2019 Budget Overview Prepared for City of Houston

2019 Budget Overview Prepared for City of Houston Council Committee on Budget & Fiscal Affairs Brenda Bazan Chief Executive Officer Frank Wilson Chief Financial Officer

2018 Accomplishments Projecting all-time high revenues in 2018 Venue Revenue Food & Beverage Revenue $10. 6 M $17. 2 M KHOU on Avenida Opens FUTURE BOOKINGS 2019 2 nd Best Revenue Year $102 M The Rustic Opening Wortham Reopening Exhibition partnership 2020 series bringing International Congress & Convention Association World Petroleum Congress 2023 2024 Houston’s diverse NCAA Final Four Men’s Basketball Championship College Football Playoffs culture programs exploring 2

2018 Notable Conferences FIRST Robotics Attendees 2018: 30, 655 2017: 29, 468 Room Nights 2018: 17, 031 2017: 14, 577 Booked for 2019 2020 2021 T 2022 T 2023 T AKA Boulé Attendees: 22, 973 Room Nights: 24, 372 Economic Impact¹: $33. 2 M Grace Hopper Celebration Attendees Economic Impact¹: 2018: 21, 780 $13. 9 M 2016: 14, 537 2015: 12, 052 Exhibitors: 2018: 426 Room Nights 2016: 326 2018: 36, 078 2015: 217 2016: 29, 894 2015: 19, 141 ¹DMAI Event Impact Calculator 3

Memorial Weekend Effect 50, 778 ATTENDEES 47 STATES 18 COUNTRIES 300+ CREDENTIALE D OPTED IN FOOD & BEVERAGE SALES (GROSS) MEDIA IMPRESSIONS MEDIA 40, 000+ SUBSCRIBERS $500, 114 25+ MILLION $160, 466 73, 000+ SOCIAL MEDIA FOLLOWERS/FRIENDS 600+ VOLUNTEERS PARKING REVENUE 63 MEMBERS OF LOC NET REVENUES¹ TO HFC/GHCVB $1, 172, 711 ¹ Includes GRB Rent & Services, Hilton-Americas, GRB Food & Beverage, Parking, Event Profitability, HOT Revenue 4

Harvey Project Progress Report Wortham Theater District Garages 46. 3% Complete 5 75. 3% Complete

2019 Budget Process Revenue and Expense Targets • Budget process involved projecting both 2018 year end & 2019 revenues. • HOT assumptions were based on outside consultants’ view of the Houston and US economies. In 2019 we assumed 4. 5% growth over 2018 projected. • Hilton revenue assumed to go down 6. 6%, based on the room displacement during the refresh. • Parking assumed to return to pre. Harvey levels, an increase of 20%. 6

2019 Budget Process Revenue and Expense Targets • Expense targets were based on an average of 2015, 2016 & 2017 actual spend by department. • The impact of special events like Harvey, Super Bowl and Final Four were removed from the average. • Department heads did a great job of meeting targets by prioritizing and making tough choices. 7

2018 Projection How We Expect to End the Year We expect to finish the year $2. 7 M in Revenues over Expenses for Operations, instead of the $8. 1 M budgeted draw on reserves because: 1. Department heads belt tightening 2. Better than expected performance at the Hilton, Avenida garages and GRB 8

2019 Budget Highlights TOTAL REVENUES AND EXPENSES 2018 Projection 2019 Budget Variance TOTAL REVENUES $181, 448, 311 $188, 021, 901 $6, 573, 590 TOTAL EXPENSES 178, 703, 388 187, 684, 488 8, 981, 100 TOTAL REVENUE LESS EXPENSES $2, 744, 923 $337, 413 -$2, 407, 510 9

Houston First Corporation CY 19 Budget Operating Revenues 2017 Actual 2018 Budget 2018 Projection 2019 Budget 2018 Proj. vs 2019 Budget Variance Venue Revenue $ 50, 059, 176 $ 63, 036, 297 $ 72, 979, 774 $ 71, 984, 636 Parking $ 16, 358, 910 $ 17, 290, 855 $ 16, 781, 233 $ 20, 154, 270 $ 3, 373, 037 Miscellaneous Operating Revenues $ 945, 315 $ 1, 193, 152 $ 825, 403 $ 993, 000 $ (995, 139) $ 167, 597 $ 67, 363, 401 $ 81, 520, 304 $ 90, 586, 410 $ 93, 131, 906 $ 2, 545, 495 10

