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San Francsico's No. 1 Industry - Tourism, Battered

By Marilee Enge, San Jose Mercury News, Calif.
Knight Ridder/Tribune Business News 

Sep. 24--The lines for San Francisco's cable cars have mostly vanished, and 10 floors of the historic Westin St. Francis Hotel are shuttered. From Fisherman's Wharf to Market Street, merchants, hoteliers and others say the city's normally bustling tourist sector is far too quiet. 

The Sept. 11 terrorist attacks have battered the city's No. 1 industry, already weakened by the dot-com bust and a shrinking market in business travel. Canceled air routes and cautious attitudes about air travel are keeping visitors away, and no one knows when they might come back. 

"It's all hinging on when will people feel safe getting on airplanes again," said Laurie Armstrong of the San Francisco Convention & Visitors Bureau. "And that's up to the government, the airlines and human perception. Until people start getting on airplanes again, the tourism industry is going to be hit hard." 

Although no concrete numbers were yet available, vacancy rates were up and revenue down in a city that counts on $7.6 billion a year spent by 17.3 million tourists. On an average day, visitors spend nearly $21 million in San Francisco. 

At the downtown Marriott, cancellations in the past week have increased, not only by groups but also by business travelers, said Chuck Pacioni, marketing director. Such drops are usually seen only around Christmas, he said. 

"The tone of conversations is, 'It's getting empty around here,'" Armstrong said. "If there's any comfort, we're in the same boat as every other destination in the U.S." 

U.S. hotel revenue plunged 20 percent last week, according to Smith Travel Research, a major data-tracking firm. 

Hotel occupancy in San Francisco, as well as in Boston and New York, is running about 30 to 40 percent this week, estimated Gary Carr, director of communications for PKF Consulting, which tracks hotel occupancy in cities around the world. His information is based on anecdotal accounts from the cities' major hotels. In San Francisco last year, an admittedly good year, the September occupancy level was 88.5 percent, he said. 

"This event took place in their high season," Carr said, adding that if the attacks had occurred in January or February, the impact would not have been nearly as damaging. 

So that appears to be it for the tourist season. November and December are slow months. 

"From here on in, that's it; it's gone," said Bob Begley, executive director of the Hotel Council, which represents the city's convention and tourist hotels. "There was a trend down economically, but then this hit. For everyone this has been a sad time." 

Even before the attacks, the St. Francis on Union Square was asking its managers to work reduced hours or weeks. But the attacks clearly cut more deeply into the hotel's business, said hotel representative Marsha Monro. 

"We have a 1,200-room hotel," she said. "We are operating half of those rooms right now." 

One convention has been canceled. For the first time in its 28-year history, the California Dental Association canceled its annual San Francisco conference. The conference was supposed to be held last week at the Moscone Center, bringing an estimated 15,000 people. 

"We just felt we wanted to join the rest of the nation in mourning," said Lori Reed of the dental association. "It's a national tragedy." There were pragmatic concerns, too. Most of the convention's 300 exhibitors are based in the East Coast, and travel plans became daunting when flights were temporarily halted. 

A meeting of 70 top sales people for a pharmaceutical company was also indefinitely postponed, said Mary Carvotta, president of a company that makes travel arrangements for Fortune 500 corporations. 

"It's an overall slowing down, and people are re-evaluating what they're doing," she said, "whether they want their employees to jump on planes right now." 

City officials are encouraging residents to resume normal activities. 

"We don't want people to live in fear," said Ron Vinson, deputy press secretary for Mayor Willie Brown. "We're telling everyone to do what they normally do, to go see a movie or go out to dinner or go to the zoo." 

But that's not much help to the tourists who arrived before all flights were halted. 

The Golden Gate Bridge has been closed to pedestrian and bike traffic since the Sept. 11 attacks and will be until at least Friday. A visitors center and scenic spots around the bridge, such as the popular Vista Point and Fort Point, are closed as well. Local tour companies are altering their routes, because they no longer can drop off visitors at the bridge. Grayline's city tour buses are driving across the bridge, but not stopping. 

At the tourist meccas of Pier 39 and Fisherman's Wharf, business owners said foot traffic this week is perhaps half its normal level. 

"It is really, really slow," said Peter Green, who sells T-shirts and souvenirs at Blossem Gifts, at the wharf. "This whole year is bad. It came at a bad time." Green said the cancellation of Fleet Week would further sting waterfront merchants who count on the annual event that celebrates the Navy. 

A veteran cable-car operator said the lack of a queue at the Powell Street turnaround was unheard-of. 

"It's very unusual," said Dan Burns, who has been working the cars for 31 years. "You see it everywhere. All the stores are empty." 

At the other end of the cable-car line, Joseph Shaw gestured down an empty bar at the Buena Vista Cafe, where he has been pouring Irish coffees for 23 years. 

"We're hurting," he said. "Everybody's hurting." 

After the Sept. 11 attacks, the visitors' bureau has refocused its advertising, trying to attract travelers from inside California who can drive rather than fly. Before Sept. 11, 82 percent of San Francisco visitors arrived by air. 

Businesses will have to look closer to home for customers, said Chris Martin, general manager of the Cannery, a shopping center with 35 stores and restaurants at Fisherman's Wharf. He predicts a nationwide trend toward shorter trips and more car travel. 

"We're obviously not going to travel much out of the country. Since we're flying less, we won't go as far," he said. 

"When disasters like this happen, you appreciate the home front more. You stay with your family and your friends." 

Staff writers Kim Vo and L.A. Chung and Mercury News wire reports contributed to this story. 

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

(c) 2001, San Jose Mercury News, Calif. Distributed by Knight Ridder/Tribune Business News. MAR, 


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