The Tourism Economics San Diego County Travel Forecast was just posted on the SDTA website at www.sandiego.org/research Below is the executive summary as a quick snapshot but see the full document to review global and US economic trends, key feeder market forecasts, and deeper analysis on the San Diego travel market. The next update can be expected in June 2014.
- San Diego hosted 10.6 million visitors in the third quarter of 2013. However, growth in visits to San Diego slowed to just 0.7% in the third quarter compared to 2012. Through the first three quarters of the year total visits have expanded 2.4%.
- Visitor expenditures were stronger in the third quarter, advancing 5.5% to $2.6 billion. Average daily expenditures increased across all visitor segments.
- Hotel demand increased 2.2% in the third quarter, improving over the first two quarters of the year. While room supply continues to grow, occupancy rates managed to top 80% in the third quarter.
- ADR has accelerated over the past two quarters in response to higher demand. ADR reached a third quarter peak of $150.89 in nominal terms—4.4% above 2012 Q3.
- San Diego hotels continue to maintain premium occupancy rates and prices compared to both California and the US, but these premia have narrowed compared to last year. The San Diego hotel sector has regained some ground since May relative to California and the US, however both demand and ADR growth lag state and national performance through October.
- The US economy is poised to expand in 2014 with GDP growth accelerating to 2.6% and steadying through the remainder of the forecast period. This acceleration will be supported by improved consumer spending, a stronger labor market, improved business investment, a stronger housing market, low inflation, and the energy boom.
- These factors, especially in the household sector, are the key drivers which will support travel in the next year. US domestic trips are forecast to grow 1.7% in 2014 from 1.2% in 2013.
- Visits to San Diego are expected to post annual growth of 2.2% in 2013 aided by relatively stronger performance in overnight visitation in the fourth quarter. Visits are forecast to slow to 1.6% in 2014.
- Longer term, visitor growth is forecast to rise above 2% in 2015 before settling toward an average growth of 1.8% in 2016-2017. While spending is expected to accelerate in 2014 due to relatively stronger overnight visitation, visitor spending growth will slow and remain stable through 2016.
- Hotel room demand is projected to grow 2.2% in 2013, revised higher from the last forecast, yet the slowest rate since the recession. Demand is forecast to rebound in 2014, growing 2.8% and stabilizing below 2.5% in 2015-16.
- The combination of slower demand and an increasing room supply in 2013 will keep ADR growth below 3% for 2013. Supply growth will continue to accelerate in 2014, but relatively higher demand will keep occupancy above 72% in 2014 and rising to 74% by 2016. These higher occupancy rates will support ADR growth of 4% on average through 2017.