service to Dubai, Qantas new services to
Beijing, San Francisco and Vancouver and Jetstar new Trans-Tasman operations.

However, the uncertainty in fuel prices is resulting in airlines seeking to preserve
viability by dropping lower-profit routes, which is causing a wide range of seat
capacity reductions, as demonstrated by the planned withdrawal of Austrian
Airlines and Japan Airlines in early 2007. On a more positive note, the aviation
industry expects a more buoyant market in 2008 owing to the new aircraft
(A380) deliveries, which will primarily be focused on arrivals from Europe and the
USA.

6.3.5 Destination Appeal

The destination appeal of a market plays an important role in the overall
convention and tradeshow potential of a locale. Event attendees typically take
time to explore the host city while attending an event and many conferences,
conventions, and tradeshows have significant social as well as business and




                                                                                              12-Feb-07
Australian and Regional Competition                                                                Page 6-11




educational components. Industry participant interviews conducted by HVS (see
Section 7) indicate that Sydney has by far the greatest destination appeal of any
city in Australia.

6.3.6 Climate Comparison

The chart compares average maximum temperatures in Sydney with its peer
markets.

            Figure 6-7
            Average Maximum Daily Temperatures (Celsius)

                         Adelaide           Brisbane          Cairns               Canberra
                         Darwin             Melbourne         Perth                Sydney

              40

              35

              30

              25

              20

              15

              10

               5

               0
                   jan   feb   mar    apr   may   jun   jul    aug     sep   oct    nov     dec

            Source: Australian Travel Source


Sydney enjoys a more moderate climate than most of its competitors, with cooler
summer temperatures and warmer winter temperatures than most. Sydney has
higher than average rainfall, but that rainfall is more evenly distributed
throughout the year than cities in more tropical climates that have heavier rains
in the summer seasons and drier winters. Sydney’s best weather is typically in
the spring months, which are also the peak months for conventions and
tradeshows.

6.4 DESCRIPTIONS OF NATIONAL COMPETITORS

The following table summarises key features of competitive convention and
exhibition venues in Australia.




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Australian and Regional Competition                                                          Page 6-12




            Table 6-3
            Comparison of Australian Competitive Venues Summary
                                            Exhibition   Number of   Largest
                                                                               Year Open/
              Competitive Venue              Space        Meeting    Theatre
                                                                               Expanded
                                              (m2)        Rooms       (Cap.)

              Canberra NCC                    2,400         15        1,748      1989

              Gold Coast CC                   4,174          9        6,021      2004

              Cairns CC                       3,190         18        2,330      1996

              Adelaide CC                    12,410         15        2,614      2001

              Perth CEC                      16,644         13        2,500      2004

              Sydney Showgrounds             14,400         --         --        1998

              Brisbane CEC                   24,088         13        3,958      1995

              Sydney CEC                     27,200         20        3,500      1988

              Melbourne ECC                  30,000         39        5,000      2008

              Avg. National
                                             14,945         18        3,459        --
              Competitors
            *Multi-Purpose Arena Seating
            Source: Respective Facilities


The comparison demonstrates that Sydney is no longer the first ranked city in
Australia with respect to the size and quality of its primary venue. This criterion is
the most important to meeting and convention organisers and highly important to
exhibition organisers when selecting a destination for their events.

        Exhibition Space – While the combined venues in Sydney have the most
        exhibition space of any city, Melbourne currently has an advantage with
        respect to the overall size and flexibility of their exhibit halls in a single
        venue. That advantage will grow when the planned expansion of the
        Melbourne Convention Centre is complete. Although smaller in size, the
        primary venues in Perth and Brisbane have exhibit halls with superior
        divisibility and functionality relative to Sydney’s venues.

        Theatre Seating Capacity – The SCEC, with a plenary hall capacity of
        3,500 seats, ranks third in this category, although the Gold Coast theatre
        seating over 6,000 is in a multi-purpose arena setting. Melbourne’s
        expanded convention centre will have a state of the art plenary hall with
        5,000 seats and superior divisibility into smaller theatres and flat floor
        settings.

        Meeting Rooms – Sydney also falls short of Melbourne with respect to the
        number of available meeting rooms and is just above the average of the
        competitive set.




                                                                                            12-Feb-07
Australian and Regional Competition                                                                  Page 6-13




The following descriptions of each of the domestic competitive venues are
provided to assess the strengths and weakness of Sydney’s competition.

6.4.1 Melbourne Convention and Exhibition Centre

The Melbourne Convention and Exhibition Centre (“MCEC”) is owned by the State
of Victoria and operated by the Melbourne Convention and Exhibition Trust
(“MCET”), a governmental agency established by the State in 1996. A
replacement of the Melbourne Convention Centre is currently being constructed
adjacent to the existing Melbourne Exhibition Centre under a Public Private
Partnership arrangement between the State of Victoria and Plenary Convention
Hotel Pty Ltd. Under a complex lease arrangement, the new convention centre
and its attached hotel will be operated by the Hilton Corporation, but Hilton will
utilise the food and beverage services operation of MCET.

Since the MCEC is Sydney’s and the SCEC’s primary competitor, this report
provides more detailed description of the MCEC than the other competitors.

            Figure 6-8
            Exterior Melbourne Convention & Exhibition Centre




            Source: MCEC


            Table 6-4
            Facilities Summary
                                      New Centre                    Existing Centre
             Year of Opening              2008                         1990
             Construction Cost              $370,000,000               NA
                                                                                Capacity
                                          Max                   2                          Class-
             Type of Space                           Area m          Theatre    Banquet
                                       Breakouts                                           room
             Exhibit Hall                  14         30,000
             Theatre / Auditorium          4               --         7,463           --     --
             Ballroom                      1          3,000             --       1,000       --
             Meeting Room                  50         5,000             --            --   2,500
            Source: Melbourne Exhibition & Convention Centre


Located on the banks of the Yarra River at the west end of the current boundaries
of the downtown development in Melbourne, the Melbourne Convention and
Exhibition Centre (MCEC) has two distinct venues: the convention centre on the




                                                                                                    12-Feb-07
Australian and Regional Competition                                                                     Page 6-14




North bank and the exhibition centre on the South bank. The convention centre
venue opened in May 1990 and the exhibition hall opened in February 1996.

The exhibition hall features 30,000 m2 of clear span exhibition space. The
divisibility of the hall is exceptional as the operable walls can be moved at 13
different locations dividing the hall into 1,500 m2 increments. This flexibility
allows the MEC to offer event organisers a hall size that precisely matches the
needs of their events. A bridge with a covered pedestrian walkway connects the
two venues, but the outdoor connection creates a barrier to integrated use of the
two facilities even if the walk between them is relatively short.

Construction is currently underway on a $370 million renovation and expansion of
the convention centre component of the MCEC. This project, which will be
completed in 2008 includes a new theatre/plenary hall with a capacity of 5,000
people and a compliment of 50 meeting rooms with approximately 5,000 m2 of
function space. The following table shows a summary of the new function space
in the renovated and expanded convention centre.

Table 6-5
Summary of new Function Space in the renovated MCEC Convention Centre

                           Total Floor    Theatre Style
          Function Area                                                          Divisibility
                              Area          Capacity

Plenary Hall
  Theatre Configuration       NA              5,000       6 rooms with minimum capacity of 600
  Flat Floor Mode           2,500 m2          3,000       Not divisible in flat floor mode
                                      2
  Foyer                     8,800 m           6,000       Not divisible
Banquet Room                2,500 m2          3,000       2 rooms with 1,500 person theatre seating capacity
Meeting Rooms
  6 Large Meeting Rooms.    3,000 m2          3,600       Each room divisible in half with 300 person capacity
                                      2
  6 Medium Meeting Rooms      900 m           1,080       Not-divisible
  6 Small Meeting Rooms       900 m2          1,080       Each room divisible in half with 90 person capacity
Sub-total Meeting Rooms     4,800 m2          5,760       Minimum of 18 rooms, maximum of 30 rooms
Total Function Space       18,600 m2
Source: KA Architects


The renovation and expansion of the MCEC convention centre will create an
integrated hotel, convention, and exhibition centre that will be the largest and
most flexible convention and exhibition facility in Australia. Once the renovation
and expansion of the convention centre is complete, the overall MCEC’s capacity
and quality will far exceed that of the SCEC.

The new Melbourne Convention Centre development is part of a larger mixed use
project that also includes a hotel, retail, and residential development, as shown in
the following rendering.




                                                                                                     12-Feb-07
Australian and Regional Competition                                          Page 6-15




            Figure 6-9
            Rendering of the New MCEC Convention Centre Development




            Source: MCEC Convention Centre


The key features of the new convention centre development include:

        A 5,000-seat plenary hall with theatre style seating that is divisible to
        accommodate simultaneous events with 500 persons. The plenary hall will
        have a seating system that allows it to be easily converted to a flat floor
        venue for banquets and social events.

        A 2,500 m2 banquet hall

        Six large meeting rooms of 500 m2 each

        A maximum of 30 meeting rooms with a total of 4,800 m2 of breakout
        space

        Direct connection to and integration with the MEC

        An 8,800 m2 multipurpose foyer

        Integration with the proposed Hilton Hotel, which will have direct access to
        the function space for hotel based groups

        A pedestrian bridge connection to the North bank of the Yarra River, which
        will connect existing and future commercial demand generators to the
        hotel and convention centre




                                                                           12-Feb-07
Australian and Regional Competition                                           Page 6-16




The new Melbourne Convention Centre development will replace the existing
Centre. MCET management has indicated that the existing Centre will be
converted to some undetermined alternative use.

The new plenary hall (depicted below) will be the largest and most flexible in
Australia. The plenary hall has a main floor, balcony, and seats a total of 5,000
persons. Employing state-of-the-art technology, the hall is divisible in a number
of ways. Both levels can be sub-divided into thirds such that three halls could
host simultaneous sessions for up to 1,600 persons. Efficient movable walls can
be put in place in minutes, so that the hall could be used for a general assembly
and for breakout sessions on the same day. The plenary hall further divides by
closing off the balcony sections, creating intimate spaces for as few as 600
persons.

            Figure 6-10
            Proposed Plenary Hall




            Source: MCEC


The main stage will have the capability to stage entertainment events that
require elaborate stage sets and light rigging. Thus, the hall will also be suited to
accommodate theatrical and concert events.

A Gala Venue seating system will allow the conversion of the first level seating to
a 2,500 m2 flat floor venue for banquet and social events in ten minutes.
Individual rows of self-guided seating risers will store the seats below the floor
when not in use. The Gala Venue system also can be used to create adjustable
sight lines that can be adapted to each type of event.

Ballroom and meeting room spaces are strategically located below and adjacent
to the hotel room tower, connecting this function space and the hotel to the
plenary hall. A 2,500 m2 ballroom on the second level is divisible in half with




                                                                            12-Feb-07
Australian and Regional Competition                                         Page 6-17




operable walls and will seat up to 1,500 persons in theatre style seating and 625
persons in a banquet capacity.

Six large meeting rooms of 500 m2 each can also serve as junior ballrooms.
Meeting spaces are located on levels one through three above the ground floor
foyer of the plenary hall.

The plenary hall is a “building within a building”, surrounded on three sides by an
expansive foyer with a total 8,800 m2 of space. A glass curtain wall will provide
views to the river front and downtown Melbourne. In addition to serving as a pre-
function area for the plenary hall, the foyer can be used for light exhibits that
may accompany a convention, or for banquet and social events. The large multi-
use foyer space will enable convention events with exhibits to be contained
entirely within the new convention centre area, allowing the existing exhibition
hall to host simultaneous public exhibition and entertainment events. This feature
creates a level of event scheduling flexibility that will exceed that of any of
Melbourne’s competitors.

6.4.2 Adelaide Convention Centre

The Adelaide Convention Centre (“ACC”) is owned and operated by the State of
South Australia. The marketing and sales function is performed by the Adelaide
Convention Tourism Authority. The ACC is centrally located in downtown
Adelaide, surrounded by a city park. (See Figure 6-11.)

            Figure 6-11
            Exterior Adelaide Convention Centre




            Source: Adelaide Convention Centre




                                                                          12-Feb-07
Australian and Regional Competition                                                        Page 6-18




            Table 6-6
            Adelaide Convention Centre Facility Summary
             Year Opened               2001      (expansion and renovation)
             Construction Cost     $85,000,000
                                                                      Capacity
                                       Max                                       Class-
             Type of Space                        Area m2   Theatre   Banquet
                                    Breakouts                                    room
             Exhibit Hall               6         10,400     5,212     4,500       --
             Great Hall                 5          2,010     2,614     1,280      798
             Meeting Room               15         1,215     1,590      850       550
             Pre-function               13         3,422       --        --        --
            Source: Adelaide Convention Centre


The ACC is a member of the Global Congress Centre Alliance. Formed by four
convention centres in May 2004, the GCCA is a cooperative marketing and
educational organisation. The GCCA enables regional city convention centres in
various countries to trade marketing leads, staff exchange, and education
programmes, as well as other cooperative ventures. Members of the GCCA
include the Hong Kong Convention Centre, the International Convention Centre in
Durban South Africa, and Hamburg Messe and Congress in Germany.

A major renovation and expansion project was completed in 2001 at the cost of
$85 million. This expansion of the Adelaide Convention Centre added 7,000 m2
more in exhibition space. The ACC currently has a total of 10,450 m2 of column-
free exhibition space and 14 meeting rooms. Additional features include:

        An atrium linking new and existing exhibition halls,

        Banquet and conference areas,

        Views of the surrounding Adelaide city park from most of the pre-
        function/reception areas,

        A 367-room Hyatt hotel connected to the centre, and

        An underground parking structure.

Recent ACC events include the 2005 Entrepreneur of the Year Awards Ceremony,
the Global Social Work Convention, and the third Australian Wine Industry
Environment Conference and Exhibition in 2004. With a tendency to host local,
regional, and small international association/specialty events, the ACC is not
considered a primary competitor in the international convention & exhibition
market.




                                                                                          12-Feb-07
Australian and Regional Competition                                                          Page 6-19




6.4.3 Brisbane Convention & Exhibition Centre

The Brisbane Convention & Exhibition Centre (“BCEC”) was built by the State of
Queensland and its ownership is vested in the South Bank Corporation which is a
government owned corporation. The Centre is managed under contract by
Convex (Qld) Pty Ltd a wholly-owned subsidiary of Ogden International Facilities
Corporation.

            Figure 6-12
            Brisbane Convention & Exhibition Centre




            Source: BCEC


            Table 6-7
            Brisbane Convention & Exhibition Centre Facility Summary
             Year Opened                1995
             Construction Cost           $203,000,000
                                                                        Capacity
                                         Max                                       Class-
             Type of Space                        Area m2     Theatre   Banquet
                                      Breakouts                                    room
             Exhibit Hall                 8        20,000     16,000     8,000       --
             Great Hall                   4        4,088       3,958     2,740       --
             Ballroom                     3        3,040       3,040     2,030     1,839
             Meeting Room                13        2,840       1,593      902       972
            Source: Brisbane Convention & Exhibition Centre


The BCEC opened in Queensland’s capital city in 1995. It has approximately
24,000 m2 of exhibition space and a total of 23 meeting rooms.

The Queensland Government is considering a major expansion of the Brisbane
Convention & Exhibition Centre and announced funding of $3.4 million for
detailed design and planning work for a major expansion of the BCEC. The




                                                                                            12-Feb-07
Australian and Regional Competition                                        Page 6-20




planned expansion of the Centre’s convention facilities will target an urgent need
to accommodate more conventions of 400 to 600 delegates. The preliminary cost
estimate of the expansion is approximately $100 million. The proposed expansion
of the Centre includes an additional 11 meeting rooms with accompanying
breakout areas, foyer space, and banquet facilities. Two new tiered plenary
auditoriums will provide much needed facilities to accommodate an increasing
demand for concurrent conventions up to 600 delegates.

Known for its unique architecture and dramatic interior design, the roof makes
the building a Brisbane architectural landmark. Cox Rayner, a specialist in
convention centre architecture, designed an efficient and flexible venue.

