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Halifax already expects to be on the hook for $2.8 million in losses from the convention centre this fiscal year, but with more than half of the centre’s events already cancelled due to COVID-19 and the long-term convention outlook even bleaker than before, the real number is likely to be higher.
Events East, the Crown corporation that runs the Halifax Convention Centre, said it hasn’t finished adding up the toll of COVID-19. The city is budgeting for $2,804,000 in convention centre losses in fiscal 2020-2021 — $109,000 more than its share last year. Convention centre losses are split 50/50 by the provincial and municipal governments, meaning the total loss projected for 2020-2021 is $5,608,000 — $218,000 more than last year.
“The $2,804,000 budgeted excludes any impact related to COVID-19,” city spokesperson Erin DiCarlo said in an email.
The pandemic has had “an unprecedented impact on the events industry and our business,” Events East spokesperson Erin Esiyok-Prime said in an email, “including the temporary closure of the convention centre.”
The convention centre has laid off 80 “hourly, event-based” staff. Esiyok-Prime couldn’t say how much revenue Events East is expecting to lose or how much it’s saving from the layoffs and other cost cutting measures.
The convention centre planned to host 150 events in fiscal 2020-2021, starting April 1 — including 31 national and international events.
“With the restrictions currently in place around public gatherings and travel, just over half of these events have been impacted and our focus over the past several months has been on rebooking them for a future date where possible,” Esiyok-Prime said. “This impact will change depending on when we are allowed to safely re-open and begin hosting events.”
On the convention centre’s website, there are only 19 events listed for fiscal 2020-2021, all from August to December, and the calendar is “subject to change as the COVID-19 pandemic evolves.”
‘A very diminished convention calendar’
Heywood Sanders, professor of public administration at the University of Texas in San Antonio and author of Convention Center Follies: Politics, Power, and Public Investment in American Cities, said in an interview that it’s unlikely there’ll be any big events anywhere this year.
“They seem to be falling into two broad categories: the ones that have cancelled outright and the ones that are desperately hoping to hold in-person events but will have to deal with the reality later,” Sanders said.
Sanders tracks convention centres, events, and their attendance across North America, and notes that the annual meeting of the Radiological Society of North America, which meets every year in late November in Chicago, has cancelled its meeting for the first time in decades. Likewise, Microsoft has announced it won’t hold in-person events till July 2021.
“It really does appear that in-person meetings have either been formally cancelled or are on the verge … and a great many of them are going virtual in one form or another. The radiologists are doing that, for example,” he said.
“I would anticipate that it will be a very diminished convention calendar till the end of the year.”
Sanders said he expects the longer term effect of COVID-19 on convention centres to be at least as bad as the 2008 financial crisis and recession.
He’s compiled numbers from the Metro Toronto Convention Centre, for example, dating back to 1998, including the number of events and the hotel room nights produced: “They’ve never gotten back to where they were in 2007, and they were last year still below where they were in 1998.”
The public health implications of large gatherings and travel restrictions due to COVID-19 mean this could be worse.
“The attendance at any given event now is going to depend on one’s personal circumstances and willingness to travel as well as the willingness of your employer to pay,” Sanders said.
“I would expect, in the first year or two after, there to be a significant drop. We’ve seen that across the board in North American centres, and I would expect it to be even greater than it was after 2008, given the circumstances. And it will likely not fully recover for a decade or more.”
What will COVID-19 cost the convention centre?
Events East, which is jointly owned by the city and the province, is still analyzing the financial impact, Esiyok-Prime said.
“We are in discussions with our shareholders and working on our year end financial statements as well as our revised business plan and budget. Once we complete that process, those documents will be available to the public, consistent with our standard practice.”
Looking at last year’s convention centre business plan, tabled to Halifax regional council in mid-July 2019 (more than three months into the fiscal year), Events East was budgeting for $11,385,000 in revenue based on 140 events.
Assuming average revenue from each event of $81,321, Events East could bring in $12,198,150 from 150 events this year. If half are cancelled, that would mean lost revenue of $6,099,075. It’s unclear how much of that would be offset with cuts to the centre’s expenses, including event operations, salaries and benefits, and general operations.
In documents tabled at Halifax regional council’s budget committee on Tuesday, 2020-2021 withdrawals from the city’s convention centre reserve are listed at $8,184,000. That includes the usual $5,380,000 annual rent payment to Nova Centre developer Joe Ramia, and $2,804,000 for “Convention Centre Deficit.”
Last year, the city’s share of the deficit was $2,695,000 — $109,000 less. And that number was $366,200 higher than originally estimate. That number could even grow again when Events East tables its year-end financial statements, given the pandemic started affecting business in March, before the end of fiscal 2019-2020.
The extra shortfall last year was attributed in part to building operating costs, including property tax. That property tax, $1,826,200 in 2019-2020, goes back to the city and then directly into an account used to pay for the convention centre along with property taxes from the office, hotel, retail, and parking portions of the Nova Centre.
As the Halifax Examiner has laid out before, the long-term forecast for that account is bleak.
The city’s year-end financials aren’t completed yet, but the projected balance in that reserve at the end of fiscal 2019-2020 — the amount left over after paying the rent and the deficit — was $3,283,109. The projection for March 31, 2021 is $3,304,109. That number drops in March 2022 to about $2.9 million, then in 2023 to $2.5 million, then in 2024 to $2.2 million.
The city’s year-end financial statements should be complete sometime this month, with the convention centre’s likely coming to council again sometime this summer.
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