FY 2021/22 QUARTERLY REPORT – 2nd Quarter Ended December 31, 2021 January 25, 2022
Santa Clara Convention Center FY 2021/22 2nd Quarter Report Page 1 of 15
Table of Contents
2nd Quarter Highlights ................................................................................................. 2 Strategic Highlights ................................................................................................... 2 Financial Highlights ................................................................................................... 2 Event Highlights ......................................................................................................... 2 Operational Highlights .............................................................................................. 3 Other Noteworthy Highlights .................................................................................... 3 Financial Summary ....................................................................................................... 5 Financial Results ....................................................................................................... 5 Income Statement ...................................................................................................... 6 Event Statistics .......................................................................................................... 7 Event Revenue ........................................................................................................... 7 Partners ...................................................................................................................... 8 Key Performance Indicators (KPIs) ........................................................................... 10 Forecast ....................................................................................................................... 11 FY 2021/22 Capital Improvement Projects (CIP) Budget .......................................... 12 Community Involvement ............................................................................................. 14
Santa Clara Convention Center is strategically located in the heart of Silicon Valley, a prime location for conventions, trade shows and exhibitions. The Santa Clara Convention Center is minutes from hotels, restaurants, Levi’s Stadium, California’s Great America Theme Park, and many of the largest and most influential technology companies in the world, with easy access to freeways and Norman Y.
Mineta San Jose International Airport and only 45 miles south of San Francisco. The Convention Center features 100,000 square feet of exhibit space, a 22,400 square foot ballroom, 31 breakout rooms and a 607-seat theater and attracts over 350,000 visitors annually. The facility is an integral economic component of Santa Clara, generating economic benefits through attendee direct and indirect spending and sustaining over 500 local jobs.
For more information, visit www.santaclaraconventioncenter.com .
Santa Clara Convention Center FY 2021/22 2nd Quarter Report Page 2 of 15
2nd Quarter Highlights
This quarterly report covers fiscal operation of the Santa Clara Convention Center for the 2nd quarter ended December 31, 2021. This report is unaudited and, therefore, subject to change.
30,787
Total Attendance
37 Total Events
$1,945,308
Total Revenue
Strategic Highlights
Spectra continues to be actively involved with the City and its consultant, Jones Lang LaSalle (JLL) on the development of a new Destination Marketing Organization (DMO) for Santa Clara. In Q2, Spectra’s General Manager worked in conjunction with a DMO Board committee to hire candidates for Discover Santa Clara’s vacant Sales Manager positions. Spectra and its partners from Levy, Smart City and Encore continued utilizing the interim booking policy and prospecting new business focused on bringing high impact events to the destination. Sales efforts were aligned with Spectra, Levy and the DMO’s overlapping key performance indicators (KPI’s). Capital projects were also a focus in Q2 including upgrades to paint, flooring, and a new security camera system. In preparation for reopening in Q2, Spectra began to phase in employees. Employee totals varied from 10 to 14 based on event load and projected revenue generation. All employees were brought back in accordance with California’s Rehiring and Retention Law.
Financial Highlights
In Q2, the COVID variants - Delta and Omicron - continued to have an impact on the building. Gross revenue October through December was $1,945,308 representing
72.64% of the overall budget for revenue. Conversely expenses totaled $1,755,965,
68.44% of the budgeted expenses for the quarter, resulting in an overall profit of $189,343 for Q2.
Event Highlights
Thirty-seven events took place during the second quarter; 20 less than the budgeted number of 57. Seventeen events canceled or rescheduled to other dates due to concerns regarding the Delta variant. The first event to take place in the Center since March of 2020 was PCB West in October, a Tradeshow with approximately 500
Santa Clara Convention Center FY 2021/22 2nd Quarter Report Page 3 of 15
attendees. The largest event of the quarter was the Holiday Craft Fair held over three days in November that had an estimated 5,000+ guests.
Operational Highlights
As mentioned above, 37 events took place in the second quarter. Six in October 15 in November, and 16 in December.
The General Manager (GM) monitored and defined the requirement of staffing levels based on business quantity and projected revenue generation. Therefore, employee enrollment varied from 10 to 14 throughout the quarter. o The vacant Director of Finance position was filled and started in November. o Staffing levels are discussed with the Contract Administrator on a bi-weekly basis.
o All employees were provided with a return-to-work orientation outlining the facilities new COVID protocols and procedures.
o The GM attended multiple meetings with Lotus Marketing, the marketing firm representing Discover Santa Clara, Spectra and Levy. Topics discussed and reviewed included: branding verbiage, branding logo, website upgrades, and sales information
In November, Silicon Valley Power conducted a shutdown of all electrical components at the Convention Center to make repairs.
