Tourism Trade Hopes Recent Pickup Spurs Better 2003
By SANDI CAIN
Orange County’s tourism trade is hoping 2003 brings a silver lining to the storm clouds that have lingered since the terrorist attacks.
A recent PricewaterhouseCoopers report said the economy’s weaker-than-expected growth will hold back lodging demand, resulting in lower profits through 2003.
But there are indications that visitor numbers will be on the upswing next year.
Los Angeles-based PKF Consulting projects that OC hoteliers will finish this year at about 65.7% occupancy.
That’s down from 69% in 2001 and 74% in 2000.
Next year, PKF expects occupancy to climb back to 69%. At the end of October, the county’s occupancy was 67%.
Part of the drop in occupancy can be attributed to new hotel rooms. This year saw Garden Grove’s Hyatt Regency Orange County roughly double in size to 650 rooms, and the long-delayed Marriott Suites open.
New resorts opening early next year will focus more attention on OC’s coastline. The Hyatt Regency Huntington Beach is slated for a Jan. 16 opening, while Montage Resort in Laguna Beach will open by March, as will the 130-room public hotel at Balboa Bay Club in Newport Beach.
Only a few other hotels are on the horizon for the year. An Extended Stay America will open in Yorba Linda in January and a Residence Inn is under construction in Garden Grove and expected to open by summer.
The new hotels should help bolster hotel employment, which was down 5% to 13,246 in 2002. OC has about 50,000 hotel rooms, with about half of those in the Anaheim area.
Despite the struggles of trade shows such as California Cable Telecommunications Association, which saw attendance at its once-thriving Western show drop to about 10,000 earlier this month, overall convention attendance in OC is likely to surpass 1 million in 2002.
Bookings for 2003 and beyond are running ahead of this year.
As of mid-December, there were 292 groups booked for next year with a projected attendance of more than 900,000. With the average booking window at three to six months, the Convention Center has a good shot at surpassing this year’s numbers.
“Attendance is starting to look a little better,” said Charles Ahlers, president of the Anaheim/Orange County Visitor & Convention Bureau.
Ahlers said the bureau has fielded inquiries in recent weeks from some companies that had scaled back meetings after the terrorist attacks.
“That’s a good sign,” Ahlers said.
But corporate executives still keep tight reins on convention and travel spending, making for a more competitive market.
Trade shows continue to struggle nationwide, with average attendance down 8% in 2002 vs. a year earlier. Some shows are sharing facilities,and attendees,to save costs and bolster their numbers.
That doesn’t help the hotels, which face cutbacks in parties, catering, suite rentals and peripheral spending as corporate excess is curtailed.
The Anaheim/Orange County Visitor & Convention Bureau now publishes expected out-of-town attendance as well as total attendance on its convention calendar.
Ahlers said that tells hoteliers what to expect in room usage.
“It gives people a heads-up,” he said.
Hoteliers are doing their own promotions to bring in more business.
At the Walt Disney Co. hotels, vacation packages account for a big chunk of business. Company officials say that call volume is up in recent weeks.
And there are other positives for OC.
The popularity of John Wayne Airport has increased this year, with year-to-date traffic at 7.2 million passengers, up from 6.7 million at the same time last year and 7.1 million in 2000. Plans are to add six gates and boost the airport’s capacity 30% by 2011, which likely would draw more tourists to the county.
Travel trends work in the county’s favor. Its suburban atmosphere, leisure attractions and location in the midst of a target drive-in market of more than 20 million people should help its tourist numbers grow.
In a recent Travel Industry Association survey, 75% of its 2,300 member organizations said their customers were sticking closer to home and taking more last-minute trips,many of those by car.
Disneyland is always the county’s big leisure draw. And with all the fine-tuning Disney has done at struggling California Adventure, attendance should start to climb there.
Cultural attractions and OC’s wealth of upscale shopping also are a draw for regional visitors.
Cultural tourism is blossoming and Costa Mesa is playing to that, pairing hotel and restaurant packages with special performances such as the Orange County Performing Arts Center’s recent Theatre Zingaro.
Shopping is now a top vacation activity and both South Coast Plaza and Fashion Island cater to visitors as much as to locals. Both are popular with the international set.
San Diego-based CIC Research, which analyzes visitor data in Southern California, estimates domestic tourism should be up about 3% in 2003 and that international levels should at least improve to 2001 figures.
As of October, global visitors still were 12% below pre-Sept. 11. For OC, the 3% uptick would mean about 42 million visitors.
If visitor spending increases by the same amount, it would generate about $6.8 billion for OC businesses.
TEAM TO WATCH: ANAHEIM ANGELS
For the past two years, rumors about the sale of the Anaheim Angels have run rampant. Various individuals and groups are rumored to be in the running.
