Boom Boom Room, Smyth Hotel Bar and Real Estate Recovery

The New York Nights Club Report for September 17, 2009

Opening

Boom Boom Room in the Standard Hotel

(Urban Daddy)

The natural marriage of luxury hotel and high end lounge manifest once in the Meatpacking District…

Smyth Hotel Lobby Bar

(New York)

…and again in the East Village. Can venues like this placate the neighbors?

Real Estate

Nightlife vs. Condos

(New York Times)

As condo development stalls across the city, nightlife continues to bring revenue into many districts…

Have fun

Gamal

The Power of New York’s Nightlife Reputation

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

Taz Pagan and Nightlife Violence

By Gamal Hennessy

Elements of the nightlife community found out about the death of one of their own last Sunday morning. By all accounts, Eric “Taz” Pagan was a good bouncer who put in extra effort to support the venue he worked for and keep the establishment in the good graces of the community. Those might have also been the same traits that got him killed. Mr. Pagan’s death goes beyond the issues of security and violence in nightlife. The incident highlights the need for a basic change in the mentality of some of our patrons.

Uncommon Circumstances

In spite of the media sensationalism surrounding nightlife violence, the fact is that nightlife fatalities are very rare. When you eliminate the extraordinary case of the Happy Land fire, there are specific patterns that have emerged over the past twenty years.

Evidence suggests that fatal violence is more likely to occur in the immediate area outside a venue as opposed to inside the venue itself. The logic behind this isn’t hard to figure out. There is a higher chance that the ego and self esteem of fanatics will be bruised outside a venue, either because they can’t get into the club or they just got kicked out. Authority or force has been used on them and lashing out at either the operators or at random passers by is a way for them to regain his sense of power and control. There have been a few fatal encounters between bouncers and patrons in recent memory. David Lemus and Olmedo Hidalgo shot bouncer Marcus Peterson outside of Palladium in 1990 . In 2003, a bouncer named Dana Blake was stabbed to death outside of Guernica by Isaias Umali. And in 2006, bouncer Stephen Sakai shot Gustavo Cuadros outside of Opus 22.

Pagan’s death differed from the others in significant ways. The shooting took place outside of Forbidden City, but by all accounts it wasn’t the result of fanatics trying to get into the lounge, because the place was already closed. Pagan often worked as a bouncer at the venue, but he was off that night. He only stopped by to check in on his friends. He wasn’t part of the fight that took place outside the lounge. He simply tried to break it up. Pagan’s death had very little to do with being a bouncer or being at a club. At the time of his death, he was just a man who tried to calm a violent situation.

Larger Solutions

In previous articles, I have argued that the presence of police officers outside of specific venues would help reduce the levels of violence. But in this case that solution wouldn’t be a viable answer. Even if police walked a beat outside Forbidden City, they still wouldn’t be around after the venue closed. Even if security inside the club was in contact with the local precinct, Taz wasn’t part of the security team that night. Louis Rodriguez, the man accused of the shooting, might not have even been inside the club, so neither the police nor security would have any clue the man would be a problem. Police officers can’t be stationed near venues on a constant basis. At a certain point it’s about the patrons, not the operators or the cops.

Fanatics go out with the goal, expressed or implied, to cause as much mayhem as they can get away with. For them, nightlife is a sandbox for them to destroy. To put it quite simply, if we want to reduce the number of problems associated with nightlife, the most effective plan is to convert as many fanatics as possible into nightlife natives. The fewer fanatics we have, the fewer issues we have. This is not a straight forward process. It requires altering the values and thought patterns of people rather than simply throwing more money or manpower at the problem. But until we reach a point where disputes aren’t resolved with a bullet in the forehead, the nightlife community and the city as a whole will continue to lose people like Taz Pagan.

Have fun.
Gamal

Can Rosen Get the Liquor Flowing in New York?

By Gamal Hennessy

Late last week a new chairman was selected to head the New York State Liquor Authority. The new appointment comes at a time when the agency is facing scandals and being criticism both inside and outside of government. Can the new Chairman turn the agency around or should the SLA be abolished altogether?

The State Liquor Authority regulates who gets to sell liquor in within the state. Every legal operator needs to obtain a license from the SLA before they can sell liquor to the public. However, many of the laws regulating liquor haven’t been changed since the 1920’s when Prohibition was part of the fabric of American society. To make matters worse, there is a severe backlog of pending applications. Operators waiting for a liquor license can wait up to 11 months to have their application processed, which means that they can lose money for most of they year waiting for a response from this agency.

