Santa Cruz Good Times

Oct 09th
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Rules of Attraction

rulesofattractionSanta Cruz is working harder than ever to keep the tourists coming despite economic hardship

It’s easy to gauge the start of tourist season in Santa Cruz — the beaches begin to fill with big umbrellas and families toting heavy coolers, the screams from the Boardwalk become inescapably audible, and in-town traffic jams turn into a daily nuisance.

More than three million visitors come to Santa Cruz each year, according to Maggie Ivy, CEO and executive vice president of the Santa Cruz County Conference and Visitors Council. She says the number one draw is the town’s coastal location — combine that with a major amusement park like the Boardwalk, the Roaring Camp Railroads, 13 state parks, a gorgeous redwood forest and a host of cultural events, and it’s no wonder why tourism has become the City of Santa Cruz’s biggest industry at $600 million a year. Countywide, tourism is second only to agriculture.

But, given the daunting nature of the current economy, the average person is pinching pennies like never before — and the resulting wave of budget-conscious consumerism has inevitably taken its toll on tourism here in Santa Cruz. The primary indicator for tourism is hotel occupancy, which has been decreasing locally over the past several months.

“For the last three years we saw modest increases in occupancy—which tends to indicate that business is better— until near the end of last season when we realized that, definitely, the national trend in the economy was affecting our industry as well,” says Ivy.

Santa Cruz hotels saw a six percent decrease in occupancy over the 2008 business year, and were disappointed to experience another drastic downturn in the first month of the new year.

“It became even more of a concern when we saw a 10 percent decrease in January of this year as opposed to January of last year,” says Ivy, emphasizing that the plunge is not unique to Santa Cruz.  “We’re tracking the same types of decreases the state is seeing. It’s a national trend.”

The Travel Industry Association (TIA), a national nonprofit that represents all components of the travel industry, predicts a 1.3 percent drop in overall leisure in 2009. The SCC Conference and Visitors Council has a lot up its sleeve, including a big spring media campaign, to try and prevent this sort of drop from happening in Santa Cruz.

Pre-existing Challenges

Present economic hurtles aside, those behind Santa Cruz’s tourism industry have long been battling other obstacles. For, although the town draws quite a crowd, its popularity tends to be entirely seasonal.

“The biggest challenge is that a lot of our primary attractions and most of the appeal of our community are limited by weather and vacation time,” says Ivy. The Conference and Visitors Council reports that the majority of tourists visit Santa Cruz between Memorial Day and Labor Day — a reality they combat by providing and promoting a legion of activities and events during the rest of the year.

Christina Glynn, communications director of the Visitors Council, says that ecotourism is a large niche market for the off-season. Between the Begonia and Birding festivals each fall and the Monarch butterflies and whale watching in winter, she says there is plenty of natural wonders to promote throughout the colder seasons. “We’re fortunate that a lot of the signature wildlife watching opportunities happen during the shoulder season,” she says. To boost this market, the Visitors Council has released the Wildlife and Bird Kit, a project that was five years in the making, and aims to increase off-season tourism by offering travelers with an extensive guide to countywide wildlife-watching opportunities.

Several of the town’s big outdoor events, like the O’Neill Cold Water Classic, the Kayak Surf Festival and, for the first time in 2009, the AMGEN tour, are responsible for large influxes of visitors. Cultural tourism also has year-round possibility, says Ivy. “The list of museums, galleries and arts events we have to promote throughout the year is really impressive, especially for a small community,” she says.

After establishing Santa Cruz as a desirable year-round destination, the trick for tourism industry operators becomes getting visitors to stick around. Sixty-five percent of the general visiting public come to Santa Cruz only for the day, and 35 percent stay overnight. This ephemerality is largely a reflection of Santa Cruz’s main market (80 percent of visitors come from the Central Valley as far as Sacramento and the Bay Area) and the fact that they live so close. Only five to 10 percent of visitors come from Southern California or out-of-state, and five to eight percent are international. Glynn works closely with the California Travel and Tourism Commission to promote Santa Cruz to the global market through marketing campaigns and media outreach.

The Game Plan

The tasks of getting tourists to stay overnight and come anytime after Labor Day are going to be even more important for the industry this year as they compete for travelers in an increasingly budget-centered market. According to the TIA, Americans will continue to vacation this year — it will just be less extravagant.

“Families won’t not travel, their trips just might be different,” explains Glynn. “Instead of going to Europe, they might check out a state or national park. They are going to travel closer to home.”

Santa Cruz plans to capitalize on this trend in 2009, aided by the fact that its primary market is already people living within a two to three hour driving distance. The Visitors Council launched its spring campaign earlier this month that introduced the “playcation”—a variation on last year’s “staycation,” or stay-at-home vacation, fad. They define the playcation as “a period of time devoted to leisure travel to Santa Cruz County” and “budget-friendly, pleasurable activities.”

“We are hoping to put the fun back into the staycation,” says Glynn. “The playcation is a vacation that is close to home, but that concentrates on budget-friendly activities and hotel deals that families can take advantage of this season.”

The Visitors Council has partnered with hotels and attractions around town to offer package deals, free passes and discounts, and also plans to continue its calendar of free events, which were successful when piloted last year. Glynn says that this influx of creativity is a perk of the demand for more affordable travel.

“Everyone is aware that people are watching their budgets right now, so they are getting more creative about what they are doing —and providing options, and different levels of options, in the process,” says Glynn.

And it seems no one is getting more imaginative than the hotels. Paul Zech is the General Manager of the Santa Cruz Hotel Group, which represents several hotels in Santa Cruz, Watsonville and Capitola. Like most hotels across the country, his have seen occupancy slumps in recent months. Also, like most others, the Hotel Group is crafting specials for the upcoming tourist seasons to draw in more customers, such as including passes to the Boardwalk and Roaring Camp Railroads with the purchase of a room.

“People expect deals right now,” says Zech. “That has caused hotels to reduce room rates. If they don’t, customers will go to the next hotel and the next until they find the discounted rate they’re looking for.”

He is optimistic that the influx of discounts will actually increase travel, despite predictions that suggest otherwise. “With the price of hotels and airline tickets being reduced, it should spur some travel,” he says. “We may not be getting the higher revenues we typically get, but we will be seeing more people come.”

However, he says they won’t know for sure until the typically busier seasons begin. For now Zech watches as the economy takes stabs at the hotel business (for example, although they are avoiding letting anyone go, “when less rooms are rented, there are less rooms to clean”), creating wounds that he says spread to the entire local economy.

“If you look at the customer and look at all the money they end up spending at all the different businesses in the community, the tax base—sales tax, hotel tax—is huge,” he says.

Nationally speaking, the TIA estimates on their website that a one percent increase in international travel to the U.S. would result in an additional  $15 billion in the economy, $1.1 billion in new state and local tax revenue and $1.3 billion in new federal tax revenue. Ivy, representing the SCC Visitors Council, believes that increased tourism could have a similar, proportional effect on the local economy. For example, she says that simply having more hotels offer conference facilities —which the recently opened Dream Inn, recently approved Mariott and up-in-the-air La Bahia development all offer, or plan to— would expand the tourism season beyond the typical window and, as conference attendees are “the highest spenders,” easily increase revenue.

She says, “If we were able to increase the hotel occupancy by ten percentage points in the off season, which I do not believe would be discernable by the average individual driving to work, that would mean millions of dollars of spending in our community each year.”



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