Wine Country tourism feels recession’s pinch

At a Healdsburg bed-and-breakfast on a recent morning, a half-dozen guests were rhapsodizing about the town’s charms, comparing notes on the restaurant and wineries they’d visited the day before.

Robert Dansby, an arts college professor from Newhall, voiced his enthusiasm for Sonoma County, but also acknowledged the drop-off in his wife’s interior design business was keeping them closer to home this summer.

“The revenue stream isn’t quite as big as it used to be,” he said. “Spending $5,000 or $6,000 on an Asian trip is not something we’re going to do this year.”

Besides, he said, “Healdsburg is more fun than Singapore. We’re crazy about this place.”

Situated in the heart of Wine Country with pedestrian-friendly charm and world-class restaurants, Healdsburg has fared better than most areas when it comes to retaining tourists and overnight visitors.

One of the best barometers of the industry, bed taxes — the fees that cities and the county collect on hotel rooms and inns — are down virtually everywhere.

For the 12 months that ended in June, those declines included a 36 percent plunge in Sebastopol, an 18 percent drop in Santa Rosa and somewhat smaller double-digit decreases in Sonoma, Petaluma and Rohnert Park.

Healdsburg’s 7 percent dip isn’t as bad as most, but city officials are projecting it will accelerate — to 14 percent in the city’s current budget year.

Tourism, an estimated $1.3 billion bulwark of Sonoma County’s economy, is continuing to struggle and the prognosis is that it will dip more.

“We will probably see a continued decline, flattening out over time,” said Ben Stone, Sonoma County’s economic development director.

But it’s also a mixed picture, Stone said, “partly cloudy with some blue sky in time,” because of recent upticks in business confidence. “As people feel more confident, they will do more travel.”

For now, hotel bookings are not being made as far in advance, fewer visitors are staying overnight and room rates are often reduced.

One industry survey of the hotel business in Sonoma County showed the average room rate in June was $118, compared to $139 a year ago, representing a 15 percent drop.

Hotel occupancy had gone from 60 percent in the first half of 2008 to 51 percent for the same period in 2009.

The situation was worse in Napa County and San Francisco.

“We are doing better than our competitive set,” said Tim Zahner, director of public relations and marketing for the Sonoma County Tourism Bureau.

Even the historical town of Sonoma, also a mecca for tourists, is feeling the pain. It’s bed tax revenues, which like most other cities go into the general fund to help pay for core municipal services such as police, fire and public works, are down 15 percent.

“This is the first year we’ve seen a drop,” said Sonoma Assistant City Manager Carol Giovanatto. “We had seen a gain overall the last several years upwards of 8, 9, 10 percent.”

Sonoma hotel occupancy rates, she said, declined from 66 percent at the end of June 2008 to 64 percent at the end of June this year.

Giovanatto said business travel probably accounts for the biggest drop. “Businesses aren’t doing conferences, retreats or getaways.”

The drop in overnight visitors is seen as a contributor to a 10 percent drop in sales tax revenues, although she said it’s hard to separate how much of that is part of the general downturn in the economy that affects the purchasing power of local residents.

There still seem to be plenty of day-trippers in Sonoma, drawn to wineries and the town square.

“It’s good to still see a lot of activity out there,” she said.

In Healdsburg, things aren’t all doom and gloom in the wine tasting rooms, restaurants and hotels that ring the historic plaza.

At the ultra swank, 16-room Les Mars Hotel, where room rates start at $575 a night, guests are staying for less time and bookings are down about 15 percent compared to last year, said manager Katie Ciocca.

But the hotel isn’t about to lower its rates to attract more clientele. “We take care of people when they’re here,” said Ciocca. “You can’t ever cheapen your brand.”

She said that in the tourism slump that followed 9/11 many hotels cut rates too much and it’s taken years for them to recover.

The Les Mars is in an elite category with rooms that feature antique furniture and high-ceilings, fireplaces and sheets that are made by the same Italian linen maker that provides bedding for the pope.

“We’re seeing a lot more last-minute (bookings),” Ciocca said. “People aren’t able to plan as much.”

Sometimes, she said, guests who might have gone to Europe decide to stay instead for five nights at the Les Mars.

At the nearby Hotel Healdsburg, rooms have been discounted from 12 to 15 percent this year. On weekends at the moment, rates start at $360 per night.

“Yes, we’re down. Yes, we’re doing more promotions,” said Circe Sher, marketing director for the Hotel Healdsburg.

After a slow season earlier this year, she said, things picked up in July. “It’s getting better. We’re feeling optimistic. We’re still holding our breath for the winter.”

Weekends have filled up much later than in the past, she said, but midweek has been doing well with a lot of Bay Area residents. There has been an upswing of day visitors taking advantage of spa and restaurant packages that include use of the pool, according to Sher.

Herb Liberman, the city’s economic development director, said that B&B operators have lowered their rates to remain attractive.

“My rate is down a little bit,” said Lucy Lewand, the owner of the Camellia Inn, a two-story pink Victorian mansion that she has operated as a bed-and-breakfast for almost three decades.

“My revenues are down around 12 percent for the year to date,” said Lewand, who also serves as president of the Healdsburg Chamber of Commerce. “In terms of a B&B, I’m typical, or faring a little better.”

Liberman said that even though many visitors come for the day, “like everywhere else, people have slowed down on purchasing.”

The merchants around the plaza report some struggles.

“We’re doing OK. We’re down from last year, as everyone is,” said Jazz Fabry, a consultant at Capture Fine Art.

The gallery features eye-catching photo montages by Thomas Barbey described as “tongue-in-cheek surrealism” and limited edition photos selling for $500 to $3,000.

Fabry said he offers deep discounts to keep business going as well as more affordable $95 “open editions.”

Next door at Electric Rose Gallery, owners are doing more than selling art. Co-owner Shiloh Sophia McCloud said the goal is to create a “destination experience” by holding workshops, classes and offering conversations with well-known authors like Alice Walker.

“We’ve brought thousands of people to Healdsburg. They pay to come,” said McCloud, who said most come from the Bay Area, but “we have people flying from Portland, Washington, New York and Denver that are on our list.”

It’s still the allure of Wine Country that is the big draw. “People come here for the wine; it still drives the economy,” said Alan Emery, an employee at the Ferrari-Carano tasting room on the plaza.

There are a lot of visitors from the Midwest and East, including Chicago and Florida, Emery said. “Yesterday there were a lot from Ohio. We get the day-trippers, too. It revs up Thursday when tourists start coming in, through Sunday. It’s still quite a destination.”