Sales Drop Citywide, 5,000 Jobs Lost

By Constance Tillotson

August 2 -- The sun failed to shine on Santa Monica's wilting economy, as first quarter sales dropped eight percent this year and 5,000 jobs, many of them in the high tech sector, were lost over the past year, according to the City's Economic Development Division.

Declines affected a myriad of businesses including department stores, business services, office equipment, service stations and the tourism industry, according to the latest sales figures released this week.

The city's auto dealers once again helped cushion what could have been a more precipitous economic drop, holding on to the approximately 18 percent gain made last year, with reported first quarter sales totaling more than $97 million.

"The first quarter is always tough, but not always this tough," said Gwen Pentecost, senior administrative analyst for the City's Economic Development Division. "We're a microcosm of what's happening in the rest of the world."

Santa Monica continued to feel the fallout of the September 11 terrorist attacks on its $788-million-a-year tourist economy. A drop in corporate travelers and international tourists -- especially from Japan -- was reflected in an 11 percent decrease in first quarter sales, compared to the same period in 2001.

"By custom, the Japanese don't go to a country that is at war," said Jack Kyser, chief economist for the Los Angeles Economic Development Corporation. "Business all over has been really hurt from the lack of international travel."

The News Bureau and Labor Statistics recently released figures showing that total passenger traffic at LAX was down by 15.8 percent, with international traffic closely mirroring the general drop at 15.2 percent.

"The Japanese are our number one oversees visitor," said Carol Martinez, assistant vice president Los Angeles Convention and Visitors Bureau. "Passenger arrivals from Japan were down 41 percent in January when compared to 2001. They are still our number one visitor but there has been a significant decline."

Pentecost notes that the travel industry already was in a tailspin prior to the September attacks on New York and Washington, D.C.

"What 9/11 did was expose problems that already existed," said Pentecost. "The tourism industry was already showing signs of economic slowdown."

The biggest loser on the store front was Santa Monica Place, which relies on foreign visitors for much of its sales revenues. The mall saw first-quarter sales plunge 20 percent, compared to last year. Just outside the indoor mall's entrance, the Third Street Promenade saw sales increase by 6 percent.

The Bayside District (not including the Promenade) also outperformed the rest of the city, although it showed a 3 percent decline. The City's other two major business districts also saw first-quarter sales decrease. Main Street saw a nearly 8 percent drop and sales declined 6 percent on Montana Avenue.

Across the City, office vacancies were up 18 percent, compared with 8 percent during the same period last year. Vacancy rates are a factor in the overall economic picture in Santa Monica, Pentecost said.

"The office vacancy rate and the slowdown in tourism has really shown a great economic impact," said Pentecost said. "Much of the vacancy is from business to business companies, which have closed down."

Along with the empty offices came a loss of jobs. According to Penecost, Santa Monica lost approximately 5,000 of its 74,000jobs over the past year. Nearly half the jobs lost were in the information technology, professional, science, and technical skills categories.

PKF Consulting has shown one bright light on the tourism industry with its recent second quarter report. It showed that at 76.8 percent, Santa Monica had the second highest hotel occupancy rate in Los Angeles County.