And Another Fifty Million People Just Got Off of the Plane

Memory Lane by Peter Funch, from the 2008 series "Babel Tales," which focuses on human relations in cities.Photo: Courtesy of V1 Gallery

Let me know when the tree goes up,” says Michael Bloomberg, salting the jam on his English muffin. The mayor and I are at the Rock Center Café, looking onto the ice rink. Above the skaters, a crane hoists a Norway spruce roughly the size of King Kong. In moments, it will officially become the Rockefeller Center Christmas tree, one of New York’s most beloved tourist attractions. Hundreds of people have gathered around, snapping pictures. More arrive each minute, drawn across the plaza from the spectacle of the Today show. Just then, a flash goes off next to us. A tourist wants a picture of Bloomberg. “Get into the shot,” he tells her, politely if without particular warmth. “Get into the shot, and let’s get this over with.”

“Part of my job is tourism,” Bloomberg says once the photo op is over. “ ‘Hi, how are you, welcome to New York.’ You gotta make people feel happy.” That is, if anything, an understatement. Luring people to New York to spend their euros, reals, and yen is one of the Bloomberg administration’s signature initiatives and outsize success stories. As we talk, Bloomberg at times comes across less like a mayor and more like the president of some giant Chamber of Commerce. It is clear that the happy commotion outside the café windows has been part of his vision all along: New York as a luxury good enjoyed by all the world.

And that vision has largely come true. This year, barring some unexpected hiccup over the next few weeks, New York will have played host—for the first time in its history—to 50 million tourists. (In 2002, when Bloomberg took office, that number was just a hair above the ten-year nadir of 35.2 million.) Not only does tourism, at $47 billion a year, make up a bigger slice of the city’s economy (7.36 percent) than ever before, but it is now New York’s fifth-largest industry, ahead of media and fashion and many of the wonderful things that actually bring tourism here. Tourism is the city’s fastest economic-growth sector and a major reason the post-Lehman recession wasn’t much worse here. In 2010, hospitality was one of the few industries in the city to gain jobs. That same year, amid global economic gloom, New York quietly sucked up almost 33 percent of all overseas travel to the U.S.—more than L.A. and Miami combined—and overtook Orlando as the No. 1 domestic-city travel destination for the first time in twenty years. The tourism industry currently supports 320,000 jobs in the city, 6,500 more than last year. We have gone from 72,625 hotel rooms in 2006 to 90,000 today—a 24 percent increase in five years. At two people per room, we are now capable of housing full stadiums of Jets, Mets, and Yankees fans in one night. (No wonder hotel workers were the only union to back Bloomberg’s third-term bid.) “In this recession, the country lost 6 percent of private-sector jobs and got about a quarter back,” Bloomberg says. “New York City lost 0.3 percent and got them all back. Why? Because we have the option to use tourism to replace growth.”

The question, of course, is whether that option can sustain growth. With the U.S. economy still sluggish, Europe flirting with one economic crisis after another, and even the Chinese juggernaut slowing down, our tourism figures are looking downright miraculous. Or, if you’re a pessimist, a lot like a bubble.

The offices of NYC & Company, at 810 Seventh Avenue, are a Bloombergian open-plan playpen that seems more like a tech start-up than home to the city’s tourism brain trust. Inside, 155 staffers divided into thirteen units, some working around the clock in shifts, are busy doing one thing: selling New York.

NYC & Company is not a city agency, although it has city DNA. Dreamed up by Bloomberg and his former deputy Dan Doctoroff, it is formally a 501(c)6 nonprofit corporation. In effect, however, NYC & Company is a large, full-service marketing, public-relations, and advertising agency whose main source of funding and sole client happens to be the city. The company in its present form appeared in June 2006, when the mayor merged two underperforming city agencies, NYC Marketing and NYC Big Events, with a traditional visitors bureau composed of hoteliers and restaurateurs and run by alleged Giuliani fling Cristyne Nicholas. On paper, Bloomberg got rid of two agencies; in reality, he created a kind of superagency free from the bureaucratic confines of City Hall. To head this new outfit, Bloomberg called on George Fertitta, a Madison Avenue veteran whose firm, Margeotes Fertitta & Partners, had been billing a broad roster of clients up to $250 million a year. Fertitta, an amiable gentleman with white hair just long enough to be too long for a city-government hack, had just sold his company and was looking for a legacy gig. Here was one for the ages: “Selling the greatest product in the world” is how he puts it.