            Figure 6-13
            Floor Plan of the Brisbane Convention & Exhibition Centre




            Source: BCEC




                                                                         12-Feb-07
Australian and Regional Competition                                                             Page 6-21




6.4.4 Cairns Convention Centre

Located north of Brisbane in Queensland, the Cairns Convention Center (“CCC”) is
owned by the Queensland State Government and operated by the Brisbane based
Ogden International Facilities Group of Australia.

            Figure 6-14
            Exterior Cairns Convention Centre




            Source: CCC


            Table 6-8
            Cairns Convention Centre Facility Summary
             Year Opened                 1996
             Construction Cost        $28,500,000   (stage 2)
                                                                           Capacity
                                          Max                2                        Class-
             Type of Space                          Area m       Theatre   Banquet
                                       Breakouts                                      room
             Exhibit Hall                  1         1,470        5,000     3,500     1,750
             Great Hall                    4         1,720        2,330     1,631      816
             Meeting Room                  18         917         780        400       352
            Source: Cairns Convention Centre


The CCC has won several AIPC APEX awards (convention industry honours)
including the 2004 award for World’s Best Congress and in 2005 was voted one of
the top three in the world. With a total of 3,190 m2 of exhibition space, the main
hall can be divided into four quadrants with 430 m2 of space each. In addition to
the large hall, there are seven individual meeting rooms with space for 60 to 140
delegates depending on seating arrangements and an additional large hall with
1,470 m2 of non-divisible exhibition space.

The CCC employs local exhibition, audio visual, destination, and event companies
to manage their events. With no headquarters hotel, delegates stay at the
various hotels in the Cairns area.




                                                                                               12-Feb-07
Australian and Regional Competition                                 Page 6-22




            Figure 6-15
            Cairns Convention Centre Floor Plans




            Source: Cairns Convention Centre


6.4.5 National Convention Centre

Located in Canberra, the National Convention Centre (“NCC”) is owned by the
Australian Capital Territory Government and operated under a management
agreement by Intercontinental Hotels Group.




                                                                   12-Feb-07
Australian and Regional Competition                                                           Page 6-23




            Figure 6-16
            Exterior National Convention Centre




            Source: NCC


            Table 6-9
            National Convention Centre Facility Summary
             Year Opened                  1989
             Construction Cost             NA
                                                                      Capacity

                                          Max
             Type of Space                       Area (m2) Theatre   Banquet     Classroom
                                       Breakouts

             Exhibit Hall                  1      2,400     2,000     1,700        1,300
             Ballroom                      1       650      600        500          300
             Meeting Room                  15     2,013     1,265      --           616
             Pre-function                  4      2,130
             Theatre / Plenary Hall        1      2,334     2,468      450          400
            Source: NCC


Opened in 1989, the NCC is centrally located in Glebe Park close to the Australian
War Memorial, the National Museum of Australia, and the popular Casino
Canberra. Canberra offers a number of major tourist attractions. The facility holds
a variety of events including concerts, banquets, association meetings, and school
functions.

The NCC is located within Canberra’s central business district and is adjacent to a
295-room Crowne Plaza hotel. While working concurrently with the NCC, the hotel
is advertised as an alternative to the purpose-built convention centre for smaller,
more intimate events. The Crowne Plaza has 12 mid- to small-sized meeting and
support rooms and a capacity for 2,500 people.




                                                                                             12-Feb-07
Australian and Regional Competition                                        Page 6-24




In the spring of 2005, the Australian Capital Territory Government announced a
$30 million initiative to upgrade the facility. This capital improvement programme
includes aesthetic changes to the exterior of the building as well as functional
improvements to the interior of the venue that address maintenance issues and
improve amenities and functionality of the venue. New amenities include a fibre
optic cable system, video conferencing, new kitchen systems, security
infrastructure, vertical transportation systems, and improved divisibility of the
theatre. These improvements are likely to improve the competitiveness of the
facility.

6.4.6 Perth Convention and Exhibition Centre

The Perth Convention and Exhibition Centre (“PCEC”) was developed through a
Public Private Partnership, built by Multiplex Constructions Pty Ltd and financed
by the Western Australian Government. The Wyllie Group owns the PCEC through
a long-term lease arrangement. It is operated by Spotless Services of Australia.

            Figure 6-17
            Exterior Perth Convention & Exhibition Centre




            Source: PCEC




                                                                         12-Feb-07
Australian and Regional Competition                                                          Page 6-25




            Table 6-10
            Perth Convention & Exhibition Centre Facility Summary
             Year Opened                2004
             Construction Cost          $225,000,000
                                                                     Capacity
                                         Max
             Type of Space                      Area m2 Theatre     Banquet     Classroom
                                      Breakouts
             Exhibit Hall                6       16,644    2,600     1,710        1,900
             Theatre / Plenary Hall      1         --      2,500      --           --
             Ballroom                    2        1,790    1,700     1,150        1,390
             Meeting Room                13       1,657    1,900                  1,280
            Source: PCEC


As the largest convention centre in Western Australia, the PCEC can
accommodate up to 5,000 delegates. Construction began in 2001 and the Centre
opened in 2004. As the only major city on the west coast, it is uniquely influenced
by Asian markets and tradeshow business conducted in the PCEC. The PCEC is
located in the centre of Perth's central business district between the Swan River
and the downtown area, accessible by Perth’s public transportation system.

The centre is built on top of a 1,500-space parking facility. Spread over three
levels are 19 meeting rooms, able to seat between 60 and 450 people each, and
16,650 m2 of exhibition space spread over six halls. The centre also has an
auditorium that can be separated into breakout spaces of varying size. On the
north side of the PCEC is a 138-room Medina Grand Perth hotel which opened in
conjunction with the PCEC.

The PCEC is not as directly competitive with Sydney as most other national
venues because of its location in Western Australia. It has better access to the
rest of Asia than most of Australia.

6.4.7 Gold Coast Convention and Exhibition Centre

The Gold Coast Convention and Exhibition Centre (“GCCEC”) is owned by the
Queensland State Government and operated under a management agreement by
Jupiter Ltd, which is part of the TABCORP Group.




                                                                                            12-Feb-07
Australian and Regional Competition                                                           Page 6-26




Figure 6-18
Gold Coast Convention & Exhibition Centre




Source: GCEC


               Table 6-11
               Gold Coast Convention & Exhibition Centre Facility Summary
               Year Opened                  2004
               Construction Cost            $127,000,000
                                                                        Capacity

                                            Max       Area                          Class-
               Type of Space                                  Theatre   Banquet
                                         Breakouts     m2                           room

               Exhibit Hall                  5        4,174    1,360        2,690   2,820
               Arena / Auditorium            3        2,600    6,021        1,600   1,620
               Meeting Room                  9        1,040    1,180        400      606
               Pre-function                  5        2,615     --          1,831     --
               Source: GCEC


The GCCEC opened in June 2004 and is the Gold Coast’s first convention centre.
With two levels and 7,000 m2 of function space, it is the largest convention centre
in the Queensland region. The GCCEC currently consists of a 6,000-seat arena,
nine meeting rooms, and two exhibition halls. A 3,000 m2 expansion is currently
in the early stages of development. The expansion will double the size of the
existing exhibition halls.




                                                                                             12-Feb-07
Australian and Regional Competition                                        Page 6-27




            Figure 6-19
            Gold Coast Convention & Exhibition Centre Floor Plan




            Source: GCEC


The Gold Coast is one of Australia's many prime tourist destinations attracting
about 10 million day and overnight visitors each year. The Gold Coast is
positioned in a resort location bordered by 70 kilometres of Australia’s famed
coastline and tropical rainforests. In terms of population and commerce, it is one
of the fastest growing regions in Australia.

6.4.8 Summary of Domestic Competition

With respect to the quality of venues, Sydney is lagging most of the domestic
competition but maintains advantages in location and destination appeal. Table 6-
12 provides a summary analysis of the competitive of each national venue with
Sydney and the SCEC.




                                                                         12-Feb-07
Australian and Regional Competition                                                                    Page 6-28




Table 6-12
Summary Analysis of Domestic Competition


  Competitive Venue          Location/Access       Size of Venue        Quality of Venue   Destination Appeal



                                                 Ample exhibition       Superior quality,
                             Less air access                                                 Moderately good
  Adelaide CC                                    and convention        highly flexible with
                            and poorer climate                                              destination appeal
                                                    capacity            connected hotel


                                                                          High quality,
                                                  Slightly smaller       expansion and     Third largest city in
  Brisbane CEC                Good access        exhibition capacity     improvements      Australia with good
                                                     than SCEC               under            urban appeal
                                                                         consideration


                                             Oriented toward            High quality and   Great Barrier Reef,
                            Somewhat remote
  Cairns CC                                 smaller convention              superior         remoteness a
                             but accessible
                                                  events                  functionality         strength


                                                                                               Location of
                                                                          Aesthetic and
                             Relatively poor                                                     national
                                                  Only suitable for        functional
  Canberra NCC              access and small                                                government but
                                                 small conventions       improvements
                             population base                                                little corporate
                                                                           underway
                                                                                                presence
                                                  Small exhibition
                                                     but large          Multi-purpose
                            Good access as a                                                Strongest resort
  Gold Coast CC                                     convention         venue decreases
                                 resort                                                    destination appeal
                                                  capacity, being        functionality
                                                     expanded

                                                   Post expansion,
                            Excellent access                           Superior to SCEC
                                                  largest and most                          Second in appeal
  Melbourne ECC                slightly less                             in quality and
                                                  flexible venue in                          only to Sydney
                            attractive climate                            functionality
                                                      Australia


                             Removed from
                                                 Good exhibit hall       New and high
                              majority of                                                    Relative lack of
  Perth CEC                                      and convention        quality state-of-the
                               Australian                                                   destination appeal
                                                    capacity                art venue
                              population

Source: HVS International


The number, quality, and capacity of exhibition and convention centres in
Australia has dramatically increased over the past two decades, and thereby,
increased competition for Sydney. Gold Coast, Perth and Adelaide are relatively
new or recently expanded. Melbourne, Brisbane, and Gold Coast are expanding or
contemplating expansion in the near future. In this dynamic environment, failure
to expand or improve the venues in Sydney will likely result in the erosion of its
competitive position in the national markets.




                                                                                                     12-Feb-07
Australian and Regional Competition                                                              Page 6-29




6.5 INTERNATIONAL COMPETITION

In addition to competing with other cities and convention centres in Australia,
Sydney competes with similar venues in Asia for rotating international convention
and tradeshow business. Although, the number of potential competitors is quite
large and dispersed throughout Asia a few venues have historically been primary
competitors. In discussions with SCEC management and the Sydney Convention
and Visitors Bureau we have identified four primary Asian competitors:

          Hong Kong Convention and Exhibition Centre

          Kuala Lumpur Convention Centre

          Suntec Singapore International Convention and Exhibition Centre

          The Venetian Macao (opening in 2007)

Table 6-13
International Competitors Summary
                                                    Number of   Capacity of
                                Year   Exhibition                              Attached     Connected
  Competitive Venue                                  Meeting     Largest
                                Open   Space (m2)                             Hotel Rooms   Hotel Brand
                                                     Rooms       Theatre
  Hong Kong Exhibition
                                1988     64,000        52         1,000           556       Grand Hyatt
  Centre
  Kuala Lumpur Convention
                                2005     9,710         20         3,000           --             --
  Center
  Venetian Macao
                                2007     75,000        68         15,000         3,000      The Venetian
  Convention Center
                                                                                            Pan Pacific
  Suntec Singapore              1995     12,000        31          596           1,284       Conrad
                                                                                            Centennial
  Average International
                                         40,178        43         1,532          1,613           --
  Competitors

  Sydney (SCEC)                 1988     27,200        20         3,500           --             --

Source: Respective Facilities


Sydney’s primary venue, the SCEC, does not compare favorably to its primary
international competition:

          The SCEC has a below average amount of exhibition space. While 27,000
          m2 is sufficient capacity to support most international events, the large
          venues are more likely to have date availability.

          The SCEC has fewer breakout rooms than all venues except the Kuala
          Lumpur Convention Centre. Breakout rooms are an important requirement
          for international meetings and conferences.




                                                                                              12-Feb-07
Australian and Regional Competition                                          Page 6-30




        The SCEC has more plenary capacity than most venues, but as discussed
        earlier, the flexibility of that capacity is questionable. Other venues such
        as Hong Kong also use flat floor ball rooms for plenary sessions.

        The lack of a headquarters hotel capacity is also a disadvantage for the
        SCEC.

Following are detailed descriptions of the international venues.

6.5.1 Hong Kong Convention & Exhibition Centre

The Hong Kong Convention and Exhibition Centre (HKCEC) opened in 1988. An
expansion was built on reclaimed land in 1997, doubling the size of the HKCEC at
a cost of approximately US$620 million. The Hong Kong Convention and
Exhibition Centre Ltd. manages the daily operations of the facility.

The HKCEC makes a strong architectural statement and is a prominent feature of
the Hong Kong sky line. A glass curtain wall provides views from the pre-function
space overlooking Victoria Harbour. Designed by Skidmore, Owings & Merrill, LLP,
the HKCEC is a prime example of a convention centre as an icon that has gained
global recognition.

            Figure 6-20
            Hong Kong Convention & Exhibition Centre




            Source: HKCEC, SOM Architects




                                                                           12-Feb-07
Australian and Regional Competition                                                             Page 6-31




Five exhibition halls provide a total of 46,600 m2 of exhibition space. The
exhibition space is not contiguous and is spread throughout multiple levels. Two
multipurpose convention halls can be used for exhibits, banquets, and
entertainment events. The HKCEC also provides 6,900 m2 of meeting space.
Generous pre-function areas adjoining the exhibit and convention halls are
sometimes used for exhibits and banquets.

The HKCEC serves an important role in the Hong Kong export economy and its
proximity to mainland China is an important part of its appeal. The HKCEC hosted
a variety of export oriented tradeshows in 2005. Jewellery shows, textile
tradeshows, and household goods tradeshows accounted for approximately 39
percent of the shows held in the HKCEC in 2005. Entertainment industry events
composed 12 percent of tradeshows held in 2005. Unlike venues in Australia,
much of the demand for the HKCEC is driven by events owned and organised by
the Hong Kong Trade Development Council.

            Table 6-14
            Hong Kong Convention & Exhibition Centre Facility Summary

                                                                                       2
               Type of Space                    Max Breakout                 Area m

               Exhibition Hall                         5                      46,000

               Convention Hall                         2                       6,100

               Meeting Room                           52                       6,900

               Theatre                                 2                 1,000 (persons)

               Pre-Function Area                       --                      8,000
            Source: Hong Kong convention & Exhibition Centre, Business Strategies Group Ltd.


Air access to Hong Kong is excellent but the airport is distant from the Centre.
The HKCEC is accessible by motor vehicle and public transportation. The Star
Ferry, a Hong Kong ferry service, operates two routes from the HKCEC across the
Victoria Harbour. With approximately 1,300 car parking spaces, and 50 bus
parking spaces, the HKCEC is also accessible by city bus routes.

A second venue in Hong Kong, the Asia World Expo opened for business in 2006
and competes for some of the tradeshow business at the HKCEC. This provides an
important example of how two separately owned and operated venues compete
with each other in the same market and may be somewhat analogous to the
relationship between the Showgrounds and the SCEC in Sydney. HKCEC has
maintained is primacy as the preferred location for convention and congresses
because of its central city location; however the two venues have become fierce
competitors for consumer and trade shows, competing on price, services, and
date availability.




                                                                                               12-Feb-07
Australian and Regional Competition                                                          Page 6-32




6.5.2 Kuala Lumpur Convention Centre

Opened in 2005, the Kuala Lumpur Convention Centre (KLCC) is the latest
addition to the Kuala Lumpur City Centre, a self contained community within
greater Kuala Lumpur. Designed by Neuformation Architect Malaysia and Cox
Group Architects, the Centre has 9,710 m2 of exhibition space spread across five
halls. The centre also has three conference halls totalling 1,800 m2, one 500-seat
auditorium, and 20 meeting rooms on the third and fourth floors. All meeting,
exhibition, and conference space is column-free and constructed with soundproof
panels that can be arranged according to event needs.

