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Wednesday, Oct 4, 2023

Tourism—Visitor industry forecast: Expansion at a moderate pace

Tourism: Disneyland, Convention Center Openings Bright Spots Among Clouds

Fair skies ahead, say officials and executives in San Diego’s tourism industry, when asked about 2001.

Predictions of record levels of visitors and spending are tempered with overall projections of slower but stable growth, following national trends.

At the annual Southern California Visitor Industry Outlook Conference last month, attendees were told to “expect the unexpected,” said Sal Giametta, vice president of community relations for the San Diego Convention & Visitors Bureau.

Signs in the Midwest indicate recessionary activity that could ultimately be reflected in consumer confidence that affect travel and other items involving consumers’ discretionary dollars, Giametta said.

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“I would say that we’re optimistic, but cautiously optimistic,” he said.

The sentiment was reflected in the answers from the 11th Annual San Diego Business Journal/Deloitte & Touche Economic Outlook Survey, which polled 21 leaders in the hospitality industry.

Eight of those surveyed thought the national tourism industry’s economic condition in 2001 will remain “about the same” as 2000.

Six respondents said it would be better, while two said “much better.” Five respondents said it would be worse.

When asked about the local tourism industry, 48 percent said it would be about the same as 2000, while 33 percent predicted it would be better and 14 percent (five) predicted it would be much better. Five percent (one respondent) predicted it would be worse.

Research from the Convention & Visitors Bureau indicates the county’s hotel occupancy levels will remain flat at 73 percent. Average daily room rates will exhibit modest growth, from $107 to $111 in the next year, according to ConVis’ forecast. It marks a 3.7 percent increase.

The bureau’s projections have 15 million overnight visitors in San Diego County next year, up from 14,891,000 in 2000.

Visitor spending will likely climb from $5 billion this year to $5.2 billion in 2001, ConVis said.

After the county’s rapid expansion in recent years, the most likely scenario is a soft landing rather than a recession, ConVis stated in its annual forecast.

“The reality is that some of the signals in the national economy are that things are slowing down,” Giametta said. “Certainly, nobody’s talking about a recession.”

Comparing the national economy in 2001 to this year, 48 percent of those surveyed in the San Diego Business Journal/Deloitte & Touche survey said it would be the same, while 33 percent (seven) said it would perform better and 19 percent (four) said it would be worse.

When asked about California’s economy, 57 percent said it would be about the same, while the remaining 43 percent said it would be better.

As for San Diego, 48 percent said it would be better, while the remaining 52 percent said it would be about the same.

Bob Rauch, a hotel-industry analyst based in Del Mar, mentioned two major events in 2001 that will likely even each other out for local tourism , the openings of Anaheim’s new Disneyland Resort and the expanded San Diego Convention Center.

The Disney Resort, which opens in February, adds a new California-themed park and additional on-site hotels , with the purpose of making the property a multiday stay.

According to Rauch, having the resort a couple hours away will both help and hinder San Diego. While it will take away some of San Diego’s typical market share, the new attraction also could bring additional visitors to the Southern California region who could make San Diego an extra stop, Rauch said.

A bolstering influence on local tourism next year will be the newly expanded Convention Center, Rauch said. In late summer, construction will be completed on the $216 million project that doubles the center’s size to 1.7 million total gross interior square feet. “I think we will see an improvement in the convention center market in the latter half, particularly the latter quarter of 2001,” he said.

A major story in 2000 was locally based Manchester Resorts’ continued problems with two waterfront projects considered integral to the larger convention groups expected with the Convention Center expansion.

The projects, a 1,200-room hotel on the Campbell Shipyard site Downtown and the additional tower to be built onto the Hyatt Regency San Diego’s property, have been mired in various problems ranging from financing to environmental concerns.

The absence of those hotel rooms creates problems, but they won’t be felt for a couple of years, Giametta said.

“Obviously, we want to see the projects started as soon as possible because the sooner they get started, the sooner they’ll be completed,” he said.

Although the need for additional hotel rooms is something that concerns ConVis, it won’t affect potential business for a few more years, Giametta said.

“The reality is the business we have on the books now, and for the next couple of years, we can handle with the inventory we have now,” he said. “But we’re not going to be able to keep that pace going without additional rooms.”

If the hotel projects are started tomorrow, they may not be completed until 2003, Giametta noted. However, if the process takes much longer, with completion dates in 2004, 2005 or later, it could become an issue, he said.

According to Giametta, the increase in hotels’ average daily room rate can be attributed in part to the fact that very few rooms have been added.

Although the same is true for 2001, San Diego’s hotel room count will dramatically change in upcoming years, Rauch said.

He predicted about 5,000 hotel rooms will be added to the county’s inventory in the next three years.

However, San Diego’s market, bolstered by the Convention Center’s expansion, will support it, he said.

Rauch’s outlook for local tourism in the next three to five years is upbeat.

“I think we are becoming more and more of a first-tier convention destination, with our Convention Center expansion,” he said. “We are already on the international leisure market’s map with some successful America’s Cup events and the Republican National Convention, and our third Super Bowl coming up.”

He continued: “I think we are a very well-known destination that will balance the growth in both supply of new rooms and demand from new travelers and we will be very successful for the next several years.”


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