San Jose team reports no income during COVID-19 pandemic

Team San Jose, a non-profit organization that manages the city’s arts and culture centers and tourism, reported zero dollar revenue last year, demonstrating the huge impact of the COVID-pandemic. 19 on the local economy.

“We have been shut down by county warrant for most of the year,” spokeswoman Frances Wong told San José Spotlight. “With a closed convention center and closed performance venues, that means small businesses have lost visitor spending. “

The association, founded in 2003, had brought in millions of dollars in San José each year. In 2018-19, the last full year before the pandemic, Team San Jose generated $ 138.8 million for the city. That number fell to $ 62.7 million in 2019-2020 and to zero last year, a new city audit revealed.

This is the first time that Team San Jose has failed to meet its economic and financial goals in 10 years, according to the audit.

Screenshot of the city’s annual audit on Team San Jose.

“When the San Jose team buildings are open, they have encouraged visitors and guests not only to travel to a convention or performance, but also to eat out, visit a museum, explore the downtown or any of San Jose’s 18 neighborhoods, ”Wong said.

Businesses in the city saw a sharp drop in revenue during the pandemic, she added.

The group has managed to book around 83,000 hotel nights in the past year during the pandemic. Still, that’s only half of what the San Jose team could do in a pre-pandemic year. In 2018-19, it booked 170,000 overnight stays.

City spokeswoman Elisabeth Handler blamed the pandemic squarely for the loss of earnings, not the San Jose team. The city will not penalize – or separate – from the organization, she added.

“The convention centers have been closed, the hotels have been closed,” she said. “It doesn’t affect the city’s contract with (Team San Jose).”

The San Jose McEnery Convention Center, which houses the San Jose team office, is pictured in this file photo.

This year’s audit also found that the organization had failed to reimburse the $ 50,000 additional incentive fee the city mistakenly granted it two years ago. Handler said the repayment would come by the end of the year.

Crippling economy

Founded in 2003, Team San Jose manages the McEnery Convention Center, Visitors Bureau, and its seven art and entertainment venues, including the California Theater, the Center for the Performing Arts, the Montgomery Theater, the San Jose Civic, and the South Lobby. The non-profit organization promotes the city through its tourism, arts, business and hospitality industries.

When the pandemic hit South Bay in March 2020, all usual activities came to a screeching halt for the San Jose team. The nonprofit laid off about 1,400 employees, the largest layoffs in the region, Wong said.

The organization was also devastated when its president and CEO, Karolyn Kirchgesler, resigned after being diagnosed with terminal cancer in April last year. She passed away in June.

As the pandemic dragged on, the team partnered with local artists on campaigns to promote different areas of the city. Team San Jose also organized virtual tours of museums and conventions.

The group has also transformed its in-house catering into a meal supplier to produce three meals a day – 21,000 meals a week – to shelters accommodating people.

Staff members of the San Jose team worked in an assembly line to prepare three meals a day, including a hot dinner, for people sheltering in place inside the McEnery Convention Center and others. places at the start of the pandemic. Photo file.

Millions of lost

After the association almost lost his contract with the city in 2010 for budget overruns, poor management oversight and outrageous bonus distribution to staff, its turnaround was successful, according to the city’s annual audits.

Under its current contract, Team San Jose is getting $ 1 million to manage the city’s tourism efforts and its convention centers. The city also grants an “incentive royalty” of $ 250,000 if the organization achieves additional financial goals, but the San Jose team has not received it in the past two years.

The group suffered a loss of $ 9.9 million last year, of which about $ 700,000 was spent on repairing and maintaining city facilities, the audit found. The San Jose team often operate at a loss and are subsidized by hotel taxes, but the number has gone from a loss of around $ 4 million in 2018-19 to a loss of $ 13 million last year. .

Team San Jose’s operating revenue last year was 86% lower than the previous year and 92% lower than in 2018-19. The group of companies also lost about $ 3 million in networking services and equipment rentals. Event production revenue increased from around $ 20 million in 2018-19 to $ 3,396 last year.

Screenshot of the city’s annual audit on Team San Jose.

But things could get better for the city’s marketing giant. Since July, the group has hosted five conventions and brought live shows to their theaters.

“Travel has just reopened to international visitors, which is great news for the entire travel industry,” Wong said. “We will continue to listen to trends and reports to see how we adapt to all of these different changes. “

Contact Tran Nguyen at [email protected] or follow @nguyenntrann on Twitter.

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