[Lnc-business] Please review before 2020 site selection agenda item tomorrow

[Alicia Mattson]

WB:  "What he doesn't get to, you can call in and ask of the presenters who
will be here to represent their respective facilities tomorrow."

Why should I now have to do it myself, when I was promised that someone
else would do it and that I wouldn't have to?  That was the whole point.

It really pushes my buttons when empty promises are made to influence a
vote, and once the desired vote outcome is reached, the promises are not
kept.

-Alicia




On Sat, Dec 9, 2017 at 5:00 PM, Whitney Bilyeu <whitney.bilyeu at lp.org>
wrote:

> I figure Robert can pull together answers for your concerns tonight. What
> he doesn't get to, you can call in and ask of the presenters who will be
> here to represent their respective facilities tomorrow.
>
> You were part of the committee this entire time, and helped get down to
> these final contenders. This is not all news to you, so I think it is a bit
> disingenuous at this point in the game to claim we don't have enough
> information. All of these things have been part of our discussions
> throughout.
>
> Whitney Bilyeu
>
> On Sat, Dec 9, 2017 at 6:39 PM, Whitney Bilyeu <whitney.bilyeu at lp.org>
> wrote:
>
>> This information should be easy for Robert to pull together, since it was
>> all part of our COC discussions. Those things were all factors in how we
>> wound up with the final options before us...
>>
>> Texas is a right-to-work state, so that one is easy :).
>>
>>
>>
>> On Sat, Dec 9, 2017 at 5:55 PM, Alicia Mattson <alicia.mattson at lp.org>
>> wrote:
>>
>>> One of the reasons that I particularly dislike missing this meeting is
>>> that the LNC is considering site selection for the 2020 convention.  I
>>> happen to have a lot of institutional knowledge about it.  I have assembled
>>> an extensive archive of available data on our conventions going back to
>>> 2008, and I have been heavily involved with all of these selections
>>> starting with the 2012 convention.
>>>
>>> I recommend that on this agenda item the LNC adopt the following:
>>>
>>> Move to postpone this agenda item until Mr. Kraus provides the LNC all
>>> missing data points in the format of the existing historical site
>>> comparison template and negotiates lower food & beverage requirements
>>> comparable to past contracts.
>>>
>>> I don’t think these bids are yet ready for a vote, for two reasons:
>>>
>>> 1)      The data is incomplete, and has not been assembled to the
>>> promised standard to make it easy for the LNC to make an informed decision
>>> on a complex issue.
>>>
>>> 2)      The food and beverage requirements (F&B) on these bids are too
>>> high.  It is more than we typically spend, thus it creates too much
>>> financial risk for the LNC.
>>>
>>> A little background.  The first decision that the COC needed to make on
>>> this subject was how the site search would be conducted.  I advocated that
>>> we use the same outside consultant we had successfully used for the 2016
>>> and 2018 processes.  Robert Kraus instead wanted to be our site search
>>> agent.
>>>
>>> I noted that previously when we have conducted in-house searches, we
>>> have received only some of the data we needed in the bids, and I had to
>>> invest lots of time tracking down the missing data and reformatting it into
>>> a useful format that lets the LNC easily make apples-to-apples
>>> comparisons.  When we used the third-party agent, she did all that work for
>>> us, and I barely had to lift a finger.  I indicated I did not have time to
>>> do that this year, and that I would not be able to step in and fill in any
>>> gaps this time.
>>>
>>> To convince the COC to use Mr. Kraus instead, the COC was told in no
>>> uncertain terms that Mr. Kraus understood that he would be responsible for
>>> assembling all the usual data to match the template in the convention
>>> archive, and he would do all of that work.  It was alleged to the other COC
>>> members that if we used the outside agent, though the LNC never writes her
>>> a check because she is instead compensated by the winning hotel, we would
>>> “pay” for it by getting bids with higher F&B requirements.  I was in the
>>> minority on that vote, and the COC opted to use Mr. Kraus rather than the
>>> outside firm.
>>>
>>> Now the LNC is being asked to make a decision.  The LNC does not have
>>> all the promised comparison data that has been used in the recent past to
>>> well-inform the LNC of the relative costs (both to the party and to
>>> delegates) and the trade-offs between bids.  There are many missing data
>>> points in what the LNC has been given.  The F&B requirements in these bids
>>> are much higher than our historical data argues is a wise financial risk.
>>>
>>> Had Mr. Kraus simply used the template that I created in the convention
>>> archive, there are fixed positions for all the required data so it would
>>> have been obvious what data points and calculations are missing.  Also the
>>> historical data is there so it could be shown side-by-side with these 2020
>>> bids so the LNC could gauge whether we’re being offered good deals relative
>>> to what we’ve used in the past.
>>>
>>> The one-page grid assembled for the LNC comparing the 2020 bids shows
