Pinching pennies in Hollywood

Somewhere between Debbie Reynolds and Jack Benny, the Laitala family of Duluth, Minn., stopped to marvel at the throngs of tourists shuffling among the sidewalk stars of Hollywood Boulevard.

Joel Laitala, a mechanic, focused his camera on a star in the pavement while his wife, Lori, watched as costumed characters -- Superman, Capt. Jack Sparrow and Homer Simpson -- posed for photos with tourists for tips.

Every day, visitors from around the world flock to the hot sites of Hollywood, the historic birthplace of America’s entertainment industry. But so far this year, the crowds are thinner, tourist spending is down and merchants are nervous.

And the Laitalas were typical of today’s visitors. They were scrimping. They avoided trinket shops, theme parks and expensive eateries. They planned to buy food at a grocery story and spend most of their visit to Los Angeles at the beach or the zoo.

“We are definitely holding back,” Lori Laitala said, citing the high cost to feed and entertain her three boys.

Aided by lower gas prices, cheap airline tickets and lodging deals, tourists like the Laitala family continue to flock to see Marilyn Monroe’s handprints in front of Grauman’s Chinese Theatre and Tom Selleck’s star on the Hollywood Walk of Fame.

But the slumping economy has taken some of the sparkle off Tinseltown, which is one of the top tourist destinations in the world. Grauman’s Chinese Theatre alone attracts about 4 million visitors a year, more than the Empire State Building in New York and the Palace of Versailles in France.

With fears of layoffs, record unemployment, foreclosures and failing banks, today’s Hollywood visitors are extra tightfisted when it comes to spending on food, tips and souvenirs.

In a January survey by the Hollywood Chamber of Commerce, 32% of area merchants said business in 2008 was down significantly or moderately, with restaurants taking the biggest hit, a drop in sales of nearly 25%, said Hollywood Chamber of Commerce President Leron Gubler.

The pain of such frugal spending has been felt by waiters, tour bus drivers and souvenir shop owners, many of whom are calling it Hollywood’s worst year for tourism since the 2001 terror attacks.

“People still want to come but they don’t want to spend much,” said Fred Sapir, manager of Starline Tours, the largest and oldest tour company in Hollywood. Business has dropped off between 5% and 10% since February, he added.

At Mel’s Drive-In, the iconic ‘50s-themed eatery adjacent to the Hollywood History Museum, waiters and busboys were laid off when business dropped suddenly last winter.

“It used to be a madhouse at night with lines out the door,” said restaurant manager Gannon Grace. “Now it’s like this,” he said, motioning to a half-empty diner.

Even foreign tourists, who make up about 30% of Hollywood’s visitors, are cutting back. Jenny and Bob Minns, a retired couple from Norfolk, England, took a tour bus across the U.S., ending in Hollywood. To save money, they planned to skip expensive eateries and pass over the bus tours of the celebrity homes.

“I can see them better on the telly,” Bob Minns said.

The penny-pinching has resulted in more aggressive tactics by Hollywood tour bus companies, which solicit tourists on Hollywood Boulevard, said Shellee-Ann Kellee, an actress and singer who also runs All Star Showbiz Tours near Grauman’s Chinese Theatre.

But sometimes tourists try to save a buck by haggling with bus tour operators for lower fares. Kellee has been forced to oblige, sometimes cutting her fare of $38 almost in half.

“They are always trying to get you to go down a little further,” she said.

Some Hollywood businesses have responded with price cuts and discounts. The Hollywood Wax Museum, the Guinness World of Records Museum and Ripley’s Believe It or Not have teamed up this year to offer a $26.95 pass that gives buyers access to all three places. Also, Starline Tours now offers $5 discounts to tourists who buy tickets online.

And now Hollywood is waiting for a happy ending. Its merchants are betting this summer season will draw visitors back, particularly locals who will stay closer to home to save money.

Business owners also hope several new developments will spark a buzz in Hollywood, including a new W Hollywood hotel opening this fall near Hollywood Boulevard and Vine Street. Next year, a 500-seat Hard Rock Cafe is scheduled to open at the Hollywood and Highland complex, adding yet another tourist magnet and hip music venue to the busy intersection.

Later this month, the refurbished Vine Theater, near Hollywood and Vine, will open a new Laserium light show aimed at families and tourists. And in 2011, Cirque du Soleil, the acrobatic circus show, is scheduled to move to the Kodak Theatre.

These projects will follow a handful of residential and commercial projects that opened on Hollywood Boulevard in the last few years, such as the $12.5-million renovation of the Art Deco-style former Kress dime store that added a nightclub and rooftop bar.

The biggest attraction to open this summer, in August, will be Madame Tussauds, the new celebrity wax museum, which will be next to Grauman’s Chinese Theatre.

The $55-million project replaces a parking lot on one of the busiest street corners in Hollywood. The three-story glass and concrete structure will house 115 wax figures of celebrities including Beyonce, Tom Cruise and Arnold Schwarzenegger.

Adrian Jones, manager of the new Hollywood project, says the Madame Tussauds in Las Vegas draws about 550,000 visitors a year and he expects the Hollywood museum to do just as well. “This says ‘Hollywood’s back,’ ” he said. “It’s about improving the experience of tourists who come to Hollywood.”

The welcome received by the new Madame Tussauds recently is telling of Hollywood’s willingness to accommodate change in the face of tough times. When details of the project were announced three years ago, nearby residents and neighboring merchants scoffed at the project.

That attitude has since changed: Hollywood merchants and nearby homeowners are now more positive.

One of the early critics of the project, the Hollywood Heights Assn., a homeowner group in the hills above Hollywood, had suggested that the area didn’t need another tourist attraction.

But now the group’s president, Lannette Pabon, says she has no objection to Madame Tussauds as long as it provides enough parking.

“A store filled with something,” she said, “is better than a store filled with nothing.”

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hugo.martin@latimes.com