The Fort Smith Board of Directors agreed Tuesday (June 25) for Fort Smith City Administrator Carl Geffken to continue talks with the Oak View Group about the possibility of outside management of the Fort Smith Convention Center.
Shura Garnett, senior vice president of convention center with the Oak View Group, met with Geffken on April 17 in order to introduce him to OVG Facilities and what it could do for the convention center. According to company provided information, OVG Facilities provides “venue owners and operators with customized services that addresses the specific needs of their entertainment, sports, performing arts, conference and expo, civic, and city venues.” The company provides strategic planning and consulting services as well as private management of public facilities.
“Private management is when the operation and management of a publicly-owned facility is transferred to that of a privately-owned organization, which specializes in a comprehensive scope-of-services that help make the venue more profitable, efficient, and successful. Municipalities, universities, and private organizations which choose to privatize their venues do so to remain competitive with other larger cities and institutions whose venues are professionally managed,” information presented at the study session said.
After their initial meeting, Garnett summarized the convention center as needing to replace the carpet rolls that can be put down over the concrete floors in the exhibit halls as needing to be replaced by carpet squares that are more cost-effective to replace and easier to place and remove, to add a pulley system with drapes and suspendable lighting so exhibit halls can be transformed into elegant ballrooms, and to convert the facility’s warming kitchen into a full-service kitchen.
“Obviously, the lack of onsite exclusive food and beverage service has a large impact on the revenues, but it is likely that discounting, rental pricing and service rates all need to be reviewed with a comp set analysis done to determine where adjustments need to be made,” Garnett said in a report on the meeting.
The convention center’s warming kitchen includes a dishwasher, hood and some warming boxes. There is a storage room that opens into the existing space.
“The two combined would be sufficient for a small efficient kitchen and small wares storage. We need to get an estimate of what it would take financially to build out a full kitchen,” she said. “Based off the estimated $500,000 annually that the center generates in gross catering (derived from using 18% commission that nets about $90,000 to the venue) and the ability to increase net profit margin and increase events and attendance, the investment to build out a kitchen would likely pay for itself over a two to three year period.”
The group also wants to discuss the possibility of managing the Fort Smith Riverfront Amphitheater. Sims Hinds, senior vice president of development, said the amphitheater could use a permanent backstage area that would accommodate more acts in the space. He said the goal would be to increase the number of events at the amphitheater and the convention center in order to raise the profitability of both.
With the right contract with the city, OVG would be willing to invest in the properties as they have in some of the other 52 facilities they now manage, Hinds said. OVG would also work to promote all events in the venues.
“I need success stories. I would not suggest this if I didn’t think we could do that here,” Garnett said. “At my first blush look, I think you are missing the boat in some areas, and I think we can come in and help you with those.”
In 2018, the convention center had $1.6 million in expenses, up 10.2% from 2017’s almost $1.5 million. It averages $800,000 in loss each and is funded by the city’s general fund. The number of events grew in 2018 to 264 from 248 in 2017. Of 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.
Tim Seeburg, general manager of the convention center, and Claude Legris, executive director of the Fort Smith Convention and Visitors Bureau, said the idea of a private management firm was just in the talking stage but agreed that the concept of bringing on board a dedicated food and beverage source is a good idea.
“We have told them (Fort Smith Board) every year for five years they need to build a cooking kitchen to create our own in house catering and then you would see a major uptick in revenues,” Legris said.