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L.A. votes to let AEG run Convention Center

City Council overrules objections by local hoteliers who claim the company would have an unfair advantage filling its hotel rooms while booking conventions.

June 26, 2013|By Catherine Saillant
  • The PlayStation exhibit at the Electronic Entertainment Expo at the Los Angeles Convention Center in June.
The PlayStation exhibit at the Electronic Entertainment Expo at the Los… (Michael Nelson, EPA )

For the first time in its 42 years of operation, the city-run Los Angeles Convention Center will transfer to private management under a pact approved Wednesday by the City Council.

In awarding a contract to Anschutz Entertainment Group, the council overruled objections by local hoteliers who said AEG would have an unfair advantage filling its hotel rooms while booking conventions.

AEG owns the JW Marriott and Ritz Carlton hotel complex adjacent to its L.A. Live and Staples Center properties in downtown Los Angeles. But council members, after questioning city Chief Administrative Officer Miguel Santana, unanimously voted in favor of the contract.

"It's a marriage that's appropriate to move forward on," Councilman Tom LaBonge said. AEG's expertise in operating entertainment venues, he added, would "create a synergy that will make a big difference." AEG's worldwide portfolio includes more than 100 companies offering entertainment, sports and exhibition venues.

Santana said hotel bookings would primarily be handled by the Los Angeles Tourism & Convention Board, a nonprofit entity separate from AEG. AEG offers a professional management team that can reduce operating costs at the Convention Center and respond more quickly to changing industry demands, he told the council.

AEG agreed to interview current Convention Center workers who want to continue with AEG, but employees also have the option of switching to other jobs in the city. AEG will also present three candidates for a general manager position, now vacant, and give the city final say on who gets the post.

"We have an ambitious plan to take the Convention Center to the next stage and will be focused on driving more hotel activity citywide," Ted Fikre, an AEG vice chairman, said shortly after the unanimous vote. "We think there's a lot of room for improvement."

Mayor Antonio Villaraigosa and the council set a goal of attracting 425,000 annual visitors by 2020, a 50% increase over current levels. By filling more hotel beds, and bringing in more shoppers and diners locally, those visitors would add about $19 million in hotel and bed taxes to city coffers, Santana said, citing a consultant's report.

Under the terms of AEG's contract, the firm will be paid a $250,000 annual management fee and would qualify for another $250,000 if it meets agreed-upon performance measures. Final wording of a management agreement is expected to come back before the council in coming weeks. The council rejected a protest by a second bidder, Pennsylvania-based SMG, that the scoring process unfairly favored AEG's winning bid.

Built in 1971 and expanded in the 1990s, the Convention Center has fallen on hard times in recent years as the city struggled through job cuts and lean budgets. Fikre said AEG would work hard to improve the venue's competitive standing in the industry.

He dismissed concerns that the company would use its authority to benefit its own hotel, a tall glass-and-steel building that he said already regularly fills with visitors going to events at L.A. Live and Staples Center.

"It's true that we own L.A. Live and the hotel," he said. "But we view that as an asset, not an impediment, to filling other hotels across the city."

catherine.saillant@latimes.com

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