BAYSIDE BUSINESS: Promenade Posts Record Sales

By Ed Moosbrugger
Business Columnist

May 5 -- The Third Street Promenade posted record taxable sales of $208 million last year and outperformed the city as a whole, scoring a 2.3 percent sales increase while the city suffered a 2 percent decline.

Results on the Promenade not only topped the $203 million in 2001, which was affected by 9/11 and a recession, but exceeded the $206 million in 2000.

“I think this really shows the Promenade’s health,” said Gwen Pentecost, senior analyst with the City’s Economic Development Division, which released the figures.

The Bayside District surrounding the Promenade showed a slight 0.4 percent sales increase in 2002, while Santa Monica Place dropped 11 percent and the Ocean Avenue/Pier/Hotels segment had a 0.3 percent decline.

The Promenade scored a 17.5 percent increase in the fourth quarter, compared to the weak 2001 period, but part of the reported increase came because of tax payment anomalies. Even after adjusting for those factors, however, the Promenade still showed a "good and healthy" increase, Pentecost said.

Among the top categories in the fourth quarter were family apparel shops, bookstores, and restaurants serving liquor, Pentecost reported.

Among the star performers were French Connection, A/X Armani Exchange, Puma, Anthropologie and Urban Outfitters, but some other apparel stores also did well, Pentecost reported. Some posted strong double-digit sales increases, she said.

“I think restaurants had a healthy increase,” Pentecost said. A comparison of restaurants that were open in the fourth quarter of both 2001 and 2002 showed sales up 5.4 percent for “fast food” outlets and up 5.8 percent for restaurants that serve alcohol.

Bookstores, which seemed to do pretty well after 9/11, didn’t post huge gains in the fourth quarter of 2002, but held their ground, Pentecost reported.

For the Bayside District outside the Promenade, sales were flat for the year, but up 7.6 percent for the fourth quarter. This increase was aided by new business entries such as Houston’s restaurant.

In the fourth quarter, taxable sales fell 7.8 percent at Santa Monica Place, but rose 16.1 percent at Ocean Avenue/Pier/Hotels.

Placing the current Third Street Promenade performance in perspective, taxable sales were $60 million a year in 1992. In more recent years, sales were $145 million in 1997, $163 million in 1998 and $182 million in 1999.

THE AMERICAN FILM MARKET is negotiating with several hotels about the possibility of extending the stay of the annual international trade show in Santa Monica beyond 2004, but no decision is expected before June.

AFM, which brings millions of dollars into Santa Monica’s economy each year, is in talks with the Loews Santa Monica Beach Hotel, which has been the film market’s headquarters hotel for 13 consecutive years, and with other hotels which house AFM delegates, said AFM spokesman Greg Ptacek.

Santa Monica has several things in its favor in keeping the AFM in the city. “We love Santa Monica,” Ptacek said.

Most important to AFM, he said, are the many movie screens Downtown that are within walking distance of hotels and restaurants. AFM exhibitors show more than 400 films each year during the trade show, and Santa Monica is one of the few places that can accommodate that volume of activity, Ptacek said.

The AFM also likes the beachfront atmosphere of Santa Monica. While AFM likes Santa Monica, much depends on continued good relations with the city’s hotels because lodging is a big expense for many delegates.

AFM, which is an annual gathering of international film sellers and buyers, draws about 7,000 people each year, giving a boost to many local businesses.

Held in February this year, AFM is particularly valuable to Santa Monica because it comes during one of the slower seasons for local hotels.

SANTA MONICA HOTELS are off to a flat start this year, as was expected by some hotel operators.

For the first two months of 2003, Santa Monica’s hotel occupancy rate dropped 1 percent to 74.6 percent, while the average room rate increased 2.9 percent to $201.96, according to a report by PKF Consulting.