Culture and TourismFund Update

Presentation toFort Worth City Council

May 5, 2019

Today’s Presentation• Update on Tax Collections• Impact on Culture and Tourism Funds• Prospects for Recovery• Debt Service Coverage Plan for FY20 and FY21• Operating Expense Plan for FY20 and FY21

• Public Events Department• Visit Fort Worth

• Questions/Discussion

Takeaways• In March and April Hospitality and Venue tax collections collapsed• The impact on the Culture and Tourism Funds is significant• It may take 2-3 years for the Culture and Tourism Funds to recover• For FY 20-22, the C&T Funds can meet their debt service obligations• Future C&T-Funded capital projects are suspended until tax revenue

recovery estimates are developed • The Public Events Dept. must reduce its reliance on Occupancy Tax

as part of Culture and Tourism Funds recovery strategy • It is imperative to maintain Visit Fort Worth’s capacity to lead the

recovery through effective Sales and Marketing

Hospitality Tax Collections$2

,719

,894

$2,8

22,6

54

$2,8

16,5

84

$2,6

15,0

48

$2,7

40,5

66

$2,5

28,9

72

$2,1

95,6

09

$2,5

27,8

99

$2,7

75,1

45

$2,4

77,0

01

$553

,409

$2,6

97,5

27

$2,3

72,5

97

846,

000

$282

,201

M A R C H 2 0 1 9

A P R I L M A Y J U N E J U L Y A U G U S T S E P T E M B E R O C T O B E R N O V E M B E R D E C E M B E R J A N U A R Y 2 0 2 0

F E B R U A R Y M A R C H E S T A P R I L E S T M A Y

HOT COLLECTIONS

Project Finance Zone Collections

$614,116

$1,013,519

$1,379,685

$548,169

$669,525

$493,980

$1,244,513

$417,242

$573,591

$515,456

$463,177

$398,707

$622,726

220,000

$55,000

0 200000 400000 600000 800000 1000000 1200000 1400000 1600000

March 2019

April

May

June

July

August

September

October

November

December

January 2020

February

March

Est April

Est May

It’s the same across the US… • Higher the ADR, lower the

occupancy• Hotel Layoffs accelerated in mid-

March, 16.9% of Hotel staff terminated

• Resort hotels showing a 90% decline of employees per hotel

Source: CBRE, Hotels Research, April 4, 2020 STR

CITY OCCUP ADR

Fort Worth, TX

-45 % -$94

Houston, TX -62 % -$105

Dallas, TX -65 % -$110

Phoenix, AZ -65 % -$120

Chicago, IL -70 % -$125

New Orleans -82 % -$125

Orlando, FL -85 % -$125

Impact on Culture and Tourism FundsFund 20101 (7% HOT) - main revenue source at 60% of budget for operations and event revenue generated at both facilities being 30%

FY2019 Actual FY2020 Projection FY21 EstimateHOT $24,076,739 $14,544,444 $20,539,556FWCC $7,952,247 $5,039,291* $7,247,831WRMC $6,853,506 $5,325,704* $7,170,900

Outdoor Events $17,300 $5,000 $11,500

Stockshow Debt contr $798,689 $798,689 $799,970Econ Dev 380 $3,844,817 $3,533,846 $3,735,885

TOTAL $43,543,298 $29,246,974 $39,505,642- 32 % FY19 actual

* FY20 Revenues for WRMC and FWCC based on 7/1 resumption. Subject to change

Prospects for Recovery• There is a lot of speculation on the recovery. No firm data, yet.• Transient business will be our best opportunity to start our recovery• The future of conventions and meetings business/attendance is an unknown• The future of sports and entertainment event attendance is unknown• It may take 2-3 years for tax revenues to return to 2019 levels

HOT FY2019 Actual

FY2020 Projection

FY2021 Estimate

FY2022 Estimate

7% (20101) $24,076,739 $14,544,444 $20,539,556 $24,772,1342% (20103) $6,852,777 $4,155,000 $5,177,000 $7,077,753

