Tourist Bureau Seeks Relief From Deep Cuts

0

Tourist Bureau Seeks Relief From Deep Cuts

By HOWARD FINE and ANDY FIXMER

Staff Reporters

Tourism officials are scrambling to keep their beleaguered convention and visitors bureau afloat after L.A. Mayor James Hahn announced plans to slash the city’s funding in half.

In his proposed 2003-04 budget, Hahn reduced the city’s pass-through of hotel bed taxes to the bureau. The $8 million cut, which still must be approved by the City Council, represents a loss of more than one-third of the bureau’s $21.6 million budget.

In explaining the funding cutback, Hahn reiterated past criticism of the bureau’s management, saying he was not pleased with the performance of the Los Angeles Convention and Visitors Bureau, now called LA Inc.

“They have not done enough to draw the major conventions that this city needs,” Hahn said at the press conference announcing the budget. “And right now, in this tight budget year, with so much pain being felt, we have other priorities in this city for which those funds are needed.”

City funding would be reduced from the current level of $15.5 million to $7.5 million, even as total bed tax receipts have remained flat at $14.5 million.

Hahn said that if visitors bureau officials can develop a viable plan to reverse the slide in convention bookings, he would re-examine the allocation.

There were 16 conventions scheduled for the fiscal year ending June 30, 2003, compared with 35 in 2001. The slide coincides with gains made by competitors like Anaheim and San Diego, which finished expansion projects to their centers during those years.

While the council could vote to restore some or even all of the city’s contribution to the visitors bureau budget, there was little sentiment last week to take such a step at least until the bureau comes out with a plan to refocus its efforts.

“Before I would consider restoring any of the funding, I need to see the new strategies they will develop to reach into new markets and bring new types of business opportunities to the city,” said Councilwoman Jan Perry. As the Convention Center is in Perry’s district, Perry has often taken the lead on LACVB issues on the council.

Travel woes

Making matters worse for the bureau is the city’s focus on public safety.

“I will certainly take a look at whether the funding should be restored, but we’re in a very tight budget year and public safety must be addressed first as our top priority,” said Councilman Jack Weiss.

LA Inc. officials, while acknowledging the sluggishness in getting more conventions, noted that the sour economy has driven down bookings across the country.

“At this point they could triple our convention budget and it wouldn’t make much of a difference,” said Michael Collins, LA Inc.’s executive vice president. “Convention business is on hold, and nothing we do is going to change that.”

Although currently receiving 60 percent of its funding from the city, the bureau is not a city agency. It is a private non-profit organization whose members vote on a board that oversees the its management.

Looking to make up some of the funding shortfall, the bureau is pursuing a plan to combine its marketing activities with those undertaken at Los Angeles International Airport and the Los Angeles and Long Beach ports.

For nearly five years, LA Inc. and Los Angeles World Airports, which operates LAX, have had an informal agreement where they share overseas staff members and office space.

Under the new proposal, LA Inc. would extend the agreement to undertake joint marketing and promotional activities domestically as well. If implemented, Collins said the plan could restore 5 percent, or more than $1 million, to the bureau’s budget.

“There’s a lot of overlap between what we do here and what they are doing at the airport,” Collins said. “Our goals are the same. We both want to increase the number of people coming to Los Angeles.”

Staffing cuts

Even with these additional funds, the organization still faces a $6 million to $7 million funding cut, which comes at the time when marketing efforts need to be boosted to attract conventions in the toughest market in years.

The declining number of visitors to Los Angeles has resulted in a drop in the tax money generated by hotel rooms. Those taxes account for at least 80 percent of the budget, either directly from the city’s collection of bed taxes or indirectly through hotel membership fees.

Already, the organization has reduced the number of employees to 90, a nearly 20 percent cut from the 110 it had in 2001. To cope with the funding cuts, there will have to be more staffing and program reductions, Collins said.

“Any business category involved with travel right now is seeing reductions,” Collins said. “So anticipating a 20 percent reduction is prudent, just as it is in the tourism business as a whole.”

But the bureau’s critics say what’s really needed is a massive housecleaning.

Discontent with the bureau’s management has been building from hotel operators and Mayor Hahn’s office for more than a year, spawned by the drop in convention bookings and reports of lavish trips taken by its staff in the hopes of luring business.

The criticism has been aimed largely at president and chief executive George Kirkland, whom critics claim has been an ineffective manager.

“The worst thing that could happen would be for the existing management and board to stay on and attempt to do what they couldn’t do with $16 million a year,” said Westin Bonaventure general manager Brian Fitzgerald. “They had their shot and blew it.”

Last year, several hotel operators and board members, led by Westin Bonaventure owner Peter Zen, tried to oust Kirkland, but were unsuccessful.

The Bonaventure has been booted out of the visitors bureau for not paying its dues, and the hotel’s parent company, FIT Investment Corp., has filed a lawsuit against the city and LA Inc. to block construction of a hotel next to the convention center whose funding would involve some public participation. Plans for such a development remain on hold.

At the same time, a group of hotel and business interests on the Westside decided to launch their own convention and visitors bureau. And Mayor Hahn only reluctantly took Kirkland along on his Asia trade mission last November, after repeatedly criticizing him and LACVB management.

Board member Colleen Kareti, who is also general manager of the Hyatt Regency hotel downtown, said replacing the board or top management is not the answer. Nor is cutting the visitors bureau’s sales staff.

“When times get tough, you don’t look to eliminate the sales staff,” Kareti said. “They generate hundreds of millions of dollars in revenues for the region. That would seem penny wise but pound foolish.”

No posts to display