Audit Committee Minutes 11-09-07

Audit Committee Minutes 11-09-07

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MINUTES AUDIT, CERTIFICATION & CREDENTIALS COMMITTEE MEETING THFRIDAY, NOVEMBER 9 , 2007 INTERCONTINENTAL THE BARCLAY, NEW YORK, NEW YORK 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 Thomas Corcoran, Jr. Joseph McInerney Don Johnson Min Zhao Ilene D. Kamsler Joseph Kane GUESTS Joe Martin Banks Brown Richard C. Nelson Drew Smith Paul Riedel Robert Slater Robert Steele, III MEMBERS ABSENT Montine McNulty 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 11th, 2007 meeting held in Nashville, Tennessee. 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 3.1% through October 2007. Three additional sales people were hired to sell membership in the direct member and partner states. Thirteen states signed the membership sales agreements. A membership campaign was launched to emphasize the importance of 1dual memberships in AH&LA and partner ...

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MINUTES
AUDIT, CERTIFICATION & CREDENTIALS COMMITTEE MEETING
FRIDAY, NOVEMBER 9
TH
, 2007
INTERCONTINENTAL THE BARCLAY, NEW YORK, NEW YORK
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
Thomas Corcoran, Jr.
Joseph McInerney
Don Johnson
Min Zhao
Ilene D. Kamsler
Joseph Kane
GUESTS
Joe Martin
Banks Brown
Richard C. Nelson
Drew Smith
Paul Riedel
Robert Slater
Robert Steele, III
MEMBERS ABSENT
Montine McNulty
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 11th, 2007 meeting held in Nashville, Tennessee.
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 3.1% through October 2007.
Three additional
sales people were hired to sell membership in the direct member and partner states.
Thirteen states signed
the membership sales agreements.
A membership campaign was launched to emphasize the importance of
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dual memberships in AH&LA and partner state associations.
AH&LA’s officers or staff attended 31
partner state meetings, 40 industry and other association events, and eleven school functions.
AH&LA
enhanced its visibility in the media.
In addition, AH&LA is forming a Green Task Force to develop a
comprehensive sustainability and greening initiative designed expressly for the hotel industry.
AH&LA assisted the Hispanic Hotel Owners Association and the National Association of Black Hotel
Owners, Operators and Developers in developing benefits for their members through both the use of the
Educational Institute’s custom textbooks and exposure at AH&LA events.
The Women in Lodging
Council sent letters to universities across the country, offering speakers.
AH&LA’s Government Affairs staff has made a significant impact on Capitol Hill and with the
Administration.
They have deepened AH&LA’s involvement with coalitions in order to more effectively
address issues concerning the industry.
They attended or sponsored over 70 fundraisers for various allies in
Congress and for Congressional candidates.
The HotelPAC and the Legislative Readiness Fund have
raised $545,000 this year
The Educational Institute is updating The Supervisory Skill Builders Series to include diversity content.
It
is also creating a Portable Lesson Plan on Diversity.
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 30th, 2007 as well as their 2008 budgets.
Continuing last year’s financial successes, she reported that all three companies will exceed their respective
budgets and generate profits in 2007.
For the nine months ended September 30th, 2007, AH&LA incurred a net loss of $206,000 compared to
$681,000 budgeted.
For 2007, AH&LA is projecting to break-even which is $156,000 better than
budgeted.
Dues revenue is forecasted to be $5.07 million, which is 3% below the budget, due to declines in
PSA and direct property dues.
AH&LA will generate a combined total net income of $1.18 million from
conventions and conferences in 2007.
Other non-dues revenues, including royalties, investment earnings
and sublet income are exceeding the 2007 budget.
Total operating expenses, excluding convention related expenses, are forecasted to be $6.91 million for
2007, which is slightly below the budget.
AH&LA’s has significantly decreased its line of credit
borrowing.
For 2008, AH&LA budgeted considerable increases in dues revenues.
PSA and direct property dues are
budgeted to increase 9.9% compared to the 2007 forecast.
Other dues are budgeted to increase 10% in
2008.
Total net income of $1.2 million will be generated from conventions and conferences in 2008.
For 2008, operating expenses, excluding convention related expenses, are budgeted at $7.37 million which
represents a $415,000 or 6% increase compared to 2007.
They include a 4% salary increase and a 15%
employee health benefit increase.
AH&LA expects to increase spending in the Government Affairs and the
Membership Departments in 2008.
For 2007, the Foundation is projected to generate net income of $1.28 million compared to $543,000
budgeted, due to good investment performance.
Proceeds from the Americas Lodging Investment Summit
were $175,000 ahead of the budget.
The Foundation is expected to generate $204,000 net income from the
Tribute Dinners, the Golf Classic and the Silent Auction events in 2007.
It will award one million dollars
in scholarships and research grants.
In the 2008 budget, the Foundation is expected to generate $871,000 net income.
The Foundation will
generate one million dollars in investment earnings.
