Fort Monroe Tourism Feasibility, Marketing and Development Analysis May 28, 2008

1. Fort Monroe Tourism Feasibility, Marketing and Development AnalysisMay 28, 2008

2. Agenda • Tourism Market Overview • Marketing Strategy • Development Plan Options • Questions and Discussion

3. Tourism Market Overview • There were 35 million visitors to Virginia in 2007 • Virginia tourism has been in a no-growth pattern since 2003 • Average party size is 1-2 persons, indicating childless couples • 78% are overnight visitors • 57% utilized hotel/motel accommodations • 40% visitation was leisure-oriented • Tourists to Hampton today are regional • 25% visitors are from Virginia • 12% visitors are from North Carolina • 7% visitors are from Maryland

4. Cultural Attractions Overview • 11 historic sites and battlefields and 3 wildlife/wilderness National Parks within 200 miles of Fort Monroe • 2007 attendance was 7.8 million persons • Colonial National Historic Park is the most heavily visited • Historic sites and battlefields have the highest total visitation throughout the year

5. Recreational Tourism Market Overview • There are 3,151 hotel rooms in The City of Hampton • Average annual occupancy is 58.1% • Annual occupancy declined from 66% in 2002 to 58% in 2007 • Average daily rate is $73.89; VA average is $93. • Summer room revenue is nearly 4 times winter room revenue • More than 1/3 annual stays were between June and August • There are 27 marinas within 30-minutes of Fort Monroe • 50% maintain a wait-list • Demand exists for new facilities or 40 ft. + slips • Amenities and services are important attributes • Average Hampton Slip Rental Rates: • Nightly: $1.35-1.85 per foot. • Long-term: $6.25 to $8.00 per foot per month • Semi-annual: $8.50 to $10 per foot per month. • There are 14 RV spots at Fort Monroe today • Average nightly rate: $24.50 • Most RV Parks offer swimming amenity, some charge premium for views • Facilities must be larger and offer more amenities to demand premium rates; expansion potential exists

6. Tourism Market Potential • Fort Monroe has strong tourism potential • Historic significance attracts several submarkets • Military Historians • African American visitors • Preservationists • The site’s natural beauty, beach, recreation facilities, marina, and campgrounds draw resort and recreation visitors • Projected Market • Estimated visitation (conservative, stabilized year) • 100,000-150,000 annual cultural attractions visitors • 115,000-125,000 beach visitors • 225,000-275,000 total visitors • If a brand is obtainable, 130-150 room resort can be supported • Seasonality will mirror beach destinations • High season will be three summer months • A two month shoulder season will bring additional visitors • Initially, regional visitors will be price sensitive

7. Agenda • Tourism Market Overview • Marketing Strategy • Development Plan Options • Questions and Discussion

8. Marketing Strategy Components • A cultural museum cluster anchored by a Civil War Museum told from three perspectives will draw visitors and highlight historic significance • A link to “America’s historic triangle” will elevate Fort Monroe’s visibility on a regional and national level • The Fort Monroe hotel, if designed to evoke the historic Hygeia Hotel and nationally branded will enhance the area’s national exposure, draw recreational travelers and link to the area’s history • Recreational areas like the beach, marina and RV park can be marketed and functioning in short order support and promote Fort Monroe through its development

9. Marketing Strategy Timeline • The Museum/Cultural/Historical cluster will likely take 7-10 years to develop and facilities should not be marketed until the year prior to opening • Incremental/existing cultural attractions (i.e. a retained Casemate museum, fort and historic driving tour) can be marketed much earlier • Recreational amenities can be marketed as soon as improved facilities are completed • Public beach, marina and RV park can be marketed when available • Incremental improvements and enhanced access and parking will be necessary to attract visitors to recreational components

10. Cultural Attraction Cooperative Agreement • Expand “History Triangle” to “America’s History Quadrangle” to include Fort Monroe • A regional/national/international joint marketing agreement with Williamsburg, Yorktown and Jamestown will require funding and strategy compliance among four partners • An agreement may take several years to craft • Fort Monroe’s interpretive direction will heavily influence the scope and benefit of this agreement • Will broaden the appeal to cultural visitors coming to the Hampton Roads Area • Can extend the stay and spending of existing visitors with enhanced attractions options and marketing

11. Marketing Funding Sources and Plan • Each component should be included in a comprehensive marketing program to promote Fort Monroe as an addition to attractions in the Hampton Roads region • The VTC, foundations, special interest groups and other donors could financially support programs and facilities • Educational programming and school trips costs • Tourism marketing could be sourced through VTC • Donors may sponsor special exhibits and events • Exhibits and programming sponsorships • Connections with area Universities can be beneficial • Promote educational materials and research without extensive funding required by FMFADA • 3-5% of overall operating budget should be dedicated to marketing programs/costs

12. Agenda • Tourism Market Overview • Marketing Strategy • Development Plan Options • Questions and Discussion

13. Development Plan • Both a private (FMFADA) and public 501(c)(3) non-profit will be needed to maximize revenue/contributions • Both organizations could manage non-profit and for- profit/commercial activities • Costs and revenue allocations to be determined by future phasing, capital investment requirements and partner capacities • Several management and development options exist for both entities: • Concessions contract • Direct Management • National Park Service • Ground Lease • Sale

14. Development Options Pros/Cons • Concessions Management • Pros: Highly experienced, efficient, well-funded, easily obtain necessary financing, steady franchise fee income stream • Cons: Institutional, high overhead, will limit control, may be hesitant to take on non-revenue producing components • Direct Management • Pros: Maintain complete control, cohesive plan, strong revenue potential • Cons: Require high capital investment from FMFADA, may be difficult to obtain financing/funding, lack experience in management of hospitality operations, take on complete project risk • Ground Lease • Pros: Steady rental income stream, Maintain ownership of sites, no capital investment requirement, long-term value enhancement • Cons: Limited development control, can be difficult to finance, may lack cohesion with introduction of sub-leasing and various management agreements for separate components • Direct Sale • Pros: Large immediate capital income to fund non-profit initiatives • Cons: Complete release of control, lack of cohesion, no long term income potential; will not address long term guarantees for quality and protection • National Park Service • Pros: Will ease linkage to “America’s Historic Triangle”; guarantees some government funding, maintains site cohesion, guarantees site’s protection in perpetuity; NPS is a ‘brand” • Cons: Bureaucratic, under-funded, restricted income potential, tax exemption limits fiscal and economic benefits for surrounding community; lease terms limit use of historic tax credits

15. Questions and Discussion