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San Diego's Tourism Industry Rebounds, Grows 5.9% in 2003; Hotel Occupancy of 69.5% Third Highest Among Top 25 U.S. Destinations
By Michael Kinsman, The San Diego Union-Tribune
Knight Ridder/Tribune Business News 

Feb. 18, 2004 - Shaking off a two-year slump, San Diego's tourism industry brought in a record $5.3 billion in revenue last year, the San Diego Convention & Visitors Bureau said yesterday. 

After visitor spending dropped 2.1 percent in 2001 and 1.6 percent in 2002, it rebounded to grow 5.9 percent last year, when a record 26.4 million people visited the region. 

The previous record spending was $5.2 billion in 2000. 

Tourism was bolstered by the Super Bowl in January and some conventions late in the year. Visitor spending was up $152 million in January, while conventions of the American Society of Hematology (19,000 attendees), the Modern Language Association (9,500) and the California School Board Association (4,000) helped increase spending in November and December by $104 million over the same period in 2002. 

"We did very, very well last year," said Reint Reinders, president and chief executive of the tourism bureau. "But I think the jury is still out as to whether we have clear sailing ahead." 

Reinders said he is concerned that the business travel market is still soft, a result of changing habits. 

"We will still do well with meetings and conventions, but it is the individual business travel that concerns me," he said. "Whether it is because of tighter budgets, safety concerns or the hassle factor, people simply are not taking as many business trips. I don't know whether that will ever change back to the way we used to have it." 

But if business travel was sluggish, leisure travelers found San Diego to be an attractive destination. 

Bob Rauch, director of San Diego State University's Center for Hospitality & Tourism Research, said that air travel, which slumped badly after the September 2001 terror attacks, has not yet fully rebounded and that San Diego's tourism industry benefits from that. 

While passenger arrivals at San Diego's Lindbergh Field were up 2.2 percent last year, the 7.6 million total was down from 7.9 million in 2000. 

"We're seeing people throughout California, Nevada and Arizona jumping in their car, and San Diego is a good destination," he said. "We're getting visitors who drive here from as far away as Utah and Colorado. San Diego was always a good destination for these people, but I think the events of 9/11 have caused people to change their travel mentality." 

The strength of that leisure market helped the region increase hotel occupancy and room rates in 2003, Rauch said. 

With 547,000 more rooms sold last year than in 2002, the region gained $6.4 million from the transient occupancy tax. 

The hotel occupancy rate of 69.5 percent was the third highest among the nation's 25 top tourism destinations while the average daily room rate of $111 was the fifth highest nationally, according to Smith Travel Research of Hendersonville, Tenn. 

"Our occupancy rate was good so our room rates could climb a little," Reinders said. "You look at other cities, and they weren't so fortunate." 

Sixteen of the top 25 destinations had declining room rates last year, Smith Travel reported. 

Rauch said that while San Diego's tourism seems to have recovered better from the effects of 9/11, he expects hotel occupancy to decline slightly this year when 1,000 more hotel rooms are added to the county's inventory of 51,000 rooms. 

The 512-room Omni San Diego hotel adjacent to downtown's Petco Park and the 210-room Estancia La Jolla Hotel are due to open in the first half of the year, along with several smaller properties during the year, he said. 

One fallout of 9/11 remains international travel to San Diego. There were only 450,000 overseas visitors last year, down from a peak of 850,000 four years ago, Reinders said. 

"International travel has really taken a hit," he said. "It's a lot more difficult to travel, not just because of Homeland Security measures, but because of new rules that force people to get visas or travel documents before they leave their countries. It's just not as easy as it once was." 

Reinders said he thinks the region will be lucky to increase overseas visitors to more than 600,000 over the next few years. 

Convis, meanwhile, is spending nearly $1 million to market San Diego to key regions. A "Good Vibes" ad campaign is planned for regional magazines and billboards in the drive market and will be part of television ads aimed at markets such as Sacramento, Las Vegas and Dallas. 

"People tell us in focus groups that San Diego feels good, that they get 'good vibes' when they come here," Reinders said. "We have a lifestyle here that people aspire to and envy, and these slice-of-life ads are geared toward promoting that." 

-----To see more of The San Diego Union-Tribune, or to subscribe to the newspaper, go to http://www.uniontrib.com 

(c) 2004, The San Diego Union-Tribune. Distributed by Knight Ridder/Tribune Business News. 


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