Since 9/11, hosting a Big Event is no bonanza

From Boston to Athens to New York, where the GOP convenes next week, fear of terror and traffic drive people away.

Dario Gonzalez is ready for the Republicans. The manager of Andrew's Coffee Shop, a diner in the shadow of the Madison Square Garden, has doubled his weekly soda order, added new burgers to the menu, and got his staff working overtime.

"People from the convention will walk right by here and most likely come in," he says. "So what I'll lose in locals, I'll make up for with the convention."

Or so he hopes. New York is predicting an economic bonanza from the GOP's nominating convention - a net gain of about $260 million from the more than 50,000 delegates, media, and other assorted political types that will descend on the Big Apple next week. But like Boston before it, which welcomed the Democrats in July, and Athens, now staging the Olympics, New York may be disappointed.

In this post 9/11-world, the economics of big events have changed dramatically. Because of unprecedented security, major cities can no longer count on a big dollar bounce out of prestigious events. This may have implications for everything from Super Bowls to future political conventions.

Many visitors, if they come at all, often tend to stay in their secure venues, instead of wandering out for a taste of New York's famous cuisine and picking up a Prada scarf for a relative. And a lot of the locals, the dayworkers that diners like Andrew's depend on to make their payrolls, simply stay home.

Indeed, Boston, with a major highway and a main commuter rail station closed, was as quiet as a monastery in areas. The predicted $154 million windfall ended up as an actual $14 million drop in the city's economic bucket, according to the Beacon Hill Institute at Suffolk University in Boston. While Athens is still tallying the cost of all of those empty seats at the Olympics, current estimates put the final bill at about $8.5 billion. Savannah, Ga., which hosted the G-8 summit in the spring, is offering small businesses loans to make up for lost income.

"At least for the foreseeable future, severe security arrangements will be a rule at these large symbolically significant events and international gatherings ... and that has an effect," says Michael Goodman, director of economic and public policy research at the University of Massachusetts Donahue Institute. "But I don't think it means the era of the big event is over."

New York is determined to use the RNC to prove it can be the safest, most secure big city in the world and still make a buck. Mayor Michael Bloomberg notes that the convention comes during one of the slowest times of the year. It's a week before school starts and lots of people are on vacation. Thus any added business helps.

He's also taking a different approach than Boston Mayor Thomas Menino, who urged city dwellers to get out of town and commuters to stay home to avoid traffic snarls. Mr. Bloomberg is telling people to simply go about their usual business.

There's one other difference. Boston had to turn away some other events because of the Democratic convention, "but if the RNC were not here, we would not have another convention to take its place," says Cristyne Nicholas, president of NYC & Company, which promotes conventions and tourism in New York.

But not all city officials or entrepreneurs are as sanguine about the city's prospects for a big boon next week. City Comptroller William Thompson this week estimated the convention will end up costing the city about $281 million in lost business and productivity. Add to that the $28 million for security that the federal government won't cover, and the tab grows to $309 million.

There are also plenty of businesses and restaurants bracing for what could be the worst week of their year. "We won't get the Republicans' business, and we weren't expecting it," says Martin Sheridan, an owner of the Ear Inn in Tribeca, one of the oldest eating establishments in the city. "But what it will do is make our regular customers leave town."

Even restaurants near the convention site are wary. At Z Gourmet Deli and Pizza at Broadway and 40th Street, owner Ali Azmed doubts he'll make money. But if he does, it will be on water "because it will be hot and tourists and people from the convention will be walking around a lot," he says.

Yet other businesses will do well, just as they did in Boston, where hotels, caterers, and high-end restaurants attracted many Democrats.

"[The Four Seasons'] business was up because they had a lot of convention parties," says Paul Bachman, economist at the Beacon Hill Institute. "But there were restaurants near the [convention center] where the business was down 60 percent."

It's expected to be just as uneven in New York. Many top restaurants, like the famous Tavern on the Green, are booked up. A PricewaterhouseCoopers survey released in July found that hotels in New York expect to be at 87 percent capacity compared to 73 percent for the same week last year. "This will contribute to the forecasted highest-market occupancy for area hotels ... since the peak in 2000," says Cheryl Boyer, an analyst at the firm.

But boosters note that big events are never just about the immediate cab receipts or sorbet sales. It's about prestige and buzz and the tourists that come later. That's what Athens is banking on for years after the Olympics. New York, for its part, is primping for the thousands of journalists who will be arriving - and the millions of people who will watch on TV.

"There is no other convention that will bring 15,000 journalists to cover it, and there is no dollar figure you could put on that," says Ms. Nicholas. "But it's probably one of the most valuable parts of luring a convention."

• Carly Baldwin contributed to this report from New York.