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11 - NB-2 - Business Improvement Area (BIA) Reauthor - 5/3/2016
CITY COUNCIL AGENDA REPORT MEETING DATE: May 3, 2016 ITEM NUMBER: NB -2 SUBJECT: BUSINESS IMPROVEMENT AREA (BIA) REAUTHORIZATION AND RESOLUTION OF INTENTION, AND REVIEW OF ANNUAL REPORT DATE: APRIL 21, 2016 FROM: CHIEF EXECUTIVE'S OFFICE PRESENTATION BY: DANIEL K. BAKER, ASSISTANT TO THE CEO PAULETTE LOMBARDI-FRIES, PRESIDENT, COSTA MESA CONFERENCE AND VISITOR BUREAU FOR FURTHER INFORMATION CONTACT: DAN BAKER (714) 754-5156 RECOMMENDATION: It is recommended that the City Council: 1. Receive and file the Business Improvement Area (BIA) annual report for Fiscal Year 2015-16 (Attachment 1). 2. Receive and file audited financial report for Fiscal Year 2014-15 (Attachment 2). 3. Approve Resolution No. 16-xx: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF COSTA MESA, CALIFORNIA, DECLARING ITS INTENTION TO LEVY AN ANNUAL ASSESSMENT FOR FISCAL YEAR 2016-2017 FOR A BUSINESS IMPROVEMENT AREA COVERING CERTAIN COSTA MESA HOTELS AND MOTELS AND SETTING THE TIME AND PLACE FOR A PUBLIC HEARING ON PROPOSAL. (Attachment 3) BACKGROUND: The California Legislature adopted the Parking in Business Improvement Area Law of 1989 (Streets and Highways Code, §36500), which enables cities to impose an assessment fee on businesses within an area designated by the city. On July 5, 1995, the City Council adopted Ordinance No. 95-9 to establish a Business Improvement Area (BIA) for the purpose of assisting the hotel and motel industry in its promotion of tourism within the city. The BIA imposed a one percent (1%) assessment on the sale of hotel and motel overnight guest room stays. This money was to be used for the establishment and maintenance of a local tourism and promotion council. The Costa Mesa City Council authorized the city manager to enter into an agreement with the Costa Mesa Tourism and Promotion Council to develop and administer the BIA. In 2001, the Costa Mesa Conference & Visitor Bureau (CVB) became the administrator of the BIA. In accordance with the CVB's bylaws (Attachment 4), the CVB's Board of Directors is currently comprised of 11 general managers from the 11 participating hotels, one member of the City Council, and the City Chief Executive Officer's designee. In January 2000, the participating hotels requested an increase in the assessment from one percent (1%) to two percent (2%), which was approved. In October 2010, the participating hotels requested an increase to the assessment from two percent (2%) to three percent (3%). The increase was approved by Council resolution and became effective on November 1, 2010. The BIA benefit zone encompasses all areas within the boundaries of Costa Mesa. ANALYSIS: Currently, the number of properties included in the BIA assessment levy is limited to the 11 hotels that have expressed an interest in participating in the program as detailed in the resolution of intention (Attachment 3), the BLVD Hotel was added in February 2015. Upon adoption of the resolution of intention, property owners of the participating hotels will be notified in writing within seven days of the assessment renewal, and the resolution will also be published in the Daily Pilot at least seven days prior to the public hearing scheduled for June 7, 2016 at 7 p.m. City staff will also notify all the hotels and motels in the city not currently included in the BIA to allow them the opportunity to be included in the BIA. Property owners will be provided an opportunity to protest the annual assessment or address any concerns regarding the BIA at the public hearing. The City Council will vote to adopt or deny the resolution levying an annual assessment for the upcoming fiscal year, and makes the ultimate decision as to the size of and the properties to be included in the BIA. Once the annual assessment is approved, the assessment is collected along with the city's Transient Occupancy Tax (TOT). The hotels and motels included in the BIA are required to itemize the BIA levy as a separate assessment. The CVB staff manages the day-to-day activities and provides all services to administer the BIA. Per the agreement between the City of Costa Mesa and the CVB and as required by Streets and Highways Code (§36533), the CVB is required to provide an annual review describing the programs and activities implemented during the previous fiscal year as well as the status of the programs and activities implemented during the current fiscal year (Attachment 1). The City Council may make recommendations and revisions to the annual report, which will ultimately be approved at the public hearing as part of the resolution to levy an annual assessment. Also in accordance with the agreement between the city and the CVB, the annual audit for the 2014-15 Fiscal Year has been completed by KMJ Corbin & Company, an independent auditor, and paid for by assessment funds. The audit is intended to ensure that the assessment revenue is expended for public purposes as specified within the resolution and that no expenditures are made in a manner contrary to the agreement. The Council is asked to receive and file the audit (Attachment 2). Highlights of the 2015-2016 Fiscal Year The Costa Mesa Conference and Visitor Bureau (Bureau) is passionate about the City of the Arts TM. Driven to elevate the city as a premier Southern California destination, the Bureau focuses on creating awareness to attract overnight leisure travelers. California is welcoming more visitors than ever, 251.5 million -person trips in 2014. Over 204 million of these travelers were leisure guests and 16.5 million were international visitors. International traffic led growth in passenger loads at airports across the state, and travel spending is at an all-time high. Visitor spending was at $117.5 billion, an increase of 3.6 percent. Tourism -related jobs grew to over 1 million. The lodging industry in the United States experienced six consecutive years of increased occupancy, the longest period of increase since 1988. Occupancy in California reached 74.7 percent in 2015, up 2.8 percent from 2014, and revenue per available room (RevPAR) grew 10 percent. Orange County occupancy reached 78.7 percent, up 3 percent with RevPAR growing 9.4 percent. Partnering hotels within the Bureau saw an overall RevPAR increase of 5.1 percent in 2015. Tourism -related jobs in California grew 4.4 percent, emphasizing the importance of the industry as a significant job creator. Over 9 billion dollars in tax revenue at the state and local levels was generated. Our local restaurants, shopping centers, attractions and entertainment venues, as well as residents, benefit tremendously from every guest that visits our city. Tourism drives our economy and keeps California in business. As we have seen throughout the years, Costa Mesa hotel owners continue to invest in their products. Residence Inn by Marriott will complete their guest room renovation in late spring and Avenue of the Arts became a Tribute Portfolio Hotel after the completion of their chic, contemporary guest room renovation in April. The BLVD Hotel is completing their contemporary accommodations with a sleek transformation of their guest bathrooms and lobby surroundings. The Marriott recently completed renovation of their ballroom space with a welcoming, modern atmosphere for meetings, weddings and events. Food tourism is now considered the leading hook in travel. The City of the Arts TM is gaining an even greater reputation for the Art of Dining. Gogobot and the Orange County Register named Costa Mesa one of the 10 best mid-sized food cities in America. In fact, according to a critics poll in the Orange County Register, 17 of the top 75 restaurants in Orange County are located in Costa Mesa. The diversity in culinary options is endless. Vaca, the newest Spanish restaurant owned by Top Chef contestant Amar Santana, opened in late December. Executive Chef Laurent Brazier opened Bistro Papillote inside The OC Mix, offering delicious quiches and crepes. The Halal Guys, famous in New York for their tasty gyro sandwiches and chicken and rice platters, opened their first Orange County location in Costa Mesa. Holsteins, at South Coast Plaza, crafts critically acclaimed hamburgers and milkshakes, and as rated by USA Today, is among the best in the United States. Taco Maria continues to receive accolades and was ranked number two on Pulitzer Prize-winning Jonathan Gold's 101 Best Restaurants list in November 2015. Exciting new partnerships took place last year. Anaheim Resort Transportation (ART) allows our guests to conveniently visit the Disneyland® Resort while enjoying the best shopping, dining and arts scene in Costa Mesa. This joint agreement enabled the Bureau to add a family customer segment to our core marketing efforts. Furthering our international efforts, new initiatives such as Ctrip (China's largest online travel agency) and a dedicated group sales effort focused on China will aid in growing awareness of our city as an attractive Southern California destination. ALTERNATIVES CONSIDERED: The Council may vote to deny the resolution of intention, which will prevent a public hearing from taking place to consider the levying an annual assessment for the upcoming fiscal year. FISCAL REVIEW: The recently completed audit shows the CVB's cash equity as of June 30, 2015, to be $1,385,046. According to the 2015-2016 annual report, the CVB has a total of $1,752,769 in BIA actual revenues through February and is estimating to generate an additional $815,257 for the months of March, April, May and June for an estimated fiscal year total of $2.57 million. The city receives one percent (1%) of the BIA revenue/assessment as partial reimbursement for its collection and administrative costs. The one percent (1%) allocated to the city for reimbursement is estimated at $25,700 for the 2016-2017 Fiscal Year. This fee will sufficiently cover the costs incurred by the City of Costa Mesa in assisting the CVB. Examples of CVB expenditures include an advertising campaign, media relations, brochures/promotional items, video production, administration, special promotions, and hotel niche marketing. Lastly, the City utilizes CVB funding for community -wide marketing and support. The Fiscal Year 2016-2017 proposed budget totaling $164,000 is outlined in attachment 5. Beginning in FY 2014-2015, the City budgets and tracks revenues and expenditures of $164,000 within the City's financial system. This budget will be annually added as an addendum to the existing Professional Services Agreement between the City and the CVB. The proposed addendum will be presented for review and authorization by the City Council at the June 7, 2016, public hearing. All expenditures of these funds will be on a reimbursement basis and will adhere to the City of Costa Mesa purchasing policy guidelines. LEGAL REVIEW: Legal counsel has prepared the resolution of intention and reviewed the documents and approved as to form. CONCLUSION: Adoption of the resolution of intent is the initial step in the reauthorization of the BIA assessment. State law mandates the specific procedure to be followed in the establishment of such an area. Staff will make a presentation to the City Council on the implementation of the BIA assessment at the public hearing on June 7, 2016, but the City Council must approve the proposed resolution of intention before the hearing can be scheduled to consider the levying of an annual assessment. DANIEL K. BAKER THOMAS R. HATCH Assistant to the CEO City CEO THOMAS DUARTE STEVE DUNIVENT City Attorney Interim Finance Director DISTRIBUTION: Costa Mesa Conference & Visitor Bureau ATTACHMENTS: 1 Fiscal Year 2015-16 Annual Report for the BIA 2 Completed Audit of Fiscal Year 2014-15 3 Proposed Resolution of Intention 4 Bylaws of Costa Mesa Conference & Visitor Bureau 5 Annual Community -Wide marketing and support budget CO CONFERENCE AND VISITOR BUREAU 1 S 0 U T I 0AS' r' I A Z. % r -�j • 1 * ■ Segerstrom Center for the Arts I j`� t— -a � 4e1 - u 1, u--- W vt mop I 9i iAQ -i: ifthk ; r T •� ^i� - .. - _ -. _ - _-_'+•� V ;yam::... � � '� eLL I d 1■■ dfit r 4 40 &Suites courtyard h+! �_. ! �:^ TABLE OF CONTENTS `:,' �. •' - -"... �+ .., �I President's Message from Costa Mesa _;_= ,., ,. •� � . �. ' 1 ;, Conference and Visitor Bureau 5 V. r. � _ I aT. �i .'� I�� ,47:7 � �' La..• Fiscal Overview 9 BIA 10 2015-2016 Objectives 12 -71: vi `Tourism Impact 14 WPM Partnerships 31 Marketing Overview 33 - Marketing Overview: Calendar Year Ending 2015 34 Travel Costa Mesa.com 37 ALKAW u Social Media 42 00 OW — Social Media Trends & Demographics 43 Travel Costa Mesa Calendar 44 ... IPW 45 OC Marathon 45 Paid Media 46 Public Relations and SEM 55 International Presence 56 z OCVA Media Initiative 60 CITY OF THE ARTS TIM Costa Mesa is the cultural epicenter of Orange County. It is the center of gravity for the very best in shopping, a vibrant performing arts scene and a dream destination for dining enthusiasts. The Costa Mesa Conference and Visitor Bureau (Bureau) is passionate about the City of the ArtsT'. Driven to elevate the city as a premier Southern California destination, the Bureau focuses on creating awareness to attract overnight leisure travelers. California is welcoming more visitors than ever, 251.5 million -person trips in 2014. Over 204 million of these travelers were leisure guests and 16.5 million were international visitors. International traffic led growth in passenger loads at airports across the state, and travel spending is at an all-time high. Visitor spending was at $117.5 billion, an increase of 3.6 percent. Tourism -related jobs grew to over 1 million. The lodging industry in the United States experienced six consecutive years of increased occupancy, the longest period of increase since 1988. Occupancy in California reached 74.7 percent in 2015, up 2.8 percent from 2014, and revenue per available room (RevPAR) grew 10 percent. Orange County occupancy reached 78.7 percent, up 3 percent with RevPAR growing 9.4 percent. Partnering hotels within the Bureau saw an overall RevPAR increase of 5.1 percent in 2015. Tourism -related jobs in California grew 4.4 percent, emphasizing the importance of the industry as a significant job creator. Over 9 billion dollars in tax revenue at the state and local levels was generated. Our local restaurants, shopping centers, attractions and entertainment venues, as well as residents, benefit tremendously from every guest that visits our city. Tourism drives our economy and keeps California in business. As we have seen throughout the years, Costa Mesa hotel owners continue to invest in their products. Residence Inn by Marriott will complete their guest room renovation in late spring and Avenue of the Arts became a Tribute Portfolio Hotel after the completion of their chic, contemporary guest room renovation in April. The BLVD Hotel is completing their contemporary accommodations with a sleek transformation of their guest bathrooms and lobby surroundings. The Marriott recently completed renovation of their ballroom space with a welcoming, modern atmosphere for meetings, weddings and events. Food tourism is now considered the leading hook in travel. The City of the Arts'" is gaining an even greater reputation for the Art of Dining. Gogobot and Orange County Register named Costa Mesa one of the 10 best mid-sized food cities in America. The diversity in culinary options is endless. Vaca, the newest Spanish restaurant owned by Top Chef contestant Amar Santana, opened in late December. Executive Chef Laurent Brazier opened Bistro Papillote inside The OC Mix, offering delicious quiches and crepes. The Halal Guys, famous in New York for their tasty gyro sandwiches and chicken and rice platters, opened their first Orange County location in Costa Mesa. Holsteins, at South Coast Plaza, crafts critically acclaimed hamburgers and milkshakes, and as rated by USA Today, is among the best in the United States. Taco Maria continues to receive accolades and was ranked number two on Pulitzer Prize-winning Jonathan Gold's 101 Best Restaurants list in November 2015. Exciting new partnerships took place last year. Anaheim Resort Transportation (ART) allows our guests to conveniently visit the Disneyland Resort while enjoying the best shopping, dining and arts scene in Costa Mesa. This joint agreement enabled the Bureau to add a family customer segment to our core marketing efforts. Furthering our international efforts, new initiatives such as Ctrip (China's largest online travel agency) and a dedicated group sales effort focused on China will aid in growing awareness of our city as an attractive Southern California destination. The dedicated team at the Bureau is proud of the work that has been accomplished. Our future is bright. We will continue to drive forward with innovative initiatives that support growing the City of the Arts- as a premier Orange County leisure destination. Paulette Lombardi -Fries President, Costa Mesa Conference and Visitor Bureau COSTA MESA CVB ANNUAL REPORT 5 #�!Ai®rg � ► r ,NN t � ala►:� i mil S�`,'`. �k#",• 4 � �1 �� �� �. .. r ': X15-¢�r -' I '� I\\ •� �:'�� ���.+F���i. •■ �-e; �i 1:1.,.. ,ay ~ ��aa�1� 1 �j F=p���y:•�J.�� �i n , Irl ;;i.r��. . V�ti�, t•, �—_ ':f;.: ''` .. .. �,\` i4�. r+yJ, I JI''. iii 1•^..f�;. �l:��� ;'v�� i`�'. ti� 1 .. � �::;�. - ;r'��;.��. :' -��,�.�:.�i �n:; •::'f;• 1'�, tea• Z i .:' `i' i • .: �, �yy � l I�f ;f•`•"' �'- -.�•r•_:..yY;.•.' ,, lye _ � \ 11 i 1 �•,'V,• `III I. 1 �� -:: II IIUI�� ![�, �''I ��'�!�� - ��Ill:ll ►��13 In tl��"� llJljilll .i' ! '�;'isj���' iii II I IlMINI— L", IN — 11• R h .Iwo= r;., �«��- �'+!�{i!1�1. ..s �+• """• '1 �:i Si'i::l�! �_ 11 �{;: _ pp ~ _ e • • - • • • • • • • • • • • - • did—, Iff We I VIN :Fr: - _ .