The Selling of the Inauguration

CALVIN COOLIDGE IS CREDITED WITH OBSERVING that “the business of America is business.” The business of America’s presidential inaugurations is business too, especially in Washington.

The election of Ronald Reagan as the nation’s 40th president was supposed to be good for business. In Washington at least, that seems to be the case. Owners of many local businesses are happily bracing for what they believe will be a series of economic shots in the arm — with the first injection coming from the inauguration itself.

Once a simple and comparatively modest swearing-in ceremony, the inauguration of a new president has ballooned into a four-day extravaganza of fealty and festivity. The city’s businesses are awash with enthusiasm, and for  good reason. Ronald Reagan’s inauguration will bring tens of millions of dollars in added revenues. While the ears of countless Americans are tuned to the blare of bands marching down the inaugural parade route, businesses here are listening for a different sound: the clinking of cash registers. When it rains, the saying goes, it pours — and this year’s inauguration is the sweetest music imaginable for Washington businesses.

The planning for Ronald Reagan’s inauguration, the most expansive (and expensive) in history, is telling much of Washington’s business establishment that happy days are here again — the happy days of wining and dining, wheeling and dealing. Even the three-martini lunch, relegated to derision in the Carter years, is back on the road to respectability.

The effects of inauguration-related spending filter down through almost every layer of Washington’s service-heavy economy. Hotels and restaurants are perhaps the most obvious beneficiaries of inaugural largess, but many caterers, liquor stores, limousine companies, formal-wear firms, florists, and the like do booming business as well. The economic benefits even trickle down to the District of Columbia government,which collects increased revenues through sales, payroll, hotel and restaurant taxes.

 

BEST OF ALL, MANY LOCAL MERCHANTS don’t expect the economic bonanza to end after the last parade float rolls down Pennsylvania Avenue. They believe the boomlet is here to stay, fed by a steady stream of bigger spenders who seek to find their way through the new corridors of influence in official Washington.

Hotels in and around Washington book thousands of additional guests during an inauguration period, and innkeepers here view it as the single best event for their trade. When the final figures are compiled, occupancy rates in the greater metropolitan area may be 25 percent higher than last January. Of the area’s 34,000 or so hotel and motel rooms, that means perhaps 8,500 normally empty rooms will be filled. It’s a seller’s market at inauguration time, and hotels almost universally require a four-day minimum stay plus an advance deposit. Double-occupancy rates soar, too, because the inauguration is much more of a social event for couples than a business convention or conference.

As a result, inaugural visitors will pump an estimated $3 million additional into the hotel industry, and that’s not even counting added banquet, restaurant, and bar business.

“We actually started getting reservations for the inaugural period back in May and June,” says Wolf Hengst, general manager of the Four Seasons Hotel in Georgetown. “But we refused to confirm until after the election. We put people on a waiting list according to their party affiliation. When the Democrats lost, we knew that was the end of them — so if they didn’t call us we just cancelled their reservations.

“I would say that 70 percent of our reservations are with guests who have stayed with us before. We really felt it was important to reward those who had been very good to us in our first year. And as for the balance, we did try to take people on the waiting list who could be beneficial to the hotel. If they were with the Republican party in San Francisco or Texas or so forth, where we are building or have hotels, it’s very logical to look at it from the point of assisting the corporation.”

For the locally based Marriott chain, with six hotels in the Washington metropolitan area, the added inaugural business “is kind of a mixed bag,” says company spokesman R.A. Rankin, Jr. “On one hand, you have higher double-occupancy rates, but people tend to overbook because they’re not sure they’re going to be able to get a room anywhere. So it’s not quite so overwhelmingly positive in terms of the simplicity or business aspects as one might thing.”

With the shift in clientele from business to social during inauguration season in Washington, innkeepers find themselves not only with extra business — but extra worries as well. “We are very, very guarded in security operations because there is a lot of jewelry and furs and that type of stuff,” Hengst says. “We also realize that the overall demands on the hotel increase, because when people travel on this level, their expectations in terms of being satisfied are higher.”

Marriott’s Rankin finds it much the same. “People do kind of come out of the woodwork for the inauguration, because it’s a very special event, a very political affair. And because they’re so-and-so representing such-and-such a state delegation or whatnot, they have pretty high expectations in terms of their political leverage and what a hotel is supposed to do to accommodate them.”