            Table 6-15
            Kuala Lumpur Convention Centre Facility Summary
                                                                     Capacity
                                         Max      Area
                  Type of Space
                                      Breakouts    m2     Theatre   Banquet     Classroom

               Exhibition Hall            5       9,710       --      --           --

               Conference Hall            3       1,800    1,780     1,330        1,122

               Banquet Hall               1       738      740        600          459

               Meeting Room              20       1,922       --      --           --

               Ballrooms                  2       2,389    2,380     2,000        1,491

               Plenary Hall               1        --      500        --           --

               Plenary Theatre
                                          1        --      3,000      --           --
               (Auditorium)
            Source: KLCC


The KLCC is equipped with typical convention centre amenities including data
networking, structured cabling, wireless internet, and digital telecommunication
and audiovisual facilities. One of the most unique features of the Kuala Lumpur
Convention Centre is called the AQUARIEA@KLCC located on the Concourse level,
directly below the centre. Called an underwater “edu-tainment experience”, it
aims to combines multi-media technologies and the areas natural marine
resources into an educational and entertaining experience.




                                                                                            12-Feb-07
Australian and Regional Competition                                        Page 6-33




            Figure 6-21
            Kuala Lumpur Convention Centre Floor Plan (Ground Level)




            Source: KLCC


The Centre has three hotels less than five minutes away: integrated within the
Convention Centre proper is a 622-room Traders Hotel; the adjacent 643-room
Mandarin Oriental Hotel; and across the street the 335-room Imiana@KLCC.

The Kuala Lumpur City Centre was designed to be a self-contained community.
Measuring 100 acres, the KLCC surrounds a 50-acre park expressly designed by
Roberto Burle Marx for the city centre. The entire 1.67 million m2 development is
located within the capital city of Malaysia, Kuala Lumpur. The City Centre is home
to the Petronas Twin Towers, the Asy-Syakirin Mosque, the Dewan Filharmonik
PETRONAS (home of the Malaysian Philharmonic Orchestra), and the Suria KLCC
shopping centre. These facilities were constructed during the first phase of
development in 1992; the second phase was completed in 2005 with the opening
of more residential facilities and the Kuala Lumpur Convention Centre.




                                                                         12-Feb-07
Australian and Regional Competition                                           Page 6-34




            Figure 6-22
            Aerial View Kuala Lumpur Convention City




            Source: Kuala Lumpur Convention City


Malaysia   is accessible by air, with most major airlines flying directly to Kuala
Lumpur.    For international destinations the country is serviced by Air Asia Fly and
Malaysia   Airlines. A contemporary highway infrastructure connects Malaysia to
Thailand   and Singapore.

6.5.3 Suntec Singapore International Convention & Exhibition Centre

The Suntec Singapore International Convention & Exhibition Centre (“SSICEC”)
opened in the August of 1995; it was built and operated by a publicly held
company. Like the Kuala Lumpur Convention Centre, Suntec Singapore is part of
a larger multiuse development in Singapore called the Marina Centre. The SSICEC
is located twenty minutes from the Changi Airport. Currently in its third year of
operation, the Asia’s Convention City initiative was developed by The Suntec
Singapore, The Oriental Singapore, Marina Mandarin Singapore, the Swissôtel,
the Stamford, Conrad Centennial, Pacific World Singapore, Singapore Airlines,
and the Singapore Exhibition and Convention Bureau.

With a 10,600 m2 multi-use convention hall, Suntec Singapore has the largest
column-free space in Asia. On the fourth floor there is an additional 12,000 m2
Exhibition Hall. The rest of the six-floor facility consists of 31 meeting rooms
allowing for 3,655 m2 of meeting space; a 2,150 m2 ballroom, a 596-seat theatre,
and 3,700 m2 of multi-purpose gallery space. There are two main pre-function
spaces, a concourse on the third level with 930 m2 of open space and the main
lobby on the ground flood.

Suntec Singapore has hosted several high-profile international events including
the World Economic Forum’s East Asia Economic Summit, the International Food




                                                                            12-Feb-07
Australian and Regional Competition                                                                 Page 6-35




Festival, IT Show, and the 1996 World Trade Organisation Ministerial Conference.
In 2006 one of their major events was the International Monetary Fund and
World Bank Meeting.

            Table 6-16
            Suntec Singapore Convention Centre Facility Summary
                                                                         Capacity
                                       Max
                Type of Space                 Area m2
                                    Breakouts         Theatre   Banquet    Classroom   Reception

               Exhibition Hall         4      12,000     --       --            --        --

               Convention Hall         3      10,600   12,000    5,000        5,442      8,800

               Meeting Room            31      3,940    113       62           60         93

               Ballroom                3       2,150   1,800     1,100        1,208      1,760

               Theatre                 1        624     596       --            --        --

               Pre-function Space      --      4,600     --       --            --        --

            Source: Suntec Singapore


Easily accessible by Singapore’s Mass Rapid Transit (MRT) system Suntec is
adjacent to the city’s Central Business District as well as the Financial District.
Twenty minutes from the Changi International Airport (CIA), Suntec is served by
68 airlines and is the hub of Singapore Airlines and has direct connections to over
140 international destinations.

Suntec Singapore is part of Asia’s Convention City precinct. Suntec and the ACC
form a fully integrated convention city with easy access to greater Singapore.
Most of the ACC facilities connect via covered walkways and/or air-conditioned
tunnels. Attracting about two million visitors each month, the daily “working
population” of the ACC is approximately 15,000.




                                                                                                   12-Feb-07
Australian and Regional Competition                                         Page 6-36




            Figure 6-23
            Suntec Singapore Convention City Map




            Source: SSCC


Singapore is located on the southern edge of Malaysia and has served as a link
between the east and west for many centuries. As Asia’s commercial centre,
Singapore has long been a popular point of entry for both trade and travel to
Asia.

6.5.4 Venetian Macao

Macao is a small territory off the southern coast of China. The Macao territory
consists of a peninsula, and the islands of Taipa, and Coloane. The region was
under Portuguese rule until 1999. In December of 1999, sovereignty was
transferred to the People's Republic of China (“PRC”) and it is now a Special
Administrative Region (“SAR”) of the PRC. Due to liberalisation of gambling laws
and the successful attraction of foreign investment, Macao is undergoing a rapid
transition from a relatively small gaming destination of poor reputation to a large
upscale resort gaming, convention and entertainment resort similar and perhaps
larger than Las Vegas in the United States.




                                                                          12-Feb-07
Australian and Regional Competition                                            Page 6-37




            Figure 6-24
            Planned Exterior of the Venetian Macao




            Source: Las Vegas Sands Corporation


The Las Vegas Sands Corporation is one of the many entities undertaking resort
development in Macao and it is currently developing the Venetian Macao, a new
convention centre, hotel, and casino, scheduled to open in 2007. The Macao
development is modeled on its successful Venetian Casino Resort Las Vegas and
the Sands Expo and Convention Centre in Las Vegas. This new convention
centre/hotel/casino will feature 3,000 suites, approximately 425,000 m2 of
convention centre, exhibition and meeting space as well as a 166,000 m2 casino.
The proposed meeting space breaks down as follows: 268,000 m2 of convention
space, a congress meeting centre of approximately 40,000 m2 and a theater that
can seat 2,000 people.

            Table 6-17
            Venetian Macao Conference & Exhibition Centre Facility Summary

                         Facility                                Area (m 2)

                         Exhibition Centre                        75,000
                         Meeting & Breakout Space                 11,500
                         Event Centre (Arena)                     18,400
                                        Source: Venetian Macao


This venue has potential to attract a substantial share of the Asian convention
and tradeshow market because it offers ample function space, is proximate to a
large number of hotel rooms, and has the distinction of being an integrated resort
destination. Consequently, its entry in the market will increase regional
competition.




                                                                              12-Feb-07
Australian and Regional Competition                                        Page 6-38




6.6 CONCLUSIONS

Sydney is clearly the premier destination in Australia, but its convention and
exhibition venues are less efficient and of lower quality than some primary
domestic competitors. The new Melbourne Exhibition and Convention Centre
offers a competitive advantage over Sydney for national events and for
international events that are determined to rotate to Australia. Brisbane,
Sydney’s second most effective competitor has also embarked on expansion and
improvement plans that will place Sydney at a further disadvantage if no action is
taken to expand and improve Sydney’s convention and exhibition facilities. The
quality and size of Sydney’s venues is the primary disadvantage it faces in the
domestic MICE market and hampers its ability to take advantage of it unmatched
destination appeal and supporting infrastructure.

Internationally, Sydney faces strong competition from high quality venues in
attractive destinations, including Hong Kong, Singapore, Kuala Lumpur, and
emerging destinations such as Macao. Despite this competition and its
disadvantage as a “long haul” destination, Sydney has met with a measure of
success in the international arena. Creation of a world class convention venue
would raise Sydney’s stature in the international MICE market and help Sydney to
achieve a higher level of penetration in the market for large and rotating
international conventions and congresses.




                                                                         12-Feb-07
7. Industry Participant Surveys and
    Interviews

7.1 SCOPE OF SRUVEYS AND INTERVIEWS

HVS surveyed and interviewed local industry participants to gain their insight into
the demand characteristics and trends of the convention and exhibition industry in
Sydney. Industry participants included:

   •   Sydney Convention and Visitor’s Bureau,

   •   Event organisers,

   •   Professional conference organisers, and

   •   Venue managers.

7.2 SCVB

The Sydney Convention and Visitors Bureau (“SCVB”) provides the primary
marketing as sales force to promote meetings, incentive travel programmes,
conventions, exhibition, and special events. SCVB management and sales staff
shared their views on the state of the industry and provided information on their
marketing and sales effort.

The SCVB focuses on attracting international conventions and tradeshows and
represents Sydney in competition with other Australian cities for the opportunity to
represent Australia in bids for international events (referred to herein as
“Showdowns”). SCVB research over a two years period identified that the average
international win rate for other Australian cities was 36% compared to Sydney’s
average win rate of 63%, an indicator of Sydney’s strong destination appeal.

The SCVB’s management pointed out that the key variable in promoting Sydney is
its status as a “long-haul” destination, which causes event planners to focus on
destination appeal and air access as the primary criteria for site selection.
International event planners have a relative lack of familiarity with the destination
and heightened concerns about the associated risks of an unfamiliar and distant
location for their events. In contrast, in the National Business Event Survey results
show that event organisers rate the quality and capacity of the venue as the most
important selection criteria.

Furthermore, SCVB Management believes that Sydney would benefit from having a
venue that is an icon and draws interest in its own right, similar to the Sydney
Surveys and Interviews                                                                  Page 7-2




Opera House, which is Australia’s leading tourist attraction. Consequently, when
considering expansion of venue infrastructure, Barangaroo (formerly East Darling
Harbour) provides, potentially, the most significant opportunity to increase
international market share due to its attractive waterside location and the
opportunity to develop a state-of-the-art venue. SCVB management believes that a
combination of Sydney’s destination appeal, coupled with the design and location
of the venue in Barangaroo would maximise the overall potential demand for
Sydney.

7.3 ANALYSIS OF LOST BUSINESS

Loss of market share to Australian cities is evidenced by Sydney’s performance in
competing for international business. Despite its superior win record in
international competitions as compared to the win record of the Australian cities,
the analysis of lost business shows that Sydney only wins one in three Showdowns
or competitions against other Australian cities. The SCVB tracked the number of
total bids and showdowns by financial year between 2000 and 2006, as shown in
Table 7-1.

            Table 7-1
            Number of Total Bids and Showdowns

                                                         No. of      Showdowns
                                       No. of Total
            Financial Year                            Showdowns    Submitted as % of
                                     Bids Submitted
                                                       Submitted      Total Bids

            2000/2001                      66             22             33%
            2001/2002                      86             14             16%
            2002/2003                      63             8              13%
            2003/2004                      50             5              10%
            2004/2005                      57             4               7%
            2005/2006                      45             2               4%
            Total                          367            55             15%
            Source: SCVB


The data reveals a decline in the number of showdowns over this period. The SCVB
attributes this decline to the following:

    •   More targeted lead qualification causing a reduction in the number of
        qualified leads,

    •   Different focus by the SCVB and a change of strategy for showdowns,

    •   Realisation that a showdown is as costly to the SCVB as a standard bid, and

    •   Limited financial resources.




                                                                                       12-Feb-07
Surveys and Interviews                                                                Page 7-3




Table 7-2 shows that the trends in the number and win rate of Showdowns are
negative.

            Table 7-2
            Annual Result of Showdowns by Fiscal Year
                                   Showdowns        Showdowns    Showdowns
            Financial Year                                                   Total
                                      Lost           Withdrawn      Won

                 2000/2001               6              2            5        13
                 2001/2002               8              3            4        15
                 2002/2003               4              2            5        11
                 2003/2004               2              1            3        6
                 2004/2005               0              3            2        5
                 2005/2006               3              0            0        3
                    Total                23             11          19        53
            Source: SCVB


The number of showdowns has declined and Sydney has won an average of less
than two per year over the past three years, compared to almost five over the
three preceding years.

Five cities have effectively competed against Sydney as shown in Table 7-3.




                                                                                     12-Feb-07
Surveys and Interviews                                                                                Page 7-4




Table 7-3
Australian Cities That Won Bids Sydney Competed for and Reasons for Their Selection
                                                                                            Outcomes
                    Number of         Main Reasons for losses against national
Australian City                                                                                        Still
                  Pre-Selections                   competition                        Won     Lost
                                                                                                       Open
Melbourne                8         Funding (3)                                         3       4         1
                                   Local Politics (2), International Politics (1)
                                   Destination Appeal (1)
                                   Not enough local support (1)
Brisbane                 8         Cost (4)                                            4       3         1
                                   Funding/ strong support (2)
                                   Local Politics (1)
                                   Already hosted in Sydney (1)
Adelaide                 2         Proposed venue not suitable (1)                     1       1         0
                                   Local Politics (1)
Cairns                   2         Climate (1)                                         2       0         0
                                   Local politics (1)

Gold Coast               1         Local Politics (1)                                  0       0         1
Perth                    1         Cost (1)                                            0       1         0
                                   Main reasons: 6x Local Politics, 5x Cost (mainly
TOTAL                   22                                                            10       9         3
                                   due to venue cost), 4x Funding
Source: SCVB


Melbourne and Brisbane accounted for over 70 percent of the bids Sydney lost to
other Australian cities. The main reasons for these lost bids were local politics (e.g.
the relationship between national and local associations), cost (e.g. convention
centre and hotel rental rates), and funding (e.g. ability to provide incentives to
event organisers). Additional analysis by the SCVB revealed that Sydney was
primarily losing bids on larger events. For example, between financial years
2003/04 and 2005/06, the five showdowns Sydney lost had an average attendance
of 4,240 and the five it won had an average attendance of 660. The analysis of lost
business conducted by the SCVB indicates improvement initiatives on multiple
fronts are likely necessary to reinvigorate Sydney as an event destination relative
to its primary competitors.

7.4 EXHIBITION ORGANISER SURVEYS

Exhibition organisers represent the privately owned tradeshow and consumer show
sectors of the industry. HVS surveyed exhibition organisers that have held events
at one or more of the venues in Sydney and received information on 41 events.
This sector is dominated by national tradeshows and local consumer shows as
shown in Figure 7-1.




                                                                                                     12-Feb-07
Surveys and Interviews                                                                                              Page 7-5




            Figure 7-1
            Respondent Events by Type
             30
                                   25
             25


             20


             15
                                                                        12

             10


              5                                                                                            4


              0
                         Tradeshow                        Consumer Show                Combination Show

            Source: HVS International


Among the respondents, 61 percent plan tradeshows, 29 percent consumer shows,
and 10 percent plan combination shows—tradeshows that also have a public
component.

The large majority of organisers hold their event at the SCEC as shown in Figure 7-
2.

