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Tourism marketing is vital as competition heats up

Loud music and bright lights kicked off an upbeat annual meeting for the San Diego Tourism Authority on Valentine’s Day.

But cheers soon turned to boos when hosts Todd Shallan and Joe Terzi announced that San Diego Mayor Bob Filner would not be making an appearance as scheduled.

The meeting focused mostly on sales and marketing, competitors, statistics from the past year and predictions for the coming year.

Last year was a record tourism year, with 32 million visitors and more than $18.3 billion in total economic impact, Shallan said. The industry has sustained 37 consecutive months of growth in hotel visitors and sold 15 million hotel room nights last year. The average hotel occupancy reached nearly 71 percent and the average daily rate (ADR) hit more than $130 per night, putting San Diego in the top 10 hotel markets in the country, Shallan said.

Demand levels for room nights for the entire year were at historic peaks, said keynote speaker Steve Hood of Smith Travel Research. Room revenue finished under $2 billion, and he expects 2013 to surpass that number. The ADR presents a challenge for San Diego, he said. The entire market dropped $22 from the prior peak and has made $11 back, but there’s still $11 left and that’s “a significant challenge.”

Tourism is the region’s second largest traded economy, Shallan said. “Our industry is vital. We provide jobs that can’t be outsourced,” he said.

The travel and tourism industry employs 14.4 million Americans -- or one out of every eight jobs, said Terzi, president and CEO of the San Diego Tourism Authority.

“Our industry employs 160,000 San Diegans and travel outperforms other industries in new job creation,” Shallan said.

For every dollar that’s spent by a traveler in San Diego, another $2.23 is generated in additional spending, representing a total economic impact of $18.3 billion annually for the San Diego region, Shallan said. That represents a 6.6 percent increase from 2011.

The theme for much of the meeting was that destinations do not sell themselves, and have to be marketed and promoted.

“Destination marketing works, and you’ve witnessed that personally here in San Diego,” said Caroline Beteta, CEO at Visit California. “Not only is it working, but we’re on a very positive projectory to see sustained growth in the next three to four years, both in volume and in spending and it adds up as well. Last year, we passed our $100 billion milestone mark for California. We’re 1.5 times the size of the Florida tourism economy and five times the size of the Hawaiian tourism economy, generating direct employment for almost 1 million Californians -- and equally important, about $6 billion in state and local tax revenue for California.”

The mission in California is to “create desire for the California experience,” Beteta said. One advertisement by Visit California highlights “misconceptions” of California -- showing a world of surfers, celebrities, yogis, winery owners and skateboarders.

Beteta presented the world premier of Visit California’s family campaign, which started last year. Rico Rodriguez, an actor on television show "Modern Family," is featured in the 60-second video featuring kids at play. Kids are shown “texting” -- writing in the sand; “streaming” -- playing in a stream; “online” -- zip lining; and “surfing” -- not the Web.

The San Diego Tourism Marketing District was then created to raise funds to promote San Diego. The district was established for a five-year term, which expired in December, and city officials approved a new district, which started January 2013 and will be in place until 2053. However, the validation of the San Diego TMD has been formally challenged, according to Lorin Stewart, executive director of the San Diego TMD. This caused a delay in the spring ad campaign, Terzi said, affecting the promotion of San Diego, which is facing “fierce competition,” he said.

The San Diego TMD provided the San Diego Tourism Authority $22 million in 2012 to support sales and marketing. As a result, sales and marketing departments produced 3.8 million room nights for the region, $3 billion in total economic impact and $52 million in transient occupancy tax (TOT) collections for the city of San Diego, Terzi said.

“It’s very easy to take the visitor industry for granted. San Diego has beautiful weather, people will come anyway. However, we must never forget that the consumer has a choice -- a choice of many attractive, leisure attractions for their family vacations, and many choices of where to have their group meetings or city-wide conventions,” said Lorin Stewart, executive director of the TMD. “and the competition for consumers has never been more fierce. As a result, positively influencing the consumers’ decision has never been more important.”

Effective sales and marketing isn’t inexpensive, Stewart said, noting that the well-known presidential candidates each spent more than $1 billion to sell and market themselves.

“Well-known destination cities such as San Diego also need to sell and market themselves in order to influence the choice of consumers,” Stewart said. “So does destination marketing work? Well let’s do a little experiment. If you were to stop anywhere in the world and say, ‘Where is Sin City?’ Where are they going to say?” Stewart said, as the audience responded, “Las Vegas.”

“Think about that for a moment. How is it that a little tiny town in the middle of nowhere, literally a desert, was able to penetrate the minds of consumers and to be a serious threat to group meetings and city-wide conventions, not only for San Diego, but across the world? How did they do that? Simple. They bought their way into our minds,” Stewart said. Last year Las Vegas spent $90 million on media alone, he said.

Almost $600 million is being spent by other state travel offices and another $600 million by other cities throughout the United States, Beteta said. Disneyland invested $1.5 billion last summer in infrastructure to improve California Adventure and Anaheim added new hotels, Terzi said, resulting in 43.7 million visitors who spent $8.6 billion, a 12 percent increase in spending year over year.

“I think it’s very important to note, if you go dark, you will be left behind. Why do we care? Because it’s about jobs and tax revenue. That’s why we care,” Beteta said.

Beteta said San Diego shouldn’t compete with California, but collaborate with the state.

California is sustaining a 47.5 percent share of the Chinese market while that market has grown 56 percent in the last five years and is projected to grow 28 percent this year, Beteta said.

“They spend a lot of money and stay an average of 10.6 nights," Beteta said. "If we can hang on to the market share while we continue to see sustained growth, California will be in fine shape."

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San Diego Tourism Authority

Company Website

750 B St. Ste., 1500
San Diego, CA 92101

San Diego Tourism Authority Executive(s):

David Peckinpaugh

  • Chief Executive Officer, President

Joe Terzi

  • Chief Executive Officer, President

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