![\"San](\"https:\/\/www.europesays.com\/us\/wp-content\/uploads\/2025\/11\/SUT-L-TOURISM-FORECAST-061_243757858.jpg\")
Crystal Pier in Pacific Beach, as seen in a recent aerial photo. (K.C. Alfred \/ The San Diego Union-Tribune)<\/p>\nSteve Pinard\u2019s Action Sport Rentals normally does a relatively brisk business renting out paddleboards, Jet Skis and power boats to vacationers at his Mission Bay locations, but given the grim numbers he has seen this year, he\u2019s hoping to just break even in the coming year.<\/p>\n
In a move to quickly juice end-of-year sales, Pinard offered a special promotion Thanksgiving week of 20% off all rentals. And for next year, he expects he\u2019ll have to launch promotions every holiday, something he says he\u2019s never done before.<\/p>\n
\u201cThis year, compared to 2024, I\u2019m down about 17, 18%,\u201d Pinard said of his six rental locations, including one at San Diego Bay. \u201cThere\u2019s definitely fewer tourists, and they\u2019re certainly not spending the money they used to. Even when the economy has been slow, there\u2019s still been enough people from Arizona, Vegas coming down, but now it seems like they\u2019re coming for just a weekend instead of a week or 10 days.<\/p>\n
\u201cUnfortunately, I\u2019m expecting the same next year. I\u2019m praying we\u2019re flat. If I can do flat, that\u2019s great.\u201d<\/p>\n
Action Sport Rentals\u2019 flagging business is hardly an aberration. The bloom is off the rose of so-called revenge travel, which had fueled a meteoric rise in leisure trips as cooped-up Americans left their homes and started planning vacations once the pandemic waned.<\/p>\n
More recently, though, growing uncertainty around the economy, on-again off-again tariffs, and rising expenses have dampened enthusiasm among businesses as well as the general public for dipping into their discretionary funds to pay for flights, hotels and dining out.<\/p>\n
A recently completed countywide forecast from the San Diego Tourism Authority, in partnership with the research firm Tourism Economics, reflects a marked slowing of growth \u2014 or an outright decline \u2014 in almost every metric, from overall visitation to hotel room revenue and occupancy rates. By the end of this year, a total of 32.8 million day and overnight visitors will have come to the county. That amounts to less than a 1%\u00a0increase over 2024 and is still far off the peak visitation of 35.8 million in 2018.<\/p>\n
For next year, the Tourism Authority anticipates little change in the number of out-of-town visitors to the county.<\/p>\n
Especially distressing to hoteliers \u2014 and the businesses that rely on their guests \u2014 is the expected 2 percentage-point decline in hotel occupancy for 2025. It\u2019s the first year since 2018, outside of the 2020 start of the pandemic, that the occupancy rate has fallen. The year-end average is expected to dip to 72%, which compares to the 2018 high of 78.5%. For 2026, the rate is forecast to decline further, to 71%.<\/p>\n
That\u2019s a marked change from the past few years when hotel stats like room revenue and daily rates were surging by double digits coming out of COVID and then normalizing to more modest increases of 2% to\u00a0 3%.<\/p>\n
\u201cThe big deal here is that San Diego has never experienced, with the exception of a big shock to the system like a financial crisis or the pandemic, an extended period of stagnation,\u201d said Robert Gleason, president of Evans Hotels and chairman of the San Diego County Lodging Association. \u201cAnd that\u2019s where we are. We\u2019re in a period of stagnation. Occupancy is declining, and occupancy drives employment.\u201d<\/p>\n
As one of the top industry sectors in the San Diego economy, the tourism trade is said to employ about 1 in 8 workers, which translates to about 209,000 leisure and hospitality workers. That\u2019s why any disruptions to its financial performance can have an outsized ripple effect, not only on the small businesses that benefit from visitors but also on the overall dollars it pumps into the local economy, says Daniel Kuperschmid, CEO of the Tourism Authority.<\/p>\n
\u201cThis isn\u2019t necessarily about going backwards as much as it is about the flattening of the growth that we were enjoying for the last couple of years,\u201d he said. \u201cWe came out exceptionally strong after COVID. We were very aggressive in the market. And really, it\u2019s just been a challenging year for the economy.\u201d<\/p>\n
Crystal Pier in Pacific Beach, as seen in a recent aerial photo. (K.C. Alfred \/ The San Diego Union-Tribune)<\/p>\n
Those macro trends are in turn playing out at individual hotels, be it along the coast or inland. Gleason says the Evans Hotels\u2019 three properties \u2014the Bahia, Catamaran and Lodge at Torrey Pines \u2014 are generating less revenue this year than in 2024, and he expects more of the same next year.<\/p>\n
Especially unnerving this year for hoteliers was a far less robust summer than normal, so much so that nightly rates for the hotel group fell by as much as 10%, depending on the day of the week, Gleason said.<\/p>\n
\u201cAnd that\u2019s like harvest time for us,\u201d he said of the summer season. \u201cRight now, you could open up a phone book \u2014 assuming phone books still existed \u2014 close your eyes, point to a hotel, and call any one of them and ask them the same questions, and you\u2019ll get the same answer. The downturn is pervasive in the marketplace.\u201d<\/p>\n
No question, it\u2019s been a disappointing year for the Ocean Park Inn, a 72-room ocean-view hotel in Pacific Beach, says owner Elvin Lai. Average daily room rates and revenue per room are all down, as is the number of reservations. As a result, the business didn\u2019t show a profit this year, as Lai struggled to simply break even.<\/p>\n
