L.A. Celebrates Record Year for Tourism; LA INC. Seeks More in '06

Let's begin by affording you an opportunity to tout the good news. 2005 has been pronounced a landmark year for visitors to L.A., with a record 25 million tourists spending $12.7 billion here. How does that compare with your competitor's success, i.e. Las Vegas, San Diego, and even Anaheim?

There are many different ways of stacking that up, but right now L.A., in terms of its occupancy rate, is fourth in the United States. In terms of the fundamental vitality of our business, we're doing as well as we have ever done in the history of this city. We have never had hotel occupancies this high. What makes L.A. worth the destination marketing investment is that, unlike our competitors, L.A. has one of the most powerful brand names on the planet.

Twenty-five million annual visitors make us, depending on whom you're arguing with, the second or third largest visitor destination in America. The world wants to be here. The challenge has been to construct a product that takes advantage of that demand. I confess we have some history in being a bit behind the curve on being able to do that. Today, in a pretty significant way, we're beginning to catch up. The numbers are pretty persuasive. One of the more interesting indicators is one that you didn't mention, and that is convention center sales. In the month of December, we closed on 142,000 room-nights for future meetings at the convention center. In 2004, for the whole year, we closed on 72,000.

What has changed? There were some bleak years not so long ago.

A lot of things have come together. First, I won't diminish the value of an economy that is producing a lot of discretionary travel. But, the big difference is that Los Angeles no longer suffers from some of the less than flattering images assigned to it in the last century. Today, L.A. is seen by domestic and, to a great extent, the international market as the pop culture capital of the country. It once would have seemed like wild hyperbole but the fact is that travelers, whether they live in Cincinatti or Osaka, have to come believe that whatever they are going to be wearing, eating, listening to or watching next year is going to be experienced this year in L.A. L.A. captures an enormous amount of attention virtually every day in virtually every media. People are curious about what's next. A visit to L.A will show them.

Elaborate on L.A.'s competition. What do convention planners consider when they weigh Los Angeles against other options?

In some ways it's dishearteningly simple. The pragmatic requirement is whether a convention center is available at the time the planners want it to be. If it's not, the planner won't go the next step. In an almost perverse way, for a destination that doesn't have a great deal of conventions booked for a particular year, this actually can be turned to an advantage. December's remarkable production wouldn't have happened if we hadn't had the convention center availability.

The second thing a planner looks at is the number, quality, distribution of hotel rooms. Other issues follow like accessibility, safety and the costs. One of the things that makes San Diego charming is its well orchestrated development right by the sea. But San Diego is challenged by the fact that few airlines serve it. LAX has a far greater concentration of domestic carriers.

Another thing that distinguishes a destination is much more ephemeral. It may seem almost flip or superficial, but central to winning a convention is a city's capacity to promise fun. That's why the AEG sports and entertainment district, LA Live, is so fundamental to the city's success as a convention venue. I should add that we've recently seen the fun factor taken, perhaps, a bit too far. Las Vegas sometimes gets rejected by conventions that are eager to keep their delegates focused on their convention and not casinos and the glittering 24-hour world outside the exhibit floor.

If L.A. has suffered from one disadvantage it's that we have not been able to provide hotel room inventory to match demand this city is capable of generating. Convention delegates are eager to be a part of the L.A. scene. We just haven't been able to provide what our competition has provided so well: new, quality, committable hotel rooms adjacent to the convention center. Now that's changing.

LA INC. has been talking, for a very long period, about the essentials for L.A. to be a competitive convention center: a convention center hotel, Staples Center and an entertainment complex. With Staples Center a vibrant reality and now L.A. Live underway, the missing piece is the hotel. Give our readers an update on the prospects for the hotel.

Last week the public saw the press conference announcing the development and financial team (AEG and KB Home) that will build the new convention center hotel. For several months, negotiations among a number of interested parties kept many of us at the edge our seats. Now, with those negotiations behind us, all that remains is to learn which hotel brand will ultimately get the prize. To anyone who knows AEG, there should be no doubt that we are going to see one of the West Coast's premier convention center hotels open in 2009.

None of this would have been possible without the willingness of the city to participate in this hotel's construction. There hasn't been a major convention center hotel built anywhere that hasn't had some material assistance from the host city. L.A. is no exception. The new hotel can't guarantee us that L.A. suddenly will jump back to the top of the national association convention market. But it will put L.A. back in the hunt. It will allow the city to be included on convention bids that, until now, we were never even asked to respond to.

Sketch out for our readers what the downtown of 2010 will include to serve as a magnet for conventions to be booking for the next 25 years.

In this instance, my opinion does not necessarily conform to that of some who have a vested interest in downtown. I think downtown L.A. is going to become a sports and entertainment venue. Yes, it will be an office and financial center and yes there will be an ever greater concentration of government workers in the years to come. But what will distinguish our downtown from others will be its capacity to entertain; to play host to events that aren't available anywhere else in the West. Sports will be at the center of that entertainment as will a new concentration of national broadcast headquarters and show venues.

