Sonoma County hotels, airlines enjoy surge of visitors

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A year ago, only one commercial airline company flew routes into the Charles M. Schulz-Sonoma County Airport.

Next month, there will be three. The pending arrival of American Airlines prompted the airport last week to move in temporary quarters for additional check-in and baggage handling, even as it gears up for a $20 million expansion of its terminal and parking.

“2016 was another record year for us,” said airport manager Jon Stout, noting that passenger counts rose almost 30 percent to 339,000. He expects another increase this year of about 10 percent.

The nation’s hospitality and travel sector continues to enjoy good times. And 2017 should be another growth year, with stronger household balance sheets and pent-up consumer demand for vacations, said Jesse Rogers, an associate economist for Moody’s Analytics based in West Chester, Pennsylvania.

For Sonoma County, Rogers said, “the outlook is even better.”

The hospitality industry here has enjoyed eight years of steady growth. It ranks as the county’s second-largest business sector, with $1.82 billion in spending in 2015, according to Visit California, the state’s chief tourism organization.

County hotel revenues have doubled since 2009, which was the hospitality sector’s low point in the last recession. Hotel revenues last year rose 9.5 percent to $282.7 million, according to travel research firm STR, which surveys nearly 6,400 county hotel rooms, or roughly half the various types of lodging units here.

The county’s average room rate rose 7 percent last year to $161.33, STR reported. Average occupancy increased to 77.6 percent from 75.9 percent in 2015. Both numbers were the highest in at least a decade.

Travelers come here because they want to experience Wine Country. That includes visiting not only wineries but also restaurants and makers of craft beer, cheeses and other artisanal foods. And tourists want to get outdoors to cycle county back roads, swim in the Russian River, hike the wooded hills of state and regional parks and walk along coastal bluffs and beaches.

Even last year’s voter approval of an ordinance banning GMO crops is a draw for many travelers, Rogers said.

“I think it just points to the growing appeal of Sonoma as a bastion for organic” and artisanal products, he said.

Along with drawing in visitors, the county in recent years has attracted airlines to fly new routes to and from the airport north of Santa Rosa.

Commercial airline service resumed here in March 2007 with the arrival of Alaska Airlines subsidiary Horizon Air. Alaska now offers daily service from Santa Rosa to San Diego, Orange County, Los Angeles, Portland and Seattle.

Last year, Alaska increased its number of total flights nearly 17 percent from a year earlier. In now offers seven flights a day, Stout said, and the airline this summer may add an extra daily flight to Portland and Seattle.

Last spring, a second carrier, Allegiant, began flights to Las Vegas, plus a short-lived route to the Phoenix area, which ended earlier this month. The airline continues its twice-weekly service to Las Vegas.

And on Feb. 16 American, the world’s largest airline, will become the airport’s third carrier when it begins daily service from here to Phoenix-Sky Harbor International Airport. Service will be aboard a Bombardier CRJ700, a regional aircraft that holds 70 passengers, including six in business class.

The new route fits with American’s strategy of linking regional airports to one of its nine hubs around the country, said spokeswoman Polly Tracey. In Phoenix, American employs 10,000 workers and carries about 20 million passengers a year through the airport. From there, travelers can take direct flights to Mexico, Costa Rica, Canada and cities around the U.S.

“You’re not just starting a flight to Phoenix,” Tracey said. “You then have connections to places all around the world.”

Phoenix residents, meanwhile, will be attracted to the county “because it’s such a lovely leisure destination,” she said.

To accommodate the new activity, the airport this week brought in a modular building that will serve as American’s temporary check-in and baggage facility.

A next step will occur this spring when a “rigid-sided tent” rises on the apron near the parked aircraft area, Stout said. The structure will have heating and air conditioning and initially will serve as a passenger waiting area, with gates leading to the aircraft.

In time, that tent structure will be expanded to accommodate check-in and baggage areas for some airlines, as well as the security screening area, Stout said. That will happen as the airport undertakes its $20 million terminal and parking expansion project.

The phased project could triple the terminal building to 45,000 square feet and add over 450 spaces in a second long-term parking area. The terminal design is expected to be completed and presented to the county Board of Supervisors around September, Stout said, with the project’s completion slated for mid-2019.

