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Visitor Volume, Spending Hit Record Levels

By Jorge Casuso

March 18 -- Tourism has become Santa Monica’s prime economic engine, generating a record $1.2 billion in visitor spending in 2006-07, up from $776 million three years earlier, according to a report released Monday by the Convention and Visitors Bureau.

The number of total visitors rose to 5.8 million, up from 4.7 million in 2003, a 24 percent increase, thanks to a surge in day visitors from the region, according to the 2006-2007 Economic Impact Study conducted by Lauren Schlau Consulting and CIC Research, Inc.

Tourism is now the leading generator of revenues to the City’s general fund, contributing $33 million a year in bed taxes (Transient Occupancy Tax) alone, the report found. The jump in the number of visitors also accounted for a doubling of tourism supported jobs, from 8,122 in 2003 to 16,030 in 2006-07.

“Tourism plays an important role in the local economy, providing the community with a significant revenue stream for services and ensuring that the city budget remains stable even during economic downturns,” said City Manager P. Lamont Ewell. “Our partnership with SMCVB is vital in these efforts.”

Of the total spent by visitors, $468 million, nearly 40 percent, went toward shopping and retail, $279 million was spent on lodging and $217 million on meals, followed by $84.8 million on local transportation/parking and $67 million on beverages.

According to the study, the occupancy rate at local hotels rose to 83.6 percent in 2006-07, up from 72.2 percent in 2003, giving Santa Monica the county’s highest occupancy rate outside the LAX area.

Daily room rates for the 1.12 million rooms occupied annually averaged $172.35, up from $163 in 2003, with a $306 average rate for the luxury hotels, $192 for the first-class level, $149 for the mid-rate properties, and $98 for the value tier.

Hotel visitors were the biggest spenders at $618 million, followed by $474 million spent by day visitors and $130 million spent by those staying in private Santa Monica residences.

Day visitors accounted for 82 percent of the total visitors, hotel guests for 14 percent and those staying in private residences accounted for nearly 4 percent.

Although the number of day visitors saw the most dramatic jump, the number of hotel visitors rose by 54 percent to 762,000. Most came from California, New York, Florida and Arizona.

And while the 2.9 million domestic visitors accounted for the highest share of the visitor market, there were 2.7 million international visitors, increasing their share from 45 percent of the market to 48 percent over the past three years, according to the report.

“We are thrilled with the hotel occupancy and rate increases and see potential growth in the international segment, especially as the U.S. dollar continues to be weak against foreign currencies, which generally stimulates in-bound tourism to the U.S.,” said Alison Best, Director of Sales at SMCVB.

“Our goal is to balance our capture of both domestic and international travelers to better protect us whether facing a domestic crisis like we saw in 2001 or international issues such as financial or security related.”

While visitors have historically stayed longer and spent more the further they travel to get to their destination, international visitors spent an estimated $150 per-person per-day, less than the $157 spent by U.S. visitors.

International visitors also stayed one-half day less in Santa Monica at 1.3 days in 2006-07, compared to 1.8 days in 2003. The shorter stays and lower spending were offset by larger international group sizes, 2.78 persons, up from 2.41 persons in 2003.

“These numbers clearly indicate that we need aggressive outreach to re-stimulate key international markets,” said Misti Kerns President/CEO of SMCVB.

“International visitors tend to stay longer, spend more and use public transportation, the most desirable visitor market for Santa Monica, that helps us maintain balance, secure diversity, and position the city as a premier travel destination,” she said.

While a weakening U.S. dollar should have boosted international tourism, increased security and stricter requirements, as well as unfavorable perceptions of the U.S., have deterred many international travelers, according to the study.

The majority of Santa Monica’s international visitors are coming from the United Kingdom, Australia, New Zealand and Germany. Japan was also among the top countries for the first time since 9-11 and the Asian financial crisis, and China appeared for the first time on the top ten list of countries.

“We offer an incredible experience in Santa Monica, but we must continue to tell people our story and invite them to visit in a fiercely competitive market,” said Kerns.

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