HARLINGEN — The new Harlingen Convention Center is projected to run a $202,389 deficit during the upcoming fiscal year — not bad for its first year of operation, officials say.
From October through September 2020, the Rio Grande Valley’s newest convention center is expected to generate $735,602 in revenue.
Meanwhile, expenditures are projected at $937,991.
“It’s performed better than expected,” City Manager Dan Serna said yesterday. “It’s doing very well. We believe those trends will continue.”
As part of an agreement, city officials have set aside $500,000 to cover any deficits during the convention center’s first two years, or “ramp-up” period.
Jeff Hamel, the facility’s general manager, said the convention center is drawing local companies’ events while pulling conferences from the McAllen and Brownsville areas.
“The primary reason is because not only is the convention center a new venue in Harlingen but we’re so centrally located,” Hamel said.
“Companies that do business in Harlingen and are based in Harlingen are really supporting the convention center from a revenue standpoint and Valley-wide there are several companies in McAllen and Brownsville that want to meet centrally and we’re at the crossroads of the Valley.”
Now, Hamel’s staff is preparing to host the Rio Grande Valley Birding Festival, the city’s biggest tourist draw, and a Comic Con convention in November.
Last week, officials with BC Lynd Hospitality, the San Antonio-based developer operating the facility, presented the convention center’s first full-year budget.
As part its review, HVS Convention, Sports & Entertainment Facilities Consulting, the city’s consulting firm, described the first-year budget projections as “within industry variances,” Assistant City Manager Gabriel Gonzalez told commissioners during a Sept. 18 meeting.
“We anticipated the start-up period might not be break-even or have our revenues exceed expenses,” Mayor Chris Boswell said after city commissioners approved the budget.
“Looking at the budget, it does look conservative. I think that’s good that you’re presenting it as a conservative budget, especially based on the outlook and performance it’s been like the last two months,” Boswell said, referring to higher projected revenues during the months of July and August. “Hopefully, you’ll have revenues even higher and expenses maybe a little lower. But certainly we’re shooting for that. I’m very pleased with the projections.”
Meanwhile, Serna said officials had earmarked money to offset any deficits during the convention center’s ramp-up period.
“I want to remind the commission we had projected losses the first two or three years of the convention center,” Serna told commissioners during the meeting. “We’re doing much better than our projections, obviously because Jeff and his team’s doing a great job of marketing and selling the building.”
Where’s the competition
Brandon Raney, BC Lynd’s chief executive officer, said Hamel and his sales team are working to draw regional events.
“We feel good about the trajectory,” Raney told commissioners. “There are lots of opportunities out there. We just need to roll up our sleeves and go get them — so that’s what Jeff and his team are working on.”
“As you guys know, we’re competing not just in the Valley — we’re competing regionally for business to come to the city of Harlingen and to the Valley. We’re excited about the opportunities we’re seeing — about the prospect next year is bringing.”
Officials are counting on BC Lynd’s hotel to boost the convention center’s revenues.
As part of an agreement, the city funded construction of the $16.7 million convention center while the BC Lynd builds an attached upscale hotel.
Next to the convention center, the $25 million, five-story Hilton Garden Inn is now in its fourth month of construction.
Now, crews are working on the hotel’s third floor.
“We’re obviously excited about adding the hotel to the mix because we think that will be (beneficial) not only for the convention center but the entire community and our ability as a community to attract larger groups that have over-night room stays,” Raney told commissioners. “That’s an important element to the overall development of this area around the convention center.”
Now, the 149-room hotel is expected to open in late July 2020, about a year behind schedule.
Late last year, Raney said he had worked for 18 months to land the “right” financing plan.
Sales team boosts revenue
Earlier this year, commissioners approved the convention center’s first budget for the period from May to September, which projected a $323,289 deficit.
However, Hamel and his sales team worked to boost revenue, driving up profits during July and August.
“He has assembled a really outstanding team, both from a sales and marketing standpoint and from a building operations and maintenance standpoint so we’re excited about the team he has and we’re starting to see the fruits of their labor,” Raney told commissioners.
For July’s budget, he said, officials had projected about $21,000 in revenue.
But Hamel and sales team boosted profits to about $82,000.
Then in August, Raney said, officials had projected about $33,000 in revenue, but Hamel and his team worked to generate about $99,000.
“Our sales team being out in the community with daily sales calls has really helped,” Hamel said.
Projected operating budget:
Projected total revenue after cost of sales — $735,602
Total operating expenses — $937,991
Net operating income — Negative $202,389
Director — $50,228
Four sales managers — total $155,133