Tourism Recovery Continues – San Diego Business Journal

Hotels in San Diego County continue to recover from COVID – and due to the region’s diversity, the local lodging industry will continue to see an uptick in the new year.

Fred Tayco
Executive Director
San Diego County Lodging Association

The update comes from the San Diego County Lodging Association’s 2023 Hotel Economic Forecast, released earlier this month.

The report also warns that while the region’s hotel executives remain a bit on their toes, there’s a general sense of optimism as business and convention travelers choose Southern California over other destinations. popular.

Forecasts see occupancy in 2023 increase by two to three points. “We’re recovering, but we’re not recovered yet,” said Fred Tayco, executive director of the San Diego County Lodging Association. “We are cautiously optimistic that business and convention travelers will make San Diego County their preferred destination in 2023, just as leisure travelers did in the second half of 2021 and throughout 2022. .”

Regular recovery

Tayco says 2022 has been a year of steady recovery for the hospitality industry, with hospitality and tourism together benefiting from pent-up demand for in-person leisure and business travel throughout the year. .

Robert Rauch
President and CEO
ARR Hospitality

The SDCLA represents the interests of hotel and motel owners and operators representing approximately 20,000 rooms throughout the county. Founded in 1980, it is also the main resource for the region’s more than 560 hotels, motels and boutique inns, which employ nearly 27,000 people.

The group has partnered with the private nonprofit San Diego Tourism Authority and RAR Hospitality, led by its President and CEO Robert A. Rauch, to produce the 2023 Hotel Economic Forecast. SDCLA, SDTA and RAR unveiled the 2023 Hotel Economic Forecast Nov. 10 during a luncheon at the Handlery Hotel in Mission Valley.

“San Diego’s appeal to travelers in 2023 will be its diversity — many places to stay, many places to go — that cater to every budget,” Rauch said. “There aren’t many other destination locations that can say the same.”

Data collected by Rauch and his team on future expectations for San Diego hotels include a projected 9.8% increase in business and convention travel over 2022 – but still 10% below 2019. – and that travelers will continue to choose San Diego over other parts of California. , especially regions slower to reopen due to pandemic concerns.

The report indicates that leisure travel is expected to decline slightly by 0.8% from the peak rebound in 2022, but remain 3% above 2019. The report notes the evolution of financial concerns, the rising borrowing costs, a possible impending recession and increased competitive pressure from other destinations. .

RAR reported that while there will likely be fewer guests compared to pre-pandemic numbers, guests will likely stay longer.

Staff to be stabilized

On the employment side, RAR said staffing should stabilize as hotels hire and train new workers to meet occupancy demands – and adjust to rising labor costs. labor and supply.

Nate Kelley
Director of Research
San Diego Tourism Authority

“Next year could be a transitional time for hotels in San Diego as they adjust to new travel patterns and hire new staff,” said Nate Kelley, director of research for the Authority. San Diego Tourism and author of SDCLA’s 2023 Economic Forecast. .

Kelley said inflation is making consumers nervous and rising prices have caused shoppers to rely on credit cards and savings to make ends meet.

“US consumer sentiment impacts the San Diego lodging market because San Diego is a domestic and international market,” Kelley said.

In a presentation shared with luncheon attendees, Kelley said that with COVID-19 largely entering the endemic phase, the focus has shifted to inflation and the economy and that “unprecedented action of the Fed to fight inflation in recent months has led to expectations of a mild recession in the first half of 2023, which could set back the group’s recovery.

He said while business and group travel demand “is expected to increase in 2023”, leisure travel is expected to be lower than in 2022.

Downside risk

Kelley said the fact that the savings rate has fallen below trend in recent months after hitting record highs during the pandemic “coupled with the large increase in credit card balances, to me, is probably the biggest downside risk to local tourism in 2023.”

“If consumers seriously cut spending as their deals dwindle, then travel will almost certainly suffer at least some of that,” he said.

Currently, however, hotel performance has been resilient, Kelley said, nearing 2019 levels for overnight demand and surpassing 2019 levels for average daily rates in 2022.

He said that from January to September, the occupancy rate in San Diego was the second highest in the country.

RAR said strong accommodation demand in 2023 will support prices, but most of the occupancy gains will be in the group and corporate market, also noting that short-term rentals are doing well, including Airbnb and VRBO.

RAR’s forecast noted that the Apartments by Marriott Bonvoy brand, announced by Marriott International, Inc. on Nov. 9, is a way for the company to capture growing consumer interest in so-called “bleisure” travel – the mix of work and leisure travel. .

Tayco said it has read in reports and surveys that people have “reprioritized” travel, that it has become increasingly important for people to get out and do “the things that have been denied them,” and that some people are traveling twice as much as they had before, making up for lost time because they weren’t able to travel during the pandemic.

“People enjoy travel much more than they have in the past. They never thought anything could be taken away from them,” he said. “We want to click our heels and believe. You have to look at the numbers. We see all that San Diego has to offer and the pent up demand to travel. We are well positioned to meet this travel demand.

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