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(continued from
April/May 2011)
By Dana Glazier, CAE;
Mark Emch, Vice President,
Finance, San Diego Convention Center
and Steve Schwartz, Senior Research Policy Manager,
Washington Convention Center
After
looking at the big picture economic conditions for all venue types, some
interesting trends were found between and among venue types. Some venues are
faring better than others, while some are not doing as well but are
optimistic that 2011 will hold improvements. The largest group of arenas
(33.8%) expects conditions to remain fl at for 2011, while a combined 54.4%
expect conditions to improve at some point in 2011. More than half of the
performing arts centers (57.5%) expect conditions to improve sometime during
2011, while most of the convention centers (60%) and complexes (69.3%) are
expecting improvements in 2011.
I.
Major Financial Indicators –
ACTUAL changes from 2009 to 2010 by venue type:
ARENAS
As noted in Table 1, arena responses are similar to venues overall
response to major indicators. When looking specifically at the combined
increases and combined decreases, the percentages are roughly equal on each
side for number of events (44.1% saw an increase; 44.7% decrease), the
rental generated by events (41.1% increase; 39.7% decrease), food and
beverage revenue (39.7% increase; 41.2% decrease). More arenas report
attendance decreases (46.9%) than increases (36.3%), and ancillary revenue
is also leaning more towards decreasing (41.7%) than increasing (26.9%).
Operating expenses are up for 41.9% of the arenas that responded.
PERFORMING ARTS CENTERS A
s noted in Table 1, performing arts centers are less positive for
major indicators compared to venues overall. The largest percentages are
seeing the “same” numbers when comparing 2009 to 2010 with the exception of
attendance. A review of the combined increases and decreases indicate that
the percentages are higher for decreases than increases, with the exception
of operational expenses: Number of events (32.7% increase; 48.0% decrease),
rental generated by events (38.6% increase; 40.4% decrease), food and
beverage revenue (25.5% increase; 30.9% decrease), attendance (38.6%
increase; 43.9% decrease), and ancillary revenue (23.2% increase; 39.2%
decrease). More performing arts centers see increases in operating expenses
(32.2%) than decreases (30.4%).
CONVENTION CENTERS
As noted in Table 1, the largest percentage of convention centers
respondents see 1-5% decreases in most major indicators. When comparing the
combined increases to the combined decreases, the percentages are split.
There are roughly as many reporting decreases as increases in number of
events (46.0% increase; 44.0% decrease), rental generated by events (48.0%
increase; 46.0% decrease), attendance for events (40.8% increase; 42.8%
decrease), and ancillary revenue (44.7% increase; 46.8% decrease). Food and
beverage revenue is the exception (53.0% saw an increase; 36.7% decrease)
with the largest percentage reporting an increase of more than 10%.
Operating expenses are also split (42.0% increase; 44.0% decrease).
COMPLEXES
As noted in Table 1, complex responses are slightly different to
venues overall in the major indicators. When looking specifically at the
combined increases and combined decreases, the percentages are similar on
each side for number of events (38.2% increase; 42.9% decrease), attendance
(45.0% increase; 42.5% decrease), and the rental generated by events (45.0%
increase; 42.5% decrease). A larger percentage of complexes report increases
for ancillary revenue (47.5% increase; 35.0% decrease), and food and
beverage revenue (50.0% increase; 35.0% decrease). Operating expenses
increased (41.9%) for more complexes than decreased (32.8%).
II.
Major Financial Indicators – ANTICIPATED changes
from 2010 to 2011:
ARENAS
Again, arena responses are similar to venues overall responses in the major
indicators. When looking specifically at the combined anticipated changes,
the responses mirror the division of the overall outlook and optimism of the
industry. The indicators are expected to increase or stay the same by the
majority. The largest swing from last year’s actual to this year’s
anticipated is in attendance. Fifty-three percent of arena respondents
expect an increase in attendance.
Arenas are expecting increases in the major financial
indicators. Most arena respondents say they expect events to increase
(44.2%), rental to increase (45.6%), food and beverage revenue to increase
(45.4%), and attendance to increase (53%). Most believe ancillary revenue
will stay the same (52.3%). Arena managers also expect the operating
expenses to stay the same (47.1%).
PERFORMING ARTS CENTERS
Table 2 shows that the largest group of the performing arts centers
expects the major indicators to stay flat or show a 1-5% increase, including
the number of events and the rental generated by events. Because the
majority of the performing arts centers indicate seeing decreases in major
indicators in 2009, it appears logical that they will be cautious when
predicting increases for their respective venues. Many expect events to
increase (50.0%), rental to increase (53.7%), food and beverage revenue to
increase (38.4%), and attendance to increase (50.9%). The majority report
ancillary revenue will stay the same (51.9%) while operating expenses will
increase (55.6%).