For many visitors to the nation’s capital, the onset of inauguration week makes availability — not price — the prime consideration, and most hotels book up far in advance. At the Four Seasons, Hengst had all of his 205 rooms booked by December 18, and payment up-front by January 5.

The competitive crunch for luxury hotel rooms in Washington reaches a fever pitch in January, and some would-be lodgers won’t take an innkeeper’s polite “I’m sorry” for an answer. “You know,” says Hengst, “I’ve been bribed. I was offered a $2,500 painting by a representative of a very well-known artist for a room in the hotel. I was also offered cash — one was an embarrassingly low amount and the other was embarrassingly high. In both cases, of course, I couldn’t accept anything.”

 

MOST WASHINGTON MERCHANTS LOOK FOR an inaugural upsurge in entertaining, and some of the most immediate effects ripple through the area’s liquor industry. Four years ago, Rosalynn Carter decided that no hard liquor would be served at official White House functions, and it was not a good omen for local purveyors of wines and spirits. With the Republicans back at the helm of government, those who read the pulse of the city’s liquor consumption say they are preparing for an intensified social circuit — a return to the traditional way of meeting friends and doing business in official Washington. And with the arrival of Reagan and his California contingent, there’s unquestionably a bull market in California wines. When Reagan lunched recently with Supreme Court Justice Warren E. Burger and the conversation turned to wine, those in the bottle business here could barely contain their glee.

“A totally different social structure is created when there’s a Republican administration,” says Doug Burdette of the Calvert Liquor Shop, “and obviously it’s extremely good for our business and for the liquor industry in general. It’s an incredibly bright light from our standpoint.”

And, says Burdette, the upsurge in liquor and wine sales won’t end in January. “It’s going to carry over — it’s not just for that week or so surrounding the inauguration. When we have a Republican administration here, Washington becomes the most social city in the world.”

Irving Falk, executive vice president of Milton S. Kronheim & Company, a major Washington wholesaler of wines and spirits, agrees with Burdette that things are looking up in their sector of the area’s economy. “We anticipate a very good January, number one,” he says. “We also anticipate a very good term in office, because as far as California wine alone, it’s going to mean a decided upturn.”

Not even the Super Bowl draws more limousines to a single city than the inauguration of a new president in the nation’s capital. VIP visitors want to leave the driving to someone else at inauguration time, and they’re not thinking of Greyhound.

“There’s no doubt about the fact that the inauguration is the single biggest event for limousines,” says Vincent Wolfington. He is chairman of the board of Carey Corporation, a worldwide network of limousine companies that’s headquartered in Washington, and president of Carey’s local affiliate.

To meet the unprecedented demand here at inauguration time, Wolfington calls in reinforcements — 250 or so limousines, from cities like Philadelphia, New York, Wilmington, and Atlanta. That’s more than a fivefold increase from his regular fleet of 30 to 45 cars, and virtually all of them were booked up by the end of November. The limousine company followed the lead of Washington hotels, requiring a four-day minimum commitment and an advance deposit for new customers.

“When the International Monetary Conference comes to town, and you have people from all over the world coming here, that’s normally our largest month,” Wolfington says. “But the inaugural is our biggest month, plus 50 percent. There’s a lot of contiguous business, too. It’s a quantum jump in terms of the demands and pressure on us.”

As with other businesses, the increased demand at inauguration time means not only added revenues, but added headaches. Wolfington has to reserve a block of rooms at a Crystal City hotel to accommodate the extra limousine drivers the company brings to Washington. And, he says, “Everybody wants an extra car at the last minute. And when you can’t give it to them, you’re a pain in the ass. They say, ‘We’ve been with you a year — how come you can’t get us a car? No one’s sympathetic.”

 

HOWEVER IT STACKS UP AGAINST ITS PREDECESSORS in the frills-and-thrills department, this year’s inauguration will be the most expensive in history. “We’re hopeful that we can hold our costs down to no more than the inflationary impact on the last inaugural,” says Robert K. Gray, co-chairman of the 1981 Presidential Inaugural Committee. “That’s our goal.”