Spectra, Levy, the DMO, the City and JLL continued holding bi-monthly sales meetings to further develop the long-term sales strategy for the Center. The strategy defines goals and responsibilities of Spectra, Levy and the DMO as all partners strive to optimize the building’s business and revenues over future years.
Other Noteworthy Highlights
In Q2, Spectra merged with Oak View Group (OVG) in November following review and approval of the Department of Justice. It is expected that the organization will eventually operate under a different name.
In December, the GM attended a meeting on Spectra/Oak View updating its vaccination policy:
o Beginning February 14, 2022, all employees of Spectra/Oak View must be fully vaccinated in order to continue working for the company. o GM shared this new requirement with its partners at Encore AV, Smart City, Levy, and the Hyatt.
o All partners have agreed to honor Spectra/Oak View’s new policy. The Center and its partners continued to monitor the updated health orders issued by the California Department of Public Health and how they may impact upcoming events.
Santa Clara Convention Center FY 2021/22 2nd Quarter Report Page 4 of 15
The GM served as a panelist for the Silicon Valley Business Journal’s (SVBJ) “Future of Santa Clara” online event. The GM met with SVBJ’s Editor and then presented the following week.
Santa Clara Convention Center FY 2021/22 2nd Quarter Report Page 5 of 15
Financial Summary
Financial Results
The Convention Center began hosting events again in October. While revenues were impacted by cancelations and postponements due to the Delta variant, Spectra and its partners were still able to generate $1,945,308 in gross revenue. However, Spectra planned ahead for these possibilities and slowly phased in employees and monitored expenditures in an effort to control losses in the quarter.
Financial Summary – 2nd Quarter ended December 31, 2021 Projected in Budget Actual Difference
Gross Revenue $2,678,155 $1,945,308 ($732,847)
Total Expense 2,565,615 1,755,965 809,650
Net Income $112,540 $189,343 $76,803
Total expenses for the quarter were $1,755,965, or $809,650 less than the budgeted amount of $2,565,615. There was $71,709 of other revenue recognized in Q2 primarily from cancelation fees and cellular site revenue.
The year-to-date expenses were $2,283,891 and year-to-date net loss was $321,845.
Santa Clara Convention Center FY 2021/22 2nd Quarter Report Page 6 of 15
Income Statement
PERIOD TO DATE -2nd Quarter YEAR TO DATE -Ended 12.31.21 Budget Actual Budget Variance Budget Actual Budget Variance # of Events 57 37 (20) 57 37 (20) # of Event Days 0 95 95 0 95 95 Annual Attendance 36,800 30,787 (6,013) 36,800 30,787 (6,013)
Event Revenue
Rental $608,640 $552,094 ($56,546) $608,640 $552,094 ($56,546) Services $69,450 $16,609 ($52,841) $69,450 $24,028 ($45,422) IT/Telecom $185,500 $305,941 $120,441 $185,500 $305,941 $120,441 Food & Beverage $1,304,577 $701,639 ($602,938) $1,304,577 $702,457 ($602,120) Audio Visual $430,900 $152,246 ($278,654) $430,900 $152,246 ($278,654) Electrical $63,800 $145,070 $81,270 $63,800 $146,513 $82,713 Total Event Revenue $2,662,867 $1,873,599 ($789,268) $2,662,867 $1,883,279 ($779,588)
Event Expenses
Services $0 $0 $0 $0 $0 $0
IT/Telecom $137,270 $208,040 ($70,770) $137,270 $212,549 ($75,279) Food & Beverage $1,096,011 $583,057 $512,954 $1,273,997 $731,522 $542,475 Audio Visual $288,703 $106,562 $182,141 $288,703 $106,562 $182,141 Electrical $47,850 $109,572 ($61,722) $47,850 $109,573 ($61,723) Total Event Expenses $1,569,834 $1,007,231 $562,603 $1,747,820 $1,160,206 $587,614
Net Event Income (Loss) $1,093,033 $866,368 ($226,665) $915,047 $723,073 ($191,974)
Other Revenue $15,288 $71,709 $56,421 $30,576 $78,767 $48,191
Total Revenue $1,108,321 $938,077 ($170,244) $945,623 $801,840 ($143,783)
Indirect Expenses
Executive $88,786 $80,535 $8,251 $177,572 $170,591 $6,981 Marketing $64,112 $68,235 ($4,123) $128,224 $112,837 $15,387 Finance $94,500 $63,030 $31,470 $188,999 $87,548 $101,451 Event Services $60,255 $36,852 $23,403 $120,510 $58,336 $62,174 Operations $387,882 $398,660 ($10,778) $775,764 $456,275 $319,489 Overhead $300,246 $101,422 $198,824 $600,492 $238,098 $362,394 Transition Costs $0 $0 $0 $0 $0 $0
Total Indirect Expenses $995,781 $748,734 $247,047 $1,991,561 $1,123,685 $867,876
Net Operating Income $112,540 $189,343 $76,803 ($1,045,938) ($321,845) $724,093
Santa Clara Convention Center FY 2021/22 2nd Quarter Report Page 7 of 15
Event Statistics
There were 37 events scheduled in Q2 with $1,873,599 in revenue and $1,007,231 in expenses. ‘Conventions’ and ‘Consumer Shows’ generated the largest amount of revenue in the quarter.
