San Diego hit a record last year for visitor arrivals, and sources hope 2016 will surpass that with the help from bleisure and meetings demand as well as a growing number of global visitors.
SAN DIEGO—San Diego hotels have seen solid performance as the city relies on bleisure business, group meetings and a growing global visitor base, according to sources.
Joe Terzi, president and CEO of the San Diego Tourism Authority, said the city had 34 million visitors in 2015, with about 9 million overnight stays in hotels. He said he foresees the city breaking last year’s record in 2016.
“We’re tracking to see another record year,” Terzi said. “Last year was a record year for the market. … We expect to see increases of about 2% to 3% in occupancy over (2015’s) number, and we’re pretty comfortable that we’ll get that number.”
“This year compared to last year, our numbers are up,” said Suresh Patel, president and CEO of Excel Hotel Group. The company has eight San Diego hotels in its portfolio.
San Diego reported occupancy of 74.5% in March, a 0.7% decrease year over year, according to data from STR, HNN’s parent company. Average daily rate for the month increased 2.1% to $144.40. Revenue per available room increased 1.4% to $107.54.
A ‘bleisure’ market, growing global
The SpringHill Suites & Residence Inn San Diego Downtown/Bayfront opened its doors in February. Michael Murphy, newly appointed GM at the hotel, said the guest mix at the property is “interesting.”
“It’s the perfect ‘bleisure’ hotel,” Murphy said. “It’s got the business and the leisure all mixed in together.
“This last month it was all families. This next month it will be all citywide convention (guests), so there’s going to be a completely different clientele that comes in.”
Terzi said leisure travel and group meetings are the main sectors driving tourism in San Diego.
“San Diego has always been tourism-driven from two major sectors,” he said. “The first one is certainly leisure travel and the second is really the meetings industry, inclusive of large city-wide conventions.
“Those are our two bread and butter market segments that we perform very well in, and that continues to be the driving factors for San Diego.”
Along with the city’s strong leisure and meetings sectors, Terzi said San Diego is seeing growth in the number of inbound international travelers.
“We have worked hard at trying to capture more international visitors,” Terzi said. “And California is one of the primary states in the country that is benefitting from international travel into the U.S. …
“In the last month, we’ve secured direct flights from Tokyo to San Diego, and from London to San Diego, and a couple of other flights that have helped make it easier to get international visitors here. A key objective of ours is to take advantage of growth of international travel to California.”
Murphy said a bridge between Tijuana and San Diego recently opened, leading to more international travelers coming to San Diego who flew into the Tijuana International Airport. The ability for flights to come into the Tijuana Airport, which is a 40-minute drive from the San Diego International Airport, has led to a greater number of inbound international travelers.
“The city is working diligently on getting a real ease of passage from the border right through the city,” Murphy said. “That’s another great attribute that I think will allow the city to grow without building a whole new airport (in San Diego).”
New builds, new challenges
Patel said Excel Hotel Group is planning to build more hotels if the price is right, but that might be a challenge with a rise in property costs in the San Diego area.
“The cost of property for hotels is financially getting difficult (for) new construction, and also for existing properties, so it’s going to affect the whole market,” Patel said.
Terzi said three major developments with “hotel components” are in the works along the waterfront in the downtown market, which will contribute to an increase in the number of rooms available in downtown San Diego.
“We’ve got about 4,500 new roomnights coming into the downtown market alone over the next four years,” Terzi said. “We’re going to see a significant increase in availability in downtown San Diego between now and 2020.”
There are nine hotels with 1,499 rooms under construction in San Diego, according to STR.