But it’s likely the committee will end up spending at least $8 million, up from the $4.2 million tab for Jimmy Carter’s 1977 inauguration. And that’s not including about $2 million for a special satellite transmission of goings-on at Washington’s inaugural balls, beamed to more than a hundred different sites around the nation.

The money to pay for all of this comes from individual and corporate contributions (up to $5,000 each); admission fees to the inaugural gala, balls, and other special events; and sales of official inaugural memorabilia.

This time around, the committee embarked on the biggest mass-marketing program in inaugural history to peddle 44 commemorative items ranging in price from $5 to $1,875. Heading up the committee’s memorabilia marketing drive is Barry Zorthian, on leave as director of the Washington/Baltimore Regional Association.

And when it comes to marketing, Zorthian and the committee’s merchandising team mean business. “As far as we can tell,” Zorthian says, “it’s the most expansive official effort ever.” In the past, only a few commemorative items — mostly medals and jewelry — bore the inaugural committee’s imprimatur. The most expensive souvenir offered in 1973, for example, was a sterling silver plate with engraved portraits of Richard Nixon and Spiro Agnew at $150.

This year, there’s a 16-page, four-color catalogue displaying the committee’s inaugural wares; it’s been mailed to 575,000 potential customers, and another 100,000 or so will be handed out during the rest of January. And to handle incoming calls, the committee has installed two toll-free telephone numbers: one for credit-card orders of merchandise, and the other for catalogue requests.

A lot of people are calling in for catalogue, too. The committee signed up three show-biz luminaries — Frank Sinatra, Johnny Carson, and Ed McMahon — to hawk the catalogue through a series of radio and television spots that patriotically call on the citizenry “to celebrate America’s new beginning.”

The catalogue includes such arcane inaugural memorabilia as:

♦ Inaugural license plates, hand-made by inmates at the Lorton Reformatory. Standard red-white-and-blue tags go for $25; vanity versions command $10 extra.

♦ Commemorative medals in copper ($5), bronze ($25), fine silver ($95), proof silver ($275), and gold ($975). Two special sets also are offered, at $480 and $1,475.

♦ Scarves ($15), ties ($20), tote bags ($25), and umbrellas ($35) created by Alexandria fashion designer Frankie Welch.

♦ From the Edward Marshall Boehm Studios, in handcrafted porcelain: a plate ($125), a “Nancy Reagan Rose” ($650), and an eagle ($1,200).

♦ From Tiffany & Company, in sterling silver: a six-inch serving tray ($550), and eight-inch version ($950), and a Paul Revere bowl ($1,050).

♦ From Steuben Glass: a refracting crystal tetrahedron ($600) and cube ($95o).

♦ From the Buffalo Bill Historic Center in Cody, Wyoming: a limited-edition replica of a Remington bronze ($1,875).

Add to all this first-day covers for philatelists, coasters, stick pins, cufflinks, leather pocket planners, serving trays, the official inaugural book, charm pendants, tie tacks, desk folders, ice buckets, invitation plaques, commemorative plates, glasses, and pen-and-pencil sets.

The idea of all this, in Zorthian’s words, is “to help underwrite the inauguration.”

The committee first grants licenses for the use of the official inaugural seal; then it collects royalties ranging from 10 percent to 50 percent of the retail price of each item sold. The size of the royalty depends on whether the item is sold by the producer or by the inaugural committee.

“The limited-edition medals are a case in point, ” Zorthian says. “Where we sell them, through our means, we get a 50 percent royalty. Where they sell them — and they’ve got their own marketing program — it’ll be in the ball park of 15 percent.

The money involved in the sales of inaugural commemoratives can be substantial. Eight years ago the Nixon inaugural committee got a $1 million advance from the Franklin Mint in return for the right to produce and market the official medal. Four years ago, the Carter committee got $750,000 in an upfront guarantee for production and marketing rights plus access to the U.S. Mint’s bicentennial mailing list.

This year, the Inaugural Medal Committee, chaired by Sen. Mark O. Hatfield (R-Ore.), gave the nod to the Medallic Art Company of Danbury, Connecticut, which has produced the official inaugural medals for eight of the last ten presidents. Just two of its 1981 items — the limited-edition silver and gold inaugural medals — will account for gross sales of $3.3 million, and royalties to the Reagan inaugural committee are virtually certain to exceed $500,000 — and will climb when royalties from the other medals are included.

