County tourism hit as groups downsize, cancel travel plans
Henry Quintero vacuums the new carpeting in the largest of the banquet rooms at the Hyatt Vineyard Creek in Santa Rosa. The hotel is taking advantage of the economic downturn to remodel meeting and guest rooms.
JOHN BURGESS / The Press DemocratPublished: Wednesday, March 25, 2009 at 3:00 a.m.
Last Modified: Tuesday, March 24, 2009 at 9:47 p.m.
To tourists looking for a romantic weekend getaway, it bills itself as the Doubletree Hotel Sonoma Wine Country.
But to business groups concerned about being criticized for excessive travel spending, the 245-room facility promotes itself simply as the Doubletree Hotel, Rohnert Park, Calif.
“They don’t have to mention it’s got 36 holes of golf nearby,” General Manager Ted Sakai said.
A sharp drop in business and meeting travel has some Sonoma County hotels subtly shifting the way they market themselves, de-emphasizing luxury in favor of value and accessibility.
After years of cultivating an image of exclusivity, some of the county’s top hotels are finding that such words as “resort,” “luxury” and “spa” these days make it harder, not easier, to book events with business groups.
“Anything with the word ‘luxury’ in it is probably not something that people are flocking to right now,” said Ken Fischang, president of the Sonoma County Tourism Bureau. “What meeting planners are looking for today is value.”
Meetings and conferences, which account for about 30 percent of the county’s tourism, have fallen off a cliff at major hotels and resorts here, with declines of up to 60 percent at some destinations.
The deepening recession, state budget crisis and political backlash against luxury business travel all conspired to deliver Sonoma County’s tourism industry one of its sharpest drops on record.
Companies have become particularly sensitive to the perception that lavish corporate trips seem less about business and more about pleasure. Many have steered clear of unnecessary travel and eliminated meetings at swank destinations.
It has become known as “the AIG Effect,” after the mega-insurer whose employees ran up a $440,000 tab at a luxury resort in Orange County days after receiving an $85 billion bailout loan from federal taxpayers. The insurer endured withering criticism from Congress, triggering a rash of meeting cancellations by other companies afraid of being similarly demonized.
“Nobody wants to be criticized, especially by the government,” said Sakai, who noted the much-maligned AIG canceled a January meeting at the Doubletree.
Congressional criticism of corporate travel has created a “paralyzing environment” for the industry, said Roger Dow, president of the U.S. Travel Association. Earlier this month, Dow and other travel industry leaders went to Washington to urge President Barack Obama to tone down the rhetoric that was scaring away business travelers and hurting tourism jobs.
Tourism is a critical engine for the county’s economy. Hotels and restaurants employ 18,000 people, or 9 percent of the total work force, and generate significant tax revenue for local governments.
Local tourism leaders have major concerns about how politicians’ remarks are affecting their industry.
“Anyone that has received any bailout money or assistance from the government is definitely paranoid about having a meeting right now,” said Tim McGregor, general manager of the Bodega Bay Lodge & Spa.
McGregor knows the impact of the backlash firsthand. One of the lodge’s clients is Wells Fargo & Co. After accepting $25 billion in government aid, the San Francisco-based bank was forced to cancel a 12-day trip for employees to Las Vegas casinos. The bank also canceled a meeting at the Bodega Bay Lodge earlier this year.
“Wells Fargo is a customer of ours, and they aren’t booking any business,” McGregor said.
Meeting and conference travel, which represents about 30 percent of the lodge’s business, is down more than 60 percent so far this year, McGregor said.
The Carneros Inn has cut hours at one of its restaurants and laid off a “handful” of staff, including its conference services manager, because of softness in its meeting travel business, said Christine Gaudenzi, director of marketing for the 5-year-old Napa Valley luxury resort.
“We’re still getting leads every day, but meeting planners are just taking longer to make a decision,” Gaudenzi said.
In some ways, Sonoma County may be better positioned to weather the downturn than more exclusive areas, such as Napa, Palm Springs and Santa Barbara, Fischang said. All those locations have higher concentrations of exclusive resorts, while Sonoma County, with an average room rate of $123 a night, has more diverse lodging options, Fischang said.
“I think Sonoma County is going to fare very well because of that diversity,” he said.
Even so, tax data suggests the AIG Effect is still hitting Sonoma County hard.
Some hotels began seeing a decline in visitor spending during the third quarter of 2008, resulting in a drop in bed-tax revenues collected by lodging establishments, according to the county Economic Development Board.
Preliminary figures suggest travel spending in Sonoma County plunged in the fourth quarter, a decline not seen since the fall of 2001, when the terror attacks brought air travel to a virtual standstill.
Bed-tax collections tumbled 13 percent in the fourth quarter, compared with a year ago, in the unincorporated areas of the county. The rural area is home to several luxury resorts, led by the Fairmont Sonoma Mission Inn and Spa, which charges guests $230 a night and up.
Bed taxes in Santa Rosa dropped even more sharply, sliding 16 percent.
That’s on a par with the post-Sept. 11 decline, when fourth-quarter transit-occupancy taxes fell 12 percent in the county and 18 percent in Santa Rosa.
Eyeing such declines, the Sonoma County Tourism Bureau, which gets about one-third of its funding from bed-tax dollars, has pared its $4.9 million budget projections by 9 percent, Fischang said.
The AIG Effect may not be solely to blame. Ben Stone, president of the Sonoma County Economic Development Board, thinks the steep recession has hurt travel spending more than corporate fear of criticism.
The state budget crisis, which forced government agencies to cancel events, is equally to blame, said Dan Brown, director of sales and marketing at the Flamingo Conference Resort and Spa in Santa Rosa.
But everyone seems to agree that a combination of lobbying, aggressive discounting and patience are required to help the industry weather the storm.
The discounting is already under way, and there are signs it is helping. Efforts to offset the drop in business travel by boosting promotions aimed at leisure travelers have been successful at such places as the Sonoma Mission Inn and Bodega Bay Lodge.
“I’m offering rates that I never thought I would,” said McGregor, including a $99 weekday rate for a lodge where the average rate is $225 a night.
By refocusing marketing and promotions budgets regionally instead of nationally, many hotels are hoping to lure California residents for a Wine Country getaway.
“Right now, we need Bay Area people to say, ‘Let’s jump in the car and go to Sonoma County,’” said Keo Hornbostel, general manager of the Hyatt Vineyard Creek & Spa in Santa Rosa, noting 7.5 million people live within driving distance.
Patience may be the hardest thing for the lodging industry to muster, but the Doubletree’s Sakai is optimistic that pent-up demand for business travel is building and will resume when confidence returns.
“In the end, business has to be face-to-face,” Sakai said. “It’s just a matter of waiting it out.”
You can reach Staff Writer Kevin McCallum at 521-5207 or kevin.mccallum@pressdemocrat.com.
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