Fort Smith Convention Center posts $1.19 million loss in 2021

The Fort Smith Convention Center again operated at a loss in 2021 thanks in part to the resurgence of COVID in late 2021, but an official at the relatively new third-party management company is hoping for a profitable 2022 and beyond.

Marc Mulherin, general manager of the convention center, said the facility had an overall loss of $1.19 million compared to the loss of $839,000 budgeted for the year.

“We missed our budget by $280,000,” Mulherin said. “Our profit decreased by $537,000. It is not something we can hide, nor something we can sugarcoat. But in the end, we were looking for meetings to come back to. We were looking at big companies in October that would definitely have been part of that, and it just didn’t happen.

Overall profit for the year was $297,421 against a budget of $835,536, with a variance of $537,114 less than expected. Overall expenses for the year were $1,417,387 against budgeted expenses of $1,673,994, a variance of $256,607 less than budgeted.

“I’m really proud of our reduced expenses,” Mulherin said. “We were able to make the building a showcase while reducing our expenses.”

Mulherin said the convention center was close to budgeting through May and June of last year, but “when the second wave of COVID came out, we started having to move events, change the dates”.

CHANGE OF MANAGEMENT, INVESTMENTS
The Fort Smith Board of Directors has unanimously approved a contract for Los Angeles-based Oak View Group (OVG) to manage the Fort Smith Convention Center from January 1. The contract has an initial term of 3 years, with options for up to seven subsequent one-year terms. The city will pay an administration fee of $8,500 per month, subject to annual CPI adjustment, plus a commission on food and beverage sales. There will also be performance and commission incentives on sales.

OVG has agreed to invest up to $500,000 to install a full-service commercial kitchen in the convention center. They will recoup this expense through annual installments of $50,000 for 10 years from the facility’s operating fund. This rate would be pro-rated based on the number of years the agreement was in effect if the contract is terminated before 10 years, the agreement says. OVG will also invest $25,000 for an initial “event solicitation” fund.

After taking over convention center operations in 2021, OVG purchased Spectra Management, making it the second-largest venue management company in the United States, Mulherin said. The company is now OVG360.

OVG360 invested approximately $300,000 to host a full-service business convention at the Fort Smith Convention Center and finalized the in-house food and beverage program. That program was used for events in November and December, Mulherin said during his annual report on the convention center to the Fort Smith board of directors.

“Even though we didn’t have the financial result we wanted at the end of the year, we were able to grow our team. We were able to do a lot of exciting things internally to make sure we were ready for this year (2022),” he said. “We ended the year on a high note.”

COVID IMPACTS
Mulherin said 2021 presented a unique situation with the COVID-19 pandemic lingering throughout the year. Things looked good at the start of the year, but an increase in the virus later in the year set things back.

“But it also gave our team the ability to do a lot of really good things that were needed. Over the past year, the convention center has grown a lot and the staff has grown a lot,” he said. “The installation needed a lot of attention. We were able to give it away. »

Staff were able to do everything from cleaning to finding new ways to save energy. They have also created new rest rooms for staff.

“We looked at the lighting systems. A project at the end of the year was to rewire some of the lighting,” he said.

Mulherin said the convention center received a big win in 2021 and was able to secure a contract for its first major association group at the convention center — the Arkansas Department of Finance and Administration. The band was scheduled for October.

“This group is worth $40,000 to $50,000 in food and beverage revenue at the convention center as well as 1,000 group room nights at our hotel partners. Taken together, this could provide the City of Fort Smith with over $1 million in economic benefits,” Mulherin said. “Unfortunately, due to COVID conditions, the band has moved their event to October 2022. This event will have a huge economic impact for the city.”

‘WILL DO BETTER’
Mulherin said staff are now able to show “who we are from a convention and meeting perspective,” and the Fort Smith Convention Center is able to compete with Rogers, Little Rock and even Hot Springs. .

The center held about 100 events in 2021, 30 of which were municipal events before the city began hosting meetings at the Blue Lion Downtown. This year they are budgeted for 146 events. As of March 1, they had 80-85 confirmed events for the year.

“We still have three quarters of a year left. We are going to be a convention center that books during the year for the year,” he said. “If we get to 130-140 this year, it will be a huge success.”

Mulherin said he thinks this year will be much better than last and is excited about the future of the convention center.

“Financially, we have to do better. We will do better,” he said.

Comments are closed.