CONVENTION CENTERS
Table 2 shows that the majority of convention center respondents are
looking for 1-5% increases in indicators in 2011, which closely resembles
the expectations by venues overall. The largest group of convention centers
(48.9%) is specifically anticipating ancillary revenue to increase.
The combined anticipated changes of convention centers
are expecting increases in all of the major financial indicators. The
majority say they expect events to increase (54.0%), rental to increase
(50.0%), food and beverage revenue to increase (58.4%), attendance to
increase (61.6%), and ancillary revenue to increase (61.6%). Convention
centers also expect the operating expenses to increase (46%).
COMPLEXES
Table 2 clearly presents the optimism of complex participants over
the other venue types. For all of the major financial indicators, the
complexes, more so than other venues, expect increases. The largest swing
from last year’s actual to this year’s anticipated is in attendance.
Sixty-nine percent of complex respondents expect an increase in attendance,
while 59.0% forecast a 1-5% increase in food and beverage revenue.
When looking at the combined expected increases in
comparison to the combined expected decreases, the difference appears even
more dramatic. The majority (57.9%) expect increases in the number of events
(10.5% decrease), rental generated by events (53.8% increase; 15.4%
decrease), food and beverage revenue (59.0% increase; 10.3% decrease),
attendance (69.3% increase; 15.4% decrease), and ancillary revenue (53.9%
saw increase; 12.9% decrease). As would be expected, with the optimism
regarding increased attendance, events and revenues, the majority of
complexes also expect operating expenses to increase (55.2%) rather than to
decrease (15.8%).
III.
Business response:
The business response related to staffing in venues overall is similar to
the response in 2009. Basic business practices related to adapting to the
strenuous times continues to be challenging with a reported increase in
aging receivables, downsizing of significant or large events, and permanent
loss in major booked events. The largest changes are in renegotiated payment
schedules, tougher negotiations, and reductions in fee-for-service
offerings.
ARENAS
The largest group of arenas (44.8%) maintain their planned staffing levels,
replacing all positions when vacancies occurred, which was similar to the
2009 responses. The second largest group (23.9%) reduces staff through
layoffs, buyouts or reduction in force in 2010; whereas only 8.1% reduced
staff in this manner in 2009. Like the venues overall responses, more arenas
are reporting increases in aging receivables, renegotiated payment
schedules, tougher negotiations, and reductions in fee- for- service
offerings than in 2009.
PERFORMING ARTS CENTERS
The largest group of performing arts center respondents (42.9%) maintain
planned staffing levels, replacing all positions when vacancies occur, which
is down from 2009. Up from 2009 and similar to venues overall, a large
percentage of performing arts centers (21.4%) reduced planned staffing
levels through layoffs, buyouts or reduction in force.
Performing arts centers are experiencing longer and
tougher negotiations, similar to venues overall, as well as an increased
downsizing of major booked events. Compared to 2009, less performing arts
centers reported cancellation of major booked events.
CONVENTION CENTERS
The largest group of convention center respondents (27.5%) maintain their
planned staffing levels, not replacing non-essential positions when
vacancies occur, which is consistent with the 2009 responses. The second
largest group (23.5%) reduced staff through layoffs, buyouts or reduction in
force in 2010; whereas only 15.0% did in 2009.
Like the venues overall response, many convention centers report an increase
in aging receivables, reductions in fee-for service offerings, and
downsizing of major booked events than in 2009. In contrast to all venues,
as well as 2009, convention centers feel the pinch of difficult economic
times with renegotiated payment schedules and tougher contract negotiations.
COMPLEXES
Two large contingencies of complexes (each 37.5%) reported that they: 1.
maintain their planned staffing levels, replacing all positions when
vacancies occur, and 2. maintain their planned staffing levels, not
replacing non-essential positions when vacancies occurred. This is an
improvement over 2009, when the majority of complexes reduced planned
staffing levels through layoffs, buyouts or reduction in force (28.6%) and
did not replace non-essential positions (28.6%).
The comparison of venues overall to complexes shows
that more complexes experience an increase in cancellations of major booked
events (all venues 18.9%; complexes 38.7%) and a permanent loss of major
booked events (all venues 16.2%; complexes 25.8%), which appears to be
inconsistent with their generally more positive view for 2011. In 2010, more
complexes report managing tougher negotiations, and reductions in fee-for
service offerings than in 2009.
fm
NOTE: The response rate for stadium managers is
statistically invalid due to low response. For discussions and to offer
feedback, visit the Venue Managers Open Forum on IAVM VenueNet. Venue Sector
reports are also available in the Venue Managers Open Forum library on
VenueNet. Questions or comments: dana.glazier@iavm.org
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