Event Revenue
Event Net Revenue – 2
nd Quarter ended December 31, 2021
Event Types Gross Revenue Cost of Sales Net Revenue
Banquets $95,043 $41,787 $53,256
Meetings 44,616 2,027 42,589
Consumer Shows 249,224 127,035 122,189
Trade Shows 129,047 60,636 68,412
Conventions 1,168,607 721,383 447,224
Special Events 87,343 33,442 53,901
Miscellaneous Events - - -
Sporting Events 99,719 20,921 78,798
Totals $1,873,599 $1,007,231 $866,367
This quarter, there was a net profit of $189,343. Revenues were generated by the events hosted and other revenue including cancelation fees. Event expenses of $1,007,231 were a combination of Levy’s labor and indirect expenses as well as expense generated by Encore and Smart City to provide services for contracted events.
Year-to-date, the Center’s net income is a negative $321,845.
Santa Clara Convention Center FY 2021/22 2nd Quarter Report Page 8 of 15
Partners
Partner Revenue – 2nd Quarter ended December 31, 2021
Partner Gross Revenue Cost of Sales Net Revenue
Levy Restaurants $701,639 $583,057 $118,582
Smart City (IT services) 305,941 208,040 97,901
ENCORE-AV (AV services) 152,246 106,562 45,684
Electrical 145,070 109,572 35,498
Totals $1,304,896 $1,007,231 297,665
Partner revenue for Q2 was $1,304,896. The cost of sales was $1,007,231 for a net profit of $297,665. Year-to-date, net partner revenue is showing a $90,006 profit versus budget.
Indirect Expenses
Total indirect expenses were $748,734 for the quarter.
Departments Expense Description Indirect Cost
Executive Senior personnel $80,535
Marketing Sales and marketing related 68,235
Finance Finance and Human Resources 63,030
Events Staffing to manage events 36,852
Operations Engineering, building services, security, and all other related expenses to operate the building
398,660
Overhead Non-departmental expenses 101,422
Transition Costs Costs related to the transition to Spectra - Totals $748,734
Santa Clara Convention Center FY 2021/22 2nd Quarter Report Page 9 of 15
Other Activities
Both Spectra and Levy continued to review staffing levels and expenditures in an effort to mitigate financial losses to the City. Indirect expenses for Q2 were $247,047 under budget primarily due to overhead expenditures.
Working in conjunction with Levy, the DMO, the City and JLL, the sales team reconfirmed their prospect goals for FY 2021/22. Spectra’s goal for the year is to be actively working at least 204 business prospects throughout the fiscal year. As of the end of the second quarter, Spectra’s sales team is actively working 222 sales prospects. Applying the goals of the booking strategy, Spectra has put an emphasis on prospecting and generating leads for Priority 3 business. Spectra is aiming to convert 20% of those prospects into tentative
1 business. Of those tentative events, Spectra will
work to reach a conversion ratio of 20% into definite2 business throughout the fiscal year. Due to COVID three Priority 3 pieces of business have canceled or postponed for this fiscal year, however at the time of this report, the Center sales team still has achieved 100% of its KPI goal for Priority 3 business in FY 21/22. The partners and sales team continue to discuss and identify ideas or concepts that will differentiate the Santa Clara Convention Center from its competitors.
In the second quarter, the GM attended the Convention Center Booking Policy call with board members from both the DMO and TID. The meeting provided discussion and suggestions on how the current booking policy should be updated to address the current business climate.
1 A tentative is defined as having dates held and/or proposals issued to the client. 2 A definite is realized when a client signs its Use License Agreement for an event at Convention Center.
