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The Kentucky Derby Feeling The Impact Of The Economy

Austerity is being practiced by most this year.

Star Jones pictured at 2007 Kentucky Derby

Star Jones pictured at 2007 Kentucky Derby dined last evening at Louisville's Chicken King

Associated Press Writer
updated 7:45 p.m. PT, Fri., May 1, 2009

LOUISVILLE, Ky. – Mike Sprowl surveyed the placid lunchtime scene in downtown Louisville just two days before the Kentucky Derby.

Perhaps the threat of rain held down the turnout, he ventured.

“Or it could be the economy,” the longtime Louisville resident added.

For many years, Derby Week has provided a jolt for Louisville’s economy as celebrities and ordinary fans alike overrun hotels, restaurants and shops.

In boom years, the bonanza amounts to nearly $120 million for area businesses, according to Jim Wood, president and CEO of the Louisville Convention & Visitors Bureau.

This year, the recession has reined in some of the usual spending spree for an event that not only kicks off horse racing’s Triple Crown season but amounts to a giant party featuring mint juleps and brightly plumed hats.

Deep-pocketed corporations made Louisville a favorite destination in years past, but in these tough times some companies that used to reward top employees or customers with lavish Derby trips stayed away.

The odds of prime downtown hotels having vacancies leading up to the Derby once seemed more remote than a longshot winning the Run for the Roses. Yet the Galt House Hotel, a downtown fixture, still had about 200 vacancies Thursday, and that was after a late surge in reservations, a hotel official said.

“This is the first time we’ve ever had rooms available for Derby, so we definitely know it’s a reflection of the slow economy,” said Rita Reedy, a marketing director for the company that owns the Galt House.

Wood predicted overall business will drop by 12 percent to 15 percent for hotels, restaurants and other hospitality businesses. Corporate business could be off by up to 40 percent, he said.

At the downtown Maker’s Mark Bourbon House & Lounge, two party rooms typically booked by corporate customers went unclaimed this year for Friday and Saturday nights, said assistant general manager Marc Dempsey.

One room typically was rented out for $10,000 per night on Derby-eve and Derby night; the other room would go for $5,000. This year, the rooms are being converted for regular dining room seating.

“People are basically saying right now, ‘Do you want to get paid or do you want to do a corporate party?”’ Dempsey said.

The regular diners had the Maker’s Mark lounge completely booked Thursday through Saturday nights, yet Dempsey still expects overall business to be down from last year. He also expects that to be commonplace in town.

“You want to be conscious of what you’re spending,” said Matt Kohan of Chicago, who grabbed lunch at Dempsey’s place after getting into town earlier Thursday. “But at the same time, if you’re here you’re going to make it worth your while. I think there’s a little constraint on the excess.”

According to her tweet, Star Jones who is in town for the Derby found a bargain last evening in dining at The Chicken King. “Lord have mercy! At the Chicken King in Louisville we got chicken shrimp yams cabbage potato salad red beans & rice and desert for $15!!!”

Not everyone is scrimping, though.

Four friends in town from Louisiana planned to spend about up to $8,000 per couple on airline tickets, hotel rooms, prime Derby tickets near the finish line, meals and new outfits for the big day at Churchill Downs. And that didn’t even include the amount they planned to plunk down on wagers.

“Do it right,” said Dale Thibodeaux of Midland, La. “It might be the only time we come.”

The couples had planned the Derby trip for some time as a 50th birthday celebration for one of them.

Meanwhile, lower demand among corporations created opportunities for others to snatch up Derby tickets.

The result could be a bigger turnout on Derby Day by people from the region, Wood said.

In the past, hotels were fully booked months in advance of the big race. Wood said he’s never seen a year when people waited so long to decide whether to attend.

“The uncertainty of the economy has caused people to delay their decisions,” he said.

Churchill Downs announced several months ago that it was freezing most Derby ticket prices this year as a result of the struggling economy. Derby tickets range from $88 to $804 apiece. Derby general admission is $40.

Even if some race fans passed up this year’s Derby, Churchill wasn’t worried.

“Over the years, we’ve always had more demand than we’ve had supply,” said Kevin Flanery, a Churchill senior vice president.

The struggling economy has also been showing up in wagering on thoroughbred racing.

Through March of this year, wagering on U.S. thoroughbred racing was down 9.35 percent from a year ago, according to Equibase. Wagering last year totaled nearly $13.7 billion, down 7.2 percent from 2007.

“We’re seeing declines just like every other sector. Not as bad as others,” said Alex Waldrop, president and CEO of the National Thoroughbred Racing Association.

Last year, $114.6 million was wagered on the Derby.

This year’s slowdown in Derby-related spending has many looking toward next year, with hope things will be better.

“We really feel like it’s a one-time blip,” Reedy said.

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    Posted in Economics & Finance and Entertainment and Sports 5 years, 5 months ago at 6:37 am.

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