Downturn Doesn’t Slow Travel in State

Travel and tourism in California are showing surprising strength this summer, proving to be a reliable economic engine that is helping to keep the cooling economy from stalling.

Despite worries that this would be the stay-home summer of the decade, state officials now expect vacation travel this season to increase slightly from last year’s brisk pace. The market is being bolstered by great travel bargains and extra cash that consumers have from home refinancing and tax rebates, plus an unwavering attitude that nothing should get in the way of the family vacation.

Apart from the resilient housing market, tourism “is really the only positive thing we see going on right now,” said economist Steve Cochrane, who follows California’s economy for Economy.com, a national research firm. “Households are still willing to spend money on things they want, and that attitude is saving the tourism industry.”

The state’s $75-billion industry, which supports jobs for more than 1 million Californians, can thank folks such as Pat and Candice Bartley.

The Stockton couple, both 44, traveled to Laguna Beach this week, none too worried about the $194 oceanfront room rate at Vacation Village. They splurged on room service, Jet Ski rentals for their two teenage boys and massages at a nearby day spa. A round of golf was also on the agenda.

“It isn’t that we’re loaded or anything,” said Pat Bartley, a mechanic, as he sipped coffee on the hotel’s beachfront patio Wednesday morning. “But we work hard all year, and this is our summer vacation. We’re going to enjoy it, by gosh.”

“That little tax rebate helped a lot too,” added Candice Bartley, a stay-at-home mom who teaches scrapbooking classes. She spent half the rebate, about $300, on an “impulse purchase” of a watercolor print.

Consumer spending has been a solid, if puzzling, cushion to the nation’s shaky economy, and that is clearly evident in California’s huge tourism industry. Although corporate travel is down and some hotels and amusement parks are struggling, many businesses that cater to tourists have been pleasantly surprised by the flow of visitors.

John Stoddard, general manager of the Wilshire Grand Hotel, said this is turning into the best vacation season in four years at the 900-room property in downtown Los Angeles--an increase he attributes to steady convention traffic, regular international visitors and consistent family spending habits.

“We’re having our best summer in years, and that’s including last August, when the [Democratic National Convention] was here,” he said. “I’m surprised. For the whole year, we’ll be up 1% over a year ago, and in this economy I’d say that’s pretty darn good.”

In Los Angeles, hotel occupancy rates have been hovering above 70%, analysts said. That’s slightly down from last year. Occupancy in the Anaheim area is up slightly. In general, hotels in Southern California are doing better than those in the harder-hit San Francisco Bay Area.

“The picture is sort of confusing,” said Bruce Baltin, senior vice president at PKF Consulting, which specializes in analyzing tourism, in Los Angeles. “But no matter what, it’s a far brighter picture than we ever thought it [would] be this summer.”

Indeed, PKF’s research shows that most hotel operators in the state have continued to raise rates this summer--an indication that they are not yet concerned enough about occupancy rates to start slashing prices. Air traffic this summer in Los Angeles is actually up. Even the theme park industry, thanks to some unprecedented promotions, is expected to eke out growth this year.

“Tourism and leisure travel [are] definitely acting like an economic stabilizer for California,” said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp. In his July report, Kyser said the strong U.S. dollar was crimping visits from international tourists.

But Californians account for more than 80% of the state’s total travel activity, according to the state Travel and Tourism Commission. Its latest forecast calls for a 1.2% increase in leisure travel this summer and double that growth next winter.

“Consumer confidence hasn’t fallen anywhere near the levels we usually associate with a recession,” said Cochrane of Economy.com. “If it doesn’t fall much further, we may see continued growth in tourism, even if this period of excruciatingly slow economic growth continues into the new year.”

Part of the explanation for tourism’s strength is that, despite mounting layoffs and sluggish stock prices, unemployment remains unusually low by historical standards. In July, California’s jobless rate actually fell to 4.9%, a 31-year low for that month. Employment at tourism-related industries such as hotels, restaurants and museums is holding steady or growing moderately.

California’s vibrant housing market has also played a role.

Refinancing their San Diego home earlier this year helped Gita and Erik Mulvaney pay for a springtime cruise to Mexico followed by a trip to Lake Tahoe last month with their 9-year-old son, Dante.

After using their $22,000 in equity to pay bills and fully cover their travel expenses, the couple decided to tack on an extra stay at a resort hotel on the way home. They returned to find five of their neighbors on vacation as well--to Napa, Yosemite, Monterey Bay and Lake Havasu.

“Doesn’t seem to me like people are cutting back,” said Erik Mulvaney, 39, who sells insurance. “Back in January, I kept hearing how gloomy things were going to get, and we thought we’d have to save a lot more to get by. But I honestly think the whole [slowdown] thing has been exaggerated. We haven’t felt a thing.”

More cautious consumers have been lured by travel bargains and promotions that businesses offered, worried about a slowdown.

Jamie Hosack of Laguna Niguel hadn’t planned to take a trip at all this summer, after she and her husband, Nick, used most of their vacation time moving from a condo in Aliso Viejo. But when she came across a discount package to Las Vegas last month, Hosack jumped at it.

“We flew a family of four and stayed two nights at one of the newer hotels for $540,” said Hosack, collecting her luggage at John Wayne Airport in Orange County last week. “I couldn’t believe it. I think we spent more money on food than we did on the whole trip. Well, that and the slots.”

The count of out-of-state visitors to California is also expected to go up a bit this summer from last, although fewer will be making overnight trips, according to a forecast by D.K. Shifflet & Associates, a consultancy. Even so, nonresidents and residents alike aren’t easily giving up their precious vacations.

Dale and Sophia Whitaker of Tulsa, Okla., began tucking away $50 into their monthly savings schedule in February, just in case the economy hit them with a surprise that might spoil their summer plans. It didn’t.

So last week, the Whitakers, a plumber and day care operator, arrived in Southern California. They took a star tour in Hollywood, jaunted down Rodeo Drive, went shopping at Fashion Island in Newport Beach and, of course, spent two days at Disneyland.

At the urging of their sons, 9 and 11, the Whitakers spent an afternoon scouring the neighborhoods of Newport Beach in search of Dennis Rodman’s house.

“It’s been the vacation of a lifetime for us,” gushed Sophia Whitaker. “Seriously, it’s never been better. And there’s crowds, crowds, crowds. . . . How can they say there’s a recession?”

“Yes, it’s been terrific,” sighed Dale Whitaker, holding a cold bottle of water to his forehead as his youngest son, wearing a Laker jersey, tugged on his hand. “Now if we could just find Rodman’s house. . . . You know, I’d pay good money for that at this point. Recession or not.”