City Subsidy Weighed for L.A. Hotel
By Margo McCall -- Tradeshow Week, 1/10/2005
As plans advance for a headquarters hotel adjacent to the Los Angeles Convention Center, the city's convention and visitors bureau continues to undergo scrutiny for not generating as many convention bookings as in years past.
A year ago, the City Council reduced from 2 percent to 1 percent the share of hotel-bed tax revenue that LA Inc. receives to spend on marketing the city. In mid-December, the council granted a third six-month extension, accompanied by $3.8 million in funding, to LA Inc.'s contract with the city, pending negotiation of a longer-term contract.
During a hearing on the matter, the council expressed concern that LA Inc. booked 15 major conventions in 2004, down from 35 in 2001. Only a dozen major events have been confirmed for 2005.
From a convention perspective, Los Angeles suffers from a lack of hotel rooms. Anschutz Entertainment Group's L.A. Live, scheduled to break ground this spring, is intended to resolve that problem. Besides a 7,000-seat concert theater, a 4,000-seat multiplex theater and numerous restaurants and bars, plans for the $1-billion project include a 55-story headquarters hotel with 1,200 rooms.
A council committee is scheduled to meet later this month for a second time to consider a subsidy for the project. Michael Collins, LA Inc. executive vice president, said he's confident L.A. Live will make it through the planning process.
The city's convention center underwent a $525-million expansion in 1993. But with only 650 nearby hotel rooms, Collins said, Los Angeles is unable to compete with San Francisco, which offers 5,000; Anaheim, which offers 4,500; and San Diego, which offers 2,700.
Hotels are "the single most influential variable in our ability to get back into the convention business," said Collins, adding that, "My belief is that once we create that hotel product, the advantages of Los Angeles will compare favorably with other West Coast products."
Patricia Gunness, marketing director for the L.A. Convention Center, which books from 22 to 50 regional shows a year, said competition is fierce, considering that most venues in the region have recently expanded. "There's a finite amount of business out there. If you increase space, it doesn't take a rocket scientist to realize that everyone will be scrambling," she said.
LA Inc. isn't the only CVB facing budget uncertainty. In San Francisco, the CVB stands to have $556,000 pared from this year's previously approved budget. That's far less, however, than the $3.6-million cut initially proposed.
