January 25, 2018 •
Coronado Chamber of Commerce Hosts Tourism Seminar
As reported in the Coronado Eagle & Journal on January 19, 2018:
Macro and Micro versions of the tourism industry were discussed at the 2018 Hospitality Business Forecast Seminar, presented by the Coronado Chamber of Commerce and held in the Lecture Hall of the Coronado Historical Association, Wednesday, Jan. 10, 2018. The macro version was laid out by Joe Terzi, Chief Executive Officer of the San Diego Tourism Authority (SDTA).
Terzi characterized the San Diego Region, from a hospitality perspective, as having 432 hotels, with 61,000 rooms to sell each night. He added that by comparison, Las Vegas has a nightly inventory of 150,000 hotel rooms. An interesting note is that Lindbergh International Airport in San Diego has 10.3 million annual inbound air passenger arrivals, second only to London Gatwick Airport.
Terzi noted of the region as a whole, “Occupancy rates are running at about 80 percent of capacity, and the hotel properties are working to increase their yield by having guests spend more money in restaurants and spas. International travelers are looking for unique places to stay. They are great customers, as they stay longer, spend money and are often on vacation for weeks at a time. As we gain more international visitors, we hope to capture them in Coronado.”
Other relevant facts regarding the San Diego Region as a tourist destination are:
• Attendance at local tourist attractions, on an annual basis, totals 14.8 million.
• There are 97 golf courses in the region, to go with 434 art institutes and 150 craft brewers.
• There were 9.8 million hotel visitors last year representing 17.1 million room nights sold.
• Sixty-three percent of the visitors are characterized as being in the leisure-transient category, meaning they are visiting on a more short-term basis
• A total of $289 million was collected in San Diego County in transient occupancy taxes (TOT) last year.
• One in eight jobs in San Diego is related to the tourism economy.
• Growth in tourism in the future is projected to come from the Millennial Generation, commonly defined as people born between 1982-1997.
There are a couple of hidden nuggets in the statistics delineated above. If you follow San Diego politics even casually, you will have noted the flurry of community projects of late that have the city’s TOT or hotel tax as the funding source. Terzi and the Tourism Authority are pushing hard to use a portion of the TOT for the expansion of San Diego’s Convention Center. “All of the approvals from the Port of San Diego, the Coastal Commission and the City of San Diego are in place for expansion,” Terzi explained. “We are missing out on hundreds of millions of dollars. Seventy percent of the money spent by a person staying in a hotel is spent in places other than the hotel. That has always been consistent. The money is spent in restaurants, bars, retail and in transportation. The economics of tourism is more than just what is going on in the hotel. Shopping is the third component of spending for visitors.”
Terzi said there is a proposal to raise the San Diego TOT from 10.5 percent, plus two percent to fund the Tourism Authority, to a new total of 15.75 percent. Terzi said of the proposed 3.25 percent increase, “We believe it’s appropriate and we are still well below our competitors.” By contrast, Coronado’s TOT is currently at 10 percent, plus a one percent add-on (technically it’s two, one-half percent add-ons) to fund Discover Coronado and their marketing outreach efforts.
The other concept of note is found in the Millennial Generation travel growth projections. Terzi presented a SDTA produced video, currently being used to attract visitors, targeted almost exclusively to Millennials. The San Diego video was an interesting contrast to the Discover Coronado video presented by Executive Director Todd Little later in the seminar, which was aimed at attracting conventions and groups. Both were well done and directed at totally different markets.
Another interesting tourism tidbit is San Diego has the third largest average hotel occupancy on Saturday nights in the United States behind New York (91.5 percent) and Orlando (87.6 percent). Terzi said, “We are not a business hub. A small portion of our visitors are business travelers, less than 10 percent. Most cities are in the range of 35-40 percent. Our challenge is to work hard on more leisure travel or to find more groups. Groups are the key to keeping the San Diego and Coronado markets strong.”
Toward the conclusion of his presentation, Terzi compared the Coronado market to the overall market in San Diego County. “Coronado occupancy rates (The Hotel Del Coronado, Loews Coronado Bay Resort, the Glorietta Bay Inn and the Coronado Island Marriott Resort & Spa) underperform the County, but the Coronado average daily hotel room rate far exceeds the County’s. Consistently, occupancy in Coronado month-in and month-out, is three to four percent lower. Rates are almost double in Coronado for the four hotels, not the whole market. Coronado’s hotels are a premium product priced at a high level. Outside of the summer months, the hotels are trying to figure out how to create occupancy. We need to get more groups for the off-times and more groups in the summer. The Coronado hotels are pretty healthy, with a good trend line. We will continue to see this moving forward; a little more rate and a little less occupancy.”
The San Diego Tourism Authority has an annual advertising and marketing budget of $41 million according to Terzi, with $20 million of that spent on media, some nationally and some internationally. San Diego has contracted office locations in the United States, Canada, Mexico, the United Kingdom, German, Australia, Japan and China to assist in growing the market. Terzi explained the marketing challenges facing his group and said, “Some of the countries are very large and they don’t have an understanding of what is happening in San Diego. They know L.A. because of Hollywood and San Francisco because it’s an international city. We have to work harder to teach them about San Diego, that we’re not just a beach town, but that we are also a city. You can spend the day at the beaches and enjoy the weather, but this is a legitimate city with great offerings. You can relax during the day and party at night.”
Terzi also presented an overview of the Coronado Visitor, which includes any visitor to the city.
• 50 percent of visitors are over 45 years of age without children.
• 25 percent are under 45 years of age without children.
• 25 percent are here with groups, with children, and are mostly young families.
• Visitors have a median income of $70,400.
The micro, or local, tourism overview was provided by Discover Coronado’s (formerly the Coronado Tourism Improvement District) Todd Little, who spoke next and elaborated on the working relationship between his organization and the San Diego Tourism Authority. “We are going after convention business and the SDTA has 13 sales people spread out over many markets. Coronado can’t replicate that. We have just two employees. The SDTA has great relationships with the airlines and the Convention Center. New international non-stop flights to San Diego mean more money for all of us. We have been with the SDTA since 2010. They do client road shows and we piggyback on them. They attended 16 trade shows, eight client road shows, multiple familiarization visits, 61 meetings and last year they helped generate 30,553 room nights. They are an ally of ours.”
Little added, “The off-season is where Discover Coronado excels. We like our work on the conventions side, which has little or no negative impact to the city. Conventions are held in the middle of the week, they arrive in big coaches, or are coming to Coronado by mass transit. There is little negative impact to the residents and we generate Transient Occupancy Tax revenue to the city in the amount of $14,577,000. We are expecting a three percent increase in TOT in 2018. And there is $3,448,000 in sales tax revenue from restaurants, merchants and retail sales. We try to push conventioneers into the businesses. The TOT tax is in a strong second place to Property Tax for the city of Coronado, which is $23,732,000.”
Recent projects funded by Discover Coronado include:
• The way-finding signage program for the city
• Bus wrap for the free summer shuttles that have become popular in the community
• Supplying a trolley for the Coronado Island Film Festival in partnership with Old Town Trolley
• The Banner Art project that is on display on Orange Avenue
Little presented an interesting marketing concept to consider. “We need to brand Orange Avenue like Rodeo Drive. It has never been sold or marketed before. We should have a website and collateral materials that would encourage people to go on Orange Avenue and spend. We expect about three percent growth for the (four main) hotels in Coronado. There will be growth for next year and then it will taper off, as the economy starts to soften just a bit.”