Hotel and downtown dining segments are pushing for huge summer sales gains in the brewing local race to feed Olympics visitors. Meanwhile, Philadelphia based ARA Services, Boston based Ogden Food Service and Los Angeles-based Man asks & Carl Co. is priming their contract-feeling plans for the Los Angeles Olympics. The three outfits, with ARA in a principal role, have contracted to feed the world’s top athletes, plus international media and fans.
Great Expectation for the Summer Games
But to many local restaurateurs and hoteliers, it looks like the 23rd modern Olympiad, to be staged here July 28 through Aug. 12, might not be the gold medal profit extravaganza they had envisioned.
The specter of discount price gouging by hotels and restaurants, and the pending disappearance of discount air fares among major carriers serving Los Angeles could throw a damper on profit taking by the local hospitality industry. And hoteliers are anxious over the apparent interference of the Olympics with normal summer group and tourist bookings in area hostelries, which could suffer from slack business both before and after the two-week Olympic binge.
Moreover, fewer visitors are expected in Los Angeles for the Summer Games than the two million or so previously envisioned. Some 650,000 out-of-town fans are now forecast by the L.A. Visitors and Conventions Bureau, compared to a total of seven million Olympics tickets to be distributed.
The most of Popular Choice of Local TV Audience
Home cooking is likely to be the choice of many local TV watchers, as well as for many locals who attend Olympic events and then would rather go home than buck the crowds. Consequently, those businesses expecting to cop most of the away-from-home dining dollars are the hotel restaurants and coffee shops/dinner houses along major roadways which connect the far-flung Games event sites to central hotel clusters.
Judy Shane, director of operations for the California Restaurant Association, says the Olympics will probably have a major impact on only 200 or so member restaurants in southern California out of some 4,000 units affiliated with the C.R.A. hereabouts. “Human nature’ will likely motivate most out-of-town fans to eat near their hotel, Shane says.
Huge Impact of the Long-range Economic
Even so, restaurants should be in line for a big chunk of the overall $3.32 billion long-range economic impact on the southern California economy forecast by organizers. Visitor spending on meals and lodging is expected to total some $317 million of the immediate $948 million impact of the Olympics, according to the Los Angeles Olympics Committee.
Nonetheless, downscaled estimates of the number of visitors has burst the local home rental profiteering bubble which had swollen rapidly in recent months. Several lawsuits against brokers brought by prospective renters have besmirched this aspect of the pre-Games dash for the dollar, and analysts now say that existing commercial accommodations in the Los Angeles area will adequately handle the estimated volume of visitors.
Although local hotel operators have been filling their reservation books with the names of visiting fans for months, many are feeling glum over slack bookings before and after the Olympics. These operators fear that convention groups and tourists have written off Los Angeles for the whole summer, in uncertainty over just when the city plays host to the Summer Games.
Los Angeles and Its Specialty
Southern California’s usual summer tourist traffic may “just be bypassing Los Angeles for the whole year,’ says Stanley E. Long, managing director for the Los Angeles Hotel Association. Aggregate readings from L.A.H.A.’s 25 member hotel companies, representing some 50,000 rooms, shows advance bookings for the month following the Olympics at an anemic 47% average, compared to the normal 85% precooked rate usually logged by this time of year.
Local hospitality operators “have all been inclined to magnify the Olympics,’ Long said, “and it’s unfortunate that potential non-Olympic visitors may be doing the same thing.’ Analysts at the L.A. Visitors and Conventions Bureau say the Los Angeles tourist economy could suffer a 15%-20% short-term slump because of the Olmpics, held during the two months when Los Angeles County normally attracts some 10 million out-of-towners.
The Olympics has put a lock on many of the 147,000 hotel rooms in the Greater Los Angeles area from Ventura to San Diego Counties, squeezing out potential non-Olympic tourist business. The unavailability of the L.A. Convention Center– headquarters for the print media covering the Summer Games–further restricts potential tourist traffic during peak months.
Effects of Long-term Damage
Concern over price gouging of hotel guests and possible long-term damage to the local tourist industry has prompted Mayor Tom Bradley to ask the City Council to consider legislation imposing hotel rate restrictions within the city limits during the Olympics.
A spokesman for Mayor Bradley’s office told Nation’s Restaurant News, “We don’t think it’s fair to the industry or to visitors’ for hotels to gouge, citing the possibility of having a luxury hotel charging $120 a day for its rooms while a 10-unit motel down the street charges $200 or more for lesser accommodations.
In his letter to the Council proposing a mandatory roll-back to rates charged on Jan. 1, Bradley cited numerous complaints his office has received over exorbitant rates hotels and motels were attempting to charge for ordinary rooms. The city could impose restrictions on room rates under the same authority used to enact rent control measures.
Prior to Bradley’s action, at least 80 hotels in southern California had already signed an agreement with the L.A.O.O.C. promising to charge rates in Effect on Jan. 1 for the approximated 22,000 rooms they represent. But an informal poll conducted by the Los Angeles Times disclosed that a number of motels and small hotels plan to double or triple their rates during the Olympics. One motel chain has announced it will raise its rates by 342% during the Games.
Several Common Local Legislations
The L.A.O.O.C. has indicated it believes the problem of price gouging will be minimal, and that legislation designed to curb profiteers could do more harm than good by spreading the notion that all Los Angeles hotels were intending to gouge.
But the spokesman for Bradley said in order to forestall pending legislation; the L.A.O.O.C. and the hotel association would have to convince city government they had organized effective countermeasures. Bradley told Nation’s Restaurant News’ MUFSO convention here in October that Los Angeles had won out in bidding for the Olympics largely because of its superior service-sector infrastructure, especially its restaurants.
Reasonable Price of This Service
The additional possibility of price gouging by restaurants “has been discussed’ by the Mayor’s office, said the spokesman, who added that Bradley was pleased by the institution of a self-policing Olympic hospitality program for local restaurants by the California Restaurant Assn.
C.R.A.’s program will seek the participation of approximately 4,000 restaurants operated by some 1,400 members in southern California, asking them to pledge maintenance of prices, portions and presentations in effect on June 1 throughout the Olympics period.
“The people of Los Angeles are very proud of their city and they want the world to see why,’ said C.R.A. president Ted Balestreri.”The southern California restaurant owners will play an important role as representatives of this city and this country. We intend to take that responsibility seriously.’