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By Gamal Hennessy
Time Out Publishing is releasing a book this week entitled “World’s Greatest Cities”. In the book, New York was singled out as the best city in the world when it comes to things like architecture, arts and quality of life. While most New Yorkers might feel nonchalant about this title, nightlife natives should take note of the impact our nightlife has on the city’s reputation and the impact of that reputation on our lives. The writers of this book singled out New York above all others because of our 24 hour culture. It is nightlife that gives New York its unique culture. Any moves to suppress that culture will have a direct effect on the economy and prosperity of the entire city.
Reputation for tourists
New York is known as ‘the city that never sleeps’. That reputation draws millions of tourists to the city every year. But when visitors think of a metropolis opened around the clock, what do you think pops into their minds? Do you think they are dreaming about a 24 hour Duane Reade? I don’t think so. Is it possible that people fly into New York from Sydney and Bali and Johannesburg to visit the all night bodega? Probably not. The concept that draws people to the city that never sleeps is the idea that we work all day and we party all night. Where do we party? If you have to ask that question, please close this page and visit a different site.
In 2004 a research organization called ARA conducted a study on the impact of nightlife on the New York’s economy. ARA found that 77% of all New York visitors identified visiting a nightclub or bar as one of their primary reasons for visiting the city. This means that almost three quarters of all our tourists came to New York to experience our nightlife. How much money would be lost from incoming tour groups, business conventions like the New York Auto Show, award ceremonies like the MTV music awards, and artistic events like Fashion Week if people decided that New York was no better than any other city when it comes to nightlife? It is hard to imagine how the reputation of New York would remain the same if people came to the conclusion that nightlife in New York, Cleveland, and Spokane were substantially similar.
Reputation for talent
It’s not just temporary occupants of the city that are lured by our nightlife. Every year job recruiters go around the country and around the world to find the top people from the top schools and try to lure them to New York. Recruits are seduced with money and the chance to work in the beating heart of their industry. They are also drawn in with images of high class bars, private parties and mega clubs. TV shows filmed in New York like Sex and the City, and Gossip Girl often have young workers hooked before the recruiter even shows up. People want to work in New York to get access to the nightlife.
If New York didn’t have the reputation for nightlife, how many young, bright people would choose to move to here to pursue careers? Other cities have cheaper rents, more space and other advantages. If New York isn’t unique when it comes to bars and clubs, what is the point of suffering thru all the difficulties of making it here? Other cities like Atlanta, Miami, Los Angeles and Las Vegas are trying to use a vibrant nightlife to attract the best and brightest. Can we afford to lose this pool of talent and still be the center of the universe?
It is not coincidental that financial networks like CNBC are focusing on the Time Out book. A city’s reputation can directly influence the economic power of an area. New York City is central to several different industries. We are not dependent on nightlife or any other single business the way Detroit, Orlando or Las Vegas are. But nightlife is still a vital part of the overall dynamic. NIMBY community groups, opportunistic politicians and other anti-nightlife advocates can willfully ignore the contribution that nightlife makes to New York. If we follow their lead or allow them to make decisions for us, we are going to lose more than the title of the best city in the world. We will lose the reputation that drives our economy.
Have fun.Gamal
By Gamal Hennessy
Last night I described the size and scope of nightlife venues and what they do to directly stimulate the economy. Today we’ll look at the other side of the equation and look at the economic activity of patrons in New York clubs.
Patron Population
All the venues and operators are useless without someone to actually serve. The 2004 Impact Study concluded that the attendance in New York clubs is more than 65,000,000 entries per year. Keep in mind that ‘entries’ is not a direct measure of the number of people who patronize nightlife on an annual basis, since club hopping and bar crawling could take one person to several venues in a night. A tourist might hit a club on her vacation in New York. A nightlife native might visit 50 or 60 venues in a year. Although total entries do not translate directly into 65,000,000 patrons, it is more than three times the amount of attendance at all 8 New York sports teams combined. 64% of nightlife patrons live within the five boroughs with each New York native visiting an average of 2.14 clubs per night out. The other 36% of all nightlife patrons came into the city from out of town and they visit an average of 2 venues per stay.
Cash Flow
Pre-Club Activity: Patrons don’t just magically appear on the dance floor at night. There are many activities that they engage in and spend money on before the night begins. The Study found that each native spent an average of $67 per person on these ‘pre-club’ activities including purchasing clothing, dining out and other activities. In addition, 82% of patrons used some form of transportation to get to the venue, for another $15 per person. So in total, each New York resident spent about $80 before she even walks inside the club. Tourist spending at non nightlife venues was even higher than resident spending. 86% of tourists people engaged in some other activity when they went to a club including dinner shopping, but also including hotels, theaters and sightseeing for an average of $90 per person. The out of town group also spent an average of $110 to get to and from the city and the venues they decided to visit, bringing their per person spending total to almost $200.
