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City tourism board rejects LJ fund request

Group sought more than $1 million

Directors of San Diego’s Tourism Promotion Corp. last week rejected the La Jolla Destination Marketing Alliance request for more than $1 million to help attract people to the area’s hotels.

Six of the seven board members present at the meeting aboard the Bahia Belle on Mission Bay voted not to approve the request from the group, which represents 16 hotels and several other hotels and restaurants in the area encompassed by the Village, the University Towne Center area and Torrey Pines Mesa.

The group had asked for $1,048,050 - the largest amount sought by any of the 15 groups seeking funds from the city-authorized organization that works to increase the number of hotel visitors to the city at large. It also received the lowest tally after each director submitted independent rankings.

The promotion corporation is a city-approved assessment district for hotels of 70 rooms or more. Owners pay 2 percent of non-exempt, gross revenues to fund marketing and activities that enhance tourism and hotel room occupancy.

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‘Difficult times’

Richard Bartell, whose Bartell Hotels operates the La Jolla Sheraton, did not vote because he is hotel owner in the area seeking funds and also an Alliance member. But he said following the meeting that he didn’t know where the La Jolla group would find funding to support its efforts.

“These are very difficult times for the hospitality industry, and La Jolla has been particularly hard hit,” he said, noting that at an earlier meeting the board had been clear that it did not feel it would be appropriate to give money to a specific geographic area.

Alliance president Deborah Marengo, who did not attend the meeting, could not be reached for comment.

Seven groups funded

In all, the Promotion Corp. agreed to allocate $2,128,000 to seven organizations to support activities ranging from the Holiday and Poinsettia Bowls to the Body World exhibit coming to the San Diego Natural History Museum.
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But they did not give money to hotels in a specific area of the city as they struggled with budget that’s showing a decline in hotel revenues.

Chairman C. Terry Brown of Atlas Hotels said the area’s hoteliers have never seen such a decline in what they call “revpar” rates - a function of occupancy rate and room rates.

“We are over a cliff, not just sliding down the hill,” he said.

Board member Joe Terzi of Starwood Hotels detailed the financial outlook and said that the forecast for 2010 had been adjusted from $31.6 million to a little less than $24.9 million. There’s also a reserve of $4 million, he noted.

After fixed costs and required commitments to the San Diego Convention and Visitors Bureau and its North County counterpart, that left only $13 million to consider allocating, Terzi said.

As the board went through the 15 proposals, members repeatedly questioned how the proposed allocations would help fill hotel rooms. As they went down the list, it became clear they were being cautious about over-committing the promotion corporation’s funds.

Board member Mohsen Khalegi said, “It behooves us to think twice (about expenditures) … We didn’t establish this organization to keep other businesses in business. It was to create room nights and market our destination.”