Convention bust may reach $50m
In the space of two months, the Democratic National Convention has gone from a $154 million boon to Boston to a potential $50 million hit to the local economy as businesses absorb the magnitude of the announced highway, street, and mass-transit closings.
A ghost town was effectively the picture portrayed by downtown merchants and businesses this week when they learned that commuters, customers, and tourists would stay away during the convention, which begins July 26. Economists say the reduction in the city's downtown work force, losses to tourism, retail, and eating establishments, plus lost productivity for workers tied up in crowded subway stations or massive traffic jams will add up to a huge negative impact on metropolitan Boston and its economy.
Economists' conservative estimates of the loss range from $34.3 million to $49.8 million for the week, but some forecasts say the potential losses could be much higher if the effect on suburban communities is factored in as well. Before the release of new traffic information, the convention had been pegged in estimates at costing businesses $13 million, according to the Beacon Hill Institute.
Last month, Mayor Thomas M. Menino's office said the event would pour $154 million into the city. Convention planners declined comment on the new numbers, but Seth Gitell, Menino's spokesman, said yesterday, "Mayor Menino is confident that when all is said and done and we look back with an historical eye, this convention will be an economic plus."
Rarely has a city's major highway been shut down for hours at a time for this many days, as State Police plan to do with Interstate 93 and other crucial arteries into the city during the convention, traffic specialists say. Yet some businesses, such as restaurants and downtown hotels, clearly will benefit from the convention.
Michael Kelleher, vice president and general manager of Faneuil Hall Marketplace LLC, the management company for the downtown destination that expects to be flooded with partying conventioneers, said the fears are overblown.
"We got through 3 feet of snow in December. We got through 10 years of the Big Dig," he said. "We can get through four days of this with the blink of an eye."
But travelers and tourists are expected to stay far away from the city, and many employers are telling employees to work partial workdays, take vacations, or stay home. Retail establishments and tourist outfits are bracing for a week that many anticipate will be devastating to business during the peak summer season.
"People are going to avoid us like a bad case of the bubonic plague," said Jeremy Shugar, a manager at Hilton Tent City, a camping- and outdoor-equipment store a stone's throw from the FleetCenter, the site of the convention. "I don't know how we're going to deal with it," said Michael Lappen, vice president of Lappen's Discount Auto Parts, which has 19 stores in Greater Boston and a warehouse in Quincy.
The mounting predictions of economic losses are undercutting early promotion of the convention as a boon to Boston. Certainly, the convention is an opportunity for a week of publicity, as historic attractions and its waterfront are beamed around the world.
News that I-93 would be shut down at least eight hours per day during the event, along with large sections of Memorial Drive, Storrow Drive, McGrath-O'Brien Highway, and Route 1 south, is expected to scare away most tourists and business travelers and create unprecedented traffic. "It's Olympian in scale," said Tim Lomax, research engineer for the Texas Transportation Institute, part of Texas A&M University.
Economic activity generated by convention visitors, economists said, will be partly offset by losses from tourists avoiding the city.
Jay Spence, whose family owns Massachusetts Bay Lines, said yesterday that he has "zero" bookings during convention week for day trips on eight boats docked at Rowes Wharf for business and parties. Busloads of Japanese tourists who typically stop for a boat ride in Boston Harbor will not stop during convention week, he said. "I hate being doom and gloom," Spence said. "But for businesses living paycheck to paycheck, or with short seasons like ours, it's a tremendous burden on us. Boston will be showcased during this time -- and we have nothing."
Beacon Hill Institute's initial estimate of the convention's impact did not take into account a $9 million loss in general tourism business because visitors will avoid the city. "When I saw the numbers I was surprised," said David Tuerck, the institute's executive director.
The institute's updated estimate of the economic drain is $34.3 million. A separate estimate, by the Center for Economic Analysis at the University of Connecticut, puts the total loss at $49.8 million. The center's estimate includes $10 million more for productivity losses, $4 million in retail losses, and $2 million more for tourism losses.
No estimates were available yesterday on the impact to suburbs, which will clearly feel negative spillover. In the worst case, said Mark Zandi, chief economist for Economy.com, the metropolitan area could lose $300 million in economic output from road closings. This assumes an unlikely scenario in which all activity will stop for one-third of the convention period. His estimate of tourism losses -- $30 million -- was also pessimistic. But, Zandi said, "that's the most you could possibly lose."
The impact of newly announced road closings will mean greater losses in productivity than during a typical rush hour, as delivery men and commuters sit in traffic, the institute said. Initially, it estimated $24 million in productivity losses; it raised that to nearly $37 million after State and Boston police announced that all major inbound thoroughfares would be closed.
David Mareira, co-owner of Roadrunner Moving & Storage Inc. in Charlestown, said there "is absolutely no doubt in my mind" that travel limitations will cost him business. The end of July is the second-busiest time of year for his company. The only way in and out of Roadrunner's location, near the Tobin Bridge, which will be closed southbound, is on roads that will either be closed or probably clogged. His big concern is who will pay for additional travel time caused by congestion: the customer or the company. "You want me to ask the consumer in this competitive market to pay $300 more because I can't get there?" Mareira said. "Either we're going to have to reduce the work or subsidize the job and make less profit margin."
Kimberly Blanton can be reached at blanton@globe.com; Andrew Caffrey at caffrey@globe.com. 