��� �► `� a•► -�� • tea= - 'i I. T^rye ,: mli'�� t] h \ ksUx lit L FISCAL OVERVIEW COSTA MESA CVB ANNUAL REPORT 9 BIA Method and Basis of Levy The proposed method and basis of levying the Mesa and will sponsor related tourist events that benefit assessment to allow each business owner to estimate the the hotel and motel businesses within the City. amount of the assessment to be levied against his or her business are set forth according to City of Costa Mesa The improvements and marketing to be funded by this Ordinance 95-9. and as follows: assessment are outlined in the annual report. The BIA assessment will be used to fund the Costa Mesa Conference and Visitor Bureau. The Bureau will fund marketing efforts to promote tourism in Costa Revenue A three percent (3%) levy will be assessed against each of the 11 hotels listed in the annual report, based on the net revenue from the sale of overnight room stays. Business owners shall pay the assessment to the Costa Mesa City Finance Department on a monthly basis. A penalty and interest shall be assessed on late payments. V , Ed New hotel and motel businesses that are interested in participating in the BIA should contact the City and the Costa Mesa Conference and Visitor Bureau. - ;.. e. ms .1s A� BIA Participating Bureau Hotels PropertyAddress A Avenue of the Arts Costa 3350 Avenue of the Arts Rosanna Inc. Mesa, A Tribute Portfolio Costa Mesa, CA 92626 3350 Avenue of the Arts Hotel Costa Mesa, CA 92626 Ayres Hotel & Suites 325 Bristol Street Costa Mesa, CA 92626 Best Western Plus 2642 Newport Blvd. Newport Mesa Inn Costa Mesa, CA 92627 I Hilton 3050 Bristol St. Costa Mesa, CA 92626 Crowne Plaza 3131 Bristol St. Costa Mesa, CA 92626 Holiday Inn Express & Suites Marriott Ramada Inn & Suites Residence Inn by Marriott The Westin South Coast Plaza BLVD Hotel 2070 Newport Blvd. Costa Mesa, CA 92627 500 Anton Blvd. Costa Mesa, CA 92626 1680 Superior Ave. Costa Mesa, CA 92627 881 Baker St. Costa Mesa, CA 92626 686 Anton Blvd. Costa Mesa, CA 92626 2430 Newport Blvd. Costa Mesa, CA 92627 Newport Country Inn & Suites, Inc. 355 Bristol St., Suite A Costa Mesa, CA 92626 James Hsuen & Shang -Pu Lee 2642 Newport Blvd. Costa Mesa, CA 92627 Ashford TRS CM LLC 14185 Dallas Parkway Suite 1100 Dallas, TX 75254 ML Brighton Management 1901 Main Street Suite 150 Irvine, CA 92614 Narendra B. Patel 2070 Newport Blvd. Costa Mesa, CA 92627 Marriott International 10400 Fernwood Rd. Bethesda, MD 20817 B.D. Inns Inc./Ramada Ltd. 1680 Superior Ave. Costa Mesa, CA 92627 Marriott International 10400 Fernwood Rd. Bethesda, MD 20817 Rosanna Inc. 3350 Avenue of the Arts Costa Mesa, CA 92626 Newport Country Inn & Suites, Inc. 355 Bristol St., Suite A Costa Mesa, CA 92626 James Hsuen & Shang -Pu Lee 2642 Newport Blvd. Costa Mesa, CA 92627 Remington Lodging & Hospitality LP 14185 Dallas Parkway Suite 1100 Dallas, TX 75254 3131 Bristol Property UC, LLC 2711 Centerville Rd. Suite 400 Wilmington, DE 19808 Narendra B. Patel 2070 Newport Blvd. Costa Mesa, CA 92627 Host Hotels & Resorts 6903 Rockledge Dr. Suite 1500 Bethesda, MD 20817 B.D. Inns Inc./Ramada Ltd. 1680 Superior Ave. Costa Mesa, CA 92627 BRE Select Hotels Corp. Dallas, TX Host Hotels & Resorts CJ Segerstrom & Sons 6903 Rockledge Dr. c/o South Coast Plaza Suite 1500 686 Anton Blvd. Bethesda, MD 20817 Costa Mesa, CA 92626 Hollywood Corner Inc. 2430 Newport Blvd. Costa Mesa, CA 92627 Shyamal Patel 16609 Honeybee Dr. Tustin, CA 92782 10 FISCAL OVERVIEW COSTA MESA CVB ANNUAL REPORT 11 2015-2016 OBJECTIVES The Costa Mesa Conference and Visitor Bureau will continue to market the City of the Arts'" as an overnight leisure destination focused on fashion, the arts and dining, along with a fourth element geared towards family fun. 1. STRENGTHEN VISITOR ENGAGEMENT FOR FAMILIES Connect a new customer segment of FAMILY to the overall City of the Arts" marketing strategy in an effort to drive overnight room night stays to partnering hotels using Anaheim Resort Transportation (ART). Strategy Develop Tactical Campaigns Focused on ART • Online • Collateral • Social Media 2. EXPAND BRANDING MESSAGE DOMESTICALLY Reach new customer segment (family) to create desire to visit and stay overnight in Costa Mesa when traveling to Orange County. Strategy Branding and Tactical Campaigns • CIC Research • Creation of Costa Mesa Review Site • Social Media 3. STRENGTHEN EXISTING INTERNATIONAL MARKETS Build on current international relationships through partnerships and engage in new marketing opportunities that generate room night production for hotel partners. Strategy OTA Int I Presence • Sales Mission Trips • Sales Management • FAMs • Social Media Financial Summary Fiscal Year 20162017 July $209,122.57 $213,305.02 August $188,937.42 $192,716.17 September $316,809.43 $323,145.62 October $235,360.92 $240,068.14 November $184,658.12 $188,351.28 December $240,748.70 $240,748.70 January $178,785.76 $182,361.47 February $198,346.11 $202,313.03 March $218,025.35 $222,385.85 April $210,490.60* $214,700.41 * May $216,596.73* $220,928.66* June $170,144.44* $173,547.33* Total: $2,568,026.15 $2,614,571.68 `Projected numbers as BIA checks for these months have not been received. Primary Expense Projections Fiscal Year 20162017 Total Marketing Expenses $1,721,510 Online marketing/ International marketing/ Display ads/Email marketing Familiarization tours/Promotions/Print advertising/Sponsorships Video production/Tradeshows/ Brochures/ Hotel marketing fund Total Employee Expenses $422,236.06 Salaries/Payroll taxes/ Workers' comp/Employee benefits Payroll services/ Incentives Total Administrative Expenses $171,696.50 City collection/Accounting audit/Mileage/Bank charges Dues & subscriptions/Insurance/Office supplies/Rent/Parking/Postage Telephone/Travel/Meetings & conferences Total Legal Expenses Total Expenses $50,000.00 $2,365,442.56 12 FISCAL OVERVIEW COSTA MESA CVB ANNUAL REPORT 13 TOURISM IMPACT A Powerful Economic Driver for California Tourism is everyone's business. Travel -related spending reached $117.5 billion in 2014, generating $9.3 billion in state and local tax revenue and continuing to improve economic conditions for the state. Tourism -related jobs grew to 1.027 million, up 4.4 percent. As California attracts more guests, their spending helps drive employment opportunities, business, and state and local tax revenues that residents all benefit from. Industry segments in 2014 such as rental cars and flights had a financial impact of $33.5 billion; food and beverage grew to over $30 billion, $21.3 billion in accommodations, $16.7 billion in shopping and $16 billion in attractions and entertainment. Continuing to grow upward, the state's hotel occupancy reached 74.7 percent, up 2.8 percent from 2014 according to STIR, Incorporated. Average daily rate (ADR) grew 7 percent to $149.96. Orange County welcomed 47.3 million visitors, up 2.6 percent in 2015. Visitors spent $11.3 billion, an increase of 6.3 percent according to CIC Research. Overall occupancy in Orange County grew 3 percent to 78.7 percent and ADR grew 6.2 percent to $143.98. Costa Mesa partner hotels achieved 80.9 percent occupancy in 2015, up 0.6 percent, with a 4.5 percent increase in ADR despite hotel room renovations. The weekend segment improved the most with occupancy growing to 84.1 percent, up 2.2 percent compared to last year. ADR within the weekend segment grew 5.6 percent. Weekday occupancy decreased slightly to 79.7 percent, a loss of 0.1 percent, and ADR grew 4.2 percent. In Costa Mesa, over 1,000 associates welcome guests on a daily basis at our partnering hotels. Our shopping centers, restaurants and theaters employ even more. The transient occupancy tax (TOT) is the fourth-largest Actual and Calendar Year -to -Date 2015 & 2016 2015 Actuals Occupancy ADR Orange County *Costa Mesa 78.7%+3.0% 80.9%+.6% $143.98 + 6.2% $135.56 + 4.5% California 74.7%+2.8% $149.96 + 7.0% Costa Mesa AmAlk 76.61 Costa Mesa and CA numbers provided by Smith Travel Research, Inc. (STR). "Costa Mesa numbers reflect nine hotels that provide results to STIR. revenue generator for the City of the Arts", as noted in the City's Adopted Operating and Capital Improvement Budget for Fiscal Year 2015-2016. The $8.1 million estimated revenue in TOT represents 7.4 percent of the general fund. The projected amount reflects a 3 percent increase from projected revenue for fiscal year 2014-2015. These funds improve infrastructure, public safety services and more. California again tops the charts with being the most popular state to visit domestically, and second most popular internationally. Tourism Economics forecast for 2016 projects an increase of 2.3 percent in total visits. Domestic travel is forecasted to increase by 2.1 percent and international travel by 4.2 percent. The forecast for 2016 spending is an increase of 5.5 percent, with a domestic increase of 4.9 percent and an international increase of 7.7 percent. History of Visitor Spending in California $120 $90 Ln $60 O J J_ m $30 $0 2 2 2 2 2 2 2 2 2 2 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 4 5 6 7 8 9 0 1 2 3 4 Source: Dean Runyan Associates 14 FISCAL OVERVIEW COSTA MESA CVB ANNUAL REPORT 15 Costa Mesa Visitor Profile The Bureau participated in a 2014 survey conducted by CIC Research, Incorporated to gain a better understanding of where travelers in Orange County (OC) are visiting. Intercept surveys with 2,400 visitors (non -OC residents) in locations throughout Orange County were completed on a rotational basis at hotels during summer, spring and fall. San Juan Capistrano, Angels Stadium of Anaheim, Honda Center, Amtrak/ Anaheim and shopping locations (South Coast Plaza and Fashion Island were excluded) were selected. Guests visiting beach destinations included San Clemente, Laguna, Newport, Huntington and Seal Beach. However, every month surveys were conducted at John Wayne Airport, Orange County; Disneyland Resort; Knott's Berry Farm and the Anaheim Convention Center. Interviews were conducted in English and Spanish. During the interview, the visitor was asked about specific attractions and locations they have visited or will visit in Orange County, including Costa Mesa. Overnight visitors were asked about the location of their overnight 70.0 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0 accommodations including the city or community within OC and the hotel name. Costa Mesa visitors were defined as anyone who lived outside of Orange County and visited Costa Mesa for the day or stayed overnight. Over 46 million visitors came to OC in 2014. Seven million visitors or 15.2 percent reported they visited the City of the Arts" while visiting OC. The report also revealed visitors are more likely to be international or from other parts of the U.S. 2014 Visitor Data: All Visitors to Orange County: 46,140,000 Total Visitors to Costa Mesa: 6,993,000 Costa Mesa Visitors as a % of Total OC Visitors:15.2% Residence of Visitors Costa Mesa v. All Orange County Visitors (2014) International Southern Western U.S. Northern Midwest U.S. Southern U.S. Northeast U.S. Visitors & U.S. California California Territories Source: CIC Research Survey 2014 Residence of Visitors Costa Mesa v. All Orange County Visitors (2014) International (total) Southern California Other Western States Northern California Midwestern U.S. ISouthern U.S. 25.4% 21.0 18.1 11.2% 10.3 8.8 60.0 13.6% 7.8 3.4% 8.5% 1 4.1 Northeast U.S. 5.5% 2.3% Sourse: CIC Research Survey 2014 San Francisco and Los Angeles County ranked as top metropolitan areas of residence for visitors. Costa Mesa draws a smaller proportion of families visiting the area than visitors to all of Orange County. Average size of a visitor group was 2.1 people compared to 2.9 people for OC visitors. Single travelers made up almost 30 percent of the city's visitors. Groups of two represented 44 percent. Groups of three represented 19 percent and 7 percent were groups of four or more. The average age of a visitor was 45 compared to the median age of all visitors to OC. Household income for the Costa Mesa visitor was $90,200 compared to $74,000 for all OC visitors. On average, guests visiting Costa Mesa spend $485 per person compared to the overall OC visitor who spends $231. About 25 percent of Costa Mesa visitors included children compared to 43 percent of all OC visitors. The Bureau's biggest opportunity is to convert day visitors into overnight guests. Costa Mesa visitors were primarily day visitors at 88 percent, while 12 percent had overnight accommodations in the city. More than half used their own vehicles to travel from home to OC and 45 percent traveled by air. South Coast Plaza was the number one attraction visited by Costa Mesa visitors, followed by OC beaches. Other attractions included Fashion Island, Disneyland® Resort and Knott's Berry Farm. 16 FISCAL OVERVIEW COSTA MESA CVB ANNUAL REPORT 17 Attractions Visited While in Orange County South Coast Plaza 91% 9,386,033 5% Beaches 46% 4,681,292 . 30% Fashion Island 39% 4,704,741 4% Disneyland Resorts 28% 38% Balboa Pavilion 26% 6% Knott's Berry Farm 20% 4% Disneyland 18% " 24% Downtown Disney 17% 26% Disney California Adventure Park 12%22% 12% Hollywood 4% Universal Studios 10% 4% The Outlets at Orange 6% 3% Queen Mary 6% 2% San Diego Zoo 5% 4% Angel Stadium 4% 4% Long Beach Aquarium 4% 2% Sea World- SD 1% 3% San Juan Capistrano 1% 3% o o 0 0 0 0 0 0 O O b 0 O O Costa Mesa Visitors , All Orange County Visitors Source: CIC Research Survey 2014 18 FISCAL OVERVIEW Air Traffic Trends Soar International traffic led growth in passenger loads throughout California in 2015. The state experienced a 4.5 percent increase in international flights totaling 90,000 new visitors. Domestic flights through July of 2015 grew 4.5 percent and international flights grew 6.9 percent. California Airport Traffic Percentage change over 2013 JUL AUG SEP OCT NOV DEC JAN FEB MAR 0 1.8% 3.5% 5.3% 7% Percentage International Source: Visit California, fiscal year 2013/2014. Domestic John Wayne Airport, Orange County Passenger Data 2015 90 Illili , 'IMM Total Passengers 10,180,258 9,386,033 8.5% Enplaned passengers 5,082,461 4,681,292 8.6% Deplaned passengers 5,097,797 4,704,741 8.4% Total Passengers 324,229 276,733 17.2% Enplaned passengers 164,164 139,285 17.9% Deplaned passengers 160,065 137,448 16.5% Source: John Wayne Airport, Orange County. Interjet discontinued service in July 2014 from Mexico City and Guadalajara. COSTA MESA CVB ANNUAL REPORT 19 U.S. Travel News Update Travel is number 1 among all U.S. service exports and is a top 10 industry in our country in terms of employment. One out of 9 United States jobs depend on the tourism industry. In 2014, the industry supported 15 million jobs. Tourist spending is critically important to our economy: • $2.5 billion per day in direct spending by resident and international travelers is made in the U.S., $105.8 million an hour, $1.8 million a minute, $29,398 per second. • Each U.S. household would pay $1,147 more in taxes without the tax revenue generated by travel and tourism. Top 5 111 Markets to the U.S. lin of Visitor 2014 Canada 23.0 million JL Mexico 17.1 million United Kingdom 4.1 million Japan 3.6 million Brazil 2.3 million Source: U.S. Travel estimates based on U.S. Department of Commerce, National Travel and Tourism Office Residents in the United States took 1.7 billion trips in 2014. More than 3 out of 4 domestic trips taken were in the leisure segment. These travelers like to visit relatives and friends, shop, dine and relax on the beach. The nation welcomed approximately 75 million international arrivals in 2014 compared to 69 million in 2013. Over 40 million came from Canada and Mexico and close to 35 million came from overseas. Overseas guests spent approximately $4,400 and stayed an average of 18 nights. Their top leisure activities included shopping, sightseeing, fine dining, and visiting national parks and amusement parks. Brand USA is the organization supporting expansion of the U.S. travel industry on a national level. A public/ private corporation created in May 2011, it was established by the Travel Promotion Act and markets the United States as a premier travel destination and communicates entry/exit policies and procedures. Brand USA inspires travelers across the world to explore the United States of America's boundless possibilities. The goal is to encourage international visitation and grow the U.S. share of the global travel market. Their long-term target is to reach 100 million visitors by 2021. It's funded by contributions from the private sector that are matched by fees paid by international travelers to the Electronic System for Travel Authorization (ESTA) program. ESTA is an automated system that determines eligibility of visitors from 37 international markets to travel to the U.S. under the Visa Waiver Program. Top 5 High -Growth Travel Markets Through 2020 China 129.2% India 47.0% Taiwan 39.1% ■ South Korea I1 36.0% Australia 26.5% Source: U.S. Travel estimates based on U.S. Department of Commerce, National Travel and Tourism Office According to the United Nations World Tourism Organization, the U.S. receives the largest volume of global tourism spending. Overseas visitors in 2014 spent $177 billion, up 2.5 percent from 2013. Spain is the second largest destination at $65 billion followed by China at $57 billion, which increased 10 percent from 2013. In terms of global spending, Chinese travelers spent $165 billion in 2014, up 27 percent. The U.S. continues to see positive growth from international markets. In 2014, international travel grew 6.8 percent compared to the previous year. The Department of Commerce's National Travel and Tourism Office forecasts a 4.3 percent growth rate over the next few years. However, short-term currency disadvantages may affect the overall performance numbers for 2015. Exchange rates in the last half of 2015 will have an impact on international travel, but speculation is that it will be short lived. Brand USA will focus on international travelers that represent the top ten markets, which include Canada, Mexico, United Kingdom, Japan, Brazil, China, Germany, France, South Korea and Australia. In 2014, visitors to China grew 21 percent and made up 2.9 percent of total international arrivals. Through 2020, growth leaders are expected to be Mexico at 27 percent, China at 19 percent, Canada and the United Kingdom at 5 percent. These four countries will account for over 56 percent of the projected growth as indicated by the U.S. Commerce Department. Hotels in the U.S. reached 65.6 percent occupancy in 2015, up 1.7 percent. ADR increased 4.4 percent and reached $120.01, according to STIR, Incorporated. Forecasts for 2016 have occupancy increasing 0.8 percent with an ADR growth of 5 percent. California Travel Forecast, Visits Visits +2.1% +2.3% Domestic +2.1% ° International +1.0% +4.2% ft Overseas mom +2.2% MM Source: U.S. Department of Commerce; StatsCan; CIC Research, Inc; Tourism Economics California Travel Forecast, Spending Ek A� Amok•. Spending +2.7% +5.5% Domestic Ir +2.5% , +4.9% International +3.4% Source: U.S. Department of Commerce; StatsCan; CIC Research, Inc; Tourism Economics 2014 International Visitation and Spending Canada $23 M (-2%) $272 B (-2%) Mexico $173 M (+19%) $19.3 B (+7%) United Kingdom $3.97 M (+4%) $13.2 B (fiat) .Japan $3.58 M (-4%) $173 B (-2%) Brazil $2.26 M (+10%) $13 B (+5%) China $2.19 M (+21%) $23.8 B (+13%) Germany $1.97 M (+3%) $74 B (2%) France $1.62 M (+8%) 'Not in Top to South Korea $1.45 M (+7%) $7.8 B (+lo%) Australia " $1.28 M (+6%) $6.1 B (-10%) "India ranks #7 in spending at $9.6 B (+7%) +77% Sources of Travel Spending FOOD SERVICES $220.3 billion LODGING $181.7 billion PUBLIC TRANSPORTATION $175.6 billion AUTO TRANSPORTATION $162.9 billion RETAIL - $94.7 billion RECREATION/AMUSEMENT - $92.7 billion TOTAL: $927.9 billion Source: U.S. Travel Association 20 FISCAL OVERVIEW COSTA MESA CVB ANNUAL REPORT 21 Domestic Trave In the July 2015 The State of the American Traveler StudyT', a Destination Analysts survey conducted biannually, revealed that Americans are planning to increase their leisure travel spending in the next year by 35 percent. That number is up from January 2015 responses of just over 31 percent. California has the largest share of U.S. visitation, with more than one in 10 U.S. leisure trips including a stay in the state. Overnight visitation to the state grew 2.1 percent and day visitation grew 3 percent in 2015, thanks in part to decreasing fuel costs. Domestic leisure travel to California is again forecasted to grow more rapidly than the business segment in 2016. Attractions such as Disney's Star Wars and Marvel theme parks will support travel demand. According to Tourism Economics, leisure travel to California is forecasted to increase 2.3 percent in 2016 and 2.4 percent in 2017 Percent Growth Visit California is forecasting an increase of 4.9 percent in domestic travel spending for 2016. According to DK Shifflet & Associates and TNS TravelsAmerica, 78 percent of U.S. leisure visits and 60 percent of spending are from California residents. The majority of visits and spend will come from residents that reside within the state. The six markets outside of California with the most visitations are Arizona, Nevada, Oregon, Washington, Utah and Colorado (primary Western markets). These states account for half of the visits outside of California and one-third of spending. They also tend to visit the state more often. Long-haul visitors (New York, Florida, Illinois, Texas) stay longer than visitors from primary Western markets, staying 4.9 nights vs. 3.5 nights. They typically travel by air, stay more often in hotels, rent cars and spend more, $860 on average vs. $411. Projected Trip Growth by Source Market Average annual growth in visitors, 2015 to 2020 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 s C Ln M O Ln C ca O ra C: ON -0 O O - W > p } v -_ O Q _O o Z � v V V Ln Z Source: Tourism Economics American Demographic Trends Baby Boomers make up 74.9 million of the U.S. population and were the largest generation in history. In 2015, the Millenials grew to 75 million, surpassing the Boomer generation and making up 25 percent of the U.S. population. This generation grew up with computers, is the most educated segment in our country and typically waits longer to get married and have a family. Both of these generations rank travel as important and make up a significant share of U.S. travel. In 2014, these combined segments made up 63 percent of all leisure trips taken. Travel by car has increased as Millennials and Boomers use their own vehicles for leisure trips more than 80 percent of the time they go on vacation. Air travel in both groups has declined about 2 percent. This decrease occurred because flying was seen as more of a hassle, crowded and expensive. Public transportation grew to its highest ridership in 58 years. Close to 11 million Americans took public transportation in 2014 thanks to accessibility and the convenience of websites and smartphone applications. The U.S. Hispanic population will make up half of U.S. growth by 2020. This segment now accounts for over 18 percent of the country's population and will grow to 29 percent in 40 years. This segment enjoys traveling with family to destinations that appreciate their culture. They are also more likely to take day trips and stay two nights or less, and travel within the