CAA may see less revenue from facilities

May 2, 2009
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Members of the convention and Arena Authority will get their first look at a draft of the 2010 fiscal year budgets for DeVos Place and Van Andel Arena this month, and an early projection predicts revenue will be less than this year’s take, which is down from last year.

A ballpark figure has the arena finishing this year with a surplus of $1.1 million, while the convention center is expecting to lose about $700,000. Add in the parking revenue from the deck below DeVos Place and the board is estimating it will have a $600,000 surplus for the fiscal year, which ends June 30.

“We are seeing a trend that is catching up with us,” said Birgit Klohs, CAA member.

Klohs said the number of bookings at the convention center is good, but revenue is down because ancillary income is lower than it has been in past years. Not as many people are attending events and those that do attend aren’t spending as much money on food and beverages.

CAA Executive Director Rich MacKeigan said the arena isn’t hosting as many concerts this year because not as many artists are playing mid-sized venues. The bigger names are sticking to larger markets and trending toward outdoor music festivals, which appear to be a growing market. Concerts are the arena’s bread and butter, as each is worth close to $60,000 in event income.

Still, MacKeigan said business at the arena remains solid — a building that has never had a deficit since it opened in 1996.

“Relative to our peer group, we’re doing extremely well,” said MacKeigan, also regional general manager for SMG, the firm that oversees daily operations at both buildings.

Less revenue this year has resulted in budget adjustments. Halfway through the year the board lowered estimates for the revenue it expected from parking and investment income. The CAA also removed about $700,000 worth of capital improvement projects from this year’s CIP budget, which cut it by more than 40 percent.

The new CIP budget, though, is expected to include a request for new signage at DeVos Place. SMG Assistant Manager Jim Watt said about $150,000 has been spent on signs for the building over the past three years, with most of that money going toward electronic signs to help people find their meeting rooms in the massive building.

“The real issue is now we’ve learned what signs worked well and which didn’t,” said Lew Chamberlin, CAA member.

“I think the parking garage should get looked at as well, both signage and lighting,” said Joseph Tomaselli, also a board member. “By the first of the year, I’d like to see these improvements in place.”

Then there is the issue of filling the enclosed skywalk from the Amway Grand Plaza Hotel to the DeVos Place entrance with some sort of artistic display. It’s a matter the Operations Committee has been working on for a year. Recently, Progressive AE unveiled a design that offered three options that can be mixed over the walkway’s 800 linear feet.

“There is nothing happening there. It’s just a long corridor and we’ve received a lot of comments about that,” said Chamberlin.

One option was a high-tech, multi-media experience node that would give people using the corridor a multi-sensory sensation. But it’s expensive. A rough estimate places the cost between $800,000 to $1.2 million, depending on how it’s used. CAA members will get a video demonstration next month. The multi-media option could become a revenue source for the board through underwriting or advertising.

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