Weekend visitors are swarming to the City, but a full rebound of the hotel and hospitality industry isn’t predicted until 2023.
The boom of Memorial Day weekend was a boon to the struggling hospitality sector. Santa Monica Travel and Tourism estimates that hotel occupancy rates ran in the 90 percent range and reached the highest levels since March 14, 2020.
Saturday was the busiest day of 2021 at Downtown and beach parking lots, where visitor levels mirrored those of 2019.
Still, there are factors slowing the recovery of local tourism including the loss of the international market, labor shortages and California’s stringent Covid-19 restrictions. SMTT forecasts that visitor numbers and occupancy rates will not return to normal until 2023.
Similar to other recovering business sectors, the local tourism industry finds itself in a seemingly contradictory situation: Yes crowds are back, but pre-pandemic profitability remains a ways away.
Tourism was arguably the City’s hardest hit industry in 2020, meaning it has the steepest hole to climb out of in 2021.
The sector went from supporting 12,010 positions in 2019 to just 3,095 in 2020, reflecting a loss of three out of four jobs. Hotel occupancy rates were cut in half for the majority of the year, and several establishments closed for months at a time.
So far 2021 trends have been promising.
According to SMTT, occupancy is back up to the mid 50 percent range on weekdays, pushing up to 70 percent on the weekends and expected to continue growing throughout the summer.
“We are seeing extremely encouraging signs of ongoing monthly double digit occupancy growth since Feb. 2021, and there is still a tremendous assurgency of local pent-up demand with dining numbers over the holiday weekend peaking to the best we have seen in over a year,” said the General Manager of the Fairmont Miramar Hotel & Bungalows Sam Jagger.
The majority of guests at the Fairmont are still drive-market visitors, but Jagger expects domestic travel to sharply increase in July and August as Southern California lifts all Covid-19 restrictions on June 15.
The absence of international tourists is strongly felt in the tourism industry as they formerly comprised 51 percent of visitors to Santa Monica. In 2019 alone, international tourists injected roughly $1.36 billion into the local economy and drove 62 percent of total visitor spending.
“The amount of international travel here is minuscule compared to what it normally has been,” said SMTT CEO Misti Kerns, adding that Santa Monica always marketed to international visitors because “they stay longer, they spend more money and they tend to use public transportation more than domestic visitors.”
There are discussions underway to establish a program for vaccinated tourists to travel between the US and United Kingdom. However, this has yet to be finalized and many other top visitor countries are lagging far behind the US in terms of vaccination rates.
“International visitors will recover to 32 percent of 2019 levels hopefully in 2021, but we won’t reach 100 percent until probably 2025,” said Kerns.
Another factor hurting local tourism’s recovery has been the severity of California’s Covid-19 restrictions relative to other states. Popular tourist destinations in Florida and Texas have been mask free and 100 percent open since March and May respectively.
This is not only impacting leisure travel but also business travel, as many conferences formerly hosted in Los Angeles are now being booked elsewhere.
Reopening hospitality businesses are also struggling to staff their new expanded capacities. There is a labor shortage nationwide and it is keenly felt in Santa Monica.
“If you have 50 tables that you can fill with diners, but you only have enough staff that you can cover 20, you’ve got to make a hard decision and that’s part of what’s being done right now,” said Kerns.
Many laid off hospitality workers have found jobs in a new sector, are living on boosted unemployment rates, are homebound due to lack of childcare options, or are still fearful of returning to work in person.
The influence of each of these pandemic related factors will take several months to fade away, underscoring that even while demand for hotels and hospitality businesses rises, economic recovery remains a matter of time.