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Bay Area Tourism Reeling From a Double Whammy

Study: Dot-com crash and dramatic post-9/11 drop in business and in-state leisure travelers hit the region hard. Officials remain optimistic nonetheless.


SAN FRANCISCO — The Bay Area will feel the sting of the post-Sept. 11 tourism slump longer than any major national destination other than Manhattan and should not expect its visitor numbers to return to normal for a year to 18 months, according to a new study.

"Of 25 markets we cover, the Bay Area ranks near the bottom in the eyes of tourists--alongside Manhattan," said analyst Troy Jones of the accounting firm Ernst & Young, which this week released its 2002 National Lodging Forecast.

The report, which examines the travel-dependent hotel industry, says San Francisco's 34,000-room lodging business had fallen off before last fall and is "further challenged" in its attempt to lure back travelers.

San Francisco officials downplayed the report.

"I don't know why they're saying this," said Laurie Armstrong, a spokeswoman for the San Francisco Convention and Visitors Bureau, adding that she has yet to see the study. "I mean, 9/11 affected tourism all over the world. Why pick on San Francisco?"

The accounting study blamed San Francisco's tourism recession on last year's high-tech crash as well as recent cutbacks by United Airlines, a major air carrier serving the city.

"With more than 80% of San Francisco's visitors arriving by air, consumer flying concerns and airline cutbacks are reducing lodging demands across all segments" of the region, the study said.

As a result, between 2000 and 2001, the city experienced a 10% decline in hotel occupancy rates.

"We admit we took a tourist hit even prior to Sept. 11, and our business travel was affected the most," Armstrong said. "When the dot-com boom busted, not as many business people came to call on clients or their home office."

On average, as many as 25 million tourists visit the nine-county Bay Area annually, fostering an $18-million industry that affects everyone from cab drivers to restaurant waiters. About 200,000 residents work in tourism-related jobs.

San Francisco, the jewel in the crown of Bay Area attractions, attracted 17 million visitors in 2000--tourists who spent $7.6 billion, or $20.8 million a day, statistics show.

Armstrong said that in-state travelers account for 43% of San Francisco's visitors. The rankings show that most domestic tourists come from Los Angeles, followed by New York, Sacramento, San Diego and Chicago. In 2000, 2.8 million overseas visitors came to the city--led by Japan, the United Kingdom, Germany, France and South Korea.

Jeff Spring, a spokesman for the Automobile Club of Southern California, acknowledged that Northern California has traditionally been among the top travel destinations for Los Angeles-area sojourners, but that rate has dropped recently.

For example, he said, from January 2000 to January 2001, flights from Southern California to San Francisco dropped by more than 50%. But San Francisco hotel bookings by Southern Californians are still strong. "My sense is that people are still going there, but that they're driving," Spring said.

Post-Sept. 11, most Southern Californians have stayed closer to home, he said. "They're going to Las Vegas, Phoenix, San Diego and Santa Barbara," Spring said. "We're also seeing a pickup in cruises and tours."

The Ernst & Young report concludes that the Southern California tourist economy could recover as early as this spring as residents drive to such places as Disneyland and SeaWorld.

The study said that with its government contractors, the Los Angeles area enjoys a more diverse economy than San Francisco, which relies more heavily on tourism.

Armstrong said she believed many of those Southern California travelers heading to San Diego and Phoenix this year would venture north to the Bay Area as well. "We want to get those state residents back to our city," she said.

One strategy being touted by local promoters for the Presidents Day weekend this month is called "Stay. Park. Play," a program in which about 60 hotels will offer specials that include free parking.

"That might not mean much to the tourist who flies into town," Armstrong said. "But we believe for state residents free parking is key."

While San Francisco hotel room prices--a reflection of demand--dropped 24.3% in the months after Sept. 11, officials say they expect those prices to rise 1.4% over normal for 2002.

David Bratton, research manager for the visitors bureau, said that might not be enough.

"We had three amazing years in San Francisco, and then the bottom fell out," he said. "And it's hard to say we've rebounded. We relied too much on the technology boom."

Bratton acknowledged that San Francisco was an expensive place to visit, especially in a recession: "So our brand of a few days away might not be seen as a cheap deal," he said.

The Ernst & Young report was even more dire, predicting a $100-million shortage in the San Francisco city budget in light of the downturn in tourists and technology jobs.

Still, Bratton sounded hopeful. "We're still one of America's most beloved destinations," he said. "I'm completely confident things will rebound."

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