SD hotel business up, but lagging coastal California cities

Could trail other cities through 2015

According to Smith Travel Research, August occupancy at San Diego hotels rose only 1% from July, while Orange County rose 4%, L.A. 2.3%, and San Francisco 2.5%. Year-to-date figures are similar: San Diego occupancy is up 0.8%, versus 3.3% for Orange County, 1.8% for L.A., and 3% for San Francisco.

Encinitas-based hotel expert Jerry Morrison says San Diego is hurt by the drop in funding of the tourism authority from $30 million to $12 million. The sequester is also hitting San Diego as government business drops, says Morrison. He believes San Diego will lag the other three California coastal cities through 2015.


An old saying, credited to advertising hero David Ogillvy: "We know half the advertising budget is wasted. We just don't know which half." Any reason Mr Morrison has to believe it wasn't the half that was already wasted which the Tourist Authority lost? It's hard to believe that "Happy Happens" and other low lights of San Diego tourism promotion were attracting tourists. Could it have been our degraded beaches, clogged freeways and run down roads, third world public facilities, Balboa Park battles instead of progress, etc. were discouraging returning visitors? Maybe it's the cost for an overnight trip to the Zoo or Sea World approaching a typical family's income for a week? So many possibilities other than that the taxpayers aren't donating enough to the hotel owners, and their workers have the audacity to ask for enough pay to take their family to the zoo (if not a football game).

rehftmann: You make an excellent point. San Diego tends to blame its lackluster tourism on a smaller ad budget. But few blame the rundown infrastructure. The parks are in bad shape, beaches not as desirable as before, roads and highways in disrepair, etc. Maybe that is what is turning off tourists. Best, Don Bauder

I tend to agree with you, and also with Don's appraisal of the situation. The least important, I think, is the spending by the tourism authority. San Diego by its very nature is going to attract visitors. Under normal circumstances, if the promotional spending stopped, I'd expect the visitors to keep coming in droves for a number of years. Word gets around, and if people have a good experience, they'll recommend a destination. If they don't remember it fondly, no amount of advertising and promotion will make up for the bad word-of-mouth.

So, for the reasons you mention, many visitors are repulsed by the attractions, the lodging, the eateries, and traffic, and decide that this isn't their tourism destination of choice. Perhaps instead of spending tens of millions a year to promote the place those millions could go into refurbishing aging and overpriced fleabag motels in Mission Valley, cleaning up the beaches and the public restrooms, and a host of details that fall between the cracks today.

Oddly enough, while traveling in other areas of the US and abroad, when we mention that we hail from San Diego, the usual reaction is that it is a beautiful city. When I hear that, I usually wonder just what they saw, what they did, and what they expected. There are too many things about the city that are just below the surface that are not all that beautiful.

Visduh: I think the public parks should be high on the cleanup agenda. Public restrooms, too, should be high on the list. But you don't see mainstream media or politicians mentioning these things. They are worried that campaigns to put money into the infrastructure would drain money from their corporate welfare projects downtown. Best, Don Bauder

Don: Because many of these people do not use the resources we use, they associate park benches and public restrooms with coddling the homeless, and increasing that population, but they rarely say that. So they hurt the homeless and the rest of us who use the parks. And so what if the homeless use the restrooms? Kicking a fellow or woman when down...not right.

Yankeedoodle: You are correct. Too many of the decision makers simply don't think cleaning up parks or public restrooms is important, because they don't use them. Best, Don Bauder

San Diego has already trailed from 2008 to 2012. Now 2013 to 2015 should be no different.

San Diego Tourism growth rate is usually lower in San Diego, than other California tourist Cities and vacation destinations. For the 5-year temporary TMD trial period of 2008 to 2012, San Diego easily did worse than Los Angeles, San Francisco, Seattle, Phoenix, and Anaheim.

There is NO correlating evidence from Smith Travel Research (STM) that increase destination marketing and Advertisement has a direct effect on TOT Revenue in San Diego.

Smith Travel Research (SMR) should be consulted to analyze if San Diego is getting good Marketing and Advertisement compared to other local, national, and international destinations.

laplayaheritage: But don't you think that money should be directed to the infrastructure -- particularly that which affects tourism, rather than advertising? Best, Don Bauder

Yes. But a public vote is needed to increase Hotel Taxes by 5% (annual $85 million) for Infrastructure from the current 10.5% to a maximum of 15.5%.

