Wall Street Journal
July 29, 2011
http://online.wsj.com/article/SB10001424053111903591104576468383797139042.html
San Francisco’s tourism-reliant businesses, one of the city’s key industries, are enjoying a rebound but no longer believe that 2011 will bring sales back to prerecession levels.
Personality Hotels LLC, which runs Hotel Union Square, Hotel Diva and two boutique properties, has raised average daily room rates by 15% to 20% from a year ago, but occupancy has remained flat, said Chief Executive Yvonne Lembi-Detert.
“I thought it would have been better than it is,” she said. Her outlook now: “I’m looking forward to 2012.”
The city’s tourism industry generally mirrors that of the national economy, and both are recovering more slowly than many had expected. This is a blow to an economic engine for San Francisco that employs tens of thousands of workers and is the city’s biggest industry by tax revenue.
In 2010, the city had 15.9 million visitors, who spent $8.34 billion and generated $485 million in tax revenue for the city, according to San Francisco Travel, the city’s primary visitors bureau.
That’s up from 2009, when 15.4 million people visited the city and spent $7.8 billion, but still down from 2008, when those respective figures were 16.4 million visitors and $8.5 billion in spending.
The tourism bureau’s chief executive, Joe D’Alessandro, predicts that spending will rise this year. He added that the outlook for 2012 is uncertain and could even decline, in part because Moscone Center, the city’s main convention site, will be closed for weeklong stretches for renovations next year.
About half of the city’s tourism-related tax revenue comes from the hotel business. Industry tracker Colliers PKF Consulting forecasts that the hotel occupancy rate will rise 2% to 77% this year, compared with 2010, while average daily rates will jump 9.7% to $149.23.
Those projections are lower than they were earlier this year, said Thomas Callahan, head of PKF’s West Coast practice. He said the more conservative forecast was “because of all the uncertainty in the economy,” adding that the hotel industry won’t bounce back to its 2008 peak until next year. PKF predicts that in 2012, occupancy will stay level, while the average daily room rate will rise 7.9% to $161.02.
The slow rebound is apparent in other tourism-related businesses. Sales at Sinbad’s, a popular restaurant on Pier 2, are flat from last year and down 20% from two years ago, said owner Tom Stinson. Not only is drop-in traffic down from before the recession, but people are spending less, he said.
Mr. Stinson had hoped that business would pick up in the spring, but now believes it will take several more months to “ride the storm out.”
Mr. D’Alessandro, of San Francisco Travel, said the industry this year had actually surpassed his expectations; the travel bureau had predicted a drop. The bulk of the growth comes from foreign tourists, who make up roughly one-third of the city’s visitors. He said there are especially more travelers from Asian countries.
“It’s very significant,” Mr. D’Alessandro said. “International visitors tend to stay longer and they tend to spend more.”
Any economic struggles weren’t obvious on Fisherman’s Wharf on a recent Sunday. Tourists struggled to stay on crowded sidewalks while throngs watched street magicians and gobbled down cookies from Boudin Sourdough Bakery & Café.
“It’s still a popular tourist destination, tons of people still out, [though] maybe not spending as much,” said Rodney Fong, president of the Wax Museum at Fisherman’s Wharf.
Mr. Fong said the museum’s ticket sales were down very slightly from last year and off 4% from two years earlier. He said business could have been worse off it weren’t for a big uptick in California visitors. “It’s not that bad,” he said.
At Scoma’s Restaurant a couple blocks away, Mariann Costello echoed that feeling. The seafood restaurant posted flat revenue last year, but it’s now up 5%, said Ms. Costello, the restaurant’s vice president. She said Scoma’s wasn’t quite back to the peak of 2008, but that it wasn’t too far off.
“We would have liked to have gotten back to pre-recession numbers, but it’s not unexpected, given the economy that surrounds us,” she said.
