Fewer Tourists Leaving Hearts in S.F.

Squinting through the window of his 82-year-old Italian restaurant in the historic heart of San Francisco, Paul Mechetti longingly remembers what he no longer sees.

“We’ve always had them ... lines of them out the door and down the sidewalk, shopping bags stuffed full,” says Mechetti, who has owned the family-run Gold Spike Restaurant in North Beach for 32 years. He squints harder, as if the tourists he speaks of will suddenly reappear on the unusually quiet street. “There’s no way it’s summertime out there. I don’t know what it is.”

For a city that has had to do little more than exist to propel a booming $8-billion tourism industry, the slowdown pressing on hotels and businesses this summer is unfamiliar and worrisome, leaving many wondering how much longer such a stubborn drought will last. The economic downturn, business travel cutbacks since Sept. 11 and the dramatic tech bust that walloped the Bay Area have all formed what industry experts are calling “the perfect storm” for upsetting a city that has been something of a spoiled child in the tourism industry.

The fallout--which could cost $1.5 billion to $2 billion in visitor spending this year compared with the peak in 2000--has left city officials and businesses hunting for ways to attract more regional visitors, a novel idea.

The goal, they say, is to recast, at least temporarily, San Francisco’s sophisticated image--the average age of out-of-town visitors is 46--as a more family-oriented destination. Carnivals and wine tastings, concerts and international food fairs are all being promoted in force.

“They’ve never had to work hard at getting people to visit and spend, because it all just sort of came to them,” said Jeffrey Dallas, an industry consultant for Ernst & Young. “But suddenly they’re not the bargain destination people are looking for. They’re not the place to grow dot-coms anymore. They’re struggling, and they’re not used to it.”

While other California tourist destinations have been showing signs of recovery in higher hotel occupancy rates and visitor numbers--with some, such as San Diego, already surpassing last year’s figures--San Francisco is by far rebounding the slowest. Arrivals to San Francisco International Airport were down 17%, or about 2 million people, for the year. Through May, hotels were slightly more than half full, compared with nearly three-quarters occupied during the same time last year.

In Los Angeles, hotels are about 70% occupied, and although local tourism officials expect fewer visitors to Southern California this year than last, they no longer worry about the double-digit drop that was forecast in the weeks after Sept. 11.

“It just about drives you crazy,” said John Marks, president of the San Francisco Convention & Visitors Bureau. “When you’re used to being on a rocket ship, this feels like a moped.”

Marks and others in the tourism industry recall the heady times of just two summers ago, when the city’s 34,000 hotel rooms were sold out and the yearly occupancy rate was among the highest in the nation, second only to New York’s. In 2000, convention business set a record, international tourism was up, and the dot-com business was robust enough to send 30-year-olds splurging on $1,500 bottles of wine at dinner, Marks said.

Things were so good, in fact, that Marks was often told by colleagues in other cities that he had the easiest job in the industry. He didn’t argue.

“I knew I had a good gig,” Marks said. “This city has always been on autopilot when it comes to having the best platform for visitors, meaning equally strong business, convention and leisure travelers.”

Within a year, though, the economy began to sour, dot-coms began to implode, and it became clear that the city’s tourism industry would suffer the most. Then came Sept. 11, and “it all went down hard,” said Dallas, the Ernst & Young consultant. “And it has been on a downward spiral since.”

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New Tourist Markets

To get through the slump, San Francisco is trying to lure more regional visitors. It’s a market the city long took for granted, said Norman Williams, spokesman for the California Technology, Trade and Commerce Agency. With 80% of the city’s visitors arriving by air, San Francisco has not had to concern itself much with attracting guests from the 100-mile “drive-in” market.

Tourism officials have launched promotions for restaurants, crab fests, street festivals and weekend getaways to draw more Californians for shorter stays. A first-ever telephone campaign targeting residents in Sacramento and the Central Valley last fall was duplicated in the spring.

The efforts have paid off for some businesses, particularly those that cater to families, such as the Wax Museum at Fisherman’s Wharf and the newly renovated Aquarium of the Bay, where business is up 15% and 20%, respectively. Lines for the cable cars are still the norm, though shorter, and the daily 5,500-person boat trips to Alcatraz from Fisherman’s Wharf are selling out three days in advance, compared with the usual week or more.

“We’re getting very strong weekend traffic from families that are driving in and staying just a night or two,” said John Frawley, the aquarium’s general manager. “After putting $2 million in improvements here, we’re very relieved that we’re doing so well. I know we are the exception right now.”

