26th August 2010

AECC facing changes but council still supports hotel plans

The economic downturn hasn't been easy for many companies operating within the event industry.

The economic downturn hasn't been easy for many companies operating within the event industry.

Earlier this year, research from industry association Eventia revealed that the recession wiped £800 million off the value of the event sector in the UK. Even now with the country officially out of recession, the industry is still struggling. In fact, an MBD study called the UK Corporate Hospitality Market Development Report suggested that the corporate hospitality sector will only grow by one per cent this year, following a five per cent decline in 2009.

Venues aren't faring much better, as the recent happenings in the Aberdeen Exhibition and Conference Centre (AECC) show.

The Aberdeen venue, which is seen as vital to the city's status as an energy capital and is also the host of Offshore Europe, had hoped a four-star hotel development at its site would secure its future.

After the AECC, which has been bailed out by Aberdeen City Council several times in recent years, ran up more than £2 million in costs for the project, the councillors had to step in again.

Despite the huge debt, Aberdeen city councillors reaffirmed their commitment to the venue and said they would investigate new ways of creating a four-star hotel at the AECC.

In a private session, the city's bosses decided to write off £2.3 million development costs for the hotel project and provide a grant of more than £500,000 to ease cash flow. The repayment date of AECC's loan facility was also been extended to May 17th, 2017.

Aberdeen City Council leader John Stewart said: "The full council reaffirmed its support for the region's major conference centre and its commitment to secure a four-star hotel at the venue.
"However, it has been necessary to re-work the hotel project to minimise risk to the council."
He added that they had received professional advice, which suggested that a hotel would boost AECC business and bring "significant economic returns to the city".

Mr Stewart justified the council's involvement by claiming that the venue contributes far more to the local economy than it receives in public funds, adding that conference centres in Edinburgh and Glasgow receive great financial support from their local authorities.

The meeting also agreed that alternative ways should be found to remove the venue's debt burden and suggested that the value of land next to the AECC should be realised through a development in partnership with the private sector.

AECC managing director Brian Horsburgh said the venue, which is celebrating its 25th anniversary this year, appreciates the "council's position and are reassured by the news that investigations into alternative methods of delivering the hotel will still go ahead".

"The centre brings in an estimated £70 million annually for the local economy, and is seen as vital to Aberdeen's status as an energy capital and host of Offshore Europe," he claimed.
In a move that was welcomed by Mr Horsburgh, the council said that changes will also be made on the AECC's board to ensure "the venue continues to deliver maximum value for the public money invested in it".

Mr Horsburgh said: "AECC also welcomes the proposed audit of our governance and operating procedures to ensure the most effective working agreement between the council and AECC, which will also involve changes to the composition of the AECC board as previously agreed."

The new board, which will be established by October 31st, will be chaired by a non-council member and will include three members of the council's ruling Lib Dem/Scottish National Party administration, two opposition members and three non-councillor members to supplement the existing two.