It will receive $514,000 from the Americas Lodging
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Investment Summit proceeds.
In addition, it will generate net income of $206,000 from its 2008
fundraising events.
It will award $1.35 million in scholarships and research grants.
The Educational Institute has generated a net income of $470,000 in the first nine months of 2007
compared to $27,000 budgeted.
For the full year, EI is expected to generate a net income of $457,000
compared to $183,000 budgeted, despite of a shortfall of product revenues of $322,000 or 3%.
Its
operating expenses are forecasted at $8.15 million, which is $543,000 or 6% below the budget.
Savings
will be realized in salaries and in marketing expenditures.
EI is budgeting $365,000 net income for 2008.
Total revenue is budgeted to increase by approximately
10% due to increases of international sales; enhancements of industry and academic e-Learning; and,
introductions of other new products.
For 2008, total operating expenses reflect an increase of 8%,
including a 4% salary increase and increases in marketing expenditures.
Upon a motion duly made, seconded, and passed, it was
Voted:
to approve the 2008 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 31st , 2007.
The New Hampshire Lodging & Restaurant Association has its third quarter 2007 dues outstanding for
$5,670.
The New Jersey Hotel & Lodging Association: NJH&LA has outstanding dues of $39,304; $5,610 for the
fourth quarter of 2006; $13,979 for the first quarter of 2007; $11,060 for the second quarter of 2007; and,
$8,655 for the third quarter of 2007.
The Utah Hotel & Lodging Association has total outstanding dues of $44,933.
No remittances have been
made for 2004 third and fourth quarter dues – totaling $12,273.
The association still owes $16,365 for the
second, third and fourth quarters 2005 dues.
UH&LA also owes 2006 second and forth quarters’ dues for
$16,295.
However, it paid for its first quarter 2007 dues.
The Virginia Hospitality & Travel Association’s third quarter 2007 balance of $13,131 remains
outstanding.
It has established a plan to remit past dues by the end of 2007.
Upon a motion duly made, seconded, and passed, it was
Voted
: the New Hampshire Lodging &Restaurant Association and the New Jersey Hotel & Lodging
Association have outstanding dues as of the third quarter of 2007 and are not eligible to vote at this Board
Meeting.
Until its next meeting, the Committee will not restrict the Utah Hotel & Lodging Association and the
Virginia Hospitality & Travel Association’s rights to vote at this time to give them more time to put their
affairs in order.
AUDIT UPDATE
Drew Smith of Larson Allen briefed the Committee about new audit standards related to risk assessment.
He also presented to the Committee a confirmation to render audit and tax services for AH&LA and all of
its affiliates.
The Committee accepted the arrangement with Larson Allen.
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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
The Committee expressed its appreciation and gratitude for Ms. Ilene D. Kamsler’s long-term service on
the Committee.
NEXT MEETING
Tentatively scheduled for June 2008.
ADJOURNMENT
The meeting was adjourned at 11:00 a.m.
Respectfully submitted,
Joori Jeon
Executive Vice President & Chief Financial Officer
5
AH&LA AUDIT CERTIFICATION & CREDENTIALS COMMITTEE REPORT TO
THE AH&LA BOARD OF DIRECTORS
NOVEMBER 11, 2007 – NEW YORK, NEW YORK
Good afternoon, my name is Gene Rupnik, Chairman of the Audit Certification & Credentials Committee.
The following comments and recommendations are from our meeting held on November 9
th
, 2007.
Joe McInerney provided the Committee with general updates on the affairs of AH&LA, the Foundation,
and the Educational Institute.
Programs which increased membership were discussed.
He informed the
Committee that the Educational Institute has significantly updated and developed its products.
He also
briefed the Committee on AH&LA’s governmental affairs activities.
He stressed the need to reevaluate
committee missions.
Joori Jeon presented the Committee with AH&LA and its affiliates’ financial reports for year to-date 2007
along with their 2008 budgets.
The Committee was pleased to see that AH&LA, the Foundation and the
Educational Institute are all forecasted to have positive financial results and approved their 2008 budgets.
Joe Martin will report on the 2007 forecasts and the 2008 budgets in more detail.
The Committee reviewed the “Partnership State Association Credentials Report”.
The following State Associations have outstanding dues as of the third quarter of 2007 and are not eligible
to vote at this Board Meeting:
New Hampshire Lodging & Restaurant Association
New Jersey Hotel & Lodging Association
The Committee will not restrict the Virginia Hospitality & Travel Association and the Utah Hotel &
Lodging Association’s rights to vote at this time to give them more time to put their respective affairs in
order.
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Drew Smith of Larson Allen briefed the Committee about new audit standards.
He presented to the
Committee a confirmation to render audit and tax services for AH&LA and all of its affiliates.
The
Committee accepted the arrangement with Larson Allen.
The Committee expressed its appreciation for Ilene Kamsler’s long-term service on the Committee.
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.