How SD Capitalizes on Tourism Driver

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Bob PrendergastThe ripple effect of a tourism-driven economy reaches far into the San Diego market, experts tell exclusively. Now that the domestic economy is on the upswing, the number of visitors to this market is increasing, and the various property sectors are taking note. In this first part of a two-part story, we explore the breadth of impact tourism has on the local economy. In Part 2, we will cover how the different real estate sectors in San Diego are affected by tourism.

Tourism is the third-largest revenue generator in San Diego County, behind manufacturing and the military. The recent expansion of the convention center and opening of the Padres’ Petco Park Downtown have fueled a tremendous amount of redevelopment in and around the already-popular Gaslamp Quarter Downtown. San Diego’s scenic coastline and breathtaking beaches are strong draws for tourists worldwide. In addition to its natural beauty, San Diego boasts of many internationally acclaimed destination points, some of which include the San Diego Zoo and Safari Park, Legoland, SeaWorld and historic Balboa Park—larger than Central Park and home to many of the county’s museums.
Bob Prendergast, managing director, Capital Market Group

The San Diego Tourism Authority reports that the impact of the visitor industry on San Diego’s regional economy is more than $18.7 billion. It is a top industry and revenue generator contributing to the $184.3-billion GRP. There were 33.1 million visitors to San Diego in 2014, of which more than 16.4 million were overnight and more than 16.7 million were day visitors, which affects the economy here in different ways. Visitors to San Diego spent nearly $8.4 billion at thousands of San Diegan businesses during their stay, and 70% of those dollars are spent at businesses other than lodging.

The single greatest impact on tourism is consumer confidence, and consumer confidence is the highest it’s been in the last 13 year. People are traveling more than they have in a long time—whether by plane, cruise ship or driving down from L.A. or other parts of Southern California for the weekend.
Craig Killman, executive vice president, Southwest Retail Lead

Moreover, the visitor industry employs about 165,900 San Diegans in fields directly related to the hospitality industry, including lodging, food service, attractions and transportation, according to the Employment Development Department. “What impact do all those people have on the economy?” Prendergast, tells “They don’t work at Qualcomm, but they work at places like Legoland and SeaWorld, and that adds up to a lot of jobs and money getting cycled through the economy fairly quickly. These are pretty much people who live paycheck to paycheck.Construction and other trades could be a little higher income if it was skilled labor; if you were a union contractor or steelwork, you’re probably doing OK. You’re not working in an office building, but you’re paying rent, and the money is being cycled through the economy.”

Let’s not forget about the business visitors, who also bring a significant amount of dollars to the region. According to the San Diego Convention Center Corp., the San Diego Convention Center hosted 75 out-of-town conventions and trade shows last year, with an estimated attendance of 524,448 individuals. These events represent approximately $560 million in direct spending by convention delegates.

Both groups of visitors spend a considerable amount on hotel rooms, too. According to STR, a global provider of competitive benchmarking, information services and research to the hotel industry, San Diego County’s average hotel occupancy was 71.6% in 2014, and the daily room rate averaged $134.20. San Diego has approximately 464 hotel and motel properties with 56,629 rooms available to visitors. Bed-and-breakfasts, casinos and health-spa resorts add 83 additional properties and 2,333 rooms.

As Killman mentioned above, visitors arrive in San Diego via a varietKillman-Craigy of methods. The San Diego Regional Aviation Association reports an estimated 8.8 million air passengers arrived at Lindbergh Field last year, which is served by a total of 21 airline passenger carriers; Amtrak reports arrivals into the county totaled more than 750,000 people; and CalTrans reports southbound and westbound traffic into the county totaled 59.7 million vehicles. That’s a huge infiltration of visitors to the area, all spending money in the county.

Stay tuned for Part 2 of this story, which explores the different property sectors affected by tourism in San Diego.

A portion of this article previously ran in GlobeSt

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