News for the Hospitality Executive
|By Keith Reed, The Boston Globe
Knight Ridder/Tribune Business News
Mar. 28, 2004 - LOS ANGELES -- When 35,000 people came here for the 2000 Democratic National Convention, business at the Millennium Biltmore Hotel shot through the roof.
The hotel's 683 rooms were 100 percent full for a week in August, when downtown hotels are usually half empty. Demand for rooms helped double room rates at the hotel, to about $200 a night -- a premium during the sleepy season for the area's hotels.
But don't expect Stephen Haller, the Millennium Biltmore's former director of sales and marketing, to sing the Democrats' praises any time soon. Instead, he describes the convention more like a visit from distant in-laws than one from thousands of paying guests.
It was nice having them, he said, but it was good to see them go. And he wouldn't want them back anytime soon.
"I would not go through the process again to get it," said Haller, who is now director of sales and marketing at the Loews Santa Monica Beach Hotel. "I would say it was not worth it. To be honest, having this little NBA All-Star game this year probably did more for the city than the DNC convention did."
Haller's sentiments echo those of other hotel managers and restaurateurs near Los Angeles's Staples Center, site of the 2000 convention. Downtown businesses, they said, were sold on hosting the convention by city officials who projected millions in revenue from rented hotel rooms, bar tabs, restaurant checks and tips, and hours of positive media coverage that would spotlight a once-blighted but revitalized downtown LA and draw tourists.
Delegates did fill thousands of hotel rooms. But they left bar stools and restaurant tables mostly empty, instead wining and dining at dozens of corporate-sponsored shindigs where they didn't have to shell out their own cash. And the positive stories about Los Angeles's convention success never were written, with coverage instead centering on clashes between hundreds of protesters and police.
The Los Angeles convention should serve as both example and warning, some business owners said, for Boston establishments staffing up and hoping for a big boost when the Democrats come to town in July. For all the hype, some businesses just won't see a return, they said.
"Boston's gonna see," said Duane Burrell, general manager at The Original Pantry Cafe, a 24-hour diner that has been an 83-year mainstay in downtown Los Angeles.
A 1999 report by the Los Angeles Convention and Visitors Bureau predicted $132.5 million in economic impact from the convention. A second study the group commissioned after the convention said it generated $147.1 million, about half of which was attributed to direct spending by delegates and on the actual production of the event.
Local boosters of this year's convention have pointed to an estimated $150 million in economic impact from the convention.
But Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., said those projections are misleading. Convention boosters in Los Angeles, he said, only counted revenue generated from hotel-room rentals, but failed to account for what some businesses lost when they shut down because of security concerns or because conventioneers simply didn't spend any money.
"You're just looking at room nights. You have to look at what disruptions there were to the local business community," he said.
David Tuerck, executive director of the Beacon Hill Institute, a public policy think tank at Suffolk University, agreed, saying Boston officials need to add the costs of security and other potential convention liabilities to their economic impact projections.
"If the DNC is saying that the delegates are going to spend $150 million, then it's necessary to adjust that figure downward to account for what's lost from the presence of the delegates," Tuerck said.
"Some tourists won't come now because the delegates will be picking up hotel rooms that tourists would have had, and some local residents will be avoiding the area and vacationing elsewhere. All that spending that won't take place would have to be subtracted from spending that will take place in order to arrive at a net effect," he said.
The positive and negative effects on Boston businesses are already being felt. Last week, the convention host committee announced a list of 50 venues around the city that won the right to host lucrative delegation parties. While those businesses are almost sure to see a benefit, the FleetCenter itself is losing out on about a dozen concerts and other events that would have been held there but had to move to accommodate the Democrats.
Even so, FleetCenter officials said they're still happy to be hosting the convention because media exposure will help them draw more top-tier sports and entertainment events.
"This for us is the Super Bowl of arena events," said Jim Delaney, a FleetCenter spokesman. "How do we know if this is going to help us attract the NCAA regionals that we're bidding on for 2007-2008? It certainly can't hurt."
Some Los Angeles business owners agreed that the convention did not live up to its billing.
"We didn't make any money off of it, let's put it that way," Burrell said.
Original Pantry, which is owned by former Los Angeles mayor Richard Riordan, spent about $13,000 installing shatterproof glass windows and hiring three off-duty Los Angeles police officers in anticipation of problems with convention protesters, according to Burrell.
But with protesters marching and police officers lining the streets in all directions, none of his regular customers showed up. Few conventioneers did, either, he said.
At the Wilshire Grand, a 900-room hotel four blocks from the Staples Center, the rooms were packed with delegates. Most of them, however, never stopped by the hotel's four restaurants to spend any money, said John Stoddard, the hotel's general manager.
"The clearest memories I had was that our restaurants and our employees were all geared up to make some money and the business levels weren't near where we expected," Stoddard said.
And filling the hotel's guest rooms didn't come without concessions. The Wilshire Grand gave away most of its meeting space so that the Democrats could hold caucus meetings, gave away one complimentary room for every 50 rooms rented by delegates, and waived the normal 50 cents per call telephone surcharge on all its guest rooms.
Giving freebies to groups that book large blocks of rooms is routine, but hotels usually do so knowing they'll make a lot more money on food and beverage spending by conventioneers. Not so in the case of the Democratic convention, Stoddard said.
"When a convention comes to town that takes up 900 rooms, you give away your space. But the problem was, there was no spending to go along with that," he said.
"All over town, somebody was hosting the delegation and entertaining them. If there was free food and booze someplace, they weren't going to open up their wallets and spend their money here."
About a half-mile away, the famous Cicada restaurant was one of the places getting elusive business from the Democrats. The 14,000-square-foot Art Deco eatery has served as a backdrop for numerous movies, a distinction that made it well known to the party planners that were hired to find venues for Democratic private parties.
"They maxed us out," said Jeffrey Stivers, a manager at the restaurant. Cicada usually takes in about $30,000 a week in revenues in August, but that jumped tenfold when the Democrats were in town, he said.
Rod O'Connor, chief executive of the 2004 Democratic convention, said he expects better results for local hotels, restaurants, and shops in Boston. In Los Angeles, he said, delegates were spread out among downtown hotels and swankier ones on the city's west side, meaning some conventioneers spent more time commuting than they did shopping or eating and drinking.
That won't be the case in Boston, a much more compact city where all the delegates will be staying no farther than three and a half miles from the FleetCenter, said O'Connor, who was chief operating officer of the Los Angeles convention.
He also said that there was probably more than $147.1 million in spending from the last convention, but that the study done afterward didn't count the impact of all the private parties.
"I don't think they did an effective job of capturing the economic impact of all the events that were thrown," O'Connor said. "I think the delegates and convention participants that are coming are spending a tremendous amount of out-of-pocket cash, regardless of where they go to eat."
Still, Uno Thimansson, owner of the 285-room Figueroa Hotel, said he will never welcome another political convention back to Los Angeles.
A few days before the convention started, protesters scaled the side of his building, which is two blocks from the Staples Center, trying to hang a banner, he said. While his $118-per-night rooms filled up and his bar did decent business, he said, the huge police and protester presence overshadowed any positive impact from the convention.
"I don't frankly know why any city would go after a political convention," he said.
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(c) 2004, The Boston Globe. Distributed by Knight Ridder/Tribune Business News. LTR,