We are witnessing the creation of a regional hub. The realities of transportation and the imagination and risk-taking by investors is creating a downtown that will serve the demands of residents throughout the city. If you don't believe me, just ask the average person attending a Kings or USC football game where they live.

The astonishing increase in market-rate housing will continue to grow well past 2010. Very much like more traditional urban centers, downtown L.A. is changing into a pedestrian-friendly 24-hour city.

The area surrounding the convention center is on its way to completing a remarkable transformation. That story is getting lots of attention especially on the East coast and, in particular New York. The New York Times routinely gives new development in L.A. its attention and, more often than not, its admiration. Right now there are almost 50 projects in the process of approval each over ten stories.

Now that LA Live has broken ground, what elements will it include, and how will they appeal to visitors?

Across the street from Staples, that vast parking lot is now a large hole in the ground and construction is underway. The central elements of it will be the dining and retail establishments surrounding a core of several big name facilities. One is the Nokia Center, a 7100-seat arena designed to serve as a massive broadcast studio for events such as entertainment industry awards shows. Next door Club Nokia will offer a 2,200-seat live music venue. Nearby will be new broadcast facilities operated by ESPN and movie theaters equipped to handle the mechanics of movie premiers.

In addition to AEG's development, I believe we are going to be hearing quite soon about the addition of smaller boutique hotels immediately adjacent to the project along with the probability of new hotel rooms added to at least one of the hotels near the convention center on Figueroa.

Regarding the downtown residential component and its relationship to these new attractions, if you think about those cities that the world loves to live in and to visit, I submit that it is visitors that make those cities loveable. Visitors initiate and subsidize so much of the characteristics that add to a city's quality of life. It's the presence of visitors that sustains much of the institutions and businesses that defines the quality of life for people who live in Paris, London, New York, and Chicago. The same will hold true in downtown L.A.. It will be a draw for an enormous amount of visitor spending, which will directly impact the quality of life for the residents.

LA INC, like most convention and tourism bureaus, works closely with city government. We've had a transition now from Mayor Hahn to Mayor Villaraigosa and you've got a change in leadership in the council. How receptive is the political leadership of L.A. in 2006 to the goals and aspirations of the visitors and convention industry and the convention center downtown?

It would be hard to overstate how powerful and effective an alliance has been built among the elected leadership of L.A., organized labor, our visitor industry and the leadership of the Convention and Visitors Bureau. There are some tangible examples of this that frankly were inconceivable just a couple of years ago. Last spring, L.A. was caught in a hotel dispute of the kind that San Francisco is still going through. Mayor Villaraigosa got the general managers and labor leaders in a room and, together, they found a way out. In an other example, there was a moment when the city's agreement to fund a headquarters hotel was about to trigger some spectacular efforts on the part of an opponent to introduce new lawsuits and all kinds of legal processes to stall or to stop the new hotel.

The mayor's intervention solved that crisis and in so doing actually strengthened a new alliance among downtown hotels, labor and organizations like AEG. LA is speaking with a single voice that I am convinced is going to provide new and smart direction for what is, after all, our city's second largest economy. In the 15 years that I've been doing this in LA, I haven't ever seen that kind of convergence of leadership and energy.

There has been an apparent settlement of the litigation regarding LAX's modernization. Is LA INC. satisfied with the cap and the rest of the agreement?

Do we have confidence in the new boundaries defined in the settlement agreement? The answer is "yes." The items that have been green-lighted go to the core of LAX modernization. The planning underway now will define the particulars of projects like the people mover, roadway utility, communications improvements and the south concourse renovation. The refurbishment of Tom Bradley international terminal is already underway. I'm delighted to see the west satellite concourse back on the list of items that have the green light. I think that many of the security elements now under review will have the added benefit of reducing congestion, enhancing the flow of traffic and generally making a more user-friendly experience. Much of this is going to happen quite soon. The Bradley terminal will be ready for the new A380.

We are eager to protect our status as one of the country's major international gateways. I think as you look at the proportion of travel, international to domestic, it's going to be 50/50 and ultimately maybe 60/40. These are all good things because international visitors comprise 18 to 20 percent of total visitors but they account for 33 percent of visitor spending.

To conclude, if TPR comes back to interview you in six months, what should be the benchmark for evaluating how successful LA Inc has been?

I don't think I'm the least bit speculative about the new Convention Center hotel. Construction will begin within 6 months. You should check in with me about the other hotel projects I just talked about. And you should ask about how effective this alliance has been in pushing ahead on some important new initiatives to get the modernization of LAX up and running. Those are the two bricks and mortar issues. But the question you'd probably start with is, "So, are you still selling all of those conventions?" I expect the answer will be an emphatic "yes."