City pares vision for Chesapeake Conference Center

CHESAPEAKE

In early 2009, hoteliers from around the community met with city officials to lay out a laundry list of concerns and complaints about the Chesapeake Conference Center.

The 13-year-old center was too staff-heavy for its size, they argued. It had a $40,000 travel budget. And most important, it was benefiting from thousands of dollars in lodging tax revenues but was pulling in little out-of-town business for Chesapeake hotels, they contended.

The complaints did not go unheard.

In part because of the city's hotel community, the Chesapeake Conference Center has sustained some of the biggest cuts of any city-run operation.

Over the last two years, the center's staff has been reduced by nearly half. The travel budget has been sliced. Officials redirected $260,000 from the conference center budget to the Conventions & Tourism bureau, which the hoteliers say needed to expand. Plans for a parking garage and hotel next to the conference center have been taken out of the capital budget.

"We needed to get leaner," said Chesapeake Economic Development Director Steven Wright, who oversees the conference center. "I think we're moving in the right direction. Are we 100 percent where we need to be? Maybe not."

The changes come at one of the most difficult economic times for the conference center. According to a review of dozens of pages of documents obtained through the Freedom of Information Act, local events and parties - the bread-and-butter niche for the Chesapeake Conference Center - are down.

The hotel community also raised a larger issue. Even though the facility shows a surplus on city financial documents, the conference center would be losing money if not for more than $2 million in restaurant and hotel tax money pumped into the operation each year.

But city officials, even those who opposed the conference center as an expensive waste, defend the facility's place in the community.

"It's a way to draw people into Chesapeake," said Mayor Alan Krasnoff, who once voted against building the center. "Fortunately now, we're doing it without a massive investment. It's earning its keep."

That wasn't always the case - and still isn't, according to some of the hoteliers.

The conference center lost nearly $900,000 in its first year, mostly because of a lease agreement with Armada Hoffler and a costly food service agreement, city auditor Jay Poole said. The city decided to buy the building from Armada Hoffler with about $9 million from a citywide debt fund, and the center is making payments back to the fund each year.

The conference center has experienced surpluses ever since the city bought the building. That is, of course, if you count the tax money the conference center gets each year - 1 percent of revenues from a hotel tax and 0.5 percent of revenues from a restaurant tax.

Since fiscal year 2006, annual banquet revenues from the center have hovered around $2.5 million, although this year's figure likely won't be as high.

A majority of the Chesapeake Conference Center's events are local parties and meetings such as weddings, business luncheons, class reunions and Rotary Club functions, according to a review of five years of event records. The center draws some out-of-town events on a regular basis, such as the U.S. Open 9-Ball Championships billiards tournament.

But the biggest one-time moneymakers are annual parties such as the U.S. Marine Corps Security Forces ball and holiday parties for organizations such as Dominion Virginia Power and Chesapeake Regional Medical Center, which could produce upwards of $45,000 in one night.

Some of those groups have been cutting back on big parties, which has put a dent in the conference center's business. Dominion didn't have its holiday party at the conference center in 2009 for the first time in at least four years.

"A lot of companies didn't come last year," said Deirdra McBride, the conference center's general manager. "They had to chill out until they could regain their composure."

The hoteliers' complaints stemmed from the increase in spending despite a decline in banquet revenues over the last few years. The city recently spent nearly $1.7 million on renovations to the conference center, some of which resulted in "shoddy work," Wright admitted. The center is planning to spend another $1.6 million in renovations over the next few years.

The underlying feeling was that for all the hotel tax money flowing into it, the conference center wasn't generating enough hotel stays - what the industry calls "heads in beds." Statistics show the conference center generated only 1,984 room stays in fiscal year 2009, compared with an estimated 124,703 at the Virginia Beach Convention Center.

The city responded by cutting the number of staff to 15 from about 30, laying off some banquet workers and an accountant. Officials also beefed up the Conventions & Tourism bureau, moving its office from South Norfolk to Greenbrier and transferring a sales position from the conference center.

"We found ways to tweak without compromising the quality of the food," which is the main reason that many local groups keep coming back, McBride said.

Some in the hotel community have been pleased with the response. "They have made some changes," said Joe Hart, director of sales and marketing for Marriott Chesapeake, which is next door to the conference center. "We're looking forward to seeing how those changes make an impact on selling the conference center as a room-night generator."

"Are they attracting the kind of events that fill up hotel rooms?" said city auditor Poole. "Maybe, maybe not. That may be what the issue is."

Some supporters and industry observers say Chesapeake may just have to accept the conference center for what it is: a nice place to host a local wedding, holiday party or banquet. One competing operator described it as an "upscale version" of a Fraternal Order of Police lodge or a Knights of Columbus hall.

Wright and other officials are OK with the conference center being used mainly as a community facility.

"One of the reasons that conference center was built was because this community got tired of holding their events in Norfolk and Virginia Beach," Wright said. "To say that the sole reason for that conference center is to put 'heads in beds' is wrong."

Mike Saewitz, (757) 222-5207, mike.saewitz@pilotonline.com