Officials Target Visitors Bureau

Troubled by the cancellation of dozens of conventions in the last three years, Mayor James K. Hahn and a city commission are pressing for an overhaul of the way events are booked at the Los Angeles Convention Center.

The target of city officials’ anger and frustration is the Los Angeles Convention & Visitors Bureau, the nonprofit independent group that promotes the city-owned center.

The city pays the bureau up to $17 million a year from hotel bed taxes to promote the city as a tourist destination, maintain a steady stream of major conventions at the downtown complex and keep local hotels filled with conventioneers.

But as they watch the Convention Center’s business drop, officials are beginning to ask what the city is getting for its money.

Forty-two conventions have been canceled in the last three years, an unprecedented number, according to bureau and city officials. And only one of those was directly attributed to the Sept. 11 attacks. In another measure of trouble, the Convention Center’s occupancy rate has dropped from 83% in the 2000 calendar year to 72% so far this year.

The future also looks bleak. Each year the sales staff books conventions for coming years. In fiscal year 2000 it booked 74 in advance. So far this fiscal year, which ends in June, only six conventions have been booked for the future.

The stakes are high for the city, which spent $500 million in 1993 to expand the center. The city is supposed to make money from the rental of the facility and hotel bed taxes paid by conventioneers. But this year, for the first time, the Convention Center will not make a profit, and the city will be forced to spend $7 million in general funds to make debt payments for the expansion.

“The mayor is looking for aggressive solutions to turning this around,” said Deputy Mayor Troy S. Edwards. “Conventions are critical to the regionwide economy, and they are critical to our hotel base here downtown.”

Indeed, the hotel industry has taken a huge hit. The bureau estimates that the number of hotel room nights booked for conventions dropped from 1 million in the 2000 fiscal year to 327,000 last year, costing the local economy about $309 million.

Peter Zen, chairman of the Convention Center Commission and owner of the Westin Bonaventure Hotel, said the panel has launched an examination into bureau operations and agreed last week to explore ways to gain more control over bookings.

If the bureau fails to improve its sales and booking record, Zen said the city could cancel its contract for promotion and convention booking.

Shortage of Hotels, Inflexible Rents Blamed

Bureau officials acknowledge that convention business is down, but said the center suffers primarily from two problems beyond the bureau’s control: inflexible rents for hall space and a shortage of quality hotels close to the facility that have made it less attractive than centers in other cities.

George Kirkland, president of the visitors bureau, said about one-third of the 42 cancellations were because of the hotel space situation.

“That is the one issue that has most put us at a competitive disadvantage with other cities,” said Kirkland, who was paid $345,000 last year by the bureau, including a $60,000 bonus.

Expansion of the Convention Center was supposed to be accompanied by the addition of 4,000 hotel rooms very close to the complex.

Only 460 such rooms have been added, said Michael Collins, the bureau’s vice president.

Cities with thriving convention centers have many more hotel rooms within half a mile of their facilities, Collins said.

For example, Las Vegas has 9,400 such rooms; San Francisco, 5,000; and Anaheim, 4,500. But Los Angeles has only 650, and major downtown hotels are more than half a mile away.

The other problem, according to bureau officials, is a city policy that limits the rental discount that can be offered to convention groups.

Bureau board member John Stoddard, general manager of the Wilshire Grand Hotel, has asked city officials in writing to give the bureau flexibility to grant greater discounts.

“Immediate changes are required in order to prevent other cities from outbidding Los Angeles for business,” Stoddard wrote last month to the City Council.

City commissioners complain that the bureau has offered unwarranted discounts on convention halls, costing the city more than $5 million that could have been used to pay off the expansion debt.

To gain more control over the convention business, the commission is considering setting performance benchmarks in the city contract for the bureau sales staff, requiring monthly meetings to allow city officials to monitor bureau activity and mandating that any rent discounts be submitted to the commission for approval.

Center Could Take Over Bookings, Promotions

If the city decides to cut ties with the visitors bureau, it could have the Convention Center take over all bookings and promotions; it already books local trade shows, car shows and other annual events, Zen said.

The hotelier, appointed to the commission by Hahn, has led the charge for change in the bureau. Some question his motives.

Stoddard has filed a complaint with the city Ethics Commission, saying Zen has a conflict of interest stemming from his dual role as a hotel owner and a commissioner promoting changes that could benefit his hotel.

Zen denies any conflict and remains undeterred in raising fundamental questions about how the bureau counts booked conventions.

Zen said he is concerned that the bureau is listing what appear to be tentative commitments as “definite.”

That would inflate its bookings and might boost bonuses received by salespeople.

He objected that salespeople get bonuses for meeting sales goals in a given year, even if some of the conventions cancel in later years.

Collins acknowledged that salespeople are not asked to return bonuses. But he said cancellations are counted against their goals in future years.

Zen countered that some conventions cancel years later, long after salespeople leave the bureau with their unearned bonuses.

In response to the concerns, the bureau last year hired the accounting firm Arthur Andersen, which concluded that policies and practices could be improved but that there was no fraudulent inflating of bookings lists.

Although the rhetoric has often been harsh, officials at the commission and the bureau said they are trying to work out their problems to avoid such drastic steps as canceling the bureau’s contract.

Kirkland said the bureau has already started taking steps to improve bookings and reduce cancellations, including the hiring of a new sales manager and tightening its booking procedures.

“Do we have challenges?” Collins asked. “Oh, brother, do we. But we can find solutions.”