Los Angeles Convention Center (LACC) reached several key and significant financial and other performance milestones since AEG Facilities took over the management of the city-owned facility in December 2013.
“Transitioning the Los Angeles Convention Center from a publicly operated entity to private management was a major undertaking, one that AEG Facilities implemented seamlessly,” said Bud Ovrom, executive director, Los Angeles Department of Convention and Tourism Development.
Just prior to the venue’s transition to AEG Facilities’ management team, City of Los Angeles projected a deficit of $2 million for the fiscal year, which ended on June 30. With AEG Facilities, a venue management organization, taking control of the downtown Los Angeles Convention Center half-way through the fiscal year, forecasts began to indicate a financial turnaround was underway, and with final figures now available for the year, a $290,000 operational surplus was reported.
Other financial milestones reached for the LACC during the same period include parking revenues increasing by $1 million, wages and salaries finishing $1.5 million lower than the previous year, increased usage and revenue from film and television production by 140 percent while new sustainability programs initiated in just the past six months have decreased electrical usage by 2 percent and decreased water usage by 10 percent year to year.
“We are very pleased with what AEG accomplished this first year, not only significantly improving the operational efficiencies and the bottom line, but also improving the customer service, security and overall maintenance of our convention center. It took bold political leadership for this City to privatize management of one of our major public facilities, and we know now that selecting AEG Facilities as our partner to embark on this endeavor allowed us to successfully overcome the many challenges and set the LACC on a better course,” continued Ovrom.
Under the leadership of new General Manager Brad Gessner, and activation of AEG 1SOURCE, the LACC has solicited, negotiated and completed over 30 new contracts with service providers, contractors, and suppliers to reduce costs. Waste Management was selected as the new provider for waste hauling, recycling and trash compactors, which will save the facility $50,000 in operating expenses annually.
“We are extremely proud of the positive achievements already made at the Los Angeles Convention Center in such a short period of time,” said Bob Newman, president, AEG Facilities. “The staff, with the full and unwavering support of the City, has created a true service culture that event planners are already recognizing as best in class in the industry.”
In a very short transition period, AEG also implemented the initial hiring and training of 82 full-time and 75 part-time employees in 2013, followed by an additional 25 more employees brought on in 2014. Under the new management structure, the current job count of 91 full and 91 part-time employees can be compared to a peak of 200 fulltime employees when the City managed the LACC.
In addition to providing full management services for the LACC, AEG Facilities also provides support to the Los Angeles Tourism and Convention Board (LATCB) in its efforts to attract Citywide Conventions, tradeshows and corporate events and propel the LACC into a top convention destination while enhancing the customer and client experience.
Milestones and other highlights since the transition to AEG Facilities’ management include:
- Budget forecast received from the City department last November anticipated a deficit of $2.0 million for the fiscal year FY-14. AEG Management LACC, LLC re-forecasted a $1.6 million shortfall in February. Actually finished the fiscal year on June 30 with a $290,000 surplus.
- Increased parking revenue by $1 million compared to the prior fiscal year.
- Wages and salaries finished $1.5 million lower than prior fiscal year.
- Reduced overtime expenses from Los Angeles City historical expense of $800K annually to $120K, a reduction of $650K year-over-year.
- Hosted and event-managed a total of 167 events held over 298 event days from December 2013 through June 30, 2014.
- Reduced utilities usage by implementing energy conservation programs, which resulted in the reduction in electrical usage of 2 percent year-over-year.
- As of June 30, LACC has hired a total of 91 full-time employees and 91 part-time employees, compared to a peak of 200 full-time employees when the City managed the LACC.
- Initiated and completed AEG’s “Encore” Guest Services training to all employees, partners, and contractors.
- Improved overall security and building coverage by increasing staffing numbers and conducting thorough training.
- Developed new marketing plan and initiatives to improve short-term bookings and assist the LATCB with Citywide bookings.
- Developed sales initiatives to increase LACC usage for feature films, TV and advertising film shoots resulting in an increase of filming revenue by 140 percent year over year.
- With the assistance of AEG 1SOURCE, LACC has solicited, negotiated and completed over 30 new contracts with service providers, contractors and suppliers.
- Implemented and improved the MBE/WBE/SBE/DBE/EBE participation completing 11 contracts worth over $1 million in annual spend for 30 percent MBE+ participation.
- Transitioned from an exclusive, in-house Utility Provider Program to an Approved Vendor Program completing three contracts with Approved Vendors. This has been well received by LACC Licensees as they now have choices and can negotiate price and terms for event utility services, something they never had before.
- Solicited bids and awarded a contract for preferred audio/visual services, eliminating the need for an AV department in-house and saving related operating expenses. Encore AV was awarded the contract.
- Solicited bids for a Business Service Center operator that resulted in awarding a contract to “ImageQuest”, a local MBE/WBE contractor. The City department had been unsuccessful in attracting and retaining a Business Service Center operator.
- Levy Restaurants implemented the “Taste of LA” food & beverage program with focus on procuring local vendors and products, while reducing the LACC’s carbon footprint.
- Groundwork Coffee replaced Starbuck’s as the specialty coffee provider for the LACC. Groundwork is a local Los Angeles coffee company that serves exclusively USDA-Organic certified coffees and teas, has an extensive sustainability program, and active social responsibility program.