FY 2022/23 QUARTERLY REPORT – 2nd Quarter Ended December 31, 2022 January 25, 2023
Santa Clara Convention Center FY 2022/23 2nd Quarter Report Page 1 of 15
Table of Contents
2nd Quarter Highlights ................................................................................................... 2 Strategic Highlights ................................................................................................... 2 Financial Highlights ................................................................................................... 2 Event Highlights ......................................................................................................... 3 Operational Highlights .............................................................................................. 4 Other Noteworthy Highlights .................................................................................... 4 Financial Summary ....................................................................................................... 5 Financial Results ....................................................................................................... 5 Income Statement ...................................................................................................... 6 Event Statistics .......................................................................................................... 7 Event Revenue ........................................................................................................... 7 Partners ...................................................................................................................... 8 Indirect Expenses ...................................................................................................... 8 Other Activities .............................................................................................................. 9 Key Performance Indicators (KPIs) ........................................................................... 10 Forecast ....................................................................................................................... 11 FY 2022/23 Capital Improvement Projects (CIP) Budget .......................................... 12 CIP Project Updates ................................................................................................. 12 CIP Project Budget .................................................................................................. 12 Community Involvement ............................................................................................. 13
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 2022/23 2nd Quarter Report Page 2 of 15
2nd Quarter Highlights
This quarterly report covers fiscal operations of the Santa Clara Convention Center for the second quarter ended December 31, 2022. This report is unaudited and, therefore, subject to change.
80,959
Total Attendance
56 Total Events
$3,664,200
Total Revenue
Strategic Highlights
Oak View Group (OVG) continues to be actively involved with the City and its consultant, Jones Lang LaSalle (JLL) on the development of the Silicon Valley/Santa Clara DMO, Inc dba Discover Santa Clara
®. In the second quarter, the OVG General
Manager, as a board member of Discover Santa Clara ®, participated in the onboarding of the new Chief Executive Officer, studied, and analyzed the interim booking policy, and provided input on the submission of multiple proposals to potential clients.
OVG 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 OVG, Levy and the DMO’s overlapping key performance indicators (KPIs). Bookings are steady, but still below pre-pandemic levels. The recent economic slowdown and continued fears inflation have led to several cancellations. OVG and its leadership continue to monitor the on-going layoffs within the tech industry and are watching for any trends that may impact the overall business at the Convention Center.
OVG continued to phase in and out employees. Employee totals varied from 24 to 26 based on event load and projected revenue generation. All employees were brought back in accordance with SB 93, California’s Rehiring and Retention Law.
Financial Highlights
The second quarter started strong with a very robust October, however the event load diminished significantly in November and December as banquets and meetings continued to lag behind the projected feed-in numbers. Holiday parties remained low as businesses are still navigating the impacts of the post-pandemic world. Gross revenue October through December was $3,664,200 representing 91.83% of the overall budget for revenue. Conversely, expenses totaled $3,306,462, 87.83% of the budgeted expenses for the quarter, resulting in an overall profit of $357,738 for second quarter.
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Event Highlights
Fifty-six events took place during the quarter, 45 less than the budgeted number of 101.
In the quarter, 20 events canceled, two events rescheduled their dates later in the fiscal year, six events canceled citing concerns with COVID-19 and non-availability at local SCTID hotels. A total of 12 clients did not move forward with their proposal. Budgeted meetings continue to underperform, while banquets were impacted by a low request for holiday parties.
In October, the Center hosted the Taiwan Semiconductor Manufacturing Company (TSMC) North America Fall event. Over 1,700 attendees took place in the single day event. In November, the SJ Holiday Craft Fair returned for its second year. The event that was previously held in San Jose attracted over 5,000 holiday shoppers to the building over Thanksgiving weekend. December was highlighted by the Global Semiconductor Alliance Awards Dinner. Essentially, the Oscars® of the semiconductor industry. Over 1,500 attendees took part in this event that returned to the center for the first time since before the pandemic.
TSMC North America Fall event
Global Semiconductor Alliance Awards Dinner
SJ Holiday Craft Fair
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Operational Highlights
As mentioned above, 56 events took place in the second quarter. Twenty-five in October 17 in November, and 14 in December.
