By Pacific Coast Business Times Staff Saturday, January 3rd, 2009

As businesses and families cut back on spending, the tri-county tourism industry is prepared to take a slight hit in 2009. But, experts say, don’t bet on travelers giving up vacations altogether.

Although the region’s tourism sector is already feeling the effects of a down economy, its location as an easy-drive destination for much of California also means that it is well-positioned to serve as a comparatively more affordable vacation alternative.

“It is going to be a struggle to keep tourism where it was in 2008, but in past recessions we’ve done OK,” said Dave Garth, chief executive officer of the San Luis Obispo Chamber of Commerce.

Garth explained that despite the overall negative effect of the recession, San Luis Obispo County can look to several positives to keep it afloat, including low gas prices and its accessible location.

“Instead of, say, flying to Europe, people may look to our county as a less expensive alternative and get in the car and head down here,” Garth said.

According to PKF Consulting, occupancies for Santa Barbara County will decrease by 1 percent in 2009 — a projection that is considered to be overly optimistic because of the uncertainty of the economy and its direct impact on travel, Kathy Janega-Dykes, executive director of the Santa Barbara Conference & Visitors Bureau and Film Commission, said in an e-mail interview. She said the worst occupancy levels will likely be in the first quarter of the year.

“That said, we think the Santa Barbara tourism industry is well-positioned to weather the storm in 2009,” she said. “Our largest customer base is nearby.  Our brand is recognized and appreciated both nationally and internationally.”

Still, other indicators suggest that a recession economy could have a much stronger downward pull on local tourism than the upward effect of accessibility and low gas prices.

The recently released 2009 Southern California Lodging Forecast predicts that San Luis Obispo County’s economy, estimated to have declined 0.7 percent in 2008, will see another 1.2 percent drop in 2009.

The county’s hospitality industry in particular looks to be fairly stagnant, according to the study conducted by PKF Consulting. The forecast expects annual rooms supply to increase by 3.3 percent in 2009. Occupied rooms are forecast to continue growing, resulting in a 1.5 percent increase over 2008 levels.

This equates to a market occupancy of 64.7 percent, which is estimated to be lower than historical figures as the market trends downward as a result of sub par economic conditions.

The study said that San Luis Obispo County has been one of the least impacted markets in Southern California thanks to its appeal as an easy-to-drive-to destination and diverse tourist attractions.

Those on the ground, however, remain concerned about what 2009 has in store.

“The general consensus is that it will be a tough year,” said Charles Crellin, general manager at Sycamore Mineral Springs Resort in Avila Beach.

Crellin said he talks with other hotel general managers on a regular basis, as everyone tries to figure out where prices should be. “We’re really strongly looking at our competitors and their rates because we know that people are more prone to shop around and compare rates before they book.”

The average daily rate for the county is projected to increase by a negligible 0.4 percent over 2008, staying at about $130 a night.

Ventura County

With no major additions of hotels in the area, the city of Ventura is expected to flatten out at 599,695 available rooms. Ventura County is expecting to add 0.2 percent more rooms in 2009 for a total of 1,624,980. Occupied rooms, however, are forecast to decrease by 2 percent for a market occupancy of 63.7 percent, according to PKF Consulting. The group predicts average room rates in the county will most likely increase 0.4 percent to $104.24.

The recession has put on hold plans to open the Residence Inn by Marriott in Ventura in 2009, city officials said in the PKF Consulting forecast report.

One potential positive outcome of the recession for Ventura County is its regional pull to the Camarillo Premium Outlets.  With 120 stores, the shopping center is one of the largest in Southern California might draw both locals and tourists looking for a bargain.

Trimming costs

Bill Watkins, executive director of the University of California, Santa Barbara, Economic Forecast Project, said that tourism will be one the Tri-Counties’ strong suits going into 2009 but won’t be enough to save the region overall.

Guthrie said his inn reflects Watkins’ forecast, as he noted that even the low cost of fuel hasn’t done much to offset the economic downturn. “We haven’t seen the walk-in activity that you would expect to see,” Guthrie said.

That seems to say that people aren’t getting in their cars for a last-minute weekend getaway but are planning and budgeting vacations carefully — a trend that only looks to continue in 2009.

Kim Wykoff, sales and marketing director for the Apple Farm in San Luis Obispo, said that staff there are bracing themselves for a weak start of the year but hope the economy and tourism will pick up by the end of 2009. With the bulk of the Apple Farm’s visitors California residents, marketing for the inn has focused on offering package deals and extra “goodies,” such as gas cards, to guests.

“When the economy’s down, it’s all about exposing yourself to your market,” Wykoff said.

With about 46,500 tourism-related jobs in the Tri-Counties, according to a 2007 study by Dean Runyan Associates, a significant slowdown in the industry could spell trouble.

Garth said he’s seen some businesses already start to cut back jobs — but that’s not entirely because of the economy.

“Some people have been taking good times for granted and not giving their business plan the attention it deserves,” he explained. “Now its going to come back down to cost control, networking and marketing.”

Paso Robles

Paso Robles, with its blossoming wine industry, may be the most well-positioned city in San Luis Obispo County to stave off the effects of a recession, with 87 percent of the 1.2 million wine tourism visits to the county attributed to the city.

“Despite a slowdown in the county’s economy, Paso Robles has been the economic engine that continues to drive the county with its robust job market and viable tourism sector,” the Lodging Forecast noted.

Still, with the increase in hotel rooms supplied exceeding the increase in demand, Paso Robles’ occupancy rate is also expected to drop from 65.1 percent to 63.3 percent in 2009, but the average daily rate is expected to go up by 1.5 percent, ending at $115.57.

He said that money raised through the Paso Robles Business Improvement District, or BID, – a 2 percent increase to the transient occupancy tax – will give the city the funds it needs to promote tourism to the area in general. Of an estimated extra $1 million of BID money spent on promoting the city’s tourism, Garth predicts that about half will go toward media promotion and advertising, particularly on the Internet.

San Luis Obispo also approved the creation of its own BID in 2008, which will, as in Paso Robles, raise extra funds for marketing and promotion of the city as a tourist destination.

• Emily Rancer contributed to this report.

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