states they reside. Their three top activities include shopping, dining and going to the beach. In 2013, the median age for Caucasians was 42 compared to that of Hispanics at 27. More than six in 10 were under the age of 35. As record wage growth, level of education, and buying power increases, marketing to this demographic can create a branding opportunity for years to come. Hispanics are also using smartphones as their primary means to access the web and conduct most of their travel research online. U.S. Travel Association revealed between 2008 and 2014, trips with children decreased with both the Millenials and Boomers. Only 14 percent of Boomers traveled with children and 32 percent of Millennials brought their kids. In both segments, traveling with other adults such as friends and family is on the rise. Boomers will continue to grow, making this segment the largest travel market. In 2014, this category represented 47 percent of travelers. Grandparents will account for 80 million people in 2020. Thirty-five percent of grandparents traveled with grandchildren in 2014 and enjoyed making memories by simply spending time together, dining out, sightseeing and relaxing at the beach. STIR and Tourism Economics for the U.S. forecast a 0.6 percent increase in occupancy to 65.9 percent and a 4.4 percent increase in ADR to $125.30. The forecast for Orange County hotels is strong for 2016. According to the Orange County Hotel Horizons° report released in March 2016, Orange County is expected to see over a 7 percent increase in ADR ($154.65) and less than a half percent increase in overall occupancy (78.3 percent). OC hotel inventory will see 2,191 new rooms by year end. Most notably is the addition of a 600 -room Great Wolf Lodge in Garden Grove, along with three select -service hotels in Anaheim, two hotels in Huntington Beach and Irvine, and one in Mission Viejo and Aliso Viejo. Focused on overnight leisure travel, the Bureau will continue to market its tactical and branding campaigns primarily to those in San Francisco, Los Angeles, San Diego, Palm Springs and the Inland Empire. Secondary markets of interest include Arizona, Texas, Nevada, Colorado, Washington and Oregon. California Tourism Summary Annual Percent Change Total Visits +2.6% +2.2% +2.3% +2.1 ffIF Leisure Visits +2.9% +2.3% Source: Tourism Economics; DKSA, TNS Global 22 FISCAL OVERVIEW COSTA MESA CVB ANNUAL REPORT 23 nternational Trave International travel continues to grow worldwide to 1.2 billion travelers in 2015, a 4.4 percent increase from the previous year. According to the U.S. Travel Association, 2015 results were influenced by exchange rates, oil prices and natural and man-made crises in many parts of the world. Contributing to the rise were continued increases in outbound Chinese tourism, falling oil prices and the effects of a strengthening U.S. dollar. The U.S. is forecasting a new record of welcoming 75.3 million visitors for 2015. This would be a 0.4 percent increase to 2014. Growth in 2016 is expected to be 2.6 percent, and by 2020 the U.S. can expect to welcome over 90 million visitors. The largest total growth percentages over the next four years will come from China at 129 percent, India at 47 percent, Taiwan at 39 percent, South Korea at 36 percent and Australia at 27 percent. However, 56 percent of the projected growth through 2020 will be from Mexico at 27 percent, China at 19 percent, Canada at 5 percent and the United Kingdom at 5 percent. California welcomed 16.5 million international guests in 2014. International inbound travel to California grew 3 percent in 2015 according to the Tourism Economics report, and spending grew 2.8 percent. International travel to California is expected to grow 3.8 percent by 2020, and spending is forecasted to increase by over 4 percent. Canada and Mexico represent close to 9 million visitors, with 548,000 arriving by air from Mexico and 1.6 million by air from Canada. California's leading Asian origin markets include China, Japan, South Korea and India. China ranks number one in overseas markets for visitation and spending and was the state's seventh-largest overseas market in 2009. •• 80 M 40 20 C International Visitors to the U.S. and Projections Arrivals in Millions (2000-2020 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15(f) 16(f) 17(f) 18(f) 19(f) 20(f) Source: U.S. Department or Commerce, ITA, National Travel and Tourism Office; Secretaria de Turismo (Mexico); Statistics Canada California Projected International Visits by Market Average annual % growth, 2015 to 2020 China India United Kingdom Scandinavia W South Korea Germany France Mexico Canada Australia Brazil Japan 00 0 3 6 9 12 Source: Tourism Economics Annual International Leisure Trips to California Annual % Change TOTAL 9.4% 8.8% 3.5% 4.5% 5.1% 3.0% 3.5% 4.0% 3.6% 3.8% 3.8% China 571% 22.9% 42.8% 22.1% 21.5% 13.0% 11.9% 10.6% 9.4% 8.9% 8.7% India 19.2% 1.2% 3.0% 26.3% 9.3% 71% 77% 11.0% 9.7% 9.2% 8.0% .Japan 19.3% 4.8% 1.7% -4.0% 74% -0.4% 1.4% 1.2% 1.4% 2.0% 1.8% South Korea 477% -5.4% -1.7% 0.4% 2.0% 12.4% 1.8% 3.4% 3.7% 4.0% 3.6% Australia 36.6% 11.3% -5.1% 5.9% 6.4% 6.0% 1.6% 2.8% 3.0% 2.6% 2.7% United Kingdom 3.2% 74% -3.1% 2.6% 5.3% 5.0% 5.6% 3.2% 3.4% 3.0% 3.2% Germany 12.5% 74% -2.4% 5.7% 4.1% 2.3% 3.0% 3.4% 3.5% 3.3% 3.3% France 371% 179% -16.1% 4.0% 14.7% 1.9% 2.6% 2.8% 3.1% 3.2% 3.2% Scandinavia 21.9% 14.2% 79% 70% 11.1% 4.6% 2.6% 3.5% 4.4% 4.1% 3.8% Brazil 32.0% 34.9% 14.2% 12.6% 6.7% 2.2% -0.2% 2.7% 3.1% 3.4% 3.6% Canada 10.0% 8.8% 4.6% 1.6% 3.7% -5.8% 1.6% 2.6% 3.0% 3.4% 3.5% Mexico 1.8% 75% 5.7% 3.4% 1.3% 3.1% 2.6% 3.2% 2.7% 2.9% 3.0% Rest of the World 9.0% -4.9% -3.1% 5.4% 10.2% 2.1% 4.8% 5.1% 3.9% 4.0% 4.0% Source: Tourism Economics, CIC Research, OTTI 24 FISCAL OVERVIEW COSTA MESA CVB ANNUAL REPORT 25 China Market Insights China's National Tourism Administration reported that 114 million Chinese traveled internationally in 2014. The United States welcomed almost 2.2 million Chinese travelers in 2014. The growth of their economic development, changing population trends and the exchange rate has led to substantial growth for outbound travel. China was the number one source of overseas visitors to California in 2015. According to Visit California, only 7 percent of the Chinese travel overseas, and the U.S. has a 3 percent share. But, the amount of Chinese travelers is increasing yearly. California saw an increase of 22 percent in guest visits from 2013 to 2014 (from 818,000 to 996,000). Airlift continues to grow with 110 weekly nonstop flights to California. There are over 33,000 weekly nonstop seats from China to California with more airlines launching new direct flights in early 2016. Beijing, Shanghai, Guangzhou, Wuhan, Chengdu and Changsha are the six gateway cities to California. The Chinese love to travel and it is considered their preferred leisure activity. Most still travel with packaged tours but there is a dramatic increase in foreign independent travel for the younger, wealthier class. They value high quality at a reasonable price. The upper and middle class spend 19 percent of their disposable income on overseas travel, which is much higher than any other country. Shopping is still a top consideration for booking a trip. Affluent Chinese spend 39 percent of their dollars in California for gifts. Chinese leisure visitors spend two full weeks in California, spending over $2,100 per trip and visiting over three destinations. Less than 25 percent of the visitors bring children with them. Popular times to travel include October and Chinese New Year (late January - February), August and July, followed by May. The Bureau continues to market to the Chinese. The Bureau worked closely over the last fiscal year to develop a presence on China's largest online travel agency, Ctrip. The Bureau, in partnership with the Orange County Visitors Association (OCVA), along with other destination management organizations and tourism businesses, developed a landing page highlighting Orange County as a preferred destination when visiting Southern California. The page was created and launched in June and ran until December. Co-sponsors included Brand USA, Disney, Visit Newport Beach, Visit Anaheim, South Coast Plaza and Costa Mesa. The purpose of the site was to gain brand recognition and room night bookings. Costa Mesa hotel partners (7 of the 11) were highlighted on this page. In total, 24 hotels from OC were listed ranging from economy to luxury tier options. Within 60 days, 800+ room nights were booked with a 1,448 percent overall increase. In 2016, the Bureau will have 9 of our 11 hotel partners represented on the OC page. California Tourism Summary for China Visitors to CA 818,000 Spend $1.95 billion CA Market Share 45.3% 996,000 1 million $2.24 billion # $2.6 billion 45.5% number not available 1.2 million number not available number not available Another new initiative that the Bureau is launching will begin in April of this year. The Bureau along with Disney, Visit Newport Beach, Visit Anaheim and South Coast Plaza will have a dedicated sales manager housed in Beijing, China. This sales manager will sell our destination and hotel partners to the meetings and incentive market, focused on the business needs of corporations that are interested in visiting Southern California, with programs that require 100-200 room nights. The Bureau continues to work closely with the Orange County Visitors Association and welcoming familiarization (FAM) groups to the city. Over the past fiscal year, the Bureau welcomed 4 FAMs from China totaling 30 executives from airlines and travel and tour groups. Each tour is designed to introduce our visitors to the City of the ArtsT" as a great overnight destination when visiting Southern California. The Bureau will continue to showcase outstanding shopping venues, the arts, dining and hotel products. Wil ZEN-[ AND HENRY '-EGER5TR0,V[ CC)Nrr.k)-, :,7'.&. 26 FISCAL OVERVIEW COSTA MESA CVB ANNUAL REPORT 27 Mexico Market Insights The United States welcomed over 17 million Mexican visitors in 2014, up 19 percent from 2013. Spending increased to $27.2 billion, up 7 percent from 2013. Over 2.3 million travelers arrived by air, which is a 6.3 percent increase over 2013. Mexican visitors will be the largest growing visitor to the U.S. through 2020 according to the U.S. Commerce Department. An expected growth of 27 percent, or 15 million additional visitors, will visit the U.S. within a four-year timeframe. There are 469 weekly flights and nearly 72,000 weekly seats to California. Nine nonstop service flights are available with connecting flights to (primarily) Houston, Dallas and Phoenix. Top leisure activities include shopping, sightseeing, visiting national parks, theme parks and fine dining. Those who travel by air tend to spend over 35 percent of their overall travel budget on gifts and souvenirs and about 20 percent on entertainment. The average spend per person is under $1,000, and they typically spend just over one week while visiting California. During their stay, they tend to visit two destinations and travel in pairs. Twenty-four percent travel with children. Long -weekend travel continues to increase as the middle class grows and the summer school holiday is only five weeks (from mid-July to the end of August). About 40 percent book with airlines directly and roughly the same percent book with an online travel agency. Travel agencies make up about 20 percent of bookings. California continues to welcome more Mexican visitors than any other international visitor. Approximately 7.5 million travelers visited in 2014 vs. a projected 7.8 million in 2015. A growth of 24 percent is expected through 2018. Through our partnership with OCVA, the Bureau continues to showcase the city to those flying into California as our target market. Marketing efforts over the past fiscal year include the distribution of press releases, tactical campaign packages, travel agent training, scavenger hunt challenge for travel and tour operators, social media postings through Facebook and hosting 3 FAM tours welcoming 14 guests. California Tourism Summary for Mexico Visitors to 7.48 million 7.57 million 7.8 million _ California i 515,000 (air) ' 542,000 (air) 1111=11 548,000 (air) Source: Information provided by Visit California and the U.S. Department of Commerce; Tourism Economics 8 million 562,000 (air) Canada The United States welcomed 23 million Canadians in 2014, which is a decrease of 2 percent from 2013. This decrease can be attributed to the depreciation of the Canadian currency relative to the U.S. dollar. Similarly, Canadians spent over $27 billion in 2014, which is also a 2 percent decrease year over year. However, through 2020, the U.S. Commerce Department is forecasting a 5 percent growth in visitation. California welcomed a projected 1.6 million visitors in 2015 and the visitation forecast is expected to grow 4 percent in 2016. Since 2009, visitation to California increased 33 percent. Strong airlift benefits visitation to California. There are 374 weekly nonstop flights to California and 49,806 weekly seats. Canadians book their flight about 30 days in advance and over 60 percent do not have a predetermined destination in mind. Average length of stay while visiting California is 5 nights and per trip spend is $1,400 according to the U.S. Department of Commerce; CIC Research, Incorporated. Canadians enjoy the Art of Dining with diverse cultural offerings, sporting events, a laid-back atmosphere and sunshine. The Millenials in particular are traveling more (up 9 percent to last year) and represent 5 million residents between the ages of 25-34. The Bureau continues to market to residents in Vancouver with tactical campaigns throughout the year. A second sweepstakes promoting the City of the Arts" along with South Coast Plaza and John Wayne Airport, Orange County was executed last year with just under 2,500 entries. The prizewinners will experience a weekend getaway in Costa Mesa including airfare, gift certificates for shopping and meals. The Bureau will be joining Visit California for a sales/media mission trip in May. 28 FISCAL OVERVIEW COSTA MESA CVB ANNUAL REPORT 29 Middle East Since 2007, guests visiting the U.S. grew from 620,000 to 1.2 million in 2014, and the forecast for 2015 is over 1.3 million arrivals. According to preliminary World Travel Monitor , results from IPK International state that the Middle East (United Arab Emirates, Saudi Arabia, Bahrain, Cyprus, Israel, Jordan, Cyprus, Iran, Iraq, Qatar, Syria, Turkey, Yemen) outbound travel market was the world's fastest-growing market this year, with a 9 percent increase in outbound trips for the first 8 months of travel in 2015. The percent change from Gulf airline carriers (Emirates, Qatar and Etihad) was up over 30 percent in 2015, according to the ITA National Travel and Tourism Office. It's also important to recognize that outbound travel for expatriates living and working in the Middle East make up over 30 percent of the overall travel. Foreign independent travel (FIT) makes up 70 percent of this market. Emirates travelers' average length of stay is 14 nights, and almost 30 percent last 16 nights or longer. Their spend averages $3,121. Outbound travel is driven by factors such as culture, entertainment, accessibility and desire to visit cities as stated by Ramzi Maaytah, Partner of IPK International Middle East. In 2014, the U.S. Department of Commerce stated booking directly through airlines still remains the most popular source for trip planning at 54 percent, which represented an increase of 5.5 percent from 2013. Online travel agency trip planning was the second most used source at 37 percent, up 3.7 from 2013. Personal recommendations are also taken into consideration as this accounts for 30 percent of trip planning. Holidays and health -focused trips account for two-thirds of travel by Emiratis. Tourism Economics states that Middle Eastern nations are leading the pack in terms of growth in demand for travel to California. However, New York has the largest market share at 45.9 percent, whereas California receives 22.4 percent (up from 21.3 percent in 2013). California welcomed 274,000 visitors in 2014 compared to 225,000 in 2013. Port -of -entry arrivals in 2014 from the Middle East to California were similar to those compared to 2012 and 2013. However, July and August entries increased substantially, with February and November having the least amount of entries. Orange County has been a welcoming destination to Middle Eastern travelers for years. Popular accommodations include luxury suites at resorts and apartments, four-star hotel properties with full-service amenities and Residence Inn hotels. Repeat visits are customary, as is traveling with extended family. The most popular time to visit has been around Ramadan and summer. This timeframe accounts for 60 percent of travel, with the other 40 percent taking vacations in the winter months. With the extreme heat in the summer months in the Middle East, California is a welcomed change of climate that is truly enjoyed. Shopping remains the favorite activity followed by sightseeing and fine dining experiences. This is the second year the Bureau has been partnering with OCVA on their Middle East initiative. Focus with this market has been on public relations and destination training for travel and tour operators and airline agencies. Online outreach is with social media (Facebook, Instagram, Twitter) and through OCVAs website. Last year, the Bureau hosted 2 FAMs with 10 guests. Check - Inn TV (a travel and tourism channel reaching over 40 million people) visited OC last summer and produced episodes focused on the destination. Coverage in Costa Mesa included shopping at South Coast Plaza. Visit California will be opening a sales office in the Middle East for the first time and will be the second U.S. tourism office to open there. PARTNERSHIPS_C311fi5khia C a I i f o r n i a There is a reason why over 47 million visitors came to OC last year. Orange County is a destination where guests can enjoy beautiful beaches, shopping, dining, world-renowned theme parks, cultural assets, beautiful weather and exciting outdoor activities in the heart of Southern California. Branding the city of Costa Mesa is an essential part of the marketing strategy for the Bureau. The Bureau aligns our organization with the OCVA, a nonprofit organization, which was established more than 20 years ago. The OCVA is the only destination management organization in the county dedicated to promoting all of OC. Through brand marketing, information dissemination, industry advocacy and educational opportunities, OCVA provides travel- and tourism -related industries brand awareness both domestically and internationally. OCVA continues to play an intricate role in branding the City of the Arts- as a must -see overnight destination. In 2015,43 million international travelers came to OC. This segment of visitors has great value and continues to grow. The international traveler's overall spend and length of stay outweighs domestic travelers. Local businesses such as hotels, restaurants and shopping centers are the largest beneficiaries of these travelers. Taxes from these establishments go directly into the city's general fund benefiting local residents and the community. International visitors are seeking the quintessential California experience, and Orange County offers all of the top activities those guests are seeking. International initiatives the Bureau continues to work on with the OCVA include China, the Middle East and Mexico. Website inclusion, social media, travel and tour operator training, press releases and FAM trips all play a role within these initiatives. This past year the Bureau also became part of the North America initiative, which focused on local, regional and national travel media. Electronic media kits were developed with the city's inclusion. In addition, this year OCVA focused on the Texas market and executed a three -city media mission trip in September that included Dallas, Houston and Austin, in an effort to build media relationships and stories about the destination. Through our Visit California partnerships, the Bureau was able to increase marketing reach of our tactical campaigns. Working with the premier travel destination organization in the U.S., whose goal is to maintain and increase travel and tourism in the state, has allowed our campaigns to go further in reaching our target markets by taking advantage of their co-op digital campaign program. The Bureau also participates in media events domestically through Visit California, further enabling us to market our brand. 