            Figure 7-2
            Venues Where Respondents Plan Events
                  30
                              27
                  25

                  20

                  15

                  10                            8
                                                                4
                   5                                                             2
                                                                                           0                   0
                   0
                         EC




                                                                                      TP




                                                                                                         rk
                                                          ill




                                                                            rk
                                            s
                                         nd




                                                        eh




                                                                                                       Pa
                                                                         Pa




                                                                                     A
                       SC




                                      ou




                                                     os




                                                                                                       c
                                                                       re




                                                                                                    pi
                                    gr




                                                    R




                                                                    oo




                                                                                                m
                                  ow




                                                                    M




                                                                                               ly
                               Sh




                                                                                           O




            Source: HVS International


Discussions with event organisers reveal that the high level of use of the SCEC is
primarily due to the availability of exhibition space. Its location in Darling Harbour




                                                                                                                   12-Feb-07
Surveys and Interviews                                                        Page 7-6




is also preferred by organisers for events that have a substantial amount of
national and international attendance. Most organisers of local events do not
express the same preference for locating their events at the SCEC but do not see
the Showgrounds as a viable alternative because of its lack of capacity.

Many events cannot accommodate all exhibitors that want to participate, a key
indication of a deficit of available exhibit space in a market. Unless the supply of
exhibit space is constrained, event planners will typically increase the size of their
shows to accommodate most of the demand for exhibit booths at their events.
Among respondents, 23 percent indicated that they had waitlists of exhibitors that
wanted to buy space in their shows but could not due to a lack of available space.
In total, existing shows need an average of 14 percent more exhibit space than is
currently available to them.

The surveys and interviews also provided the opportunity for event planners to
relay their comments and concerns about existing exhibit space in Sydney and
factors that are currently limiting their ability to function as effectively as they
would if these issues were addressed.

    •   Event planners prefer to hold their events in Darling Harbour when they
        draw interstate and international exhibitors and/or attendees.

    •   The Showgrounds is an acceptable location for consumer show and local
        tradeshow events. The Showgrounds’ location at the centre of the metro
        area, good public transportation access, and ample parking availability are
        its most positive attributes. However, it currently lacks exhibition and
        function space to accommodate most events appropriately. In recent years
        a number of events have moved to the Showgrounds, only to return to the
        SCEC in subsequent years.

    •   Most event planners report difficulty in securing dates for their events,
        particularly at the SCEC.

    •   The cost of conducting events at the SCEC reduces the profitability of shows
        due to higher rental rates and inefficient floor space, but does not deter use
        because it is the only venue available for most large events.

    •   There is no private incentive to invest in venues, and event planners
        expressed concern over the perceived lack of government commitment to
        the convention and tradeshow industry in Sydney.

7.5 PCO INTERVIEWS

HVS conducted a series of interviews with Professional Conference Organisers
(PCOs) to obtain their views on the current state of the convention and meetings
industry in Sydney. PCOs in Sydney plan local, state, national, and international
events and most often become involved in the planning after the bid for the event
is won. Some of the larger PCO companies generate a portion of their business
without the involvement of the SCVB. The interview subjects included professional
organisers of conventions, tradeshows meetings, incentive events, and other types




                                                                             12-Feb-07
Surveys and Interviews                                                      Page 7-7




of events. HVS used a survey guide in the interviews, but the nature of the
discussions was intentionally more conversational than a strict series of questions
and answers. Several themes consistently emerged from the interviews.

7.5.1 Sydney is the Premier Destination in Australia

The PCO contacts were unanimous in their view that Sydney is and will continue to
be the most desirable event destination in Australia. Recent convention facility
development in Melbourne and other areas may have increased competition and
raised people’s expectations of convention centres quality and services. However,
Sydney remains the preferred destination in Australia. According to the PCOs, their
clients are willing to pay more for Sydney than other Australian destination. They
estimate that a 10 to 15 percent cost premium for everything from space rental to
hotel rooms and restaurants is part of holding and event in Sydney. In their view,
Sydney’s mix of urban culture and attractions, climate, and visitor infrastructure
(hotels, restaurants, retail) provides inherent advantages over other Australian
destinations. They cited its reputation as a safe city and its climate as two major
advantages.

7.5.2 Current Marketing Efforts are Disjointed and Lack the Proper Focus

PCOs expressed a high level of concern over the effectiveness and lack of
aggressiveness of existing efforts to market the city as a convention and meetings
destination. Some contacts were convinced that current funding levels for
marketing were grossly inadequate. Others were as or more concerned about how
existing resources are being applied. In either case, there was a consistent belief
that Sydney was resting on its laurels and as a result was losing market share to
its competitors. Some contacts described a situation where the SCVB was grossly
under funded and was doing what it could with the resources at hand. Others
expressed concern that the SCVB’s marketing efforts were focused entirely on
international events, which in the words of one organiser, “are declining at the
moment,” and that the national market was neglected.

PCOs expressed a desire for more emphasis on generating specific leads and less
on general promotion of Sydney as an event destination. PCOs insisted that for
certain events, Sydney needs to become more aggressive in providing financial
incentives to counter similar incentives offered by competing destinations in
Australia. Most often cited were the efforts of the government of Victoria to invest
in the convention and meetings industry on a variety of levels—facilities,
marketing, incentives—as an example of what could and should happen in Sydney
and New South Wales.

7.5.3 The Sydney Convention & Exhibition Centre

Views on the SCEC were generally favourable, although PCOs were uniformly
aware of the new venues in Melbourne and several other cities that have placed
the SCEC in a less competitive position. Because the PCOs generally plan
conventions with “light” exhibits and meetings, their need for exhibition space is
relatively limited. The respondents could generally fit their events into one or at
the most two halls of the SCEC. They expressed frustration at not being able to




                                                                           12-Feb-07
Surveys and Interviews                                                        Page 7-8




secure dates at the SCEC from September though November, the busiest months
for many types of conventions and exhibits.

PCOs also indicated a desire for more conference and meeting space at the SCEC.
In particular, they expressed the need for breakout space that was located closer
to the exhibit halls. If each hall had a block of meeting rooms adjacent to it the
facility could accommodate simultaneous events more effectively and increase the
overall level of utilisation, particularly in the busiest months. PCOs also noted that
it would be beneficial to have a theatre or plenary hall that was directly adjacent to
the exhibit space and associated breakout space. They also noted deficiencies in
the ease of loading the exhibit halls and problems with trucks queuing up for
several blocks down the street for larger events due to the in ability to get them
into and out of the halls efficiently.

7.5.4 International Events

While PCOs view Sydney as the premiere destination for international conventions
and tradeshows, they express scepticism about its ability to penetrate the
international market because of the limitations inherent in a long-haul destination.
As one PCO put it, “if you could get people here from the US or Europe in four
hours or less, Sydney would be a premiere international event destination.” As it
stands, Sydney is largely limited to Asian regional events. The competition for such
events has primarily been Hong Kong, Singapore, Kuala Lumpur, and Macao. In
the future, the rapid development of convention centres in China will significantly
increase the competition for such events. PCOs view the most growth potential in
capturing a greater share of national events rather in the international arena.

7.5.5 If You Could Implement One Change What Would It Be?

HVS asked PCOs to identify a single change that would most improve the ability of
the Sydney to attract and accommodate events. Uniformly, PCOs believe that
revamping marketing efforts is the top priority. The focus of current efforts are not
only under funded, but too exclusively focused on international business and on
generating the necessary private funding for the SCVB. One respondent
characterised the difference between recent efforts in Sydney and Melbourne is
that Melbourne has a process for working in the common interest, whereas in
Sydney, operates in a less coordinated manner. The marketing and promotion
efforts in Melbourne and Victoria are held up as examples of a commitment from
everyone, from the government to the PCOs, to work together to elevate the City’s
status as an event destination.

The PCOs expressed serious concern that if a comprehensive plan to reinvent the
approach to, and support for, group marketing is not implemented, Sydney is
destined to further lose market share. Complementary upgrades to the SCEC,
especially in terms of its breakout meeting and plenary hall capabilities, would
further elevate Sydney’s future market potential.




                                                                             12-Feb-07
Surveys and Interviews                                                       Page 7-9




7.6 VENUE MANAGER INTERVIEWS

Venue managers at the SCEC and the Showgrounds share a longstanding desire to
expand the supply of exhibition and meeting space in Sydney. Both have
commissioned studies and developed detailed concepts for expansion of their
respective venues but have so far failed to secure the necessary government
funding for expansion. (These expansion plans are discussed in more detail in
Section 7 of this report.)

7.6.1 SCEC Management

The primary mission of the SCEC is to generate economic impact by attracting
business tourism. Yet this goal often comes in conflict with the need to generate
operating profit. Local consumer shows that dominate the SCEC schedule in certain
peak months of demand generate relatively high profit margins but little interstate
and national visitation. In contrast, international and national conventions generate
lower profit margins but high levels of economic impact due to higher incremental
spending. This conflict is inherent in the operation of most convention centres, but
is exacerbated at the SCEC by the lack of adequate capacity.

SCEC management is also well aware of the limitations of the venue discussed in
Section 3 of this report.

7.7 Royal Agricultural Society

The Royal Agricultural Society (“RAS”) holds a long-term land lease and manages
the Sydney Showgrounds. Management is seeking to expand its business by taking
advantage of the relatively new and ongoing development of the Sydney Olympic
Park Precinct. Owing to the RAS history as an agricultural society, the
Showgrounds is only one part of a complex of pavilions, stadiums, and event
venues under RAS management. The expansion plan seeks not only to enlarge the
exhibition space but to replace and consolidate some of the existing venues.

RAS management believes the expanded Showgrounds venue would dramatically
increase its capacity to host tradeshows, consumer shows, and other events.
Adjacent precinct development of the Sydney Olympic Park is designed to
transform the park into an urban growth centre. Development plans, some of
which are currently under construction include new hotels, office space, retail, and
residential. RAS believes that these developments will enhance the destination
appeal of the Showgrounds and thereby its level of exhibition activity.

7.8 CONCLUSION

All industry participants see a pressing need for expansion of exhibition space and
improvements to convention centre space in Sydney. This need is felt most acutely
by venue managers and exhibition organisers, for whom their business
opportunities and profitability are severely constrained. PCOs concur with the need
for expansion, but their first priority is to improve marketing and sales efforts.
Industry participants involved in national and international events insist that the
central City is the most appropriate location for expansion and the only location




                                                                            12-Feb-07
Surveys and Interviews                                                   Page 7-10




that takes advantage of Sydney’s superior destination appeal. However, important
segments of the industry: organisers of local trade shows, consumer shows, and
other local events, view an expanded Showgrounds as a viable alternative for their
events.




                                                                         12-Feb-07
8. Demand Forecast

8.1 DEMAND SCENARIOS

For the purpose of keeping the focus of this analysis on large scale events,
“demand” is defined as the events, attendance, and space utilisation in major
existing venues or in proposed new and expanded venues in Sydney. As such, the
HVS demand projections represent a subset the entire MICE industry in Sydney.

HVS developed two series of convention and exhibition centre demand estimates
for the projection period of 2007 through 2016:

   •   Baseline Scenario - Assumes that there are no significant new exhibition
       facilities or expansions in the market.

   •   Unconstrained Scenario - Assumes that new facility development and/or
       expansion increases the supply of exhibit space sufficiently to accommodate
       existing levels of unaccommodated demand and future growth. For the
       purposes of this report we assume increases in the supply of space occur in
       2009.

Industry trends, analysis of the competition, input from industry participants, and
the historical event demand for the SCEC and the Sydney Showgrounds were all
used as factors in generating a forecast of event demand for both scenarios. The
following assumptions guided the estimates of future demand in the two scenarios
(see Table 8-1).
Demand Forecast                                                                                          Page 8-2




Table 8-1
Assumptions Underlying Demand Forecasts
         Assumption                     Baseline Demand                         Unconstrained Demand

 Opening Year                              Not Applicable                                 2009

 Stabilisation                             Not Applicable                                 2012


                           All of these events currently occur at the
                                                                         Recovery of 50 percent of current lost
                           SCEC. Over a three year period the
                                                                         business plus new events attracted to
                           number of events is forecast to decline
 International Conventions                                               Sydney due to improved market
                           from an historical average of
 and Tradeshows                                                          penetration is forecast to cause a 25
                           approximately 20 events to 17 annual
                                                                         percent increase in the number of events
                           events due to the increase competition
                                                                         over current levels.
                           form other Australian cities.


                          These events currently take place at the
                          Showgrounds and the SCEC. The RAS is
                          expected to maintain its demand levels         Recovery of lost business and incubation
 National Conventions and but rotating shows at the SCEC are likely      of new shows is forecast to cause a 6%
 Tradeshows               to decline by approximately 5 percent          increase in business over average
                          due to lack of date availability and           historical levels.
                          increased competition from other national
                          destinations.


                                                                         The number of local events is based on
 Consumer Shows and          These events currently take place at the
                                                                         the historical average. No anticipated
 Local Conventions and       SCEC and the Showgrounds. The
                                                                         growth in the number of events, but the
 Tradeshows and Other        forecast of the number of local events is
                                                                         size of events would grow. (See average
 Events                      based on the historical average.
                                                                         floor area.)

                             Approximately 95 percent of these events
                             are national and 5 percent are              Recovery of lost business and increased
 Meetings and
                             international. Increased competition from   penetration of the international and
 Conferences without
                             Melbourne and other Australian              national markets are expected to cause a
 Exhibitions
                             destinations is assumed to cause a 5%       20% increase in the number of events.
                             decline over the next three years.

 Other Local Non-
                             Based on historical average.                Based on historical average.
 Exhibition Events

 Average Event Length        Based on historical average.                Based on historical average.

                                                                         Expanded space allows for the growth of
                                                                         existing shows and larger new shows
 Average Attendance          Based on historical average.
                                                                         resulting in a 10% increase in average
                                                                         attendance.

                                                                         Expanded space allows for the growth of
                                                                         existing shows and larger new shows
 Average Floor Area          Based on historical average.
                                                                         resulting in a 10% increase in average
                                                                         floor area.

Source: HVS International




                                                                                                        12-Feb-07
Demand Forecast                                                                                   Page 8-3




8.2 EVENT AND ATTENDANCE FORECASTS

Applying these assumptions, HVS generated a forecast of the annual number of
events by type and geographic scope. Table 8-2 shows a summary of the event
and attendance forecasts for the two scenarios through in a stabilised year of
demand (2012).

           Table 8-2
           Summary of Event Estimates for Baseline and Unconstrained Scenarios in a Stabilised
           Year (2012)
           Type & Geographic Scope of Event                 Baseline          Unconstrained

           Convention & Trade Shows with Exhibitions
              International                                    17                    26
               National                                        60                    69
               Local                                            5                    5
           Sub-total                                           82                   100
               Consumer Shows                                  40                    40
               Other                                            8                    8
           Total Exhibition Events                             130                  148

           Meetings & Conferences without Exhbitions
             International                                      8                    15
               National                                        175                  220
               Local                                           20                    20
           Sub-total                                           203                  255
               Social                                          125                  125
               Concert                                          8                    8
           Total Non-Exhibition Events                         336                  388
           Source: HVS International


Combining the event forecasts with the previously described assumptions
regarding event length, average attendance, and average floor area utilisation,
HVS generated annual estimates of event days, attendance and occupied square
metre days. The following charts highlight key aspects of the forecasts.

Figure 8-1 shows the estimated the actual number of exhibition events in 2006 and
estimated events between 2007 and 2016 in the two scenarios.




                                                                                                 12-Feb-07
Demand Forecast                                                                                      Page 8-4




           Figure 8-1
           Number of Conventions with Exhibitions and Tradeshows at Major Venues in Sydney
                           Baseline scenario                   Unconstrained Demand
            120


            100


              80


              60


              40


              20


               0
                    2006    2007   2008   2009   2010   2011    2012    2013   2014   2015   2016

           Source: HVS International


The estimated annual number of conventions and tradeshows stabilises at 82 in
the baseline scenario. In the unconstrained scenario the number of events
increases dramatically along with the assumed facility improvements in 2009. The
number of conventions and tradeshows stabilises at 100 by 2012 in the
unconstrained scenario representing a 23 percent increase.

