TOURISM: Locals, foreigners dampen impact of roiling economy

By CHRIS BAGLEY - Staff Writer | Tuesday, July 22, 2008 7:43 PM PDT ∞

Southern Californians and foreigners are helping North County's tourism industry weather the choppy U.S. economy, managers at local hotels and tourist attractions say.

Roughly as many visitors are pouring into the area this summer as in prior years, lured by promotions and hotels' aggressive discounting, according to industry data and executives.

Record-high fuel prices this summer have discouraged Southern Californians from vacationing outside the region, and many are taking three-day weekends instead of full-week trips, vacationers and resort managers said. Some North County residents are simply taking a few days off from work and making day trips while spending nights at home.

"A lot of people truly are taking stay-cations," said Beth Downing, a spokeswoman for Legoland California in Carlsbad.

The tourism industry accounts for one out of every eight jobs in San Diego County, a proportion that has grown over the last eight years, according to the state Employment Development Department.

And California economists have frequently pointed to tourism as one of several sectors that have helped to stabilize the county's economy, particularly since the construction and real estate sectors began to drag down the national economy last year. Hotels and other hospitality-related businesses have added jobs at a 2.2 percent clip in the last 12 months, compared to a 1.1 percent decline in other private-sector jobs, according to the state agency.

In past recessions ---- and in this economic downturn, too, apparently ---- Californians have put off out-of-state vacations and spent money at tourist-friendly areas, such as San Diego County, that are closer to home.

Pala Casino Spa and Resort has seen that dynamic play out this year. Gamblers are cutting back on visits to Las Vegas and spending the day at Pala instead, said Sue Welp, Pala's vice president for marketing. Advertising slogans for both Pala and Pechanga Resort & Casino in Temecula tout the two casinos as nearby alternatives to Las Vegas.

Visitor traffic to Las Vegas has increased from last year, but by less than one-tenth of a percent, according to the Las Vegas Convention & Visitors Authority. And visitors are spending fewer nights there. Room rates and gambling revenues are also down, according to the agency.

By contrast, North County hotels, motels and resorts reported visitor-nights increasing by 0.1 percent from 2007, according to a North County Times analysis of data from Tennessee-based Smith Travel Research, which cover the first five months of the year. San Diego County coastal hotels reported that visitor-nights were up 6.5 percent from the first five months of 2007, while inland hotels reported visitor nights falling 3.9 percent from year-ago levels, according to Smith Travel Research.

Figures for June are due out this week.

Representatives of several tourist-oriented businesses in North County said their stability also owes a lot to an influx of foreign visitors. At the national level, economists cite the weakening U.S. dollar: The greenback has fallen 13 percent against the Japanese yen, 15 percent against the euro and 4 percent against the Canadian dollar since July 2007. That makes U.S. travel for foreigners less expensive.

Passengers on international flights at San Diego's airport decreased by 11 percent in the first six months of 2008 from 2007, but it wasn't clear whether that represented fewer foreigners arriving or fewer Americans traveling abroad.

Determining visitors' origins is part art, part science. Most tourist attractions count visitors precisely but rely on surveys and statistical estimates to gauge their ages, occupations and place of origin. Christina Simmons, a spokeswoman for the San Diego Zoo and its Wild Animal Park, said an increase in visitors from San Diego County and foreign countries appears to be helping the Wild Animal Park stay on track to have about 1.4 million visitors by the end of 2008, roughly matching last year's total.

"We're hearing a lot more languages," Simmons said.

Lionesses at the park are lending a paw, she said: Two recently gave birth and visitors can now see seven cubs frolicking with their mothers. A baby rhinoceros could also help later this summer when it emerges from its shelter, Simmons said.

But the outlook for the industry is partly cloudy.

North County hotels took in $153 million in the first five months of the year, up 4.3 percent from 2007, according to the analysis of Smith's data. That mirrors visitor spending in San Diego County as a whole, which rose 3.7 percent, to $3.28 billion, in the same five months, according to the San Diego Convention & Visitors Bureau.

But those increases are below the nation's 5 percent consumer inflation rate, according to the U.S. Department of Labor. Robert Rauch, who co-owns two hotels in Carmel Valley, said the industry's lackluster increase is revenue results partly from "vigilante consumers" who shop aggressively for the lowest rates.

Discounting by many hotels and motels is also to blame, said Rauch, chairman of the San Diego North Convention & Visitors Bureau.

"It's pretty widespread," Rauch said. "It's terrible for profit margins."

Rauch and economists have pointed to a crush of new hotels and resort condominiums, mainly near the coast. In North County as a whole, the average occupancy rate fell to about 66 percent in May from 68 percent in May 2007, according to the analysis of Smith's data.

Generally, a hotelier needs an occupancy rate of about 55 percent to break even and about 65 percent to consider raising room rates, Rauch said.

Contact staff writer Chris Bagley at (760) 740-5444 or cbagley@nctimes.com.

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