Aeg facilities took over the Los Angeles Convention Center after the city of Los Angeles, which had managed it for 42 years, put the venue up for RFP in 2012. The facility had been running on an average a $3.5 million annual deficit.
General Manager Brad Gessner took charge with a mandate: Turn it around. Gessner zoned in on staffing, parking, food and beverage, adding concerts, sustainability measures, improving security and forging relationships.
The result?
“We now run an average of $10.2 million in surplus a year since AEG has been running the venue,” Gessner said. “That’s a $14 million swing. The city wanted a $2.7 million reserve at the end of year four; we now have a $7.1 million reserve fund.”
How did they do it?
“Winning the contract and then actually transitioning the management was quite a challenge,” Gessner said. “There were 130 full-time staff members and about the same number of part-timers, and all but 15 were gone. We had to create new job descriptions, do a mass hiring and training, create manuals and take over in a matter of months.”
“First, we found a way to cut staff and cut labor costs and still keep the building running at full capacity,” he said. There are now 105 staffers.
“Second, we drastically enhanced and revamped F&B completely and increased revenues and flow through,” he said. “We removed Aramark and replaced them with Levy Restaurants.”
“We looked at all the cost areas — food cost and labor cost — and cinched that up,” Gessner said. “It was really out of whack before we got here, and we greatly increased the amount of F&B we wanted to offer.
“Previously, and unbelievably, people were having conventions here and their banquets somewhere else. We made it attractive to stay. The food quality went up, our beverage business went up, our catering went up, and our net flow-through profit went up,” he said.
The next component of the convention center makeover was parking.
“The city didn’t have good cash handling procedures in place,” he said. “They were holding spaces for possible convention center goers while turning away parkers from other close-by parts of the downtown core like Staples Center and Microsoft Theater. We changed that policy and turned it into first come, first served.
“We also installed new parking systems, with faster credit card capabilities, and the result was less cash handling and we could get them in quicker. We also increased the rates. We were well below what everyone within a six-block radius was charging. It was artificially low.” Parking revenue was increased by $3 million a year.
Next on Gessner’s agenda was increasing the occupancy rate. “When we took over, the occupancy rate was 55 percent,” he said. “We increased that to 72 percent. In the convention center industry 70 percent is considered fully booked, so we’re functioning at just over full occupancy and will do over 300 events this year.”
Gessner also formed a better relationship with the Department of Convention and Tourism Development for the city of Los Angeles. “We increased those bookings by five more a year. They are very lucrative to the building and the city.”
Over 2.5 million people came through the building last year. Big conventions last year included the American Heart Association, American Academy of Neurology, Anime Expo, Electronic Entertainment Expo (E3) and the Los Angeles Auto Show.
They also added in concerts, from acts such as the Chainsmokers, Marshmello and Kaskade, and electronic dance music shows. “We generate about a quarter of a million dollars net from each show,” he said. “We transform our exhibit halls into an incredible venue.”
Security is always on Gessner’s mind. Any event that has more than 5,000 attendees expected will have armed police at the entrance. “When we got here they had only 30 cameras working. Now we have 325 high-end cameras and a command post manned 24/7,” he said.
Security bollards were installed at the front of the facility. “We spent about $500,000 and the bollards will be able to stop a semi going 80 miles an hour. They dug down 6 feet deep to install the bollards,” he said.
They also bought 25 magnetometers. The screening devices “paid for themselves in the first year, compared to renting them,” he said.
For the EDM shows they create a “medical MASH unit with doctors, EMTs and water stations. If anyone gets into distress, we can provide care,” he said. Gessner was happy to report that after three EDM shows there were no medical transports or arrests.
Of the $27 million in surplus, Gessner has put a great deal back into the building. All the carpet has been replaced. The restrooms have been retrofitted with low-flow devices to drastically reduce water consumption. Back-of-house improvements included upgrading all the chillers.
All the lighting has been retrofitted with an energy efficient system, and a solar project that will have a two-megawatt solar array that will save the facility 15 percent in energy costs is being put in place. The project cost $6.5 million, funded by the city. All the sustainability improvements have earned LACC a LEED Gold certification.
“The city likes what we’ve done here,” said Gessner modestly. “The economic impact to the city has been greatly enhanced, and our neighbors are thrilled with the LACC turnaround.”
↧
MISSION ACCOMPLISHED
↧