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Vying for Visitors; To Outsiders, Southern
California is One Big Tourist Playground

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By Sandi Cain, April 2005
Orange County Business Journal Staff
 

OC’s Tourism Share Disproportionate to Size

The Santa Monica Pier, Disneyland, SeaWorld and other tourist draws blur together as a sprawling, sun-kissed region with little regard to cities and county lines.

But up close, Orange, Los Angeles and San Diego counties are as much rivals for visitors as they are partners in promoting Southern California as a fun zone of theme parks, beaches and shopping.

“We are each other’s best customers,” said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp. “But there is a rivalry.”

The three markets feed off each other, creating a regional tourism market worth $25 billion annually and employing some 500,000 people. The competition comes down to how long visitors stay in each county, according to Kyser. And the stakes are high this year with the expanding economy, weak dollar and some big draws: Disneyland’s heavy marketing for its 50th anniversary, the launch of Disney cruises at the Port of Los Angeles, the King Tut exhibit in L.A. and the Mummies exhibit at Bowers Museum in Santa Ana.

“This should be a superb year,” Kyser said.

Los Angeles is the big draw in the region’s tourist market, accounting for about half of the area’s visitor spending and tourism-related workforce.

But, based on population, both OC and San Diego get more of a bang from tourism than L.A. With 10 million residents, L.A. generates about $1,200 per person a year in visitor spending.

For OC, the figure is $2,433. For San Diego, it’s $1,833. Both counties have about 3 million residents.

At 19% of the three counties’ population, OC gets 30% of the region’s visitor spending. San Diego gets 22%.

Walt Disney Co.’s two Anaheim theme parks drive tourism in OC—and spur a lot of visitors to L.A. and San Diego, too. Knott’s Berry Farm in Buena Park also plays off Disney.

Beyond theme parks, OC is starting to build a reputation for luxury tourism, with its swanky coastal resorts and tony shopping at South Coast Plaza and Fashion Island, which rivals Rodeo Drive and Melrose Place.

Conventions are a key component of OC’s visitor spending. This year, the Anaheim Convention Center expects about 1 million attendees, about the same as 2003 and 2004.

The county doesn’t have an international airport, making it reliant on L.A. for a good chunk of its visitors. Last year, about 6% of OC visitors—roughly 2.2 million—were from other countries a higher percentage based on population than L.A. or San Diego. OC scored a recent coup: the Japan Travel Bureau picked Anaheim as its Southern California headquarters during Disneyland’s 50th anniversary marketing push this year.

L.A. doesn’t have an airport issue (beyond the ongoing saga to expand Los Angeles International Airport). The county, known the world over, is a gateway for global tourists, which make up about 17% of overnight visitors to L.A.

In all, L.A. is the No. 2 destination for international visitors and No. 4 for domestic travelers (behind New York, Orlando, Fla., and Las Vegas).

Conventions are big business for L.A., but the city has had to fight for business, in part because of a lack of convention headquarter-style hotels around the downtown facility.

L.A. also has labor issues. Union workers have called for boycotts of L.A. hotels after their contract ended last year and a renewal has proven elusive. Hotel union Unite/Here counts about 2,800 in L.A. members.

(OC’s Local 681 has about 5,000 full-time hotel workers but hasn’t had issues. In San Diego, Local 30 has been picketing Hotel del Coronado in a contract dispute with its owners for more than a year.)

San Diego has been one of the busiest tourist and convention markets for the past two years, thanks to Petco Park and a revitalized downtown and waterfront. The county added about 3,000 hotel rooms last year.

Excluding daily crossings at the Mexican border, San Diego counts a smaller percentage of international visitors at 4%, or about 650,000 last year. The county does have an international airport, but faces an expansion challenge for the facility, which isn’t much bigger than John Wayne Airport.

One thing all three markets share: fuller hotels. The three counties were among the top 10 markets in occupancy last year, according to Hendersonville, Tenn.-based Smith Travel Research.

San Diego posted a 74% occupancy rate in 2004, according to PKF Consulting, which tracks hotels. Los Angeles came in at 75%. OC was 71%.

When it comes to price, San Diego comes out on top. The average countywide daily room rate there in 2004 was $138, versus $119 in Los Angeles and $114 in OC.

