Tourism Makes Steady Comeback

By Ed Moosbrugger

January 10 -- Santa Monica’s vital tourism industry showed solid growth in 2004 and more of the same appears in store for this year.

“I believe we will continue to experience moderate growth in 2005,” said Misti Kerns, president/CEO of the Santa Monica Convention & Visitors Bureau.

For Santa Monica hotels, Kerns expects average room rates to increase more (5 percent) than occupancy rates (3 percent).

Among factors fueling growth are increased business and leisure travel and more European visitors because of the weak dollar compared with the euro.

Santa Monica was expected to post a hotel occupancy rate of 78 percent for 2004, up 6 percent from 2003, and an average daily room rate of about $208, up 7.2 percent, industry experts estimated late in the year.

“Santa Monica has done very well,” said Bruce Baltin, senior vice present of PKF Consulting in Los Angeles, which tracks the regional tourism market.

For 2005, PKF forecasts that Santa Monica’s occupancy rate will rise 2 percent to 79.6 percent, and its average room rate will increase 4.5 percent to $217.

“We have continued to hold our own,” Kerns said, noting that the occupancy rate continued to grow despite a slightly larger inventory of rooms in 2004.
Downtown hotels reflect the moderate growth trend.

“It’s the best it’s been in awhile,” said Dino Nanni, general manager of Hotel Shangri-La. “Everything is slowly coming back.”

He looks for slow, steady improvements in 2005 on the strength of several factors, including the weak dollar (which makes it cheaper for foreign visitors to come to the United States) and an improved economy.

Nanni reported that November was very good at his hotel, thanks in part to the American Film Market, and December was looking pretty good.

At the Fairmont Miramar Hotel, occupancy was about flat in 2004, but the average daily room rate rose $10 to $12, said Desmond Acheson, interim general manager.

During 2005, the Fairmont Miramar hopes to improve its occupancy rate to about 78 percent from 75 percent and the average room rate to $240 from $230 in 2004, he said.

“Business is there,” Acheson said. “More people are traveling. They are willing to pay more if you give good service. The feeling is that business is coming back.”

At Hotel Carmel, business has been very good, aided by a recent $1.8 million renovation of rooms, said General Manager Sherry Minetree.

“We’re very optimistic about the numbers for next year (2005),” she said, noting that advanced bookings have been “pretty decent.”

One concern, however, is the potential impact of an increase in the city’s bed tax approved by voters in November, Minetree said.

The tax boost could hurt Hotel Carmel because it does a big share of its business through international contracts where overall cost is an important factor, she said.

Santa Monica’s visitor industry will be operating in a favorable travel market climate in 2005. The Travel Industry Association of America (TIA) expects overall spending in the United States by domestic and foreign travelers to increase 5.3 percent in 2005.

TIA noted that in 2004 “two of the hardest-hit segments in the travel industry, domestic business travel and international inbound travel, will both see their first increases since before Sept. 11, 2001.” Further gains are seen for 2005.

Both of those markets are very important to Santa Monica.

Kerns said Santa Monica has been fortunate because the local entertainment and creative industries, which generate considerable commercial travel to Santa Monica, have not suffered as much as some other industries.

The United Kingdom continues to be Santa Monica’s top international market, but Kerns believes the number of visitors from Japan will grow over the next two years “and once again become a number one market certainly for Los Angeles and most likely Santa Monica as well.”

Australia, New Zealand, Germany and Canada are among Santa Monica’s other top foreign markets.

California is its top domestic market, followed by New York, Illinois, Arizona and Colorado.

Santa Monica faces stiff competition in its key markets. Most destinations, for example, now seek the U.K. traveler, and many places are spending more than Santa Monica on promotion, Kerns noted.

Among travel trends over the last two years have been a shift to domestic and regional visitation, shorter trips and increased day visitors, trips with shorter term planning, and lower trip and per-capita spending, Kerns said.

“Today’s traveler is looking for value and good customer service,” Kerns said.

To help provide that, the bureau, working with Santa Monica’s shopping districts, has launched a VIP program (Visitor Incentive Program) offering an incentive and savings card to group travelers. More than 100 businesses are participating.