Audit Committee Minutes 11-07-08 2
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AUDIT, CERTIFICATION & CREDENTIALS COMMITTEE MEETING FRIDAY, NOVEMBER 7, 2008 INTERCONTINENTAL THE BARCLAY NEW YORK, NEW YORK MINUTES CALL TO ORDER Meeting was called to order by Chair Gene Rupnik at 8:00 a.m. ROLL CALL Roll call was conducted. The following members were present: MEMBERS PRESENT AH&LA STAFF Gene Rupnik (Chair) Joori Jeon Gregory A. Bryan Roy Kennington Jan Marie Chesterson Pamela Inman Debbie Johnson Joseph McInerney Don Johnson Robert Steele, III David Kong Min Zhao Joe Martin Richard C. Nelson GUESTS Robert Slater Banks Brown Drew Smith MEMBERS ABSENT Thomas Corcoran, Jr. Gerald W. Petitt ANTI-TRUST STATEMENT Banks Brown drew the group’s attention to the AH&LA Antitrust Statement, attached to the agenda, and explained the importance of this policy. APPROVAL OF MINUTES Upon a motion duly made, seconded, and passed, it was thVOTED: to approve the minutes of the June 9 , 2008 meeting held in Oklahoma City, Oklahoma. AH&LA CEO REPORT President and CEO Joseph McInerney discussed the affairs of AH&LA and its affiliates. He pointed out that AH&LA’s membership has increased by 3.4% through October 2008. AH&LA’s officers or staff attended 30 partner state meetings; 39 industry and other association events; and, eight school functions. Twenty-eight seminars will be completed in 21 states as part of the AH&LA seminar series in 2008. The Under 30 Gateway ...
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AUDIT, CERTIFICATION & CREDENTIALS COMMITTEE MEETING
FRIDAY, NOVEMBER 7, 2008
INTERCONTINENTAL THE BARCLAY
NEW YORK, NEW YORK
MINUTES
CALL TO ORDER
Meeting was called to order by Chair Gene Rupnik at 8:00 a.m.
ROLL CALL
Roll call was conducted.
The following members were present:
MEMBERS PRESENT
AH&LA STAFF
Gene Rupnik (Chair)
Joori Jeon
Gregory A. Bryan
Roy Kennington
Jan Marie Chesterson
Pamela Inman
Debbie Johnson
Joseph McInerney
Don Johnson
Robert Steele, III
David Kong
Min Zhao
Joe Martin
Richard C. Nelson
GUESTS
Robert Slater
Banks Brown
Drew Smith
MEMBERS ABSENT
Thomas Corcoran, Jr.
Gerald W. Petitt
ANTI-TRUST STATEMENT
Banks Brown drew the group’s attention to the AH&LA Antitrust Statement, attached to the agenda, and
explained the importance of this policy.
APPROVAL OF MINUTES
Upon a motion duly made, seconded, and passed, it was
VOTED
: to approve the minutes of the June 9
th
, 2008 meeting held in Oklahoma City, Oklahoma.
AH&LA CEO REPORT
President and CEO Joseph McInerney discussed the affairs of AH&LA and its affiliates.
He pointed out that AH&LA’s membership has increased by 3.4% through October 2008.
AH&LA’s
officers or staff attended 30 partner state meetings; 39 industry and other association events; and, eight
school functions.
Twenty-eight seminars will be completed in 21 states as part of the AH&LA seminar
series in 2008.
The Under 30 Gateway membership category has reached 205 members.
AH&LA is a part of the Coalition for a Democratic Workplace (CDW) and AH&LA’s Legislative
Readiness Fund has raised $3 million to protect a worker's right to a private ballot when deciding whether
to join a union.
The HotelPAC has raised $427,000 in 2008.
AH&LA has enhanced its visibility by
hosting two industry events during both major political parties’ national conventions.
AH&LA’s Green
Task Force is developing a series of comprehensive, sustainable greening guidelines to create an
environmental-friendly hotel.
The Educational Institute has appointed Robert Steele as President after Roy Kennington’s pending
retirement at the end of the year.
It continues its efforts to revitalize its product line-ups.
The Foundation will fund $1.4 million in academic scholarships and research grants in 2008.
AH&LA AND AFFILIATES FINANCIAL REPORTS
CFO Joori Jeon presented the Committee with AH&LA and its affiliates’ financial reports for the nine
months ended September 30
th
, 2008 as well as their 2009 budgets.
AH&LA is expected to break-even in 2008.
For 2008, AH&LA’s dues revenue is forecasted to be $4.31
million, which is $385,000 below the budget but representing a 8% increase from 2007.
AH&LA will
generate a combined total net income of $1.3 million from its conventions and conferences in 2008.
Other
non-dues revenues, including royalties, investment earnings and sublet income are exceeding its 2008
budget.
Total operating expenses, excluding convention related expenses, are forecasted to be $7.2 million for
2008, which is $192,000 (3%) below the budget.
For 2009, AH&LA is budgeting a modest increase in its dues revenues.
PSA and direct property dues are
budgeted to increase 5% compared to the 2008 forecast.
Other dues are budgeted to increase 3% in 2009.
Total net income of $1.2 million will be generated from conventions and conferences in 2009.
For 2009, operating expenses, excluding convention related expenses, are budgeted at $7.7 million which
represents a $500,000 or 6% increase from 2008.
They include a 4% salary increase and a 10% employee
health benefit increase.
AH&LA expects to increase spending in the Finance, Marketing and
Communications and Central Administrations Departments in 2009 due to staff realignment, a special
event, and increases in rental expenses.
For 2008, the Foundation is projected to generate a net income of $708,000 compared to $871,000
budgeted, mainly due to poor investment performance.