The problems surrounding the SLA evolved into a scandal. Several individuals working in the New York Office of the SLA were charged with taking bribes to expedite certain applications. The fallout from this investigation led to Governor Paterson naming Dennis Rosen, a former New York State District Attorney, to head the SLA.

Mr. Rosen’s new job will not have a long honeymoon period. During his confirmation hearing, several state senators complained that the licensing process takes too long and hurts the state’s economy. One senator suggested that the SLA can’t be fixed and might need to be abolished. At the same time, Governor Paterson has signed an executive order calling for several agencies to review and modify “antiquated and burdensome regulations on businesses”. The SLA was one of the agencies named in that executive order. It appears that Mr. Rosen will be called upon to modify the Prohibition Era laws that govern the SLA and clear the backlog of applications or the whole agency might go down with him.

It is unclear at this stage how much change Mr. Rosen can bring to the SLA. It is a step in the right direction to give the new chairman a mandate to assist operators instead of hindering them. It is a step in the right direction to recognize that the Beverage Control Law needs to be brought into the 21st century. But, Governor Paterson is facing political struggles of his own and anti-nightlife factions haven’t openly commented to Rosen on their position. As members of the nightlife community we have both the ability and the right to support change in the SLA that matches the interests and needs of our culture.

Have fun.
Gamal

How Big is New York Nightlife? Part II

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

How Big is New York Nightlife?

By Gamal Hennessy

There is a movement building to transform millions of nightlife patrons into a political force. As organizations like the Nightlife Preservation Community begin to gain momentum, it makes sense to look at what nightlife brings to the New York economy in hard numbers. When you look at the number of jobs, the number of patrons, the amounts the clubs spend and the amounts the patrons spend you begin to see how vital nightlife is to the financial health of the city.

Where the numbers come from
The New York Nightlife Association (NYNA) is an organization that represents the nightlife industry in New York. The NYNA commissioned a study in 1998 and again in 2004 called “The $9 Billion Dollar Impact of the Nightlife Industry on New York City”. Two weeks ago, Zagat released its 2009-2010 New York nightlife Guide with an updated analysis of the club industry. The numbers in this article are based on these two studies and my own calculations. The numbers coming out of the study have been verified, but since I can hardly add, my calculations are suspect at best.

Venues and Operators
According to Zagat, New York City currently has more than 1,300 nightlife venues, including 100 new venues added in the past year. This finding is supported by our own Trends Report that has continued to track new venues opening almost every week in spite of the economy. While there is no mention of how many venues were lost in 2008, the number of new venues is remarkable considering the economy and the stiff competition for drinking dollars.

Each venue needs several different people on hand to service and entertain customers on a nightly basis. The employees included management, security, bartenders, bar backs, dancers, waitresses, sound and light technicians and food service people such as cooks and chefs. It did not cover people who worked in the club, but were not direct employees of the venue, like musicians, DJ’s and promoters. According to the Impact Study, each bar has an average of 17 people on staff and each nightclub having approximately 38 people working there for an average of 27 operators per venue. That means that the total number of operators currently hovers around 35,000 people. The secondary group of natives who work in the club but do not work for the club is also considerable. Based on the study, nightlife generates 8,600 more local jobs as a direct result of its activities. This means that nightlife employs almost 44,000 people locally.

Spending by Operators

Wages: There are three major costs that operators pay for to keep their businesses running; wages, operational costs and taxes. Employees on the payroll of venues earn approximately $531,000,000 in wages and salaries every year. Freelance operators pull in more than $320,000,000 dollars per year. I can tell you from personal experience that the distribution of these funds varies wildly. If an unknown DJ spins at a club, she might get free drinks. If I DJ at a club, I might get $250 for a night. If a superstar DJ spins for a night, he could get several thousand dollars. While the distribution of these funds fluctuates there is still more than $850,000,000 in wages being generated by this industry, with a majority of those funds getting pumped back into the local economy.

Operational Costs: A bar or club has to purchase a significant amount of goods and services in order to offer its service to the public. While liquor and food are obvious examples, venues also have to purchase capital improvements to their spaces, furniture, cleaning and sanitation, electricity, climate control, accounting, legal advice, advertising, marketing, permits, music licensing fees and financial services. According to the Impact Study, nightlife spends more than $755,000 million dollars worth of goods and services in the city every year.

