What Lies Ahead for San Diego's Tourism Industry
Forecast for 2005
By Joanne DiBona, Communications Director, jdibona@sdcvb.org
Each year at this time, I'm asked to look into my crystal ball and forecast how San Diego's visitor industry will fare in the new year. Since tourism is our region's third largest industry, this is not a trivial request, as a huge part of our local economy depends upon the growth and health of our visitor industry.
I'll start out with the good news. 2004 was a very healthy year for our region's visitor industry, despite the fact that travel demand was highly unpredictable due to a number of factors, from national economic woes to the War in Iraq. For six weeks in the summer of 2004, San Diego's hotel occupancy, at an average of 87%, ranked number one in the nation.
Although the year wasn't marked by a major international event such as Super Bowl, San Diego's attraction as a premiere visitor destination was nonetheless enhanced by the opening of the "Journey to Atlantis" ride at SeaWorld; the long-awaited Midway Aircraft Carrier Museum; and downtown’s PETCO Ballpark.
These exciting new additions to the visitor industry infrastructure, coupled with San Diego's overall appeal as a close-in drive and short-haul flight destination, led to a strong year for tourism in 2004. Preliminary figures show that San Diego County tourism in 2004 increased over 2003 levels, with 27.5 million visitors (+2%) spending $5.6 billion (+5.6%) in the local economy.
Now for the bad news. . . San Diego tourism will remain relatively flat this year, simply because we are losing market share. To clarify, market share is measured by the number of persons visiting a destination times the number of days they stayed. According to a recent report by D.K. Shifflet and Associates, San Diego rose to number four market share nationally in 2002. However, 2003 and 2004 data suggests that San Diego’s market share is declining. In other words, San Diego is receiving a smaller piece of the entire U.S. domestic travel pie.
Although we enjoyed a healthy 2004, we don’t expect San Diego to outperform our competitors this year. The visitor industry is a highly competitive industry and there are several factors that may adversely impact San Diego tourism in 2005. Our biggest challengers, Anaheim and Las Vegas, will both be orchestrating mega events this year: Disney’s 50th anniversary and the Las Vegas Centennial. We expect many of the potential visitors who might have chosen San Diego as their vacation destination in 2005 to select either or both of these destinations instead.
There are also other factors to overcome. The State of California, as well as the San Diego ConVis Bureau, have suffered significant cuts in budget, resulting in decreases in destination marketing funding. January has seen El Nino-like rains hit our region. We are also battling against the perception that San Diego is an expensive destination.
All said, we project a small increase in tourism revenue compared to 2004. In 2005, the total number of visitors to our region is projected to reach 27.5 million, an increase of +1.7% over 2004 projections. Overall visitor spending is estimated to hit the $5.9 billion mark, representing a +4.9% increase over 2004 projected spending figures, mostly due to inflation.
Much of this growth will come from San Diego's leisure travel market, which remains our region's largest travel segment. Last year, San Diego fared better than many of its competitors because of its position as a popular drive market (68% of all overnight visitors use their own vehicle to travel to the region) and the success of the ConVis branding campaign, which sells the region as a relaxing and fun vacation experience.
Based on several research studies, the region is perceived as a destination that pleases all generations, where people of all ages can enjoy a variety of vacation activities--from relaxing on the beach or in a spa to visiting attractions to enjoying the region's culture and nightlife. Some 70% of the area's overnight visitors come from the Western region of the United States and San Diego already enjoys a strong reputation as a popular destination for parents with children, baby boomer couples, and extended family groups among this market base.
Our research shows that there is another trend developing among our visitors that includes the "urban experience." The exciting developments in San Diego's downtown area will definitely enhance our reputation as an up-and-coming city with an exciting urban core. The addition of the Hard Rock Hotel in 2006 will add credibility to the "hip and cool" urban experience that young adults and empty nesters are looking for in their travels. 2005 will also bring exciting new additions to local attractions, including "Monkey Trails," the most elaborate animal habitat ever created at the San Diego Zoo; "Lion Camp," at the San Diego Wild Animal Park that will allow visitors to see lions closer than ever before; and several new attractions at LEGOLAND.
Those of us who work and live downtown can't ignore the ever-increasing presence of cruise ships at the Embarcadero--and they are lined up at times three in a row! San Diego's cruise ship industry is expected to contribute significantly to the health of the industry in 2005. According to the Port of San Diego, 225 cruises will depart from San Diego in 2005 carrying more than 500,000 passengers, an increase of well over 10% compared to last year.
I'm often asked about international travel, which is on the rise due to the weakness of the dollar against the Yen and Euro. Unfortunately for San Diego, we are not a gateway destination with direct international air service, so the increased international traffic feeds into the airports in San Francisco and Los Angeles. ..as do their tourist dollars!
The forecast for San Diego’s convention and meetings industry looks promising for 2005. As of November 2004, the San Diego Convention Center reports 453,350 attendees and 625,262 room nights booked for citywide conventions in 2005. This is 13,000 more room nights than were blocked in 2004, pointing to fact that San Diego can expect a solid year of convention center activity. San Diego recently had the opportunity to showcase its outstanding convention amenities directly to more than 2,700 meeting professionals who were in town the last week of January to attend the Meeting Professionals International (MPI) educational conference.
Again, while we are optimistic that our region’s visitor industry will continue to grow moderately this year, we cannot lose track of the fact that many other destinations are competing for our business. Los Angeles, Anaheim, Orlando and Phoenix ended 2004 with an increase of 5-15% in visitor numbers. Disney and Las Vegas will be major threats in 2005, as they have incredibly fat marketing budgets to generate advertising to lure away our potential visitors.
Marketing your product has a direct relationship with your sales. San Diego's product is changing rapidly and the offerings are relevant and desired by travelers around the world, but if San Diego can't make noise to tell people about it, we won't see increased sales for future years.
Each new year has its challenges, to be sure, and your San Diego Convention & Visitors Bureau is striving to do more with less in carrying out its mission to promote San Diego as the nation's premiere convention and leisure travel destination.
