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Bonuses Paid for Canceled Events

Tourism: L.A. convention bureau staff got $225,000 for goals that went unmet when 20 bookings were lost. City finances suffered and hotel operators were angered.

April 29, 2002|PATRICK McGREEVY | TIMES STAFF WRITER

The Los Angeles convention bureau paid $225,000 in bonuses to its sales staff and executives for booking events at the city-owned convention center although 20 of the events cited to justify the payments were later canceled, angering local hotel owners and raising questions about the bureau's accounting and management practices.

Overall, 42 conventions once listed as "definite" have been canceled in the last three years--but only after bureau staff were allowed to count all but five of those conventions toward their annual goals and bonuses.

Organizers for at least 12 of those 42 conventions said in interviews that they thought they had never made a definite commitment to come to Los Angeles.

The cancellation rate, which bureau officials acknowledge is higher than ever before, has strained the city treasury, triggered a city review of bureau operations and led some downtown hotel owners to complain that the booking practices have forced them to fill empty rooms caused by false expectations.

"It seems clear to me there were a lot of bookings that simply were not true bookings," said Uno Thimansson, operator of the Hotel Figueroa. "It's devastating to the hotels, because if you block space for future years thinking it's definite, you end up turning down business."

Bureau President George Kirk- land, who shared in the bonuses, said that a lack of hotels near the convention center and the sluggish economy are the main culprits for what he admitted was a rash of cancellations higher than the bureau has ever experienced before. He said the bureau's booking practices were not to blame but has nonetheless taken steps to tighten the process.

Kirkland said the bureau considers a booking "definite" once an organization sends a letter indicating that it plans to hold a convention in Los Angeles, although such letters of intent are not legally binding. Anaheim and San Francisco also follow this practice.

Other cities, including Long Beach and Phoenix, require signed contracts and deposits before a booking is designated as definite.

The Times reviewed four years of bookings and bonuses for the Los Angeles Convention and Visitors Bureau, which is responsible, under a city contract, for soliciting major conventions that are booked more than two years in advance. The contract, which last year resulted in the city paying $17.5 million to the bureau, also calls on the nonprofit organization to boost the number of tourists and visitors to Los Angeles.

The peak time for bonuses was a two-year period ending June 30, 2000, when the bureau paid $225,000 to its convention salespeople, a manager overseeing them and Kirkland, for achieving either individual or bureauwide convention sales goals.

The bonuses for convention sales averaged $34,600 per person for the two-year period.

Kirkland, who receives a $285,000 annual salary, got a total bonus of $155,000 in the fiscal year ending June 30, 1999, and a $199,000 bonus in the fiscal year ending June 2000. Kirkland said $55,720 of his total bonus in the year ending June 2000 came from convention sales, with the rest for his successes in tourism and management.

No bonuses were paid last year because the bureau fell far short of its goal of booking 51 conventions. Kirkland said it is unlikely that bonuses will be paid for the current fiscal year ending in June because the bureau has booked only six conventions toward a goal of 35.

In the fiscal year that ended in June 2000, when the biggest bonuses were paid, the bureau set a goal for its salespeople of 62 major convention bookings with 810,000 room nights. After subtracting cancellations in the same fiscal year, it reported net bookings of 63 events with 845,711 room nights. Because it met the goal, bureau staff and management executives were entitled to bonuses.

However, since the fiscal year ended and after the bonuses were paid, 11 of the "definite" events representing 144,900 room nights were canceled.

Some convention organizers said in interviews that despite being listed as definite, they never committed to Los Angeles.

"We do not announce a convention until it is definite, and we never announced going to Los Angeles," said Nancy Elder, meetings director for the American Society for Microbiology, which the bureau listed as a definite booking in late 1999. The convention, to be held in 2004, is set for New Orleans.

She said her group never signed a contract. The group only sent a letter to the bureau saying that "it is the intention" to go to Los Angeles.

Still, the event and its 30,875 room nights were counted by the bureau toward its goals for that year.

In the fiscal year ending June 1999, the bureau said it met its sales goal of booking 55 events with 750,000 hotel room nights. The bureau reported that it booked 59 conventions with 755,684 room nights.

However, nine of the events have since been canceled, representing 86,325 hotel room nights.

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