The county's tourism industry has withstood the recession longer than most other industries. Now it's set to play catch-up in 2009. 

Visitors, hotel stays and other aspects of tourism are likely to see small declines in 2009 after a 2008 that started out strong but faded as the economy worsened. 

Orange County is likely to finish 2008 with 43.8 million visitors, down from 44.3 million in 2007. Next year, the county is bracing for a decline of 2% to 3.5%, according to preliminary data from San Diego-based CIC Research Inc. 

Regional spending, which is expected to be down 1% in 2008 to $27.8 billion, is likely to drop again next year to $27.1 billion. 

Local convention attendance of 1.1 million people helped OC keep pace this year. But estimated year-end hotel occupancy of 71.2% reflects a slight downturn of about 1% from 2007. Next year could see hotel occupancy of roughly 70%, according to Atlanta-based market tracker PKF Consulting Corp. National hotel occupancy is expected to be 58% next year. 

Charles Ahlers, president of the Anaheim/Orange County Visitor & Convention Bureau, said he's "cautiously optimistic for a good meeting year." There are 41 conventions set for Anaheim next year, compared to 38 in 2008. The number of groups already booked is roughly the same as it was at this time a year ago, Ahlers said. "It's framed to be a good year," he said. 
 

NAMM show: registration on pace for next month

Whether continuing economic woes cause some attendance attrition or cancellations is anybody's guess. In a November survey of National Business Travel Association members, 51% of respondents said their companies planned to send fewer people to meetings and conventions next year. 

Orange County's first big convention of 2009 is The NAMM Show - the International Music Products Association, which drew 88,128 people last January. A spokesperson for the show said registration is on pace for similar attendance next month. 

Meeting planners and trade show organizers are concerned. In recent weeks, Meeting Professionals International, the Financial & Insurance Conference Planners and the Incentive Marketing Association all issued marketing statements touting the value of meetings and incentives. 

Some trade show organizers are projecting attendance decreases of 10% to 15%. 

The leisure travel outlook also is uncertain. Consumer confidence has plummeted since September and there are few signs that the economy will bottom out before mid-2009. 

Factors that work in the county's favor include lower gas prices that encourage regional visitors, plenty of theme parks and a broad range of hotel rates. 

"Destinations with large regional populations tend to do better" in this kind of climate, said Suzanne Cook, senior vice president of the Travel Industry Association in Washington, D.C. 

In an October survey conducted by Orlando-based tourism marketing companyY Partnership and the Travel Industry Association, 71% said they still planned to travel in the next six months-with caveats. 

Seventy-six percent said they'd book a package deal to save money. Seventy-five percent said they'd spend less money. Two-thirds said they'd stay fewer nights than in the past. 

Those statistics could pose a challenge for the county, which has almost 56,000 hotel rooms to fill, including a handful of new ones: the 332-unit Resort at Pelican Hill, the 110-room Hampton Inn at Seal Beach, the 174-room Renaissance ClubSport in Aliso Viejo, the 285-room Sheraton in Garden Grove and the tiny 11-room bed and breakfast Seven4One in Laguna Beach. 
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Another timeshare at Anaheim GardenWalk may go forward next year, while some other projects in the Anaheim area have been pushed back. 

A few midsize hotels are slated for Tustin Legacy and Irvine, while Makar Properties LLC's W Hotel in Huntington Beach has been delayed until 2011 along with a delay for the Shorebreak Hotel until early 2010. 

The county's high-end coastal resorts typically don't face the kind of downturn seen in other markets but are likely to be tested in 2009 as the luxury sector shows signs of softening. 

Laguna Beach's Montage Resort & Spa, the Ritz-Carlton Laguna Niguel, St. Regis Monarch Beach and The Island Hotel Newport Beach all earned five-diamond ratings from the American Automobile Association in November. The recently opened Resort at Pelican Hill has tossed its hat in the high-end ring. 

In Anaheim, Walt Disney Co. in October announced detailed plans for its remake of Disney's California Adventure, the struggling second park alongside Disneyland Park. The plan includes numerous changes at the Paradise Pier area of the park, some of which will be unveiled next year. 

In a November Conference call, Walt Disney Chief Executive Bob Iger said attendance at the company's theme parks, including Disneyland, was down 1% from 2007 and that hotel bookings were down 4% in the third quarter at its Anaheim hotels. "The pace of booking is slower, making projections difficult throughout the industry," he said. 

Disneyland typically draws 13 million to 14 million visitors a year.The company recently launched a promotion that offers families seven nights for the price of four-plus spending certificates-to encourage visitors in 2009. 

Ohio's Cedar Fair Entertainment Co., parent company of Knott's Berry Farm, debuted a midsize coaster at the park this year. But $62 million in spending for the company's parks for 2009 didn't include anything major for Knott's. Standard &Poor's lowered Cedar Fair's debt ratings in late November with the expectation that economic conditions could hamper the company's 2009 performance. 

But with most of Cedar Fair's theme parks in seasonal markets, the company-and Knott's-could benefit in the long run if the economy turns around by mid-2009. 

Entertainment may be a bright spot. Anaheim's Honda Center, ranked among the top performance venues of its size, has yet to see ill effects of the downturn. Tickets for Elton John, Billy Joel and Britney Spears all sold out in an hour last week and the arena continues to book top-line entertainment when the Anaheim Ducks aren't playing at home, said Anaheim Arena Management LLC Chief Executive Tim Ryan. 

Still, "There's slight trepidation about what's in store for all of us," Ryan said. "We hope consumers will still have a need for entertainment." 

John Wayne Airport saw its traffic decline nearly 10% to 7.6 million passengers through October and lost some flights due to airline cutbacks. The airport is still proceeding with the addition of a third terminal, which is fully funded. 

The airport's passenger capacity is capped at 10.3 million annually through 2010, when the cap adjusts to 10.8 million. 
 

Sandi Cain is a freelance writer and contributor to the Orange County Business Journal and meetings industry publications. She specializes in hospitality, tourism and travel. Cain holds bachelor�s and master�s degrees in education from Kent State University in Ohio, where she majored in social studies. A former high school teacher, she has written for niche-market sports publications in the U.S., England and Australia and formerly worked in both the printing and high-tech industries. A Cleveland, Ohio native, Cain hasbeen a resident of Laguna Beach since the late �70s. She enjoys travel, gardening, reading and spoiling her three cats.

Sandi Cain
Contributing reporter
Laguna Beach CA
Phone: (949) 497-2680
Fax: (949) 606-8447
Cell (949) 292-3279
Email: [email protected]