Destination San Diego


March 3, 2005

April 28, 2005

Declining market share has region's tourism outlook looking flat

Each year, I'm asked to look into my crystal ball and forecast how San Diego's visitor industry will fare. Since tourism is our region's third largest industry, this is not a trivial request.

The good news is that 2004 was a very healthy year for our region's visitor industry, despite the fact that travel demand was highly unpredictable due to a number of factors, from national economic woes to the War in Iraq.

For six weeks in the summer of 2004, San Diego's hotel occupancy, at an average of 87 percent, ranked No. 1 in the nation. Although the year wasn't marked by a major international event, such as the Super Bowl, San Diego's attraction as a premier visitor destination was enhanced by the opening of SeaWorld's "Journey to Atlantis" ride, the long-awaited Midway Aircraft Carrier Museum and downtown's Petco Park.

Preliminary figures show that San Diego County tourism in 2004 increased over 2003 levels, with 27.5 million visitors (up 2 percent) spending $5.6 billion (up 5.6 percent) in the local economy.

The bad news is San Diego tourism will remain relatively flat this year, simply because we are losing market share.

According to a recent report by D.K. Shifflet and Associates, San Diego rose to No. 4 in market share nationally in 2002. However, 2003 and 2004 data suggests that San Diego's market share is declining. In other words, San Diego is receiving a smaller piece of the entire U.S. domestic travel pie.

Although we enjoyed a healthy 2004, we don't expect San Diego to outperform our competitors this year. Our biggest challengers, Anaheim and Las Vegas, will both be orchestrating mega events this year: Disney's 50th anniversary and the Las Vegas Centennial.

There are also other factors. The state of California, as well as the San Diego Convention and Visitors Bureau, have suffered significant budget cuts, resulting in decreased destination marketing. We've seen El Nino-like rains hit our region and we are battling against the perception that San Diego is an expensive destination.

All said, we project a small increase in tourism revenue compared to 2004. In 2005, the total number of visitors to our region is projected to reach 27.5 million, an increase of 1.7 percent over 2004 projections. Overall visitor spending is estimated to hit the $5.9 billion mark, representing a 4.9 percent increase over 2004 projected spending figures, mostly due to inflation.

Much of this growth will come from San Diego's leisure travel market, which remains our region's largest travel segment. Last year, San Diego fared better than many of its competitors because of its position as a popular drive market (68 percent of all overnight visitors use their own vehicle to travel to the region) and the success of the ConVis branding campaign, which sells the region as a relaxing and fun vacation experience.

Some 70 percent of the area's overnight visitors come from the Western region of the United States and San Diego already enjoys a strong reputation as a popular destination for parents with children, baby boomer couples and extended family groups among this market base.

Our research shows that there is another trend developing among our visitors that includes the "urban experience." The exciting developments in San Diego's downtown area will definitely enhance our reputation as an up-and-coming city with an exciting urban core.

Those of us who work and live downtown can't ignore the ever-increasing presence of cruise ships at the Embarcadero -- lined up three in a row at times. San Diego's cruise ship industry is expected to contribute significantly to the health of the city's tourism in 2005. According to the Port of San Diego, 225 cruises will depart from San Diego in 2005, carrying more than 500,000 passengers, an increase of well over 10 percent compared to last year.

The forecast for San Diego's convention and meetings industry looks promising for 2005. As of November 2004, the San Diego Convention Center reports 453,350 attendees and 625,262 room nights booked for citywide conventions in 2005. This is 13,000 more room nights than were blocked in 2004, pointing to fact that San Diego can expect a solid year of convention center activity. San Diego recently had the opportunity to showcase its outstanding convention amenities directly to more than 2,700 meeting professionals who were in town the last week of January to attend the Meeting Professionals International (MPI) educational conference.

Again, while we are optimistic that our region's visitor industry will continue to grow moderately this year, we cannot lose track of the fact that many other destinations are competing for our business. Los Angeles, Anaheim, Orlando and Phoenix ended 2004 with an increase of 5 percent to 15 percent in visitor numbers. Disney and Las Vegas will be major threats in 2005, as they have incredibly fat marketing budgets to generate advertising to lure away our potential visitors.

Marketing your product has a direct relationship with your sales. San Diego's product is changing rapidly and the offerings are relevant and desired by travelers around the world, but if San Diego can't make noise to tell people about it, we won't see increased sales for future years.

Reinders is president and CEO of the San Diego Convention and Visitors Bureau. Send comments to Appropriate comments may be published as Letters to the Editor.


March 3, 2005

April 28, 2005