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Report Keen On Tourism’s Future Here

Report Keen On Tourism’s Future Here

BY TANYA RODRIGUES

Staff Writer

A hotel industry forecast released earlier this month by Ernst & Young echoed other predictions for this year in saying that San Diego will likely outperform other major lodging markets in the country.

Troy Jones, an analyst for the New York City-based company’s hospitality division who helped write the forecast, reviewed several factors for the strong room demand.

Among them was the $216 million expansion of the San Diego Convention Center.

Another factor was the leisure market. Hotels focused on it would benefit from San Diego’s longtime focus on visitors living within driving distance of the county, Jones said.

More than 70 percent of visitors have traditionally been within what’s commonly called the “drive” market. The area includes Los Angeles, Orange County and Phoenix.

The last factor Jones mentioned was San Diego’s corporate travel visitors, which will be boosted by several expansions among the county’s businesses, including technology firms and defense contractors.

Among the growing companies is Idec Pharmaceuticals, which has announced plans to build a new manufacturing plant and research and development facility in Oceanside, the report said. The project is expected to employ 2,400 people by 2003.

The report also listed Texas-based EDS, having won a $10 billion contract with the Navy, is planning to set up a regional center in San Diego that will employ 1,500 people.

The report included estimates of the local lodging market’s average room rate, $112.40 in 2001 and $116 in 2002, and San Diego’s average occupancy, 72 percent in 2001 and flat in 2002.

The report also reviewed possible changes to the local lodging market’s supply.

It pointed out the high degree of interest in hotel development in San Diego contrasts the current lack of funding.

Jones doesn’t have any predictions as to when that would change, but said existing hotels would likely be able to find refinancing sooner than new projects would be funded.

The report also listed several projects that will boost the number of hotel rooms Downtown. Among the projects is the Hyatt Regency’s 750-room expansion, which is expected to be completed in 2003, and the 512-room Omni San Diego Hotel planned next to the Padres’ new ballpark. It’s expected to open in the first quarter of 2004.

Bob Rauch, a managing director with Interbank Brener Hospitality, agreed with the report’s optimism about the local market compared to the rest of the country.

“I was pleased a national firm was able to track data and look at our market and see that in fact we have the makings of probably the top market in which to recover from a very difficult period for most markets,” Rauch said.

He pointed out that the first three months of 2001 was “a great quarter” because hotels were comparing it to the same period the year before, which has been affected by a Y2K slump.

As for now, he said, “Statistically speaking, I think we’re holding up remarkably well, and compared to other markets, we’re doing very, very well.”

Although no one in the industry can be sure how 2002 will play out, Rauch said he’s upbeat about the local market’s performance.

“My hunch is based solely on the confidence I have in San Diego’s market and the results that came in last month for ConVis’ Web site user sessions, as one example,” Rauch said.

The San Diego Convention & Visitors Bureau, called ConVis, had more than 180,000 hits on its site in January, marking an increase of at least 30,000 hits compared to previous months.

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