Travel Trends: "Good News — Bad News" — by Lakshman Ratnapala

San Francisco and the Bay Area received a dose of both good news and bad news last month (March, 2010).

The good news is that President Obama has at last signed the Travel Promotion Act into law. With that the United Stated is equipping itself to compete in the international travel market by promoting diverse attractions under a collective national brand, as so many other countries are doing. It is a historic victory for which the U.S. travel industry has fought for so long.

The Travel Promotion Act establishes a public-private partnership to promote the U.S. and to communicate U.S. security and entry policies. According to analysis by Oxford Economics, the bill is estimated to drive $4 billion in new consumer spending annually, provide $321 million in new federal tax revenue each year and create 400,000 jobs nationwide. Overseas visitors spend an average of over $4,000 when they visit the U.S.

The TPA is funded through a matching program featuring up to $100 million in private-sector contributions and a $10 fee on foreign travelers who do not pay $131 for a visa to enter the United States. The fee is to be collected once every two years in conjunction with the Department of Homeland Security’s electronic system for travel authorization.

Now for the bad news. The San Francisco Convention & Visitors Bureau (SFVCB) released its annual estimate of the economic impact of the tourism industry in the city, reporting that last year (2009) San Francisco saw a drop in both visitor numbers and expenditures. The negative results had a spill-over effect throughout the Bay Area as tourist destinations all around the bay and beyond depend much on excursions originating in San Francisco.

Total number of visitors to San Francisco in 2009 was 15.4 million, a decrease of 5.8 percent, and visitor expenditures amounted to $7.8 billion, a drop of 7.8 percent from the previous year. The data was not unexpected, given the state of the global economy, but it is especially disturbing in the light of the importance of tourism to the economic health of San Francisco and the Bay Area.

The tourism industry generated over $426 million in taxes for the city of San Francisco, down 19.2 percent from 2008. The industry supported 66,837 jobs in 2009 with an annual payroll of $1.8 billion. There was an average of 125,407 visitors in San Francisco each day, last year. They spent $21.5 million daily, on average.

Now, to help boost hotel business, the SFCVB is casting a wider net for meetings and conventions. Also, this summer, for the third year in a row, the Bureau is orchestrating a cooperative campaign with several major cultural venues to promote San Francisco’s “embarrassment of riches” in art exhibitions, targeting “cultural travelers” in prime feeder markets to the city. This month (April, 2010) SFCVB will be launching a new campaign aimed at gay and lesbian (LGBT) travelers, a key market segment for San Francisco, considered to be the #2 overall destination in America for LGBT travelers.

— Lakshman Ratnapala
BATW International Consultant

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