Convention Centre seeks $5M line of credit as ‘a safeguard’
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The RBC Convention Centre revenue hit an all-time high of $20.7 million in 2019, the third year in a row of increasing revenue after the completion of the centre’s $181 million expansion.
After the pandemic hit, revenue fell to $4.6 million in 2020.
Cost-cutting to the tune of $11.3 million in reduced expenses, federal COVID support of $1.4 million and the creation of the province’s vaccine super-site kept the centre in business.
In July 2020, the Convention Centre Corp. obtained a $7.5 million line of credit that expires this July.
Next week, the Executive Policy Committee of City Hall will consider a request for the city to guarantee a new $5 million line of credit for the convention centre.
Drew Fisher, the centre’s general manager, said the request for the new line of credit is being made out of an exercise in good governance.
“It is a safeguard,” he said. “It is us being proactive as opposed to reactive. Our goal is not to draw down on it. We will do everything we possibly can not to draw from this.”
If the centre’s track record counts, council should have some confidence of the convention centre’s prudence in this regard because while it did have to use some of the current $7.5 million line, it was quickly re-paid.
A spokesman for the city acknowledged that the current line was unutilized.
“But COVID-19 impacts are still being felt,” he said. “Out of an abundance of caution, the city is requesting that the convention centre is allowed to keep its open line of credit through to the end of 2023.”
Fisher said the total amount sought is reduced because any potential cash flow crunch also seen to be lessened.
“We are seeing a positive recovery for 2022 but it is not a flick of the switch.” Fisher said. “It will hopefully be a continual and gradual improvement. We hope we are past the pandemic but after what we have been through we would be kidding ourselves not to be thinking there is a possibility that the virus will re-invent itself.”
But after all that the convention centre’s business model has been working despite the pandemic disruption.
Fisher figures revenues will be back to about 60 per cent of pre-pandemic levels this year after business truly opened up after the end of the first quarter.
But he said it will still take a few years to get back to the same trajectory it was on before the disruption.
“Our galas and consumer shows are showing strong attendance similar to pre-pandemic, but when we get into national conventions, they are coming back more slowly,” he said. “Attendance for those are not quite at the pre-pandemic numbers. That will take time to recover as business travel returns.”
About 80 per cent of events that had been scheduled over the past two years of shutdown have been re-scheduled but key to the centre’s ultimate ability to get back on pace with the original projections tied to the expansion is the completion of the Sutton Place hotel.
The hotel was originally to have been finished last year but reports now indicate it might not be until 2025 or 2026.
“As soon as the adjacent hotel is built and operational we will be in position to cater to larger conventions coming into the city,” Fisher said. “We obviously grew with the expansion. We’ll get to the next level of revenues when the hotel is built.”
In the meantime the city has been funding the convention’s portion of long term debt tied to the expansion, at about $1 million per year since 2017.
Fisher said the Convention Centre Corp. is committed to repaying the city’s contribution and believes it will have the wherewithal to do that when that hotel is completed.
In the meantime, Fisher said he was thrilled to be able to stand in the centre’s reception area greeting people he’d not seen for some time attending the mayor’s state of the city address this week, typically one of the centre’s largest lunch events of the year, even during the boom years.
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.