Province expects to pay an extra $3M in Halifax Convention Centre costs due to COVID-19
With convention delegates unable to come from outside Atlantic bubble, 'we can't host those events right now'
The Nova Scotia government is planning to spend twice what they were expecting to cover Halifax Convention Centre costs during COVID-19, and one expert says these significant losses are bound to keep happening.
After the global pandemic dealt a major blow to the convention industry, the tab is increasing by $3 million for the 2020-21 fiscal year, with the province now looking at spending about $5.8 million of public funds, said provincial government spokesperson Tracy Barron in an email.
The convention centre relies heavily on delegates coming from outside the Atlantic region, said Events East spokesperson Erin Esiyok-Prime.
"Unfortunately, we can't host those events right now," she said.
Events East runs the convention centre, which has its operating and building costs funded through a 50-50 partnership between the province and Halifax Regional Municipality.
Forty-four national and international events made up 75 per cent of the revenue for the convention centre in 2018-19.
Nova Scotia has been closed to non-essential travel from Canada and abroad for months, and while Atlantic residents can move freely in the bubble, there is currently no timeline for opening up to the rest of the country.
About 30-40 local, regional events in the works
Before the pandemic hit Canada, Esiyok-Prime said they had about 150 events on the books for fiscal 2020-21 that would bring in about 90,000 people.
Instead, Esiyok-Prime said they quickly moved to rebook national and international events for future dates after they closed their doors in March.
They are now hoping to open again in September, with various measures in place to respect public health rules for physical distancing and extra sanitization.
"It's been a rough time, but we have been really trying to focus on looking to the future," said Esiyok-Prime.
She said they're still finalizing details, but they're now looking at hosting 30 to 40 events that will bring local and Atlantic guests between now and next spring.
For their share, the Halifax Regional Municipality has budgeted $2.8 million for convention centre costs in 2020-21, but that excludes any impact related to the pandemic.
"COVID-19 has had a significant impact on the tourism sector which could not be foreseen and the full scope of the impact is not yet known at this time," Halifax spokesperson Maggie-Jane Spray wrote in an email.
This year, the convention centre was expecting events revenue of $13 million.
Last year, Events East predicted $11.4 million in revenue, plus contributions from the city of $2.6 million and $2.5 million from the province.
Dipping into a reserve
After some additions, Halifax ended up having to take $3.6 million from reserves to cover its share of the costs, in a year where the convention centre hosted 160 events and 100,000 delegates.
The city has a convention centre reserve, where all commercial property taxes from the Nova Centre are placed. The idea was that those revenues would offset the annual costs under the agreement with the province.
For years, the Nova Centre has struggled to fill its office space. After an extra year of delays, the development's Sutton Place Hotel is accepting reservations starting in September.
Situation 'going to get worse': expert
Heywood Sanders, author of Convention Center Follies and professor at the University of Texas at San Antonio, said the convention industry has been "absolutely devastated" by the pandemic and it's clear most major trade shows and events will not take place this year.
Although Sanders said attempts to hold local and regional events is the best any convention centre can do, those are also uncertain in the face of the coronavirus, which has proven unpredictable and difficult to control. He added it's unclear whether people will want to assemble in large groups even with a vaccine.
"It may well be months or years before we can get back to where we were in 2019," he said.
The province must be realistic about accepting the centre's "significant operating losses going forward," Sanders said, especially as it competes with others across Canada for a fraction of the national and international events they once expected.
The North American convention centre market has been overbuilt in the last few years, Sanders said, and competition is fierce to attract events.
With the pandemic, Sanders said the situation is "simply going to get worse" and he expects to see provincial governments also stepping in to subsidize events in the hope of bringing in new cash flows.
Sanders said the province and municipality need to provide complete transparency on how the convention centre is performing and what it's costing in public funds.
Business plan expected this fall
Esiyok-Prime said Events East is currently revising their business plans to reflect the pandemic's impact on their budget, which will include a forecasted deficit and what the exact needs are from Halifax and the province.
They offset some costs by laying off hourly employees over the past few months who usually worked at events, Esiyok-Prime said, which is a pool of 200 to 300 people.
She said "obviously there are still a lot of unknowns" around reopening and when they could host a full slate of events, but they are aiming to present their plan in early fall.