The General Manager (GM) continued to monitor event load and scheduled staffing levels based on business quantity and projected revenue generation. Therefore, employee levels varied from 24 to 26 throughout the quarter. The GM continued negotiations with the Teamsters, Local 853 on a new two-year Collective Bargaining Agreement. The entities met several times to discuss more productive ways to provide needed labor for events. Negotiations are progressing. GM continued to oversee the Convention Center Safety Committee. During the quarter, the GM and the Safety Committee team updated and issued a new evacuation policy and plan for the Convention Center.
OVG’s senior management met to review the current operations at the center and to discuss strategies on how to streamline processes and procedures for upcoming fiscal years.
Other Noteworthy Highlights
In Q2, OVG hosted 37 site tours for potential future events at the Convention Center. The OVG GM, with input from OVG Operations reviewed the previous 5-year capital plan, added new jobs, and discussed reprioritizing the list of the projects. OVG held multiple interviews for the vacant position of Sales Coordinator, a role OVG has been trying to fill since June of 2022. OVG also held interviews for the open Operations Supervisor job. The acquisition of talent continues to be extremely challenging as many applicants do not respond to requests for interviews. Those that do typically lack the required experience or ask for salaries that are not in line with those for the position.
The OVG GM along with the Sr. Sales Manager, Levy and the DMO hosted a meeting with the Santa Clara Tourism Improvement District (SCTID) hotel GM’s and Director of Sales. Conversations focused on new ideas and concepts of how to provide a more streamlined process for clients and review of the current Convention Center Booking Policy. Another meeting is scheduled for February. Began the budgeting process for the next two-year operating budget by meeting with Levy, Encore (AV) and Smart City (IT) to discuss their projected revenue budgets.
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Financial Summary
Financial Results
Historically, the second quarter has tended to be one of the stronger quarters of the fiscal year. October of FY 2022/23 followed the pre-pandemic pattern with solid revenues despite a diminished event load. Conversely, November and December were not as robust as previous years. There were multiple cancelations in November that led to lower revenues. Holiday parties that used to be a staple in December are still not materializing at the rate anticipated. As a result, OVG and its partners generated $3,664,200
in gross revenue during the quarter missing the budgeted amount by $326,135. Net income for Q2 was $357,738 or $131,855 more than the budgeted amount of $225,883.
Financial Summary – 2nd Quarter Ended December 31, 2022 Projected in Budget Actual Difference
Gross Revenue $3,990,335 $3,664,200 ($326,135) Total Expense $3,764,452 $3,306,462 $457,990 Net Income $225,883 $357,738 $131,855
Total expenses for the quarter were $3,306,462 or $457,990 less than the budgeted amount of $3,764,452. There was $69,530 of other revenue recognized in Q2 primarily from cancelation fees.
The year-to-date expenses were $5,711,806, a year-to-date positive variance of $881,708 versus budgeted expenses.
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Income Statement
SANTA CLARA CONVENTION CENTER
QUARTERLY GROSS INCOME STATEMENT
For the quarter ending December 31, 2022
QUARTER 2 TO DATE YEAR TO DATE
BUDGET ACTUAL VARIANCE BUDGET ACTUAL VARIANCE
Number of Events 101 56 (45)
166 107 (59)
Number of Event Days 196 124 (72)
341 233 (108)
Attendance 52,540 80,959 28,419
92,540 127,024 34,484
Event Revenue
Rental 956,230 855,514 (100,716)
1,466,660 1,439,101 (27,559)
Services 31,800 133,704 101,904
57,400 204,467 147,067
IT/Telecom 174,250 209,756 35,506
469,150 423,527 (45,623)
Food & Beverage 2,369,370 1,619,940 (749,430)
3,384,300 2,794,300 (590,000)
Electrical 85,448 172,780 87,332
168,948 305,655 136,707
Audio Visual 355,000 602,976 247,976
530,000 992,303 462,303
Total Event Revenue 3,972,098 3,594,670 (377,428)
6,076,458 6,159,353 82,895
Event Expenses
Services - 29,132 (29,132)
- 42,063 (42,063)
IT/Telecom 128,945 142,634 (13,689)
347,171 287,998 59,173
Food & Beverage 1,908,341 1,382,356 525,985
2,922,426 2,261,804 660,622
Electrical 64,086 129,192 (65,106)
126,711 234,958 (108,247)
Audio Visual 237,850 420,740 (182,890)
355,100 690,977 (335,877)
Total Event Expenses 2,339,222 2,104,054 235,168
3,751,408 3,517,800 233,608
Net Event Income (Loss) 1,632,876 1,490,616 (142,260)
2,325,050 2,641,553 316,503
Other Revenue 18,237 69,530 51,293
36,475 262,708 226,233
Total Net Event & Other Revenue 1,651,113 1,560,146 (90,967)
2,361,525 2,904,261 542,736
Indirect Expenses
Executive 90,596 75,685 14,911
181,192 147,729 33,463
Finance 90,447 74,833 15,614
180,894 140,952 39,942
Event Services 111,475 113,176 (1,701)
214,596 206,422 8,174
Sales/Marketing 95,866 93,617 2,249
191,731 157,297 34,434
Operations 683,581 557,332 126,249
1,367,164 1,007,548 359,616
Overhead 353,265 287,765 65,500
706,529 534,058 172,471
Total Indirect Expenses 1,425,230 1,202,408 222,822
2,842,106 2,194,006 648,100
Net Operating Income 225,883 357,738 131,855
(480,581) 710,255 1,190,836
Other Income/(Expense)
Net Income 225,883 357,738 131,855
(480,581) 710,255 1,190,836
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Event Statistics
There were 56 events scheduled in Q2 with $3,594,670 in revenue and $2,104,054 in expenses. ‘Conventions’ and ‘Trade Shows’ generated the largest amount of revenue in the quarter.
