Amidst lingering economic uncertainty, San Diego’s tourism industry showed signs of recovery during the first nine months of 2011 according to November’s Monthly Industry Report released by the San Diego Convention and Visitors Bureau (ConVis).
The CIC Research study stated that hotel performance was again strong in September: RevPAR (revenue per available room, a performance metric in the hotel industry that calculates a hotel’s average daily rate by its occupancy rate) grew almost 13 percent in the city of San Diego and slightly less than 12 percent for the county as a whole. September was also a strong month for visitor volume and spending, growing 1 percent and 10 percent respectively, compared to September 2010.
The Tourism Economics San Diego Travel Industry Forecast released in October showed room rates have increased in four consecutive quarters, but remain well below peak 2008 levels. Rates are forecasted to rise 5.9 percent in 2012 due to a supply-restrained environment.
The forecast cites several factors signaling a slow recovery: U.S. households continue to struggle with debt, high unemployment, weak income growth, declines in net worth, and high levels of uncertainty. Additional negative economic factors such as weakening U.S. economic performance, conditions in Asia, and the unresolved European debt crisis suggest that the tourism industry recovery San Diego and the U.S. have been experiencing will slow in 2012. The forecast also suggests that although visitor spending rose 2.7 percent in the first half of 2011,visitor spending would not exceed the previous 2008 record of more than $7.9 billion until 2013.
Weighing strong September numbers against a less-than-optimistic forecast, Joe Terzi, president and CEO of ConVis, said, “I don’t think anyone knows where we’re going economically. Every time I think we’re gaining some forward momentum, something else happens.”
Several months ago, Terzi had been optimistic that RevPAR would grow 8 to 10 percent in 2012, but has revised that to 6 to 8 percent.
“We see business returning, but we don’t see the rate structures growing as much as we thought,” Terzi said. “There’s still a lot of discounting and aggressive pricing out there.”
Regional attraction attendance, also strong in September, grew 9 percent over last year. Terzi noted that many attractions have modified and expanded during the recession.
SeaWorld San Diego opened a sea turtle attraction called Turtle Reef, a new immersive animal exhibit called Animal Connections, and debuted a new Shamu show this year. Come spring, they’ll introduce a mega-attraction called Manta, which combines a coaster shaped like a giant manta ray with underwater animal habitats.
According to Communications Director David Koontz, SeaWorld Parks and Entertainment, a portfolio company of The Blackstone Group (NYSE:BX), doesn’t release attendance figures. Koontz stated SeaWorld San Diego added slightly less than 200 employees to its workforce in 2011, but he was not in a position to speculate about the park’s employment outlook for 2012.
Legoland California, owned by U.K.-based Merlin Entertainments, has not released attendance figures since 2006 when annual attendance was more than 1.65 million. Since then, according to Legoland spokesperson Julie Estrada, attendance at the Carlsbad park has increased annually. The 128-acre park opened in 1999 and has had several expansions. In 2008 it added Sea Life, a separate admission aquarium. Last year, it added a 5.5-acre water park, which was expanded this year with Splash Zoo. Estrada said the park also added a Star Wars mini-land in March and Holiday Snow Days, which runs through January 2.
“We’re blowing 40 tons of new snow every day, and it’s been very popular,” said Estrada.
Legoland California will soon break ground on a three-story, 250-room Lego-themed hotel built by R.D. Construction scheduled to open summer 2013. The first of its kind in North America, it will feature brightly colored Lego décor, a pool area and restaurant.
In spite of growth in other areas of the industry, arts and museum attendance posted slight declines in September. Terzi acknowledges the region’s cultural institutions have suffered the most.
“I have a sense of what’s happening at the major institutions,” Terzi said. “They are seeing the numbers come back, but the yield is lower because not unlike hotels, they’re doing so much to attract visitors.”
Aggressive marketing and advertising, building membership, and offering deeper discounts than ever have been key to rebounding attendance figures at The Natural History Museum, which saw its fiscal year figures grow by more than 41,000 (excluding school groups, special events and programs), according to media spokesperson Hallie Johnson.
“Next year, hands down our biggest strategy for increasing attendance is by having two major attractions: ‘Titanic: The Artifact Exhibition,’ and ‘The Horse,’” said Johnson.
According to ConVis, San Diego’s visitor industry is the third largest revenue generator of the region’s economy, following manufacturing and the military. In 2010, nearly 29.9 million San Diego visitors spent almost $7.1 billion at local businesses, generating a local economic impact of more than $16.2 billion.
Terzi believes that a convention center expansion is critical to rebounding to peak spending levels set in 2008, when 31.1 million visitors spent more than $7.9 billion, generating an $18.1 billion impact on the local economy.
He said the convention center is “the main driver of business in the community. The numbers are strong on a go-forward basis, and I see the expansion approval a key to the success of that.”
Terzi expects international tourism to the United States to grow double digits next year and is working with the airport to bring in more daily non-stop international flights.