Part of OC’s lower occupancy rate has to do with the nature of the market here. Anaheim gets more families with several members sharing a single room, driving up the county’s overnight visitor count but not the number of rooms rented.

Same goes for OC’s lower average hotel rate, which is impacted a larger number of Disneyland-area motels, versus San Diego’s more pricey resorts and L.A.’s more expensive business hotels.

Los Angeles County has roughly 110,000 hotel and motel rooms. OC checks in at 55,700. San Diego has 53,000.

Of course, visitor spending is key. Last year, visitors spent $12 billion in Los Angeles, $7.3 billion in OC and $5.5 billion in San Diego.

That spending helps generate jobs at hotels, theme parks and related industries. California leads the nation in tourism-related jobs, according to Washington D.C.-based Travel Industry Association.

Estimates of job numbers typically are based on total economic impact and include jobs at restaurants and stores, both of which play an increasingly important role in tourism.

Who’s a Visitor

Visitor numbers give a good idea of how Southern California’s tourism markets stack up. But each city measures the figure in a slightly different way.

Nationally, a visitor is considered to be anyone who travels more than 50 miles from home for purposes other than work or school and does not spend more than six months each year in the area.

That makes Southern California a complex market.

Orange County residents who take weekend getaways in Santa Barbara are tourists. Angelenos who head to Palm Springs are tourists. And San Diegans who spend the weekend at Disneyland are tourists.

By the broadest measure, OC has about 44 million visitors a year. But more than half, about 24 million, are day-trippers. That leaves about 20 million overnight visitors, mostly from other parts of California and other states.

L.A. counted 24.3 million overnight visitors last year and doesn’t track day-trippers. About 10% of visitors actually are coming from other parts of the Southland, including the Inland Empire, Ventura or OC.

San Diego had 26.7 million visitors in 2004 — 11 million of those were day visitors, leaving 15.6 million who spent the night.

San Diego’s numbers are confounded by another factor: visitors from Mexico, who often come to shop for as little as a few hours. And San Diego’s numbers don’t even begin to address those who cross the border in search of work—either legally or illegally.

“Those visitors don’t fit in the ‘domestic overnight’ visitor profile, but they’re not the traditional international visitor either,” said Skip Hull, vice president at San Diego based CIC Research, which does visitor studies for convention and visitor bureaus as well as the federal government.

Legoland on the Block

One of San Diego’s tourist draws is up for grabs.

Danish toymaker Lego Co. recently said it plans to sell its four Legoland theme parks, including one in Carlsbad, to stem losses.

Would Orange County’s big theme park operators—Walt Disney Co. and Cedar Fair LP—be possible suitors?

Among theme park operators, the two companies are among the strongest, industry watchers say. But Legoland California could be a tough sell, they say.

“I don’t know who’s going to buy it,” said Mel Cecil, a partner in Newport Beach-based Ledo International Inc., which consults on entertainment development and management.

Legoland’s global operations could be attractive to Disney. But Disney has a history of building, rather than buying, parks.

Universal Studios, now owned by General Electric Co., is refocusing its business and may not be ready to jump into more theme parks, Cecil said.

Industry watchers also discount Oklahoma’s Six Flags Inc., which sold off its global operations a year ago.

Charlotte, N.C.-based Paramount Parks, a unit of Viacom Inc.’s kiddie TV giant Nickelodeon, could be a candidate, according to Dennis Speigel, president of International Theme Park Services in Cincinnati.

Legoland’s appeal is to families with younger kids, a challenge for selling the park, according to Speigel.

“When you limit your market that way, you also limit your potential buyers,” he said. Lego’s European parks are in Denmark, England and Germany. Legoland California in Carlsbad opened in 1999. For 2005, the Carlsbad park reported plans for $6 million in spending on new features.

Jim Benedick, a partner in Longwood, Fla.-based ProFun Management Group, said he believes European companies or investors might end up buying the parks.

“We’d always heard that the Lego family wanted to buy the parks (from the company),” he said.

Last year, Lego’s founding family member Kjeld Kirk Kristiansen stepped down as chief executive. The company talked about spinning off the theme parks at that time, according to a report in Amusement Business, an industry publication.

Benedick also suggested German operator Merlin Entertainments might take a look at Legoland.

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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.
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Contact:
Sandi Cain
Laguna Beach CA
949-497-2680
scainado@earthlink.net

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