Event Revenue
Event Net Revenue – 2
nd Quarter Ended December 31, 2022
Event Types Gross Revenue Cost of Sales Net Revenue
Banquets $944,554 $751,260 $193,294
Meetings 82,400 19,021 63,379
Consumer Shows 346,387 137,247 209,140
Trade Shows 504,560 190,535 314,025
Conventions 1,519,934 931,590 588,344
Special Events 99,255 29,279 69,976
Miscellaneous Events - - -
Sporting Events 97,580 45,122 52,458
Totals $3,594,670 $2,104,054 $1,490,616
This quarter, there was a profit of $1,490,616 even though the gross event revenue was lower than anticipated. This was in spite of a lower number of events being contracted, 56 compared to the 101 budgeted. The benefit of fewer events is that it usually leads to a decrease in overall event expenses which was the case in the second quarter.
Santa Clara Convention Center FY 2022/23 2nd Quarter Report Page 8 of 15
Partners
Partner Revenue – 2nd Quarter Ended December 31, 2022
Partner Gross
Revenue
Cost of
Sales
Net
Revenue
Levy Restaurants $1,619,940 $1,382,356 $237,584
Smart City (IT services) 209,756 142,634 67,122
ENCORE-AV (AV services) 602,976 420,740 182,236
Electrical 172,780 129,192 43,588
Totals $2,605,452 $2,074,922 $530,530
Partner revenue for Q2 was $2,605,452. The cost of sales was $2,074,922 for a net profit of $530,530. Year-to-date, net partner revenue is showing a $1,040,048 profit versus budget.
Indirect Expenses
Total indirect expenses were $1,202,408 for the quarter.
Departments Expense Description Indirect
Cost
Executive Senior personnel $75,685
Marketing Sales and marketing related 93,617
Finance Finance and Human Resources 74,833
Events Staffing to manage events 113,176
Operations
Engineering, building services, security, and
all other related expenses to operate the
building
557,332
Overhead Non-departmental expenses 287,765
Transition Costs Costs related to the transition to OVG - Totals $1,202,408
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Other Activities
OVG produced and submitted the Building Condition System and Maintenance Report for the City in the quarter. The document provides a narrative on any challenges with operating systems and a recap of continuing and preventative maintenance of the facility.
Working in conjunction with Levy, the DMO, the City and JLL, the sales team reconfirmed its prospect goals for FY 2022/23. OVG’s goal for the year is to average 204 active business prospects throughout the fiscal year. At of the end of the second quarter, OVG’s sales team is actively working 236 sales prospects. Applying the goals of the booking strategy, OVG has put an emphasis on prospecting and generating leads for Priority 3 business. OVG is aiming to convert 20% of those prospects into tentative 1 business. Of those tentative events, OVG will work to reach a conversion rate of 20% into definite2 business throughout the fiscal year. With a full year of data, the sales team is reviewing the conversion ratios. 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 GMs of OVG and Levy, in tandem with the DMO’s new CEO continued to review and examine new marketing materials to drive sales for the destination. Mock-ups of the proposed social media campaign were presented by the marketing firm. Review of the proposed ads will take place at the beginning of the third quarter. In addition, OVG’s GM remained working with the DMO CEO on obtaining room block pick-ups from events sending requests to the SCTID hotels for submission.
