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Derby Yields Plenty of Economic Benefits for Louisville

April 30, 1996

LOUISVILLE, Ky. (AP) _ Long before a bugler calls the horses to the post, cash registers ring a different tune for Louisville-area businesses that capitalize on the hoopla leading to the Kentucky Derby.

Hotels are booked solid, restaurants are jammed and shops do brisk business as tens of thousands of people arrive in the days leading up to the first Saturday in May.

It’s also hectic for people shuttling visitors around town.

``It’s the busiest time of the year,″ said Paul Powell, executive vice president of Yellow Cab of Louisville.

The company reinforces its fleet with an extra 50 limousines and 25 vans for derby week and dispatches every available cab, he said.

``We’re running everything we’ve got,″ Powell said.

All 1,300 rooms are booked for Thursday, Friday and Saturday at the Galt House hotels in downtown Louisville, said Tom O’Hearn, hotel manager.

Nearby, the run on flowery, colorful derby hats was pretty much over at the Bacons department store at the Galleria mall.

The usual one or two hat racks grew to six in the women’s accessories department in preparation for the Easter and Derby rush, said Michelle Glover, a store employee. Most were snatched up well before Derby.

``They sell like crazy,″ she said.

The spending spree swells as Derby week progresses.

In a study five years ago, University of Louisville economics professor Paul Coomes found that the derby infuses huge amounts of money into the Greater Louisville economy. He found that of the 135,000 people who attended the 1991 Derby, 75,000 were from outside the Louisville area.

Those visitors stayed an average of 2 1/2 days and spent a total of $35 million, Coomes found. The biggest expenses were lodging, food and beverages, followed by entertainment, shopping, car rentals and other items, he said.

The spinoff effects resulted in more than $60 million of new net sales by local businesses, more than $20 million of new income for area residents and more than $3 million in new state and local taxes, the study found.

Coomes said those figures are even higher now.

Louisville also tries to capitalize on derby fever in the highly competitive world of business recruitment.

Each year, the Greater Louisville Economic Development Partnership plays host to 12 to 18 business guests at the derby. They sample the pre-derby parties and mingle with politicians and celebrities at Churchill Downs.

``For one Saturday in May every year the eyes of the world are on Louisville,″ said Mike Bosc, a partnership executive. ``We’ve been able to leverage that into a business attraction tool.″

And it has paid dividends. In the past couple of years, four or five of the business executives invited to the Derby have located facilities in the area. Their decisions were based strictly on business factors, he said, but the derby can help entice an executive to check out Louisville.

``These things are going to be business decisions,″ he said. ``It’s like offering free hot dogs at your car lot. You get people into the dealership and then they see the product. And that’s the way we look at it. It’s a marketing tool.″

The Kentucky Derby Festival also has become an economic bonanza.

What began 41 years ago as a single event _ the Pegasus Parade _ has mushroomed into a two-week extravaganza expected to draw more than 1.5 million people this year.

Among the highlights are a balloon race, steamboat race, basketball classic, Chow Wagons and its signature events _ the parade and Thunder Over Louisville, a huge fireworks show that kicks off the festival.

Of the more than 600,000 people who gathered for this year’s fireworks show, nearly a third were from outside the area, organizers estimate.

The Galt House hotels, overlooking the Ohio River, are a prime beneficiary of the fireworks show. All of its rooms were reserved for this year’s show, and don’t expect to get a room anytime soon for the spectacle.

``We’re sold out through the year 2000″ for the Saturday night of the fireworks show, O’Hearn said.

The Galt House also gets plenty of convention business during the festival that boost bookings, he said.

``The Derby Festival activities definitely have an impact on our business,″ O’Hearn said.

A 1990 study found that the festival had a $34.2 million economic impact on Louisville, festival spokeswoman Stacey Shepherd Yates said.

Coomes said the festival attracts out-of-towners, but far fewer than the derby. Much of the festival revenue comes from local residents, he said.

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