Tourism's Importance to the Global and Local Economy
By Joanne DiBona, Communications Director, jdibona@sdcvb.org
Whenever one thinks of travel and tourism, pleasant images of relaxing on the beach, strolling through colorful neighborhoods, or hiking through a landscape of awe-inspiring natural beauty may come to mind.
Not too many people associate travel and tourism with business and commerce. Yet, the economic, social and cultural benefits tourism brings to the local community, to the nation, and to the world at large are of a magnitude one might find hard to imagine.
Just how big is this contribution?
Travel and tourism--encompassing transportation, catering, accommodations, recreation and services for travelers--is actually the world's largest industry and generator of jobs.
It is the nation’s third largest retail sales industry and one of America’s largest employers. It is in fact the first, second or third largest employer in 28 U.S. states and the District of Columbia, creating 7.8 million jobs nationally. The travel and tourism industry that has developed to service the traveler contributes enormously to the U.S. economy. In 1999, direct travel spending in the United States by domestic and international travelers reached nearly $519 billion dollars, 5.6 percent of the nation's gross domestic product.
For San Diego, the economic impact of travel and tourism is just as dramatic. In 2000, 15.2 million overnight visitors poured $5.2 billion into the local economy, making the visitor industry San Diego's third-largest, following manufacturing and the military.
Tourism continues to grow at a steady rate nationally, despite a few stormy clouds on an otherwise stable economic horizon. Locally, the visitor industry is poised for a continued strong year throughout 2001.
There are several reasons for this, a major one being San Diego's strong reputation nationally as a vacation destination that delivers a good value for the money. In this current economic atmosphere, people will be looking for travel bargains, as evidenced by the stupendous growth of consumers who are purchasing travel in record numbers on discount internet sites. Getting more bang for the visitor buck will be a leading factor influencing a traveler's choice of vacation spot as Americans begin to tighten their belts.
San Diego not only offers a variety of accommodations in every price range, our region's rack rates are well below those of some of the nation's more popular destinations. Those of you who have tried to book a room recently in Chicago, San Francisco, New York, or Washington D.C. will agree.
San Diego has shed its image as a sleepy resort town, thanks to our efforts to promote and publicize the diverse arts and culture and first-rate dining and entertainment opportunities available to our visitors. We can now offer the excitement of the big city, without losing the charm and ambiance that makes San Diego such a unique vacation site. In essence, San Diego is a big city with a resort state-of-mind, boasting a combination of experiences that few city destinations in the nation have to offer.
Furthermore, our reputation as a family travel destination continues to attract leisure travelers--many with kids and grandparents in tow-- to our region. Baby-boomers, one of the hottest demographic markets in the travel industry, also find San Diego an excellent choice for a vacation destination, owing in no small part to the relaxing ambiance the region offers, combined with an ever-expanding list of recreational and entertainment options that appeal to the middle-aged traveler.
Over the past several years, San Diego's reputation as a premier meetings and convention destination has blossomed among corporate and association meeting planners across the country. It's pretty hard to beat San Diego as a convention site. Our year-round sunny climate, coupled with the natural beauty that surrounds the region and a sophisticated and vibrant downtown, make us the preferred choice for many convention and meeting groups from around the world.
With the opening of the $216 million San Diego Convention Center expansion in September, we'll be in the enviable position of doubling the meeting space we can offer to convention and trade show groups. This means we will be able to attract an entirely new convention market we were forced to turn away for years--those mega-groups requiring the square footage our new, expanded center will offer.
This newer and bigger space will immediately make itself felt on the local economy as it is projected to generate more than $1.5 billion annually in convention and meetings expenditures. This money will trickle down into all areas of the San Diego economy as convention consumers reach out locally for more services and products.
Based on these positive factors, the San Diego Convention & Visitors Bureau is forecasting sustained growth for the visitor industry in 2001 with projected increases of one or two percent over levels achieved in 2000. Total visitor spending is expected to reach an all-time high of $5.3 billion, up from $5.2 billion in 2000 and the number of overnight visitors is expected to increase to 15.3 million, up from 15.2 million last year.
Taking a look at the lodging industry, San Diego’s hotel market was strong throughout 2000, a pattern that is expected to continue. We're predicting 2001 to be a time of tremendous opportunities and challenges for the region’s lodging industry . Barring some unforeseen calamity that would force the U.S. into a recession, we forecast that 2001 will be a very profitable year for the local hotel industry.
Key statewide economic indicators are strong and the economic environment in California and surrounding states remains strong for improvement in convention, leisure and corporate transient business. Our forecast is for local occupancy levels to remain at 73.8 percent in 2001 with average room rates moving from $109 to $111. Areas of strength will continue to be La Jolla, University City, downtown San Diego, waterfront properties and the North County coastal area.
It’s important to note that during 1999 and 2000, the San Diego region added 17 hotels and 2,456 rooms. Another 14 hotels with a total of 3,328 rooms are planned. All together, the total increase in lodging supply is 5,784 or a 13 percent increase through 2003. It appears the region is capable of absorbing several thousand new hotel rooms during the next four years, most of which should be targeted for convention center use.
While 2001 may result in a "cooling off" period for some local industries, It looks promising that the visitor industry--San Diego's third largest--will continue to enrich San Diego's economy as interest in our region as a premier visitor and convention destination continues to grow.
