Fort Smith Convention Center posts $1.19 million loss in 2021

The Fort Smith Convention Center operated at a loss again in 2021 thanks in some part to the late 2021 COVID resurgence, but an official with the relatively new third-party management company has hopes for a profitable 2022 and years to come.

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

“We missed our budget by $280,000,” Mulherin said. “Our profit was down $537,000. It’s not something we can hide, not something we can sugarcoat. But at the end of the day we were looking at meetings to come back. We were looking at big business in October that would have certainly been a part of this, and it just didn’t happen.”

Overall profits for the year were $297,421 versus a budget of $835,536, with a variance of  $537,114 less than expected. Overall expenses for the year came in at $1,417,387 versus budgeted expenses of $1,673,994, giving a variance of $256,607 less than expected.

“I am truly proud of our reduced expenses,” Mulherin said. “We were able to make the building be a showcase and still reduce our expenses.”

Mulherin said the convention center was on pace to make budget through May and June of last year, but “when the second wave of COVID came out, we started having to shift events, shift the dates.”

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

OVG agreed to invest up to $500,000 to put a full-service commercial kitchen in the convention center. They will recoup that expense through $50,000 annual installment payments for 10 years that would come from the facility’s operating fund. That rate would be prorated over the number of years the agreement was in effect if the contract is terminated before 10 years, the agreement states. OVG also will make a $25,000 investment for an initial “Solicitation of Events” fund.

After taking over the convention center operations in 2021, OVG purchased Spectra Management, making it second in the business of U.S. venue management, Mulherin said. The company is now OVG360.

OVG360 invested roughly $300,000 to put a full-service commercial convention in 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.

“Even though we didn’t have the financial outcome of what 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 prepared for this year (2022),” he said. “We finished the year on a strong note.”

COVID SETBACKS
Mulherin said 2021 presented a unique situation with the COVID-19 pandemic lingering during the year. Things were looking good as the year started, but a rise in the virus later in the year set things back again.

“But it also gave our team the ability to do a lot of really good things that were needed. In the last year the convention center did a lot of growing and the staff did a lot of growing,” he said. “The facility needed a lot of attention. We were able to give it.”

Staff was able to do everything from cleaning to looking at new ways to conserve energy. They also created new break rooms for staff.

“We’ve looked at lighting systems. One project late in the year was rewiring 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 large association group at the convention center – the Arkansas Department of Finance and Administration. The group was scheduled for October.

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

‘GOING TO DO BETTER’
Mulherin said the staff is now able to showcase “who we are from a conventions and meetings destination” standpoint, and the Fort Smith Convention Center is able to compete with Rogers, Little Rock and even Hot Springs.

The center had roughly 100 events in 2021, 30 of those were city events before the city started holding meetings at the Blue Lion Downtown. This year, they are budgeted for 146 events. As of the first of March, they had 80-85 events confirmed for the year.

“We still have three quarters of a year to go. 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’s going to be a huge success.”

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

“Financially, we’ve got to do better. We’re going to do better,” he said.