In 2016, the Republican National Convention went to Cleveland. Back then, it was sold to the city as a major economic driver and that the city could plan on $200 million in direct and indirect spending, and over 50,000 visitors for the region. It was also promoted as something that would promote a positive image of the city for people who weren’t familiar with "The Forest City" and help drive tourism.
So how did it do?
Cleveland’s host committee projected the economic impact after the convention anywhere from $130-$190 million in economic gains. Short of the projected $200 million goal. But economists who study these events, like political conventions or mass sporting events, are a lot more skeptical of those numbers.
“A lot of the people I talked to said that they thought it did ultimately benefit the city,” says Milwaukee Journal Sentinel reporter, Sarah Volpenhein. “[They said] it presented a positive image of the city to the rest of the country.”
In Milwaukee, a collection of politicians and business owners pitched to host this year’s RNC after losing the 2020 DNC from a cancellation over COVID. Similar lines were used as in Cleveland: This will be great for local businesses, it’ll promote a positive image of Milwaukee, which is often maligned across the state, and ultimately, could see a huge economic impact.
Early reports are that businesses within the security zones, set up by the RNC, should see a boost. How healthy of an economic boost is yet to be known, and could potentially be offset by regulars avoiding the area both before and after the RNC. But those outside of the security zones, even maybe just a few blocks from where the action is taking place, could be big losers financially during this time.
“What's interesting here in Milwaukee is that a lot of those businesses haven't seen much bookings in advance of the convention,” Volpenhein says. “In Cleveland's experience, they didn't anticipate a lot of the loss of business that some of the surrounding areas would see.”
There’s one story from Cleveland that could shed light into what surrounding neighborhoods see in Milwaukee during the RNC.
Ohio City is a 20-minute walk from where Cleveland held it’s convention, equivalent to Milwaukee’s Third Ward. It’s also a hot spot for local restaurants, art and trendy apartments and condos. Local residents called it a ghost town over those four days during the convention, losing an untold amount of consumer spending.
Local venues and restaurants in Milwaukee also signed contracts with organizers to keep their spaces private during the convention to give first dibs to RNC delegates and crowds. Many businesses say that they haven’t had a single booking so far, costing them anywhere from tens of thousands of dollars, to over $100,000 dollars when it comes to the Pabst group.
“The contracts basically required the venues to set aside their venues for the days of the convention, give or take a few, and hold them basically for convention related bookings,” says Volpenhein. “What the businesses told us was that they kept being told the business is coming, just wait. They just kept being told to wait.”
Victor Matheson is a professor of economics at the College of the Holy Cross in Worcester, Massachusetts, and he produced a study in 2009 that looked at the economic impact of political conventions over the years.
He says that hotel buys are one way to measure the impact of a convention, or mass event, after the fact. In Cleveland, hotel revenue was around $20 million, which isn’t $200 million, as was promised, or projected in Milwaukee, but it’s a real bump, Matheson says.
But that doesn’t mean that money is staying in Milwaukee, or helping Milwaukee’s local economy. He called this a leakage, when money gets spent in a place but doesn’t stick in that place. For example, Matheson says that during a hotel stay, there’s the room fee, which is increased wildly during these events, but the hours of workers doesn’t increase. And their wages don’t increase. The financial boon is happening only for the corporation.
“None of that money sticks in Milwaukee in the hands of local residents and local laborers … that all goes back to corporate headquarters,” says Matheson. “So you've got money being spent in Milwaukee, but it's not actually benefiting Milwaukee.”
Matheson says there will be some clear winners in Milwaukee during the RNC, the Milwaukee's police department.
“If you are local law enforcement, you get a lot of overtime pay here and you're looking forward to that,” he says. “But the losers are businesses that cater to other types of tourists [and] folks who cater to regular clientele.”
Volpenhein says she’s heard the same thing. And it could be the only way those businesses come close to breaking even during the RNC.
“A lot of businesses that I've talked to have said that they're not expecting any of their regulars the days of the convention because they expect them to go out of town,” she says. “The question is, is that replaced by the convention business or not?”
