The Tourism Rebound

Bret Schanzenbach

President & CEO

ost of us San Diegans are well aware that we live in paradise.  All we need to do is take a look at the national weather map on any given day and we end up with a smile on our face.  And we are not the only ones who know that San Diego is a slice of heaven.  People have been flocking here for vacations for decades. And we are certainly glad to accept their economic investment in our community as they pour discretionary dollars into creating their own memorable experiences. 

Those visitors have made tourism a major economic driver for the San Diego region in general and Carlsbad in particular. According to the San Diego Tourism Authority, 1 out of 8 people employed in our county is employed in the tourism industry.  That is nearly 200,000 people countywide. The economic impact of tourism in San Diego County is $12.7 Billion. Yes, that is “billion” with a “B”. 

Carlsbad is one of the leaders in tourism for our county. Carlsbad has long been a desirable tourist destination.  Carlsbad’s last “normal” full fiscal year pre-Covid generated $27M in transient occupancy tax (TOT) revenue.  In San Diego County that was second only to the city of San Diego itself. With our beautiful beaches, stunning resorts and championship golf courses, there is much to desire in Carlsbad.  The opening of LEGOLAND in 1999 ramped up our tourism exponentially.  In the 20+ year since LEGOLAND opened, hotels have popped up at staggering pace – nearly 1.5 hotels/year on average. Currently we have 43 hotels in Carlsbad with more on the way.  

But how is tourism doing since Covid struck?  Obviously, 2020 was a rough year with most of the year being marred by mass shut downs.  2021 was definitely much better, and 2022 is off to a great start. 

Tourism can be broken down into a couple of categories: individual/family visitors (also known as leisure travel) and group/conference/business travel.  The summer of 2021 saw record numbers of leisure travel tourists and tourism dollars here in Carlsbad. Multiple metrics are tracked in the tourism industry with the two most common being occupancy rates and average daily rates (ADR).  Occupancy is the percentage of available rooms that are filled.  ADR is the average price paid for a room across all our occupied hotel rooms.  Summer of 2021 saw strong occupancy and ADR that exceeded the ADR for summer of 2019 (i.e. the “BC” rates).  Most in the industry were predicting a strong tourist summer season as there was a lot of pent-up demand from the previous 12+ months of restrictions.  People were anxious to get out and create new memories. It was satisfying to see such strong occupancy rates after the debacle of 2020.  Carlsbad, in particular experienced that bounce. The really encouraging statistic is that hotels didn’t have to go into the “discount” game here in Carlsbad to attract those visitors, thus allowing our average daily rate to exceed even our pre-pandemic averages.

From the beaches to the Flower Fields, tourism is continuing to rebound strongly in Carlsbad.

However, tourist season typically ends on Labor Day weekend.  Then we enter the business, corporate and group travel time of year.  That transition did lead to steeper than usual declines in the fall of 2021. Most travel experts expected that.  In talking with our larger resorts here in Carlsbad, they all expect group and corporate business to take up to two years to fully rebound from COVID shut downs.  The San Diego Tourism Authority is predicting that business travel will not fully recover to pre-pandemic levels until 2025.

Spring Break, however, has been very generous to Carlsbad.  Visit Carlsbad recently shared that occupancy rates in March, 2022 were 75.5%.  That is nearly identical to what it was in 2019, which saw occupancy at 76.5%.  The ADR, however, was stronger in March, 2022 than in March, 2019.  This year the ADR was $209 vs. $174 in 2019.  Kim Sidoriak, the CEO of Visit Carlsbad shared, “The first quarter of 2022 is showing positive movement in terms of hotel performance in Carlsbad. While the Omicron surge in early 2022 created some cancellations or postponements for meetings and conferences, our hotel performance is trending upward as we move through Spring. Our hotels have welcomed healthy occupancies for March and into April due to continued pent up travel demand bolstered by a rolling spring break school schedule, the LPGA JTBC Classic at Aviara, the Flower Fields bloom, and larger advertising campaign investments from Visit Carlsbad with our ‘Growing Good Times’ campaign.” 

Thankfully, COVID concerns are decreasing for travelers.  There are new travel impediments, however, as gas prices skyrocket.  Kim shared, “According to traveler sentiment conducted by Longwoods International, most American travelers are no longer citing concerns about COVID-19 as an impediment to traveling. However, we are also closely watching the impact of inflation, gas prices and the war in Ukraine on the wider travel industry’s ability to make a full recovery.”

Adding to these external pressures on tourism are internal challenges, especially the labor shortage.  Labor shortages have hit the hospitality industry harder than other industries as we exited the forced shut downs.  Unfortunately, the complexities of this shortage are beyond any simple turn key solutions.  Our hospitality businesses may be coping with short staffs for quite some time.  These shortages challenge our hotels and resorts who pride themselves on the level of service they provide.  But with no end in sight to these staffing deficits, everyone is having to innovate and adapt. 

Despite the external and internal challenges, tourism is continuing to rebound strongly in Carlsbad. As we head toward the traditional summer travel season, let’s all share the message that “Carlsbad is Calling”.