Tourism Rebounding in California

Marketing aimed at keeping California’s 34 million residents close to home after Sept. 11--along with a much-needed lift in consumer confidence--has helped accelerate a rebound in the state’s tourism industry, which was severely hurt after the terrorist attacks.

Although some cities have fared better than others, signs of recovery are being noted throughout the state, with many tourism officials adjusting their travel forecasts from less optimistic predictions. In January, for example, overall summer travel in California was expected to be down 9% from last year; the projection has since been changed to a 5% decrease.

But that still means the state will collect about $4 billion less in visitor spending, which in 2001 amounted to $76 billion. Tourism accounts for about 6% of the state’s economy and employs more than 1 million workers.

“Things were just real sad and dismal in the beginning,” said Skip Hull, director of CIC Research, which tracks tourism statistics for several visitor bureaus in California. “No one was real hopeful about what 2002 would bring. But you can see things changing now.”

After the Sept. 11 attacks, with foreign tourists disappearing and domestic travelers avoiding the skies, heavily populated California became the golden market for tourism officials in places such as Texas. Suddenly, anyone within a 14-hour drive was a potential customer.

Not wanting to lose their share of the “drive market” to other states, California tourism officials quickly doled out more than $12 million on a print, radio and television advertising campaign encouraging residents to rediscover their home state.

The first phase, called California, Find Yourself Here, featured scenic portraits of the state and instrumental music meant to inspire family togetherness, said Caroline Beteta, executive director of California Tourism, the state’s tourism agency.

The second phase, called We’re Californians, showcased famous residents such as Clint Eastwood golfing at Pebble Beach and Jack Nicholson attending a Lakers game. Both series targeted state residents--a first for California Tourism officials, who traditionally focus on international and out-of-state visitors and leave in-state customers to individual tourism bureaus.

“We knew we had to do something different, and we had to do it quickly,” Beteta said. “So we went straight for Californians and tried to convince them to vacation in their own backyard.”

By January, requests for travel packets from the state’s tourism Web site jumped 100% from the same month last year, and marketing surveys showed that Californians’ awareness about traveling within the state quadrupled, officials said.

Regional convention and visitor bureaus soon followed the state’s cue, launching drive-market campaigns of their own that offered discounts, packages and “rediscover us” themes.

In Los Angeles, an offer of two nights for the price of one at some hotels is credited for adding nearly 8,000 “room nights” through February, said Robert Barrett, marketing director of the Los Angeles Convention and Visitors Bureau. The $625,000 campaign generated more than $1 million in hotel revenue.

Hotel occupancies in Los Angeles have averaged 64% this year, which is slightly behind total U.S. occupancies, said Bruce Baltin, a lodging industry specialist at PKF Consulting in San Francisco. But the number continues to inch upward each month, and downtown hotels have managed to increase average daily room rates by 11%, to $123, from a year ago.

“It’s still a tough market,” he said. “But recovery is underway.”

In Orange County, hotel occupancies are expected to increase 5% this summer over last year--a projection that was changed from an earlier forecast for a 2% drop, according to Smith Travel Research.

Officials partly credit their ad campaign, Objects in Orange County Are Closer Than You Think, for boosting drive-in business and overall occupancy rates, along with strong attendance at the Disneyland Resort and steady convention traffic.

A $1-million Rediscover San Diego campaign has helped lift occupancy rates from the estimated 70% to 75% this year, said Kerri Kapich, marketing spokeswoman for the San Diego Convention and Visitors Bureau. The city attracts about 33% of its overnight visitors from Los Angeles and Orange counties and already has launched a second phase of its campaign directly for those markets.

“We’re in a better position than others to weather this situation because we are primarily a drive-to destination anyway,” Kapich said.

But cities that rely more heavily on air traffic--such as San Francisco, where 84% of overnight visitors arrive by plane--could benefit from retooling their marketing plans and looking farther outward instead, experts said.

“The people who are going to drive will come anyway, especially when you have a population base of 34 million,” said Rolfe Shellenberger, a travel consultant at Runzheimer International. “Focus on Canada or the East Coast or the Midwest, because they’re going to come and stay for a while.”

Lynn Franco, director of the Conference Board’s research center, said the latest national consumer confidence index surged to 110.2 in March after a small drop in February. The increase was the largest monthly gain in 11 years.

“This can only translate into increased consumer spending, which can only mean good things for the tourism industry,” Franco said.

Buoyed by results so far, state officials plan to launch a third and final advertising phase next month. This time, however, they will target four key markets just outside California--Portland, Ore.; Las Vegas; Seattle; and Phoenix--in an attempt to build on the drive-in campaign and spread their message beyond state lines for the first time since Sept. 11.

“Some destinations simply never realize how valuable the near-in market can be,” said James Cammisa Jr., an analyst at Travel Industry Indicators in Miami. “Targeting the drive market is the only way to pick up the slack from the loss of foreign travelers. The strategy is sound because it recognizes where the consumer’s head is--shorter trips, closer to home.”