DULUTH – The city’s marketing arm and convention center are considering a merger as both entities grapple with budget blows from the COVID-19 pandemic.
At a Wednesday board meeting for Visit Duluth, the nonprofit contracted by the city to handle tourism, officials said they were forming a group to discuss the possibility of combining with the Duluth Entertainment Convention Center (DECC).
Other Minnesota cities, including Minneapolis and St. Paul, already combine their convention centers and visitors bureaus. Noting this, Mayor Emily Larson said in an interview this month that many organizations are going to be exploring ways to economize as they budget for next year.
“This may be one of the things the pandemic brings out: How can we help find any efficiencies in how all of us are operating?” she said. “Now that we’ve seen how things can change, what is it that we can do to adapt ourselves proactively?”
Anna Tanski, president of Visit Duluth, said the organization will lay off seven employees by the end of the month, leaving three full-time staff members.
The nonprofit typically gets the bulk of its revenue — $2 million — from the city’s tourism tax collections to handle marketing and advertising. Visit Duluth received one-third of that this year before Mayor Emily Larson told entities not to expect additional payments due to the city’s tourism-related debt obligations.
“This will get us through the end of the year,” Tanski told the Visit Duluth board.
Unlike other convention centers in the state, the DECC was given its authority by the Legislature in 1963. The DECC is statutorily allocated a portion of Duluth’s tourism tax on lodging, which the city collects for it.
Last year, the DECC brought in roughly $10 million in operating revenue. A recent report from the state auditor’s office said the convention center lost about $1 million in revenue in just April, typically one of the busiest months for conventions.
Interim Executive Director Roger Reinert estimated that without many events, the DECC is losing about $230,000 a month. That hit will grow with the loss of tourism tax dollars due to the pandemic’s impact on travel.
“I think it’s a healthy conversation to have,” Reinert said. “They’re very strong in places where we’re not as strong, and then vice versa.”
“Both organizations have administrations. Both organizations have overhead. And at the end of the day, both organizations are about bringing visitors to Duluth and the region.”
The chairs of the boards of Visit Duluth and the DECC are picking three members from each authority to start discussing what a merger would look like. Noah Schuchman, the city’s chief administrative officer, will facilitate the talks. Larson said if plans progress, the city and council will be involved.
“Recognizing the need for timeliness for both Visit Duluth and the DECC, our goal is to move quickly to determine what recommendations — if any — come out of our discussion and bring those back to the boards for discussion,” said a letter from Schuchman read at this week’s board meeting. “Notes will be taken at each meeting and both boards will be provided with a status report after each meeting.”
Neither Visit Duluth nor the DECC received federal aid from the CARES Act, though both are lobbying for assistance from a potential second congressional relief bill.