Taxes: Nightlife venues have to pay business taxes, sales and use taxes and in certain cases real estate taxes to stay in operation. The employees have to pay income taxes on the wages that they have earned (although I believe some payments are made on a cash basis to avoid taxation). The Impact Study estimates that nightlife pays the almost $104,000,000 million dollars a year in taxes to New York City and another $46,000,000 million dollars to New York State.

Part II of this study will be available tomorrow…

Have fun.
Gamal

What Imette St. Guillen’s Death Means to Nightlife

By Gamal Hennessy

On February 25, 2006, Imette St. Gullien left the Falls Bar with Darryl Littlejohn. Two days later her body was found. She had been beaten, raped, murdered and dumped on the side of a road in Brooklyn. Her killer was convicted late last week, but the shockwaves from her death are still being felt in the industry. The creation of the CEI and the passage of Imette’s Law are directly tied to Ms. St. Guillen’s death and have permanently altered the nightlife landscape in New York.

The Sean Bell Connection

The Club Enforcement Initiative (CEI) was set up by the New York City Police Department shortly after the Ms. St. Gullien was killed. Fourteen officers were recruited out of the vice and narcotics squads and sent into clubs undercover where they would investigate drug sales, prostitution and other alleged crimes. The officers were allowed a two drink minimum to help them blend into the venue and they would take deliberate steps not to reveal their identity once they were in the club.

Unfortunately, the police of the CEI were themselves accused of nightlife violence shortly after the unit was created. In November of 2006, Sean Bell and his friends left a strip club called Club Kalua in Queens after his bachelor party. Believing Mr. Bell to be armed and the suspect of a crime, the CEI proceeded to follow Bell’s car. Police reports indicate that after the car hit one of the officers and slammed into an unmarked police van, members of the CEI fired 50 rounds into Sean Bell’s car, killing him and wounding two of his friends. It was later discovered that Bell was not armed and was not guilty of any crime. This incident touched off heated debate within the city about police brutality and racism within the department.

The Best Practices Connection

On the other side of the coin, the murder of Imette also led to increased cooperation between operators and the NYPD. In 2007 a Nightlife Summit was held to discuss the issue of crime and violence within nightlife. City Council Speaker Christine Quinn organized the summit that brought together Police Commissioner Ray Kelly, David Rabin, the current president of New York Nightlife Association and other various club owners.

The result of that summit was the 58 measures of the Nightlife Best Practices which were supposed give club owners incentive to call the police if trouble occurs. In theory, the call would not raise the specter of disorderly premises citations that interfere with liquor licenses and the ability to stay open. Shortly after the summit, the New York State Assembly’s passed Imette’s Law which required video surveillance in clubs and stronger background checks for security staff

Unfortunately, not every measure discussed during the summit translated into policy. The operators at the Summit also called for finding ways to get more cops to patrol outside clubs and bars, increasing accountablility for teens that use fake IDs, targetting the makers and sellers of fake IDs, raising the admittance age for venues from 16 to 18 or 21, and fostering a better relationship among club owners, the NYPD and the SLA. Unfortunately, these measures have yet to be been implemented. Even though they could have improved safety from all types of crime and violence these recommendations were pushed aside for a quick fix at the operator’s expense. A chance to support nightlife was rejected for a one sided demand for operators to assist a police investigation after a crime as taken place.

A camera can record who goes into a club, who leaves, when they leave and who they leave with. If a person like Ms. St. Guillen leaves with a murder like Mr. Littlejohn, then the homicide division will be able to look at the tapes and compare them to criminal profiles once the body turns up bound and asphyxiated. But if there were police patrolling the club areas, criminals might decide to not commit their crimes at that point. If there were Paid Detail officers standing outside of The Falls then perhaps Ms. St. Guillen would have had other options on how to get home instead of walking away with someone she never met. Maybe nothing would have changed, but even the likelihood that nightlife could be safer should be enough of an incentive to take up the Summit’s recommendations.

Littlejohn has been convicted of murder, the lawsuits against the operators of the club are still pending and operators and patrons socialize under the new guidelines. Although violent death is extremely rare in New York nightlife, the steps left on the table during the Nightlife Summit could make nightlife even safer. Hopefully more political action on the nightlife issue will lead to more progress in the wake of Ms. St. Guillen’s death.

Gamal