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.
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Key Performance Indicators (KPIs)
Gross revenue was $3,664,200 and net income was $357,738 for Q2. Through the second quarter, the event mix shows the Convention Center hosted eight of its targeted P3’s, 20 of its P4 goal and 79 of its P5 mark. Prospecting numbers remain strong as the Sales Manager continues to focus on bringing new business to the facility. KPI Q2 and YTD results are reported below.
Performance Measures
2022/23
Target YTD October November December NOTES
$13,603,635 $6,422,061 $2,183,790 $609,028 $871,382
2. Net Income ($217,715) $710,255 $621,162 ($193,451) ($69,973) 14,755 7,960 1,822 115 1,347
4. Economic Impact $17,234,704 $20,203,115 $4,612,778 $3,548,563 $2,155,887 85% - - - - Reported at year-end
1% 0.00% 0.00% 0.00% 0.00%
3 0 0 0 0
2% 0.00% 0.00% 0.00% 0.00%
6 0 0 0 0
6% 7.48% 8.00% 5.88% 7.14%
24 8 2 1 1
18% 18.69% 28.00% 23.53% 7.14%
67 20 7 4 1
73% 73.83% 64.00% 70.59% 85.71%
274 79 16 12 12
Total Events 374 107 25 17 14
7. Community Benefit
2 1 0 0 1
60% 0% - - - Reported at year-end
20% 0% - - - Reported at year-end
220 245 244 244 236 Average for the year of P3, P4, P5
Percent of small, local and M/WBE businesses/vendors
8. Number of Prospects (active) (non-cumulative)
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 P1 Events
Number of P1 Events
Percent of P2 Events
Number of P2 Events
Percent of P3 Events
Number of P3 Events
OVG 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)
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Forecast
The Center operated at a profit of $357,738 through Q2 as a result of larger than anticipated revenues in the month of October. For the remainder of FY 2022/23, revenues are projected at a $564,064 loss resulting in an overall profit of $146,191 for the fiscal year. If these projections hold, the Center will beat its budgeted loss of $217,715 by $363,907. While it is the midway point of the fiscal year, short term bookings continue to be active, the event numbers are expected to grow.
SANTA CLARA CONVENTION CENTER
ROLLING FORECAST
FY 2022/23
ACTUAL YTD FORECAST TOTAL ORIGINAL
July - Dec Jan - June PROJECTION BUDGET VARIANCE FY 2023 FY 2023 FYE 6/30/23 FYE 6/30/23
# OF EVENTS 107
114
221
374
(153)
DIRECT EVENT INCOME $ 1,737,033
$ 1,937,002
$ 3,674,035
$ 3,519,063
$ 154,972
ANCILLARY INCOME 904,520
844,407
1,748,927
1,693,161
55,766
TOTAL NET EVENT INCOME 2,641,553
2,781,409
5,422,962
5,212,224
210,738
OTHER INCOME 262,708
-
262,708
72,950
189,758
EXECUTIVE 147,729
182,351
330,080
339,385
9,305
MARKETING 140,952
204,444
345,396
346,281
885
FINANCE 206,422
223,624
430,046
429,193
(853)
EVENTS OPERATIONS 157,297
201,513
358,810
359,017
207
OPERATIONS 1,007,548
1,630,473
2,638,021
2,615,957
(22,064)
OVERHEAD 534,058
903,068
1,437,126
1,413,057
(24,069)
INDIRECT EXPENSES 2,194,006 3,345,473 5,539,480 5,502,889 (36,589)
OPERATING NET INCOME (LOSS) 710,255
(564,064)
146,191
(217,715)
363,907
NET INCOME (LOSS) $ 710,255
$ (564,064)
$ 146,191
$ (217,715)
$ 363,907
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FY 2022/23 Capital Improvement Projects (CIP) Budget
CIP Project Updates
• OVG worked with Levy and Sixth Dimension, the center’s third-party project management team, on revising the agreement with the architectural firm to provide updated design documents for kitchen upgrades at the Center. • Partition Specialties, Inc. (PSI) provided unexpected maintenance on the Grand Ballroom air wall system. A full report and recommendations are expected to be submitted to in Q3.
• The final punch list item from the Carpet/Flooring project was completed in December.
