A spike in revenue from room tax receipts and facility use rentals will bump the Las Vegas Convention and Visitors Authority’s budget by 6.7 percent in the next fiscal year.
The authority’s board, in a special meeting, on Thursday unanimously approved a $248.4 million operating budget.
An increase in visitation and the gradual upturn in the average daily room rate has led to a projection that room tax revenue would increase by 3 percent in the next year.
Room-tax revenue provides the largest portion of the LVCVA’s budget.
In addition to higher room-tax revenue, the authority is anticipating a 12 percent increase in facility rental fees, thanks to a two-tiered rate increase approved by the board in 2015.
Under the planned rate increase, rental fees will go up 13.8 percent at the Las Vegas Convention Center beginning July 1 followed by a 6 percent increase two years after that.
The rate of 29 cents per net square foot, in effect since Feb. 14, 2006, would be increased to 33 cents per square foot on July 1, and to 35 cents per square foot on July 1, 2018. Rates also would increase from the current 14.5 cents per net square foot on move-in and move-out days to 16.5 cents per square foot on July 1 and 17.5 cents on July 1, 2018.
The authority expects the increases would increase revenue by $700,000 in fiscal year 2018, $1.3 million by 2019, $3.5 million by 2020, $3.9 million by 2021, $4.4 million by 2022 and $5.2 million by 2023, much of which would be dedicated to a $1.4 billion project to upgrade and expand the Convention Center.
But the big increase is in room-tax revenue. In the 2014-15 fiscal year, room-tax revenue totaled $239.3 million. At the end of the current fiscal year, June 30, revenue is projected to hit $245.1 million. The authority’s financial experts are conservatively estimating receiving $267.2 million by the end of the 2016-17 fiscal year.
Southern Nevada is ahead of 2015’s visitation pace by 3.5 percent after the first quarter of 2016 and the average daily room rate is up 4 percent over the first quarter of last year.
The authority doesn’t keep all the room-tax revenue collected with some of it portioned out to education, transportation, parks and state tourism initiatives. This year, $26.9 million is destined for community support.
The LVCVA’s operating budget doesn’t include payments to capital expense projects and debt service on past bond issues. In the budget approved by the board, the capital fund spend is expected to be $115.4 million for the year and $134.5 million will be spent retiring debt.
Other highlights from the budget:
The LVCVA will spend $96.5 million for advertising and $45.2 million for marketing the destination in the coming year. The authority’s research shows that keeping the city’s name before the public is key to driving additional visitation.
The special events budget is listed at $14.3 million, including $11.2 million targeted to Las Vegas Events, the separate nonprofit organization that manages events on behalf of the LVCVA. The budget has $3.5 million targeted for the National Finals Rodeo in December and $1 million for the U.S. Bowling Conference women’s tournament. Other big spends are $625,000 for New Year’s Eve and $500,000 each for the Mountain West and Pac-12 basketball tournaments.
The authority is required to disclose planned lobbying expenditures for the upcoming legislative session. The LVCVA has listed expenses of $177,000, which includes $120,000 in compensation to lobbyists.
The budget has $23 million in contractual obligations for 2016-17. The largest contract, by far, belongs to R&R Partners, at $15.5 million for advertising and marketing communications. It runs through June 2021. Another big contract is with Cordell Corp., the Las Vegas Convention Center project representative. The contract runs through February and is budgeted for $862,000. Terracon Consultants has a $796,944 contract through December for testing and hazardous materials abatement for the demolition of the Riviera site and KGA Architecture is on contract through June 2017 for $475,000 for Riviera site demolition and site improvements.
Contact Richard N. Velotta at firstname.lastname@example.org or 702-477-3893. Find him on Twitter: @RickVelotta