The company that manages the Oakland Convention Center is out of money and wants the city to bail it out—again.
Integrative Services Corporation, or ISC, the long-time operator of the George P. Scotlan Memorial Convention Center, asked Oakland for $1.7 million earlier this year, according to a report recently shared with the City Council. ISC said it needs this money to cover operating shortfalls caused by lackluster convention business and parking revenue.
The city of Oakland owns the Convention Center, which is located just a few blocks from City Hall. Built in 1983, the center is attached to a 585-vehicle parking garage and the Marriott City Center hotel. On top of the garage is the Golden State Warriors’ former practice facility and corporate offices.
Monthly gross revenues from Oakland’s Convention Center saw revenue plummet 88% from mid-March to November 2019 to the same period in 2020, while parking garage revenue dropped 67%. Revenue has climbed back up since then, but not enough to overcome a shortfall. According to a recent city report, the convention center and garage collected about $3.3 million in fiscal year 2022-2023 but had operating costs of over $4.4 million.
The convention center relies heavily on parking revenue, which includes guests at the adjacent Marriott, and from workers at big companies like Blue Shield that are based downtown. During the pandemic, many companies shifted to remote work, which undercut parking revenue. COVID-19 restrictions also caused massive economic damage to the convention industry as conferences and trade shows were canceled across the country. While some cities like San Jose have seen an improvement over the last year or two, recovery is slow.
Oakland has spent over $2.6 million since April 2021 to help ISC stay afloat during the pandemic. ISC is obligated to pay for all operating expenses at the convention center, according to the city’s recent report. But officials have warned that ISC is likely going to need the city’s assistance for the foreseeable future.
“Although economic trends are looking positive, it is not certain at this time when the Convention Center will reach financial self-sufficiency, and ISC anticipates additional operating shortfalls,” into 2026, wrote Sofia Navarro, Interim Director of the Economic and Workforce Development Department, in the staff report.
This poses a problem for Oakland, which had to make painful cuts to city services last year to balance a record $360 million deficit in the general fund. This year, Oakland is grappling with a $177 million shortfall that must be resolved before July. City officials declined to speak with The Oaklandside about the convention center.
Last month, the City Council’s Community and Economic Development Committee agreed to let Integrative Services Corporation take up to $350,000 from its capital reserve fund to cover expenses until July, a decision the full City Council must approve. The council is scheduled to start budget discussions in coming weeks, which will include decisions about the financial future of the center.
“I support this item and want to do more,” said Councilmember Carroll Fife during the April 23 Community and Economic Development Committee meeting. Fife added that the center is a source of “good labor jobs” that contribute to the city’s financial health.
“I look forward to partnerships to support institutions like our convention center,” said Fife, whose district includes downtown.
Kurt Hanson, general manager of the Oakland Convention Center and the Marriott Hotel, touted the economic benefits of the center. He noted that roughly 1,000 people were staying at the hotel earlier this month for an energy industry conference.
“This is what we do, we bring thousands and thousands of people every week, every month, to downtown Oakland every month,” Hanson said. “Having the Convention Center attached to a 500 room—the largest hotel in the East Bay—is extremely important for the tourism in Oakland.”
Hanson and ISC representatives did not respond to interview requests to discuss the shortfall at the convention center. The Oaklandside was also unable to reach representatives from UNITE HERE Local 2, the union that represents hospitality workers in the East Bay.
Oakland signed an agreement with ISC in November 1997 to manage the convention center and the Marriott. The agreement said one of ISC’s principal goals was to maximize the amount of revenue the city collected from hotels. ISC agreed to manage all activities and operations in the parking garage and the convention center, including renting space, marketing and sales, managing events, handling PR, maintenance and security, and arranging catering and related services during conferences and other events.
For much of its existence, ISC has been controlled by whoever owns the downtown Marriott. ISC was previously run by Oakland Renaissance Associates, which sold the hotel and the company to CIM Oakland City Center LLC in 2007. CIM then sold the Marriott and ISC to DiNapoli Capital Partners and Apollo Global Management in 2015. In the first year under new management, the Convention Center’s net revenues increased by 39%, and the city awarded ISC a “incentive fee,” a bonus for exceeding financial performance benchmarks. A city report from 2016 noted that the Convention Center could not operate without annual subsidies from the city. Two years later, the private equity firm Gaw Capital purchased the Marriott City Center hotel.
