Visitor’s bureau will get extra $500K from hotel tax
CITYWIDE —Tourists spent $840.6 million in Santa Monica last year, with the average person spending $110.50 a day, a recent study shows.
About $250 million of that money was spent on shopping and gifts, but dining and restaurants also saw quite a bit of the revenue — $196 million. Hotels raked in $188 million.
And not only did visitors spend more here, but there were more of them. The report, commissioned by the Santa Monica Convention & Visitor’s Bureau, shows that the number of visitors here has grown significantly since 2000, which was a peak year in the tourism industry. Since then, visitor volume has increased from 3.8 million people to 4.7 million people annually, according to the report, prepared by Lauren Schlau Consulting and Skip Hull, an economist based in San Diego.
The 9/11 terrorists attacks nearly halted travel in the last part of 2001, but it appears the industry is on the rebound. Business and international travelers to Santa Monica are on the upswing; the city in 2004 realized a record-breaking $23.8 million in transient occupancy tax, a 14 percent tax paid by hotel guests.
“People had more money in 2004, and we had more of them here,” Schlau said.
The increase isn’t just good for City Hall coffers, but for local merchants too, because overnight visitors tend to spend more.
“This crucial research shows the importance of domestic and international overnight hotel guests who spend more — $198.20 per day — compared to the day visitor spending of $73.47,” said Misti Kerns, president and CEO of the visitor’s bureau. “While overnight hotel visitors comprise only 11 percent of the total number of Santa Monica’s visitors, they contribute nearly half of the total spending.”
The TOT, which is about 35 percent of City Hall’s total general fund revenue, has grown by $11 million in the last four years, Kerns said.
The TOT was raised from 12 percent to 14 percent late last year, following voter approval. The new tax went into effect in January. The study forecasts that 2005 TOT income will push $27 million.
“I’m pleased to see the number of people staying in local hotels,” Schlau said of the study’s results. “It’s a great sign in a resurgence of people spending money on hotels. That’s a good sign for Santa Monica.”
Day visitors still account for 85 percent of all tourists in Santa Monica, the study shows.
Since 1983, the visitor’s bureau has conducted an economic impact study every three years to gauge what type of people are coming to Santa Monica and where they spend their money. Similar analysis was done in 1997, 2000 and 2003. But since the market dramatically changed in 2000 and business appeared to be on the upswing in 2003, officials decided to get an annual update to better determine how to spend their limited marketing dollars for 2005.
“This is the only visitor’s bureau that I know that does these analyses so frequently and with such detail,” Schlau said.
The recent study includes on-site interviews with 600 visitors near hotels and in high traffic areas during September, the most representative month of the year, Schlau said. Her firm also surveyed hotels that provided data on their occupancy levels and rates for every month. Another 300 households that hosted guests were surveyed in December. The entire study took about six months, Schlau said.
Those results were then given to Hull, vice president of CIC Research Inc. and a noted economist. The numbers were crunched and analyzed, resulting in the percentage of day, overnight and visitors staying with residents, which was translated into the total volume of tourists and their spending habits.
Schlau said her firm also drew information from a host of other sources, including private and public national and state tourism agencies, as well as the Los Angeles International Airport, to determine the change in domestic and international arrivals into LA from 2003 to 2004.
Santa Monica also saw a resurgence of the business traveler, who typically stays at more expensive hotels than the international visitor. However, international tourists usually stay longer and spend more than domestic travelers, officials said.
Market research shows that 78 percent of hotel visitors walk or use public transportation once they arrive in Santa Monica.
The visitor’s bureau for the past few years has stepped up its marketing efforts abroad, specifically in the United Kingdom. Before 9/11, Japan was the No. 1 market for Santa Monica’s international marketing efforts, Kerns said.
The visitor’s bureau, which operates on a $2 million annual budget, will receive an additional $500,000 from TOT revenue for increased marketing efforts. The visitor’s bureau currently spends about $500,000 on sales and marketing, $400,000 on services that include staff and the rest on operational costs. The 2004 study is estimated to cost between $30,000 and $35,000.
Key findings from the 2004 economic impact study include the following estimates: ■ Total visitor volume: 4.74 million (up 1.2 percent from 2003) ■ Total visitor spending: $840.6 million (up 8.3 percent from 2003 and ahead of the previous record of $787.93 million in 2000) ■ The breakdown of total spending by major spending categories: shopping (28.9 percent); meals out (23.3 percent); lodging (22.4 percent) ■ Daily visitor spending in 2004 was estimated at $110.50 (up 6.8 percent from 2003). ■ Average daily hotel visitor spending increased 11 percent from 2003 ($186.76) to 2004 ($198.20). ■ Although the majority of visitors to Santa Monica were day visitors, hotel guests accounted for 11 percent, generating 49 percent of the total spending. Home visitors accounted for 4 percent of overall visitor volume and 16 percent of total spending. ■ International visitor volume is slowly and steadily returning to Santa Monica, comprising 47 percent of total visitor volume. Visitors spend more than domestic visitors, accounting for 58 percent of total visitor spending.
Originally published in the Santa Monica Daily Press print edition on June 29, 2005. Read the original PDF.