By Joshua H. Silavent - Staff Writer
December 18, 2012 - There are many lessons to be learned from the economic recession and painfully slow recovery, not the least of which is that good times never last forever – and bad times can last longer than expected.
The convention and tourism industry, which boomed for so many years in places like New York, Orlando, Las Vegas, Los Angeles and seemingly everywhere in between, suffered huge losses as Americans watched their discretionary income dry up and spending habits sober up. The service and hospitality industry began to see the impact of the fiscal shocks right away. People are quick to pull back on leisure purchases when times get tough. They travel less, eat out less, shop less – in general, they do more with less. The same is true when businesses feel the pinch. They scale back operations, nix corporate conferences, cut payrolls – in general, they do more with less. And this means that hotels, convention centers and tourist destinations pay the price.
In Los Angeles County, employment in the industry peaked in the summer of 2007, but had shed tens of thousands of jobs by January 2010. But that was the low point and things have been heading in the right direction since. “It’s definitely improved quite a bit from where it was during the recession,” said Kim Ritter, an economist with the Los Angeles County Economic Development Corporation.
Of course, it’s not as if the region had to remake itself. Ritter said this recent growth spurt, which has now recovered all the jobs lost in the industry during the recession and then some, is based on the same strong fundamentals that has made Southern California a hotspot for decades: world-class cultural and entertainment options.
Whether it’s international visitors, corporate travelers or simply locals out for a night on the town, tourism is rebounding in a way few could have hoped for just two years ago. “What we’re seeing is that people are more sure of their employment and income prospects, so they’re more willing to go on vacation, take longer vacations and spend a little bit more money,” Ritter said.
It’s not just anecdotal evidence that foretells of a continued recovery in the convention and tourism market. The 2013 Southern California Lodging Forecast reports that occupancy rates in Los Angeles County reached 77.7 percent this year. This figure is near a historic peak, said Bruce Baltin, senior vice president at Colliers PKF Consulting in Los Angeles, which prepared the forecast. Average daily room rates also increased in 2012, jumping 5.2 percent to $171.54. Additionally, revenue per available room increased to $133.24 in 2012, which is 8.9 percent higher than the previous year.
Though Long Beach lags slightly behind, it is gaining ground. “Long Beach is getting close, but they’re not quite there yet as far as achieving those occupancy rates,” Ritter said.
These gains, however, are facing a new recessionary threat: the colloquially known “fiscal cliff.” Unless Congress acts, a potentially volatile mix of tax increases and spending cuts could hit the American economy just as the New Year begins: the end of the Bush-era tax cuts, the loss of the payroll tax cut for workers, $100 billion in spending cuts next year alone (known as sequestration), a reduction of unemployment benefits and the elimination of some deductions, such as the mortgage debt tax relief.
Moreover, despite the fact that the national unemployment rate was 7.7 percent in November, California lagged well behind. In October (the last month for which data was available prior to press deadline), Long Beach had a jobless rate of 11.4 percent while Los Angeles County was at 10.3 percent and the state at 10.1 percent.
Baltin said that while trend lines remain positive for 2013, other caveats exist. For example, while occupancy rates have bounced back, profitability remains on the mend. Expenses are simply increasing at a faster clip than revenues, he said.
Still, Baltin said he expects to see a continued increase in international travelers to the region as local convention and tourism bureaus push to “really capitalize on whatever opportunities exist.” In addition, Southern California remains an affordable, easily accessible destination for American travelers.
Conventions, Trade Shows, Concerts And More
In many ways, the Long Beach convention and tourism industry is building upon recent successes. As occupancy rates improve, so too does the catalogue of offerings. “Everything is about deliverables,” said Steve Goodling, president and CEO of the Long Beach Area Convention and Visitors Bureau (CVB).
For example, upgrades at the Long Beach Convention Center and Long Beach Arena reflect the city’s growing optimism about attracting new trade shows, conventions and conferences. And this confidence is not just wishful thinking. For example, hotel bed tax revenue increased $600,000 in 2012, for a total of $17.6 million. Half this money goes into the city’s general fund to support critical public safety and community services. The other half is pumped back into marketing the city as a destination for one and all.
The general hospitality sector has an estimated $300 million annual economic impact in Long Beach, but it’s not just chance or good luck that makes the city stand apart from competitors like Los Angeles, cities in Orange County or other destinations along the West Coast and across the nation. The local CVB sets itself apart by involving the mayor, the chief of police, the airport director, hotel general managers and other officials in its sales missions. “Here in Long Beach, it’s all about how we can make it work,” Goodling said. “That is not common in other cities.”
This kind of engagement is at the core of the CVB’s work. Goodling said Long Beach is unique because it remains small enough to involve so many, yet it’s big enough to catch people’s attention.
This helps explain why the TED conferences do so well here, or why the American Correctional Association chose to come here this year, or why the National Association of Counties has signed on to visit in 2016, bringing with it an estimated economic impact of $2.6 million. “We may not always agree initially, but collectively, as a team, we find ways to make it work for the client,” said Charlie Beirne, general manager of the Long Beach Convention & Entertainment Center.
When others were cutting back and looking for ways to merely survive, the local CVB was investing in renovations and upgrades that help set Long Beach apart. “We invested when everyone else wasn’t investing,” Goodling said.
