Convention’s Impact Beats Projections

Perhaps the only clear winner to emerge from the 2000 presidential campaign was Southern California’s service and hospitality sector.

The Democratic Party’s nominating convention in August generated a regional economic impact of $147.1 million in direct and indirect spending, roughly half of which came from direct spending on everything from hotels and entertainment for delegates to stage construction and production needs for the event itself, according to a report released Tuesday by hospitality industry analyst PKF Consulting.

The finding, based on data gathered from hotels, restaurants and convention committee officials in Los Angeles and neighboring communities, beats by about $14 million the projected economic impact of $132.5 million that Los Angeles-based PKF issued in April 1999.

Just before the convention, local economists questioned whether that prediction might be too rosy, especially because overnight hotel stays pegged to the four-day event were running about 23,000 short of the 94,500 that planners had forecast would be needed.

“I think many of us were apprehensive that civil disobedience [related to the convention] was going to deflect revenue from the city, and it turns out not to have been the case,” said Michael Collins, executive vice president of the Los Angeles Convention and Visitors Bureau, which contracted the PKF study.

Hotel operators, it seems, were ultimately able to make up for that shortfall by charging higher room rates. In downtown alone, overnight hotel stays in August cost about 30% more than in the prior year, PKF found in a separate study released last month.

Also benefiting from convention-related spending were suppliers and employees of hotels, restaurants and other service businesses that spent about $74 million to attend to delegates and other convention participants, the report concluded.

Los Angeles also got a bonus from the convention of nearly $2 million in hotel occupancy tax, the study said. PKF Senior Vice President Bruce Baltin called the figure at least a $300,000 increase in hotel tax revenue over August 1999.

But it was unclear Tuesday just how far that windfall went toward defraying the total price tag the city paid to host the convention, especially the cost of beefed-up police patrols to handle the massive street demonstrations that dogged the event.

Based on filings to the Federal Election Commission, the PKF report indicates the city may have spent as much as $22.7 million on security, transportation and other support services, both in cash and in-kind expenditures.

But Ben Austin, former spokesman for the convention’s host committee and now on staff in Mayor Richard Riordan’s office, could not confirm the figure. He said there were currently no “hard numbers” on the total cost, but he indicated the exact figure could be finalized within the next two weeks.

As for the convention’s economic impact, Austin said Los Angeles may see an ongoing benefit in the form of more meetings and conferences booked downtown. “I think this convention showed that L.A. is more than ready to host an event of any size,” he said.