New Orleans on path to rebuilding tourism infrastructure

Lewis Fader got his first glimpse of the InterContinental Hotel in New Orleans French Quarter a few days after Hurricane Katrina hit. It brought more relief than anxiety.

It wasnt as a bad as we expected, said the vice president of North American operations for InterContinental Hotels Group (IHG).

Though there had been no flooding, the broken glass, lack of power, a burned-out generator and empty rooms with beds still made left an eerie calm in the darkness that greeted him and other corporate executives as they walked through the hotel that day.

But the mood was decidedly upbeat last week as they greeted employees with a pep talk and opened about 20% of the hotels rooms with everything but full room service. InterContinental has now reopened all four of its hotels in New Orleans.

The city has given all our hotels a clean bill of health, Fader said. The water is fine. The outgoing water is fine. The power has no more spikes, and it is normal. We had to do some special things to prepare the hotel for reopening, but a customer is not going to see any differences in the hotel today. It is all back.

Angele Davis, secretary of Louisianas Dept. of Culture, Recreation and Tourism, said earlier this month that state officials would seek $1 billion from Congress to help restore the states vital tourism industry. She told tourism industry officials she expected that about 75% of the downtown New Orleans hotels -- about 21,000 rooms -- would be up and running by the end of October and that all but 5% of its hotel inventory would open in time for the holiday season.

Loews Hotels, whose New Orleans property also opened last Monday, is among the operators hoping to begin luring tourists back to the city quickly, even as it currently relies on the crush of construction workers, Federal Emergency Management Agency employees, the Red Cross and other relief personnel.

Return of conventions a key

Tourism recovery depends, in part, on restoring convention business downtown, which may not happen until the first quarter of 2006. Some groups -- including a national librarians convention -- have said they will book conventions beginning next year, raising hopes for a recovery earlier than many had initially predicted.

While efforts focus on reviving tourism, worth some $5 billion a year to Louisianas economy, there remain significant hurdles, including finding sufficient numbers of employees to work in the tourism sector.

Many of those workers lost homes and have relocated elsewhere, either temporarily or permanently.

We have 100 rooms open in the InterContinental right now and 100 employees out of a normal staff of 350, Fader said. As we gather additional staff, we will open more rooms. In some cases, we are housing employees because they have nowhere else to go for the time being.

IHG has about 550 workers in its four hotels in New Orleans.

Several Louisiana state officials were in Washington last week to plead their case for resources to rebuild New Orleans and the Gulf Coast regions shattered tourism economy, battered first by Katrina, then by Hurricane Rita.

Testifying both in person and by conference call before House and Senate transportation subcommittees, officials told Congress the region is losing some $15 million per day in economic benefits while the tourism sector struggles to right itself.

But with a wish list that includes $1 billion in federal assistance dedicated to tourism recovery in Louisiana alone, and with a number of divisive proposals -- including allowing new casinos in New Orleans hotels -- gathering political baggage in the state, officials acknowledge they have a long way to go.

They are also battling perceptions of past political corruption in the state, prompting both Lt. Gov. Mitch Landrieu and Gov. Kathleen Blanco to assure Congress they are taking steps to audit and re-audit federal funds to alleviate concerns that taxpayers dollars could be wasted.

Political red tape

Local officials and business owners have a long list of daunting political challenges that lie ahead.

More than 50,000 applications for low-interest small business loans filed to help recover from the flooding and wind damage are causing a paper jam in Washington. As a result, weeks after floodwaters were drained from New Orleans, very few of these loans have been processed.

Ralph Brennan, who owns two restaurants in New Orleans French Quarter, told the House Committee on Small Business earlier this month that small business owners, who make up 97% of the tourism services in the city, are struggling with federal loan issues.

The committee should examine ways to reduce the paperwork required to apply for business loans and grants to rebuild, he said. The process of obtaining an SBA loan under these disaster conditions is extremely daunting.

Louisiana officials and local businesspeople have told House and Senate committee members that in addition to making government assistance more efficient, they also need tax credits and direct federal funding.

Many local businesses also are waiting on insurance claims on their businesses in areas where damage from the two hurricanes is now estimated at about $60 billion.

While hotels and restaurants are opening, many are doing so with smaller than normal staffs. Brennan said some restaurants in the region are trying to operate with 30% of their normal workforce.

Concerns about bringing tourists back also revolve around attractions -- from golf courses to historical and cultural sites -- that remained closed last week and have uncertain schedules for reopening.

Even the doors of the citys Welcome Center had yet to open.

Other destinations still reeling

While the French Quarter, which escaped flooding and much of the damage experienced elsewhere, is seeing tourists filtering back into the city, other areas are not as lucky. In Lake Charles, another popular tourism destination in Louisiana, Hurricane Rita brought new damage following Katrina, costing the area an estimated $1.5 million a day in losses.

Meanwhile, political winds that have long treated gaming and casinos with suspicion in Mississippi are shifting. The state legislature there has approved rewriting state gaming laws to allow casino operators to build or rebuild casinos on land, a practice that had been prohibited before the storms hit.

Mississippi casino operators had traditionally been forced to build their gambling houses on floating barges as a concession to a strong religious community that opposes gaming.

But following hundreds of millions of dollars in damages to those facilities (many barges were driven onto the beaches and into coastal towns by Hurricane Katrina) legislators responded by changing state law.

Casinos in Louisiana, even in areas that were not heavily affected by the hurricanes, saw revenues drop more than 40% between August and September as a result of the storms, according to the state gaming control board. Some casinos that took in more than $20 million a month in gross revenue have been closed since the storms.

To contact reporter Dan Luzadder, send e-mail to [email protected].