Tourism economic outlook gloomy for area

Hotel occupancy down 6 percent

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 by the La Jolla Light said.

Broad gauges, 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 of last year, 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,” said 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, an SDSU 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 said.

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, or 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 said.

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 Bureau 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.

“Clearly when you hear that retails sales are dismal and see what continues to be happening with stocks and real estate, it certainly is cause for concern and we’ll have to see what the next few months bring,” Giametta said. “In the meantime, we continue to be out there aggressively marketing the destination, thanks to the additional funding being provided by the tourism marketing district.”

In La Jolla, an annual event in January is being watched for signs of how tourists respond. The La Jolla Motorcar Classic at La Jolla Cove will be in its fifth year, and is charging admission for the first time, Tiffany Sherer, executive director of Promote La Jolla, said.

The event marks the addition of a vehicle valued at $5 million, a record for the show, she said.

Restaurateur Sammy Ladecki, owner of Sammy’s Woodfired Pizza and Roppongi, said he is bullish on the long-term future, despite expecting a continued slowdown through the first half of ’09.

He plans to open new locations in Carlsbad and Las Vegas next year.

In the meantime, he said he’s trying to “cut out the fat in advertising or promotions, working with contractors to try to get cheaper rates and watching labor costs.”

“You win some, you lose some,” he said. “We are a big account and trying to see if we can get concessions from people we buy products from.”