Council Gives Visitors Bureau a Shorter Contract

The Los Angeles City Council extended its contract with the city’s visitors bureau Friday despite concerns that the number of major conventions it has booked in the last four years has dropped by more than half.

The bureau, known as LA Inc., booked 35 conventions for the city-owned Convention Center in 2001, but just 15 this year, and officials confirmed Friday that the bureau has booked only 12 so far for 2005.

Given the severe drop in business, council members decided to approve a six-month contract extension Friday, saying that they want to negotiate a longer pact with tighter performance standards.

“We are very concerned,” Councilman Greig Smith said. “The Convention Center is not a winner for us right now, and it was supposed to be.”

The city issued $525 million in bonds in 1993 to pay for a major expansion of the Convention Center based on the promise that an increase in conventions would pay off the debt. However, city officials said revenue from the center has fallen far short of the amount needed for debt payments, so the city is dipping into the city general fund for $22 million to subsidize the facility this year.

LA Inc., a private, nonprofit corporation, has long had a contract to market the center and book major events.

The contract extension approved Friday provides $3.8 million to the bureau for the first six months of 2005 to market the city for conventions and tourism.

In previous years, the bureau received 2% of the hotel bed-tax revenue, but concerns about its performance and city budget problems caused the city to cut that budget last year to 1% of the tax.

The reduction was made after a city controller’s audit found that the bureau had given excessive discounts on rental fees and had incurred high costs for food, travel and other luxuries.

City officials also charged that the bureau was not aggressive enough in marketing the Convention Center.

Michael Collins, executive vice president of LA Inc., told city officials this week that the drop in bookings is due to a decline in travel after the Sept. 11 terrorist attacks, a slump in the economy and a lack of quality hotel space within walking distance of the Convention Center.

Fewer events have been booked in Los Angeles as competing cities have built more hotels near their convention centers in the last few years, he said.

“It’s the central determiner,” Collins told council members this week about the lack of hotel rooms.

Bureau officials are supporting a proposal for a new hotel across the street from the center, but that plan has run into criticism at City Hall because it would require the city to provide $150 million in subsidies and loans.

Councilman Eric Garcetti said he is troubled by the decrease in conventions, but also is concerned that the cut in funding to LA Inc. might harm the bureau’s ability to book conventions.

“My fear is some of this will be a self-fulfilling prophecy,” Garcetti said.

“When we cut from what is a revenue-generating activity the revenue may go down.”

But Smith said the bureau will simply have to adjust and should expect the next long-term contract to have measurable performance requirements.