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Verbatim Text of Statement by LB Convention & Visitors Bureau Board Chairman, George Medak

(September 8, 2000) The following is the verbatim text of a statement issued today by Mr. George Medak, Chairman of the Board of the Long Beach Convention and Visitors Bureau:

September 8, 2000

Statement from the Board of the Long Beach Convention and Visitors Bureau George Medak, Chairman

In answer to challenges made to the Long Beach Area Convention and Visitors Bureau, the Bureau has undergone an independent review of the convention bookings and sales incentives awarded to marketing staff for Fiscal Years 1998-1999 and 1999-2000 to date. This Bureau believes that the reviews conducted by Ernst & Young under the supervision of the City Auditor were fair, detailed and thorough. Preliminary findings reveal that errors may have occurred in overstating room night bookings for Fiscal Year 1998 & 1999, resulting in inaccurate calculations of sales incentives awarded for this period.

The Bureau agrees that inaccurate reports are unacceptable, however, the consequences appear to be relatively minor and correctable. As the City Auditor has stated, the apparent over reporting of room night bookings appears to have resulted in the payment of unearned commissions in small amounts to several individuals. The estimated amount of approximately $23,000, while unacceptable, must be viewed in perspective to the overall magnitude of the Convention Bureau operation that is well in excess of $4 million per year.

The Board of Directors and CEO will continue to work with the City Auditor in an effort to correct the errors identified and implement systems that will ensure the accuracy and integrity of future reports. New measures will include the installation of updated computer programs, an expanded internal audit process and external review of sales incentive programs.

The Long Beach Area Convention and Visitors Bureau has contributed greatly to improved hotel occupancies in Long Beach as evidenced by the increase from 53% six years ago to the current 76% level. The Bureau has produced over two million room nights for meetings and convention business between 1994 through 2008. Those bookings between 1994 and 2000 have resulted in over $1 billion dollars in direct spending in the City. Concurrent with bookings has come an increase in hotel average daily rates from $59.00 citywide to today's $110.00. Moreover, Transient Occupancy Tax has more than doubled in the last five years to a current level of $14 million. This tremendous growth clearly points out the need to upgrade reporting capabilities.

The Bureau and its staff will continue to work closely with the City Auditor over the next several months to further review procedures and implement programs to further assist management as needed.

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