Houston First braces for $55M funds gap after ‘historic disruption’ to journey business
Houston First Corp. is preparing for a “year of transition” in 2021 – and a budget slump of $ 55 million – to slowly rebuild the city’s convention industry after the economic chaos of the coronavirus.
The pandemic effectively stalled the tourism and hospitality industries and shook revenue for Houston First, the city’s convention agency.
The agency earned $ 100 million in 2019. In 2020, an expected surplus of $ 1 million became a loss of $ 4.8 million. A deficit of $ 55 million is now expected in 2021, according to the budget city council approved on Wednesday.
“It was a historic disruption to the travel, live events and tourism businesses,” said Michael Heckman, who took over the business in August. “It’s probably the hardest hit industry out there.”
The pandemic weighed on each of the agency’s four main sources of income. Hotel occupancy tax revenue declined from $ 87.5 million in 2019 to $ 54.8 million this year. The venues that Houston First operates raised $ 25 million, roughly a third of their $ 73 million last year. Revenue from the Hilton Americas, which Houston First operates, declined from $ 31 million to $ 7 million. And the downtown parking lots, which the agency typically earns around $ 20 million a year, were only $ 8.5 million.
The agency employed 48 people, about a fifth of its workforce, and nearly the same number were on leave, Heckman said. The remaining employees, who earn more than $ 50,000 a year, accepted wage cuts.
The agency also cut operating costs by 40 percent, withdrew around $ 13 million in cash reserves, and used Hurricane Harvey’s Federal Emergency Management Agency reimbursements to turn an expected loss of $ 35 million into a manageable success of Convert $ 5 million this year. It has reserves of around $ 30 million.
The uncertainty surrounding the pandemic made it “very difficult” to draft a budget for 2021, Heckman said, but the agency wanted to be conservative. It plans to fill the $ 55 million gap with a $ 20 million loan from the city, $ 15 million in other credit, $ 11.3 million in FEMA reimbursements and $ 10 million in cash reserves .
While the financial picture is strong, there is cause for hope, Heckman said. The COVID-19 vaccines, slated for federal approval, could help later in the year, and the agency was able to rebook 92 percent of canceled hotel rooms for years to come, an indication of expectations that business will rebound becomes.
“We believe the second half of the year is promising and can be very encouraging,” said Heckman. The agency hopes 2022 will be the year after the pandemic.
The agency usually measures success in terms of overnight stays and major events. Next year it simply aims to “create value” according to its budget package.
The crippling effects of the pandemic on tourism are being felt across the country. The industry has caused 36 percent of the jobs lost since the pandemic began, said Tori Emerson Barnes, executive vice president of public affairs and policy for the US Travel Association. That number includes more than 4.5 million direct jobs across the country.
“The current expectation is that we will not recover until 2024,” said Emerson Barnes.
The far-reaching hotel tax cuts were similarly far-reaching, she said. Some cities with beaches or national parks – outdoor areas where travelers could of course distance themselves – performed slightly better, but were not spared.
In Florida, where the state relies on sales taxes as its main source of income, state economists recently forecast he would receive $ 4 billion less than expected, about half of which is attributed to a “virtually dead tourism economy.”
In San Antonio, which relies on tourist visits to the Alamo and the Riverwalk, the impact was similarly severe. Hotel occupancy taxes fell 44 percent, slightly better than Houston’s 48 percent, according to VisitSA, the city’s marketing arm. Like Houston First, this organization had to cut 26 full-time positions, cut or even cut marketing contracts, and cut operating costs.
The Transportation Security Administration reports that as of Nov. 19, airport screenings were still down an average of 61 percent year over year. The travel association notes that this was the best performance since the pandemic began.
For cities like Houston that rely on convention and business meetings, the vaccines offer hope, Emerson Barnes said. She cited data from iMeet, a software company, that showed that 82 percent of meeting planners expect to resume face-to-face meetings at some point in the next year.
“There is a social responsibility for people wearing masks,” said Emerson Barnes. “The sooner we can all follow this type of protocol, the sooner we can travel more robustly.”
In another action on Wednesday, the city council approved a $ 5.5 million package of federal pandemic relief funds, which included $ 2 million for the Houston Food Bank and $ 131,000 for animal relocation the city shelter.