Promote it, and They Might Come

Business

Tourism in San Diego is suffering——though travelers still want to be here. Smarter marketing efforts are aiming to make that happen despite the struggling economy.

IMAGINE YOU’RE SITTING somewhere in the Midwest watching television, and the latest sun-baked, surf-splashed ad from the San Diego Convention & Visitors Bureau pops up on your screen. It’s zero degrees outside, and you really could use a few days in San Diego, but your job is hanging by a thread, and the convention that paid for your La Jolla tennis lessons and spa treatments last year has been cancelled.

That’s what the local tourism industry is up against as this bear of a recession takes a bite out of one of the pillars of the San Diego economy. It’s not a case of supply and demand. There’s plenty of San Diego–style amusement to be supplied, and almost unlimited demand, but the recession has many wanna-be travelers to this shore stuck in Peoria.

The situation is illustrated by a recent Pew Research Center study that ranked San Diego second among places respondents would like to live, edged only out by Denver (Denver?)——ahead of Seattle, Orlando, Tampa, San Francisco, Phoenix, Portland, Sacramento and San Antonio. Pew also found 46 percent would like to live “in a different type of community” than the one where they’re now living.

Local tourism officials are using the results of the Pew survey to drive tourism from some of the cities San Diego bested.

“Any of the city rankings can be helpful,” says David Peckinpaugh, ConVis president. “Last year’s Condé Nast Traveler awards had us at number nine overall, and we were ranked higher in some categories, like family travel and spring break travel.”

The Pew survey prompted a front-page story in The Seattle Times wondering how in the name of Frasier Crane Seattle could have come in behind San Diego. “Seattle’s one of our great feeder markets,” Peckinpaugh says, “so we’ll use that survey in our communications to reinforce the attractiveness of San Diego.”

But even with glowing surveys, marketers of San Diego tourism are swimming against a riptide. In December, ConVis issued a revised and decidedly downbeat 2009 outlook, predicting a 3.5 percent drop in overall visits, with the decline in overnight visits that most affect the hotel and restaurant trades exceeding 5 percent. Expenditures among overnight visitors are expected to drop 7 percent, with a corresponding decline in hotel room demand, with occupancy falling from almost 70 percent in ’08 to 63 percent in ’09.

Even day-trippers from the surrounding areas of Los Angeles, Riverside, Las Vegas, northern Mexico and Arizona will be cutting back. According to the ConVis report, “Demand from drive markets will continue to be weak as regional housing and business conditions weigh heavily on leisure travel activity.”

ConVis pegs direct visitor spending for ’09 at $7.39 billion and economic impact at $16.9 billion——both off 6.5 percent from ’08.

The high end of the tourism market is a particular concern, since business travel fuels those rounds of golf at Morgan Run or tennis lessons at La Costa. Many business travelers will reminisce that their most lavish trips were taken on someone else’s dime.

“That dime has become a nickel and in some cases a penny,” says Jeff Higley, spokesman for Smith Travel Research, which tracks the health of the hotel industry. “If you look at luxury resorts, they’re being hit the hardest in all major markets, because you have Wall Street types playing it close to the vest. Those who still have a job aren’t staying at luxury resorts, and their expenditures are being scrutinized by the media with the concern over the use of taxpayer bailout money.”

According to Smith, San Diego suffered the fourth-worst decline among the top 25 markets in December revenue associated with room occupancy, down 16.2 percent, exceeded only by Atlanta, Phoenix and Detroit.

GIVEN THESE TRENDS, and a diminishing amount of transient occupancy tax devoted for use by ConVis, the local hotel industry realized as far back as 2007 that it needed to mobilize to avoid an even worse tumble than is projected for the coming year. The upshot was the creation of the San Diego Tourism Marketing District (SDTMD), a business improvement district-type organization devoted to promoting San Diego through assessments on members’ hotel properties. Subsequently, the San Diego Tourism Promotion Corporation (SDTPC) was formed to administer the program.

The Tourism Marketing District, comprising hotels within the city of San Diego with more than 70 rooms, started collecting assessments in January 2008 of 2 percent of room night revenue, according to Lorin Stewart, executive director of the SDTPC. Of the assessments collected, at least half go to ConVis for promotions, totaling more than $20 million so far. SDTMD-ConVis collaborations included a successful summertime ’08 “Road to Happiness” TV ad, which highlighted the surrounding drive market by showing visitors in cars zooming to San Diego with the tops down.

SDTMD expects to draw significant future business from the American Society of Association Executives, an influential group with more than 22,000 members who manage leading trade associations, individual membership societies and non profits in the United States and 50 countries around the globe. The group was wooed by ConVis in partnership with the Convention Center at ASAE’s meeting here last August.

In recessions, marketing organizations face a fork in the road: Hunker down until business improves or, as Peckinpaugh says ConVis has done, increase efforts, with no stone unturned. Last summer, ConVis took advantage of the window for legal gay marriages by running a contest for a San Diego commitment ceremony.

Although tourism is suffering, ConVis says San Diego is hit less than other Western locales. So while a dismal fourth quarter sent San Diego room nights down 2.4 percent in ’08, Seattle was down 2.7 percent, Los Angeles–Long Beach was off 3.6 percent, and Phoenix had a decline of 7.3 percent.

The local tourism marketing effort does have critics, however. Maria Kniazeva, an assistant professor of marketing at the University of San Diego, says it’s not enough to market San Diego as a best-weather destination. She suggests taking better advantage of the city’s ethnic diversity.

“Tourists are becoming more sophisticated, so you need to offer more than relaxation. They might want to educate themselves, so that [marketers would say] you find yourself in China or Vietnam in Mira Mesa, for example,” she says.

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