Durham convention center deficit down to $104K

Feb. 07, 2014 @ 06:49 PM

The Durham Convention Center recorded a $104,069 operating deficit in fiscal 2012-13, a drop of 93 percent from its peak shortfall three years before, officials said.

Its governing board is “very pleased” with Global Spectrum, the Philadelphia company that the city and county hired in 2011 to manage the downtown facility, said Patrick Byker, the Durham lawyer who chairs the board.

Byker and other officials briefed the City Council on the results Thursday, almost two years to the day after it and the County Commissioners controversially voted to replace the center’s former operator, Shaner Hotels.

A fiscal 2009-10 operating deficit of $1.4 million played a big part in that decision, as the city and county normally split the bill for the convention center’s shortfall, spending taxpayer dollars to cover it.

Global Spectrum got the nod after promising to knock the deficit down to $720,000.

Once in charge, it bettered its promises. The center recorded a $297,223 shortfall in fiscal 2011-12, Global’s first full year in the driver’s seat.

Byker acknowledged that the new numbers are likely an anomaly, as the convention center did an unusually large amount of business in fiscal 2012-13 with Duke University.

The university’s student union, the Bryan Center, was closed for renovations for much of the year. Because of that, Duke wound up sending more than $700,000 worth of bookings to the convention center, versus the $250,000 or so officials expect from it going forward, he said.

But while the fiscal 2013-14 deficit will be higher, it should stay “on budget” in the $350,000 range, Byker said in answer to a question from Councilman Eugene Brown.

Banquets and meetings were the backbone of the center’s business, accounting for about two-thirds of its net revenue if only about a third of the people who attended events there.

The center’s general manager, Jennifer Noble, said about 90 percent of its business comes from the local market.

Officials credit Global with improving the center’s marketing, and say it’ll be working even more closely with organizations such as the Durham Bulls, the Durham Performing Arts Center and the Carolina Theatre to obtain bookings.

The center continues to see lag, however, in bookings of conventions and trade shows by out-of-town groups.

Byker said he’s hoping that’ll pick up in the years to come as a quartet of downtown hotel projects delivers more lodging in walking distance of the center.

The city and county could help with arrangements that make parking for the center “as convenient as possible,” he said, adding that the board wouldn’t ask that it be free.

Convention center patrons typically park in the Durham Centre parking deck, across the downtown loop.

Another potential cloud on the horizon is a planned renovation of downtown’s water and sewer piping that’ll turn much of it into a construction site, Byker said.

He said it’ll be vital to make sure the project holds to schedule, given that Global Spectrum will arrange bookings around it.

“We have to watch that with an eagle’s eye to make sure that’s done on time,” he said.

Shaner is the owner of the downtown Marriott, which essentially shares the building with the convention center. The Marriott has “air rights” to the space above the city’s and county’s facility.

The decision to split management of the hotel and the convention center was hard-fought, not so much among local officials as between them and Shaner. The hotel company argued that the two operations are most effectively managed as one.

But city and county leaders disagreed.

They suspected the old arrangement gave Shaner little incentive to seek bookings for the convention center beyond those necessary to fill rooms in the Marriott.

The split triggered a lawsuit by Shaner against the two governments, focusing not on the decision to bring in Global Spectrum but instead on the proper division of space in the building between hotel and convention center operations.

A settlement of that litigation was in the works as of last fall.