Proceeds from the Americas Lodging Investment
Summit were $195,000 above the budget.
Its Annual Giving Campaign has exceeded the budget of
$100,000 to reach $115,000.
The Foundation is expected to generate $130,000 net income from the Golf
Classic and the Silent Auction events in 2008.
According to its 2009 budget, the Foundation is expected to generate a net income of $800,000.
The
Foundation will receive $871,000 from its investment earnings.
It will obtain $673,000 from the Americas
Lodging Investment Summit proceeds and will raise $115,000 from its Annual Giving Campaign.
In
addition, it will generate net income of $137,000 from its 2009 fundraising events and will award $1.44
million in scholarships and research grants.
For 2008, the Educational Institute is expected to sustain a net loss of $431,000 compared to a budgeted net
income of $365,000.
It will have a shortfall of product revenues of $1.3 million or 9%.
The shortfall is
caused by declines of course sales in India; delays in key product introductions or revisions; and, certain
unfavorable timing of long-term contract renewals.
Its operating expenses are forecasted to be $8.9
million, which is within the budgeted range.
EI is budgeted to break-even in 2009.
Total revenue is budgeted to increase by approximately $762,000 or
6% due to introductions of new or revised products; establishments of strategic partnerships; sales recovery
in India; and, a more favorable timing of long-term contract renewals.
For 2009, total operating expenses
are budgeted at $9 million; representing a modest increase of 1%.
Its budgeted operating expenses
contemplate a 4% salary increase and reflect realignments of sales and marketing expenditures.
Upon a motion duly made, seconded, and passed, it was
Voted:
to approve the 2008 financial statements and 2009 budgets for AH&LA, the Foundation and the
Educational Institute.
PARTNER STATE ASSOCIATION REPORT
The Committee reviewed the list of State Associations which are delinquent in their payments as of
October 31
st
, 2008 presented by Pamela Inman.
The New Jersey Hotel & Lodging Association has outstanding dues of $34,677.
This includes $11,060 for
the second quarter 2007 dues; $4,773 for the first quarter of 2008; and, $11,292 for the second quarter of
2008.
In addition, it has not paid for its third quarter 2008 dues of $7,552.
With the exception of New Jersey, all Partner State Associations have paid their dues as of the third quarter
of 2008.
Upon a motion duly made, seconded, and passed, it was
Voted
: in consideration of the fact that that the New Jersey Hotel & Lodging Association provided
AH&LA with a payment plan to retire its old debts and pledged to stay current with its future dues starting
the fourth quarter of 2008, the Committee will not restrict its rights to vote.
AUDIT UPDATE
Drew Smith of Larson Allen briefed the Committee about new audit standards and the redesigned Form
990 reporting requirements.
He also presented to the Committee the confirmations to render audit and tax services for AH&LA and all
of its affiliates for 2008.
The Committee accepted the arrangement with Larson Allen.
EXECUTIVE SESSION WITH LARSON & ALLEN
The Committee went into executive session with Drew Smith of Larson & Allen.
OLD BUSINESS
There was no old business.
NEW BUSINESS
There was no new business.
NEXT MEETING
Tentatively scheduled on June 22
nd
, 2009 in Chicago, Illinois.
ADJOURNMENT
The meeting was adjourned at 11:00 a.m.
Respectfully submitted,
Joori Jeon
Executive Vice President & Chief Financial Officer
AH&LA AUDIT CERTIFICATION & CREDENTIALS COMMITTEE REPORT TO THE AH&LA
BOARD OF DIRECTORS
NOVEMBER 9, 2008 – NEW YORK, NEW YORK
Good afternoon, my name is Greg Bryan, Vice Chairman of the Audit Certification & Credentials
Committee.
The following comments and recommendations are from our meeting held on November 7
th
,
2008.
Joe McInerney provided the Committee with updates on the affairs of AH&LA, the Foundation, and the
Educational Institute.
Programs that increased membership were discussed.
He informed the Committee
of the Educational Institute’s leadership changes and its efforts to revitalize products, briefed the
Committee on AH&LA’s governmental affairs activities, and gave updates on the Green Task Force.
Joori Jeon presented the Committee with AH&LA and its affiliates’ financial reports for year to-date 2008
along with their 2009 budgets.
AH&LA is expected to break-even in 2008 and sustain a net loss in 2009.
The Foundation is projected to generate net incomes in 2008 and 2009.
The Educational Institute is
projected to sustain a loss in 2008 but break-even in 2009.
The Committee approved their 2008 financial
statements and 2009 budgets.
David Kong will report on the 2008 forecasts and the 2009 budgets in more
details.
The Committee reviewed the “Partnership State Association Credentials Report” presented by Pam Inman.
The New Jersey Hotel & Lodging Association has outstanding dues of $34,677.
This includes $11,060 for
the second quarter 2007 dues; $4,773 for the first quarter of 2008; and, $11,292 for the second quarter of
2008.
In addition, it has not paid for its third quarter 2008 dues of $7,552.
Considering that the New
Jersey Hotel & Lodging Association provided AH&LA a payment plan to retire its old debts and pledged to
stay current with its future dues starting the fourth quarter 2008, the Committee will not restrict its rights to
vote.
With the exception of New Jersey, all Partner State Associations have paid their third quarter 2008 dues.
Drew Smith of Larson Allen briefed the Committee about new audit and tax standards.
He presented to the
Committee a confirmation to render audit and tax services for AH&LA and all of its affiliates for 2008.
The Committee accepted the arrangements with Larson Allen.
Mr. Chairman, this concludes my report.
We now need a motion and a vote of the board to accept the
recommendations of this report.
Thank you.