Figure 8-2 shows the estimated square metre days of occupied exhibition space in
the two scenarios.

           Figure 8-2
           Estimated Square Metre Days of Occupied Exhibition Space
                            Baseline scenario                   Unconstrained Demand
            14.0
                    millions of square metre days
            12.0

            10.0

              8.0

              6.0

              4.0

              2.0

              0.0
                    2006    2007   2008   2009   2010   2011     2012   2013   2014   2015   2016




                                                                                                    12-Feb-07
Demand Forecast                                                                     Page 8-5




The number of square metre days is forecast to grow at a faster rate than the
number of events because the average size of events is expected to grow by
approximately 10%. The amount of occupied square metre days is 28 percent
higher in the unconstrained scenario in 2012, compared to a 23 percent increase in
the number of events in that same year between the two scenarios.

The mix of events is also forecast to change as shown in Figure 8-3, number of
conventions and tradeshows by geographic scope in the stabilised year of demand
in the two scenarios.

           Figure 8-3
           Geographic Scope of Forecasted Conventions and Tradeshows by Scenario
                          Baseline scenario               Unconstrained Demand
            80

            70

            60

            50

            40

            30

            20

            10

             0
                       International           National                   Local

           Source: HVS International


The unconstrained forecast produces a richer mix of international and national
conventions and tradeshows in Sydney, as the number of such events increases by
nine and ten, respectively. The estimated increases in not only the raw numbers of
events, space utilised, and attendance but also the increased share of international
and national events underlies the potential for significant increases in economic
impacts associated with conventions, tradeshows, and other events.

The unconstrained scenario anticipates growth in all three geographic segments.
See Figure 8-4.




                                                                                   12-Feb-07
Demand Forecast                                                                                          Page 8-6




           Figure 8-4
           Overall Attendance Growth in Unconstrained Scenario by Scope
           (Exhibit and Non-Exhibit Events)
                                 Local                 National               International
                        1.4

                        1.2

                        1.0

                        0.8
             Millions




                        0.6

                        0.4

                        0.2

                        0.0
                          2006   2007    2008   2009   2010   2011   2012   2013   2014   2015   2016

           Source: HVS International


On a percentage basis, international events show the largest growth through 2012
at 46 percent, followed by national and local at 25 and 14 percent, respectively.
Note this estimate represents the potential for attendance at major venues in
Sydney and not the overall attendance impact of the MICE industry as a whole.

8.3 SUMMARY

The expansion of convention and exhibition space in Sydney is forecast to have a
significant impact on the industry through growth in the size of existing events,
recovery of lost business and increase market penetration in the domestic and
international markets. However, realising this demand potential would require
65,000 to 70,000 m2 of exhibition space, and complementary breakout space as
compared to the approximately 42,000 m2 of exhibition hall space available today
at the SCEC and the Showgrounds. Sydney could attract an additional 19
conventions and tradeshows (a 23 percent increase) and approximately 50
meetings and conferences (a 25 percent increase) over the 2012 baseline scenario.
Attendance at conventions, tradeshows, consumer shows, meetings, and other
events would increase by approximately 155,000 delegates over the baseline
scenario.

The HVS estimates were used as the basis of a separate economic impact analysis
performed by URS to determine the effect the potential growth of this industry
could have on the Sydney and New South Wales economies.




                                                                                                        12-Feb-07
9. Expansion Options

The demand analysis discussed in Section 6 clearly demonstrates an overwhelming
and immediate need for expansion exhibition space and the need for higher quality
and more functional convention space in Sydney. The purpose of this section is to
analyse various approaches to expansion and to recommend the preferred ones.

Expansion options should consider the long-term convention and exhibition centre
needs of Sydney over a 20- to 30-year life span of the propose venue. The growth
in population, employment and income will increase the need for adequate
convention, trade, and consumer show venues that support local industries and a
growing business tourism market. HVS recommendations were developed
considering this long-term framework.

9.1 FACILITY DEVELOPMENT RECOMMENDATIONS

As a first step in the analysis, HVS developed a building programme
recommendation that would accommodate the amounts and types of convention
and exhibition business projected in the unconstrained demand scenario. The
approach to development on each site or a combination of sites was designed to
meet these general building programme requirements. Our building programme
recommendations call for an expansion of exhibition space, meeting rooms, and
ballroom space; improved quality and flexibility of convention and exhibition space;
development of adjacent parking facilities; and where possible, new hotel
development proximate to the venue.

Exhibition Space - The overall amount of exhibition space in Sydney needs to be
expanded such that the annual occupancy of exhibit halls in future years will
stabilise somewhere between 50 and 60 percent. Today the SCEC exhibit halls
have an annual occupancy of approximately 70 percent. Achieving a lower
occupancy would allow for an increase in the number and size of events by
eliminating most date conflicts and size constraints that face event organisers
today. Under the HVS demand projections the number of occupied square metre
days (“SQMD”) could reach 12 million per year by 2012, a 36 percent increase over
the current level. We estimate that a total floor area of 65,000 to 70,000 m2 would
be necessary to accommodate this level of occupancy. Today the SCEC and Sydney
Showgrounds offer a combined total of 41,600 m2 of exhibition space. The overall
requirement for exhibit space is in part determined by the number and
configuration of venues in the market and the required amount of floor area may
be greater if the exhibit space is located in two venues rather than a single venue.

Meeting and Banquet Space – Convention and tradeshow event planners have
demonstrated an increasing need for meeting and banquet space in order to
accommodate the educational and food and beverage components of their events.
Expansion Options                                                           Page 9-2




Many events also need a larger space for general sessions which are
accommodated in a plenary hall. In aggregate, meeting, ballroom, and plenary hall
space are often referred to as “breakout space.” As the industry has matured and
competition for attendees and exhibitors has increased the demand for breakout
space to accommodate more detailed educational and technical content has
increased. These educational and technical sessions require significant amounts of
breakout space. Most contemporary convention facilities are programmemed with a
ratio of 40 to 50 percent of breakout space to exhibition space. This implies that
Sydney needs 25,000 to 35,000 m2 of breakout space in its convention venues.
This compares to the current supply of approximately 20,000 m2 of breakout space
in the SCEC and Sydney Showgrounds.

Plenary Hall – A plenary hall with capacity of 3,000 to 5,000 persons is necessary
to accommodate large convention events. The Plenary Hall in the SCEC seats a
maximum of 3,000 persons and the Sydney Entertainment Centre is used for
larger plenary sessions. However, improved divisibility and staging capacities could
greatly increase the utilisation of the existing or new plenary halls.

Parking – Today the SCEC and the neighbouring Wilson Entertainment car parks
offer 2,700 spaces. An additional 5,000 spaces are available in the Darling Harbour
area. The Sydney Olympic Park offers ample parking around the Showgrounds and
the various sports venues. Any expansion scenario should maintain or increase
parking capacity or consider alternative transportation access.

Convention Centre Hotel Development – Sydney currently offers more overall
lodging capacity than any of its Australian competitors, and much of that supply is
well located in the central business district. However, Sydney lacks a hotel that is
connected to its convention centre, like the headquarters hotel being developed in
Melbourne. Development of a headquarters hotel could enhance the overall
attractiveness the convention venue and provide a location for simultaneous
functions that are often associated with conventions. Furthermore, Sydney’s hotel
properties have relatively low room counts when compared to international
competitors. In Sydney, the largest property has 631 rooms and the average room
count is 335, which causes event planners to use more hotel properties than they
would prefer. HVS recommends the eventual development of a full-service
convention hotel with no less than 500 rooms near the primary convention facility.
The ultimate size of the property should be determined in consideration of what
can reasonably be absorbed into the market to achieve a self-funding and
financially feasible project.

9.2 PRELIMINARY SITE REVIEW

In consultation with client representatives, HVS was directed to consider a range of
options that would fulfill exhibition and convention centre space requirements. HVS
reviewed eight potential sites for expansion including all five existing venues
discussed in Section 4 and three new development sites:




                                                                           12-Feb-07
Expansion Options                                                                Page 9-3




    •   Existing Venues

            o    Sydney Convention and Exhibition Centre                (including   the
                 Entertainment Centre and the related car park)

            o    Sydney Showgrounds at Sydney Olympic Park

            o    Rosehill Gardens

            o    Playbill Venues at Moore Park

            o    Australian Technology Park

    •   Potential New Sites

            o    Barangaroo

            o    Glebe Island

            o    Railyards at Central Station

HVS performed a cursory review of all sites to eliminate from consideration those
that did not appear to be feasible based on issues of site capacity, constructability,
and location. Four sites were eliminated on this basis, and building programme
recommendations were created for each of the four remaining sites. The strength
and weakness of each approach to development was evaluated in detail resulting in
a priority ranking of each approach.

Four sites were eliminated from further consideration based on capacity,
constraints, location, and constructability.

    •   Central Station Rail Yards – The rail yards are located to the Southwest of
        Central Station and provide a very large site for potential development.
        However, development of this site would require construction of a deck
        over the rail lines that would serve as a site pad for convention centre
        development. A tour of the site area revealed the following issues that
        would adversely affect convention or exhibition centre development.

             o      The ability to construct over the rail lines is problematic. Even if
                    rights to build could be obtained, the costs and difficulties of
                    building over active rail lines would be prohibitive.

             o      The surrounding neighbourhood does not contain highly supportive
                    land uses. The hotel supply in the immediate area is of lesser
                    quality and amounts than necessary to support convention centre
                    development. The availability of other amenities including
                    restaurants, retail, and entertainment opportunities is also limited.

             o      Although it could be improved, the pedestrian connection to the
                    amenities in Darling Harbour is poor.




                                                                                12-Feb-07
Expansion Options                                                           Page 9-4




    •   Playbill Venues at Moore Park – This site lacks capacity for expansion
        unless existing land uses are displaced. While existing entertainment
        amenities proximate to the venue create an active pedestrian and tourism
        environment, the area lacks adequate hotel supply and is too distantly
        removed from the central city.

    •   Australian Technology Park – Expansion would require the replacement of
        existing facilities and heritage considerations would likely prevent the
        displacement of existing building uses. Access to the site is problematic
        and while it is currently well utilised, it simply lacks capacity for any
        significant expansion.

    •   Rosehill Gardens – The existing 4,000 m2 exhibition hall is a small
        component of the overall operation of the Rosehill Gardens, which features
        horse racing as its primary activity. Any significant expansion option would
        most likely interfere with the core business of the owner and operator.

9.2.1 User site preferences

Industry participants (exhibit organisers, associations, PCOs, and CVB
representatives) communicated a clear preference for locating convention and
tradeshow events that have international and interstate attendance in the central
business district and Darling Harbour area. Convention delegates and tradeshow
attendees are the ultimate consumers of the convention product, and this product
includes many elements in addition to the venue, including transportation, lodging,
retail, and entertainment amenities. Furthermore, these amenities need to be
available during the event as well as before and after. The combined availability
and quality of these elements of the convention product determines the value of
Sydney as a convention and tradeshow destination. For this reason, the ability to
continue to host conventions and tradeshows in the Darling Harbour area should be
the top priority of venue expansion.

In contrast, consumer shows and local events do not require the same mix of
tourism amenities as most attendees come from the local area and are less likely
to engage in associated tourist activities. Consumer shows and local event
organisers view the proximity to the local population and their income as the most
important consideration. Ease of transportation access and the functionality of the
venue are much more important than the availability of nearby tourism amenities.
For this reason, HVS believes that expansion of the Sydney Showgrounds at
Sydney Olympic Park could well serve the local event and consumer show market,
which constitutes a substantial component of the demand for exhibition space in
Sydney.

9.3 MAJOR SITE ALTERNATIVES

HVS developed building programme recommendations for each of the four
remaining sites that meet the overall space requirements and separately addressed
the needs of local and non-local events.




                                                                           12-Feb-07
Expansion Options                                                          Page 9-5




9.3.1 Development at Barangaroo

Barangaroo (formerly East Darling Harbour) is the only remaining site proximate to
the central business district that has capacity for significant new convention and
exhibition centre development. The Barangaroo Site is 22 hectares with 1.4 km of
shoreline. Surrounding land uses include the historic neighbourhoods of Miller
Point, and the Rocks. The Sydney Harbour Bridge is to the east and Darling
Harbour is to the south. Currently land uses on the site include a container port
and cruise ship terminal. With the movement of the container activities to a new
location, much of the site has become available for redevelopment.

The site is currently under the purview of the Sydney Harbour Foreshore Authority
(“SHFA”), a State Government agency. In 2005, the State Government of New
South Wales conducted an urban design competition for the redevelopment of
Barangaroo. The development brief required that respondents present a plan that
addresses the following general development principals.

    •   A minimum of 50 percent of the site is to be designated as parkland.

    •   The development should “enhance the growth and positioning of Sydney as
        the premier business, cultural and living centre (emphasis added) of the
        Asia-Pacific region.”

    •   Development should be self funding.

    •   Incorporate a 1.4 km Public Foreshore Promenade.

    •   Create commercial development.

    •   Strengthen local communities.

    •   Be environmentally sustainable.

The competition resulted in the selection of a plan from Hill Thalis Architecture +
Urban Projects. The plan is impressive in its scope and urban design. However, the
plan does not include any provision for a convention and exhibition centre. Land
uses include residential, commercial, and parkland development. In our view,
without the inclusion of significant public buildings, the plan may fall short of
creating a “premier business, cultural, and living centre.”

Since the State Government has already accepted this submission, the use of
Barangaroo for convention centre uses would require a reworking of the plan. HVS
was asked to consider an approach to convention centre development on
Barangaroo that is consistent with the principles of the development brief and, to
the extent possible, consistent with the accepted urban plan.

Since the focus of this development would be for national and international
conventions, tradeshows and conferences, it would need approximately 40,000 m2
of contiguous exhibition space to accommodate large tradeshows and conventions
with exhibitions and smaller simultaneous events. Since the constraints of




                                                                          12-Feb-07
Expansion Options                                                                            Page 9-6




Barangaroo site would most likely preclude future expansion, consideration should
be given to overbuilding in the short term so that long-term needs are addressed.
A range of possible building sizes are shown in Table 9-1.

            Table 9-1
            Barangaroo Building Programme

            Type of Space                          Low                     High

            Total Exhibition Space              30,000 m2               40,000 m2

            Meeting and Ballroom Space          15,000 m2               20,000 m2

            Plenary Hall                       3,000 seats              5,000 seats

            Proximate Hotel Rooms               500 rooms               750 rooms

            Future Exhibit Hall Expansion                      none

                                            Green design & technology; Iconic conference
            Other Considerations
                                            centre design to complement the Opera House

            Source: HVS International


A concept plan provided by Skidmore, Owings & Merrill LLP (“SOM”) demonstrates
that the recommended development of up to 40,000 m2 of contiguous exhibition
space can be accommodated on the site and retain the desired level of commercial
development currently planned for Barangaroo. The SOM site plan achieves the
desired maximum building programme and fulfils the objectives of the
Government’s design brief through:

        Innovative use of green roof technology which allows for multiple use of the
        site as exhibition space, parkland, and commercial development;

        Creating an iconic convention or conference centre building at the northern
        most point of the site that would provide a plenary hall, ballroom, and
        meeting space over a public plaza;

        Preserving the foreshore promenade;

        Improving the connection to the local neighbourhood over Hickson Road;

        Creating an environmentally sensitive                 concept      that       preserves   the
        requirement for 50 percent parkland;

        Providing excellent and separate vehicular access for truck loading and
        event attendees; and

        Potential to “self-fund” or at least partially fund the project through
        redevelopment of the existing SCEC site.

See Figures 9-1 and 9-2.