Kevin Westlye, manager of the Franciscan restaurant at Fisherman’s Wharf, said that although he has started to see improvement in weekend crowds within the last two weeks, business is still down at least 10% from a year ago and the restaurant is “still pretty empty” on weekdays--which he attributes to a significant drop in business travel.

Immediately after Sept. 11, Westlye said, business fell 55% and five of his 80 employees were laid off. By November, he had renegotiated construction loans and credit card fees to avoid more layoffs, he said.

“We’re not seeing foreign visitors or the usual number of Midwesterners this summer, that’s for sure,” Westlye said. “Everyone we talk to is trying to minimize their budgets.”

Patrick Tierney, a tourism and hospitality professor at San Francisco State University, said that at least until business travel fully rebounds, the city may have to do more to position itself as a family-friendly destination.

The city’s reputation as an adult playground, with its pricey restaurants, urbane nightlife and sexually liberal ambience, may not be the most desirable in a climate in which families are looking to spend less money--and more quality time together--on vacations, Tierney said.

“Forget about business travel meltdowns and the dot-com exodus,” he said. “To survive right now, you have to be affordable and you have to have a family market. San Francisco is becoming a little more affordable--but only out of desperation. So now it has to highlight its family attractions too.”

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Family Affordability

Drew and Janise Singleton of San Diego said it had been nearly 10 years since their last visit to the Bay Area, largely because they had always considered a San Francisco vacation unaffordable for a family of four.

“We can do so many other things where we live for so much cheaper,” said Drew Singleton, 40, as his wife and sons munched Ghirardelli chocolate crepes at Pier 39 last week. “This always seemed like an expensive trip to us, almost a splurge that we couldn’t justify.”

But when Janise found rooms at the upscale Argent Hotel near Union Square for $99 a night and air fare for less than $100 a person on the Internet last month, the family decided to take a long weekend and go for it.

“It’s been wonderful,” she said. “A little colder than we expected, but the [smaller] crowds are nice and the city is as beautiful as we remember.”

Still, many hotels and merchants say the absence of business travelers has hurt even more than the slowdown in tourism because corporate visitors tend to spend more on rooms and meals.

Tom LaTour, chief executive of the Kimpton Group, which operates 16 mid-range, boutique hotels in San Francisco, said the much-anticipated upswing in travel hasn’t materialized since Sept. 11, and the pace of improvement is painfully slow. Even convention traffic--which typically pays the second highest after business travel--has been bringing in fewer attendees per event. In years past, there would have been an overflow of delegates clamoring for hotel rooms.

As a result, LaTour said, his properties have just started to bump into the 70% occupancy rate, with average room rates down 15% from last year.

“We’re hardly healthy,” he said. “And I’m surprised, frankly, that I’m still saying that.”

In the popular North Beach neighborhood, where restaurant and retail owners are having the worst summer in memory, a few merchants have tried to boost business with mini-attractions of their own, said Chamber of Commerce Executive Director Marsha Garland. The district has seen 10 shops close in a three-block radius since January, she said.

“Business is down 30% or more for North Beach, and there’s nothing I can do to make it better,” Garland said. “It’s unheard of. You used to barely be able to walk down the sidewalks around here. Now you can find parking.”

Tony Azzollini, who owns the Caffe Roma coffee shop on Columbus Avenue, recently introduced a casual evening wine bar, complete with lighthearted Italian lessons for the whole family, that has helped keep business somewhat on par with last summer. He also makes a weekly production out of roasting coffee beans in the front window of his store, after 14 years of quietly getting the job done in the back room.

“I think we’re doing OK, but only because we’ve worked very, very hard at staying afloat,” Azzollini said.

“Tourists are our gravy, but we can’t just wait around for them to come back. We have to grab what we can get.”

As always, crowds are still the largest at Fisherman’s Wharf, where every other store sells tourist garb, street performers hope for handouts and artists sketch children’s faces for $2 apiece--a price, they will quickly say, that has been cut in half from last year. But even managers at the busiest shops say few sales are being made.

Kenny Wong, who runs a shop packed floor to ceiling with shirts and sweaters on Taylor Street in the wharf, said he finds himself “sitting down on the job” more than ever before.

“There’s no customers to help,” Wong said, perched on a stool by the cash register. “A few people will come in, look a little and leave. They don’t buy. So here I sit. Let me know when it’s time to get up.”