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No tourism means millions in budget cuts for St. Louis tourism office

No tourism means millions in budget cuts for St. Louis tourism office

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ST. LOUIS — The region’s major tourism office, faced with plummeting hotel taxes and disappearing convention income, approved a budget on Wednesday that spends almost one-quarter less next year and uses up millions of dollars in reserves.

And deeper cuts may be necessary, leaders warned, as events continue to cancel and tax collections from the hard-hit hospitality industry come into focus.

Spending would fall 22% to $30 million for the fiscal year that begins July 1 under a budget approved by the St. Louis Convention and Visitors Commission. Revenue is projected to fall by $10.5 million, led by a 43% decline in St. Louis and St. Louis County hotel tax collections.

Explore St. Louis, as the CVC calls itself, has already reduced spending by about $7 million this year, cutting advertising, slashing salaries and furloughing some staff. It projects hotel taxes to fall $5.1 million below the $19.1 million budgeted through June, and convention revenue to drop $2.8 million of $11.6 million.

Meanwhile, maintaining the America’s Center convention complex downtown, which is not currently producing any revenue, costs almost $10 million annually.

“We’re just going to have those costs whether there’s events or not,” CVC President Kitty Ratcliffe said last week.

She cautioned that some scheduled events could still cancel, forcing further revenue adjustments. And board treasurer Jeffrey Barone said it was difficult to project what revenue and conditions will look like next month, much less a year out. While it will need frequent review, Barone said he thought the projections were as good as could be expected.

“(Ratcliffe) and her team have cut a lot, down to the bone,” Barone said.

Still, the organization projects spending down its reserves from about $5.2 million to $1.4 million to make up for a shortfall.

“That is a very low fund balance and we’re hoping we may see some upticks as the year progresses,” said CVC Chief Financial Officer Neil Palacios.

The organization is holding out hope that travel will begin resuming and business will return as next year progresses. Ratcliffe said groups are still signing contracts for 2022 and beyond. Some expect America’s Center facilities will have undergone significant improvements by then as part of a $210 million expansion plan still awaiting a city commission’s final approval to issue its half of the bonds.

“The need for the expansion on the convention center and the improvements in terms of our overall product in St. Louis are important,” Ratcliffe said. “We cannot stop doing what we’re doing or we’re going to harm our future.”

The city board in charge of issuing those bonds held up a final decision last month but is expected to take up the matter again next week. That debt would be paid by hotel taxes that now go to service the debt on the Dome at America’s Center, where the NFL’s St. Louis Rams used to play, which will be paid off next year.

Adding to the CVC’s urgency: the bonds will free up cash for the tourism agency by reimbursing it about $5 million for loans it took out to acquire downtown real estate over the last few years to make way for the expansion.

Last week, the CVC approved a bridge loan with Busey Bank of up to $4.9 million to tide it over until the bonds are issued.

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