Convention Center Banking on Large Events Returning in December - Voice of San Diego

Economy

Convention Center Banking on Large Events Returning in December

New Convention Center budget projections for 2020-21 count on large conventions resuming with 50 percent attendance in December, before gradually increasing to pre-COVID-19 levels, reaching 100 percent attendance by July 1, 2021.

The city of San Diego is temporarily housing homeless residents at the Convention Center in an effort to stop the spread of the coronavirus. / Photo by Adriana Heldiz

Convention centers are still closed for normal business across the state, but San Diego Convention Center officials are hopeful they will return to some normalcy in December when they welcome a large medical conference of hematologists.

In fact, their budget – now projected to shrink from $40 million to $20 million next year – is banking on it.

New Convention Center budget projections for 2020-21 count on large conventions resuming with 50 percent attendance in December, before gradually increasing to pre-COVID-19 levels, reaching 100 percent attendance by July 1, 2021.

The new plan sketched out for the San Diego Convention Center budget committee Monday included job losses that slash the center’s workforce almost in half, even after receiving millions in payroll stimulus dollars from the federal government this year.

A picture of the Convention Center’s operations next year is coming into focus, and there will be tough times ahead.

COVID-19 closures will result in a $5 million operating deficit this fiscal year, revised budget records show. Losing events for half of next year will cost the center at least $20 million in operating revenues, half of the $40 million originally budgeted for fiscal year 2021, Mardeen Mattix, chief financial officer for the Convention Center, told the budget committee. The combined losses this year and next will be partially offset by $4.3 million in payroll protection stimulus money and up to $9 million from the city of San Diego – which is using the Convention Center to house more than 1,300 homeless people during the pandemic.

As recently as April, Convention Center officials adopted a more aggressive budget that brought events back in August.

That budget was approved “when things were really fresh,” and before any events in August had been canceled, said San Diego Convention Center CEO Rip Rippetoe in an interview.

“We did not know the devastation of the pandemic and how it impacted everything, and not just our industry. … Now that this has progressed and turned into what this has turned into, we are using realistic optimism,” he said.

But even assuming normal business returns in December might be wishful thinking, said at least one member of the Convention Center’s budget committee before ultimately adopting the new version of the budget on Monday.

“This budget is our best guess at this time based on where the governor is at,” Mattix, the financial officer, told the committee. “This is very fluid, but we had to pick something that was best,” and she said it aligns with the city’s latest projections for tourism occupancy taxes in the coming months.

Convention center leaders will cut 39 full-time and 170 part-time positions – totaling 48 percent of the workforce. Remaining staff will see furloughs and related pay cuts totaling 10 to 50 percent, depending on the position. Executives will lose 30 paid days. All bonuses are also off the table.

The cuts will hack the Convention Center’s $24 million personnel expense down to $18 million. Even then and with some new revenue from the city and federal government, officials project the Convention Center will still need to outspend operating revenues by nearly $1.4 million next year, decreasing reserves below its goal level of roughly $3 million, or 8 percent.

Cuts made by the San Diego City Council will also trickle down to the San Diego Tourism Authority, tasked with long-term event bookings. Mattix said the city nixed its normal $2.2 million payment to the Convention Center typically passed on to the Tourism Authority, so the Convention Center will only pay half that amount this year from its own coffers – though the amount may increase if revenues manifest sooner.

Though Rippetoe said he is happy to help the city by serving as a homeless shelter during the crisis, he is working to get back to business as soon as possible.

“Our purpose is to be a premier gathering place that provides economic activity for San Diego,” said Rippetoe. “I wake up every morning trying to find the path back to the level we were. … Everyone is anxious to get trade shows and conventions back in the building.”

Rippetoe and about a dozen other California convention leaders are putting together proposed guidelines for reopening to send to Gov. Gavin Newsom that are distinct from amusement parks and stadiums, in hopes he will green-light conventions sooner than the others. The pitch will be heavy on disinfectant and also outline occupancy level limits and food and beverage controls, he said.

Roughly 14 San Diego Convention Center gatherings are still on the books in October, Rippetoe said. To actually host those events will require both state and county approval.

For events next spring, organizers are hoping public fears of crowds will ease with increased COVID-19 immunity or a vaccine, Rippetoe said.

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