The old NYC & Company was a simple membership-based organization. Hotels and restaurants would sign up, pay dues, and, in return, get extra business thrown their way through conventions, sporting events, and so on. Fertitta was not impressed. The bureau had “no expertise from the marketing perspective,” he says. “There was no vision to expand to international markets. No vision to make it a world-class organization. No in-house creative. The website was … adequate.” It also had limited city funds behind it and no clear mandate. Bloomberg gave Fertitta $103 million over five years—a number the company would go on to nearly match through its own marketing efforts, Fertitta says—and a wildly ambitious target: 50 million visitors by 2015. In 2008, lest anyone relax, Bloomberg moved up the deadline to 2012.

No one had tried this sort of business model before. (It is widely copied now—Boris Johnson and Richard Daley adopted it in London and Chicago.) Fertitta got rid of almost all of the old agencies’ workforce and brought in an “A-Team,” in his words, of advertising executives and creatives. The room began to ring with adman-speak: “O.O.H.,” “earned media,” “the spend.”

The first thing the company set out to do was to upscale the city’s image. It was determined early on, for example, “that New York can’t have a tagline,” Fertitta says. A slogan, any slogan, would drag it down to the level of a Minneapolis (“City by Nature”) or Chicago (“Second to None”). The closest NYC & Company would come to a tagline was the minimalist “This is New York City.” Next came the logo. The so-called Brand Identity Project, which started with the chunky NYC insignia on taxis, took five years for almost every city agency (some enthusiastically, some kicking and screaming) to adopt. “The mayor wanted everyone to feel like they’re part of the same team,” says Willy Wong, the company’s chief creative officer, while the lettering itself “conveyed a sense of strength.” Like it or not, New York now had a font. It also had a new entity that, while not a part of the government, had the juice to tell other agencies what to do.

In 2007, Bloomberg saw Fertitta at City Hall and said offhandedly, “New Yorkers think tourists are just a pain in the ass. We have to do something about it.” Fertitta responded by creating the “Just Ask the Locals” campaign, designed to get New Yorkers to be nicer to visitors and to give the city an “engaging, friendly, warm personality.” The idea was to photograph New York–associated celebrities giving local shopping and dining tips—neighbors first and stars second. Fertitta began by getting Robert De Niro, whose Tribeca Film Festival his old firm had helped launch (“That was an easy ask. It was like, boom”), and a slew of boldface names, 40 in all, quickly fell in line. No one asked for a dime or a favor (except, notably, Diddy, who contrived to be photographed next to a Sean John billboard). The celebrity-studded campaign then became a magnet for corporate sponsorship. De Niro had a relationship with American Express, which ended up underwriting Just Ask the Locals. American Airlines flew in scores of international reporters for the press conference unveiling the campaign—which happened to take place in the brand-new American Airlines terminal. (“We’re always trying to connect the dots,” says Fertitta.) Soon, AmEx was sponsoring Get More NYC, a system of visitor incentives, and AA was in for a two-year, $8 million deal with the city involving ads on cabs and a Times Square billboard. NYC & Company started doing something no visitors bureau had ever done: make almost enough money to pay for itself.

Today, NYC & Company departments have their hooks in almost every interaction between New York and the outside world. Its Government Affairs arm reaches out to elected officials here and abroad. Sports Marketing and Convention, Meeting & Incentive Development land events like the Super Bowl. The Interactive Media team runs, the company’s new website (it generates some $3 million a year in revenue, mostly through ads). New York’s cachet and attractive demographics give Partnerships leverage to strike lucrative deals. When it won the contract to build our glassy new bus-stop shelters and news kiosks, the Spanish company Cemusa agreed to pay New York $1 billion over twenty years for the right to sell ad space on these structures. Under the terms of the arrangement, not only did NYC & Company get to keep 22.5 percent of the ad space for its own purposes but it secured $18 million worth of free ad space a year in Cemusa markets, including Spain. Spanish travel into New York shot up 25 percent, generating $794 million. As one city official put it to me, “We are New York. We don’t pay anybody. You pay us.”

New York’s image, outside of New York, is largely a function of its media depictions. When NYC & Company opened its Shanghai office in 2007, Fertitta gave a speech about the importance of tourism to a group of Chinese reporters—only to be asked where exactly is the shop where Carrie buys shoes. But for all the glamour our high-profile image can bring, it also has a downside. New York is always one Central Park strangler or would-be terrorist bomber away from a tourism debacle. NYC & Company’s Communications department is essentially a rapid-response message machine devoted to getting “good” New York stories covered and “bad” ones quashed. (The company’s chief communications officer, Kimberly Spell, ran war rooms for John Edwards’s successful Senate campaign and for John Kerry in 2004.) After the Times Square pipe bomb didn’t go off, the company’s eighteen international offices were pumping out the “business as usual” message within hours. When the Daily News ran a widely picked-up story that Hotel Le Bleu had gouged tourists during Hurricane Irene, NYC & Company launched its own investigation, threatened to oust Le Bleu from its membership roster, got it to return the money, and arranged for coverage of the apology. On April 14, 2010, when Iceland’s Eyjafjallajökull volcano erupted, grounding flights across the world and wreaking havoc at JFK, NYC & Company immediately began pressuring city hotels to cut rates by 15 percent for stranded travelers. Thirty or so agreed. By April 16, the list of participants was up on a new web portal thrown together overnight. On the 18th, NYC & Company officials were on CNN Europe describing the city “opening up [its] arms, frankly, to offer unprecedented discounts.” The target of all this high-octane PR wasn’t the stranded travelers, of course. It was whoever was considering a future trip to New York.