                                                                                            12-Feb-07
         Expansion Options                                                              Page 9-7




Figure 9-1
Barangaroo Convention and Exhibition Centre Concept (scaled site diagram)




                                              Source: Skidmore, Owings & Merrill LLP




                                                                                       12-Feb-07
         Expansion Options                                                                            Page 9-8




Figure 9-2
Floor Plan Concept for Barangaroo Convention and Exhibition Centre and Iconic Architectural Images




                                              Source: Skidmore, Owings & Merrill LLP




                                                                                                     12-Feb-07
         Expansion Options                                                             Page 9-9




         The conference centre building would be placed over a public plaza and reach into
         Darling Harbour, creating a gateway to Sydney and an icon that has potential to be
         known throughout the world as is the Sydney Opera House and Harbour Bridge.
         The images shown in Figure 9-2 illustrate a type of structure that could be
         successfully implemented.

         A cross section of the site (looking south to north) shown in Figure 9-3
         demonstrates the compatibility of exhibition space development with the existing
         site plan.

Figure 9-3
Barangaroo Convention and Exhibition Centre Conceptual Cross Section




                                             Source: Skidmore, Owings & Merrill LLP


         The topography of the site lends itself to potential construction of the exhibition
         hall above ground level along with improved pedestrian links to the east over
         Hickson Road. The exhibition hall structure would support commercial buildings
         and parkland. Hickson Road would provide access to the convention centre for
         truck loading and other vehicular traffic.




                                                                                      12-Feb-07
          Expansion Options                                                               Page 9-10




          Meeting space and pre-function areas would be placed to the west side of the
          exhibition halls, overlooking parkland, and providing spectacular views of Darling
          Harbour. Meeting space would be distributed along the length of the exhibition hall
          on an upper level. As in the Hill Thalis Architecture + Urban Projects plan, the
          height of the exhibition centre and the commercial development above it could be
          taller on the south and of the site and gradually decrease in size as the
          development moves toward the north.

          Vehicular access for attendee drop off can also be provided on the west side of the
          site along the front of the exhibition hall. The combination of 1) an efficient drop-
          off zone, 2) loading from the back of the exhibition halls, and 3) the proper
          distribution of meeting space would greatly enhance the ability to host several
          simultaneous events and represents a quantum leap in flexibility over the current
          configuration of the SCEC.

          The structural requirements that make this concept feasible are not exceptional
          and have been implemented on many projects throughout the world. The following
          image of Millennium Park in Chicago (the largest green roof in the world) is shown
          in Figure 9-4.

Figure 9-4
Millennium Park in Chicago (the largest green roof in the world)




                                                 Source: Skidmore, Owings & Merrill LLP




                                                                                          12-Feb-07
Expansion Options                                                          Page 9-11




Millennium Park is constructed over commuter rail lines and a large car park that
serves the central business district of Chicago. A Frank Geary designed
amphitheatre, sculptures, monuments, fountains, gardens, and recreational uses
combine to form one of the premier urban landscapes in the world. Similarly,
development at Barangaroo can strengthen the urban environment in Sydney’s
central business district.

The site concept provided by SOM for this report should be viewed as preliminary
and is only presented to establish the feasibility of constructing a convention and
exhibition centre on the site in a manner that is consistent with the Government’s
design brief. Additional concept planning and design would be necessary to refine
the approach to development.

The Barangaroo site offers an opportunity for Sydney that no other site can match.
On it, Sydney could achieve the goal of hosting the premier convention centre in
the world, known for its design, functionality, and environmental sensitivity. A
monumental conference centre would serve as a tourist attraction in itself, and
would complement the world-renowned, iconic monoliths of the Sydney Harbour
Bridge and the Opera House. This approach to convention centre development has
potential to address all the requirements of the Barangaroo development brief,
including preserving parkland and maintaining the same level of commercial
development already included in the approved plan. While the convention centre
itself would not be self-funding, the reuse of the existing SCEC site for is highest
and best creates new funding potential for SHFA that is not included in the existing
SCEC expansion plan.

9.3.2 Expansion of the SCEC

Expansion and improvement of the SCEC has been discussed for several years and
management of the SCEC has proposed a redevelopment plan. The expansion
option proposed herein is consistent with the general outlines of that plan as
described to HVS by SCEC management. The management plan was developed
without consideration of any other venue expansion in Sydney. HVS offers an
alternative programme plan that assumes the Sydney Showgrounds would also be
expanded as a consumer show venue, as shown in Table 9-2.




                                                                           12-Feb-07
Expansion Options                                                                            Page 9-12




            Table 9-2
            SCEC Building Programme Including Expansion
                                                                               SCEC
            Type of Space                                 HVS Plan (m2)   Management Plan
                                                                               (m2)
            Exhibition Space

               Existing                                     27,200             27,200

               Expansion                                    10,000             20,000

            Total Exhibiton Space                           37,200             47,200

            Meeting and Ballroom Space

               Existing                                      9,736             9,736

               Expansion                                     5,000             10,000

            Total Exhibiton Space                           14,736             19,736

            Theatre Seating

               Existing (Bayside and Parkside)               4,500             4,500

               Expansion (in new theatre)                    1,000             1,000

            Total Seating Capacity                           5,500             5,500

            Convention Hotel                                           none

            Future Exhibit Hall Expansion                              none
                                                          Improvements to existing meeting
            Other Considerations
                                                                 and plenary space
            Source: HVS International


The SCEC management plan could add 20,000 to 25,000 m2 of exhibition floor
area, growing the total available space to between 47,000 and 52,000 m2.
However, if the Sydney Showgrounds were also expanded as a consumer show
venue, the size of the SCEC exhibit hall expansion could be reduced to perhaps
10,000 m2, and more resources could be dedicated to improving the functionality
of existing convention spaces. A smaller expansion could be tailored to the ability
to host more simultaneous convention and tradeshow events rather than events
that occupy the entire venue. As described earlier in Section 4 of this report, the
divisibility of the ballroom and breakout space and the functionality of the plenary
hall are in need of improvement.

The SCEC expansion could occur on the site of the Wilson Entertainment Car Park
and the Sydney Entertainment Centre, as shown in Figure 9-5.




                                                                                             12-Feb-07
        Expansion Options                                                           Page 9-13




Figure 9-5
SCEC Expansion Area




                                     Source: SCEC and HVS International


        A two-phased expansion would be necessary to maintain operations of the venue
        during construction. In the first phase, the new exhibition halls and meeting space
        would be put in place followed by a second phase of improvement to the existing
        facilities.

        Certain obstacles are apparent in this expansion plan that would most likely have
        the effect of increasing the overall project costs.

             •    Roadway relocation would be necessary to connect the current exhibit halls
                  with the new buildings.

             •    Two current land uses, Wilson Entertainment Car Park and the Sydney
                  Entertainment Centre would have to be displaced to accommodate an
                  expansion of 20,000 m2. On the Wilson Entertainment Car Park would be
                  involved in a 10,000 m2 expansion.

             •    SCEC management reports that a site survey revealed the presence of
                  significant utilities underground that would have to be relocated.

             •    Continuous operation of the convention centre would be problematic during
                  the second phase of improvements.

             •    Options for nearby hotel development would be limited by site capacity
                  constraints.

        The outcome of this expansion scenario would greatly improve Sydney’s primary
        convention centre venue and maintain its strategic location in the Darling Harbour




                                                                                   12-Feb-07
Expansion Options                                                         Page 9-14




area. However, certain compromises are inevitable in an expansion plan that is not
a part of any original master plan. Although expansion of the SCEC would
substantially improve Sydney’s standing in the national and international MICE
industry, this approach would not provide Sydney with the premier venue in
Australia.

9.3.3 Glebe Island

Glebe Island is located just west of the central business district proximate to the
Balmain Peninsula. A relatively large site along 2.1 km of waterfront forms a
crescent around White Bay. The residential areas of Balmain, Rozelle, and Pyrmont
overlook the site, as shown in Figure 9-6.

            Figure 9-6
            Glebe Island and White Bay




            Source: Glebe Island Master Plan (2000)


The primary asset of the site is its size and ability to accommodate a large venue,
as well as future expansion of that venue. The site is largely vacant and not
existing development would be displaced. The Anzac Bridge connects the site to
the central business district and Darling Harbour but pedestrian connections to
tourism amenities are not currently available, as shown in Figure 9-7.




                                                                          12-Feb-07
Expansion Options                                                                      Page 9-15




            Figure 9-7
            View of Glebe Island and the Anzac Bridge




            Source: Glebe Island Master Plan (2000)


Consequently, the site is more suitable for a consumer show venue than a
convention centre. For this reason, HVS recommends that any exhibition centre
development on this site would necessitate the continued operation of the SCEC.
With this presumption, HVS developed a building programme shown in Table 9-3.

            Table 9-3
            Glebe Island Building Programme

            Type of Space                                 Low                High

            Total Exhibition Space                      40,000 m2          40,000 m2

            Meeting and Ballroom Space                  10,000 m2          15,000 m2

            Plenary Hall                                            none

            Convention Hotel                            300 rooms          500 rooms

            Future exhibit hall expansion               20,000 m2          20,000 m2

            Other considerations                         SCEC remains in operation
            Source: HVS International


A 40,000 m2 exhibition could accommodate the demand for the largest consumer
shows in the market today. Future expansion of 20,000 m2 may be necessary to
support growth in future demand and a master plan should provide for that
expansion. As a consumer show and local tradeshow venue, the amount of
necessary meeting and ballroom space is less than what would be required in a




                                                                                       12-Feb-07
Expansion Options                                                           Page 9-16




convention centre. HVS recommends 10,000 m2 of breakout space, but we do not
see the need for a theatre venue as long as the SCEC remains in operation.

The primary disadvantage of this site is lack of business tourism infrastructure in
the surrounding neighbourhood (e.g. hotels, restaurants, entertainment venues,
etc.). Any planned convention centre development should be accompanied by a
precinct master plan that would, over time improve the suitability of this site as a
convention destination. Nearby hotel development would be beneficial to the
operation of the exhibition centre. However, a hotel development in this location
would be less feasible than in the central business district or Darling Harbour
because it is removed from the sources of commercial and leisure lodging demand.
A light rail connection to the site could dramatically improve its accessibility, but
that would be a very expensive proposition. Development on this site would require
a long-term vision for neighbourhood improvement.

9.3.4 Expansion of the Sydney Showgrounds

The Sydney Showgrounds (described in detail in Section 4 of this report) is
currently the secondary exhibition venue in Sydney, hosting approximately 30
trade and consumer shows each year. Despite the inadequacy of current facilities,
existing event demand has demonstrated that the Showgrounds site is viable for
local exhibitions. Its primary advantages are its location in the centre of the
Sydney metro area, excellent transportation access, and availability of parking.

For this reason, HVS recommends expansion and improvement of the Sydney
Showgrounds to serve the local consumer and tradeshow market. This expansion
should take place in addition to convention centre redevelopment at either
Barangaroo or the SCEC.

The Royal Agricultural Society (“RAS”), the owner and operator of the Sydney
Showgrounds, has proposed a concept for expansion. After reviewing that plan,
HVS recommends an alternative building programme plan that we believe will
better serve existing and future levels of demand in the market place. Both
programme plans are shown in Table 9-4.




                                                                            12-Feb-07
Expansion Options                                                                                   Page 9-17




            Table 9-4
            RAS Building Programme Including Expansion
                                                     HVS Plan             RAS Management
            Type of Space                                2                          2
                                                       (m )                  Plan (m )

            Exhibition Space

                 Existing*                               14,400                  14,400

                 Expansion                               26,000                  14,700

            Total Exhibiton Space                        40,400                  29,100

            Meeting and Ballroom Space

                 Existing*                               7,200                    7,200

                 Expansion                               7,500                 unknown

            Total Exhibiton Space                        14,700

            Theatre Seating                                          none

            Convention Hotel                                         none

            Future Exhibit Hall Expansion                    Yes master planned
                                               Create positive interface between exhibiton center
            Other Considerations                       and Sydney Olympic Park Precinct
            Source: HVS International


The RAS expansion plan would roughly double the amount of exhibit space,
bringing the total to approximately 29,000 m2 (excluding the Dome of 7,200 m2,
which is multi-purpose space). This is accomplished by adding on to the existing
exhibition halls in the configuration shown in Figure 9-8.




                                                                                                    12-Feb-07
        Expansion Options                                                          Page 9-18




Figure 9-8
RAS Expansion Plan




                                      Source: Royal Agricultural Society


        Currently, the exhibit hall loads from two sides of the building. Pre-function space
        is wholly inadequate and overlaps the loading docks. The RAS plan addresses this
        problem by creating a new pre-function area in between the existing exhibition hall
        and a new hall.

        HVS has proposed an alternative plan that will:

             •   Provide more floor area to accommodate existing demand in the market.

             •   Make the new exhibit halls contiguous with the existing hall.

             •   Create more meeting and breakout space.

             •   Improve pedestrian access with vehicular drop off zones that separately
                 serve each exhibit hall.

             •   Improve the urban impacts on the Sydney Olympic Park Precinct.

        The later concern regarding the urban impact of the development is particularly
        important in view of the master plan for development of Sydney Olympic Park. The




                                                                                   12-Feb-07
        Expansion Options                                                                Page 9-19




        Vision 2025 master plan states the goal of “transforming the area of Sydney
        Olympic Park adjacent to the rail station into a vibrant town.” Vision 2025 calls for
        110,000 m2 of commercial office space, 45,000 m2 of leisure/entertainment/retail
        land uses, 24,000 m2 for hotel uses, 1,300 residential unites for 3,000 residents,
        and other cultural and institutional development. Further office and hotel
        development is currently under construction in the Precinct.

        HVS’ recommendations for building programme development at the Sydney
        Showgrounds are intended to provide a framework for a development that will
        support market demand for local trade and consumer shows and enhance the
        vibrancy of the Precinct. Figure 9-9 shows the expansion concept.

Figure 9-9
HVS Expansion Concept




                              Source: Royal Agricultural Society and HVS International


        The design of the venue should allow for the separation of truck loading and
        attendee access to the building. Murray Rose Avenue, which is between the Sydney
        Showgrounds and the Sydney Olympic Park Railway Station and Showground
        Road, should provide pedestrian and vehicular access for event attendees. The
        design of the pre-function areas can create an effective interface between the
        building and the street, one that provides an inviting pedestrian environment.
        Truck loading should be located at the back of the halls such that each hall can be
        loaded independently.




                                                                                         12-Feb-07
Expansion Options                                                            Page 9-20




A meeting room block should be integrated with access from Showground Road
and from the exhibit halls and the Dome building. Parking would be provided under
the exhibition hall as in the RAS plan. While most consumer shows do not require
meeting space, many local tradeshows do. The Sydney Showgrounds could achieve
higher occupancy by hosting local tradeshows, smaller local area conferences, and
social events.

HVS’ recommendations would require replacement of the existing exhibit halls,
which would also afford the opportunity to provide state-of-the art halls that create
efficiencies for exhibitors and other users. The Dome could be maintained and
serve as an anchor for the architecture of the rest of the building. The concept
presented above is just one of many ways to achieve the necessary amounts of
highly functional space and supports the overall development of the Precinct.
Further physical planning work will be needed to consider future expansion
alternatives and to determine the optimal approach to achieving the recommended
building programme.

9.4 EVALUATION OF SITE ALTERNATIVES

To evaluate the relative strengths and weaknesses of the four alternative
development sites discussed above, HVS considered 22 criteria related to site
capacity, location, availability of supporting infrastructure, constructability, and
other considerations (See Table 9-5). Each concept was rated on a scale of one to
three with:

    •   1 = poor compliance,

    •   2 = acceptable compliance, and

    •   3 = good compliance.

The rating criteria can be divided into five categories: site capacity, suitability of
location, availability of supporting infrastructure in the surrounding neighbourhood,
constructability, and other considerations.

9.4.1 Site Capacity

Although a detailed land planning exercise (which is not a part of the scope of this
study) would be necessary to precisely determine the size of the building foot
prints for each scenario, HVS had sufficient information to make a general
determination as to whether the sites had capacity to accommodate the various
elements of the proposed building programme. Site capacity issues were
separately rated for:

    •   The amount of exhibition space recommended for each site,

    •   The amount of convention and conference space recommended for each
        site,

    •   On-site parking requirements,




                                                                             12-Feb-07
Expansion Options                                                              Page 9-21




    •   A convention hotel, and

    •   Future expansion opportunities.