I imagine if San Diego hired capable and effective promoters approved by Smith Travel Research (STR), Marketing San Diego as a Tourism destination for the world could actually raise the number of heads in beds, and increase local TOT revenue.

In 1965, approximately 48 years ago, was the first and only time the citizens of San Diego voted to increase our local Transient Occupancy Tax (TOT) on Hotel Visitors. [February 16, 1965. Proposition C. – 4 % Transient Occupancy Tax (TOT). Section 35.0116 Utilization of Revenue.]

From the original 4% TOT, an Annual contribution of 60 % maximum for Advertisement/Promotion to the San Diego Convention and Tourist Bureau (CONVIS), renamed the San Diego Tourism Authority (SDTA). For a potential maximum of 2.4% of the original 4% to SDTA/CONVIS for Marketing/ Advertisement/ Promotion based upon Matching funds acquired by private hotels (40%) and the County of San Diego (20%) Board of Supervisor’s funds. See Appendix A for excerpts from the original 1965 Ballot Pamphlet.

Katheryn: Originally, the TOT was to be used exclusively for tourism promotion. But later the TOT revenue was used for promotion of the arts and other things that could boost tourism. Frankly, I think TOT should now be used to eliminate that $1 billion infrastructure deficit. This would boost tourism more than advertising. Best, Don Bauder

A 5% rise in TOT will NEVER pass if put to the voters. The hotel industry will use their money (that ironically, could and should be used to promote tourism) to defeat any measure like that which would go before the voters. They've done it before.

In 2004, the Hotel Industry and the City Unions actually wrote their self-serving Proposition C for the March 2, 2004 ballot, and lost. The Hoteliers wanted a 1.5% TOT increase plus reallocation for the existing 10.5% for CONVIS and public safety pensions.

Proposition J on November 2, 2004 ballot, was the ONLY time the Hotel industry defeating a General Fund TOT increase. The private CONVIS and the San Diego Regional Chamber of Commerce marketed Proposition J as a "Pension Tax" into the City's General Fund with no benefits for Hoteliers or tourist interests. Hoteliers stated that ANY increase in TOT would make San Diego less attractive for conventions and business travel.

The 6.5 percent in additional TOT increases made between 1965 and 1994 were raised by City Council votes only.

Agreed a General Fund TOT increase (50% approval) would be voted down because the revenue could be seen as a Pension tax. The Hoteliers and City Council have already pre-approved a 5% TOT increase, and could not make the argument that the existing increase in Hotel taxes would be bad for business.

Katheryn: I believe the hotel tax can be raised significantly and the money used for infrastructure. That would boost tourism and help fill hotels, but the industry and the downtown clan will never understand that. Best, Don Bauder

aardvark: San Diego's TOT is actually low in comparison with the hotel taxes in other coastal California cities. Our hotel business is doing poorly now relative to that in the other cities. I'm not convinced that a higher hotel tax deters tourism to any great degree. Best, Don Bauder

Don: I would imagine the hotel industry would fight tooth and nail against any TOT increase, unless they get to control the funds. They would invariably try to tie any new TOT ballot propositions to the funding of the city pensions, as the industry did before. But without a doubt, the TOT rate should be higher.

aardvark: The hotel industry is one of San Diego's most potent lobbies. Best, Don Bauder

That was the original intention of Transient Occupancy Tax (charming name). Museums in the park, festivals, and other attractions, not accommodations, are in the public interest, to say nothing of our environmental stewardship. Shifting to a corporate reference leads to a unique waterfront becoming a wall of hotels and tourist traps the proverbial Martian visitor wouldn't be able to distinguish from any other mid-sized metropolis ("Big Bay" is the vacuous and typically hyperbolic marketing label). It's a vision thing. The plutocrats sell it as a stadium, the lowest common denominator, and it's a deal. Balboa Park Centennial is the next corporate take over. It's nowhere now, primed for one of the usual heroes (Q or UT). I think Filner stirred that pot too.

rehftmann: The plutocrats are loaded with money. They can sell almost anything to the public. Best, Don Bauder

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