The good times in hospitality also have prompted a surge in ne hotel projects. One of the biggest is the 200-room, $175 million hotel that opened last fall at the Graton Resort & Casino on the northwest edge of Rohnert Park.

“We expect to see continued robust hotel occupancy this year as new visitors to Graton Resort & Casino and existing casino guests experience our new hotel and spa offerings for the first time,” general manager Joe Hasson said in an email. Staff members “are already getting incredible feedback from guests who have stayed with us since debuting our hotel in November.”

Hotel construction is underway in several cities, including Healdsburg, Windsor and Rohnert Park, where the 163-room Oxford Suites property already is taking reservations for June. The soon-to-be-completed hotel sits near the casino and across the street from Amy’s Drive Thru on West Golf Course Drive.

More than two dozen other lodging projects have been proposed around the county. They include the planned transformation of the iconic Empire Building in downtown Santa Rosa’s Old Courthouse Square into a 62-room hotel and the construction of a 132-room Cambria Hotel & Suites in Rohnert Park. Choice Hotels International of Rockville, Maryland, last week announced the latter project, which is slated to be built about a half-mile from the casino and open in 2019.

Tourism officials expect the county this year to once more host a number of events that draw large numbers of guests. The first such event comes Friday with the limited release of Pliny the Younger at Russian River Brewing Co. in downtown Santa Rosa.

Last year, the two-week release of the world-famous beer drew more than 16,000 people to Russian River and generated nearly $5 million in economic activity, according to the county’s Economic Development Board.

Downtown Santa Rosa this year also will host two Ironman competitions, the 70.3 Vineman in May and a full-distance Ironman in late July. The latter includes a swim of 2.4 miles, a cycling segment of 112 miles and a run of 26.2 miles.

The Vineman previously had been held in Windsor. A spokesman for the Ironman organization said each competition should draw more than 5,000 visitors, and the newly renovated Old Courthouse Square will be an ideal location to host the events.

“The move of the event to downtown Santa Rosa provides the iconic finish for the athletes,” Keats McGonigal, the group’s senior regional director for North America, said in a statement.

A question remains regarding how long the county’s hospitality business can keep growing.

This year presents some relatively minor bumps in the road. They include the temporary closure of much of San Francisco’s Moscone Center for renovation, a move that could decrease the number of conventiongoers coming to the Bay Area this year even as it increases competition by San Francisco hoteliers for smaller group gatherings, the same events Sonoma County typically seeks to attract.

Also, the strong dollar may continue to discourage international travel to the U.S., though California seems to be faring better in attracting foreign tourists than other parts of the country.

Nonetheless, there will be pressures to raise prices, officials said.

First, the county’s labor market “is extraordinarily tight,” Rogers said, which could cause hospitality business owners to raise wages to attract workers.

Second, many companies will be raising pay anyway in compliance with the state’s minimum wage law.

Lynn Mohrfeld, president and CEO of the California Lodging and Hotel Association, told hotel operators in Santa Rosa last week that minimum wage hikes historically were one-time events, which then gave businesses several years in which to pass on costs to consumers.

But starting this year, the state is raising the minimum wage from 50 cents to $1 an hour every year until it reaches $15 an hour in 2022.

The next few years will still be strong for the hotel industry, Mohrfeld said after his speech to the annual meeting of the Sonoma County Lodging Association. But starting next year, occupancy rates may flatten even as the room rates continue to rise.

“I would say that this is probably going to be the high-water mark,” he said.

As the hospitality industry has continued to grow, more county residents have raised concerns about its impacts. Some have complained about the effect of short-term vacation rentals on their neighborhoods. Others have opposed new winery tasting rooms and event centers because of the extra traffic and noise they bring to rural areas.

Hospitality officials are responding. The county lodging association revised its mission statement this year to call for the initiation of “a vibrant exchange of ideas to ensure tourism’s positive impact within Sonoma County.”

And Sonoma County Tourism, the county’s main hospitality group, said it plans to increase community engagement efforts.

“The industry as a whole is mindful of the impacts of tourism on the local community,” said Tim Zahner, the group’s chief marketing officer.

Part of the discussion will be to describe the positive impacts on the county, he said. But the community needs to see hospitality as a sustainable part of the county’s economic and social life.

As such, he said, tourism officials will endeavor to speak with residents and “hear more about what’s going on and how we can assist.”

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