2008 San Diego Visitor Industry Forecast
Cautious Optimism Marks Visitor Industry Outlook for New Year
By Joanne DiBona, jdibona@sdcvb.org
Faced with an uncertain economy in the coming year, the 2008 forecast for San Diego County’s visitor industry is one of cautious optimism, according to a report issued today (December 27) by the San Diego Convention & Visitors Bureau (ConVis).
Despite a year of challenge for the national tourism industry—marked by rising gas prices, the subprime mortgage crisis, and an overall loss in consumer confidence—San Diego consistently remains among the top five visitor destinations in the U.S. as measured by person-days (number of persons multiplied by number of days stayed), according to statistics provided by D.K. Shifflet and Associates.
What lies ahead for local tourism in 2008? The leisure travel market, San Diego's largest travel segment, is expected to again lead the industry in the coming year. In 2008, the total number of visitors to San Diego is projected to reach 32 million, an increase of +1.8% over 2007 estimates. Overall visitor spending is estimated to hit the $8.1 billion mark, representing a +4% increase over 2007 projected spending figures.
Hotel occupancy will decrease slightly to 71.5%, due to greater growth in supply than in demand. In 2007, eight new properties with 1,436 rooms opened in San Diego County, raising the total room count to 54,398. In 2008, it is expected that another eight new properties with 1,098 rooms will open. Although fewer rooms were sold in 2007, the ones that were sold cost more--resulting in a projected 5 percent increase in the average daily rate to $137.53. The same scenario is expected in 2008, when the average daily rate is expected to increase another 5 percent to $144.41.
In 2007, San Diego fared better than many of its competitors because of its popularity as a leisure travel destination, with 81 percent of all overnight visitors arriving for leisure purposes. The ConVis 365 days of ahhhhhhh brand campaign, now in its second year, sells the region as the ultimate setting for active relaxation--with an unusually wide variety of activities--to visitors of all ages and interests.
ConVis also partnered with the State of California and followed the state’s national cable campaign to expand market reach. In addition, ConVis marketing programs targeted a variety of niche travel markets (i.e., arts & culture, dining, golfers, spa visitors, etc.), adding to San Diego’s appeal as a top leisure travel market.
There are several bright spots on San Diego’s horizon that will contribute significantly to the health of the region’s visitor industry in 2008. San Diego’s tourism promotion budget will get a significant boost, thanks to the recent creation of a Tourism Marketing District (TMD). Effective January 1, 2008, and applicable to properties within the city of San Diego with a minimum of 70 rooms, the TMD will levy a 2% assessment on hotel room nights sold in the city. First year collections are estimated at $26 to $30 million and all revenue is earmarked for tourism promotion, with a minimum 50% of proceeds going to ConVis. This will enable the Bureau to generate more demand through stepped-up sales and marketing initiatives.
The weakening dollar, especially against the Euro, is expected to spur increased international travel to the U.S., particularly from European markets. Zoom Airlines, a European low cost carrier, recently announced new, direct flight service to San Diego from London, which will shave hours of travel time off the transatlantic route from Europe to San Diego. In addition, because of the weak dollar, many Americans may trade their overseas vacation this year for a domestic one, opting to travel to San Diego instead.
Special events and new additions at local theme parks will also help augment visitation to the San Diego region. The eyes of the world will again be on San Diego in June, when San Diego hosts the prestigious U.S. Open golf tournament at the Torrey Pines Municipal Golf Course. In addition, SeaWorld and LEGOLAND will both open new exhibits in 2008, including a “Sesame Street Bay of Play,” at SeaWorld, and a “Land of Adventures” exhibit at LEGOLAND. Also, opening adjacent to LEGOLAND in 2008 is a second park, SEA LIFE LEGOLAND, a two-story, 36,000 sq. ft. aquarium designed to educate children about life under the sea.
On the dining front, the highly popular Restaurant Week has expanded to two dates in 2008, one in January and the other in June, and will offer visitors the opportunity to sample the cuisine, service and style that make San Diego’s dining scene one of the region’s top attractions.
Owing in great part to the highly successful Dead Sea Scrolls exhibition at the Natural History Museum, overall Museum attendance increased 19 percent in 2007. Adding to this growth in the local arts scene, in May of 2008 the new Children’s Museum will open in a signature building located in the heart of downtown San Diego, offering an interactive arts destination for families with young children.
Gaming continues to grow as a motivator for travel to San Diego. San Diego County has the greatest concentration of Indian casinos in the U.S., and the building continues with new and expanded casinos scheduled to open over the next five years.
The Cruise Industry continues to expand, generating additional revenue for the San Diego economy. According to recent statistics released by the Port of San Diego, each cruise ship call to San Diego generates an economic impact of around $2 million. Annually, the cruise industry generates 2,243 jobs and $190 million in economic impact for the region.
While the hotel meetings segment will not grow markedly in 2008, it should remain solid, barring any dramatic economic downturn in 2008. The addition of several new stylish, trend setting hotels in San Diego, such as the recently opened Hard Rock Hotel in the Gaslamp Quarter, will help position San Diego as a preferred meetings market to serve Gen X and Y business travelers.
"Faced with uncertainty in the economy in 2008 and increased advertising budgets among our competitors, there is no question we will have our work cut out for us. The creation of the Tourism Marketing District and the additional revenue it will generate could not have come at a more crucial time, as it will greatly enhance our ability to effectively market our region,” said David Peckinpaugh, ConVis President & CEO.
“San Diego's product is evolving and the offerings are relevant and desired by travelers around the world. More advertising dollars will generate a buzz about San Diego that will translate into greater visitation and higher visitor spending," he added.
