Tourism forecast for 2009 'not a pretty picture'

By Steve Perez

Contributor

The economic outlook for the '09 local tourism season mirrors that of the broader national financial picture - in other words, brace for more headwinds in the coming months, those interviewed recently said.

Broad measures such as transient occupancy tax receipts from stays in local hotels show a recent decline. The current recession, which economists now say started in December 2007, is expected to last through the middle of next year at least.

Tourism is San Diego County's third-largest industry.

"It's not a pretty picture," says Bob Rauch, a local hotelier. "We are in a recession. We will continue to be in one through a lot of 2009 and assuming I'm correct, we're going to see flat or average (room) rates at best, and we're going to see declines in occupancy receipts."

Rauch, a San Diego State University professor who operates the Hilton Garden Inn San Diego Del Mar and a Homewoods Suites by Hilton, points to last month's opening of an 1,190-room Hilton in downtown San Diego. The addition of new supply is expected to compete for visitors with existing locations, he says.

In the La Jolla area, the authoritative Smith Travel research firm reports that occupancy year to date is down 2.3 percent for San Diego, and 6 percent for La Jolla. Revenue per occupied room was also down - 0.5 percent for San Diego and down 3.6 percent for La Jolla.

The city of Del Mar also shows a decline. Transient occupancy tax receipts for Del Mar's 2007 fiscal year were $1.68 million, but declined to $1.2 million in FY 2008, a 25 percent drop.

The city of Solana Beach did not respond to a request for information by press time.

"The industry is very much subject to the whims of consumer confidence," Sal Giametta said. "Eighty-five percent of our visitors are leisure travelers, and that's considered 'discretionary.' When people have tough times, that changes spending habits and people tend to cut back on discretionary spending."

Giametta is a spokesman for the San Diego Convention and Visitors Bureau (ConVis).

John Campbell, general manager of the La Jolla Beach and Tennis Club, said he is an optimist.

"I think we give it the first quarter and maybe two before we see strength and then hopefully the fourth quarter will certainly be better than this one," he said.

A few factors remain in the area's favor, tourism boosters say.

First, San Diego as a whole remains a major drive-in destination for the Southern California region. The Auto Club of Southern California annually surveys its travel agents for members' top picks for major holidays and San Diego always ranks among the top five, an Auto Club spokesman says.

Second, the area has some financial wherewithal to promote itself during these challenging financial times.

That's thanks to the formation of tourism marketing districts funded by assessments on hotel guests.

Groups such as ConVis and other tourism-boosting organizations can access these funds to promote the area.

ConVis embarked on a late summer and early fall promotional campaign after noticing a drop in hotel guests over the Fourth of July.

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