Santa Clara Convention Center FY 2021/22 2nd Quarter Report Page 10 of 15
Key Performance Indicators (KPIs)
Gross revenue for Q2 was $1,945,308, while net revenue was $189,343 for the quarter.
Through the second quarter the event mix shows the Convention Center has hosted 25% of its targeted P3’s, 10% of its P4 goal and 19% of its P5 mark. Prospecting numbers remain strong as the Sales Manager continues to focus on bringing new business to the facility. Monthly results of the KPI’s for Q2 are included below.
Performance Measures
2021/22
Target
Q1 & Q2
Results October November December NOTES
$8,352,205 $1,962,045 $363,142 $1,182,058 $400,108
2. Net Income ($646,267) ($321,843) ($103,067) $373,282 ($80,872) 6,605 TBD 1,256 TBD TBD
4. Economic Impact $8,980,044 TBD TBD TBD TBD
85% - - - - Reported at year-end
1% - 0% 0% 0%
1 - 0 0 0
1% - 0% 0% 0%
2 - 0 0 0
8% - 6% 19% 25%
16 - 1 2 1
20% - 5% 10% 10%
42 - 2 2 0
71% - 2% 9% 19%
150 - 3 11 15
7. Community Benefit
1 0 0 0 0
50% - - - - Reported at year-end
20% - - - - Reported at year-end
204 212.5 231 246 222 Average for the year of P3, P4, P5 Spectra Venue Management – Santa Clara Convention Center
1. Convention Center Gross Revenue
3. Number of Room Nights Consumed
5. Customer Service Survey Results (overall satisfaction)
6. Event Mix at the Convention Center (consumed)
Percent of P1 Events
Number of P1 Events
Percent of P2 Events
Number of P2 Events
Percent of P3 Events
Number of P3 Events
Percent of P4 Events
Number of P4 Events
Percent of P5 Events
Number of P5 Events
Number of collaborative, community-based events hosted at the Center Percent of Center employees that volunteer in the community Percent of small, local and M/WBE businesses/vendors
8. Number of Prospects (active) (non-cumulative)
Santa Clara Convention Center FY 2021/22 2nd Quarter Report Page 11 of 15
Forecast
The Center operated at a loss of $321,845 through Q2 as a result of canceled or rescheduled events. Anticipated losses for the remainder of FY 2021/22 are projected at $375,326 resulting in an overall loss of $697,171 for the fiscal year. If these projections hold, the Center will miss its budgeted loss of $646,267 by a variance of $50,904.
However, this number is fluid and will continue to fluctuate based on the on-going challenges due to COVID-19 variants and the impact of California’s mandate for indoor mega events.
SANTA CLARA CONVENTION CENTER
ROLLING FORECAST
FY 2021/2022
ACTUAL YTD FORECAST TOTAL ORIGINAL
July - Dec Jan - June PROJECTION BUDGET VARIANCE FY 2022 FY 2022 FYE 6/30/22 FYE 6/30/2
# OF EVENTS 37 109 146 211 (65)
DIRECT EVENT INCOME $669,514 $1,579,699 $2,249,213 $2,144,697 $104,516 ANCILLARY INCOME 53,559 467,643 521,202 1,012,652 (491,450) TOTAL EVENT INCOME 723,073 2,047,342 2,770,415 3,157,349 (386,934)
OTHER INCOME 78,767 - 78,767 61,150 17,617
EXECUTIVE 170,591 182,426 353,017 332,143 (20,874) MARKETING 112,837 156,302 269,139 245,052 (24,087) FINANCE 87,548 220,700 308,248 365,547 57,299 EVENTS OPERATIONS 58,336 148,704 207,040 228,558 21,518 OPERATIONS 456,275 1,036,260 1,492,535 1,492,492 (43) OVERHEAD 238,098 678,276 916,374 1,200,974 284,600
INDIRECT EXPENSES 1,123,685 2,422,668 3,546,353 3,864,766 318,413
OPERATING NET INCOME (LOSS) (321,845) (375,326) (697,171) (646,267) (50,904)
NET INCOME (LOSS) ($321,845) ($375,326) ($697,171) ($646,267) ($50,904)
Santa Clara Convention Center FY 2021/22 2nd Quarter Report Page 12 of 15
FY 2021/22 Capital Improvement Projects (CIP) Budget
CIP Project Updates
Flooring/Painting projects
• The carpet installation project was completed in October as scheduled. • The polished concrete project in the main lobby was put on hold until the end of December due to required flooring infill work that needed to be completed. The infill work was completed, and the continuation of the polished concrete has resumed. Completion of the polished concrete flooring in the Center is expected to be complete by the end of January.