9.4.2 Suitability of Location

Similarly, the site location and its urban context were considered with regard to the
types of activities that would occur in each venue. The suitability of the location
was separately rated for:

    •   Convention and conference use,

    •   National and international tradeshows,

    •   Local trade and consumer shows, and

    •   Lodging.

9.4.3 Supporting Infrastructure

The availability of supporting infrastructure has many components that influence
the attractiveness of a venue to potential users. In its evaluation, HVS considered
the following issues:

    •   Accessibility to the airport,

    •   Accessibility by trucks for loading and unloading,

    •   General transportation access for attendees including vehicular and public
        transportation modes,

    •   Parking availability in the surround neighbourhood,

    •   Proximity to hotel rooms of the quality necessary to support event
        attendees,

    •   Proximity to retail and entertainment opportunities,

    •   Proximity to cultural activities and events,

    •   The quality of the pedestrian environment and the degree of “walkability” to
        and from the venue, and

    •   The perception that the site is safe for event attendees and delegates.

9.4.4 Constructability

Although a detailed financial feasibility of each alternative is not within the scope of
this report, HVS was able to rank each site on key indicators of financial feasibility,
including:




                                                                               12-Feb-07
Expansion Options                                                             Page 9-22




    •   The capacity of the site to generate income producing activities that would
        support financial operations. More attractive sites with a variety of land uses
        are likely to produce more income.

    •   The degree of difficulty in constructing the building taking into account the
        complexity of the structure and other site factors that would influence the
        timing and cost of construction.

    •   The extent to which construction would interfere with existing operations.
        Expansion options would obviously be lower rated than new construction.

9.4.5 Additional Considerations

Additional important considerations include:

    •   The ability to generate a positive or even inspiring aesthetic impact that
        influences the overall appeal of the venue and the destination appeal of
        Sydney.

    •   Neighbourhood impacts consider the positive or negative impacts on
        surrounding land uses and whether the project will improve or degrade the
        area immediately adjacent to the project.




                                                                              12-Feb-07
Expansion Options                                                                                                                 Page 9-23




            Table 9-5
            Ranking of Sites and Plans by Evaluation Criteria




                                                                                                                              n
                                                                                                                           sio
                                                                                                                        pan
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                                                                                  pan


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                                                                      gar


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                                                                                                         ey
                                                                  ran




                                                                                           be
                                                                                EC




                                                                                                       dn
                                                                                       Gle
                                                                              SC
                                                                Ba




                                                                                                     Sy
            Site capacity for:
              Recommended exhibit space                            3            3           3           3
              Recomended conference space                          3            3           3           3
              Parking                                              3            2           3           3
              Convention hotel                                     3            1           2           2
              Future expansion opportunities                       1            1           3           2
            Suitability of location for:
             Conventions and conferences                           3            3           1           1
             National and international tradeshows                 3            3           2           2
             Local consumer and tradeshows                         3            3           3           3
             Convention hotel                                      3            3           1           1
            Availability of supporting infrastructure
             Accessibility to airport                              3            3           3           2
             Accessibility by trucks for load/unload               3            1           3           3
             General transportation flow/ access                   2            2           2           3
             Parking accessibility/ availability                   2            2           3           3
             Proximity to hotel rooms                              3            3           1           2
             Proximity to retail & entertainment                   3            3           1           2
             Proximity to cultural activities/ events              3            3           1           2
             High degree of "walkability"                          3            3           1           2
             Perception of safety                                  3            3           2           3
            Constructability
             Ease of development                                   2            1           3           3
             Construction interruption of operations               3            1           3           2
            Other considerations
             Aesthetic image/impact                                3            2           2           2
             Neighbourhood impact                                  3            2           3           3

                                                                  Ratings Key
                                                                   3   Good
                                                                   2   Acceptable
                                                                   1   Poor

            Source: HVS International


While a certain level of objectivity can be achieved in rating the development
options based on each of these criteria, the relative importance of each criterion
will differ depending on the viewpoint of the observer. For example, a convention
event planner will be more concerned with the proximity of lodging than would a
consumer show organiser. For this reason, HVS created a system of rating each
criterion in importance on a scale of one to five, with one being of least importance
and five being of greatest importance. For each criteria, the rating (1 to 3) was




                                                                                                                                  12-Feb-07
Expansion Options                                                                              Page 9-24




multiplied by the importance of the criteria (1 to 5). The sum of the ratings
provides an overall score for each plan. These scores can then be ranked.

HVS created two different rankings assuming the perspective of: 1) an organiser of
local exhibition events, and 2) a national and international tradeshow and
convention organiser. The results of these weighted rankings are compared to an
un-weighted ranking in Table 9-5.

            Table 9-5
            Ranking of Site Alternative
                                                                          Weighted for:
                           Site Alternative          Unweighted
                                                                  Exhibitions    Conventions

            Score
                 Barangaroo (EDH)                       183          192              247
                 SCEC Expansion                         153          161              208
                 Glebe Island at White Bay              147          175              180
                 Sydney Showground Expansion            156          181              199
            Rank
                 Barangaroo (EDH)                        1            1                   1
                 SCEC Expansion                          3            4                   2
                 Glebe Island at White Bay               4            3                   4
                 Sydney Showground Expansion             2            2                   3
            Strength of Rank (compared to average)
                 Barangaroo (EDH)                      115%         108%             118%
                 SCEC Expansion                         96%          91%             100%
                 Glebe Island at White Bay              92%          99%             86%
                 Sydney Showground Expansion            98%         102%             95%
            Source: HVS


Barangaroo emerges as the top ranked site opportunity in all rankings. The Sydney
Showground expansion ranks second highest with respect to exhibitions but third
behind the SCEC expansion for conventions. The strength of each ranking was
assessed by comparing the score of a development approach to the average score
for all site alternatives. Here, Barangaroo shows the greatest advantage as
convention venue, scoring 18 percentage points higher than the second ranked
SCEC plan. The Glebe Island exhibition plan demonstrates the weakest overall
rankings.

9.5 THREE DEVELOPMENT OPTIONS

This report clearly demonstrates that significant investment in convention and
tradeshow infrastructure is necessary to maintain and improve Sydney’s position in
the national and international event markets. Since no single site can
accommodate the total amount of exhibition space required to meet Sydney’s
demand potential, a combination of sites must be utilised. The overall combined
approach to development should attempt to create the maximum benefit to all key
players in the convention and exhibition industry.




                                                                                               12-Feb-07
         Expansion Options                                                                                                Page 9-25




         HVS recommends three possible options for development as shown in order of
         preference in Table 9-6.

Table 9-6
Evaluation of Expansion Options
                                                                     Site Utilisation
                           Barangaroo                      SCEC                    Showgrounds                   Glebe Island


                       Iconic convention and
                                                 Reuse for highest and best Expand showgrounds with
    Option 1              exhibition centre                                                                No convention or exhibition
                                                land use (commercial, hotel, state-of-the-art consumer
    Preferred       development consistent with                                                                centre development
                                                        retail, etc. )       oriented exhibition venue
                      existing land use plans




                                                   Expand SCEC exhibition
                                                                              Expand showgrounds with
                     No convention or exhibition    halls, increase meeting                                No convention or exhibition
     Option 2                                                                  state-of-the-art consumer
                        centre development           space, and improve                                        centre development
                                                                               oriented exhibition venue
                                                            flexibility




                                                                                                              New state-of-the-art
                                                   Add meeting space and      No convention or exhibition      consumer oriented
                     No convention or exhibition
     Option 3                                    improve SCEC flexibility and   centre development or     exhibition venue with master
                        centre development
                                                        functionality                 expansion            plan for future convention
                                                                                                            uses and adjacent hotels




         9.5.1 Option 1

         As the preferred option, HVS recommends a new convention and exhibition venue
         at Barangaroo, along with reuse of the existing SCEC site, and consumer show
         venue expansion at the Sydney Showgrounds. This approach is the only option
         that has the potential to place Sydney in the undisputed lead in the Australian
         market and establish itself as a premier destination in the international MICE
         market.

                •   Only the Barangaroo site presents the opportunity to create an iconic
                    building that would be recognised throughout the world and become an
                    attraction in itself.

                •   The Barangaroo development plan can be accomplished in a manner that is
                    consistent with the government’s objectives for redevelopment of the site
                    using the innovation of a dual land use - exhibition centre and park land.

                •   Convention centre development at Barangaroo should be viewed as a
                    replacement for the SCEC, requiring the subsequent redevelopment of the
                    existing SCEC site. A significant advantage of this option is that it allows
                    for the continuous operation of the SCEC while the development takes
                    place at Barangaroo. The current SCEC site could be redeveloped for its
                    highest and best uses, and those development rights could generate
                    additional income to the government to at least partially offset the cost of
                    development at Barangaroo.




                                                                                                                          12-Feb-07
Expansion Options                                                           Page 9-26




    •   The simultaneous redevelopment of the Showgrounds into a state-of-the-
        art exhibition venue would be essential to alleviate schedule pressure on
        the Barangaroo venue by moving local consumer shows and tradeshows
        out of the central city.

Every effort should be made to achieve governmental approval of this plan before
consideration of secondary alternatives.

9.5.2 Option 2

Expansion of and improvements to the SCEC along with expansion of the
Showgrounds would address the need for more exhibition and convention centre
capacity, but has less potential than the Barangaroo development to improve
Sydney’s destination appeal.

    •   SCEC expansion and modernisation would have to be accomplished while
        the existing venue is in operation.

    •   As in Option 1, expansion Sydney Showgrounds would be necessary to
        alleviate pressure on the SCEC schedule.

    •   With the redevelopment of the Showgrounds the size of the SCEC
        expansion could be half as large as the expansion originally proposed by
        SCEC management (e.g. 10,000 m2 rather than 20,000 m2 of exhibition
        space).

9.5.3 Option 3

Development of Glebe Island for convention and exhibition uses is the least
attractive option because the surrounding neighbourhood is not supportive of
convention activity. Consequently, the initial orientation of this venue would be for
local exhibitions.

    •   The primary advantage of this option is that it does not displace any
        existing development.

    •   Currently, the primary disadvantage of this site is the lack of supporting
        infrastructure. This option should be viewed as part of a long-term master
        plan that involves redevelopment of the Glebe Island and White Bay area
        into a retail and entertainment precinct that would be supportive of a
        convention and exhibition centre.

    •   The SCEC would remain in operation and focus on the convention events
        rather than exhibition events that would occur at Glebe Island.

    •   HVS does not view this alternative as compatible with the expansion of the
        Showgrounds because it would result in excess capacity of exhibition
        oriented venues.




                                                                            12-Feb-07
Expansion Options                                                         Page 9-27




9.6 NEXT STEPS

Industry participants and government should seek consensus on one of the three
general options recommended in the report. Once that consensus is achieved, the
next step would be to develop a city-wide strategic master plan that would include:

    •   A description of the overall approach and schedule for development,

    •   Detailed site concepts of each of the chosen sites,

    •   Environment assessment of each site,

    •   Analysis of financial feasibility, and

    •   An approach to financing the project.

With this strategic master plan in place, Sydney could take the necessary steps to
reclaim its status as a premier convention destination. Time is of the essence; as
significant lost opportunities to Sydney are ongoing and the development
processes for complex convention and exhibition centre developments are lengthy.




                                                                          12-Feb-07
10. Management, Marketing and
    Sales

10.1 MARKETING AND SALES ORGANISATIONS

Realising Sydney’s full potential in the MICE industry will require more than just
expansion in the supply of convention and exhibition space. Coordinated
management, marketing, and sales initiatives are essential to bring more events to
Sydney and grow existing business. The highly competitive nature of the market is
evident as Sydney’s market share has eroded (See Market Trends Analysis in
Section 2.)

HVS identified a number of public or quasi-public organisations that have a role or
potential role in facilitating convention, exhibition, and tourism growth.

       Tourism Australia - Tourism Australia is the national agency responsible for
       international and domestic tourism marketing, as well as the delivery of
       research and forecasts for the sector. Tourism Australia was established
       under the Tourism Australia Act 2004. Their main objective is to influence
       people to travel to Australia.

       New South Wales Department of State & Regional Development - provides
       information, advice and assistance to foster business growth, industry
       innovation in Sydney and New South Wales.

       Tourism New South Wales - markets New South Wales as a destination,
       working with and providing advice to industry, government agencies, and
       other key stakeholders. Its objective is to create “sustainable” tourism
       destinations.

       SCEC Management - The mission of the SCEC includes the following
       objectives: 1) contribute to the financial well being of Sydney, New South
       Wales and the SCEC, 2) drive visitation through Darling Harbour, and 3)
       provide a financial return to the Sydney Harbour Foreshore Authority
       (“SHFA”). The latter objective may not always be compatible with the first
       two objectives, as convention events that drive visitation and high levels of
       economic impact may not generate as much profit for SHFA as consumer
       shows and other local events that generate less economic impact.

       Sydney Showgrounds and Other Venue Managers - Venue managers have
       responsibility for delivering the convention and exhibition space to users
       and play an important role in the marketing and sales process. The level of
Management, Marketing, and Sales                                               Page 10-2




        service provided by the manager is of utmost importance in assuring repeat
        business and the overall quality of the convention tourism product.

        The Sydney Convention and Visitors Bureau (“SCVB”) is the primary
        convention marketing and sales organisation in Sydney. The SCVB
        prioritises four key market segments:

                    1) international congresses and five to six hall exhibitions,

                    2) domestic exhibitions (public and trade),

                    3) domestic conferences, and

                    4) domestic corporate events.

        Other short-term business is sold to fill in any gaps left after the other
        priorities.

        Data on the SCVB current business pipeline indicates an overwhelming
        emphasis on international events. Of 908 leads and bids currently in the
        system, 97 percent are for international events. It appears that only top
        priority events are targeted by the SCVB and the distribution channels by-
        pass the SCVB for other types of events.

10.2 MARKETING AND SALES RESOURCES

The level and method of funding available to market a city as a location for group
events can have a significant influence on the ability to effectively compete for
events. Funding levels determine the size of the marketing and sales staff, the
capacity to implement targeted marketing efforts, and the ability to offer incentives
to high economic impact events. A comparative analysis of funding levels and
sources between Sydney and peer cities in Australia provides information regarding
its capacity to conduct key group sales and marketing activities relative to its
peers.

The Association of Australian Convention Bureaux (AACB) conducts a survey of its
member organisations and the amounts and sources of their funding. HVS
summarised the confidential data in the survey and conducted a comparison of
Sydney versus the set of Australian peer markets for fiscal year 2005.

10.2.1 Convention Bureau Funding Comparison

A comparison of the SCVB funding with the average of bureau in Australia
demonstrates a lower level of overall funding and heavier reliance on private
sources. See Figure 10-1.




                                                                               12-Feb-07
Management, Marketing, and Sales                                                                Page 10-3




            Figure 10-1
            Australian Convention Bureaux Funding by Source

                                                      Per Capita

             Sydney             $0.55                    $0.87




                                           Public                          Private


               Peers                    $0.89                    $0.59




                      $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 $1.60 $1.80 $2.00 $2.20

                                                    Per Hotel Room

             Sydney              $71.75                     $114.56




                                                Public                       Private

               Peers                      $118.65                        $79.49




                           $0           $50          $100             $150        $200   $250
            Source: AACB


As measured on per capita and per hotel room bases, the SCVB funding level is
slightly lower (6 percent less than peers) but governmental funding is substantially
lower (40 percent less than peers). The only reason the SCVB has its current
overall level of funding is due its reliance on private sources. Approximately 60
percent of Sydney’s funding is private compares to 40 percent for the peer
bureaux. The lower level of funding and reliance on private sources means that
Sydney has fewer resources to find business and win bids from associations and
event organisers.

While this overall funding disparity presents a problem of resources, the
substitution of private funding for public funding has a more subtle effect on the
incentive of PCO’s to work in Sydney. The SCVB’s private funding comes from two
sources: annual membership dues paid by PCOs and other organisations, and
commissions on room night bookings of three percent of room revenue. In




                                                                                                12-Feb-07
Management, Marketing, and Sales                                                                        Page 10-4




interviews with HVS, several PCO representatives indicated that the SCVB funding
mechanism creates a disincentive to work with the SCVB and more generally in
Sydney as compared to Melbourne or other Australian destinations that do not
have a commission structure for funding their marketing efforts.

