For the fifth year in a row, the Fort Smith Convention Center had record revenue, the annual report presented to the Fort Smith Board of Directors at their Tuesday (Feb. 12) study session indicated.
Starting in 2014, the convention center has consistently brought in revenues of $700,000 or more annually, said Tim Seeberg, general manager. In 2018, revenues were higher than ever, reaching $833,546, a 5.8% increase from 2017’s revenue of $788,713, Seeberg told the board.
“I believe we’re going to continue to grow in revenue. I foresee we’re going to have revenues above $800,000 each year as long as we keep the building up and maintain the asset,” he said.
The number of events grew in 2018 to 264 from 248 in 2017.
Of the 2018 revenue, $734,131 was from convention center rental and $99,415 was from beverages, catering and concessions. The beverage revenue was down 6% from 2017, Seeberg said, noting staff was working to raise beverage sales in 2019. Though revenues continue to grow, they are not surpassing expenditures. In 2018, the convention center had $1.6 million in expenses, up 10.2% from 2017’s almost $1.5 million.
“Building repairs expenses increased $28K over 2017 due to a variety of issues, such as chiller motor failures and unexpected roof damage repairs,” Seeberg said.
Planned capital expense in 2018 exceeded 2017 capital expenditures by more than $58,000, a portion of which was for the first phase of a carpet replacement project in the convention center. The second phase of the carpet replacement, in the south corridor to the south rotunda, which is much smaller area that that completed in 2017, will be completed in 2019 with a cost of $30,000. The third phase — to include the performing center and its lobby — is scheduled for 2020 at a cost of $66,000. Other contributing factors to the increased expenses in 2019 were equipment rentals increased $4,000 due to the need to rent equipment for building repairs and for events.
“These equipment rentals are recovered in marked up revenues,” the report said.
Also contract labor increased $34,000 in 2018 and staff overtime expense increased $3,600.
“These increases are tied to the continual need to keep up with building conversions between events as well as facility upkeep and cleanliness demands,” noted the report.
With the increase in expenses in 2018, came an increase in subsidy from the city. In 2018, the city subsidized the convention center $775,448, up 15.6% from the $670,845 city subsidy in 2017.
Seeberg noted although the convention center is in need of city subsidy, the business and events hosted at the convention center result in an economic impact to the region. Looking at only a selected 26 events — all of which were multiple day events with many out of town visitors, the economic impact to the region was almost $9 million with $229,882 in Fort Smith city sales tax paid, he said.
“That sounds like a pretty good investment,” said Director Neal Martin, at-large Position 7.
Ward 1 Director Keith Lau agreed, saying it’s worth it to the city to keep the convention center.
Feedback from customers was positive in 2018, with 93% of those completing a survey after their event saying their expectations were met or exceed. However, only 30 report cards, 14%, were received through the year, Seeberg said. With report cards sought for 220 events, the response rate was less than 2%.
Report cards are emailed to every customer who makes a rental payment. There were 220 report cards issued in 2018. The number of report cards completed dwindled from years past when paper satisfaction surveys were mailed to past customers, Seeberg said, noting staff would be working to increase the number of surveys returned in order to have a better picture of customer experience and satisfaction.
Along with a picture of how the convention center fared in 2018, Seeberg gave directors a capital improvement plan for next several years. That plan calls for $67,500 in capital improvements in 2019, of which $30,000 is for the carpet replacement and $25,000 is for theater lighting backup generator replacement, and $338,000 in capital improvements in 2020, which includes $75,000 chair replacement.
Event chairs are going on 19 years old, Seeberg said, noting the chairs have a lifespan of 10 to 15 years. At least a dozen of the convention center’s 5,500 chairs are repaired each week because of the deteriorated state. All the chairs need to be replaced, at a cost of around $100 each, he said.
“We are failing our customers with the chairs. They are below industry standards,” he said.