Liquor Purchases: The Study and the Zagat guide don’t estimate how much patrons spend when they are actually in a venue, but we can develop an educated guess. In our estimate, we’re going to assume that a person goes into a bar or club and buys four drinks; two for himself and two for the person he is with. I’m assuming a social unit of two, even though larger groups are just as common in clubs. I’m also assuming basic manners here, which means people not going Dutch. This might be overly optimistic in New York City, but in my experience New Yorkers can be very generous with alcohol, especially if they’ve already had a drink or two.
To keep things simple, I’m not including cover fees, coat check fees or bottle service, which would raise the numbers exponentially Let’s say each drink is $10. This is an average between the $5 beer and the $15 martini. That means in every club this guy goes into, our theoretical patron spends a total of $40. Let’s project that out to the total group. If there are 65,000,000 entries per year and only half of them pay for drinks then that’s 32,500,000 “drink entries” per year. If each drink entry is worth $40, then the estimated spending by nightlife patrons in clubs is 1.3 billion dollars.
Effect on the City
The amount of jobs, patronage and spending in nightlife might seem abstract until you put it in context. To place the numbers in perspective, we can look at the local film industry. According to the Mayor’s Office for Film, Theater and Broadcasting, local TV and movie production generates $5 billion dollars in economic activity for the city. In comparison, nightlife generates twice the revenue. The film industry has a government office to support and promote it. Nightlife has no such office despite repeated calls from operators to create it. If and when the city puts its full support behind the nightlife industry the benefit to the city could rise exponentially.
Have fun.
Gamal
By Gamal Hennessy
Many major cities have designated areas where nightlife concentrates. Vegas has the Strip. New Orleans has Bourbon Street. South Beach has Ocean Drive. London has Leicester Square. New York has pockets of venues scattered all over the city, but what if there was a central area that was easy to get to, isolated from local residents, and big enough to house the next generation of mega clubs? Could something like that work here? Would we want it to?
Diane Vacca of Chelsea Now reported last week that members of community boards 4 and 5 in Midtown are in the initial stages of a plan that would designate areas in the Garment District (between 34th and 41st Streets and 6th and 9th Avenues) as a manufacturing zone. By using a non residential area for larger nightclubs like the venues currently in West Chelsea, the boards hope to give the residents of the quality of life they are looking for while providing space for a vital part of New York’s culture and economy.
Clubs have had conflict in recent years with local residents, community boards and police where local residents complain that the club’s activities are detrimental to the neighborhood and club operators complaining that they don’t have the tools or authority to solve the problems and remain in business. The encroachment of residential buildings into traditional nightlife areas has exacerbated the problem, which probably had a lot to do with this proposal.
Creating an Ocean Drive in Midtown wouldn’t radically alter the geography of most of the cities venues. Local bars, live music venues, lounges, speakeasies, and wine bars would still flourish all over New York. But mega clubs like the historic Palladium, Roxy and the Limelight, recent venues like Crobar and Lotus and current clubs like Webster Hall and Home need more space, generate more street noise and cause more late night traffic congestion than the smaller venues. Creating an area for them could help isolate the inevitable issues that come up.
There are at least two issues with the current plan, both turn on economics. The first question is “How do mega clubs fit into the future of New York nightlife?” The desire for operators to sink money into a mega club might not be very strong. Real estate costs are still fairly high, even in a recession. Liquor licenses are still a time intensive process that can tie up an investment for up to a year. Operating costs might be prohibitive in this district if patrons are planning to hop from club to club like in New Orleans, but are unwilling to pay substantial covers five or six times in one night. And the ability to pack a mega club with patrons on a consistent basis might be challenging without a point of difference to set them apart from the club next door. Steven Lewis has noticed a dispersal of nightlife from a few large venues to many small ones. In that kind of environment, can a mega club survive?
The second issue has to do with the zoning of the area itself. Ms. Vacca reports that the city is unwilling at this point to rezone the area for a nightlife district. Altering their position may take some time. Even if they succeed, operators run the risk of sinking investment capital into properties in a nightlife district only to find that the area is rezoned for residential once they make the area trendy enough for residential developers. This pattern has played itself out in the Meatpacking District and West Chelsea. Vegas and South Beach have created nightlife zones and maintain that status. If a similar New York zone is going to exist, local government needs to have the same commitment to maintain it.
