The Fort Smith Convention Center had a sixth year of record revenue generated, the annual report presented to the Fort Smith Board of Directors at their Tuesday (June 9) study session indicated. But the numbers will drop drastically in 2020.
The convention center brought in $912,661 in total revenue in 2019, a 9.49% increase from the $833,546 generated in 2018, said Tim Seeberg, general manager. This included $775,589 in rental revenues, up 5.92% from 2018, and $135,074 in revenue from beverage, concession and catering, up 35.84% from 2018.
Two rap concerts early in the year brought in between $30,000-$40,000 each, Seeberg said, noting that the Moneybagg Yo concert in April 2019, brought in $35,000. The number of events in 2019 decreased 3.78% from 2018, going from 264 to 254, but Seeberg noted the events were better “quality” and brought in more revenues.
Out-of-town-dollar impact on the Fort Smith economy from the 2019 convention center events is estimated at $7.296 million, which generated $189,700 for the city through the city sales tax, Seeberg said. Convention center expenses also rose marginally in 2019. Expenses last year came in at $1.611 million, up 0.13% from the $1.608 million in 2018.
“With the overall expenses increasing by only a fraction and almost 10% revenue increase in 2019 along with overall tightening of the budget, we were able to reduce the operating subsidy (from the city) by $77,000, almost 10%,” Seeberg said.
City Director Neal Martin noted that the convention center is a loss leader for the city but that the losses come back to the city in forms of sales tax and economic impact.
“I think that is important for people to hear. … We spend a little money to generate economic activity. And that’s what is happening here. You look on the budget, and it shows we are subsidizing it. People look at that and wonder why we are subsidizing the convention center, but you’ve got to look at that economic impact,” Martin said.
Even though the convention center needed $77,000 less in subsidized help from the city in 2019, the city still budgeted $777,000 to the center. What wasn’t used went into the convention center’s fund balance. The center now has approximately $750,000 in its reserve account, Seeberg said.
Things do not look as rosy for 2020. Because of the COVID-19 pandemic, the convention center was closed from March 17 to May 31. During that time, 43 events were cancelled and 19 were rescheduled for a loss to the convention center of almost $250,000. Until Phase 2 and later of reopening are approved in Arkansas, more events will be canceled, Seeberg said.
“We are losing most of July,” he said.
The convention center has cut $270,000 from its 2020 budget already and is looking at the possibility of some furloughs, but Seeberg said it looks like the convention center will need an extra $100,000 in subsidy this year.
Claude Legris, director of the Fort Smith Convention & Visitors Bureau, said the hospitality industry in Fort Smith is hurting even more than the convention center and that will have a negative impact on the Fort Smith’s economy and sales tax raised for the city.
“Now we are seeing a demonstration of it (economic impact of the convention center) going backwards from the impact of the building not being (open) and not having people in town, the impact it has on hotels and restaurants,” Legris said.