Posted on: Sunday, August 31, 2003
Bay Area tourism still reeling from 9-11
By Caille Millner
Knight Ridder News Service
Although the terror of Sept. 11 unfolded on the other side of the nation, the San Francisco Bay Area was ground zero for damage to one key economic sector: tourism.
According to a study by Cornell University, the two American cities that suffered the largest decline in travelers in the months immediately after the 2001 attacks were San Jose, Calif., and San Francisco.
And despite signs of recovery, San Jose's turnaround is expected to be the slowest of any U.S. city.
It's not just post-Sept. 11 jitters that's keeping tourists away. It's the overall economy — particularly of Silicon Valley.
In fiscal 2000, San Jose's hotels, which depend heavily on convention traffic, were averaging 85 percent occupancy. That fell to 70 percent in fiscal 2001 and 53 percent in fiscal 2002.
The impact wasn't limited to hotels and restaurants. It was also felt by downtown retailers and city government, which lost $4 million in hotel tax collections for the fiscal year that ended in June 2002.
In the Bay Area, the quarter immediately after Sept. 11 saw a $6 billion tourism sector shrink by as much as 25 percent. Few in the industry expect recovery to the levels of the tech boom.
"We don't know when things will get better," said Laurie Armstrong, vice president of public relations for the San Francisco Convention and Visitors Bureau. "From our perspective, it would be much easier to deal with a good, old-fashioned earthquake — you just clean up and move on."
There are signs of a slow turnaround: Oakland International Airport is buzzing along at 11 percent annual growth. Anyone wandering around Fisherman's Wharf or Napa Valley knows to expect long lines and crowded parking lots. And cities and tourism offices have learned a few lessons about how to attract visitors in a slow economy.
"We had a reliance, maybe an overreliance, on the technology sector to bring us business," said John Southwell, general manager of the Hilton San Jose and Towers. "But these challenging economic times have really opened our eyes to the need to aggressively change the type of business that we're going after."
The response has been an overhaul in the way San Jose sells itself to visitors. Fair weather and arts are in; proximity to tech is out.
The situation is considerably more complicated in San Francisco. While San Jose lives and dies on business travel, San Francisco depends heavily on the leisure market, which is far more sensitive to economic and other impacts — such as the recent aversion to flying.
About 80 percent of the city's tourists fly in, a significant percentage of them from overseas. In 2000, the city hosted 2.83 million foreign visitors. In 2002, their ranks declined 42 percent, to 1.64 million.
"People are more skittish with what they do on vacation than when they travel on business," said Armstrong. "So all the disasters in the world — 9-11, the tech bust, SARS, the war — they really had an impact on us."
In the peak year, 2000, San Francisco's hotel occupancy rate was 82 percent. That dropped to 68 percent in 2001 and 65 percent in 2002.
San Francisco has responded by playing to the nationwide trend of taking shorter trips closer to home. The visitor's bureau has created events such as "Dine About Town," a monthlong prix-fixe promotion that offers consumers a break at the city's top restaurants.
Meanwhile, the state tourism office is reeling from woes of its own. The new state budget nearly eliminates the $8 million budget of the California Division of Tourism, even though tourism marketing brings in $7 in tax revenue for every dollar spent, said Jennifer Jasper, deputy director of the California Travel and Tourism Commission.
"We'll just have to get more creative," said Terri Taylor-Solorio, president of the California Travel Industry Association. "And at least we still have this: Who doesn't want to come to California?"
