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16
Nov
What would private sector input mean for Harrogate Convention Centre?
News that Harrogate Convention Centre may be about to embark on a new chapter under a public-private partnership business model poses some important questions.
Anyone affected by the change – and, given that the centre contributes an estimated £45 million to the local economy, that’s most of us – will be interested to know the rationale behind the move, what it might mean in real terms, and which other convention centres operate in this way.
As we reported on Monday, Tom Gordon, the Liberal Democrat MP for Harrogate and Knaresborough, has written to Cllr Carl Les and Richard Flinton, North Yorkshire Council leader and chief executive respectively, “to request an update on the timeline for transitioning the centre to an arm’s-length commercial model”.
This comes after Cllr Les hinted in an interview with the Stray Ferret last month that a major change was coming when he said:
The future is quite possibly some sort of joint venture with people who perhaps know more about operating conference centres than the council does.
Why should it change?
The rationale behind any change of business model comes down to money. HCC has run at a loss for some time, and needs an annual subsidy of £2.7 million from North Yorkshire Council to keep on operating.
Because of this, North Yorkshire Council’s predecessor, Harrogate Borough Council (HBC), had been exploring its options for some time. As far back as 2014, a council-commissioned report had concluded that an arm’s-length solution would be best.
But HBC decided instead to keep things in-house for the time being and invest in the town’s number-one visitor magnet. In 2016, it developed a two-phase redevelopment plan that was ultimately costed at £57 million.
The council applied to the Government’s Levelling Up Fund (LUF) for £20m external funding, but was turned down, straining the project's feasibility to breaking point. The scheme was finally dropped last March.
But while the signs are that a public-private partnership looks likely, North Yorkshire Council is playing its cards close to its chest.
The council’s corporate director for community development, Nic Harne, told us:
No decision has been taken on the future operating model of the convention centre. Options are being considered regarding the investment requirements for the centre and a report is being prepared which will go to the council’s executive.
That’s presumably the report commissioned from London consultancy 31ten, which was engaged at a cost of £23,000 to “explore opportunities in the marketplace and appraise the best options for taking the venue forward”. Its “soft market testing” project was due to conclude by late spring this year, but no results have yet been forthcoming.
Where else does this?
As hinted by Cllr Les and Mr Gordon, though, the arm’s-length model looks most likely. Harrogate Convention Centre is believed to be one of only two major conference venues in the country to still be council-run – the other is Brighton – so any change to a model of council ownership with private-sector operation would bring it into line with the likes of Belfast, Birmingham, Bournemouth, Edinburgh, Glasgow, Liverpool and Manchester.
What would be different?
So what would such a change mean for the centre?
According to one industry veteran who wished to remain anonymous, it would allow more operational freedom, making HCC more commercially agile. So, for example, when anything needed to be bought, the operator would not have to go through a lengthy procurement process, as has historically been the case.
HCC currently has to pay North Yorkshire Council for some of its services, such as building maintenance, accountancy and finance, legal services and HR. An arm’s-length model would enable it to find the best fit and best value from the open market, potentially reducing overheads.
The downside of that would be that the council would lose revenue for those services, so any operating deal with a commercial partner would have to take that into account.
Whether the public-private partnership model prevails, or whether the council goes for the “nuclear option” and sells the whole thing off to a private equity firm – which is a possibility that has been considered – industry expert Max Agostini thinks any change bodes well for HCC, and for the town.
Mr Agostini is portfolio director at London-based trade magazine Exhibition News and has seen many such transactions in the industry over the years. He told the Stray Ferret:
Whatever happens, it sounds like the venue could be way more active. If it has got to this stage, it implies that the council haven’t been able to give it much love, but if some company’s willing to come in and run it, they’ll want to make money out of it, which will mean more events.
Overall, I think it spells good things for Harrogate Convention Centre. It used to be a really prominent venue, but has slipped back into the second tier, and anything that gives it a second chance has to be a positive thing.
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