It’s virtually impossible to gauge how well many of the committee’s other commemoratives will sell, and Zorthian won’t say how much — or how little — the Reagan committee could realize from royalties. “It’s a no-risk proposition from the committee’s standpoint,” he says. “We’ll certainly cover all of our expenses.”

 

NO ONE REALLY KNOWS HOW MUCH ECONOMIC ACTIVITY is pumped into Washington’s economy by an event like the inaugural, but as many as 50,000 out-of-towners will converge on the nation’s capital for the four-day extravaganza. And as they sleep, eat, drink, and be merry, they leave behind uncountable millions spent on transportation, lodging, food, and whoopee.

People who come to town for the inaugural ceremonies come prepared to spend money. Many who travel to Washington for the inauguration come for the frills — and price, often, is little object. A limousine for four days? Upwards of $1,000, not including tip. The best room at the Four Seasons hotel? A two-bedroom suite is $2,500 for four days. Tickets for one of the inaugural balls? $200 per couple. Tickets for the gala at the Capital Centre? Anywhere from $100 to $300 a couple. Rental of formal wear? A tuxedo for at least two nights, and the prescribed stroller coat and accessories for the inauguration itself, adds up to at least $125.

And after spending all this money, you might want to follow Frank Sinatra’s lead and pick up a souvenir of the special occasion. The inaugural committee might suggest an eight-inch sterling silver tray, designed by Tiffany & Company especially for the inauguration. With an “engraved Monticello border in the presidential tradition,” it’s a tidy $950.

But most of the inaugural visitors to Washington keep tighter reins on their budgets, and that’s where estimating the economic trickle-down gets murky. “It would be very, very difficult to have a comparable event,” says Austin Kenny, executive vice president of the Washington Area Convention and Visitors Association. “I would peg the economic effects of the inaugural in the neighborhood of $500 per person, and I would suspect that number might be conservative, Hotel rooms, restaurants, entertainment, retail sales, the whole schmeer. It would cover everything but ball tickets or gala tickets or something of that nature.”

Using Kenny’s multiplier as an average — and it is only that — yields at least $25 million that will find its way into the metropolitan area’s economy over just four days. And that’s not counting the $10 million to $12 million the 1981 Presidential Inaugural Committee may end up spending, much of which will find its way to suppliers and merchants in the city. And, add to that the boosts in business before and after the four-day inauguration period. The figure mounts, and where it ends no one knows.

“The business fallout from the inauguration is incredible,” says the Carey Corporation’s Vincent Wolfington. “You take our business. We not only hire additional people, but we pay sales taxes to the District. With the increased number of drivers, there’s withholding and all that. We rent rooms for the drivers, they get food and laundry. It’s gas, it’s car-washing, it’s telephone operators.”When you really force yourself to go through it, and outline all this stuff on a chart, you say, ‘My God, this stuff is amazing.’ So if it’s that way with us, you can imagine what it is with everyone else. If you try to quantify the economic fall-out from all the businesses, you’re going to find you’re talking about megabucks.”

While it’s impossible to nail down the precise economic effects of the inauguration, one thing is clear: This year’s extravaganza proves to official Washington, at least, that the Reagan crowd knows how to throw a party. And there’s a good bit of optimism among Washington businesses for the local economic outlook in the course of a Reagan administration. As Wolf Hengst of the Four Seasons puts it: “I do know that for our style of hotel, which is geared to the top of the market, there’s no question that it will be beneficial to us. We just know that the Republicans are made up of a greater amount of money people, and when they come to Washington — particularly in view of the fact that so many will come from California —it means longer stays and less attention to a difference of $20 or $30 a night. So it’s definitely going to help us, there’s no question in my mind.”

It’s likely that the 1981 inauguration could pump more than $50 million into the metropolitan area’s economy. But the benefits of inaugural largess are not spread evenly, and while some types of businesses have much to gain, others can only watch the inaugural spending parade go by.

Perhaps a good bit of caution will set in as the last parade stand is taken down on Pennsylvania Avenue and inaugural euphoria fades. Washington businesses then will be left to wonder — along with their counterparts on Capitol Hill — how long the honeymoon will last.

It certainly will be remembered as having been fun while it lasted.

 

This article originally appeared in the January/February 1981 issue of Regardie’s.