AN UNCERTAIN SUMMER

Orange County Business Journal, May 5-May 11, 2008 by Cain, Sandi

The tourism boom of the past couple of years might wane this summer as consumers scale back spending in the face of rising living costs, shrinking jobs and an uncertain economy.

Fifty-seven percent of Americans have taken at least one trip away from home in the past year-down from 63% in a 2007 survey, according to the National Travel Monitor by Orlando, Fla.-based Y Partnership.

While 76% of travelers still 'are determined to get out of town, many say they'll travel less often or for fewer days, primarily due to financial and job concerns. Fifty-three percent of all trips already taken this year have been long weekends of three or four days.

"That doesn't (bode) well for the next 12 to 18 months," said Peter Yesawich, chief executive of Y Partnership who presented the leisure trend data at the eighth annual Resort Conference in San Diego last month.

While that's unsettling news for the local tourism industry, Orange County hoteliers are crossing their fingers that a downturn won't come to pass.

"We had a tremendous (room) pickup in March," said J.D. Shafer, general manager of the Hilton Waterfront Beach Resort in Huntington Beach. "If that's any indication, we're not concerned for summer."

But soaring fuel costs, increasingly difficult air travel and worry about what lies ahead might mean fewer Disney princess dresses and steak dinners for this year's vacationers.

"The good news is that most Americans will stay closer to home," said Bill O'Connell, who owns the Best Western Stovall's Inn and three other tourist hotels in Anaheim.

"With 30 million people within a day's drive, we'll probably be OK but not great (this summer)," he said.

The drive-in market has always been a solid one for OC with Disneyland as the anchor that brings many vacationers here.

This year, Disney will unveil its Toy Story Mania ride and the Disney World of Color nighttime light show at Disney's California Adventure. In March, the company debuted a Playhouse Disney program and the Pixar Play Parade at California Adventure to entice families to visit.

At Disneyland, Innoventions this summer will get a new Dream Home that will feature digital technology for the home that is on the horizon. This fall, new Tinkerbelle characters also will be introduced at the park.

Disney officials say gas prices don't traditionally impact visitor numbers and that high gas costs may cause people to come to Disneyland instead of going somewhere else.

With gas prices spilling over the $4 per gallon mark, that theory may be put to a test.

"Gas is approaching the point at which people say they'd change their plans," Yesawich said.

Nationally, that figure was $3.50 a gallon-a price California hasn't seen in more than a month. Yesawich said higher gas prices likely will translate to less money spent on hotel stays or dining.

"Cancellation is way down on the priority list of options," he said.

One plus for amusement parks and OC: Travel with children is on the rise, with 38% of travelers saying they've taken at least one trip with kids.

So far, hoteliers haven't seen a slump in occupancy. But they say the booking pace has slowed.

"The market is soft because people are being cautious about money," said Dan Fitzgerald, director of sales at the Hilton Costa Mesa. "We're looking at it as a short-term blip."

Last year, overall occupancy in the county leveled off at around 72%, while overall rates increased roughly 7%.

"2005,2006 and 2007 were terrific years and this year was terrific in the first quarter," O'Connell said.

Hotels are having a difficult time figuring out what to expect.

"There's a much shorter booking window," said Doug French, director of revenue management at the Hilton Anaheim, the county's largest hotel.

Vacationers, he said, typically book rooms 30 to 40 days ahead of travel.

"Now that's three to seven days," he said. "They're making last-minute decisions even to come to Disneyland."

Weather also drives some of those impromptu decisions.

During the brief April heat wave, coastal hotels got an unexpected bump in business as temperatures rose.

"We were at 70% occupancy (for the weekend) on Friday and ended up selling out," said Todd Wheeler, director of sales at the Doubletree Guest Suites in Dana Point

To entice the indecisive, more hotels are offering special packages such as Hilton Waterfront's S'Mores & More beach party.

"We're promoting summer packages heavily," Shafer said.

The Costa Mesa Conference & Visitors Bureau has for several summers offered gas and/or restaurant coupons under a Drive & Dine program for guests who stay at member hotels.

"We do very strong business with drive and dine," Fitzgerald said.

Still Hopeful

Other factors that keep OC tourism officials hopeful:

* The buzz around GardenWalk in Anaheim is sure to increase after the May 15 grand opening of the 440,000-square-foot entertainment and lifestyle shopping center across the street from Disneyland. Restaurants at the complex-including Cheesecake Factory, California Pizza Kitchen, P.F. Chang's, McCormick & Schmick's Grille and Roy's of Hawaii-began opening in December.