30 FISCAL OVERVIEW COSTA MESA CVB ANNUAL REPORT 31 dew 4 MARKETING OVERVIEW COSTA MESA CVB ANNUAL REPORT 33 MARKETING OVERVIEW Calendar Year Ending December 2015 TOTAL AD IMPRESSIONS TOTAL 97,644,418 WEBSITE SESSIONS 353,447 EDTA REACH 188,749,943 The Bureau continues to focus on a strategic marketing plan that incorporates branding and tactical components, with the main objective of increasing awareness of the City of the Arts" as an overnight leisure destination in Orange County. The refreshed, elevated branding concepts launched in 2014 remain a continued success and were utilized throughout 2015 as well. The Bureau implements consistent brand messaging around the segments of "STAY," "SHOP," "EAT" and "PLAY," which encompass The Art of Fashion, The Art of Play, The Art of the Stage and The Art of Dining. The Bureau continues to work with Myriad Marketing to utilize the PESO model (Paid, Earned, Search and Owned) of integrating initiatives in order to reach our target audience. This method allows us to reach prospective travelers in the right place at the right time, with multiple touch points and consistent messaging. The Bureau continues to seek new opportunities that would promote our 11 partner hotels and promote the attributes of the city of Costa Mesa. The marketing activities results will be presented for calendar year 2015, from January through December. The purpose of using the calendar year timeframe is to have a complete 12 months of data to fully compare results year over year in their entirety. The Art of The Art of The Art of The Art of Fashion Play The Stage Dining Tactical • Print • Digital • Email Marketing • Digital Radio • Social Media • Search Engine Marketing (SEM) • Cooperative Partnerships • Public Relations • Campaigns: - Canada Media and 2015 Sweepstakes - Costa Mesa OC Pride - ART - Magical Memories - Sunday Free - Valentine's Day 2015 - Spring Tactical 2015 Branding & Tactical 166% 34% Branding • Online • Native Content • Print • Public Relations • Social Media • Search Engine Optimization (SEO) 34 MARKETING OVERVIEW COSTA MESA CVB ANNUAL REPORT 35 bl�r 4r—Y 1 1k-.ter _. , Z-vom ii r 4W T RAVE LCOSTAM ESA.CO M Website Audience Overview For the calendar year 2015, Travel Costa Mesa.com had 353,447 sessions. A user session (also referred to as a visit) is the visit to the website of a user with a unique IP address who has not visited it recently (typically, anytime within the past 30 minutes). New visitors make up the majority of site traffic at 83 percent. The growth in sessions and users year over year is due to a detailed strategic marketing plan that encompasses the balance of timing and the amount of funding allocated to each advertisement medium in order to maximize our reach. The Bureau advertising channels include strategic display ad marketing, affiliate marketing partnerships, search engine marketing (SEM), search engine optimization (SEO), social media and public relations. Marketing campaigns were refined in 2015 to continue to reach an even more targeted audience. The Bureau focuses on researching top keywords and applying them to relevant, engaging and well -crafted content. In the first half of 2015, the Bureau expanded its geographical targeting to reach long-haul markets including Dallas, Houston, Illinois, Denver, Seattle, Vancouver and Calgary audiences who have an interest in Costa Mesa and frequently travel to John Wayne Airport, Orange County. The Bureau geotargets the majority drive market DMAs (designated market areas), which include Los Angeles, San Diego, San Francisco, San Jose, Phoenix and Las Vegas. Website bounce rate decreased almost 57 percent, from 26 to 11 percent, which is an excellent sign. The bounce rate is the percentage of visitors to a particular website who navigate away from the site after viewing only one page. This result means visitors are staying longer on the site. The improved website layout, packed with interesting content and beautiful images, enabled us to increase engagement. Website Visitors Jan 2014 — Dec 2014 New Visitor Returning Visitor 441 Website Audience Overview Jan 2015 — Dec 2015 New Visitor 87% Returning Visitor 13 Traffic January - January - YOY December 2014 December 2015 Sessions 339,520 353,447 +4.10% Users 285,955 308,445 +786% % New Sessions 8701% 83.38% +4.35% Bounce Rate' 11.27% 25.92% -56.52% `Bounce Rate is the percentage of single -page sessions (i.e., sessions in which the person left your site from the entrance page without interacting with the page). Source: Google Analytics COSTA MESA CVB ANNUAL REPORT 37 Website Access by Device Mobile platforms continue to surpass desktop and tablet usage at an accelerating rate. Mobile devices represent 58 percent of the total sessions, compared to desktop at 35 percent and tablet at 7 percent for Travel Costa Mesa.com in 2015. According to Inc., one of the key contributors to mobile success is the explosion of mobile app usage in the past two years. Mobile use has become the majority of all digital media activity. Another contributor is the user's ease of accessibility to the Internet on the go, with information readily available at all times. Google reported that mobile usage overtook desktop and tablet and will remain the preference of choice. Mobile will continue to outperform both desktop and tablet usage in the future of the digital age. Visit California states that as brands try to keep up with how consumers are changing, they're beginning to understand that mobile is no longer simply a disruptive technology, it's a behavior. Consumers are relying more on digital media, usually through mobile devices, for information and entertainment. For the third year in a row, mobile continues to be the dominant choice and represents a 21 percent growth year over year for the Bureau. Travel Costa Mesa.com is fully optimized for mobile use. The Bureau proactively keeps abreast of market and technology trends in an effort to provide the best experience across all platforms. Website Access by Device Jan 2014 - Dec 2014 Mobile _ Tablet 11% Desktop 39% Jan 2015 - Dec 2015 Mobile Tablet 7% *A(— —::: Desktop 35% Source: Google Analytics Website Traffic - Audience Demographics The website traffic shows a reflection of our geotargeting marketing efforts. In conjunction with Myriad Marketing, the Bureau created two tiers of target markets. In 2015, the Bureau became even more strategic with geotargeting, splitting our markets into two segments. Tier 1 is the primary drive market (Los Angeles, San Diego, San Francisco, San Jose and Long Beach), and Tier 2 is the secondary fly market (Dallas, Houston, Chicago, Seattle and Denver). In larger scale campaigns, the primary drive market accounted for 70 percent of the marketing fund. The remaining balance of 30 percent is for the secondary fly market. Gender Age Group Source: Google Analytics The Bureau also joined the OCVA North America initiative, which targeted leisure guests in Texas. Through this initiative, the Bureau met with 28 media representatives, hosted 4 media familiarization trips and was part of 6 OCVA press releases throughout the year. Travel Costa Mesa's demographic is 55 percent female and 45 percent male, a ratio that's remained the same over the past few years. Visitors within the age group of 24-34 years old represent the largest share. They represent 51,000 users, followed by the 35-44 age group with 39,000 visitors. Audience Demographics 50 40 C O 00 OO 30,343 N 30 20 10 18-24 LJ 51,175 38,984 26,693 25-34 35-44 45-54 Age Jan 2015 - Dec 2015 Male Female Jan 2015 - Dec 2015 21,478 I13,569 N 55-64 65+ 38 MARKETING OVERVIEW COSTA MESA CVB ANNUAL REPORT 39 Website Traffic — Page Rankings Mobile pages continued to show prominence, which is indicated by the homepage traffic of 119,432 sessions and by the mobile hotel deals page traffic of 107,192 sessions, an unprecedented increase of 730 percent year over year. The introduction of new campaigns in 2015 led to new landing pages: ART; Stay 2, Get Sundays Free; and the Costa Mesa Magical Memories campaign. These campaigns brought a substantial audience, all of which ranked in the top five viewed mobile pages for TravelCostaMesa.com. Top Viewed Mobile Pages (number of sessions) Landing '.. Homepage 171,676 119,432 Hotels Deals 15,324 107,192 ART 0 59,579 Magic Campaign 0 47,635 Sunday Campaign 0 19,522 Source: Google Analytics 40 MARKETING OVERVIEW -17.49% 729.64% 100% 100% 100% SOCIAL MEDIA Social media raises brand awareness, builds a community (of locals and current and potential travelers) and drives traffic to Travelcostamesa.com. It plays a vital role for the Bureau not only to brand Costa Mesa as a travel destination, but to also engage with our audience and be the go -to trusted source for users, who in turn can share our content to their social networks. The Bureau provides fun and interesting information on an ongoing basis with an emphasis on Facebook, Twitter and Instagram. Our social media continues to grow 13 percent year over year, with the highest growth in Instagram at 28 percent. Travel Costa Mesa has 11,700 Twitter followers, 51 percent of whom are male and 49 percent female. The overwhelming majority has an annual household income of $100,000 or higher, and prefer buying premium brands. With regard to Facebook, our audience demographics are 68 percent female and 31 percent male; 45 percent of them are married. The average users' annual household income ranges from $50,000 to $75,000. They're also educated, with 70 percent having a college degree. Social media is now used by 2.2 billion people globally, 1.9 billion of whom are using it via their smartphone, which represents a 23.3 percent year -over -year growth in 2015. Mobile devices have thus become the primary source for the average social media user, a sharp change from a few years ago. (Source: We Are Social's Global Digital Statshot 2015, August 2015) Today, 9 out of 10 businesses in the U.S. are present on social media, and the competition for social media visibility has never been stronger. This trend explains the pressure on social media advertising rates, which are expected to rise in the next year. (Source: Forbes) North America is the number one market for social media advertising, with an annual spend of $10 billion in the U.S. (nearly half of the global advertising expenditures of $23 billion). Social media advertising spending is growing fast, with a 33.5 percent growth in 2015 compared to the previous year. Facebook leads the race, receiving twice as much ad money as its closest competitor, Google Ad Words. (Source: emarketer.com) The Bureau continues to place a heavy focus on social media segmentation strategy to align our marketing In terms of social media, there has been a massive shift efforts in order to better geotarget our audience. We from text to visual media in the past couple of years, with provide impactful and engaging content that connects video leading the way with our audience in an effort to build brand loyalists. FOLLOW US ON TRAVE LCOSTAM ESA! FOLLOWERS AS OF 2015 if M a 70 11,700 4,130 1,060 Social Media Trends & Demographics Age 18-24 16% 23% Age 25-34 22% 27% Age 35-44 19% 19% Age 45-54 18% 15% Age 55-64 15% 12% Age 65+ 10% 4% Source: Business Insider, Update: A breakdown of the demographics for each of the different social networks, June 29, 2015 FACEBOOK INSTAGRAM TWITTER: • 1.59 billion active users worldwide* • 400 million active users worldwide* • 320 million active users worldwide* • 53% female vs. 47% male • Average user has 130 friends • 74% are college graduates • 72% of online users have income of more than 75k • 350 million photos are uploaded every day, with 14.58 million photo uploads per hour, and 4,000 photo uploads per second. • Every 20 minutes, l million links are shared, 20 million friend requests are sent, and 3 million messages are sent. • The average time spent on Facebook per visit is 20 minutes • More than 83% of daily active users are outside the U.S. and Canada • Top 3 countries for Facebook users outside of U.S.** o India 9% o Brazil 7% o Indonesia 5% Source: Facebook by the numbers: Stats. Demographics & Fun Facts Source: The Statistics Portal, Leading social networks worldwide as of January 2016 '"Source: Sprout Social, May 2015 • 68% are female vs. 32% male • More than 75% of users are from outside of U.S. • More than 30 billion photos have been uploaded • The most popular hashtags are #Love, #Instagood, #Me, #Cute, and #Follow • Pizza is the most Instagrammed food globally, followed by sushi • Instagram influencers are charging up to $100,000 for a sponsored post Source: Instagram by the numbers: Stats, Demographics & Fun Facts 'Source: The Statistics Portal, Leading social networks worldwide as of January 2016 • 52% female vs. 48% male • 54% of users earn more than $50,000 a year • 77% monthly active users are from outside of the U.S. • Twitter can handle 18 quintillion user accounts • 500 million total tweets per day Source: Twitter by the numbers: Stats, Demographics & Fun Facts, November 4, 2015 "Source: The Statistics Portal, Leading social networks worldwide as of January 2016 42 MARKETING OVERVIEW COSTA MESA CVB ANNUAL REPORT 43 TRAVEL COSTA MESA CALENDAR The TravelCostaMesa.com calendar is updated on a continuous basis to provide prospective travelers key insights to the city, as well as provide a great resource for the community. The Bureau spends a great amount of time on its calendar section to collect and input upcoming specials and packages offered from partner hotels, events, performing arts, shopping and dining in the City of the Arts?" In 2015, the Bureau added a new feature to the calendar on Travel Costa Mesa.com to accept multiple events occurring on the same date. This change allows users to have more choices and activities featured on the Costa Mesa website. In addition, the Bureau continues to share more key events and special offerings on a regular basis to Visit California and OCVA. As a result, our upcoming events calendar page visits have grown 120 percent over the prior year. PW Orlando, Florida, was the 2015 location for the annual IPW conference. The Bureau attended along with 6,500 delegates from 73 countries. U.S. Travel Association created IPW 47 years ago. It is the travel industry's premier international marketplace with business -based appointments from international and domestic journalists and leisure buyers representing meeting and incentive segments. South Coast Plaza and the Bureau share a media table representing the city. The Bureau has a dedicated booth located in the Orange County section next to South Coast Plaza's booth. The Westin South Coast Plaza and Avenue of the Arts Hotel joined the Bureau in representing the City of the Arts". As a result of the conference, $33 thousand in room revenue was actualized, with other contracts for group rooms in the planning stages. 0 11)w Powered by U.S. Travel ORLANDO MAY 30 -JUNE 3, 2015 44 MARKETING OVERVIEW COSTA MESA CVB ANNUAL REPORT 45 UPCOMING EVEN IS ■��= A 4A�rt �Y��w�Nhirr -� . Yer hn tw.`. ww,w�Vi WrN"rw,nw ��"��� ~la �...LJr._�1.1 - OC M Aqw,."The _ 2015 OC Marathon, which begins in Newport Beach and ends in Costa Mesa, had just under 13,000 registered runners for the full and half marathon. The Bureau is a sponsor of this event as it draws visitors from outside of OC. Gera bAf�u Wo.ILAMNM ..-.4i.v holo GHdn -Q In 2015, 53 percent of the runners came from outside of OC. Runners from 46 states and 22 countries participated last year. Texas, Nevada, New York, Arizona and Washington make up the top 5 states represented in the race. Costa Mesa partner hotels received 55 percent of the hotel room nights booked through the OC Marathon website, compared to 25 percent in 2010. The Bureau offers complimentary shuttle transportation to and from our partner hotels for the race and has been doing so for the last four years. Nine of 11 hotel partners extended courtesy room blocks resulting in 620 room nights,just four room nights less than last year when all 11 hotels participated. _'7bank. 015 ��•_�_, w __ i, wrath n e... r.+a.ew.n<..d v..era...1 • n n,na,s.�..e s... wo • e.,,. xw.. r�r,,,., rbm • w ue sec wu CwoW"p xaaC,.,,. ew. CwM.r.. a err A.w, �trYnlW.r"Yea+ 44 MARKETING OVERVIEW COSTA MESA CVB ANNUAL REPORT 45 PAID MEDIA Print Campaign Although digital media continues to grow and represents a majority of footprint in advertising, print media is still crucial. Print is tangible, so users have a physical item to hold. It can be more engaging with less distractions compared to digital media, where online ads are being served constantly. According to the Association of Magazine Media, print remains an important resource for creating long-term brand effects with consumers in key market segments. Their report shows 94 percent of adults under 35 and 95 percent of adults under 25 read both print and digital magazines, particularly the affluent audience, who tend to be heavily influenced and inspired by magazines. The Bureau allocates 8 percent of its marketing budget toward print media to market Costa Mesa as a premier leisure destination. The Bureau has continued to position the Travel Costa Mesa brand through imagery and native content, each of which are demographically and geographically targeted. Print advertisements garnered more than four million impressions across California, Arizona, Texas and Colorado. The Bureau has a three-touchpoint approach. Each advertising outlet's audience sees Travel Costa Mesa ads two to three times throughout the year during prime seasons for each target market. r A �0..�'c.•:..rir. -.r � ` "' y ywr+a.- L.�w..4...d� .. 0..V+-iC.4n'.'rwM raw �,•,w�...yT�.ac �... .µ •.rte 5`r.a�V 0.....•.•.n.. F+ -r• -f W Aae+L. I •nJ�4+C+V 14V n. COSTA MESA VISIT TRAVELCOSTAMESAXOM .�.•�••��•.. STAY AND PLAY JUST GOT EASIER IH COSTA MESA! Canada Marketing and 2015 Sweepstakes Canada is ranked as the top country outside of the U.S. that brings the most visitors to the Travel Costa Mesa website. There are also frequent West -let flights from Vancouver and Calgary to John Wayne Airport, Orange County. The Bureau continued to engage with this market with tactical campaigns and distributing monthly newsletters, along with sharing information about Costa Mesa on TripAdvisor Canada. For the second year in a row, the Bureau partnered with John Wayne Airport and South Coast Plaza to optimize the momentum of "Win a Shopping Spree in Costa Mesa' sweepstakes cooperative campaign. The package included a $2,500 shopping spree at South Coast Plaza, two nights' hotel accommodations at The Westin South Coast Plaza, dining certificates and round-trip airfare to John Wayne Airport. The 2015 campaign advertised solely across digital platforms. Marketing efforts included Vancouver, British -I W N "250 If^,I SHOPPING SPRLE A -I SOL; I H CORS I PLALA IN S I A MESA PLUS , -Ad YO UH OWN PC R 5914A L STY LI 5T AT 5OUTH COA3T PLAZA ROUNOTHIP AIR FROM VANCOUVER OR CALGARY TO OH44 WAYNE AIRPORT 2+ IGFFTSACCOM-OOATPON IN COSTA MESA. CALIFORNIA it. kwgj W ACJa.A'iI C(]STR MFSa'� CUM Hit". GIYORNIR.