The Walt Disney Co. last summer admitted its Angels and Mighty Ducks of Anaheim hockey team were for sale and hired an investment banking company to assist in shopping them around.
Then the Angels did the unthinkable. They won the World Series. Disney Chief Executive Michael Eisner was suddenly a hero of sorts.
So was Jackie Autry, once blamed for putting the Angels on the verge of moving from the area. Times really do change.
For 2003, there are two pressing questions: can the Angels repeat, and will Disney sell its entire interest in the team?
Since the October madness, Disney officials have said that the teams absolutely are for sale. Eisner has waxed eloquent on why the sports business doesn’t make sense for a public company.
Yet at the same time he has softened his stance. He has said the company would consider keeping an interest in the team. He has referred to selling ‘some’ of the company’s sports assets.
In a recent Forbes story, he mentioned selling the Ducks and the company’s radio stations without talking about the Angels.
It would be a true Disney fantasy to believe the company wouldn’t sell if the right offer came along. But add in Eisner’s insistence that the teams would have to stay in Anaheim, and it could be longer than initially thought before a sale in inked.
So can the Angels repeat?
Why not? With Disney’s blessing to raise the payroll about 35% to $84 million, General Manager Bill Stone-man and Manager Mike Scioscia will be able to keep most of the championship roster intact and seek help in areas where it’s needed.
Several key players were already signed to long-term deals. And the fans will be less leery of a reliance on the farm system after the remarkable performances of John Lackey and Frankie Rodrigues last season.
Of course, ticket prices are up, too, though Kevin Uhlich, senior vice president of operations for the Angels, said there have been no complaints so far. And team officials project attendance to increase about 17% to 2.7 million next year.
Uhlich said a lot of thought went into the new pricing, including a $5 surcharge on popular games. The surcharge isn’t levied on season ticket or mini-pack ticket holders.
“They’re our bread and butter,” Uhlich said.
The team will keep its promotional giveaways and will reach out to new markets such as Bakersfield, Las Vegas and possibly Hawaii through its shift to radio station KSPN next season.
“We’ve broadened our brand throughout the region,” Uhlich said.
Of course, teams are “bandwagoners” every bit as much as fans and other teams may try to imitate the Angels’ style of play.
Will they be better prepared to face the Angels’ style? Maybe. And a 162-game season is nothing to sneeze at. Anything can happen. But this is a young team overall, and manager Mike Scioscia has shown he can adjust to any given situation,as have the players.
When you’ve reached No. 1, a repeat performance is never easy. But this team appears to have the tools to do it.
,Sandi Cain
PERSON to watch: BOB ALTER
Being private doesn’t mean being quiet.
Since taking San Clemente-based Sunstone Hotel Investors Inc. private two years ago, Chief Executive Bob Alter has increased the company’s portfolio to include more full-service hotels in an effort to boost its national presence.
Sunstone bought 10 hotels for $132 million shortly after going private in 2000. Now it will take over management of 15 hotels from Dallas-based Wyndham Inter-national Inc., bought by Sunstone investment partner Westbrook Hotel Partners for $447 million.
Sunstone manages 73 hotels in 17 states with a total room count of about 16,000.
The addition of the Wyndham hotels,including the Hyatt Newporter, the Del Mar Hilton and the Warner Center Marriott in Woodland Hills,takes the company another step closer to its goal of having a national presence. Alter said 22 of the company’s hotels are in California.
“This takes us to the East Coast for the first time,” Alter said. “It also strengthens the quality of our hotels.”
The move puts Sunstone within the largest 40 hotel companies, according to the most recent list by Hotel & Motel Management magazine.
Sunstone’s current portfolio puts them on par with industry players such as Four Seasons and Harrah’s, in terms of the number of hotel rooms under management.
Alter said the company has sold 20 hotels with an average room count of about 125 since 1999, but bought another 28 hotels with an average of 250 rooms or more. Among the hotels acquired were those operated under the Marriott, Hilton, Hyatt, Holiday Inn, Crowne Plaza and Ritz Carlton flags.
“It’s a good group of hotels,” he said.
“We expect our revenue in 2003 to be about $600 million, counting third-party managed hotels,” he said.
That would be up from roughly $294 million for 2002. The company employs 7,000.
Alter said newly acquired hotels will “absolutely” be renovated.
Sunstone recently completed a $20 million renovation at the 267-room Napa Valley Marriott that included the addition of meeting space for up to 600 people and a full-service spa.
Next month, two properties in Old Town San Diego will reopen under new brands: the Holiday Inn will convert to a Courtyard by Marriott and the Ramada Limited will become a Holiday Inn Express.
Alter said the company is looking for more hotels to add to its portfolio.
“We still have capital to invest in 2003,” he said. “We’d like to continue the move to the East Coast as we try to diversify our portfolio.”
,Sandi Cain
