City to split convention center deficits; BC Lynd cuts projected revenue in half

The coronavirus pandemic has affected many businesses including the opening of the Hilton Garden Inn located adjacent to the Harlingen Convention Center. BC Lynd Hospitality has pushed back the opening until October. (Maricela Rodriguez/Valley Morning Star)

HARLINGEN — Soon, the city will get help in covering any of the Harlingen Convention Center’s deficits.

Under an agreement with BC Lynd Hospitality, which operates the convention center, the city set aside a $500,000 “working capital fund” to cover deficits during the facility’s first two full years of operation.

Now, as the convention center, which opened in May 2019, prepares to enter its second full year of operation, that $500,000 fund is now down to about $113,000.

As part of the agreement, BC Lynd will begin covering half of any deficits after the working capital fund’s remaining $113,000 is depleted.

“Once the start-up fund is exhausted, any excess revenue would be split and any deficit would be split,” Mayor Chris Boswell said Monday.

Boswell blamed the coronavirus pandemic for driving down the convention center’s revenues.

“All the hospitality industry has been hit and we’ve done considerably well despite of it,” he said. “We look forward to a better 2021.”

Projected revenues cut in half

Last week, Keith Morgan, BC Lynd’s director of operations, presented city commissioners with the convention center’s budget for the 2020-2021 fiscal year beginning Oct. 1.

As a result of the pandemic, BC Lynd has cut projected revenues in half compared with budget forecasts prepared during the same period last year.

During a special meeting Sept. 22, BC Lynd released figures showing total revenues at $488,150 with a deficit of $234,772.

Earlier this month, Steven Villarreal, the convention center’s sales and marketing director, said officials don’t plan to book an event until as late as next June.

Pandemic deeply cuts into revenue

This year, the coronavirus pandemic deeply impacted the convention center’s revenues, Morgan told commissioners.

With a total budget of $955,108 and a deficit of $202,389 for the 2019-2020 fiscal year, the convention center generated actual revenues of $890,030, Morgan said, “just a very short downfall from our original budget even factoring in the impact of COVID.”

Morgan said the convention center had been on track to meet budget projections until the pandemic’s March outbreak.

“Through February, we were well on our pace to achieve our budgeted numbers,” he said.

From the pandemic’s March outbreak through the end of this month, the convention center lost a projected $182,190 as a result of event cancellations, he said.

Based on average bookings, BC Lynd also estimated an additional $400,000 in lost revenue from March to September, Morgan said.

Since the March outbreak, federal guidelines and state and local orders aimed at controlling the spread of the virus have capped gathering sizes at 10, effectively wiping out convention center bookings.

“With reduced restrictions in capacity, we will focus on following up with all cancelled business about the possibility of rebooking using our new social distancing guidelines,” BC Lynd stated in a PowerPoint presentation during last week’s meeting.

During the meeting, commissioners credited BC Lynd’s work during the pandemic which has deeply impacted the hospitality industry worldwide.

“I think they’ve done a fantastic job,” Commissioner Richard Uribe said. “It’s been a very tough six or seven months for everybody. To be able to pull it off and make moves during a very tough time, I think you’re doing great. They are much better numbers than I anticipated.”

fdelvalle@valleystar.com

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