A new hotel will attract more delegates and boost revenue for the Vancouver Island Conference Centre, but it won’t put the building in the black, a new report shows.
The City of Nanaimo released a feasibility study on the conference centre and an adjoining hotel, which includes the centre’s performance, economic spinoffs and what an adjoining hotel would do for the centre.
It also looked at what kind of hotel the Nanaimo market can support.
The report shows that most conference centres are money losers in municipal budgets, but contribute to economic activity.
The conference centre generated direct spending of $5.7 million in 2015, which equates to $141 for every person who attended an event. It also shows that based on its economic contributions for every dollar the city invested, $2.35 was generated for the local economy last year.
With an adjoining, 150-room branded hotel, the conference centre could see more delegates, room nights and additional out-of-town delegate spending. It would also boost revenue.
The report says that in the past five years, insufficient hotel rooms contributed to a loss of 18 events and 7,700 delegates, amounting to lost room rental revenue of $82,300 and food and beverage revenue of more than $310,000. With an adjoining hotel in 2019, revenues would be projected to go up by 14 per cent, reaching $2.3 million in the hotel’s first year of operation.
After expenses, and a $84,000 management fee per annum, the report projects the conference centre to operate at an annual deficit of approximately $1.1 million per year, in line with 2014 and 2015 results.
Without a hotel and if the conference centre continues to attain similar operating results as last year, the municipal operating subsidy for the centre is projected to increase to $1.3 million by 2022.
The fact that even with a hotel, the city will still subsidize makes sense to Coun. Gord Fuller “because convention centres don’t make money.” He’s previously talked about getting ideas for different uses of the conference centre and said the report hasn’t changed his mind.
“It’s really not saying that by building a hotel we’re going to have this phenomenal increase in conventions in Nanaimo. We’re still going to be paying for this thing,” he said.
The report also says there’s room in the market for only one new hotel, and two others are currently proposed – including the Hilton hotel on Front Street and a new development by Howard Johnson Hotels. Fuller asks if Nanaimo really needs the hotel behind the conference centre or if the city could allow the Hilton or Howard Johnson to go forward with their proposals.
Coun. Bill Bestwick said there might be some inaccuracies or inconsistencies he’d like verified about some of the information presented in the report, be it the number of room nights directly related to events at the conference centre or the daily spend.
He also said when he’s read that what’s been lost is $80,000 a year – a reference to room rental revenue at the conference centre – that doesn’t seem like a game changer.
“There’s no question that we need a hotel, make no mistake about it,” he said. “I’m getting a little tired of hearing that a hotel is going to save the conference centre. I’m getting a little tired of hearing that we have to [provide incentives to] whoever may build it in order for it to be built.”
Bestwick said he wants the report reviewed in detail with staff, and a meeting with consultants about how they arrived at their information.