• The painting refresh project was substantially completed in October as scheduled. The one outstanding item is the paint for the main lobby elevator as there is a delay in shipping.
• Fabric for the wall panels was ordered late in Q1 and arrived early in Q2.
Installation of the wall panels are expected to be completed in Q3. • The installation of the corner guards reached substantial completion in November.
• The installation of the wall bases reached substantial completion in October.
Final installation of the wall bases will resume once the polished concrete work has been completed.
Kitchen & Digital Signage projects
• The Center and Levy hosted a site walk for the Request for Bid (RFB) that was released in October. This was a reissue of the work for upgrades to both kitchens, the digital signage project and build outs of the Tech Café and Stand B projects for Levy. Submittals for the RFB were due at the end of October, only one bid was presented which was rejected.
• Spectra hired a third-party project manager to manage the CIP projects. The project manager will be reissuing the digital signage and the Tech Café/Stand B RFBs separately in Q3 & Q4 of FY 21/22.
Santa Clara Convention Center FY 2021/22 2nd Quarter Report Page 13 of 15
CIP Project Budget
• Levy continues to contribute investments funds as needed for the improvement projects related to the food and beverage operational and service areas.
Proj. # Project Name Phase CITY/SPECTRA
REVISED BUDGET
LEVY TOTAL BUDGET YTD Exp. Balance
001 Convention Center HVAC Study - $ - $ - $ - $ - $ - 002 Convention Center HVAC - Duct Work - $ - $ - $ - $ - $ - 003 Convention Center HVAC - BMS System Upgrade Compl eted FY 2019/20 $ 20,450 $ - $ 20,450 $ 20,450 $ - 004 Convention Center HVAC Portable A/C Units Compl eted FY 2020/21 $ 75,350 $ - $ 75,350 $ 75,350 $ - 005 Convention Center Security System Compl eted FY 2021/22 $ 177,381 $ - $ 177,381 $ 89,575 $ 87,806 006 Convention Center Lobby Roof (Glass Pyramids)
Assessment and Repair
Compl eted FY 2021/22 $ 480,787 $ - $ 480,787 $ 479,300 $ 1,487 007 Convention Center Building Envelope Repair -
Terrace Building Front
- $ - $ - $ - $ - $ - 008 Convention Center Interior Digital Signage and
Display System
Procurement $ 855,386 $ - $ 855,386 $ 43,039 $ 812,347 009 Convention Center Interior Paint Implementation $ 694,994 $ - $ 694,994 $ 542,457 $ 152,537 010 Convention Center Door Replacements - $ - $ - $ - $ - $ - 011 Convention Center Facility Lighting Project - $ - $ - $ - $ - $ - 012 Convention Center Riding Vacuum Purchase Compl eted FY 2019/20 $ 31,238 $ - $ 31,238 $ 31,238 $ - 013 Convention Center Carpet Replacement Implementation $ 1,628,720 $ 241,856 $ 1,870,576 $ 395,988 $ 1,474,588 014 Balance - Contingency - $ 145,694 $ - $ 145,694 $ - $ 145,694 015 Kitchen/Tech Café/Stand B Procurement $ - $ 1,757,065 $ 1,757,065 $ 37,903 $ 1,719,162 TOTAL $ 4,110,000 $ 1,998,921 $ 6,108,921 $ 1,715,300 $ 4,393,621
Santa Clara Convention Center FY 2021/22 2nd Quarter Report Page 14 of 15
Community Involvement
GM attended the bi-annual Milpitas HS
Academy of Travel and Tourism event
and acted as a judge for mock interviews
with students.
GM worked with the Bill Wilson Center to
provide and contract space for its annual
Adopt-a-Family drop off and pick-up
location for 2021. Expenses for the event
will be covered by Spectra and Levy as
part of their “Community” KPI’s.
GM attended the bi-annual advisory
committee meeting for Mission College
Extended Opportunity Program & Services
(EOPS). The mission of EOPS is to assist
students challenged by language,
economic, and educational disadvantages.
The program provides services to facilitate
the successful completion of their
academic goals. GM has been a committee
member since 2019.
Santa Clara Convention Center FY 2021/22 2nd Quarter Report Page 15 of 15
Santa Clara Convention Center
5001 Great America Parkway
Santa Clara, CA 95054
Tel: (408) 748-7000
www.santaclaraconventioncenter.com
General Manager: Kelly Carr