• The agreement for the Levy refrigeration project was reviewed, updated, and forwarded to the vendor for review.
• Idibri submitted a proposal for the Digital Signage project. After review and acceptance of the proposal, during contract negotiations, Idibri was unable to agree to the full terms of the agreement.
• It was determined that AVI-SPL was part of a global procurement co-op, so contract documents were produced for AVI-SPL, submitted, and signed to continue moving the Digital Signage project forward. Installation is expected to begin in Q4 of this fiscal year.
CIP Project Budget
• OVG reviewed, revised, and produced an updated 5-year Capital Plan. The document, that was submitted within the quarter, is currently under review by the City.
SANTA CLARA CONV ENTION CENTER - OV G
CAPITAL PROJECTS
Proj. # Project Name Phase CITY/SPECTRA
REV ISED BUDGET
L EV Y TOTAL BUDGET YTD E xp. Balance
001 Convention Center HVAC Study - $ - $ - $ - $ - $ - 002 Convention Center HVAC - Duct Work - $ - $ - $ - $ - $ - 003 Convention Center HVAC - BMS System Completed FY 2019/20 $ 20,450 $ - $ 20,450 $ 20,450 $ - 004 Convention Center HVAC Portable A/C Units Completed FY 2020/21 $ 75,350 $ - $ 75,350 $ 75,350 $ - 005 Convention Center Security System Completed FY 2021/22 $ 177,381 $ - $ 177,381 $ 172,831 $ 4,550 006 Convention Center Lobby Roof (Glass
Pyramids) Assessment and R epair
Completed FY 2021/22 $ 480,787 $ - $ 480,787 $ 479,300 $ 1,487 007 Convention Center Building E nvelope Repair
- Terrace Building Front
- $ - $ - $ - $ - $ - 008 Convention Center Interior Digital Signage
and Display System
Planning $ 855,386 $ - $ 855,386 $ 45,999 $ 809,387 009 Convention Center Interior Paint Completed FY 2021/22 $ 694,994 $ - $ 694,994 $ 648,052 $ 46,942 010 Convention Center Door Replacements - $ - $ - $ - $ - $ - 011 Convention Center Facility Lighting Project - $ - $ - $ - $ - $ - 012 Convention Center Riding Vacuum Purchase Completed FY 2019/20 $ 31,238 $ - $ 31,238 $ 31,238 $ - 013 Convention Center Carpet Replacement Completed FY 2021/22 $ 1,628,720 $ 241,856 $ 1,870,576 $ 1,751,725 $ 118,851 014 Balance - Contingency - $ 145,694 $ - $ 145,694 $ 32,924 $ 112,770 015 Kitchen/Tech Café/Stand B Planning $ - $ 1,757,065 $ 1,757,065 $ 214,901 $ 1,542,164 TOTAL $ 4,110,000 $ 1,998,921 $ 6,108,921 $ 3,472,770 $ 2,636,151
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Community Involvement
In the 2nd quarter the OVG team, with its partners Levy, Encore and Smart City hosted their inaugural Community Event, “Frosty Fest”.
Here are some details about the event:
• Promoted solely on social media
• Free registration hosted on Eventbrite
• Sold out registration of 300
• Event included the following activities:
o Gingerbread men decorating
o Treasure Hunt
o Winter-themed movies
o Games and crafts
• Levy provided complimentary snacks
• Sourdough Sam (49ers mascot) visited for one hour
• Heavy rains on event day decreased attendance to approximately 150
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In October, the GM and Sr. Sales Manager volunteered for the Academy of Travel & Tourism (ATT) program at Milpitas High School as mentors and judges. ATT is a small learning community focusing on Hospitality, Tourism and Recreation in partnership with local businesses. Teachers integrate class subjects and projects. The GM and Sr. Sales Manager conducted mock interviews and discussed resume tips with students.
The GM continued to serve as a volunteer Board Member for the Extended Opportunity Programs and Services program at Mission College (EOPS). EOPS is a state-funded, services-oriented program. It combines financial assistance with support services designed to inform, recruit, admit, and academically motivate low-income and educationally disadvantaged full-time students to pursue a college education. In December the GM attended the Fall Meeting recap.
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Santa Clara Convention Center
5001 Great America Parkway
Santa Clara, CA 95054
Tel: (408) 748-7000
www.santaclaraconventioncenter.com
General Manager: Kelly Carr