CHARLOTTE, N.C. -- The Democratic National Convention was a boom to the local hospitality industry, but its impact on other parts of the Mecklenburg economy appear limited, according to an analysis of sales tax data from the N.C. Department of Revenue.
The hotel industry had perhaps its best month ever in September, with revenue up 82 percent compared with the same period in 2011.
During what is historically a slow week, just after Labor Day, area hotels were packed. They were able to charge twice or three times their usual rate.
County restaurants and bars also posted strong sales.
But outside of those two sectors, the four-day DNC didn’t appear to boost retail spending.
Tax receipts for sales outside of hotels, restaurants and bars increased by just under 2 percent in September compared with the same month in 2011. In the previous six months, those sales had increased by just under 7 percent on average.
The economy had been strengthening and Mecklenburg consumers appeared more willing to spend. It’s possible that in September, local consumers felt uneasy and slowed their spending – a decision that had nothing to do with the convention.
“Outside of the hospitality industry, there doesn’t appear to be much going on,” said Craig Depken, an economist at UNC Charlotte who has studied the economic impact of political conventions on host cities.
Wells Fargo economist Mark Vitner, who reviewed sales tax receipts at the Observer’s request, said it appears visitor spending was limited to restaurants, food and drink uptown.
“I don’t know if too many people who came for the DNC made the trip to SouthPark,” Vitner said.
The DNC was the city’s biggest convention ever, with roughly 6,000 delegates and 15,000 media converging on the city for four days. In addition, the host committee said thousands of other people came to Charlotte in early September to nominate President Barack Obama.
Other cities that have hosted political conventions have said the event’s economic impact has been large. Denver, which hosted the 2008 DNC, said the regional economic impact was $266 million.
In Charlotte, public officials have been cautious about assigning a specific dollar amount to the DNC.
The Charlotte Regional Visitors Authority, the city’s tourism arm, has hired an outside consultant, Tourism Economics, to measure the convention’s economic impact. The group will likely release its report in February, according to the CRVA.
Depken said it is difficult for economists to determine the full economic impact of large events such as political conventions or the Super Bowl. Those events generate tens of millions of dollars in spending, but Depken said they can also displace regular spending that would have occurred without the special event.
The September sales tax receipts won’t capture the full economic impact of the DNC.
For instance, people who rented their homes for several thousand dollars may not spend that money for weeks or months. And construction of a stage at Time Warner Cable Arena, which cost $7 million, was finished before September.
DNC-related guests were coming to Charlotte from mid-summer on. For example, security personnel, who were paid for by a $50 million federal grant, had been coming to Charlotte since June, staying in hotels and spending money.
Retail sales slow
In September, Mecklenburg County’s share of the general sales tax was $31.4 million – $2.4 million more than in September 2011.
But that new revenue can’t all be attributed to the DNC, Depken said.
For instance, other recent months have posted similar year-over-year increases –without the benefit of the DNC.
Mecklenburg received $2.3 million in new sales taxes in May compared with the same month in 2011. The county took in $1.3 million in new sales taxes in July compared with July 2011.
The jump in March was even larger, with $3.4 million in new sales taxes.
September’s increase was almost all fueled by hotels, restaurants and bars. Increases in other months were more evenly distributed among retail, along with hotels and restaurants.
Depken said it’s a mystery why retail sales in September weren’t as robust compared with previous months.
The DNC might have kept residents home and avoiding shopping. Or it’s possible that a cooling off in retail sales was unrelated to the convention and a sign that consumers had become wary about spending, Depken said.
Linda Martinez is manager at Sloan, an upscale women’s clothing boutique on East Boulevard. She said despite store advertisements in publications distributed at hotels that hosted convention goers, her store didn’t see any uptick in sales during that week. She suspects that except for restaurants, other retailers along her corridor had a slow week, too.
Martinez said she isn’t sure why business was slow, but said even regular customers stayed away because of concerns about heavy traffic.
“I don’t know what we thought we were going to (get),” she said, adding that the only noticeable increase in out-of-town visitors is during CIAA, the annual basketball tournament that runs from the end of February to early March.
Scott Greer, treasurer for the city of Charlotte, speculated that if locals decided not to go shopping during the DNC, they would eventually spend money.
“If they didn’t go out and buy a new refrigerator, eventually they are doing to do that,” Greer said.
He added that the large increases in hospitality taxes show the convention’s positive economic impact.
Depken, however, said any new tax revenue from the DNC won’t be a game-changer for local governments.
“It’s nice to have,” Depken said. “But you aren’t going to be able to build a new school with it.”
Some public officials, however, have emphasized the value of the exposure for Charlotte more than the new dollars it brought to the city. Charlotte Mayor Anthony Foxx, who was part of the host committee, said the convention was an opportunity for the city to “tell its story to the world.”
Vitner of Wells Fargo said that was most likely the real value of the DNC.
“The benefit is the exposure and the image-making,” he said. Staff writer Celeste Smith contributed.
Sales tax increases
Here is the monthly revenue for Mecklenburg County from general sales taxes receipts. The percent increase refers to the growth in sales tax compared with the same month a year earlier.
|Month||Receipts in millions||Change|
• The DNC gave a boost to the hospitality industry.
Tax receipts on hotel rooms and sales at restaurants and bars increased by 38 percent in September compared with the same month in 2011.
In the previous six months, those sales tax receipts increased by a monthly average of 13 percent compared with the same period in 2011.
September hotel revenue was roughly $61 million. That is the highest in the four years of county data provided to the Observer and likely the biggest sales month ever.
• Retailers did not fare as well.
Sales tax receipts on Mecklenburg retail purchases not including hotels, restaurants and bars increased by 1.7 percent in September 2012 compared with the same month in 2011.
In the previous six months, sales tax receipts outside of hotels, restaurants and bars increased by a monthly average 6.6 percent compared with the same period in 2011. Steve Harrison