Travel
and tourism in California are showing surprising strength
this summer, proving to be a reliable economic engine that
is helping to keep the cooling economy from stalling.
Despite worries that this would be the stay-home summer of
the decade, state officials now expect vacation travel this
season to increase slightly from last year's brisk pace. The
market is being bolstered by great travel bargains and extra
cash that consumers have from home refinancing and tax rebates,
plus an unwavering attitude that nothing should get in the
way of the family vacation.
Apart from the resilient housing market, tourism "is really
the only positive thing we see going on right now," said economist
Steve Cochrane, who follows California's economy for Economy.com,
a national research firm. "Households are still willing to
spend money on things they want, and that attitude is saving
the tourism industry." The state's $75-billion industry, which
supports jobs for more than 1 million Californians, can thank
folks such as Pat and Candice Bartley.
The Stockton couple, both 44, traveled to Laguna Beach this
week, none too worried about the $194 oceanfront room rate
at Vacation Village. They splurged on room service, Jet Ski
rentals for their two teenage boys and massages at a nearby
day spa. A round of golf was also on the agenda.
"It isn't that we're loaded or anything," said Pat Bartley,
a mechanic, as he sipped coffee on the hotel's beachfront
patio Wednesday morning. "But we work hard all year, and this
is our summer vacation. We're going to enjoy it, by gosh."
"That little tax rebate helped a lot too," added Candice Bartley,
a stay-at-home mom who teaches scrapbooking classes. She spent
half the rebate, about $300, on an "impulse purchase" of a
watercolor print.
Consumer spending has been a solid, if puzzling, cushion to
the nation's shaky economy, and that is clearly evident in
California's huge tourism industry. Although corporate travel
is down and some hotels and amusement parks are struggling,
many businesses that cater to tourists have been pleasantly
surprised by the flow of visitors.
John Stoddard, general manager of the Wilshire Grand Hotel,
said this is turning into the best vacation season in four
years at the 900-room property in downtown Los Angeles--an
increase he attributes to steady convention traffic, regular
international visitors and consistent family spending habits.
"We're having our best summer in years, and that's including
last August, when the [Democratic National Convention]
was here," he said. "I'm surprised. For the whole year, we'll
be up 1% over a year ago, and in this economy I'd say that's
pretty darn good."
In Los Angeles, hotel occupancy rates have been hovering above
70%, analysts said. That's slightly down from last year. Occupancy
in the Anaheim area is up slightly. In general, hotels in
Southern California are doing better than those in the harder-hit
San Francisco Bay Area.
"The picture is sort of confusing," said Bruce Baltin, senior
vice president at PKF Consulting, which specializes in analyzing
tourism, in Los Angeles. "But no matter what, it's a far brighter
picture than we ever thought it [would] be this summer."
Indeed, PKF's research shows that most hotel operators in
the state have continued to raise rates this summer--an indication
that they are not yet concerned enough about occupancy rates
to start slashing prices. Air traffic this summer in Los Angeles
is actually up. Even the theme park industry, thanks to some
unprecedented promotions, is expected to eke out growth this
year.
"Tourism and leisure travel [are] definitely acting
like an economic stabilizer for California," said Jack Kyser,
chief economist at the Los Angeles County Economic Development
Corp. In his July report, Kyser said the strong U.S. dollar
was crimping visits from international tourists.
But Californians account for more than 80% of the state's
total travel activity, according to the state Travel and Tourism
Commission. Its latest forecast calls for a 1.2% increase
in leisure travel this summer and double that growth next
winter.
"Consumer confidence hasn't fallen anywhere near the levels
we usually associate with a recession," said Cochrane of Economy.com.
"If it doesn't fall much further, we may see continued growth
in tourism, even if this period of excruciatingly slow economic
growth continues into the new year."
Part of the explanation for tourism's strength is that, despite
mounting layoffs and sluggish stock prices, unemployment remains
unusually low by historical standards. In July, California's
jobless rate actually fell to 4.9%, a 31-year low for that
month. Employment at tourism-related industries such as hotels,
restaurants and museums is holding steady or growing moderately.
California's vibrant housing market has also played a role.
Refinancing their San Diego home earlier this year helped
Gita and Erik Mulvaney pay for a springtime cruise to Mexico
followed by a trip to Lake Tahoe last month with their 9-year-old
son, Dante.
After using their $22,000 in equity to pay bills and fully
cover their travel expenses, the couple decided to tack on
an extra stay at a resort hotel on the way home. They returned
to find five of their neighbors on vacation as well--to Napa,
Yosemite, Monterey Bay and Lake Havasu.
"Doesn't seem to me like people are cutting back," said Erik
Mulvaney, 39, who sells insurance. "Back in January, I kept
hearing how gloomy things were going to get, and we thought
we'd have to save a lot more to get by. But I honestly think
the whole [slowdown] thing has been exaggerated. We
haven't felt a thing."
More cautious consumers have been lured by travel bargains
and promotions that businesses offered, worried about a slowdown.
Jamie Hosack of Laguna Niguel hadn't planned to take a trip
at all this summer, after she and her husband, Nick, used
most of their vacation time moving from a condo in Aliso Viejo.
But when she came across a discount package to Las Vegas last
month, Hosack jumped at it.
"We flew a family of four and stayed two nights at one of
the newer hotels for $540," said Hosack, collecting her luggage
at John Wayne Airport in Orange County last week. "I couldn't
believe it. I think we spent more money on food than we did
on the whole trip. Well, that and the slots."
The count of out-of-state visitors to California is also expected
to go up a bit this summer from last, although fewer will
be making overnight trips, according to a forecast by D.K.
Shifflet & Associates, a consultancy. Even so, nonresidents
and residents alike aren't easily giving up their precious
vacations.
Dale and Sophia Whitaker of Tulsa, Okla., began tucking away
$50 into their monthly savings schedule in February, just
in case the economy hit them with a surprise that might spoil
their summer plans. It didn't.
So last week, the Whitakers, a plumber and day care operator,
arrived in Southern California. They took a star tour in Hollywood,
jaunted down Rodeo Drive, went shopping at Fashion Island
in Newport Beach and, of course, spent two days at Disneyland.
At the urging of their sons, 9 and 11, the Whitakers spent
an afternoon scouring the neighborhoods of Newport Beach in
search of Dennis Rodman's house.
"It's been the vacation of a lifetime for us," gushed Sophia
Whitaker. "Seriously, it's never been better. And there's
crowds, crowds, crowds. . . . How can they say there's a recession?"
"Yes, it's been terrific," sighed Dale Whitaker, holding a
cold bottle of water to his forehead as his youngest son,
wearing a Laker jersey, tugged on his hand. "Now if we could
just find Rodman's house. . . . You know, I'd pay good money
for that at this point. Recession or not."