+M.. U. IN.m Seanmoni LSM M 7e Vuh �piwle dup W rshu r ..n Awtl4 wree iu Yr L_ Swinn0—n C :7 , Uwl.lyrer • Si.. 1YSN lLp.r Columbia, in addition to Calgary, Alberta. Selected advertising partners were based on market reach and demographics. They included The Vancouver Sun, The Province, Vancouver Magazine, Expedia.com and Steel Media ad network. The Bureau also partnered with influential Vancouver- and Calgary -based travel and lifestyle bloggers to increase promotional efforts around the sweepstakes. Marketing efforts also included digital banners on Visit CA, email, newsletter, radio, social media, TripAdvisor and Expedia. The 2015 sweepstakes received nearly 2,500 entries. More than 4 million impressions were received from paid and non -paid advertising initiatives, compared to 1.2 million impressions in 2014. There were more than 29,677 sessions from Canadian web users to the sweepstakes landing page as reported by Google Analytics. COST �1�4 'Rcacrictionc apply. fY rYF f 3 i -yT 46 MARKETING OVERVIEW COSTA MESA CVB ANNUAL REPORT 47 Costa Mesa OC Pride Campaign To support Orange County -based LGBT events and expand marketing to the LGBT community, the Bureau promoted offers from partner hotels during OC Pride Week in 2015. The Bureau worked with the EDGE Media network, which served as a platform to reach LGBT travelers interested in Southern California. Promotional efforts included online editorial features, dedicated emails, social media promotions and inclusion in an online magazine. Marketing for the event positioned Costa Mesa as an essential part of Orange County Pride Week, highlighting the city's proximity and exclusive travel offers. The campaign was targeted to Southern California drive markets, which include San Francisco and Phoenix. A press release was also developed and distributed to relevant regional print and online media outlets. The OC Pride Week campaign ran from July 27 -August 2, 2015. Online display ads received more than 1.3 million impressions. IRFoiME�S�AT ART Campaign The Bureau, in partnership with the Anaheim Resort Transportation (ART), South Coast Plaza and the city of Costa Mesa, began providing round-trip transit service from Costa Mesa and South Coast Plaza to the Disneyland® Resort and the Anaheim Regional Transportation Intermodal Center (ARTIC) on May 4. This campaign was a great opportunity to market for the first time to the family segment. Visitors staying at Costa Mesa partnering hotels now have a convenient option to get to the Disneyland® Resort without the drive. A press release was distributed to regional print and online media outlets, announcing the partnership. It was shared on the Huffington Post. Digital ads were placed on Visit California, receiving over 10 million ad impressions. The Bureau ran a full-page ad in AAA Westways, which has a circulation of more than 4 million. Marketing spanned across outdoor, print, digital media and social media. Targeted audiences included those within Costa Mesa's regional markets, as well as with travelers who had 005TA MES, searched online topics related to Southern California, family travel and the Disneyland® Resort. The ART landing page was also developed to support the campaign. The page provides information about ART shuttle service. It also links to partner hotels' websites describing the service. During the campaign's timeframe (May 4 to September 30, 2015), there were more than 102,000 visits to the ART landing page, resulting in the page ranking the third highest of mobile pages viewed. The advertising campaign supporting ART — carried out on Expedia, Priceline, Visit California, Facebook, Twitter and Google Ad Words — resulted in 16,788,918 banner impressions. Promotion of the ART shuttle service was also included in tactical Magical Memories campaigns. F�..rtibW.r«�n�nw �f IN- COSTA MESA To DISNEYLAND RESORT '.:. ar A RREEZE THE ART OF SHOPPING. THEATER, AND GIHIMG PERFECTEd1; C451A MESA 48 MARKETING OVERVIEW COSTA MESA CVB ANNUAL REPORT 49 Magical Memories Campaign The Bureau continued to promote its partnership with The Bureau continued the Magical Memories offer ART and the Disneyland® Resort. ART shuttle service was during the last two weeks of December promoted throughout the Magical Memories campaign. Compared to the first campaign, the second round From the end of August to the beginning of September reached further, consisting of more diverse platforms 2015, guests who booked a minimum of two consecutive — print ads, dedicated email distributions and native nights with select Costa Mesa hotels received one editorial content. The result was an increase of adult ticket to the Disneyland® Resort. The campaign impressions from 1.2 million in the summer to 6.8 million geotargeted, and also retargeted, audiences who showed in the winter. Across both campaigns, the landing page interest in both Costa Mesa and similarly competitive received more than 65,000 visits. destinations. A press release that announced the Magical Memories campaign was distributed and featured in numerous blogs and major media outlets, including the Los Angeles Times and Frugal Travel Guy. Keapthe relatives relatively[OSPilry kalyayr.xwn..ia, MMaGy..Cern Mru, 011W w a.n' l kwtr NU r6.irr w him .grw.k« fw & •Inn ,and. u e ..ria baAw. c.e.r.v an...d.y,a..prk odorry din Disnryfrid, R.r.n Ak. —m.�..o r.Lhr minlmu —, ?•,"��; ..r TgtiYE LLC)S7AMESA,CUM1HnGIC r...�.+..-.rte COS IA HBA, Sunday Free Campaign To reach business travelers, the Bureau introduced its new Get Sunday Free campaign, targeting travelers who were more inclined to book quick turn -around trips and travel solo. From September 14 to November 29, 2015, guests who extended a two-day stay to include Sunday night received Sunday night free. The offer was valid on two or more consecutive days immediately following or leading up to a Sunday. A "Stay 2, Get Sunday Free" landing page was developed to support the campaign, which launched on August 31, 2015. ow SUNDAYS ARE FREE The page provided guests with more information about the offer, including links to each participating hotel. The campaign geotargeted and interest -targeted audiences who showed interest online in both Costa Mesa and competing destinations. A press release announcing the Sunday Free offer was distributed to relevant regional print and online media outlets. The campaign generated more than 4 million impressions, with more than 30,000 visits to the its landing page. Extend your weekend getaway or arrive early For a better Monday morning. Fr nm Sxpternher 16 through Movem her 29, Z111d, a tP1Wlynur 7.day %ray7n wfclule Surxlay 19ght and reLene Surday1 q1A FREE'. Spend the extra day enlgnng an array or world rLtss cracra rmment in the City of the Arts M. Treat your ta,[ bwu sto ona aFcosu Mesa s more tha n 1 so fKtd1Manu, enjoy day nl,hrpp,n&.1 Sr.dhC—t PL-. pe rick an aherrxmn =the 1—Thy Oiawylmrdt Resorts mod down mdi an ewning periorerwnce 11 Costa Mesa's arts dhtrlcc 6MIN P1 AVNING YOUR FREE SUNDAY TODAY. d- &L...ym L."W to SwMn.RunnmuJoan ebr:a�,. rrrw.r.cmrofGwf.q 50 MARKETING OVERVIEW COSTA MESA CVB ANNUAL REPORT 51 Valentine's Day During Valentine's Day weekend, the Bureau promoted partner hotel packages in an effort to increase occupancy over this three-day weekend. The Bureau used online banners, dedicated emails and social media ads to draw guests to the City of the Arts'". A press release was also developed and distributed to relevant regional print and online media outlets. The campaign was heavily focused on the immediate drive markets of Los Angeles, San Diego and Arizona The Bureau distributed dedicated emails positioning Costa Mesa as a Valentine's Day getaway destination STA MFW Ti YOUR LOVE REACHES r{Ew HEIGH -Y9UR LOV L TAXE FLIC FIT hi 'Ca•t. Ms s•. I nd ulg r in . varh ty o+very rp.r ul Wl.nrrn.'a b.y nH.rs mrrurlmg c 1p Libre! 1111 I r, rn..nd.r yui.n. Jin W9 d..l r . wi+h ew.rd-x inn ing per{ormenc.s .t S.garrr m m C •nt.r for th. A rtr, wo dd- a la r r f—hI.— 5nnrh Cnarr PI.r. —I lmr rnniul•n f,„r,� Lr.�6.. .,,d Il,e Di.r,.'l. r,J° re:ar+, .:Iry ir, rh. Ciry .f 1A, Art:- ��r.. V.1. .n.: n.y w.A..d w rl he s romance ro rem.mher. through Modern Luxury Riviera San Diego, Los Angeles Magazine and AZCentral.com (Arizona Republic). Digital banner ads were also placed on partnering websites. Facebook and Twitter ads also drove visitors to the hotel deals page on Travel CostaMesa.com. During the Valentine's Day campaign timeframe — February 5 to 15, 2015 — there were a total of 5,908 new users to the Costa Mesa website. Valentine's Day social media ads received more than 4,000 page interactions (likes, comments and shares). r } COSTA MESA Spring Tactica As a part of ongoing initiatives to drive hotel bookings, the Bureau continued its successful Stay and Get $50 tactical campaign in early Spring 2015. Print and online advertising, dedicated email distributions and newsletter inclusions promoted the gift card offer, with a website call to action encouraging visitors to go to hotel partners' landing pages and book. A press release was also developed and distributed to relevant regional print and online media outlets. The Stay & Get $50 spring tactical campaign was promoted on the Google Display Network and targeted residents interested to travel to California and nearby . OSTA drive markets. Like the 2014 campaign, which proved to be a successful format, the Spring 2015 campaign advertised exclusively across online and print platforms. Overall, the 2015 Stay & Get $50 Spring tactical campaign performed much better than the prior year. The campaign had an increase of 7,628 more visits to the landing page, in comparison with 38,275 visits in 2014. During the campaign period, 74 percent of all traffic to the Costa Mesa website was a result of marketing and advertising efforts around the 2015 spring tactical campaign, compared to just 42 percent in 2014. M E Silo O COSTA MESA coy GET 5TEP INTO SPRING MESA 52 MARKETING OVERVIEW COSTA MESA CVB ANNUAL REPORT 53 TripAdvisor The Bureau continues to own and maintain a sponsorship page on the TripAdvisor U.S., TripAdvisor Canada and TripAdvisor Mexico sites. The Costa Mesa sponsorship page includes information about Costa Mesa hotels and attractions, as well as photos, videos, special offers and links driving visitors to Travel CostaMesa.com. Geotargeted tactical and branding banners are updated across this page throughout the year. Within the past year, Costa Mesa sponsorship pages have received more than 600,000 sessions and 1.2 million pageviews across their desktop and mobile platforms. Traffic has grown by 25 percent year over year since launching in 2013. TripAdvisor is the world's largest travel site and serves as a great resource for travelers to gain insights on specific destinations, while also enabling travelers to plan and book trips easily. The site manages and operates ®mtripadvisor c.>aw-.-6—ee,c,fC-1.1,4� in 48 markets globally, with more than 6.2 million users, and has more than 320 million reviews and opinions on accommodations, restaurants and attractions worldwide. TripAdvisor has the largest travel community in the world. Last year, TripAdvisor added Instant Book, which simplified the booking process of repeat guests to the site. The Bureau looks forward to enhancing our destination management organization's page next year by adding additional video and native content. This new initiative will allow more photos and event listings in an effort to increase brand awareness. Other opportunities include expanding our reach within the Chinese market and new native placements on mobile devices. p Costa Mesa,, Calilomia. IJnited Statas I Cl, What are you looking far? LMAmd &a Ca"ICAI OnIW, CD1ft MMTcumm JOIN Lon IN 8 $ - 0 GE 1' SUNDAY Nliih f IN .FREE COSTA 1+CALIFORNIASC]LTNERN I ORNIimp% tlI�_ d Costa Mesa, Califomia 1"Uniftmo soI * t o,& ® Lodging(M) 7A�'riC.gx; Vacation Rentals 18] © Flights Thkvs to Do I W Reekws Rastsurants[I50} 6.Sti2 Renerrs Forum 51 Ppr15 GwryNw Placa w stay L-1, Teinga w I e 011r W Rueur F— ded nV 5 PUBLIC RELATIONS AND SEM In 2015, we prepared and circulated numerous press releases and communicated with the media a variety of topics, from events and happenings around Costa Mesa to hotel deals and tactical offerings. Our public relations efforts contributed to strengthen Costa Mesa brand awareness and to generate the growth of key Costa Mesa visitor market segments. Through more than 10 press releases and pitches strategically deployed and coordinated with advertising campaigns throughout the year, we reached 188,749,943 potential visitors over the year. Highlights included a feature story on the Costa Mesa Magical Memories campaign in the Los Angeles Times; a piece on the Canada sweepstakes in the Good Life Vancouver; The Westin South Coast Plaza renovation coverage in AZ Central and the Huffington Post; and new restaurant openings in Thrillist. We reached a total of 21,236,852 Search Engine Marketing (SEM) impressions in 2015 that resulted in 166,718 clicks with a click -through rate of 0.79 percent (well above the industry average of 0.06 in 2015). These results increased our conversion significantly, almost doubling the click -through rate of 0.42 percent observed in 2014. OUR SEM CAMPAIGNS HAVE INCLUDED: • Costa Mesa Branding • OC Pride Campaign • ART Transportation Campaign • Costa Mesa Magical Memories Campaign • Stay 2, Get Sunday Free Campaign • Holiday/Winter Hotel Deals T ' 't _i., I L^,� Cou,lnyrlti wars Six hatch that will give you a � n 1L'_ Gu{ u� IM Wert ticket to Disneyland 54 MARKETING OVERVIEW COSTA MESA CVB ANNUAL REPORT 55 INTERNATIONAL PRESENCE International markets hold an abundance of opportunities for our city. California welcomed 16.5 million visitors in 2014. By 2020, the state is forecasting a 3.8 percent increase in international guest arrivals. Research conducted by CIC discloses 25 percent of those who visited Costa Mesa were international travelers. We will continue with existing marketing programs and partner with OCVA and Brand USA on additional new opportunities in the upcoming fiscal year that will benefit our city and partner hotels. The Bureau continues to build brand awareness and promote Costa Mesa as a premier leisure destination to our international audiences in Mexico, Canada, China and the Middle East. Monthly newsletters are distributed to Mexico and Canada and quarterly for China and the Middle East markets. Original content about hotel's specials, events, shopping, food, and the performing arts are shared on a weekly basis to OCVA and our sales office overseas to educate and provide a greater exposure to the City of the Arts'" The Bureau's International Presence Country ocial Online estination &Newsletter Media Managers/ PR Mexico Canada China Bahrain, Kuwait, UAE, Saudi Arabia, Qatar, Oman Facebook Facebook Instagram Twitter WeChat & Weibo Facebook Instagram Twitter Travel Costa Mesa.com TripAdvisor Mexico City Monthly Visit the OC TrdveICosta Mesa.com TripAdvisor Travelcostamesa.cn Visit the OC Ctrip In country websites: UAE, Kuwait, Bahrain, Qatar, Oman through OCVA Myriad Shanghai/ Beijing Dubai Monthly Quarterly Quarterly Mexico Orange Call" J9nugry 5 Bt 7!1 Sam Chea este Inoretefe promo para tr armando Ws vacaetones eel 2016 on Avenue of the Arts Costa Mesa Orange County to esti. esperando! httpYlb1t.lyr1S2K9gM #CnstaMesa C;naok out Mi5 awOSOMO promo 10 00 Armando your vacation of Avenue of the Arts Costa Mesa 2016 in orange county is waiting for you! h1r1pDbl1.ly1152K9gM tCostamesa Translated from Spanish �C Orange County January r 1 . 0 #CrangeCounty as un dedno ideal para quienes gustan del shopping. South Coast Plaza es uno de IOB mejores Centras Comerctalo de lujo, es el mAs grand& de California, de cabida a mercas coma Hermes. Chanel y Prada. IVlsiialo! Foto corteaia de animalhouse See Translation JW one'" C -M --- -- Ocmoar 3o at 5 AWn - r Silver Trumpet Restaurant & Bar as una de Ica lugares mAs luiosos y exclusives para disirutar de una cepa de vino. mientras cenas y escuchas un pato de musica lounge. #CostaMesa Silver Trurnvel fieslauranl & Bar is one of the most luxurious and exclusive to enjoy a glass of wine, while dinners and linen to a lithe music lounge. 8 costamesa At.lo-translalion Preferences Orange County Taco Maria on Costa Mesa esia de manteles largos, Su chef Carlos Salgado es semitinalista para al premlo James Beard 2015. Ser Tr.inslation 56 MARKETING OVERVIEW COSTA MESA CVB ANNUAL REPORT 57 Middle East Orange County Visitors Assaciatlon - Middle East Jac office August 13 - 0 w P9 arty+ r�9t ! L— � L-49 w* i eJ clo.J! .sq l_Ial_ealQ, lilt aro-•+A` ,�-,..iJ •+maw y �P,e .aiL_,s�k�� .w9 #Happiness .. why _ W stay two nighla in Cvsta Mesa and provides you a ticket free day al odisney land. Don't miss the offer, #Travel #Tourism Auto-lranslstion Prelereneas armor COSTA MESA MAGICAL MEMORIES PACKAGE Stay 2 Nights and Deceive a FREE TICKET A)iSnegland i Like ■ Commem o4 Share China Last year the Bureau's hotel partners were highlighted on China's largest online travel agency, Ctrip. The city was also featured as a must -see destination while visiting Orange County. WeChat, a mobile messaging app first released in 2011, has 650 million monthly active users. Users between the age of 25 and 34 accounted for 40 percent of WeChat users worldwide. In comparison, only 2 percent were between the age of 55 and 64. WeChat has 82 percent of the market share, dominating mobile messaging in China. In addition to mobile messaging, users can send voice messages, share social moments, purchase virtual goods, send payments and meet new people. Orange County Visitors Assaciatian - Middle East Office Omotwe 1 1 W 5'3SAm • E drtad ylgxll# k ay;Wl pctbnJl# ! v!Wl , jW— ,. UK -1 Off Aolr,#3 *Dining # Destinations Award-winning Nrestaurants Distinct eateries 40 145ourhCoastPlaIa tion Appetit Check in my 40 a place of tourism attrasoens and restaurants +#weapon #awards South Coast but possession #Healli, Nwellness and # 10hring 1Desdnations Award-winning #rrestaurants 48 Distind eateries #Southcoastplara Bon Appetit! Checkinnty Auto -translation Preferences ■ SHOPPING MALL, SOUTH COAST PLAZA OC ITrr+Irl=:�� LJ 01� A uke ■ comm.nl d slaw Weibo, released in 2009, is a microblogging service that has a format similar to Twitter and has 222 million monthly active users. Daily active users are 100 million. Most users are young, between the ages of 17 to 33. Brands, celebrities, leading executives and politicians are setting up accounts to gain new fans and influence followers. About half of China's population now owns a mobile device. Eighty-nine percent of those who access the Internet are using mobile phone. This information reinforces the significance of mobile in China. (Source: Netimperative 2015 SZ&A baa*Tribute Portfolio%r_J#SMT%*rz*tzAA 2075-:0-28 t0lH4Ec96:1.V 2 ��l8&PoR 2401-T]A7$tan (AMNIFCounty) n . iS�2a,s��f�]4rnnuae �zi�. ni��f�s�t��fr9CttpA7k§��JGJ`��ntszi;a&. JJtJR�fJa.�Pz; elwmcome��B�]t31i1F�Biie��c7�1:a�18fF75rnws rwnrano���RRtlr�- h7�t�-�i'iir�t'dl�Fi�lE,L9431-tk, i�r4FBg��ffi1&;filftdrr;�. M i61JiFJit1CIR�J�3�ll[Rf 49��°T RRBFetCB§�. &H6lfRi�J�r&?E�k1�+Jl�19�. L'!-FS]]]tiltff�9BY�1�iEtli�ECi 2t1#fittsitl�m6�R'JXiC. r9h�oT>�5J8J. E�]i€�1pAi5>K1JB�tc�iit�1@84£tJ�. ARE 421111, Jf �: 771-761 -6t O0 � s �: ph }*� Ld ir�t wrf gamnn tet" *tam*rt.60 rr� 58 MARKETING OVERVIEW COSTA MESA CVB ANNUAL REPORT 59 OCVA MEDIA INITIATIVE In an effort to expand our reach, the Bureau joined the OCVA North America initiative in 2015. The goal of the North America initiative is to develop a domestic integrated marketing program to generate destination awareness in key U.S. markets for Orange County as a premier year-round destination. Texas was the target market, in which the cities of Dallas, Houston and Austin were the focus. The Texas media mission consisted of desk side visits in each city in order to educate and build relationships and seed stories for future coverage. Over 20 media attendees attended this mission. Next fiscal year, the Bureau will continue to partner with OCVA and expand our marketing efforts to Northern California, complementing our current strategy. The Bureau also looks forward to hosting travel writers from the Texas media mission and opportunities to further brand the City of the Art ST. MEDIA COVERAGE: 2.4 million total media coverage generated through 2015 Six press releases to local, regional and national travel media: 1. Must -Sees in The OC 2. Family Fun in The OC 3. Food & Drink in The OC 4. Luxury & Indulgence in The OC 5. Outdoors Adventure in The OC 6. Culture & Entertainment in The OC MAJOR MEDIA OUTLETS INCLUDE: Shermans Travel (2.25 million unique visitors monthly) Modern Luxury Dallas (130k visitors monthly) How to: Visit Orange County on a Budget August 13, 2015 by Teresa Saler Where the Locals Eat in Orange County August 10, 2015 by Teresa Bitter i. Two Maria E.an Itwugh Carlos Sallow was recently named a Food B 4IA v 2815 Bask Naw Char, his restaurant, Tarn Marin, still {Ilea largely under the radar o1 mos. Orange Cauny muriam. But mos; [owls prefer it Mai way — ire already hard enough io pei a saes in ;he tiny .pace at Thr OC Mix, a cullediun of bcnl'equa .hops end sV ielLy foc 1 purvey— Lunrh is limilnd to up. la mrna, like pndr rhank and pr oJm& nr statake mushroom choriza with a*y potato, seared an handmade tonitlas. Al dinner, Salgado carves a prix gxe menu maturing r five Miamian wish nn a,�N, xu r HOME EVENTS SCENE VIDEOS ARTICLES 9 HQP AND QIFIF Chanel a ilM iM now twuaqun w Soulh C at f wa In April, MMInng, an eleignnt intndnr natlod by N_ York arnhism r'atralearn 3,13.1 rf+r-+t<N Sr _ G'atln AM ye. 71 /.7M 7*5fi Spring nim cow the npanrg ni Galea b Gabbana'a fiat hmfigeae in 6,xdh frveat l3sxa. Leek lar a 9nra,n of walom. aywrear. Wtaaa, hanzaga aria more TN Biwa arca vnll featura speoallsts in malaup, fragrsadas and wince.. 3333 Bntld St.. Coast Maw oin T= I Fano, a Taiwan based dein that Tho Mon Ywk somas once naniLd among tho lap to rastauranls in tho uald_ opened its tim+ 11 r, o." in O.0 ft emaatdWoy one emo tho ba of" ft.