TOTAL $30,929,516 $18,699,000 $25,716,000 $31,849,887Variance to FY2019

-40% -20% -1%

Debt Service Obligations• Projected cash to cover legacy debt payments for WRMC & FWCC

($8M annually) is adequate• 7% Hotel Occupancy Tax• 2% Hotel Occupancy Tax• DFW Revenue Share

• Using reserves, projected cash to cover Dickie’s debt payments ($13M-$15M) through FY22 is adequate

• Project Financing Zone (PFZ) Revenue• Venue Taxes• Dickie’s Debt Reserve• Suspended PED Capital Funding

9

Public Events Department – Sales and Marketing StrategyMajor “Turn UP” Aggressiveness on selling space

• 67 Booked events for FY2021 as of April 22, 2020• Banquets - 5• Conventions – 32• Graduation – 1 • Public Show – 7• Religious - 2• Sports – 11• State Associations - 9

• Revenues• FY2019 Actual - $7,952,247• FY2020 Projected - $5,039,291 (July 1 restart)• FY2021 Estimated - $7,247,831

• 132 Booked events as of April 22, 2020• Arts, Crafts, Collectibles – 8 Livestock - 6• City – 1 Exams – 2• Concerts – 5 Banquet - 13• Convention - 2 Sporting - 21• Dog - 6 Dance – 10• Equestrian – 28 Tradeshow - 5• Exhibit – 8 Graduation–4• Gun – 12 Misc. – 1

• Revenues• FY2019 Actual - $6,853,506• FY2020 Projected - $5,325,704• FY2021 Estimated - $7,170,900

Convention Center Will Rogers

PED Expense Plans for FY 2020• Closely tracking expenses attributable to FWCC Shelter, WRMC Mask

Decon Service, and WRMC Isolation Trailers for reimbursement• Following CMO direction on eliminating discretionary expenses• Focus on Labor Expenses

• Eliminated Temporary Labor• No Staff Overtime• Skeleton Crew at WRMC servicing N95 Decontamination• Minimum Shelter Operations Staffing at FWCC• Developing leave and furlough programs to maximize benefit of CARES Act

• Continually in contact with clients to revise event revenue and attendance forecasts

• Suspended new Capital Project spending• Continued investment in Sales activities

PED Expense Plans for FY 2021• Targeting increased revenues (vs. FY20 Budget)

• Elevate PED partnership with Visit Fort Worth• Consider alternative business opportunities

• Targeting decreased expenses (vs. FY20 Budget)• Revising expenses in response to event and revenue estimates• Developing aggressive cost reduction plans for dark days• Revising workforce plans in response to new business model

• Capital Spending deferred to FY 2022• Continued investment in Sales activities

Visit Fort Worth Funding

• Short-term actions:• Reduced headcount by 6 FTE• Shrinking Visitor center operations and eliminated part time staff• New program initiative to generate more local leads in medical, aviation & logistics;

Hispanic segment initiative• 90% reduction in international marketing efforts• Requested FY2020 funding decrease

$10,715,974 $11,310,186 $9,514,275 $10,022,883

$961,785 $988,128 $900,303 $938,000

FY2019 ACTUAL FY2020 BUDGET FY2020 ADJUSTED FY2021 ESTIMATED

Funding

CVB Funding HERD funding

Visit Fort Worth = Opportunity• The Goal: Position VFW to lead our recovery• Prepare VFW to resume Sales and Marketing activities• Fort Worth’s strength as a drive-in market is an advantage• Develop a plan to maintain funding to effectively perform• “The need for sales and marketing are greatest when things are

at their worst”

Summary• In March and April Hospitality and Venue tax collections collapsed• The impact on the Culture and Tourism Funds is significant• It may take 2-3 years for the Culture and Tourism Funds to recover• For FY 20-22, the C&T Funds can meet their debt service obligations• Future C&T-Funded capital projects are suspended until tax revenue

recovery estimates are developed • The Public Events Dept. must reduce its reliance on Occupancy Tax as

part of Culture and Tourism Funds recovery strategy • It is imperative to maintain Visit Fort Worth’s capacity to lead the recovery

through effective Sales and Marketing

Questions