Tourism industry awaits Convention Center finish.

Tourism industry awaits Convention Center Finish

Construction has finally begun on the long overdue los Angeles Convention Center's expansion, but tourism industry officials said the city still needs a major hotel adjacent to the center and more downtown hotel rooms to lure more conventions.

Earlier this month, the first shipment of 167 tons of steel was delivered to the construction project, which is slated for completion in late summer of 1993. The steel's arrival represented a significant step in the expansion of the Convention Center, which is two years behind schedule and tens of millions of dollars over original costs estimates, according to Los Angeles Convention & Visitors Bureau officials.

"It's about time. It's great, but it should have been here about 15 years ago," said Les Benson, about the expansion. Benson is president of the Southern California Businessmen Association, which has a Los Angeles Hotel and motel group.

To get Los Angeles into "the big leagues of conventions." said Benson, the city needs 3,000 to 4,000 more first class hotel rooms favored by convention goers and a 1,600-room hotel built next to the convention center.

Building these hotel room is "as important to the city as the convention center expansion." said Benson. He added that five to six developers are trying to get the city's approval for hotel projects.

Downtown Los Angeles presently has 3,000 to 4,000 first class hotel rooms, Benson said.

The expansion, with a total price tag of more than $485 million including land purchase costs, will more than double the nine-year-old Convention center's size to 680,000 square feet from the present 234,000 square feet in the main building and 100,000 square feet in the interim North Hall facility. THe number of meeting rooms will be increased to 66 from the present 20.

Plans for the expansion include a 350,000-square-foot exhibition hall, two glass and steel pavilions, several lobbies, outdoor plazas, 65 meeting rooms, a 300-seat theater, restaurants, food courts and parking for 6,200 cars. The project will be built by Maryland-based contractor Hyman/Mortensen.

For Los Angeles hoteliers, the expansion is a long awaited boost. Hotel occupancy rates have declined in the past few years as the outdated Convention Center has lost major conventions bookings to other cities.

The present decline in convention bookings can be attributed to poor marketing effort five years ago, said Michael Collins, the Convention & Visitors Bureau vice president for public affairs. That is because of the long lead time necessary in convention planning.

But, collins said, the main problem is Los Angeles' poor national image the bureau is now increasing its marketing efforst to change people's perceptions about Los Angeles.

Los Angeles' current image problems are similar to those of New York City in the mid-1970s when that city was on the verge of bankruptcy and receiving bad press about its crime, congestion and pollution, said Collins.

New York bounced back by creating the "I Love New York" campaign and so, Collins said, Los Angeles will also need to emphasize its best qualities to attract more visitors and additional convention business.

The expansion recently received needed funding when the Los Angeles City Council approved a half-cent increase in the hotel bed tax, which should raise an additonal $44 million for the project.

Hotel industry officials in the city generally favored the increase, saying the benefits of an expanded Convention Center far out-weighed the possible negative effects of the tax increase.

Kurt Samhaber, a hotel management consultant, noted that the bed tax is now up to 12.5 percent, and 6 percent of it is already earmarked for the Convention Center. Samhaber explained that the city council is exploiting this levy to place money into the general fund.

In addition to 6 percent for the convention Center, .5 percent of the tax was levied for Olympic Games seed money and is still being collected, along with 2.5 percent for the Olympic Games funding, 2.5 percent for tourism promotion and 1 percent for Los Angeles Convention & Visitors Bureau.

Samhaber said that all that money is going into the general fund and "no accounting is being made as to how it really is being spent." He added that although allocation for the Olympic Games was suppose to end at the conclusion of the games, the city council has managed to extend it several times.

Samhaber said that the city council claims the tax is paid by tourists and visitors to the city, but "all merchants will be affected if the hospitality industry loses business because of outlandish bed taxes."

In 1985 the city issued $350 million in bonds to finance the Convention Center expansion, including $225 million for project construction. But the construction budget was increased to $240 million two years later when the expansion plans were redesigned to include a concourse across Pico Boulevard connecting the Convention Center's two buildings.

Although the city budgeted $243 million for the project, the lowest bid for the expansion was $287 million from Hyman-mortensen.

The city decided to go ahead with the project because it would be time-consuming and costly to redesign the project and ask for additional bids, said Dick Walsh, Convention Center general manager.

While the Convention Center expansion is getting off the ground, plans for a hotel across Figueroa Street from the convention have stalled.

The Community Redevelopment Agency, which is charged with finding a developer for the project, recently extended the deadline by one month, to Sept. 8, for proposals for construction of a hotel on the site. The CRA has also offered financial assistance to developers interested in building a hotel, but did not specify what type of aid it will extend.

A hotel adjacent to the center can save the city on the costs of shuttling convention delegates to hotels, expalained Walsh.

Walsh said that while most major cities have hotels close to its convention centers the hotels located nearest to the Los ANgeles Convention Center -- the Los Angeles Hilton and Towers and the Holiday Inn -- are still a few blocks away.

The city is searching for a developer who would build a hotel with between 1,000 and 1,400 rooms. With per-room cost of hotels rangng from $150,000 to $200,000, the projects could cost as much as $280 million.

One of the leading candidates to develop the hotel is Ohbayashi America Corp., a Los Angeles-based real estate development company, which is a major land owner at the hotel site.