10.2.2 Comparison to Melbourne

A direct comparison to Melbourne’s current funding plan shows a large disparity
between Sydney and its primary competitor. See Table 10-1.

            Table 10-1
            Comparison of Melbourne and Sydney CVB Funding
                                                               Melbourne
                                                                                                 SCVB
                                                                 CVB

            State Governement 1                                     $4.5                         $2.3

            Convention Centre                                       $1.5                         $0.3

            Private 2                                               $1.9                         $3.1

            TOTAL FUNDING                                           $7.9                         $5.7
            1State Government funding is recent and effective for 2006/07
            2Private sector funding information comes from a 2005 comparison study by the AACB
            Source: SCVB.


The SCVB’s public funding is 43 percent, and total funding is 72 percent of the
Melbourne CVB funding levels. Given that Sydney is larger than Melbourne and the
premier destination in Australia, HVS recommends aggregate funding levels that
are competitive with Melbourne.

10.3 MANAGEMENT ISSUES

Like the SCVB, SCEC management has a policy of booking convention and
exhibition events that provide the greatest possible overall economic impact. While
this is the stated goal, the dominance of consumer show events in the venue
during peak convention and tradeshow months, runs counter to this objective. The
2007 SCEC business plan shows that:

        Consumer shows and local events will generate 27 percent of the SCEC’s
        operating profit but only 12 percent of its economic impact benefit.

        International events deliver 13 percent of the SCEC profit and 29 percent of
        its economic benefit.

This inverse relationship between economic benefit and profit presents a challenge
to SCEC management. The need for profitability, particularly since it affects SHFA’s
overall level of resources, is not always compatible with the stated goal of
generating economic impact. This problem is intensified by the fact that the overall




                                                                                                        12-Feb-07
Management, Marketing, and Sales                                              Page 10-5




lack of supply of exhibition space forces management into difficult space allocation
decisions that compromise either the profit or economic impact goals.

As the only viable venue for most large events, event organisers recognise that
they have little choice but to locate their events in the SCEC. As indicated earlier in
this report, the costs of placing an event in the SCEC can be as much as 30
percent higher than other venues in Australia. For many events that cannot
relocate to another venue in Sydney or to another city, the SCEC faces little price
sensitivity on the part of event organisers. However, the relatively high cost of the
SCEC affects the overall profitability of the exhibitions to organisers and exhibitors.
Lower profit margins may also have the affect of reducing investment in the
development of new events. Expanding the supply of space in Sydney may have
the effect of placing downward pressure on SCEC rental rates, which would benefit
the industry but reduce profit margins to the SCEC. This is another source of the
incompatibility of profit making and wider economic goals.

Earlier in this report, HVS recommended the simultaneous expansion of supply of
exhibition and convention space in more than one venue. Ultimately, the State
government is the likely source of all or part of the capital funding for these venues
and the State government or its agencies would likely be responsible for their
ongoing financial operations. While the potential competition between two venues
would benefit certain industry participants, this competition would not necessarily
be consistent with the governmental interests of generating economic impact,
maintaining profitability, and supporting their ongoing capital requirements.

Consideration should be given to coordinating the marketing, sales and operations
of publicly controlled venues with the goal optimising their utilisation. Under our
proposed expansion scenarios, the current venue management arrangements could
remain in place; however, HVS recommends creating an entity that would establish
and enforce booking policies for both venues. We view this as a cooperative
arrangement between the respective venue managers, and the SCVB.

        Consistent with the current policies, booking priorities would be established
        to place primary emphasis on the generation of economic impact.

        The central city venue would be the primary location of international and
        national tradeshows and conventions.

        The Sydney Showgrounds would be the primary location of consumer show
        and other local events.

10.4 MARKETING RECOMMENDATIONS

HVS has identified a clear need to change the funding mechanisms for the SCVB.
While it is beyond the scope of this report to identify the specific sources of funding
it is clear that:

        Increased overall levels of funding in excess of $8 million annually are
        necessary to fully capture the opportunities available to Sydney and
        compete effectively with Melbourne.




                                                                              12-Feb-07
Management, Marketing, and Sales                                             Page 10-6




        Decreased relative reliance on in private funding sources through the
        increase in public resources.

HVS also recommends a review of the overall marketing strategy of the SCVB with
the goals of:

        Placing more emphasis on marketing and sales of national events rather
        than the current exclusive focus on international events. We believe this will
        be essential to increase Sydney’s market share of national events.

        Increasing the overall number of bids pursued by the SCVB to reverse the
        currently trend toward a declining number of bids.

        Increasing the participation of PCO’s and other business tourism
        organisations in the marketing and sales process. This may involve creating
        forums for key participants to communicate, developing joint marketing
        strategies, and collectively responding to specific bid opportunities.




                                                                             12-Feb-07
11. Assumptions and Limiting
  Conditions

1.    This report is to be used in whole and not in part.

2.    No responsibility is assumed for matters of a legal nature.

3.    We have not considered the presence of potentially hazardous materials on
      the proposed sites.

4.    We have made no survey of the sites and we assume no responsibility in
      connection with such matters. Sketches, photographs, maps, and other
      exhibits are included to assist the reader to visualise the properties and sites.

5.    All information, estimates, and opinions obtained from parties not employed
      by HVS are assumed to be true and correct. We can assume no liability
      resulting from misinformation.

6.    The reader should not use this report to make fiduciary or individual
      investment decisions.

7.    We take no responsibility for any events or circumstances that take place
      subsequent to the date of our field inspection.

8.    The quality of a convention centre facility's on-site management and the
      organisation that markets the facility have a direct effect on a centre’s ability
      to attract events and its economic viability. The forecasts presented in this
      analysis assume responsible ownership, competent management, and
      effective marketing and sales. Any departure from this assumption may have
      a significant impact on the projected operating results.

9.    It is agreed that our liability to the client is limited to the amount of the fee
      paid as liquidated damages. Our responsibility is limited to the client, and use
      of this report by third parties shall be solely at the risk of the client and/or
      third parties. The use of this report is also subject to the terms and conditions
      set forth in our terms of reference.

10.   This report was prepared by HVS Convention, Sports & Entertainment
      Facilities Consulting, a division of HVS International. All opinions,
      recommendations, and conclusions expressed during the course of this
      assignment are rendered by the staff of this organisation as employees,
      rather than as individuals.
Appendix – Definitions

A1. DESCRIPTION OF THE INDUSTRY AND DEFINITION OF INDUSTRY
    TERMS

The definitions provided herein will aid in understanding the convention and exhibition
market analysis and an understanding of industry trends.

The meetings and exhibition industry encompasses several types of events, from large
trade and exhibition events to conferences and corporate meetings. Each type of
event has unique facility needs. Certain events require large amounts of contiguous
space and others require several smaller meeting rooms. A single event may use
different types of space, including exhibit halls, banquet rooms, breakout meeting
rooms, and theatre seating. Event facilities need to offer the proportions of different
types of space that are appropriate for their markets. Improvements to the event
venues in Sydney must be designed to accommodate the full range of industry event
types.

The following is a description of these various types of events:

A2. MICE (MEETINGS, INCENTIVE, CONVENTIONS, AND EXHIBITIONS)

This commonly used acronym identifies four primary types of groups that may be
hosted by a convention centre, exhibition centre, or hotel. These types of events are
further defined below.

Corporate and Other Meetings - Corporate meetings include training seminars,
professional and technical conferences, sales meetings, shareholder events, product
introductions, and management meetings. Attendance typically ranges between 100
and 250 persons; however, large corporations may sponsor meeting events with over
1,000 persons. These meetings are held in hotels with meeting space, conference
centres, and sometimes in the meeting-room blocks of larger convention centres.
Corporate meetings usually require meeting rooms or ballroom space, but not
exhibition space. Larger functions are sometimes held at convention centres and may
use large-capacity venues arranged with theatre seating for general assemblies.
Corporate meeting planners and attendees prefer facilities with business amenities
and a high-quality, professional appearance.

Conferences - Conferences are events held by associations, professional groups, and
other membership organisations. These events do not usually require exhibit space,
but are otherwise similar to conventions. They require meeting space for general
Appendix                                                                         Page A-2




sessions, food-service areas, and breakout meeting rooms. Hotels and conference
centres host the majority of conferences.

Conventions or Congresses - Associations, professional groups, political organisations,
and other membership organisations hold conventions, with attendance ranging from
300 to 30,000 attendees, the average of which is approximately 800-900. The larger
of these meetings typically take place in convention centres with exhibit halls of
10,000 square metres or more. Smaller events are held in hotels and conference
centres. Conventions usually consist of a number of concurrent meetings, with a few
general sessions. Facility needs include assembly space for general sessions, banquet
facilities, and numerous breakout rooms. Approximately two-thirds of conventions use
exhibit space for displays and booths.

Conventions generate a greater amount of new spending in the area economy because
a large percentage of attendees originate from outside the local area, typically stay
several nights in the host city, and spend money on accommodations, food, retail
goods, transportation, and entertainment. Spouses, family, or companions accompany
from 25 to 40 percent of attendees. In order to properly accommodate conventions, a
minimum exhibit space of around 7,000 to 10,000 square metres is necessary.
Without a dedicated exhibit space of this size, a market is limited to events that occur
in individual hotel properties or conference centres.

Incentive Travel - The Society of Incentive and Travel Executives defines incentive
travel as “a global management tool that uses an exceptional travel experience to
motivate and/or recognise participants for increased levels of performance in support
of organisational tools.”

Tradeshows or Trade Fairs - Tradeshows provide a means for wholesalers and retailers
to transact business with industry buyers. Trade associations, government trade
development councils, independent show organisers, and other individual companies
may sponsor and produce tradeshows. Similar to conventions, tradeshows require
exhibit halls and are generally restricted to convention and exhibition centres, as
opposed to hotel or conference centre event spaces.

Like conventions, tradeshows offer a forum for exchanging industry ideas. However,
tradeshows are primarily product and sales-oriented. They are exhibit-intensive, and
exhibitors prefer column-free, contiguous, open-space facilities with ceiling heights of
approximately ten metres. Exhibitors construct temporary custom booths for product
display. Tradeshows typically attract a large number of attendees that originate from
outside the host city, but their length of stay is shorter and their average spending
lower than convention attendees.

In Asia, the requirements for meeting space are more limited than in the United
States and Europe, as the events are often exclusively oriented toward exhibitions.
However, throughout the world the trend is toward increasing the amount of meetings
and other breakout sessions in order to augment the educational component of
Appendix                                                                         Page A-3




events, attract more attendees, and keep visitors in the host city for longer periods of
time.

In Asia, the types of tradeshows or trade fairs can be further defined by the origin of
exhibitors and attendees.

Domestic Trade Fairs - Domestic fairs are events in which the main activity is
domestic companies trading with each other. Many of these types of events are typical
in Australia. Many exhibitors and nearly all attendees originate within the host
country.

Export Sales Trade Fairs - Export sales fairs have been the focus of many international
organisers for the past 20 years. The exhibitors in this case are international and the
attendees or buyers originate primarily from the host country. These events mainly
take place in Hong Kong and Singapore, but, as of late, have migrated to some areas
of Mainland China.

Sourcing Trade Fairs - Sourcing fairs have arisen in Asia as a direct result of the boom
in manufacturing of consumer merchandise in Asia over the past 30 years. Visitors for
these fairs are typically international, while exhibitors are domestic.

Public or Consumer Shows – Public/Consumer shows are ticketed events featuring
exhibitions of merchandise for sale or display, providing a means of product
distribution and advertising. Some shows, such as auto, sporting goods, and boat
shows, have recreational and entertainment components as well. Public shows range
in size from small local, specialised shows with a few hundred attendees to large
shows with many thousands of attendees. The larger public shows may occur in
convention centres, shopping malls, fairgrounds, and other public-assembly facilities
with large exhibition areas.

Most attendees are local residents, although a few large public shows have a regional
or national draw. Exhibitors often come from out of town and may follow a series of
events occurring in different venues. Site selection considerations for public shows
include the size and income of the local population, availability of facilities, and the
number of competitive shows in the market. Many public shows are beginning to
incorporate educational seminars, and the availability of meeting space is becoming
increasingly important for these events.

Public and Trade Shows - Sometimes called combination events, these shows typically
have initial days with attendance restricted to qualified buyers followed by an
exhibition open to the general public.

Assemblies - Assembly events usually involve a ceremony, speech, or other similar
activity that attracts a crowd of spectators. These events attract anywhere from 200
to 50,000 people or more and many require arena or stadium seating. Assemblies are
Appendix                                                                          Page A-4




less likely to involve a food and beverage element. These events do not usually
require large amounts of exhibit and meeting-room space/

A3. OVERALL FACILITY AND EVENT CHARACTERISTICS

Convention and exhibition centres typically provide several types of space that are
used in different combinations depending on the type of event.

Exhibition Space - typically the largest single area in a convention centre, with high
ceilings (nine metres or higher) and clear spans that limit the number of support
columns in the room. Large contiguous areas are divisible with movable, soundproof
walls so that the halls can be used in various configurations. Most exhibition halls have
a low level of finish and their concrete floors are designed to support heavy loads.
Neutral in their design, exhibit halls are more like empty stages that are appropriately
decorated for each event. Loading docks with high doors allow easy loading access
and trucks may be allowed to drive onto the floor. Utilities for exhibition booths are
provided from boxes in the floor or dropped from the ceilings. Utilities typically include
electricity, telecommunications hook-ups, water, and sometimes, compressed air and
natural gas. Facilities that only offer a preponderance of exhibition space are often
called exhibition centres. In Europe and Asia, the term “Fair” is often used to describe
a venue that typically offers one or more large pavilions or exhibition halls.

Ballroom space - Primarily designed for food and entertainment functions, ballrooms
typically have the highest level of finish in the convention centre with permanent
carpet and various lighting fixtures. Like exhibit halls, ballrooms also offer high
ceilings, clear spans, and divisible space with soundproof movable walls. Often used as
assembly space or for entertainment events, ballrooms are usually equipped for
staging presentations. Sound attenuation and sophisticated sound systems are also
important features of a ballroom. Close proximity to kitchen facilities is vital for the
efficient delivery of food service.

Meeting or breakout rooms - Intended for small groups and range from 50 to 1,000
square metres, they are often divisible into smaller units to provide maximum
flexibility. Meeting rooms are characteristically carpeted and have a high level of
finish. Most meeting spaces have flat floors and no fixed seating so that they can be
configured for an assortment of meeting styles. Meeting rooms offer variable lighting
setups, sound attenuation, and in newer facilities, access to advanced
telecommunications technology. Some meeting rooms are designed exclusively for
presentations and may have fixed tiered theatre-style seating and video projection
capabilities. Boardrooms are elegant meeting rooms with the permanent installation of
a conference table.

Breakout space – umbrella term for meeting and ballroom space.

Assembly halls and theatres - space frequently located within a convention centre that
usually has a large number of fixed seats and stages. Convention centres may also be
Appendix                                                                           Page A-5




connected to arena facilities that are occasionally used as assembly spaces for events
with a large number of attendees.

Multi-purpose space - area that can be used as an exhibit hall or a banquet space.
Similar to exhibit halls, multi-purpose rooms offer the amenities necessary for hosting
exhibitions, but the level of finish is more like that of a ballroom. A multi-purpose
space may also combine arena and exhibit hall functions.

Function space - rentable event space including: meeting rooms, ballrooms, exhibition
halls, theatres, and other assembly spaces.

Pre-function space - locations just outside of or adjacent to the event space. Pre-
function areas support the circulation of pedestrian traffic through the facility, serve as
registration areas, and are essential to the control of access to event spaces.

Back-of-house space - storage, loading docks, administrative offices, service corridors,
kitchens, mechanical spaces, and other areas that are vital to the operation of the
facility but not visible to the public.

				
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