3 Trends That Could Dramatically Impact West Coast Hospitality
West Coast hospitality markets could take a big hit this year. Recent policies coming out of President Donald Trump's administration have many industry experts expecting a dip in international travelers into California and the West Coast. Growth at convention centers may be what helps shore up the gaps.
While the national tourism industry is watching how Trump’s travel ban will affect the industry in the long run, short-term numbers have not been positive. Marriott reported a 10% decline in U.S. bookings from Mexico and a 25% to 30% drop from the Middle East in February. Nationwide projections indicate the U.S. could lose 6.3 million visitors over the next year. Many of these travelers could turn to Europe instead.
About 17 million foreign visitors traveled to California in 2015 seeking out iconic sites like the Golden Gate Bridge and Disneyland. About 7.8 million visitors came from Mexico, 1.16 million came from China and 286,000 visitors traveled from the Middle East in 2015.
Searches for international flights to the San Francisco Bay Area, where Chinese travelers are among the largest visitors, are down 40% in recent months, according to Hopper. Flight searches into San Francisco International Airport dropped 45.6%, The Mercury News reports.
In 2016, visitors to California spent $125.9B, which includes $25.5B from international travelers, according to Visit California. In the Bay Area, foreign visitors spent about $34.3B. Tourism Economics expects a potential three-year loss of 800,000 international visitors and $736M in tourism dollars in the Los Angeles County area.
Increased immigration enforcement also may make it more difficult to find workers for leisure and hospitality industries, the sectors where the greatest number of undocumented workers are employed in the U.S. A report by the National Bureau of Economic Research said if all undocumented workers were deported from the country quickly, it could cause an 8% decline in construction, leisure and hospitality economic output. San Diego hoteliers in particular could lose a chunk of their workforce.
Convention Center Growth
Renewed focus on convention centers could make or break different hospitality markets in California heading into 2018. In San Francisco, a $500M expansion at Moscone Center will lead to closures at the convention center. These closures will mean 290,000 fewer visitors in 2017 and up to 1 million fewer visitors in 2017 and 2018 total. While the renovation will lead to 25% more space, San Francisco’s tourism industry will have to endure a loss of up to 490,000 room nights through 2018, the San Francisco Business Times reports.
Silicon Valley will benefit from several large tech conferences heading its way instead of San Francisco. Apple, Google and Facebook have all moved their big developer conferences to Silicon Valley this year. About 1,000 developers attend Apple's conference.
Hoteliers are chomping at the bit near the Los Angeles Convention Center, where there has long been a shortage of hotels. TriCal Construction proposed a 1,024-room hotel towering over 53 stories near the convention center. The city has planned to have 8,000 rooms near the convention center by 2020. Last September, 3,172 rooms existed with 2,000 on the way, the Los Angeles Times reports. At 11% RevPAR growth in 2016, Los Angeles had the highest growth rate of any other city, which could attract even more interest from hoteliers.
Find out more about the issues that will impact West Coast hospitality at Bisnow’s Big West Coast Hospitality event in Los Angeles on April 21.