While New York’s top tourist attractions are largely what you think they are—the Empire State Building, the Metropolitan Museum of Art, Macy’s—there are some surprising differences in the ways tourists from various places spend their time and money. In 2010, the city played host to 39 million domestic tourists, compared with 9.7 million international travelers, and behaviorally, the two groups couldn’t be more different. Americans, the majority of whom pour into the city through the East Coast “Amtrak corridor,” stay an average of 2.7 nights and spend an average of $432 while they’re here. The internationals, by comparison, stay 7.3 days and spend an average of $1,700. “The international visitor is very intrepid,” says Jane Reiss, NYC & Company’s chief marketing officer. “They will come to JFK and immediately go to Harlem because they want to go to the Lenox Lounge. They are very comfortable with public transportation, because they’re mainly from urban environments. Domestic travelers are not like this.” The stereotype we have in our heads—the lost guy with a map—is much more likely to hail from Indiana than from India.

Among travelers from the top foreign markets, Australians are the most adventurous. They are the most likely to attend a sporting event, go dancing, shop, buy tickets to a concert or a play—anything, really. The French are the likeliest to attend an art gallery or a museum. The British, Irish, and Arab Middle Easterners are the least interested in art. Brazilians are emphatically anti–guided tours. The Japanese are seriously into Harlem, crowding gospel brunches and church tours (it is an open secret among New York’s jazz community that our jazz clubs are, at this point, all but subsidized by older Japanese men). The Norwegians, Danes, Finns, and the Dutch are the wealthiest, with 18 percent of the arrivals earning more than $200,000. Indians are the thriftiest, in a sense—because they often stay with friends or relatives and avoid hotels, they spend only $88 a person a day. But they also tend to stay longer than other groups, spending $1,000 per trip. The “Russian oligarch” stereotype, statistically speaking, is fiction.

Our visiting compatriots, meanwhile, have their own quirks. Their behavior patterns fall into two main categories: day-trippers, who tend to come from relatively nearby and get in and out quickly for a specific purpose, and overnighters, who swarm in from farther away and stay longer. While just about every day-tripper who comes to New York shops here, guests from D.C. are almost twice as likely as the average tourist to name that as their main reason to visit. Among overnighters, Angelenos do the most shopping, Miamians are the most inclined to hit an art gallery, and Bostonians tend to favor our nightclubs.

To capitalize on those and other differences, NYC & Company has launched niche-marketing campaigns for different places. While the efforts all share the upscale New York brand identity, they are tailored in unique ways. Asian ads focus on our main icons to entice first-time visitors. European markets get bombarded with messages meant to encourage repeat visits and a “live like a local” experience. In Italy and Germany, NYC & Company has been selling the notion of the city’s “energy” and “vibrancy,” as opposed to any specific sites. It’s less Broadway and more Bedford Avenue—a place where you go to be cool. In the domestic market, the sales pitch stays largely the same: The ads for New York that appear in Texas are the same as those running in Connecticut. Instead, the city has been targeting specific demographic groups within the U.S., actively pandering, for example, to families with children. Amid the downturn of 2008, “we realized people weren’t traveling to Disney World,” says Reiss, “and we thought, How do we get the families to come here?” (The solution involved things like declaring Smurfs Week in the city.) NYC & Company is also pushing, perhaps for the first time in city history, all five boroughs—“five cities in one,” as the ad copy puts it. The strategy is to increase tourist flow to the formerly underpromoted areas, and increase repeat visitation—to create the sense that if you’ve already been to New York but haven’t ventured to Brooklyn, Queens, or the Bronx, you haven’t really been here. “Staten Island is still a bit of a challenge,” Reiss admits.

