Concerned for our colonial capital
- September 10, 2019
Since its restoration in the 1930s, Colonial Williamsburg (CW) has remained a significant economic asset for Virginia, with current employment of 1,778 jobs, 570,000 annual visitors and a property tax base of $266 million. Its educational mission was eloquently summed up by its founder, John D. Rockefeller Jr., who said, “That the future may learn from the past.” Since 1932, more than 100 million people have visited CW to experience that critically important message.
It is unfortunate to note that CW is now facing several life-threatening challenges. Exiting Colonial Williamsburg Foundation President and CEO Mitchell Reiss has been very outspoken on the existential dangers of continued operating deficits balanced by unsustainable endowment withdrawals along with relentless declines in attendance and visitor revenues.
These challenges have existed for many years. In 2002, the CW Annual Report stated: “This level of deficit is unacceptable. The foundation’s goal is to reach a balanced budget in 2006 with operating deficits of no more than $25 million in 2003 and $15 million in 2004.” From 2007 to 2014, however, the average annual deficit was $34 million.
Expense and revenue summary
Based on CW annual reports, operating expenses from 2009 to 2018 averaged $218 million, with total revenues averaging $197 million generating an average deficit of $21 million. On a positive note, 2018 expenses dropped 13%. From 2015 to 2018, annual deficits were eliminated but only through increased withdrawals from the endowment. From 2012 to 2017, visitor- and guest-generated revenues have remained flat averaging $38 million annually.
In 2018, the endowment declined to $650 million, a 17% drop from its $784 million value in 2013. From 2015 to 2018, the average annual endowment withdrawal increased to $65 million, up from an average of $44 million for 2007 to 2014. All of these large withdrawals are depleting the endowment’s ability to offer revenues in the years ahead.
Declining assets and total debt
In 2018, total assets declined to $1.04 billion from $1.32 billion in 2010, a 21% decrease. Net assets for 2018 were down to $620 million, from $908 million in 2010, a 32% decline. Total debt is $342 million, which equates to more than 52% of the endowment fund balance.
Annual attendance at CW has declined nearly 30%, from 780,000 in 2007 to 550,000 in 2018. Williamsburg’s hotel occupancy declined 17% since 2009, based on lodging tax revenues. Recently, several hotels have closed or adapted to residential usage. Alternatively, nearby Busch Gardens Williamsburg and Virginia Beach attract millions annually with steady increases since 2004.
It is appropriate to note that many of these adverse conditions are the fault of no one because many historic sites have also endured similar financial declines. And it is important to state that there are many CW leaders and dedicated staff who work very diligently to strengthen its operations in many ways.
Some observers have minimized CW’s financial declines while others see CW as doomed to closure. Many feel that history is no longer a popular tourism asset. Others work to finance new marketing efforts when previous efforts have not succeeded.
Some important steps for CW to take in the months ahead are:
• Prepare a 5-year financial plan with best/worst case scenarios.
• Attempt to increase the endowment to $1 billion.
• Restrict future endowment withdrawals to 3% to 5% for long-term value.
• Offer financial incentives for return visitorship
• Analyze, address and plan for the “aging demographic” reality.
• Consider the “History is Dead” belief and how to change this.
• Solicit public comments and participation for all of these issues.
• Expand evening programs to reach short-term or off-site day visitors
• Continue the “living history” programming, similar to the Tenement Museum.
• Resurrect the Kimball Theater as an educational/entertainment resource.
• Improve rail links to Washington, D.C., as a congestion-free travel option.
• Offer docents and walking guides to personalize the visitor experience.
Since 2015, Mitchell Reiss has implemented many positive measures to improve CW’s finances, install new programs and upgrade the museums. Mitchell Reiss and his wife, Elisabeth, deserve our thanks for their dedicated efforts.
Terence Masterson, a longtime visitor to Colonial Williamsburg, has served as an economic development director in Westchester and Cayuga counties in New York state and currently in Northampton, Massachusetts. Masterson attained a B.A. and M.P.A. from Pace University, White Plains, New York, and served as deputy mayor and trustee for Irvington, New York, from 1983-1993 and 2009-2010.