CEO Blog

In honor of National Travel and Tourism Week, which runs through May 17, I’d like to remind everyone how tourism impacts our lives, and why we cannot take it for granted. We are lucky to have a governor who gets it and supports our efforts to keep this industry strong, which is not an easy task these days, and I urge legislators at the state and local level to do the same.

 

Governor Schwarzenegger supported this vital industry once again this week with a proclamation declaring this Travel & Tourism Week in California, to coincide with the national holiday. Why should you care? Travel and tourism expenditures total $97.6 billion annually in California, supporting jobs for 924,000 Californians and generating $5.8 billion in state and local tax revenues. These revenues help relieve our tax burdens and keep unemployment down. Also, some of these revenues benefit the state’s cultural and heritage assets, which attract more visitors and enhance our lifestyle in California.

 

With the economic difficulties and TARP-related downturn in meetings and conventions nationwide and in California, our industry was already suffering losses before the global panic over swine flu – which many health experts agree was overblown by the media. While it is true that more than 80 percent of our visitors come from within the state, we can’t assume that residents alone will carry us through the recession and keep travel industry staff employed.   It is critical that we keep our industry growing by attracting more out-of-state and international visitors.

 

That’s why the California Travel & Tourism Commission (CTTC) is working hard to maintain its aggressive marketing efforts domestically and overseas. Since many of our destination marketing organizations (DMOs) have had to cut their marketing budgets, and CTTC’s funding remains stable, we continue to run our advertising, public relations and sales efforts in key U.S. and international markets. Many of our competitors are losing marketing funding, so as I’ve mentioned in previous blogs, we have a great opportunity to increase share of voice globally. Right now, we are reminding consumers in the U.S. and around the world that California is a great value, and studies show that travel continues to be so beneficial for well-being, relationships and productivity.

 

An important promotional prospect coming up next week is International Pow Wow, the largest travel marketplace for international buyers of U.S. destination products. CTTC and nearly 20 California travel industry partners will be meeting and networking with hundreds of international travel buyers and journalists May 18-20. Although preliminary statistics indicate that total international visitation was down 2 percent to 13.4 million visitors in 2008, overseas travel was up about 6 percent, and international visitor expenditures were up about 10 percent, so we want to keep attracting these high-value customers. In Europe, news of the swine flu has died down, and the euro is still up over our dollar, which should help our efforts. However, in Asia we are still seeing much negative coverage about the virus, which is resulting in tour operator cancellations in key markets. Efforts like Pow Wow give us a chance to put perspective on issues like this and get out the word about new products and deals that will entice more travelers.
 

Speaking of international tourism, which is a hot topic these days because it is so important for our state’s continued tourism development, here’s the latest bad news and good news. Not surprising, the slight drop in California’s international visitation was due in large part to the global economic downturn, which caused Mexican visitation to the Golden State to decrease 9 percent to 6.7 million visitors in 2008. Although additional markets were down slightly for the same reason, such as Japan, Taiwan and South Korea, other markets were up. Canada’s stronger dollar and shorter trip appeal helped boost Canadian travel to the Golden State by 5 percent (+1.2 million visitors). Stable economies and strong travel drives in the United Kingdom, Germany, France, Australia and China have also contributed to growth in total overseas visitor volume to California, up 5.8 percent to nearly 5.5 million visitors.

With strong promotional efforts, CTTC and the state tourism industry hope to capitalize on some encouraging trends to get California more ahead of the recession curve. According to a recent study by PricewaterhouseCoopers, Brits say that despite hard economic times, they feel that long-haul holidays are a priority for their discretionary spending. According to a 2009 projection reported in ReiseAnalyse, Germans’ travel intentions are more positive than expected; people are just waiting longer to see what deals and options are out there before booking. New flights are also encouraging – Canadian low-cost carrier WestJet is scheduled to begin service in June 2009 to San Diego and San Francisco, while Mexico’s successful low-cost carrier Volaris recently announced intentions to establish new service to California in late 2009 or early 2010.  Aeromexico recently introduced a new nonstop between Mexico City and San Francisco last February, increasing capacity into California. The new V Australia airline and Delta have halved Pacific flight costs, which wholesalers say increased sales year on year. Delta is also launching new from Sao Paulo to LAX in early summer. As of March 2009, among the South Korean travelers who visit California, more than 30 percent have received authorization to travel to the United States through ESTA, and the number is growing as California’s product and friends/family appeal is high. In 2010, both of Tokyo's airports will increase capacity for more international flights, and with high outbound fuel surcharges disappearing and the yen gaining against the dollar, tour operators are reporting increased long-haul bookings. Since China has the only economy still producing at growth rates above 2 to 3 percent, and recently signed a Memorandum of Understanding with the U.S., group leisure travel is expected to remain healthy in 2009.