Local News

Oct 24, 2013 6:02 PM

Audit: CVB Sales Figures Bloated

The Corpus Christi Convention and Visitors Bureau today accepted President and CEO Keith Arnold's resignation on the same day an auditor recommended changes to some of their business practices.

The auditor, hired by the bureau board to check on staff-supplied sales figures in pursuit of current goals, found that of about 90,000 room nights sold in 2011, 2012 and 2013, almost a quarter - 21,400 - could not be confirmed.

Almost 9,000 sales booked as "definite" actually have since cancelled or have booked rooms with convention and visitors bureaus in other cities, according to the auditor's report.

In one case, the CVB booked an event and logged it as a 2,500 room night sale, almost 2,000 more than would have actually been needed, according to the event organizer.

There was neither an letter of intent nor any documentation supporting such a figure, according to the audit report.

Convention and Visitors Bureaus commonly sell blocks of hotel rooms, years in advance. Those sales are considered "definite" when a signed letter of intent is received from the group buying the rooms.

"Definite" sales are then used to measure performance and can, depending on a bureau's contract with the city, trigger staff bonuses or even lead to the bureau receiving a greater share of the city's hotel tax revenue.

The bureau has an agreement with the city to get about 40 percent of the city's hotel tax revenues that it turns and plows into promoting local tourism initiatives and attracting large scale convention business.

Hotel rooms are taxed at seven percent in Corpus Christi.

Since August, 2012, the bureau has received a little more than $4.1 million - an average of about $341,000 per month - from the city, according to the city's check register.

KRIS-6 broke the story of Arnold's departure on Tuesday evening, when our investigative team confirmed the board had voted to place Arnold on leave, following the auditor's recommendation.

The bureau issued a statement announcing that Arnold had resigned, later that night.

At Thursday's board meeting, all eyes were on Arnold, who said his resignation is his choice and not related to the audit.

"We've had a tremendous run here ...related to the performance of this organization and everything," he told KRIS-6 on Thursday. "(This) is a perfectly good staff and a good board to continue what we built on."

Arnold's contract, signed in 2006, was renegotiated in 2010 and extended from 2011 to 2015.

It paid a $123,000 base salary with language allowing annual adjustments. Another $18,450 was available in bonuses and Arnold was given a $600 monthly vehicle reimbursement plus mileage.

The contract shows small bonuses available for exceeding hotel tax revenue collections from one year to the next. It makes no mention of room-night sales.

Arnold's $119,000-per-year contract - which had about 2 years remaining on it - called for Arnold to give the board at least a month's notice.

The auditor recommended, among other things, that the bureau stop claiming sales as "definite" without either first obtaining a letter of intent or a signed contract. Arnold has said the bureau will begin requiring this documentation, this month.


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