Year after year, our most loyal foreign customers are the British. Roughly one out of ten international visitors to New York come from the United Kingdom. The British arrival numbers, says Fertitta, “pretty closely track the pound.” In 2008, when the pound and the dollar traded at two to one, “we saw a spark in visitation of over 1.3 million. So a weak dollar actually helps support travel into the United States.” Bloomberg, interestingly enough, has a different reading: “If it was [just] the weak dollar, you would see a big expansion of tourism in all other port cities in the U.S. And there’s some, but nowhere near ours. So there’s gotta be something else.” It’s true. With the yen at record highs against the dollar, one would expect an uptick in Japanese travel to the more convenient West Coast. But our share of Japanese tourism actually rose from 7.4 to 8.9 percent in 2010, growing faster than that of San Francisco and Los Angeles.

A newly booming foreign economy can suddenly drive whole nations’ worth of travelers here. For a time in the middle to late aughts, the Irish, propelled by the so-called Celtic Tiger boom, were flooding New York. “They would fly in for a new iPhone,” says Fertitta. “Young women would say, ’What do you want to do this weekend? Let’s go shopping in New York!’ ” Since the 2008 financial crisis, NYC & Company has been eager to identify the next Ireland. In 2010, they found it, unexpectedly enough, in Brazil. As their economy grew like never before, middle-class Brazilians abandoned traditional vacation destinations like Argentina for New York. NYC & Company quickly influenced American Airlines to create discount fares. After observing the Brazilians’ consumer behavior and realizing they are disproportionately taken with Broadway theater, NYC & Company sent five musicals to São Paulo. “Nobody’s paying for anything—AA is flying them in,” says Fertitta, practically giddy. Between 2009 and 2010 alone, the number of Brazilian tourists in the city increased by an incredible 77 percent. And the typical Brazilian drops $415 a day here, about double the international average.

This year, the fastest-growing market, as it is in almost every other industry, is China. Between January and August, Chinese travel to New York was up 37 percent. This boomlet, however, is proving harder to monetize. Because China has a difficult visa regime, Chinese tourists tend to cram as much as they can into a U.S. trip, in case there’s no next time. “They’re traveling the way Americans did to Europe in the sixties and seventies—fifteen cities in fifteen days,” says one NYC & Company employee. “They fly into D.C. for a day, see the Washington Monument, get on the bus, drive here, stay across the river in New Jersey, and come into the city for the iconic sites.” The Wall Street bull sculpture, oddly enough, has somehow become a must on this itinerary. Of the myriad hands that have buffed its brass testicles to their present shine, a disproportionate number are Chinese.

Stateside, the picture is simpler. For all the planes landing at our airports and cruise ships docking in our harbors, 57 percent of New York’s more than 39 million domestic visitors this year will come from within five hours’ driving distance of the city. In fact, 30 percent hail from the state of New York, and 41 percent from the New York metro area. Our tourists, in many cases, are our neighbors.

The Mayor and I are finishing breakfast. I ask him about the downsides to our increased dependence on tourism. Let’s say the dollar bounces back against the pound, the yen, and the euro. Let’s say Disney World stages a fire sale. Let’s say the crime rate rises just enough to generate headlines about the Bronx burning again. Let’s say (and hope not) there is another terrorist attack. How solid is the foundation we’ve built here? Is there a danger to being hooked on tourism?

Bloomberg insists there is not. He clearly subscribes to the “superstar city” economic theory, which holds that in a sufficiently globalized marketplace, there will always be a customer for places like New York. On this subject, he is an unabashed booster. What about the economic problems in Greece and Italy? “They may even help a little bit! Some people might not want to go to those countries while they’re in turmoil.” Have we built too many hotels? “That’s what capitalism is all about. If there are [too many], the number will shrink.”

Of course, there’s a darker view. Although data on the subject is difficult to come by (several top urban economists I spoke to hadn’t even thought about the problem), it stands to reason that if hot foreign economies, favorable exchange rates, and the like lift the tourist economy, then their converse will drive it down. During the slump of 1989–94, hotel occupancy dropped to 71 percent. No one expects a return to the bad old days of 2,000 murders a year, but if the local economy falters and the crime rate edges upward, the prettied-up playground we’ve built could revert to being at least somewhat less attractive to visitors.

Then, of course, there is NYC & Company itself, the embodiment of Bloomberg’s gigantic tourism marketing push. The company’s original five-year contract with the city came up this summer, and City Hall reinvested in it ($66 million over five years this time). But it’s anyone’s guess whether the next mayor will consider the aggressive branding and marketing of New York around the world as much a priority as Bloomberg has. It is not inconceivable that after the next administration takes office, the New York brand will have to coast for a while. When I ask the mayor if the Greatest Product in the World can be sustained on momentum alone, Bloomberg smiles. “My job is to sustain it for the next 781 days.”

And Another Fifty Million People Just Got Off of […]