Tourist-Related Businesses May Face a Flat Year : Visitors: The economic lag and the Gulf War could sharply curtail outside entertainment spending in the county.
From Camp Snoopy to the seaside surf shops, Orange County businesses that depend on tourist spending for their profits can expect 1991 to be a flat year, a local economic forecaster said Monday.
That sluggish outlook, which follows a decline in local tourism last year, could grow much gloomier depending on events in the Persian Gulf, warned Chapman College economist James Doti in his annual look at the county’s tourist industry.
If the Gulf War drags into the spring and summer--or if the fighting ends before spring but is followed by a spate of international terrorism--tourist spending in the county is likely to plummet from the 1990 level, Doti said.
The tourist business accounts for 10% of the county’s economic output. With the county’s gross output expected to hit $76.4 billion this year, tourism should be a $7.6-billion business, Doti said. That includes estimated tourist spending at the county’s shopping malls, as well as at restaurants, hotels, car-rental firms, amusement parks and other attractions.
The national recession will be the biggest reason for lower tourism, offsetting a slight boost in foreign spending resulting from a weaker U.S. dollar, according to Doti, who is head of business forecasting at the Chapman Center for Economic Research.
He bases his forecast on a sophisticated computer model that he says has predicted every rise or fall in tourist spending in the county since 1980.
For 1991, he said, a nominal 4% increase in tourist spending--largely from foreign travelers--will be erased by an estimated 4.7% inflation rate.
If fears of terrorism keep Asians and Europeans at home, even the small gain in tourist spending could be erased. And a reduction in domestic air travel would also hurt local tourism, he predicted.
Doti’s forecast follows several recent indications that Orange County tourism is being affected by the recession and war fears that began in August when Iraq invaded Kuwait. Among them: Disneyland announced a temporary reduction in ticket prices for Southern California residents and Knott’s Berry Farm rolled back children’s admissions. Also, inflation-adjusted retail sales for the first half of 1990 fell nearly 2%, and hotel occupancy rates for the January-September, 1990, period fell to 69% from 70.6% in 1989.
“It is very tough this year to tell just what the overall picture will be, but I tend to agree with Doti that spending will be pretty level,” said William Snyder, president of the Anaheim Visitor and Convention Bureau. Convention business in the county remains strong, he said, “but the war is a big unknown. It might cut attendence at conventions and cut into foreign and even long-range domestic air travel, and that would hurt here.”
He said attendance at the first convention in Anaheim in 1991--a national music merchants’ gathering--is down slightly from 1990.