- 3333 Pa seer $1., Coafs Mesa, 714.549.339a IICO Asylum Is noordinsayfacost". Irs die breafmild a lefenled chef CarlosAn" to C40mnoar Krtcffan winnrtni, whoan 'n—law sena w dw Mmi— lawnta haw mn rite haerm and palates cf k gds, 3B37 S. Bd.w Si., G -f. Masa_ 714.922. do 00 60 MARKETING OVERVIEW COSTA MESA CVB ANNUAL REPORT 61 54hero sa 6hap — Orarga Cdunry ion'[ a Cudgel Mopping destlnaaon, bulaaletdye alwppars can still awn y great deals on high-end fashions and houlique Theme_ Star! at South Coael PLua, Orasye Ccunry's answer to Rada Orlva, for d►sprn by Chanel, Cucd, Qarbara But, Celina, John Varveme, no mono-. N. r= Kyau're nvf Iran the mall scene, vy Tne LaC In stead. Fulled as in anti -mal. the Casa Mesa shopping deatinadon is a mlloam of eclec[ic shops end remm raniE. Like the _ f . wroor.'? Cmm di17 wme time to slop C Ank out Its fl!,7pr nmpMy. Ton [:mmn, dtl0?4 the street Fre an altamnll a m traditional high—d nhapping, Orange Cnunly Mara! Patna Is nsantlelly an upscale away meet farevarydiing ham fumlture and elattror" tofrash prach r and meal. Irs open eaery Saturday and Sunday a[ rite murnymirginnstda • I (aaanap; during duly and August when Vie Gtr Is In full awing). i. Two Maria E.an Itwugh Carlos Sallow was recently named a Food B 4IA v 2815 Bask Naw Char, his restaurant, Tarn Marin, still {Ilea largely under the radar o1 mos. Orange Cauny muriam. But mos; [owls prefer it Mai way — ire already hard enough io pei a saes in ;he tiny .pace at Thr OC Mix, a cullediun of bcnl'equa .hops end sV ielLy foc 1 purvey— Lunrh is limilnd to up. la mrna, like pndr rhank and pr oJm& nr statake mushroom choriza with a*y potato, seared an handmade tonitlas. Al dinner, Salgado carves a prix gxe menu maturing r five Miamian wish nn a,�N, xu r HOME EVENTS SCENE VIDEOS ARTICLES 9 HQP AND QIFIF Chanel a ilM iM now twuaqun w Soulh C at f wa In April, MMInng, an eleignnt intndnr natlod by N_ York arnhism r'atralearn 3,13.1 rf+r-+t<N Sr _ G'atln AM ye. 71 /.7M 7*5fi Spring nim cow the npanrg ni Galea b Gabbana'a fiat hmfigeae in 6,xdh frveat l3sxa. Leek lar a 9nra,n of walom. aywrear. Wtaaa, hanzaga aria more TN Biwa arca vnll featura speoallsts in malaup, fragrsadas and wince.. 3333 Bntld St.. Coast Maw oin T= I Fano, a Taiwan based dein that Tho Mon Ywk somas once naniLd among tho lap to rastauranls in tho uald_ opened its tim+ 11 r, o." in O.0 ft emaatdWoy one emo tho ba of" ft.- 3333 Pa seer $1., Coafs Mesa, 714.549.339a IICO Asylum Is noordinsayfacost". Irs die breafmild a lefenled chef CarlosAn" to C40mnoar Krtcffan winnrtni, whoan 'n—law sena w dw Mmi— lawnta haw mn rite haerm and palates cf k gds, 3B37 S. Bd.w Si., G -f. Masa_ 714.922. do 00 60 MARKETING OVERVIEW COSTA MESA CVB ANNUAL REPORT 61 r r.� i100 r COSTA MESA CONFERENCE AND VISITOR BUREAU EXECUTIVE COMMITTEE Susan O'Brien Moore Chairperson, General Manager, Ayres Hotel & Suites Mike Hall Vice President, General Manager, The Westin South Coast Plaza Sue Cooke Treasurer, General Manager, Residence Inn by Marriott Paul Sanford Secretary, General Manager -Asset Manager, Avenue of the Arts, A Tribute Portfolio Hotel DIRECTORS Naj Ekhlas General Manager, Best Western Plus Rob Gauthier General Manager, Hilton Thomas Haidet General Manager, Holiday Inn Express & Suites Tom Hatch CEO, City of Costa Mesa Jennifer Ixta General Manager, BLVD Hotel Stephen Mensinger Mayor, City of Costa Mesa Rhanda Richardson General Manager, Marriott Ross Stibor General Manager, Ramada TBD General Manager, Crowne Plaza ADVISORS Werner Escher Executive Director of Domestic and International Markets, South Coast Plaza Terry Dwyer President, Segerstrom Center for the Arts STAFF Paulette Lombardi -Fries President Linda Ta Director of Marketing Jessica Placentia Operations Manager TraveICOSTA M ES/\.com 575 Anton Blvd., Suite 880 Costa Mesa, CA 92626 Attachment 2 COSTA MESA CONFERENCE & VISITOR BUREAU FINANCIAL STATEMENTS For The Years Ended June 30, 2015 and 2014 with INDEPENDENT AUDITORS' REPORT THEREON in J' KMCompare Y Business Advisors Tax and Audit INDEPENDENT AUDITORS' REPORT To the Board of Directors of Costa Mesa Conference & Visitor Bureau We have audited the accompanying financial statements of Costa Mesa Conference & Visitor Bureau (the "Organization"), which comprise the statements of assets, liabilities and net assets — cash basis as of June 30, 2015 and 2014, and the related statements of revenue and expenses — cash basis for the years then ended, and the related notes to the financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the cash basis of accounting described in Note 1; this includes determining that the cash basis of accounting is an acceptable basis for the preparation of the financial statements in the circumstances. Management is also responsible for the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Organization's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Organization's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. p 714 380 6565 f 714 380 6566 555 Anton Blvd Suite 1000 Costa Mesa CA 92626 knnjpartnerscpa.com p 818 999 5885 f 818 704 4668 20720 Ventura Blvd Suite 160 Woodland Hills CA 91364 p 760 431 5465 f 760 431 5466 2768 Laker Avenue West Suite 101 Carlsbad CA 92010 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the assets, liabilities and net assets of Costa Mesa Conference & Visitor Bureau as of June 30, 2015 and 2014, and its revenue and expenses for the years then ended in accordance with the cash basis of accounting described in Note 1. Basis of Accounting We draw attention to Note 1 of the financial statements, which describes the basis of accounting. The financial statements are prepared on the cash basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter. V -M3- Ck6,4, t 10*L" LL� KMJ Corbin & Company LLP Costa Mesa, California November 3, 2015 COSTA MESA CONFERENCE & VISITOR BUREAU STATEMENTS OF ASSETS, LIABILITIES AND NET ASSETS - CASH BASIS June 30, 2015 2014 ASSETS Cash $ 1,385,046 $ 1,079,582 Total assets $ 1.385.046 $ 1.079.582 LIABILITIES Current liabilities $ - $ - Total liabilities - - NET ASSETS Unrestricted 1,385,046 1,079,582 Total liabilities and net assets S 1,385,046 1,079,582 See accompanying notes to financial statements 3 COSTA MESA CONFERENCE & VISITOR BUREAU STATEMENTS OF REVENUE AND EXPENSES - CASH BASIS For The Years Ended June 30, 2015 and 2014 June 30, 2015 2014 CHANGE IN UNRESTRICTED NET ASSETS Revenues: Business improvement area assessment, net of handling fees $ 2,424,202 $ 2,316,282 Interest income 2,695 2,660 Net revenues 2,426,897 2,318,942 Expenses: Hotel marketing funds 336,347 356,293 Marketing 1,087,512 1,286,108 Salaries and benefits 346,850 372,452 General and administrative 350,724 541,339 Total expenses 2,121,433 2,556,192 Increase (decrease) in unrestricted net assets 305,464 (237,250) Unrestricted net assets, beginning of year 1,079,582 1,316,832 Unrestricted net assets, end of year $ 1.385.046 $ 1.079.582 See accompanying notes to financial statements 4 COSTA MESA CONFERENCE & VISITOR BUREAU NOTES TO FINANCIAL STATEMENTS For The Years Ended June 30, 2015 and 2014 NOTE 1 — NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Activities The Costa Mesa Conference & Visitor Bureau (the "Organization") is a California non-profit corporation formed in 1995 to market the City of Costa Mesa (the "City") as a leisure transient travel destination. The vision of the Organization is to be a destination -marketing leader by supporting and selling the City's distinct visitor brand experiences and advocating community tourism benefits. The Organization's mission is to enhance and promote the City's brand experience, thus increasing visitor spending for industry and community economic viability, sustainability and quality of life. The Organization is funded by the eleven member hotels that comprise the Business Improvement Area ("BIA") established by the City. The member hotels are Costa Mesa Marriott, Hilton Costa Mesa, Holiday Inn Express & Suites, Residence Inn by Marriott, Avenue of the Arts Wyndham Hotel, Ayres Hotel & Suites, The Westin South Coast Plaza, Ramada Inn and Suites Costa Mesa, Best Western Plus Newport Mesa Inn, Crowne Plaza, and BLVD Hotel. California state law provides that BIA assessments are to be used for the purposes specified in the authorizing resolution that established the assessment. The City's resolution that established the BIA stated that its purpose is to promote tourism to the City and to fund programs and activities that benefit the hotel and motel business within the City. Basis of Presentation The accompanying financial statements have been prepared on the cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. Consequently, revenues are recognized when received rather than when earned, and expenses are recognized when disbursed rather than when the obligation is incurred. Net assets and revenues, expenses, gains, and losses are classified based on the existence or absence of donor -imposed restrictions. As of and for the years ended June 30, 2015 and 2014, the Organization had no temporarily or permanently restricted net assets. The Organization incurred expenses related to program activities of approximately $1,741,000, and $1,976,000, respectively, for the years ended June 30, 2015 and 2014. 5 COSTA MESA CONFERENCE & VISITOR BUREAU NOTES TO FINANCIAL STATEMENTS For The Years Ended June 30, 2015 and 2014 NOTE 1 — NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued Tax Status The Organization qualifies as a tax-exempt organization for Federal income taxes under Section 501(c)(6) of the United States Internal Revenue Code and for California state income taxes under Section 23701(d) of the California Revenue and Taxation Code; therefore, the Organization has no provision for federal or state income taxes. During the years ended June 30, 2015 and 2014, the Organization had no unrelated business income. The Organization annually evaluates tax positions as part of the preparation of its exempt tax return. This process includes an analysis of whether tax positions the Organization takes with regard to a particular item of income or deduction would meet the definition of an uncertain tax position under current accounting guidance. The Organization believes its tax positions are appropriate based on current facts and circumstances. The Organization's policy is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. At June 30, 2015 and 2014, the Organization did not have any unrecognized tax benefits. The Organization is no longer subject to U.S. Federal and state income tax examinations by tax authorities for tax years before 2011. Use of Estimates The preparation of financial statements in conformity with the cash basis of accounting requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Significant estimates made by the Organization's management include, but are not limited to the allocation of expenses to program expenses. Actual results could differ from those estimates. R eveni i e The City levies a special assessment on the eleven member hotels in the BIA based on the sale of overnight guest room stays. For the fiscal years ended June 30, 2015 and 2014, the levy was three percent (3%). The levy is transmitted by the hotels to the City and is remitted to the Organization, net of a one percent (1%) handling fee. The levy is 99.9% of the net revenues of the Organization for fiscal years ended June 30, 2015 and 2014. on COSTA MESA CONFERENCE & VISITOR BUREAU NOTES TO FINANCIAL STATEMENTS For The Years Ended June 30, 2015 and 2014 NOTE 2 — CASH Cash consists of demand deposits at the following institutions as of June 30: American Securities Bank Pacific Premier Bank 2015 2014 $ 328,039 $ 361,996 1,057,007 717,586 $ 1.385.046 $ 1.079.582 The Organization maintains cash deposits at institutions which are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000. At various times during 2015 and 2014, the Organization maintained balances in excess of FDIC limits. The Organization periodically reviews the quality of the financial institutions it has deposits with to minimize risk of loss. NOTE 3 — HOTEL MARKETING FUNDS EXPENSE During the fiscal years ended June 30, 2015 and 2014, the Organization allocated $150 per room to each BIA member hotel for hotel -specific marketing purposes. The allocation subsidizes hotel -specific advertising and marketing efforts that also include the Organization's logo. Vendor invoices are either paid by the hotel and reimbursed by the Organization or paid directly by the Organization. Samples of advertising and marketing material must be submitted showing the Organization's logo for reimbursement. For advertising or marketing material where the Organization's logo cannot be used, the Organization requests that the hotel partners use the following verbiage, "Hotel partner name is a proud partner of Costa Mesa Conference and Visitor Bureau." Hotel marketing funds expense totaled $336,347 and $356,293 for fiscal years ended June 30, 2015 and 2014, respectively. If the hotels do not use all their allocated funds, the funds revert back to the Organization. NOTE 4 — MARKETING EXPENSE The Organization incurs marketing expenses related to its mission of promoting the City as a tourist destination. For the fiscal years ended June 30, 2015 and 2014, marketing expenses totaled $1,087,512 and $1,286,108, respectively. Marketing expenses include video and photography production, community sponsorships, brochures, print advertising, various promotions, and tradeshow costs. All of these endeavors promote tourism in the City. VA COSTA MESA CONFERENCE & VISITOR BUREAU NOTES TO FINANCIAL STATEMENTS For The Years Ended June 30, 2015 and 2014 NOTE 5 — COMMITMENTS AND CONTINGENCIES Guarantees and Indemnities The Organization has made certain indemnities and guarantees, under which it may be required to make payments to a guaranteed or indemnified parry, in relation to certain actions or transactions. The Organization indemnifies its directors, officers, employees and agents, as permitted under the laws of the State of California. In connection with its facility lease, the Organization has indemnified its lessor for certain claims arising from the use of the facilities. The duration of the guarantees and indemnities varies, and is generally tied to the life of the agreement. These guarantees and indemnities do not provide for any limitation of the maximum potential future payments the Organization could be obligated to make. Historically, the Organization has not been obligated nor incurred any payments for these obligations and, therefore, no liabilities have been recorded for these indemnities and guarantees in the accompanying statements of assets, liabilities and net assets — cash basis. Operating Lease The Organization has a lease for office space through July 31, 2016. The Organization also has a lease for a color copier through October 31, 2020. Total rent expense for fiscal years ended June 30, 2015 and 2014 totaled $37,800 and $35,500, respectively. Future minimum lease obligations as of June 30, 2015 consist of the following: Years Ending June 30. 2016 $ 43,500 2017 5,300 2018 1,800 2019 1,800 2020 1,800 Thereafter 300 $ 54.500 COSTA MESA CONFERENCE & VISITOR BUREAU NOTES TO FINANCIAL STATEMENTS For The Years Ended June 30, 2015 and 2014 NOTE 5 — COMMITMENTS AND CONTINGENCIES, continued Liti ag tion In the ordinary course of business, the Organization may face various claims brought by third parties and they may, from time to time, make claims or take legal actions to assert their rights. Any of these claims could subject the Organization to costly litigation and, while the Organization generally believes that it has adequate insurance to cover many different types of potential liabilities, its insurance carriers may deny coverage or its policy limits may be inadequate to fully satisfy any damage awards or settlements. If this were to happen, the payment of any such awards could have a material adverse effect on the Organization's operations and financial position. Additionally, any such claims, whether or not successful, could damage the Organization's reputation and business. The Organization had previously initiated a lawsuit against a former vendor during the fiscal year ended June 30, 2013. The Organization believed the vendor had breached a contract with the Organization by not performing services as requested. On October 3, 2014, the lawsuit concluded, resulting in the Organization losing the lawsuit against the vendor. No settlement payments were required from the Organization other than to reimburse the vendor for trial fees of approximately $29,000 which is included in general and administrative expenses in the accompanying statement of revenue and expenses — cash basis for the year ended June 30, 2014. On July 22, 2014, the vendor that won the lawsuit filed a complaint against the Organization citing (1) malicious prosecution, (2) abuse of process, (3) defamation, (4) breach of the covenant of good faith and fair dealing, and (5) violation of Business and Professions Code 17200. On November 25, 2014, pursuant to a ruling by the Superior Court of the State of California, County of Orange, the malicious prosecution claim is still being evaluated, but the remaining four claims were dismissed. On May 26, 2015, the Organization filed a motion to reconsider in regards to the ruling. Management believes it might have to incur substantial legal expenses in its defense if the litigation process continues. However, litigation is inherently uncertain and, as such, the ultimate outcome of this matter is not presently determinable. Z COSTA MESA CONFERENCE & VISITOR BUREAU NOTES TO FINANCIAL STATEMENTS For The Years Ended June 30, 2015 and 2014 NOTE 6 — EMPLOYEE BENEFIT PLAN The Organization sponsors a defined contribution salary deferral plan (the "Plan") covering all employees. Beginning in April 2012, the Board of Directors has agreed to match Plan contributions dollar for dollar up to 3% of the eligible employee's salary. During the fiscal years ended June 30, 2015 and 2014, matching contributions amounted to $7,193 and $8,536, respectively, which are recorded in salaries and benefits in the accompanying statements of revenue and expenses — cash basis. NOTE 7 — RISKS AND UNCERTAINTIES Due to the nature of the Organization's business, the Organization's revenue is entirely dependent on the City, which established the BIA and collects the BIA levy from the eleven hotels in Costa Mesa (see Note 1). A cancellation of the BIA would adversely and severely impact the Organization's financial position. NOTE 8 — SUBSEQUENT EVENTS Management has evaluated and determined that no events have occurred through November 3, 2015, the date that the financial statements were issued, which would require inclusion or disclosure in its financial statements. 10 Attachment 3 RESOLUTION NO. 16- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF COSTA MESA, CALIFORNIA, DECLARING ITS INTENTION TO LEVY AN ANNUAL ASSESSMENT FOR FISCAL YEAR 2016-2017 FOR A BUSINESS IMPROVEMENT AREA COVERING CERTAIN COSTA MESA HOTELS AND MOTELS AND SETTING THE TIME AND PLACE FOR A PUBLIC HEARING ON PROPOSAL THE CITY COUNCIL OF THE CITY OF COSTA MESA DOES HEREBY RESOLVE AS FOLLOWS: WHEREAS, the California Legislature in adopting the Parking and Business Improvement Area Law of 1989 (Streets & Highways Code § 36500 et seq.) authorized cities to levy assessments on businesses in order to promote economic revitalization and tourism, to create jobs, attract new businesses, and prevent erosion of business districts; and WHEREAS, on July 5, 1995, by Ordinance No. 95-9, the City Council adopted a business improvement area, commonly known as the Costa Mesa Tourism & Promotion Business Improvement Area (the "BIA"), the purpose of which is to promote tourism to the City and to fund programs and activities that benefit the hotel and motel businesses within the City of Costa Mesa; and WHEREAS, the owners of the BLVD Hotel requested a modification to the boundaries of the BIA so that it would include the BLVD Hotel and make the BLVD Hotel voluntarily subject to the BIA assessment; and WHEREAS, on January 20, 2015, by Ordinance No. 15-01, the City Council adopted an amendment to the BIA which expanded its boundaries making the BLVD Hotel subject to the BIA assessment; and WHEREAS, the City Council appointed the general managers of the now 11 hotels and motels subject to the assessment area, to serve as the advisory board as required by California Streets and Highways Code Section 36530; and WHEREAS, said advisory board is known as the Costa Mesa Conference and Visitor Bureau (the "CMCVB"); and WHEREAS, the City Council has voted to continue the special assessment for the BIA each year since its inception, and it has been levied upon the 11 hotel and motel businesses listed on Exhibit A, attached hereto and incorporated herein by this reference; and WHEREAS, in January 2000, the City Council approved an increase in the assessment, raising the assessment from one percent (1 %) to two percent (2%) based on the sale of overnight room stays; and WHEREAS, in November 2010, the City Council approved an increase in the assessment, raising the assessment from two percent (2%) to three percent (3%) based on the sale of overnight room stays; and WHEREAS, this Resolution of Intention will commence proceedings under the Parking and Business Improvement Area Law of 1989 (Streets & Highways Code § 36500 et seq.) to levy the annual assessment of the Costa Mesa Tourism & Promotion Council Business Improvement Area for the 2016-2017 fiscal year; and WHEREAS, the Agenda Report, and its attachments, for the May 3, 2016 City Council Meeting filed with the City Clerk sets forth a detailed description of the activities to be provided in the 2016-2017 fiscal year, the boundaries of the Business Improvement Area, the benefit zone of the area, and the proposed assessments to be levied upon the businesses within the area for the coming fiscal year. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Costa Mesa as follows: Section 1. Assessment. An annual assessment for the Costa Mesa Tourism & Promotion Council Business Improvement Area is proposed to be levied pursuant to Streets & Highways Code § 36500 et seq. The proposed boundaries of the territory are the 11 motels and hotels listed in Exhibit A, attached hereto and incorporated herein by this reference. The proposed amount of the annual assessment is three percent (3%). The three percent (3%) assessment is based on the sale of overnight room stays. New hotel and motel businesses commenced after the effective date of the ordinance levying the assessment will be exempt from the levy of assessment, pursuant to Streets & Highways Code § 36531 and § 36535. 2 Section 2. Annual Report. An annual report on the Business Improvement Area has been prepared by the Costa Mesa Conference & Visitor Bureau, acting as the advisory board as required by Streets & Highways Code § 36533 and § 36534. Said report is on file in the City Clerk's Office. Section 3. Types of Activities To Be Funded. The proposed type or types of activities to be funded by and through the annual levy of assessments on businesses within the Costa Mesa Tourism & Promotion Council Business Improvement Area are specified in the referenced annual report and Exhibit B. Section 4. Method and Basis of Levy. The proposed method and basis of levying the assessment to allow each business owner to estimate the amount of the assessment to be levied against his or her business is set forth in the Costa Mesa Conference & Visitor Bureau's annual report relative to the Business Improvement Area. Section 5. Time and Place of Public Hearing. The time and place of the public hearing on the business improvement area and the annual levy of assessments shall be at 7:00 p.m., June 7, 2016, at the Costa Mesa City Hall, City Council Chambers, 77 Fair Drive, Costa Mesa, California. At the public hearing set forth above, the testimony of all interested persons for or against the annual levy of assessment for the business improvement area, the extent of the area, or the furnishing of specific types of improvements or activities will be heard by the City Council. Section 6. Protests. The following rules shall apply to all protests: (a) A protest may be made orally or in writing by any interested person. Any protest pertaining to the regularity or sufficiency of the proceedings shall be in writing and shall clearly set forth the irregularity or defect to which the objection is made. (b) Every written protest shall be filed with the City Clerk's Office, Costa Mesa City Hall, Room 101, 77 Fair Drive, Post Office Box 1200, Costa Mesa, California 92626-1200, at or before the time fixed for the public hearing as set forth above. (c) The City Council may waive any irregularity in the form or content of any written protest, and at the public hearing, may correct minor defects in the proceedings. 3 (d) Each written protest shall contain a description of the business in which the person subscribing the protest is interested sufficient to identify the business and, if a person subscribing is not shown on the official records of the city as the owner of the business, the protest shall contain or be accompanied by written evidence that the person subscribing is the owner of the business. A written protest which does not comply with this section shall not be counted in determining a majority protest. (e) If written protests are received from the owners of businesses in the proposed business improvement area which will pay fifty percent (50%) or more of the assessments to be levied and protests are not withdrawn so as to reduce the protests to less than the fifty percent (50%), no further proceedings on the proposal to continue the business improvement area assessment, as specified by this Resolution, shall be taken by the City Council for a period of one year from the date of the filing of a majority protest. BE IT FURTHER RESOLVED THAT the City Council of the City of Costa Mesa, California, does hereby adopt the annual report by the Costa Mesa Conference & Visitor Bureau acting as the advisory board on the business improvement area (referenced report on file in the City Clerk's Office), and this Resolution, including all exhibits. PASSED, APPROVED, AND ADOPTED this 3rd day of May, 2016. ATTEST: Stephen M. Mensinger, Mayor APPROVED AS TO FORM: Brenda Green, City Clerk Thomas P. Duarte, City Attorney 91 FXHIRIT A The Business Improvement Area ("BIA") benefit zone encompasses the entire City of Costa Mesa boundaries. It is anticipated that the entire City, including businesses and residents, will benefit from increased revenues generated by the activities financed by the BIA assessment. The following businesses will be included in the BIA that is established pursuant to Streets & Highways Code § 36500 et seq., the businesses commonly known as: Ayres Country Inn & Suites Property Address: 325 and 345 Bristol Street, Costa Mesa Business Owner: Newport Country Inn & Suites, Inc. 355 Bristol Street, Suite A Costa Mesa, CA 92626 Property Owner: Newport Country Inn & Suites, Inc. 355 Bristol Street, Suite A Costa Mesa, CA 92626 Best Western Plus Newport Mesa Inn Property Address: 2642 Newport Boulevard, Costa Mesa Business Owner: James Hsuen Shang -Pu Lee 2642 Newport Boulevard, Costa Mesa, CA 92627 Property Owner: James Hsuen Shang -Pu Lee 2642 Newport Boulevard, Costa Mesa, CA 92627 Hilton Costa Mesa Property Address: 3050 Bristol Street, Costa Mesa Business Owner: Ashford Hospitality Trust 14185 Dallas Parkway, Suite 1100 Dallas, TX 75254 Property Owner: Remington Lodging & Hospitality LP 14185 Dallas Parkway, Suite 1100 Dallas, Texas 75254 Crowne Plaza Property Address: 3131 Bristol Street, Costa Mesa 5 Business Owner: Brighton Management 1901 Main Street, Suite 150 Irvine, CA 92614 Property Owner: 3131 Bristol Property UC, LLC 2711 Centerville Road, Suite 400 Wilmington, DE 19808 Holiday Inn Express Hotel & Suites Property Address: 2070 Newport Blvd., Costa Mesa Business Owner: Narendra B. Patel 2070 Newport Blvd. Costa Mesa, CA 92667 Property Owner: Narendra B. Patel 2070 Newport Blvd. Costa Mesa, CA 92667 Costa Mesa Marriott Property Address: 500 Anton Boulevard, Costa Mesa Business Owner: Marriott International 10400 Fernwood Rd. Bethesda, MD 20817 Property Owner: Host Hotels & Resorts 6903 Rockledge Dr., Suite 1500 Bethesda, MD 20817 Ramada Inn & Suites Costa Mesa Property Address: 1680 Superior Ave., Costa Mesa Business Owner: B.D. Inns Inc./Ramada Ltd. 1680 Superior Ave. Costa Mesa, CA 92627 Property Owner: B.D. Inns Inc./Ramada Ltd. 1680 Superior Ave. Costa Mesa, CA 92627 Residence Inn by Marriott Property Address: 881 Baker Street, Costa Mesa Business Owner: Marriott International S 10400 Fernwood Rd. Bethesda, MD 20817 Property Owner: ING Clarion Partners 2650 Cedar Springs Road, Suite 850 Dallas, TX 75201-1491 The Westin South Coast Plaza Hotel Property Address: 686 Anton Boulevard, Costa Mesa Business Owner: Host Hotels & Resorts 6903 Rockledge Dr., Suite 1500 Bethesda, JD 20817 Property Owner: CJ Segerstrom & Sons c/o South Coast Plaza 686 Anton Boulevard Costa Mesa, CA 92626 Avenue of the Arts Wyndham Hotel Property Address: 3350 Avenue of the Arts, Costa Mesa Business Owner: Rosanna Inc. 3350 Avenue of the Arts Costa Mesa, CA 92627 Property Owner: Rosanna Inc. 3350 Avenue of the Arts Costa Mesa, CA 92627 BLVD Hotel Property Address: 2430 Newport Blvd, Costa Mesa Business Owner: Hollywood Corner Inc. 2430 Newport Blvd Costa Mesa, CA 92627 Property Owner: Shyamal Patel, CA 92782 16609 Honeybee Dr. Tustin, CA 92682 7 EXHIBIT B The BIA assessment will be used to fund the Costa Mesa Conference & Visitor Bureau (CVB). The CVB will fund activities to promote tourism in Costa Mesa and will sponsor related tourist events that benefit the hotel and motel businesses within the City. The specific improvements and activities to be funded by this assessment are outlined in the CMCVB's 2013-2014 Annual Report. Revenue A three percent (3%) levy will be assessed against each of the 11 hotels listed in Exhibit A, based on the net revenue from the sale of overnight room stays. Business owners shall pay the assessment to the Costa Mesa City Finance Department on a monthly basis. A penalty and interest shall be assessed on late payments. Note: New hotel and motel businesses commenced after the effective date of this resolution will be exempt from the levy of assessment. Attachment 4 Bylaws of Costa Mesa Conference & Visitor Bureau A California Nonprofit Mutual Benefit Corporation ARTICLE I NAME AND PRINCIPAL OFFICE The name of the corporation is Costa Mesa Conference & Visitor Bureau ("CVB"). The principal office for the transaction of the affairs and activities of this corporation shall be located in the City of Costa Mesa. The Board of Directors may change the location of the principal office. ARTICLE II PURPOSE The purpose of this corporation shall be to promote tourism for the general benefit of businesses, hotels and motels in the City of Costa Mesa, California. ARTICLE III LIMITATIONS Section 1: Assets. This Corporation is not organized, nor shall it be operated, for pecuniary gain or profit, and it does not contemplate the distribution of gains, profits or dividends of its members and is organized solely for nonprofit purposes. No part of the profits or net income of this Corporation shall ever inure to the benefit of any Director, officer or member thereof, or to any individual. Upon the dissolution or winding up of the Corporation, after payment of, or provision for payment of, all debts and liabilities of this Corporation, the remaining assets shall be distributed to a nonprofit fund, foundation or corporation which has been formed to provide benefits or services for Costa Mesa tourism businesses and which has established its tax-exempt status under §501(c) of the Internal Revenue Code. If no such corporation as described above is in existence at the time of dissolution, then the remaining assets shall be distributed to a nonprofit fund, foundation or corporation, which has established its tax-exempt status under §501(c) of the Internal Revenue Code. Section 2: Construction. Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the California Nonprofit Mutual Benefit Corporation Law shall govern the construction of these Bylaws. Without limiting the generality of the preceding sentence, the masculine gender includes feminine and neuter, the singular includes the plural, the plural includes the singular, and the term "person" includes both a legal entity and a natural person. Bylaws of Costa Mesa Conference & Visitor Bureau April 2012 ARTICLE IV MEMBERS Section 1: Definitions. This corporation shall have no members within the meaning of the California Nonprofit Corporation Law, pursuant to Corporation Code §7332(a) as may be amended or re -codified from time to time. As used herein, the term members shall refer to Directors. The Board may, in its discretion, admit individuals to one or more classes of nonvoting members; the class or classes shall have such rights and obligations as the board finds appropriate. ARTICLE V DIRECTORS Section 1: Number. The corporation shall have no less than nine (9) and no more than fifteen (15) Directors. The precise number of Directors for any given year shall be set by resolution of the board and equal to the number of businesses assessed in the Costa Mesa Tourism & Promotion Business Improvement Area ("BIA") plus two. Each Director shall have one vote. A reduction in the number of Directors shall not result in removal of any Director before his or her term of office expires. Section 2: Tenure. Each Director of the corporation shall serve for a term of five (5) years. Section 3: Criteria. The Board shall be composed as follows: A. Two Directors shall be representatives of the City of Costa Mesa: 1. One shall be a city employee designated by the city's chief executive officer; and 2. One shall be a city council member. If the council member declines the appointment, the representative shall instead be a city employee designated by the city's chief executive officer. B. The remaining directors shall be the general managers of each lodging business assessed by the BIA. C. Directors shall not be allowed to designate alternates. Section 4: Annual Election. Directors shall be elected by the Board. Election of Directors shall take place at the annual meeting of the corporation. Procedures for election of Directors shall be determined by the Board of Directors. Section 5: Powers. Subject to the provisions and limitations of the California Nonprofit Mutual Benefit Corporation law, the provisions of the BIA, and any other applicable laws, and subject to any limitations of the Articles of Incorporation and these Bylaws, the corporation's activities and affairs shall be managed, and all corporate powers shall be exercised by, or under the direction of, the Board. 2 Bylaws of Costa Mesa Conference & Visitor Bureau April 2012 Section 6: Specific Powers. Without prejudice to the general powers set forth in Article V, Section 6 of these Bylaws, but subject to the same limitations, the Board shall have the power to do the following: A. Appoint and remove, at the pleasure of the Board, all corporate officers, agents, and employees; prescribe powers and duties for them as are consistent with the law, the Articles of Incorporation, and these Bylaws; fix their compensation; and require from them security for faithful service. B. Change the principal office or the principal business office in the City of Costa Mesa from one location to another; cause the corporation to be qualified to conduct its activities in any other state, territory, dependency, or country; conduct its activities in or outside California; and designate a place in the City of Costa Mesa for holding any meeting of members. C. Borrow money and incur indebtedness on the corporation's behalf and cause to be executed and delivered for the corporation's purposes, in the corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages, pledges, hypothecations, and other evidence of debt and securities. Section 7: Occurrence of Vacancies. A vacancy or vacancies on the Board shall occur in the event of- A. £ A. The death, removal or resignation of any Director; or B. The declaration by resolution of the Board of a vacancy in the office of a Director who has been convicted of a felony, declared of unsound mind by a court order, or found by final order or judgment of any court to have breached a duty arising under Corporations Code §7238, the BIA, or other applicable laws; or C. An increase in the authorized number of Directors; or D. A Board member no longer being authorized to represent the business or City they were selected to represent; or E. The failure of an election to elect the number of Directors required to be elected in that election. Section 8: Filling Vacancies. Vacancies on the Board may be filled by approval of the Board, or if the number of Directors then in office is less than a quorum, by either: A. The unanimous written consent of the Directors then in office; or B. The affirmative vote of a majority of Directors then in office at a meeting held according to the notice provisions of these Bylaws and the Ralph M. Brown Act; or C. A sole remaining Director. Section 9: Resignation of Directors. Any Director may resign by giving written notice to the chair of the Board, if any, or to the president or the secretary of the Board. The resignation shall be effective when the notice is given unless it specifies a later time for the resignation to become effective. If a Directors' resignation is effective at a later time, the Board may elect a successor to take office as of the date when the resignation becomes effective. Section 10: Removal of Directors. Any Director may be removed, with cause, by the vote of the majority of the members of the entire Board of Directors at a special meeting called for that 3 Bylaws of Costa Mesa Conference & Visitor Bureau April 2012 purpose, or at a regular meeting, provided that notice of that meeting and of the removal question are given as provided in Article VI. Section 11: Compensation and Reimbursement. Directors shall serve as volunteers and shall not be compensated. Directors may be reimbursed for expenses, as the Board may establish by resolution to be just and reasonable to the corporation at the time that the resolution is adopted. Section 12: Advisors. The Board may, in its discretion, invite individuals to serve as Advisors to the Board. Advisors shall be invited to Board meetings in the same manner as are Directors, but shall not be Directors. ARTICLE VI MEETINGS Section 1: Annual Meeting. The annual meeting of the corporation shall be held once per year, at such time and on such date as the Board may fix from time to time. At the annual meeting, Directors shall be elected and other business may be transacted, subject to the provisions of these Bylaws. Notice of the annual meeting shall be posted at least seventy-two hours prior to the meeting in a publicly accessible location, in accordance with the requirements of the Ralph M. Brown Act. Each notice shall state the general business to be transacted, and the day, time and place of the meeting. Section 2: Board of Directors Regular Meetings. The Board shall meet not less than every - other -month on dates agreed upon by the Board. Notice of regular meetings shall be posted at least seventy-two hours prior to the meeting in a publicly accessible location, in accordance with the requirements of the Ralph M. Brown Act. Each such notice shall state the general business to be transacted, and the day, time and place of the meeting. Business may be transacted at any regular meeting of the Board in accordance with the requirements of the Ralph M. Brown Act. Section 3: Board of Directors Special Meetings. Special meetings of the Board may be called by the Chairperson of the Board or any three Directors. Notice of special meetings shall be given to each Director stating the time, place, and business to be discussed at least twenty-four hours before the time of the meeting specified in the notice. Notice shall be delivered to the Board personally or by any other means pursuant to Government Code §54956. Notice shall also be posted at least twenty-four hours prior to the meeting in a publicly accessible location in accordance with the requirements of the Ralph M. Brown Act. Section 4: Notice of Meetings. Notice of all meetings will be given in accordance with the provisions of the Ralph M. Brown Act, Government Code §54950 et. seq. The noticing provisions in these Bylaws shall be subject to any amendments of the Ralph M. Brown Act. Section 5: Place of Meetings. All meetings of the corporation shall be held at such location in the City of Costa Mesa as may be determined by the Board. Section 6: Telephonic Appearance. Teleconferencing, as authorized by §54953 of the Ralph M. Brown Act may be used