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 Travel & Outdoors | November 2007 
California Tourism Forecast Cloudy
 Emily Rancer - Pacific Coast Business Times
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 |  | The declining housing market is also affecting how people travel, particularly their spending habits.
- Tiffany Urness |  | |
As the housing market declines and gas prices rise, the tourism industry could see slower growth in 2008, according to a panel of experts who spoke at California's 2008 State, Regional and Local Tourism Forecast on Nov. 9.
Although fewer Americans may travel to the Tri-Counties, the region could see a surge in international tourists as an upside to the dollar’s weakened state.
“The dollar has been dropping. It’s now at an all-time low against the euro,” said Tiffany Urness, research manager of California Travel & Trade Commission, at the forecast. “For the first time in over 30 years, this is definitely big news. And in Canada and overseas, we’re seeing inbound travel to the U.S. improve... Now the U.S. is a bargain.”
Santa Barbara’s market occupancy rate is expected to climb just slightly from 72.0 percent to 72.1 percent. Meanwhile, the average daily rate for hotels is expected to rise from $184.99 in 2007 to $192.36 in 2008.
“We’re seeing a flattening of occupancy and a slowing down of event growth as the economy slows down,” said Bruce Baltin, vice president of PKF Consulting, which compiled the 2008 Southern California Lodging Forecast. Baltin said the economy has “hit the ceiling” and expects a general downturn in both the market and tourism industry.
One reason for the slowdown is in the rising cost of gasoline, which some analysts say could reach an average of $3.50 by the summer. Panelist Robert Peterson, senior director of Travel Industry & Tourism Development at the Los Angeles Convention and Visitors Bureau, said 14 percent of Americans plan to take trips closer to home as a result of higher fuel prices. Another 24 percent said they will take fewer trips altogether.
“What we do see are the repercussions and the domino effect as the price of oil starts to affect other sectors of the economy. People first try to find other ways of cutting back,” Urness said of rising gas prices. “They may make closer-to-home trips, a group will get together and rent and RV. What we do know now is that leisure is becoming an integral part in people’s lives and they’re not about to deny themselves of that pleasure.”
The declining housing market is also affecting how people travel, particularly their spending habits, Urness said.
“Even households that don’t have their homes on the market feel a loss of net worth and are shakier about making big-ticket purchases, such as vacation travel,” Urness said. “They may even feel shaky about little-ticket purchases.”
International travelers – particularly from Mexico and Canada – could swoop in to fill the void caused by less domestic tourists and their tighter wallets. Urness said an estimated 8.1 million Mexicans travel to the United States annually, compared to 4.2 million travelers from all other countries combined. Moreover, Mexican tourists spend an estimated $1.58 billion in California, making them the first among all in the international market.
And with the loonie, euro and pound gaining ground against the dollar, the United States is poised to see an upswing in overseas travelers next year. The Los Angeles Convention and Visitors Bureau already has set up satellite offices in Canada and is marketing continually in that region. “The Canadians are coming,” Peterson said. “The biggest growth opportunity is there.”
However, Urness said the East Coast may benefit from increased international travelers more than the West Coast.
“I think one of the reasons may be because the other gateway cities get a higher proportion of their international visitation from Europe, which is benefiting from the strong euro,” she said. “And our market tends to lean more toward Asia, which has not been doing so well.”
The exception is China, which is flying more tourists to the United States than ever before.
“China, which really wasn’t on the market seven or eight years ago, is clearly the market of the future. They’ve had double-digit [growth] in the last few years and by 2020, they’re expected to be the fourth-largest outbound travel market in the world,” Urness said.
In addition to international tourists, one segment of the American population is expected to travel more despite market conditions: baby boomers.
“In case you haven’t heard, the No. 1 retirement activity baby boomers plan to engage in is travel,” Urness said. About 14 percent of domestic travelers to California are retired, as opposed to 12 percent for the United States as a whole. Baby boomers also have the highest net worth of all age groups and don’t mind spending a little more on vacation.
Santa Barbara could see an upshot in that segment, as many prefer cultural and culinary destinations that offer outdoor activities and shopping. |
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