Houston First Corporation CY 19 Budget Operating Expenses Personnel Advertising & Promotion Travel, Promotion, and Events Facility Maintenance Food and Beverage Security Utilities Parking Janitorial Insurance Lease Expense Consulting Supplies Fees & Services Computer Services Legal Expense Other Operating Expenses Approved Positions¹ $ 4, 493, 298 $ 5, 580, 915 $ 3, 265, 503 $ 5, 339, 687 $ 3, 481, 734 $ 3, 224, 277 $ 3, 397, 391 $ 1, 513, 072 $ 1, 187, 383 $ 1, 129, 134 $ 424, 081 $ 829, 267 $ 84, 630, 267 2018 Budget $ 28, 780, 564 $ 9, 695, 354 $ 5, 479, 205 $ 8, 746, 847 $ 9, 714, 004 $ 5, 131, 512 $ 6, 128, 380 $ 4, 113, 628 $ 5, 841, 527 $ 2, 845, 495 $ 2, 492, 100 $ 4, 259, 452 $ 1, 790, 138 $ 1, 116, 375 $ 1, 293, 328 $ 460, 000 $ 1, 119, 640 $ 99, 007, 549 2018 Projection $ 26, 858, 489 $ 8, 911, 177 $ 4, 239, 161 $ 7, 773, 293 $ 11, 309, 572 $ 4, 376, 916 $ 5, 538, 389 $ 3, 495, 405 $ 5, 998, 977 $ 2, 186, 971 $ 3, 944, 690 $ 2, 941, 542 $ 1, 459, 384 $ 988, 283 $ 1, 212, 342 $ 758, 000 $ 712, 145 $ 92, 704, 735 2019 Budget $ 27, 619, 283 $ 8, 120, 836 $ 4, 590, 188 $ 9, 059, 015 $ 12, 860, 697 $ 4, 845, 521 $ 5, 658, 258 $ 3, 592, 880 $ 6, 646, 563 $ 2, 319, 447 $ 1, 506, 800 $ 3, 156, 960 $ 1, 818, 228 $ 1, 047, 025 $ 1, 273, 798 $ 660, 000 $ 866, 919 $ 95, 642, 418 2018 Proj. vs 2019 Budget Variance $ 760, 794 $ (790, 341) $ 351, 027 $ 1, 285, 721 $ 1, 551, 125 $ 468, 605 $ 119, 869 $ 97, 475 $ 647, 586 $ 132, 476 $ (2, 437, 890) $ 215, 418 $ 358, 844 $ 58, 742 $ 61, 456 $ (98, 000) $ 154, 774 $ 2, 937, 683 223 249 231 18 2017 Actual $ 27, 347, 221 $ 9, 821, 005 $ 5, 208, 432 $ 8, 387, 868 ¹ Variance in Approved Positions is 2018 Budget vs. 2019 Budget 11

Houston First Corporation CY 19 Budget Non-operating Revenues Hotel Occupancy Tax (Current & Delinquent) Contributions Net Available Pledged Rev. Transfer Interest Income Non Operating Revenue 2017 Actual 2018 Budget 2018 Projection 2018 Proj. vs 2019 Budget Variance 2019 Budget $ 84, 508, 382 $ 87, 000 $ 89, 918, 591 $ 94, 000 $ 4, 081, 409 $ 5, 000 $- $- $- $ 739, 979 $ 675, 744 $ 943, 310 $ 889, 995 $ (53, 315) $ 85, 253, 361 $ 87, 675, 744 $ 90, 861, 901 $ 94, 889, 995 $ 4, 028, 094 12

Houston First Corporation CY 19 Budget Non-operating Expenses 2017 Actual Sponsorship Expense 2018 Budget 2019 Budget $ 11, 132, 834 $ 7, 157, 650 $ 6, 373, 693 $ 6, 049, 720 Contingency Capital Spending 2018 Projection $ 2, 300, 000 2018 Proj. vs 2019 Budget Variance $ (323, 973) $ 2, 500, 000 $ 6, 960, 664 $ 2, 007, 997 $ 8, 099, 376 $ 1, 564, 485 $ (6, 534, 891) Debt Service $ 42, 401, 331 $ 46, 017, 338 $ 50, 453, 275 $ 60, 213, 856 $ 9, 760, 581 COH Contractual Obligations $ 17, 584, 302 $ 17, 727, 261 $ 18, 366, 564 $ 19, 464, 009 $ 1, 097, 445 Hotel Tax Refunds Non Operating Expense $ 2, 049, 846 $ 3, 096, 213 $ 2, 705, 745 $ 2, 250, 000 $ (455, 745) $ 80, 128, 978 $ 78, 306, 459 $ 85, 998, 653 $ 92, 042, 070 $ 6, 043, 417 13

Capital Projects 2019 CAPITAL PROJECTS • $37 M Hilton Refresh • $14. 8 M for capital for other facilities – life / safety, operational risk LONGER TERM PROJECTS • $125 M AIG Mortgage Loan Maturity 2020 • $20 M GRB Loading Dock: estimated start 2021 - 2022 • $20 M Harvey Mitigation: estimated start late 2019 - 2020 14

Total Debt Outstanding and Debt Service Expense Millions Bank Credit Facility¹ $125, 0 Mortgage Loan (AIG) $125, 0 $70 $60, 2 $60 $50, 5 $50 TOTAL DEBT OUTSTANDING² $45, 0 $45, 5 2016 Actual 2017 Actual $40 $830. 8 M $30 Pension Bonds $3, 5 Revenue Bonds¹ $577, 3 $20 $10 $0 ¹ Tax Exempt ² Includes the proposed $50 M in 2019 15 2018 Actual 2019 Budget

$300 • $66. 4 M is bond ordinance restricted and included in sinking funds $250 • $5. 4 M Hilton Reserves $200 $43 400, 0 $100, 4 $150 $100 $50 16 л 18 ию в 18 ян л 17 ию в 17 ян л 16 ию в 16 ян л 15 ию в 15 ян л 14 ию в 14 ян л 13 ию в 13 $0 ян Thousands Cash Balances / Reserves