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Lead Diversified firms ride out losses, take local turn

It’s no secret: when the Sept. 11 terrorist attacks struck the East Coast, the effects on many facets of the tourism industry were devastating.

Hotel occupancies plummeted, restaurants teetering on the edge of profitability closed permanently and attractions saw ticket sales almost grind to a halt.

The industry, divided between leisure, corporate, meetings and conventions, saw the convention business slide at first, then slowly show signs of recovery.

The same has been true for smaller, less-visible businesses that service the conventions industry.

According to the San Diego Convention Center, convention business has picked up again. Almost all the bookings lost in September have been rescheduled, said spokeswoman Gayle Falkenthal.

Smaller businesses that deal with convention groups and don’t have to be booked as far in advance may not see the ripple effects for several weeks or months.

After dealing with numerous cancellations, these companies are waiting for things to change. The businesses that are diversified have found it easier to hang on.

Adventure Bike Tours saw 14 of its 15convention-group bookings for the rest of the year cancel within a week of the terrorist attacks.

It represented 15-20 percent of the Rancho Mirage-based company’s annual income, and a third of its income from corporate business, said Bruce Yeager, one of Adventure’s owners.

“We were hit very hard,” Yeager said.

The company laid off two employees who were basically full-time, and from there, “hunkered down and waited” for the challenging times to pass, he said.

Bike tours for corporate groups are only 40 percent of Adventure’s business, however. The remaining business comes from overseeing bike rentals at various hotels, including the Rancho Bernardo Inn and the Four Seasons Aviara.

The company’s sales are about $200,000 a year, he said.


– Absorbing The Losses

Adventure basically absorbed the various cancellations, mainly because the accountable businesses would have been the local destination management companies, known as DMCs, which hired the company.

“For me to play hardball on the contracts with the DMCs would have been ludicrous,” Yeager said.

Although DMCs have told him that groups have begun rebooking their arrangements in San Diego, he has yet to see the business trickle down to him.

It could be because the DMCs contracts are signed three to six months in advance, Yeager said.

“I’m very hopeful the phone will start ringing pretty aggressively right now,” he said.

Yeager hopes to gather more bookings between now and the end of the year for his company’s primary season for corporate work: February through May.

Yeager said it’s hard to predict what will happen.

“We are a little slow,” he said. “At this time of the year, I would start to see a lot of bookings for that period of time.”

He’s loath to make too many guesses.

“Whether this has had a more long-term impact, I really don’t know,” he said. “It’s too early to tell.”

At Harbor Sailboats, a local company whose actual name is Harbor Island Sailing Academy, Inc., convention business represents 30 percent of the company’s annual income, which owner Tom Hirsh did not want to disclose.

“We lost a lot of business,” said Hirsh, who has had the business since 1980. “Everyone was canceling, primarily because they didn’t know what the airline situation was going to be.”

He estimated that $30,000 to $50,000 worth of corporate events were quickly canceled.

“There was a period of a couple weeks where all we dealt with was cancellations,” Hirsh recalled. “All we could do was try to be as service-oriented to the people, in hopes of drawing the business back at a later date.”

Like other businesses, Harbor Sailboats had to quickly reassess its cancellation policy.

“Normally, you have to book these things months, if not years, out,” Hirsh said. “All of a sudden, they’re calling you up and saying, ‘Hey, we’re not coming and what are you going to do about it?’ ”

Hirsh followed the lead of the destination management companies he deals with. The DMCs, who often oversee the local arrangements for groups Hirsh books through his company, gave full refunds.


– Rediscovering Local Customers

For now, he’s focusing on business other than corporate bookings.

Long before this year, he began nurturing the company’s private sailing club, which currently has 950 members. The corporate business has always been more extreme and cyclical, compared to the steadier run of club members. Although corporate groups can be larger bookings, members are more inclined to be return business.

Another reason to nurture the sailing club, beyond the events of Sept. 11, was that corporate group business had been already slowing down, Hirsh noted.

However, the club’s membership is also somewhat spread across the Western states. Thirty percent is located outside of the local market, according to Hirsh’s estimates.

Hirsh doesn’t expect to see many of his customers who would have to fly to get here.

“If they have to get on an airplane to get here, they’re not coming,” he said.

Hirsh said the new marketing campaign coordinated by the San Diego Convention & Visitors Bureau could prove helpful because it’s focused on the market within a driving distance of the city.

He’s trying to develop more club events and other activities directed toward locals.

Hirsh has yet to see most of his lost convention business be booked again. However, he said, it could happen a little closer to when the groups would arrive.

November and December aren’t usually big months for his company’s convention business. February and March are his busiest time for those groups, he said.

Perhaps the slowdown has most drastically affected local tour guides. They say their business is gone without large groups booked for the convention center or the bigger hotels in town.


– No Safety Net For Tour Guides

Edwin Lohr, a tour guide and tour director for more than a decade, said the slowdown was clear before Sept. 11.

“This summer was probably the slowest summer I’ve ever had,” Lohr said. Although summers are generally slow for conventions, he said, it was particularly quiet.

After Sept. 11, it got worse. He and other guides started getting calls about convention groups’ bookings being canceled.

Even if the business is booked again, he worries that the groups won’t be large enough to hire many guides.

The guides, who are often paid $10 to $20 an hour, accompany groups on leisure activities. They usually greet them when they arrive and stay with the same groups until they leave for the airport, Lohr said.

He and his fellow guides are independent contractors, hired by visiting groups’ meeting planners or DMCs.

Because of that, a cutback in business leaves them without income and without a way to apply for unemployment, Lohr said.

“We felt like we got caught between the cracks,” he said.

For now, Lohr said, many guides have taken on part-time work, sometimes even out of the tourism industry.

For the most part, the guides set money aside for times like this, he said.

“We chose this type of life,” Lohr said. “We chose to be our own boss and we knew there’s a chance that this type of thing could happen.”

He added, though, “I don’t think any of us knew the severity of how it’s affecting our business.”

Still, Lohr said, he has no regrets and continues to relish his job. He recently founded a local association that hopes to certify tour guides and represent their interests as an industry.

“The majority of us love people, and love to show off, and we love to show off our town,” he said.

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