“We call it stolen taxes,” says activist Gavrielle Gemma when I ask her about her views on the proposed hotel addition to the Morial Convention Center. The Convention Center is mainly funded by a hotel and motel tax, by its nature levied almost exclusively on tourists and earmarked for the Convention Center. The Convention Center is run by a board that is not publicly elected but is selected by state and city officials.
“The taxes they receive don’t go to the general fund. They talk about job creation, but all this ‘job creation’ doesn’t change the picture necessarily,” Gemma continues.
Is an expansion really necessary?
Residents of New Orleans are probably familiar with the hulking figure of the Morial Convention Center, which sits on the river, next to the Riverwalk Mall. With around 500,000 visitors annually, the Convention Center is a major convention center nationally. However, the directors claim that to remain competitive in the Convention marketplace, the Convention Center needs to build an adjoining hotel, which it currently lacks. The Convention Center, which is run by a board appointed by State and City officials, owns the land where it plans to build a 1,200 room hotel. However, the board also wants to finance the hotel using a combination of incentives and tax abatements from the city, and money from the Convention Center’s fund, which in turn comes from city taxes earmarked for its coffers.
Specifically, the developers want $41 million from the Convention Center’s fund (the Convention Center currently has a $220 million surplus) a 100 percent tax exemption, and a free land lease. The development also is asking for 40 years of hotel and sales tax rebates. The total of all these public investments will total $329 million over the course of the project. This proposal does not include further development; retail and residential real estate, as well as green areas, that developers see as essential to the hotel’s success. These developments would, by their very existence, require additional public funds to develop further infrastructure to support the new buildings. That would cost an additional estimated $70 to $80 million. The ask for public money is so high that Mayor Latoya Cantrell has come out publicly as skeptical of the plan, saying she has “grave concerns” about the price tag.
Originally, the convention center’s request for proposals included 800 room hotels; the RFP was later amended to only allow for 1200 room proposals. Only one proposal was submitted. The plan is to build an Omni hotel that will have a pedestrian bridge from the Convention Center to the hotel, thus eliminating all need to ever actually set foot outside of the convention center once the guests are ensconced.
Furthermore, the money generated by guests at the hotel (including the tax that would go back to the convention center) does not necessarily imply a net gain, as the guests might have stayed somewhere else without the new option. In fact, these guests are more expensive to the city, considering the behemoth of an investment it would take to put the hotel there in the first place.
A negative impact on hospitality workers
One group, the New Orleans Hospitality Workers Committee, see the public investment in the Convention center as nothing less than “grand larceny,” pointing to the low standards of living and wages that hospitality workers endure.
“Hospitality workers, whose labor is the source of all this wealth, have no benefits, and no laws to protect us from exploitative labor practices. We work through hurricanes and floods, without access to affordable health care or reliable public transportation,” said James Alec, a member of the Hospitality Workers Committee at a meeting of the Board of the Convention Center in late August. The meeting was packed with people speaking out against the hotel proposal.
“We work for poverty wages, have no sick leave, no maternity leave, and no access to affordable childcare,” Alec continued.
Activists have pointed also to many projects that could be funded with the money that the convention center plans on using; funds that could go directly to New Orleanian residents rather than following the trickle-down ideology espoused by the Convention Center’s defenders. These ideas include expanding bus service in New Orleans East, improving funding for health care initiatives and for childcare.
The “necessity” of this public investment for a viable development is debatable as well. The non-partisan Bureau for Government Research (BGR) released a study examining the use of public funds for the hotel and noted that the currently vacant site slated for the hotel development is actually extremely valuable real estate; meaning that private development is very feasible for the area.
And while the Convention Center’s board insists that a hotel is necessary for them to remain competitive, this too is suspect. Las Vegas’ convention center, ranked #2 nationwide by Meetingsmag.com (yes this is a thing) doesn’t have one.
Overall, the proposal estimates the hotel will cost $557.5 million to build (for those interested, the operating budget for the City of New Orleans for 2017 was $1.037 billion, slightly less than double the projected cost of developing the hotel.) The hotel would be part of the Omni hotel chain. The estimated cost does not include the cost to extend utilities to the project site.
Support for the exorbitant amount of public investment in this project hinges on these arguments:
- The Convention Center is a major driver of tourism in the city
- The tourism industry is a job creator and thereby creates wealth for workers
Is there something to these arguments?
- The Convention Center is a major driver of tourism in the city
By the numbers, this seems, at best, a stretch. In a 2015 breakdown of visitor profiles, University of New Orleans reported that “association, convention, tradeshow and corporate meeting” showed these visitors are just 13.1 percent of all visitors. Not only that, but a local news report from Fox8 alleges that less than half of these conventions are actually held at the Convention Center, and estimated only 5 percent of the tourists actually were in town for a convention hosted by the Convention Center.
In fact, by their own accounting, the Convention Center supports this claim. The Convention Center reported in 2016 that it hosted about 600,000 visitors, while the city overall reported 10.75 million, putting the amount of convention center visitors at six percent overall. Is it possible that the Convention Center needs us more than we need it?
- The tourism industry is a job creator and thereby creates wealth for workers
Tourism may create wealth, but is a wealth that eludes the majority of people working on the ground in the tourism and hospitality industries. One report by The Advocate based on 2016 Bureau of Labor Statistics clocked the average hospitality worker in New Orleans’ average earnings at only $9.84 per hour.
On the other hand, the owner of Dallas-based Omni Hotels, Robert Rowling is worth $5.3 billion. At $9.84 an hour, 40 hours a week (though a regular work week is not guaranteed to New Orleans hospitality workers), it would take over 264,000 years for a hospitality worker to reach Rowling’s net worth.
Despite the owner’s wealth, the Omni hotel chain had a documented history of labor violations and wage theft. The proposals submitted for the new hotel also does not include a “neutrality agreement” (which states that management will not interfere with the formation of a union), nor does it include any guarantee of workers’ rights. By contrast, other hotels in the area are currently unionized.
New Orleans relies on hospitality workers
With over 88 thousand workers, the hospitality labor force is the third largest in the city, behind only education and health services (100.7 thousand) and transportation, trade, and utility workers (113.4 thousand). If increased tourism spending – and New Orleans has seen all-time highs in tourism spending – translated to money for the people working in hospitality, wouldn’t we expect to see high wages in the New Orleans hospitality sector? Why is it then, that there are incredibly low wages, no benefits and no unemployment insurance?
While the city is starving for money to fund education and infrastructure, the Convention Center has a surplus in the hundreds of millions. The taxes collected for the Convention Center’s exclusive use has gone from $5 million to $59 million in the last 30 years, while attendance for conventions has held steady. Meanwhile, despite decades of wealth-spreading conventions hosted by the Convention Center, income in New Orleans remains far lower than the national average with a large racial disparity in wealth.
At the Convention Center Board meeting, a woman named Kim Ford, director of New Orleans Citizens for a Better Section 8, and owner of a local photography business, spoke out about the reality that Black New Orleanians working in tourism face:
“The millions of dollars that you make off of our community and our culture… it’s time to change that. People out here are suffering. They can’t even pay rent.”
Jesse Lu Baum is a queer writer and cartoonist originally from Brooklyn, New York. Her writing has been featured in publications such as Medium.com, The Jewish Daily Forward, The Mid-City Messenger and Preservation in Print. Aside from writing, she has also worked as a non-profit home repair person, a theater bartender, and a research assistant. If you liked this piece, be sure to check out her other investigative pieces here.
