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San Diego bests Los Angeles, San Francisco in attracting leisure and business travelers since pandemic

Passengers board a Lufthansa flight to Munich at San Diego International Airport.
Passengers board a Lufthansa flight to Munich at San Diego International Airport.
(Sandy Huffaker/For The San Diego Union-Tribune)

Some cities are doing much better than others when it comes to recapturing overnight room revenue that they took in before COVID-19 shut down tourism in 2020

Crowded beaches, pricey hotel rooms and long lines at the airport validate the findings of a new report showing that San Diego’s leisure travel sector is already surpassing pre-COVID levels, outranking California rival cities, Los Angeles and San Francisco.

By the end of this year, hotel revenue generated by vacationers coming to San Diego — nearly $1.9 billion — is projected to surpass 2019 numbers by nearly 20 percent, in spite of a pandemic that for much of 2020 paralyzed the tourism economy. That’s according to a new analysis released this week by the American Hotel & Lodging Association and Kalibri Labs, a firm that forecasts hotel revenue performance. By comparison, hotel revenue from leisure travel for the top 50 U.S. hotel markets is up an average 14 percent, the report found.

Among the 50 cities, San Diego ranks 14th in terms of its projected room revenue growth since 2019. Just ahead of it, in 11th place, is Anaheim, which is expected to see a more than 23 percent increase in hotel dollars from overnight vacation stays. However, California’s two other top travel destinations — Los Angeles and San Francisco — trail far behind.

L.A. has a ranking of 32nd, and in very last place is San Francisco, which has struggled to regain its once strong tourism footing. With a stunning decline of nearly 19 percent since 2019, it is one of just eight cities among the top 50 that are projected to see a decrease in hotel revenue tied to vacation travel.

San Diego had some advantages over Los Angeles and San Francisco as the tourism economy gradually reopened among rapidly changing COVID restrictions, explained Peter Hillan, a spokesman for the California Hotel and Lodging Association. For one thing, both L.A. and the Bay Area did not reopen quite as quickly, he said. In addition, both those areas rely much more heavily on international visitors, especially from Asia, which has been one of the slowest parts of the world to resume travel, Hillan said.

“The pandemic showed some of the longer-term issues that had already been present (in San Francisco), particularly with the convention market and business travel, like street behavior and homelessness pushing out business travelers and conventioneers,” Hillan said

Just a year before COVID arrived, one of San Francisco’s biggest annual tech conventions — Oracle’s OpenWorld — decided to move to Las Vegas, citing high hotel prices and “poor street conditions.”

“It’s not to say other cities don’t have this issue but San Francisco is suffering more nationally from this than is San Diego,” Hillan said.

Unlike the leisure market, business travel has been much slower to rebound, as evidenced by the Kalibri report, which predicts that just 40 percent of the nation’s top markets will surpass 2019 levels by the end of 2022. The news for San Diego, however, is good. The analysis concludes that hotel revenue related to business travel will be 8.5 percent higher than what was recorded in 2019.

While business travel in San Diego is not expected to match pre-pandemic levels until 2023 or possibly 2024, the Kalibri analysis includes within the business category meetings and convention travel, which has been rebounding strongly in San Diego.

Daniel Kuperschmid, general manager of the Manchester Grand Hyatt, which is San Diego’s largest convention hotel, said that his convention-related business is already exceeding the hotel’s performance in 2019. That, along with especially robust revenue from leisure travelers, is helping make up for the more sluggish rebound of corporate travel.

“San Diego is definitely out-performing the rest of the West coast cities,” he said. “And business travel is starting to come back but it’s not at 2019 levels yet. Our convention business, though, is very strong and already above 2019 levels. As a hotel, we’ve been above 2019 since June of this year, and next year will be a record year for the hotel.”

San Diego Tourism Authority Chief Operating Officer Kerri Kapich noted that San Diego compares favorably to cities like Los Angeles and San Francisco because it has never depended heavily on international travel the way those two metro areas have.

She added, “If we look at this calendar year to date for January through September, the average daily rate for group (and convention) business is $35 a night higher than it was in 2019, so everyone is seeing a rise in prices, which no doubt accounts for some of this revenue increase.

“When I look at the amount of revenue generated in this report, that’s great. This is a long haul so the market is performing quite well, so I’m feeling pretty good but there is still more work to do.”


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