Sep. 10--California's $75 billion tourism industry was already feeling the distress of an economic slump when the calendar page turned to Sept. 11, 2001. 

The terrorist attacks dashed any hope for a year-end travel rally and, in fact, plunged hotels, airlines and related businesses further into a deep hole. 

"After 9/11, everyone's whole sense of safety and security was shaken, and it only made things worse for us," said Stephen Pinetti, senior vice president of sales and marketing for Kimpton Boutique Hotels, which owns more than 35 hotels in a dozen U.S. cities and Canada. "And the worst place of all to be in the business -- San Francisco." 

Yet as the first anniversary approaches, there are signs people are traveling once again, perhaps helped along by a state marketing campaign and special hotel and restaurant deals to lure more drive-in tourists. In the past few months, California hotels -- even in the hardest-hit Bay Area -- have reported that more rooms are booked. Hotel occupancy rates and revenues are generally thought to be the most accurate measure of an area's tourism health. 

Occupancy rates at San Francisco hotels rose from 68 percent in April to 74.2 percent in June, said Gary Carr of PKF Consulting, which works with researchers to assess trends in the hotel industry. 

"The push for local travelers seemed to work," said Carr. If hotels "can make it through 2002, then 2003 will look much better." 

Tourism turnaround California Tourism, the agency that represents the state's tourism division, had predicted an 8 percent to 9 percent decrease in travel for 2002 but is now happily reporting that summer travel is 7 percent ahead of last year and expected to stay on that pace for the rest of the year. 

The state's best-known attractions -- SeaWorld in San Diego, Yosemite National Park, Disneyland and Universal Studios in Hollywood -- report attendance is what they'd expected, given the slow economy. Their number of regional visitors also is higher than normal. 

"We're encouraged by what we've seen so far," said Norman Williams, assistant secretary of California's Technology, Trade and Commerce Agency, which oversees tourism. 

Still, hotel occupancy rates are down more than 15 percent in Northern California in the first six months of 2002 compared to the same period in 2001, according to PKF's report. 

Many workers continue to be unemployed. About one-third of the 9,000 members of the Hotel and Restaurant Employees union in San Francisco lost their jobs in the first few months after Sept. 11. About 5,500 people who work for travel- and tourism-related businesses were laid off in San Mateo County after the attacks. 

Also dampening the bit of good economic news is continued upheaval for the nation's airlines. Within a few days of each other in mid-August, US Airways filed for bankruptcy, United Airlines announced it may have to do the same and American Airlines said it was cutting 7,000 jobs. The airline industry, saddled with high fixed costs for labor and equipment, lost more than $7 billion over the past three quarters, and forecasts call for more losses through the end of the 2002. 

Airline travel, which declined 6.9 percent nationwide in 2001, is expected to continue to decline another 4.7 percent in 2002, according to a new report by Smith Travel Research and Ernst & Young. 

Carriers at San Francisco International Airport have cut 10 percent to 15 percent of their flights since Sept. 11, particularly dismal news for San Francisco because about 85 percent of its visitors arrive by air. 

"We're off by 10 to 15 percent from last summer in the total number of passengers," said Mike McCarron, assistant deputy director for San Francisco International Airport. 

At Mineta San Jose International Airport, the number of departures has gone from 240 before Sept. 11 to today's 200 flights per day, said spokesman Steve Luckenbach. 

At Oakland International Airport, the number of departures is up 7.2 percent -- from 194 to 208 flights a day since Sept. 11 -- because of the addition of Jet Blue as a carrier and new routes offered by American and United Airlines, said spokeswoman Cyndy Johnson. 

When air travel decreased, California hotels and visitors bureaus began advertising to travelers who lived close enough to drive to tourist destinations. 

The state's 2001 winter marketing campaign, "We're Californians," encouraged residents to get to know their own state. 

Hotels offered overnight packages and reduced rates that included free parking. It appears the regional emphasis is succeeding. 

"Every month, it's getting a little better," said Troy Jones, a hotel consultant for Ernst & Young, which recently released its California Mid-Year Lodging Report for 2002. 

The venerable Mark Hopkins Hotel on San Francisco's Nob Hill traditionally attracts national and international guests, but its regional visitors have increased to as much as 40 percent of customers on some nights. Most drive in to take advantage of the luxury hotel's lower rates or special packages catering to food lovers or families. 

The Huntington, also on Nob Hill, offers spa packages for Bay Area travelers. Reservations once made months in advance can now be booked two weeks or less before arrival, said spokeswoman Sally Haims. 

"For us, it's a quick getaway," said Dane Christensen of Saratoga, a retired Pacific Bell executive who stays at the Huntington with wife, Peggy. "Since 9/11 we have a certain amount of questions about traveling so driving to San Francisco feels like a vacation without the hassles of getting on a plane." `Sour icing' Still, the slowest region to recover has been San Francisco, where, according to the Ernst & Young report. Continued cutbacks in corporate travel as well as fewer air travelers are blamed. 

About 30 million tourists visit the Bay Area every year, and tourism here is an $18 billion industry with 219,322 residents working in tourism-related jobs. 

"9/11 was a very sour icing on a bad cake for us," said Laurie Armstrong, vice president of the San Francisco Visitors and Convention Bureau, which also works with surrounding tourism areas such as the Napa Valley and the Monterey peninsula. "We were already dealing with the dot-com bomb and the energy crisis," so the attacks "pretty much sealed our fate." 

La Playa Hotel in Carmel, which has always relied on drive-in guests, has seen a shift in guests from corporate travelers to area residents looking for a vacation close to home. "Now we're almost back on track with normal business," said hotel general manager Tom Gliddon. 

The one Bay Area region that hasn't seen a major improvement is San Jose and Silicon Valley. In July, just 47 percent of San Jose's 2,200 downtown hotel rooms were occupied, compared to a year ago when 63 percent were filled. 

"We are not seeing any indication of movement," said Daniel Fenton, president and chief executive officer of the San Jose Convention and Visitors Bureau. The bureau has started working with hotels on marketing to people who live within a few hours' drive to come to the city for events such as the mariachi and jazz festivals. 

"It's a market we have to go after now with business travel still down," said Cyril Isnard, general manager of the Fairmont Hotel in San Jose. "It has helped that people want to stay closer to home." 

-----To see more of the San Jose Mercury News, or to subscribe to the newspaper, go to http://www.bayarea.com 

(c) 2002, San Jose Mercury News, Calif. Distributed by Knight Ridder/Tribune Business News. U, AMR, UAL, JBLU,