Neither of these obstacles is insurmountable. A specific nightlife zone could spark growth in nightlife similar to what we saw in the mid 1970’s with the rise of Studio 54. Fresh capital and new ideas like a nightlife zone could be the start of a new age in the nightlife industry.
Have fun.
Gamal
By Gamal Hennessy
There are several new buildings going up in areas that were once very hospitable for nightlife. From the Lower East Side to the Meatpacking District to Grammercy Park to West Chelsea, new buildings are rising every month. Even though the prices for New York real estate are extreme, we’ve largely been spared from the effects of the national housing slump up to now. Some have tied the increase in luxury residences to increased conflict between residents and certain clubs. But the money for condos and co-ops is starting to dry up. Does this mean that there will be fewer calls for nightclub closures and more opportunity for nightlife real estate?
Background
The amount of residential real estate in New York has risen steadily since 2001 when commercial firms moved out of the city following the terrorist attacks. More demand led to increase desire for space. The weakening of the national housing market as a result of the sub prime crisis did little to decrease demand in New York, primarily because financial professionals and foreign buyers taking advantage of the weak dollar continued to buy. As real estate developers looked for more space to build, nightlife venues became attractive targets and the nightlife community became an obstacle to their growth. Some nightlife professionals have suggested that the influx of upscale residents has created an oppressive atmosphere for clubs.
The struggle between residents and nightlife wasn’t created by the housing boom. Clubs can contribute to traffic, noise and incidents requiring a police presence. Previous residents have been vocal about their needs in the past. The difference between the previous situation and the current one is that some luxury residents actively attempt to change the nature of the neighborhoods that they have paid so much to live in. Using the liquor licensing process as a tool, nightclubs and bars have been closed, forced to operate with reduced hours, or they haven’t been able to open at all.
New Situation
But the residential real estate market in New York might be following the rest of the country. Sales to foreign buyers, which recently accounted for up to 33% of new condo sales, is falling. Hedge fund managers and other financial professionals aren’t getting the bonuses that traditionally spurred purchasing. This means that many of the buildings going up today might not have a long list of buyers when they are finished.
What does this mean for New York nightlife? The results might not be immediately apparent. Clubs will still have to work with community boards and current residents who have moved into club neighborhoods. The rents that bars and clubs have to pay will continue to eat up a significant chunk of revenue, which means bottle service and other things we pay for will reflect those prices. But it could mean that there is less desire to convert club spaces into condos and an increased recognition of the continuing economic strength of clubs. Unlike most other types of commercial activity, New York nightlife attracts visitors and money from all over the world and will continue to do so even as the housing market dries up.
Have fun.
Gamal
By Gamal Hennessy
New York has never been known for being cheap. Our nightlife can be especially expensive. The $30 cover, the $9 pack of cigarettes, the $15 cocktail, and the $700 bottle are not uncommon. As Wall Street falters and gas prices rise, some New Yorkers have less and less disposable income. All of a sudden, a $15 margarita seems a little pricey. This situation can become even more stressful when you look across the bar and tourists of every stripe seem to be buying bottles of Grey Goose and then giving it away. Tourists are using their economic power to wine, dine and pay for all the things we can’t afford this summer…
New York City nightlife has always included a considerable amount of tourists. This year the numbers are expected to rise. NYC Company expects tourism to increase 20% from the same period in 2006, which means almost 3.3 million tourists will descend on New York this summer. A large reason for the increase is money. The U.S. Dollars is currently weaker than currencies in Europe and Asia. When tourist exchange their euros, yen and pounds for dollars it turns normal, middle class people into extravagant VIP’s who are willing to make it rain from SoHo to Central Park.
If you’ve ever taken a trip to the Caribbean or to Mexico, you’ve probably lived through this experience before, just on the other side. We show up with our American dollars and we can get into clubs where the locals can only work. We can easily afford things that we couldn’t afford back home. The people who lived in the places we visit probably feel a mix of appreciation and envy. They wanted us to spend money…that’s how their clubs stayed open. They just wanted to be able to have fun too. New York hasn’t become Cancun just yet, but experiencing the feeling from their point of view can be a little disturbing.
A savvy New Yorker will see this cash invasion as an opportunity, not a problem. If you have European friends, invite them to New York, all of them. Offer to take them to the best spots. When they bring you along, you’ve got a built in sponsor. If you don’t have international friends, now is a good time to make some. As a native, you know the best spots to party, now they have money to party. It’s a win win situation.
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