California’s travel industry needs a boost to fully recover and restore the workforce

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In summary

Other US travel destinations are gaining ground on California and making investments to inspire travel at our state’s expense.

California’s tourism economy has made significant strides toward recovery amid devastating disruptions and huge job losses over the past two years.

The Legislative Assembly and Governor Gavin Newsom last year wisely agreed to spend $95 million on tourism marketing programs to revive the economy. It was the first time since the aftermath of 9/11 two decades ago that funds from state taxpayers supplemented the tourism industry’s contribution to marketing the state as a tourist destination.

This investment has been the key to survival during unprecedented times. But the travel and hospitality industry still faces daunting challenges – especially in San Francisco, Los Angeles, Orange County and San Diego – and the industry needs another lifeline to carry on. recovery and make our tourism economy whole. Lawmakers are expected to approve the $45 million Newsom’s budget proposes to maintain proven national marketing programs.

Tourism marketing works. Last year, he inspired leisure travelers from California and across the United States who felt safe to travel responsibly in the Golden State.

A preliminary report prepared by Dean Runyan Associates for Visit California shows that visitor spending reached $97.4 billion in 2021, up 50% from 2020. Employment and tax revenue generated by visitors increased also increased last year.

Yet what visitors spent in 2021 was only two-thirds of the record $144.9 billion recorded in 2019, before the COVID-19 pandemic took hold. million workers identified in 2019.

The recovery in urban centers, where the largest percentage of tourism jobs exist, is still lagging. Cities are disproportionately dependent on large meetings and events to drive tourism spending and boost employment. The California meetings market was unable to operate for most of 2020 and into 2021 and has been slow to recover.

In February, Visit California held its annual travel conference at the Hilton San Francisco Union Square. It was the first time in nearly two years that dozens of hotel catering workers had been asked to work.

Hotel data from STR Inc. further illustrates the divide: room revenue in California’s rural and outdoor recreation areas exceeded that of the record year of 2019. The four gateway cities, however, have was significantly below. In San Francisco, room revenue was just 45% of 2019 levels.

Other US tourist destinations are gaining ground on California and making investments to inspire travel to the detriment of California’s economy.

  • Thanks to stimulus funds, California’s share of the domestic travel market has regained its edge over its closest rival, Florida. But California’s market share remains well below 2019 levels, and Florida also gained significant market share in 2021.
  • In New York, Governor Kathy Hochul has committed $450 million in public funds, including $50 million for tourism marketing, to help the tourism industry and its workforce recover.

All of Newsom’s proposed $45 million would be spent on national media buys for tourism marketing. It is expected to generate $13.9 billion in additional revenue for California businesses and $1.2 billion in additional tax revenue for states and local governments.

More importantly, the stimulus extension will help get thousands back to work. California travel and hospitality companies suffered by far the biggest job losses in 2020 and 2021, with more than half of tourism workers out of work after the lockdown. Our industry’s unemployment rate during the pandemic was double the rate during the Great Depression.

The travel and hospitality industry remains an important component of the California economy. It is critical that the recovery momentum created by smart state investment in 2021 continues into 2023.

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