for all purposes in connection with meetings. All votes taken during a teleconferenced meeting shall be by roll call. If teleconferencing is used, the Board shall post 4 Bylaws of Costa Mesa Conference & Visitor Bureau April 2012 the agenda at all teleconference locations and conduct teleconference meetings in a manner that protects the statutory and constitutional rights of the parties or the public appearing before the Board. Each teleconference location shall be identified in the notice and agenda of the meeting, and each teleconference location shall be accessible to the public. During the teleconference, at least a quorum of the members of the Board shall participate from locations with the boundaries of the City of Costa Mesa. The agenda shall provide an opportunity for members of the public to address the legislative body directly pursuant to §54954.3 at each teleconference location. Section 7: Quorum. At any meeting of the Board, a majority of the members of the Board shall constitute a quorum. If less than a quorum is present at a meeting, a majority of the Directors present may adjourn the meeting from time to time without further notice other than announcement at the meeting, until a quorum shall be present. There shall be no voting by proxies or voting by absentia. ARTICLE VII OFFICERS Section 1: Offices Held. The officers of the corporation shall be a Chairperson, a Vice President, a Secretary, a Treasurer, and such other officers as the Board may from time to time designate. All officers shall be members in good standing of the Board. Any number of offices may be held by the same person. The officers of the Corporation shall also serve on the executive committee of the corporation. Section 2: Election of Officers. The officers of this corporation shall be chosen every other year by the Board and shall serve at the pleasure of the Board, subject to the rights of any officer under any employment contract. Section 3: Term. All officers shall be elected for a term of two (2) years or until their successors are elected and qualified. Section 4: Removal of Officers. Without prejudice to the rights of any officer under an employment contract, the Board may remove any officer with or without cause. Section 5: Resignation of Officers. Any officer may resign at any time by giving written notice to the Board. The resignation shall take effect on the date the notice is received or at any later time specified in the notice. Unless otherwise specified in the notice, the resignation need not be accepted to be effective. Any resignation shall be without prejudice to any rights of the corporation under any contract to which the officer is a party. Section 6: Vacancies in Office. A vacancy in any office because of death, resignation, removal, disqualification, or any other cause shall be filled in the manner prescribed by these Bylaws for normal appointments to that office. However, vacancies need not be filled on an annual basis. Section 7: Responsibilities of Chairperson. The Chairperson shall preside at all meetings and have such other powers and duties as the Board or these Bylaws may require. 5 Bylaws of Costa Mesa Conference & Visitor Bureau April 2012 Section 8: Responsibilities of Vice President. The Vice President shall assume the duties of the Chairperson in his or her absence and shall have such other powers and duties as the Board or these Bylaws may require. Section 8: Responsibilities of Secretary. The Secretary of the corporation shall have the following responsibilities: A. The Secretary shall keep or cause to be kept, at the corporation's principal office or such other place as the Board may direct, a book of minutes of all meetings, proceedings, and actions of the Board, of committees of the Board, and of any members' meetings. The minutes of meetings shall include the time and place that the meeting was held; whether the meeting was annual, general, or special, and if special, how authorized; the notice given; and the names of persons present at Board and committee meetings. B. The Secretary shall keep or cause to be kept, at the corporation's principal office, a copy of the Articles of Incorporation and Bylaws, as amended to date. C. The Secretary shall keep or cause to be kept, at the corporation's principal office or at a place determined by resolution of the Board, a record of the corporation's members, showing each member's name, address, business represented, and class of membership. D. The Secretary shall give, or cause to be given, notice of all meetings that these Bylaws require to be given. The Secretary shall keep the corporate seal, if any, in safe custody and shall have such other powers and perform such other duties as the Board or the Bylaws may require. E. The Secretary shall maintain, or cause to be maintained, the corporation's records in accordance with the requirements of the California Public Records Act, Government Code §6250 et seq. Section 9: Responsibilities of Treasurer. The Treasurer of the corporation shall have the following responsibilities: A. The Treasurer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and accounts of the corporation's properties and transactions. The Treasurer shall send or cause to be given to the Directors such financial statements and reports as are required to be given by law, by these Bylaws, by the BIA, or by the Board. The books of account shall be open to inspection by any Director at all reasonable times. B. The Treasurer shall deposit, or cause to be deposited, all money and other valuables in the name and to the credit of the corporation with such depositories as the Board may designate; shall disburse the corporation's funds as the Board may order; shall render to the President and the Board, when requested, an account of all transactions as Treasurer and of the financial condition of the corporation; and have such other powers and perform such other duties as the Board or these Bylaws may require. C. The Treasurer shall review monthly financial reports prepared by CVB staff. Section 10: Contracts with Directors. No Director of this corporation nor any other corporation, firm, association, or other entity in which one or more of this corporation's 6 Bylaws of Costa Mesa Conference & Visitor Bureau April 2012 Directors are Directors or have a material financial interest, shall be interested, directly or indirectly, in any contract or other transaction with this corporation unless: A. The material facts as to the transaction and such Director's interest are fully disclosed or known to the members and such contract or transaction is approved by the members in good faith, with any membership owned by any interested Director not being entitled to vote thereon; or B. The material facts regarding such Director's financial interest in such contract or transaction or regarding such common Directorship, officership, or financial interest are fully disclosed in good faith and are noted in the minutes or are known to all Board members before consideration by the Board of such contract or transaction, and such contract of transaction is authorized in good faith by a majority of the Board by a vote sufficient for that purpose without counting the vote of the interested Director. Section 11: Loans. The corporation shall not loan any money or property to, or guarantee the obligation of, any Director or officer of the corporation. The corporation may advance money to a Director or officer for reasonable business expenses, provided that the Director or officer is entitled to reimbursement. ARTICLE VIII COMMITTEES Section 1: Establishment. The Board, by resolution adopted by a majority of the Directors then in office, may create one or more committees, each consisting of two or more Directors, to serve at the pleasure of the Board. Appointments to committees of the Board shall be by majority vote of the Directors then in office. The Board may appoint one or more Directors as alternate members of such committee, who may replace any absent member at any meeting. Any such committee shall have all the authority of the Board, to the extent provided in the Board resolution, except that no committee may do the following: A. Fill vacancies on the Board or any committee of the Board; B. Fix compensation of the Directors for serving on the Board or any committee; C. Amend or repeal Bylaws or adopt new Bylaws; D. Amend or repeal any resolution of the Board that by its express terms is not so amendable or repealable; E. Create any other committees of the Board or appoint the members of committees of the Board; or F. Expend corporate funds to support a nominee for Director if more people have been nominated for Director than can be elected; or G. With respect to any assets held in charitable trust, approve any contract or transaction between this corporation and one or more of its Directors or between this corporation and an entity in which one or more of its Directors have a material financial interest, subject to the approval provisions of Corporations Code §5233(d)(3). Section 2: Executive Committee. Pursuant to Article VII of these Bylaws, the Board shall appoint two or more Directors of the corporation, including the officers, to serve as the executive committee of the Board. The executive committee, unless limited by a resolution of the Board, 7 Bylaws of Costa Mesa Conference & Visitor Bureau April 2012 shall have and may exercise all the authority of the Board in the management of the business and affairs of the corporation between meetings of the Board; provided, however, that the executive committee shall not have the authority of the Board in reference to those matters enumerated in Article VII. All actions of the executive committee shall be reported to and ratified by the Board at the next duly scheduled Board meeting. The President may call special meetings of the Executive Committee. Section 3: Meetings and Actions of Committees. Meetings and actions of committees shall be governed by, held, and taken under the provisions of these Bylaws concerning meetings and other Board actions, except that the time for general meetings of committees and calling of special meetings of committees may be set either by Board resolution, or if none, by resolution of the committee. Notice of committee meetings will be given in accordance with the provisions of the Ralph M. Brown Act. Minutes of each meeting shall be kept and shall be filed with the corporate records, and in accordance with the provisions of the California Public Records Act. The Board may adopt rules for governance of any committee as long as the rules are consistent with these Bylaws. If the Board has not adopted rules, the committee may do so. ARTICLE IX INDEMNIFICATION AND INSURANCE Section 1: Indemnification. A. To the fullest extent permitted by law, this corporation shall indemnify its Directors and officers, and may indemnify employees and other persons described in the Corporations Code, including persons formerly occupying such positions, against all expenses, judgments, fines, settlements and other amounts actually and reasonably incurred by them in connection with any "proceeding," as that term is used in the Corporations Code, and including an action by or in the right of the corporation, by reason of the fact that the person is or was a person described in the Corporations Code. "Expenses," as used in these Bylaws, shall have the same meaning as in the Corporations Code. B. On written request to the Board by any person seeking indemnification under the Corporations Code, the Board shall promptly decide under that code whether the applicable standard of conduct set forth has been met, and if so the Board shall authorize indemnification. C. To the fullest extent permitted by law and except as otherwise determined by the Board in a specific instance, expenses incurred by a person seeking indemnification under these Bylaws in defending any proceeding covered by these Bylaws shall be advanced by the corporation before final disposition of the proceeding, on receipt by the corporation of an undertaking by or on behalf of that person that the advance will be repaid unless it is ultimately found that the person is entitled to be indemnified by the corporation for those expenses. Section 2: Insurance. This corporation shall have the right, and shall use its best efforts, to purchase and maintain insurance to the full extent permitted by law on behalf of its officers, Directors, employees and other agents, to cover any liability asserted against or incurred by any 8 Bylaws of Costa Mesa Conference & Visitor Bureau April 2012 officer, Director, employee, or agent in such capacity or arising from the officer's, Director's, employee's, or agent's status as such. ARTICLE X RECORDS Section 1: Maintenance. This corporation shall keep all of the following records, either in written form or in any other form capable of being converted into clearly legible tangible form or in any combination of the two: A. Adequate and correct books and records of account; B. Minutes of the proceedings of its members, Board and committees; and C. A record of each member's name, address, and class of membership. Section 2: Inspection by Directors. Every Director shall have the absolute right, at any reasonable time, to inspect the corporation's books, records, and documents of every kind, and to inspect the physical properties of the corporation. The inspection may be made in person or by the Director's agent or attorney. The right of inspection includes the right to copy and make extracts of books, records, and documents of every kind. Section 3: Articles and Bylaws. This corporation shall keep, at its principal office, the original or a copy of the Articles of Incorporation and Bylaws, as amended to the current date, that shall be open to inspection at all reasonable times during office hours. Section 4: Annual Reports. The Secretary of the corporation shall prepare and submit, or cause to be prepared and submitted, the following annual reports. The Secretary shall keep, or cause to be kept, copies of all annual reports with the corporation's records. The two annual reports may be combined into one all-inclusive document. A. BIA Annual Report. The BIA annual report will be prepared and submitted in accordance with the provisions of Streets and Highways Code §36533. B. CVB Annual Report. The CVB annual report shall be prepared within 120 days after the end of the corporation's fiscal year. This section shall not apply if the corporation receives less than $10,000 in gross revenues or receipts during the fiscal year. The report shall contain the following information in appropriate detail: 1. A balance sheet as of the end of the fiscal year, an income statement, and statement of cashflows for the fiscal year, accompanied by an independent accountant's report, or if none, by the certificate of an authorized officer of the corporation that they were prepared without audit from the corporation's books and records; 2. A statement of the place where the names and addresses of current members are located; and 3. Any other information required by these Bylaws or the Board. Section 5: Annual Statement. As part of the annual report to all members, or as a separate document if no annual report is issued, the corporation shall annually prepare and mail, deliver or send by electronic transmission to its Directors a statement of any transaction or 9 Bylaws of Costa Mesa Conference & Visitor Bureau April 2012 indemnification of the kinds in subparagraph B below within 120 days after the end of the corporation's fiscal year. A. The statement shall include: 1. A brief description of the transaction; 2. The names of interested persons involved and their relationship to the corporation; 3. The nature of interested persons in the transaction; 4. The amount of the interested persons' interest, except that in a partnership in which such person is a partner, only the partnership interest need be stated. B. Transactions included in the statement shall be those transactions: 1. To which the corporation or its subsidiary was a party; 2. Which involved more than $50,000 or was one of a number of such transactions with the same person involving, in the aggregate, more than $50,000; and 3. In which either of the following interested persons had a direct or indirect material financial interested (a mere common Directorship is not a material financial interest): a. Any Director or officer of the corporation; b. Any holder of more than 10 percent of the voting power of the corporation. ARTICLE XI OPERATIONS AND ADMINISTRATION Section 1: Fiscal Year. The fiscal year of the corporation shall begin on July 1 and end on June 30 of each year. Section 2: President. The Board shall employ a President of the corporation. The President shall: A. Serve as the executive officer of the corporation; B. Be charged with the general supervision and management of the corporation's affairs and staff; C. Advise the Board of Directors; D. Attend all meetings of the Board and executive committee; E. Serve as an ex -officio member of all committees; F. Have the authority to counter -sign checks; and G. Act as the corporation's agent for service of process. Section 3: Funds. All funds of the corporation shall be deposited in such banks, trust companies, or other reliable depositories as the Board from time to time may determine. All checks, drafts, endorsements, notes and evidence of indebtedness of the corporation shall be signed by such officers or agents of the corporation and in such manner as the Board may determine from time to time. Endorsements for deposits to the credit of the corporation shall be made in such manner as the Board may determine from time to time. 10 Bylaws of Costa Mesa Conference & Visitor Bureau April 2012 Section 4: Contracts. The Chairperson, President or any other officer or agent specifically authorized by the Board may, in the name of and on behalf of the corporation, enter into those contracts or execute and deliver those instruments that are specifically authorized by the Board. Without the express and specific authorization of the Board, no officer or agent may enter into any contract or execution or deliver any instrument in the name of or on behalf of the corporation. Section 5: Brown Act Compliance. To the extent that Government Code §54952(c) shall require the corporation to be subject to the open meeting requirements of the Ralph M. Brown Act, then the Board will comply with the provisions of Government Code §54950 through and including §54961. To the extent that any provisions of these Bylaws are inconsistent with the Ralph M. Brown Act, the provisions of said Act shall prevail. In the event the corporation does not meet the requirements of Government Code §54952(c), then the Board will not endeavor to meet the requirements of the Brown Act. ARTICLE XII AMENDMENT Except as otherwise provided herein, and subject to the power of Directors to amend or repeal the Bylaws, these Bylaws may be altered, amended or repealed and new Bylaws may be adopted by an affirmative vote of a majority of the Directors present at any regular or special meeting, a quorum being assembled, provided that written notice of such meeting, setting forth in detail the proposed revision(s) and explanation(s) therefore, be given not less than 7 days prior to such meeting. CERTIFICATE OF SECRETARY I, Robert Spoto, certify as follows: 1. I am the duly elected and acting Secretary of Costa Mesa Conference & Visitor Bureau, a California Nonprofit Mutual Benefit Corporation; 2. That these Bylaws, consisting of 11 pages, inclusive, are the Bylaws of the corporation as adopted by the Board of Directors on 2012; 3. That these Bylaws have not been amended or modified since that date. Robert Spoto, Secretary 11 Bylaws of Costa Mesa Conference & Visitor Bureau April 2012 Attachment 5 2016-17 Community -Wide Marketing and Support Budget The events and programs below support the goals of bringing tourism to the community and increasing room night stays at local hotels: Anaheim Resort Transportation Shuttle Bus $ 25,000 City of the Arts Master Plan for Public Art $ 35,000 Community Sponsored Sister -City Program $ 20,000 Summer Concerts in the Park Support $ 10,000 Costa Mesa Community Run Support $ 10,000 Snoopy House Holiday Event $ 20,000 International Conference of Shopping Center Booth - Marketing and Branding to Potential New Businesses $ 10,000 Mayor's Celebration Sponsorship $ 10,000 Community Promotional Materials - Giveaways, Apparel, Maps, etc. $ 24,000 Total $ 164,000