>>> the “F&B Min” data, which is the minimum amount that we would be
>>> contractually obligated to spend on food and beverage.  These bids range
>>> from $65,000 to $75,000…but that is not the full picture.  There are two
>>> substantial up-charges for those base figures, and those are not shown.
>>> There is a service charge, typically ranging from 20% to 25%.  There is a
>>> sales tax, which is applied to the base charge and also to the service
>>> charge.  Neither of those data points are provided on the grid, but they
>>> significantly impact the final cost.  Some, but not all, of that data is in
>>> the PDF version of the bids if you dig through it.  This grid should show
>>> you those figures and calculate the total spending that would be required,
>>> as compared actual amounts spent in past years.
>>>
>>> The 2020 Glendale bid would require $65,000 of F&B expenditures, before
>>> the up-charges.  The PDFs indicate there is a 24% service charge, and a
>>> 10.2% sales tax.  That means if we buy $65,000 of product, the final F&B
>>> bill will be $88,821.  Atlanta’s 2020 bid requires base spending of
>>> $65,000, plus a 25% service charge, plus 8.9% sales tax, which yields a
>>> final bill of $88,481.  I do not see those data points anywhere in the
>>> Austin bid, so I don’t know what to add to the $75,000 base requirement.
>>> If it were 24% and 10%, it would be a bottom line of $102,300.
>>>
>>> How do you know whether those are good bids?  What’s our typical F&B
>>> usage?  That’s why I assembled the site comparison data in the archive,
>>> which has our historical spending, but the grid you received doesn’t have
>>> that data side-by-side with these bids.
>>>
>>> Let me give you some historical data:
>>>
>>> 2010 convention (non-presidential)
>>> Contracted Minimum:  (none)
>>> Service Charge:  21%
>>> Sales Tax: 7.72%
>>> Actual Spending after Surcharges:  $56,633 (back-calculates to $43,450
>>> base spending)
>>>
>>> 2012 convention (presidential)
>>> Contracted Minimum:  $40,000
>>> Service Charge:  20%
>>> Sales Tax: 8.81%
>>> Actual Spending after Surcharges:  $68,160 (back-calculates to $52,201
>>> base spending)
>>>
>>> 2014 convention (non-presidential)
>>> Contracted Minimum:  $40,000
>>> Service Charge:  21%
>>> Sales Tax: 6.75%
>>> Actual Spending after Surcharges:  $68,854 (back-calculates to $53,306
>>> base spending)
>>>
>>> 2016 convention (presidential)
>>> Contracted Minimum:  $60,000
>>> Service Charge:  24%
>>> Sales Tax: 6.50%
>>> Actual Spending after Surcharges:  $105,398 (back-calculates to $79,811
>>> base spending)
>>>
>>> The bids in front of us for 2020 are well above historical spending
>>> levels, with the exception of 2016, which was an outlier.  Please note that
>>> the 2016 convention nearly maxed out our delegate allocations, so the 2016
>>> expenditures to some degree create a theoretical maximum that we’d ever
>>> spend.  I think it is unwise and too financially risky for us to presume
>>> that every future presidential convention will mirror 2016 and to
>>> contractually obligate ourselves to match that performance.
>>>
>>> When I brought this F&B issue up with the COC about two months ago, Mr.
>>> Kraus replied that he thought the higher figures were fine because there
>>> are some events involving F&B that are not “charged” to the convention’s
>>> profit/loss figures.  The Chairman’s Circle event often happens offsite,
>>> thus does not credit to our F&B.  It looks to me like the pledge club
>>> reception tends to run about $3,000.  Some groups may have onsite parties
>>> with a bar, which gets credited to our F&B requirements, but I am quite
>>> skeptical and have been shown no data to demonstrate that these would add
>>> up to an additional $20,000 of spending.
>>>
>>> These are important data points that you need to have available before
>>> you make a substantial financial decision.
>>>
>>> In a quick look over these partial bids, I also do not see complete info
>>> about:
>>>
>>>    - All taxes on guest rooms (can narrow the first-glance margin
>>>    between base room rates)
>>>    - Comparisons of prices of meals (impacts how much you get for your
>>>    F&B dollars)
>>>    - Square footage and ceiling heights of the ballrooms
>>>    - Will our ballrooms use air walls to separate us from another
>>>    potentially noisy event?
>>>    - Are the hotels union shops? (impacts A/V and setup costs)
>>>    - Airport transportation costs delegates will likely pay
>>>    - The grid does not include the conditions placed on the a/v
>>>    discounts
>>>    - The grid doesn’t give side-by-side match-up of the concessions for
>>>    easy comparison.
>>>    - Etc.
>>>
>>> The COC was told we would get all of this data (more than 50 comparison
>>> points), and I think it is important to have in front of you as the LNC
>>> tries to balance the many factors involved in a convention site selection.
>>> Some, but not all, of that data has been given to the COC spread out across
>>> numerous files, but it has not been compiled for the LNC.  The remainder
>>> needs to be sought from outside sources still.
>>>
>>> -Alicia
>>>
>>>
>>>
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>>>
>>>
>>
>
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