Council committee delves into ACE finances
Thursday, April 29, 2021 by Jo Clifton
Jolsna Thomas, who serves as secretary/treasurer of the board of Austin Convention Enterprises, which oversees financial matters related to the downtown Hilton Hotel, asked members of the City Council Audit & Finance Committee Wednesday to work on getting City Council to appoint an additional two members to the board. With a full complement, the board would have five members.
Thomas; Board Chair Phillip Schmandt, an attorney; and Board Member Sherri Greenberg, a professor at the LBJ School of Public Affairs, were all appointed in early 2020 when all the previous members resigned. Thomas said it would be helpful to the board if Council could appoint other members with some experience in the hospitality industry because none of the current members have such a background.
Council members Leslie Pool and Kathie Tovo asked the most questions at Wednesday’s meeting. Tovo told the Austin Monitor later that Council could appoint new board members as soon as next week. However, she did not indicate whether she had any particular individual in mind for the volunteer position.
As Thomas explained, “We’re a nonprofit public facility corporation … created as a bankruptcy remote entity” that is entrusted to protect the asset. While ACE was created by the city, its debts are its own and not the city’s.
Thomas said, “In good times, it’s a very profitable asset (that generates a) steady stream of cash the city can use.” However, the good times ended with the arrival of Covid-19. In fact, the Hilton paid the city about $2 million in January 2020, from revenues earned in 2019. After that, things went downhill and the Hilton, like other hotels worldwide, suffered a steep drop-off in revenues.
Thomas presented a chart titled “Pandemic impact on performance” showing that the Hilton’s occupancy rate fell from 74 percent in Fiscal Year 2019 to 23 percent in FY 2020. The average daily room rate was $324 in 2019, and fell to $190 in 2020. ACE received a $2.1 million federal Paycheck Protection Program loan, and Thomas said she expects the hotel to be able to rehire any employees who were laid off and want to come back to work. Before the pandemic, the Hilton had about 500 employees, but that number fell to around 200 after the pandemic struck.
Council members did not discuss the board’s decision to hire former Council Member Jimmy Flannigan as president of Austin Convention Enterprises. Several Council members were shocked when they learned earlier of the decision to hire Flannigan at a half-time salary of $140,000 a year.
Tovo and Pool both indicated a willingness to dive further into ACE and the intricacies of convention center financing at a later meeting. Tovo was particularly interested in learning how the city might find the 15 percent of Hotel Occupancy Tax funds Council has designated for historic preservation that was collected several years ago.
Photo made available through a Creative Commons license.
The Austin Monitor’s work is made possible by donations from the community. Though our reporting covers donors from time to time, we are careful to keep business and editorial efforts separate while maintaining transparency. A complete list of donors is available here, and our code of ethics is explained here.
Join Your Friends and Neighbors
We're a nonprofit news organization, and we put our service to you above all else. That will never change. But public-service journalism requires community support from readers like you. Will you join your friends and neighbors to support our work and mission?