Santa Monica’s tourism industry shrunk slightly in 2018 after several years of sustained growth, with total visitor spending falling 1.4 percent.
Visitors spent $1.93 billion in 2018, a slight decrease from a peak of $1.96 billion in 2017. Spending has still grown 18.4 percent in the last five years, however, and it generated significantly more tax revenue for the City of Santa Monica last year. The drop was driven by tourists spending less money on spa, beauty and health treatments and buying fewer beverages, said Misti Kerns, president and CEO of Santa Monica Travel & Tourism (SMTT).
“Much of the research shows that younger travelers may not be looking for a two-day spa experience, but might go for a hike or do a beach cleanup,” she said. “They may not spend as much on personal care and instead prefer to go out and experience things.”
Kerns said the small drop in spending isn’t a concern for SMTT. The tourism industry still supports 12,600 jobs in Santa Monica and supplies the City’s General Fund with more than $73 million in tax revenue, saving every household $1,540 in local taxes.
There are several threats to local tourism, however, according to a brand perception study that SMTT commissioned last year. Kerns discussed the study, which analyzed 7.8 million conversations on social media and surveyed 2,300 residents, at SMTT’s annual summit Wednesday.
Santa Monica is increasingly defined by the very rich and very poor and it’s changing how travelers see the city. The survey found that high costs of living and running a business are taking away some of the city’s charm by shutting out mom-and-pop stores and restaurants. At the same time, visitors are concerned about homelessness, safety and cleanliness.
Santa Monica Pier and the beach are a microcosm of that changing atmosphere, according to the report. The high rents on the pier are driving small, independent businesses away, Kerns said, and that trend holds true in the rest of the city.
“There’s a concern that we’re losing some authenticity,” she said.
The homeless population in nearby Palisades Park also impacts perceptions of the pier and beach. It’s an issue that the entire California tourism industry is grappling with, she said.
There are also issues that stem from the perception of the United States as a whole. The United States has been less welcoming to international travelers since the 2016 election, Kerns said. Those visitors, which make up more than half of local tourism, are critical because they stay longer and spend more.
“What happens in Washington does affect us here in Santa Monica in terms of travel,” she said.
SMTT is developing an experience management plan in response to the study’s findings. Local stakeholders will be developing plans to address the high cost of doing business in the city and livability issues such as homelessness.
Ensuring the long-term health of Santa Monica’s tourism industry is critical to the local economy, Kerns said. Tourists typically shop in brick-and-mortar stores and dine in restaurants, while residents are more and more likely to shop online or use food delivery apps.
“If we want to have little local restaurants, they can’t just survive on the resident population,” she said. “Visitors are doing what a lot of us aren’t doing. It’s the balance of residents and visitors that help our local businesses thrive.”