Will the Coronavirus Have a Major Impact on West Hollywood?

With 21 hotels, hundreds of restaurants and bars, the historic Sunset Strip and the biggest gay nightlife district in Southern California, West Hollywood is a major destination for tourists from across California, the United States, and much of the world. And those tourism-related businesses are a major part of the city’s economy, with the hotel room tax the largest single contributor to the City of West Hollywood’s general fund.

That means the coronavirus pandemic may well have an outsized impact on West Hollywood’s economy. In an interview with USA Today, Mark Zandi, chief economist for Moody’s Analytics, said the impact of the coronavirus on the travel and tourism industry would be greater than the impact of 9/11, or the 2003 SARS outbreak.

“Global travel is effectively shutting down,” he said. “It’s going to take a while to get it back up and running again. This is going to be a very tough year for the travel and tourism industry.”

Several hotel managers have told WEHOville that they have seen a drop in room reservations and increased cancellations, and several restaurant owners and managers and bar owners have said they are seeing a decline in business both from local residents, who are trying to isolate themselves from people who may be infected with the virus, and from tourists. For example, Kitchen24, the 24-hour restaurant adjacent to the Ramada Plaza hotel on Santa Monica Boulevard that often is filled in the early morning hours with Australian tourists and at lunch time by locals, was relatively empty on Wednesday. The nearby Starbucks also had relatively few customers inside. It had removed milk containers and sweeteners from access by its customers, who had to ask baristas themselves to provide those amenities.

There also have been cancellations of, or major changes to, a number of events in and around West Hollywood.  For example, the West Hollywood resident Vera Mijojlic’s South East European Film Festival (SEEfest) on Wednesday announced it was delaying its 15th annual event, initially scheduled for April 29 to May 6, to a future date. And while the Pacific Design Center will host its annual Westweek design event on March 18 and 19, it will cancel keynote events where large crowds gather because of coronavirus concerns and will focus instead on visits to individual showrooms.  “Many international and nonlocal participants have expressed concern over traveling to Los Angeles for the annual market, with many already canceling their trips,” said an announcement of the changes.

The La Cienega Design Quarter has cancelled this year’s Legend’s festival, which was scheduled for May 5 to 7 and attracts thousands, because of concerns about the coronavirus.

“Because we are faced with too many ‘what ifs,’ the board had to make the painful, but ultimately responsible, decision to cancel Legends before window designers, vendors, sponsors and our own members started investing money, and we ended up with a half-attended event. That would be far worse than no Legends event this year,” the board announced in a statement.

Members of the city’s Public Safety Commission on Monday raised the question of whether Christopher Street West should cancel its annual LA Pride parade and festival, which is scheduled for June 12 to 14. LA Pride attracts tens of thousands of people to West Hollywood and generates significant revenue for businesses in the Boystown entertainment district.

“With the potential spread of COVID-19, Christopher Street West is carefully monitoring the situation and following local and national recommendations,” said Estevan Montemayor, chair of CSW, in response to a question from WEHOville. “The health and safety of the LGBTQ+ community and allies is our organization’s priority. We are working closely with various agencies to ensure we are following correct protocols and are committed to introducing additional safety measures to protect the health of our community, if needed.”

West Hollywood City Manager Paul Arevalo acknowledged the impact of the coronavirus outbreak on hotels in West Hollywood and said he anticipated there would be some negative impact on the fiscal year 2020 budget, which City Hall is now working on.  However, citing the city’s sound financial standing, Arevalo was optimistic about the future.

“While the health and welfare of our community is our number one concern, we have also been tracking the potential financial impacts to both the city’s general fund and to the many impacted businesses and non-profits in our community,” Arevalo said in an email message to WEHOville.  “Specific to your inquiry, we have been in contact with a number of the hotels and as anticipated they are being impacted by this public health emergency.

“As we dive into our next budget process, we anticipate our current projections and early fiscal year 2020 projections will be negatively impacted. Once these revised numbers are available, we will share them with the City Council and the community. The City of West Hollywood maintains comprehensive policies that have built resiliency and the city has consistently received high marks for sound general and fiscal management protocols.

“The city, with its diverse revenue base, recovered more quickly from the 2008 recession than most cities in the nation and receives top ratings from agencies such as Standard & Poor’s (S&P). The city also maintains an implied general obligation bond rating of ‘AAA’ which has been re-affirmed by S&P. Even in the difficult aftermath of the economic downturn, the City of West Hollywood was able to expand its services and remain financially stable.

“I am confident that the city will fiscally weather this storm, allowing us to focus on the health and welfare of our community and secondly, help our businesses and non-profit partners that may be negatively impacted by this challenge.”

Tom Kiely, president and CEO of the West Hollywood Travel + Tourism Board, also acknowledged the virus was having an impact on local hotels. “We definitely know that our hotels are seeing cancellations from the corporate segment, the group segment and individual bookings,” Kiely said.

Given the radical decline in foreign tourism Kiely, said his organization was focusing more on promoting West Hollywood to domestic tourists. “We are going after visitors that are in our traditional drive markets,” he said.  “Also Chicago and Seattle. We’re really doubling our efforts I those markets.”

However, Kiely said the Travel + Tourism Board continues to promote West Hollywood to foreign tourists. “We love internaitnal visitors,” he said. “On average, they stay twice as long and spend twice as much money.”

Kiely noted that he and representatives of five local hotels were in the U.K. in February and he and representatives of seven hotels will be visiting Australia and New Zealand in a few weeks.

He also said the fact that West Hollywood didn’t have places to house conventions, and hadn’t been attracting many Chinese tourists to local hotels in recent years, meant cancellations of conventions across the country and the very sharp decline in Chinese travel hasn’t had much of an impact on West Hollywood.

“Sometimes your greatest strength is your greatest weakness,” Kiely said.