While many larger properties can turn to promotions and discounting to lure travelers, Lai said that doesn\u2019t work for smaller hotels like his, where the cost can\u2019t be spread across a large number of rooms or other hotels in a chain. On top of that, costs, be it for insurance premiums, labor or water, are climbing at a faster pace than any modest gains he can eke out in a given month.<\/p>\n
\u201cEveryone is competing for the same business,\u201d he said. \u201cI am 100% leisure, and I\u2019ve had more competition for leisure than I\u2019ve ever had. My leisure business is dropping because people have more options. That\u2019s because group (meeting) business is down, so these other hotels that also depend on that group business now have to go for the leisure business.<\/p>\n
\u201cI am budgeting to be flat next year, and I believe that is optimistic. The independent small guys are feeling this the worst.\u201d<\/p>\n
The worrisome trends that local tourism professionals have been monitoring throughout the year have also been showing up across the country. CoStar and Tourism Economics recently downgraded their outlook yet again, predicting declines next year for the hotel occupancy rate and what\u2019s known as revenue per available room, an important metric for the lodging industry.<\/p>\n
\u201cWe expect little change in the macroeconomic environment as unemployment and prices continue to rise,\u201d Amanda Hite, president of hospitality data firm STR said in a statement. \u201cAs a result, our hotel performance outlook for the remainder of this year and next was lowered once again. (Average daily rate) is growing well below the rate of inflation, which in turn will put more pressure on margins.\u201d<\/p>\n
A big change for major tourist destinations across the country, including San Diego, is the continued decline in international visitation, an important financial boon for cities, given foreign travelers\u2019 proclivity to stay longer and spend more during their visits. While international visitors account for only 10% of all travelers to San Diego, compared to much higher shares for cities like San Francisco and Los Angeles, they remain a critical part of the local tourism economy.<\/p>\n
As it has been elsewhere in the U.S., tourism from Canada has dipped significantly because of ongoing political tensions between the two countries. In the past several years, the number of Canadian visitors coming to San Diego County had climbed steadily to nearly 315,000 last year, approaching pre-pandemic levels, according to the Tourism Authority. The total this year is expected to fall to a little more than 270,000.<\/p>\n
Tourism from China has fallen even more precipitously, going from 119,000 visitors in 2019 to just 54,370 this year.<\/p>\n
In hopes of raising San Diego\u2019s profile in Canada, Kuperschmid recently traveled to Toronto, where he met with airline chief executives, travel operators and media representatives. While tourism agencies are not actively marketing travel to the U.S. right now, Kuperschmid said he wanted to make sure that San Diego was still on their radar when clients come to them seeking vacation advice.<\/p>\n
\u201cI wanted to remind them that the weather\u2019s amazing, we have arts and culture, and a burgeoning food scene, with all the new restaurants and Michelin-starred restaurants and the like,\u201d he said. \u201cCanadians are still traveling to the U.S. They\u2019re just not touting it or promoting it on social media. They literally told me in a couple of different meetings that Canadians will come here, but they will not post it on their socials because they\u2019ll be ridiculed.\u201d<\/p>\n
In general, competition among tourist destinations is keener than ever, as cities\u2019 tourism bureaus respond with new, improved campaigns, said Kerri Kapich, chief operating officer of the San Diego Tourism Authority.<\/p>\n
In the wake of the devastating January wildfires, Los Angeles recently launched a marketing campaign dubbed \u201cLA is Open.\u201d Just a couple of months ago, Las Vegas, which has been struggling to reverse declining visitor numbers, debuted its \u201cWelcome to Fabulous Las Vegas,\u201d a distinctly different message from the familiar \u201cWhat happens in Vegas, stays in Vegas\u201d slogan of years ago.<\/p>\n
San Diego is also rolling out a new slogan, which will replace its 24-year-old marketing mantra, \u201cHappiness is calling,\u201d with \u201cCome to the bright side.\u201d While it\u2019s not a major pivot, Kapich sees the new messaging as more of a welcoming call to action.<\/p>\n
\u201cWe wanted to go a little bit deeper and talk about optimism as really a core fundamental of our community,\u201d she said. \u201cSo optimism comes from the sunshine, from the weather, from the people who live here and are open-minded and inclusive. And you know, it\u2019s a place where anything is possible.\u201d<\/p>\n
The Tourism Authority is planning to spend $18 million on its media marketing campaign, launching it with the Farmers Insurance Open at Torrey Pines golf course in late January, and it will run through June. Advertising will be more regional in nature than in the past, Kapich said, with the focus on Los Angeles, San Francisco, Phoenix, Las Vegas and Seattle.<\/p>\n
\u201cThis year has been more challenging than we expected, and before we get too far into the new year, there are still a lot of things that are uncertain as it relates to the U.S. economy, business spending, consumer spending,\u201d Kapich said. \u201cCautiously optimistic would probably be the best way to say what we\u2019re thinking. We know this won\u2019t be where we are forever.<\/p>\n
\u201cWe\u2019re just not sure when we will start to see a real shift in terms of market conditions.\u201d<\/p>\n
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