Convention centers continue taking financial hits from pandemic

DULUTH – In their pitch to prospective clients, staff at the convention center here used to advertise the facility's proximity to Lake Superior and tourist-friendly Canal Park. Now they boast about ventilation and square footage.

"Right now our single greatest asset is our physical space," said Roger Reinert, interim executive director of the Duluth Entertainment Convention Center (DECC).

The COVID-19 pandemic and resulting statewide shutdown have been particularly painful for many of Minnesota's largest venues, whose industry revolves around the very behavior health officials are urging the public to avoid. Convention centers have spent months sitting mostly empty, racking up bills without taking in revenue.

Arenas and banquet halls designed to hold thousands must comply with the state's 250-person cap on indoor events. Those in charge of facilities across Minnesota are starting to wonder what the future looks like for the car shows, concerts and hockey games they rely on financially.

Steve Grove, commissioner of Minnesota's Department of Employment and Economic Development (DEED), said the continued spread of the virus makes it difficult to know when the state guidelines might relax.

"Overall, we just want to see Minnesotans mask up, wash their hands and stay distanced from one another," he said. " … I think the frustrating standpoint from a business perspective is people aren't doing that at the rates that they should, and therefore we aren't able to open up our economy and see the consumer confidence that we want to see."

In the meantime, conventions centers — many of which are publicly funded — have been forced to make layoffs and push back major capital projects. Some worry about budgeting for years to come, especially those with aging infrastructure that will need updates soon.

"Our industry is in survival mode," said Chris Navratil, who owns a trade show producing business based in Farmington. "We were the first to get shut down, and we'll be the last to open."

Tough decisions

In mid-March, the Minneapolis Convention Center closed its biggest event of the year two days early. That's when it really hit Melvin Tennant how devastating the virus could be.

Tennant is the chief executive of Meet Minneapolis, the city's convention and visitors association. He said staff estimates the convention center's annual revenue will be down 75% from last year's $21 million, and the convention center will likely defer $10-15 million in capital projects.

In Duluth, the DECC recently laid off 400 employees as it expects to see a $1.8 million deficit based on projections through May 2021. Mankato's Mayo Clinic Health System Event Center transferred almost all its employees to other city departments for the spring.

Many convention centers are funded by a combination of operating revenue and tourism-based taxes. With both funding streams crippled by the pandemic, some venues are lobbying for federal relief. Many did not receive any dollars from Congress' first stimulus bill.

"The convention center is a catalyst for our hospitality industry," Tennant said. "We have to do everything we can to ensure its viability because so many other businesses and the livelihoods of so many workers are tied so closely to it."

Others in the industry are asking for more answers from the state. Navratil said it takes months to plan events, and she hasn't booked any new ones since the pandemic's onset. Soon she'll have to decide whether to cancel the sports and homes shows scheduled for early 2021.

Under current health guidelines, indoor venues are allowed to host several groups of 250 if areas within the facility have separate occupancy capacities. But a single large space, like Duluth's 6,600-seat Amsoil Arena, must abide by the cap.

DEED hosts a weekly call with leaders of Minnesota's large venues to listen to concerns and provide guidance. Reinert said as the weather turns too cold for outdoor gatherings, he expects many will seek ways to safely socialize indoors.

Outdoor venues can currently host up to six sections of 250 as long as each group has its own entry point, assigned seating area, restroom and concession stand. By following similar protocols, Reinert thinks the DECC could increase the number of people at some of its events without jeopardizing public health.

"There's a tension between being economically viable but also protecting public safety," he said. "Figuring out how to navigate that is the difference between a place like the DECC surviving or not surviving this pandemic."

Silver lining

Like many homeowners, some convention centers have taken time to do some sprucing up during the shutdown. Mankato put in new carpet and painted the walls of its convention center, while Meet Minneapolis redid some floors and finished renovating its outdoor plaza.

Convention centers' marketing staffs are catering to smaller groups they may not have considered hosting in pre-pandemic times. Those with previously scheduled events at hotels or restaurants may now require more space to distance.

The venues are finding creative ways to adapt events by adding virtual elements or using multiple rooms to host more people. They're also looking at new ways to lease their space. The DECC, for instance, is home to the state's first COVID-19 saliva testing site, and it's exploring the possibility of hosting an indoor craft market and a turf recreation area.

Organizers of traditional conventions are still holding onto hope that some sense of normalcy may return next year. The Minneapolis Convention Center already has more than 100 events on its books for 2021, including a regional volleyball tournament that would bring 25,000 people to the city.

"I don't think the average person realizes what these convention centers do for the state of Minnesota," Navratil said. "They bring in millions and millions of dollars. We have to do whatever we can to make sure they're there and ready to open whenever this is all over."

Katie Galioto • 612-673-4478