For example, $1.7 million was pumped into a LED lighting project that now showcases the fountains and plaza area outside the convention center. And $7 million is being pumped into making the 50-year-old Long Beach Arena a state-of-the-art entertainment space for concerts, banquets and conferences. “This arena’s going to be the only public space of its type anywhere in the U.S. . . . because it’s so unique in its design and concept,” Goodling said.
The arena, which has a capacity of 13,000, can be modified to accommodate a 5,000-person audience, transformed into a fashion show space or made into a ballroom. This customization makes it a huge attraction for higher-end clients, Beirne said.
The arena’s makeover is set for completion in August. “It was definitely the missing link,” said Iris Himert, senior vice president of sales at the CVB.
Goodling said the CVB would focus on promoting its existing spaces in 2013, and he expects the positive momentum to continue. Familiarization tours and press trips will continue to be a priority as part of the CVB’s mission to educate and raise awareness about the many things Long Beach offers – from its beaches to its harbor waterfront, from fine dining and shopping to entertainment and sports. “We believe we’ll continue to be successful in bringing new business to Long Beach and in retaining the existing business by having them come back on a rotational cycle,” Goodling said.
Major conventions already booked for 2013 include the American Astronomical Society, Association for Institutional Research, LRP Publications, TED, Solid Waste Association of North America, Applied Power Electronics Conference and Nerium. “Downtown Long Beach only continues to improve as a destination,” Goodling said.
It would be easy for the city to rest on its laurels, congratulate itself for recent successes and sit back and count the money. But Goodling is cautious not to get too comfortable.
“The challenge for Long Beach is to continue to not lose focus,” he said. “You have to tend to it to keep it competitive.”
Attractions: From The Marina To The Living Museum
The Aquarium of the Pacific has truly become a centerpiece of Long Beach. It is a great economic engine for the city while simultaneously existing as a cultural icon. “Great cities have great cultural institutions,” said Jerry Schubel, president and CEO of the Aquarium.
The payoff can be seen in increased attendance and sales. “2012 has been a fabulous year in terms of attendance, in terms of revenue, in terms of new programs, the completion of new projects like the penguin exhibit, breaking ground for retail out front,” Schubel said.
“So it has really been a defining year in the brief history of the Aquarium of the Pacific.”
Membership has now surpassed 100,000, a 20 percent jump over last year, and retail sales have posted strong gains, jumping about $250,000 over the last 12 months, Schubel said. Moreover, 1.5 million visitors will have toured the Aquarium in 2012, making it the fourth-most attended aquarium in the country.
But these successes may pale in comparison to the potential of 2013. Expanded retail is set to launch in the spring, and the Aquarium is celebrating its 15th anniversary in June with the launch of a new program on ocean exploration, a rotating collection of lectures and films, and an international forum bringing great explorers to Long Beach in July. The Aquarium also plans to continue ballet, opera and symphony performances.
Schubel said Long Beach is the perfect home for the Aquarium because of its diversity as an urban ocean-waterfront city. This helps serve the Aquarium’s mission of connecting people with the local environment and demonstrating that healthy coastal ecosystems support a vibrant economy, Schubel said. “We don’t see the environment and a healthy business community at odds,” he added. “We see them as working closely together and complementary.”
Schubel said that in five years he hopes to see the completion of the Aquarium’s campus master plan, attendance exceed two million and a wide acknowledgment that the Aquarium is the most distinctive in the country. It will take the work of city officials, the CVB and residents to make this happen, but he’s confident it will. “We couldn’t accomplish the things that we do unless we have these strong partnerships,” he said.
The Queen Mary is another staple attraction in Long Beach. Evolution Hospitality took the management reigns in the fall of 2011 and in its short time, the benefits of the takeover have paid off. “We are very pleased with the success we had at the Queen Mary” in 2012, said Lynn Kozlowski, vice president of marketing.
The Queen Mary added 14 new events this year, all of which have given the ship a new image as a destination beyond its historical appeal. For example, adding the Princess Diana exhibit “was one tremendous coup,” Kozlowski said. And the first-ever “CHILL” event, which runs through January 6, has brought ice sculpting and skating to Long Beach.
Steve Sheldon, director of entertainment events, said adding events helps keep the Queen Mary relevant. He compared this to museums that host traveling exhibits as a way to spruce up their everyday attraction. Of course, the Queen Mary is like a “living museum,” Sheldon said, and “events give people a reason to come back.”
Sheldon said he is looking forward to hosting a brand new chili cook-off and brew festival at the Queen Mary in 2013, and Evolution will continue to service the ship with upgrades and new amenities for visitors.
“We never had a presence in Long Beach” before acquiring the Queen Mary, Kozlowski said. But Evolution will soon begin operating the new Courtyard by Marriott hotel near the Long Beach Airport. “Now it seems like we’re going to become fast friends.”
When tourists and day visitors to Long Beach experience the city’s unique waterfront, they often head to Shoreline Village at Rainbow Harbor, an ocean-side strip of retailers and restaurants. Business here fared pretty well in 2012, said Property Manager Maureen Baker. She believes more Americans are feeling better about the state of the economy, and therefore are traveling and spending more.
Baker said she intends to add more entertainment on the weekends in 2013, including live music, face painting and balloon artists, “something to just increase the fun atmosphere at Shoreline.”
There are no expansion plans in the works at this time, but a few vacancies mean that new tenants are likely to come in next year.
Of course, for visitors and convention-goers in Long Beach, getting to and from the Aquarium, the Queen Mary or Shoreline Village is made easy thanks to the services of Long Beach Transit.
“Long Beach Transit supports the convention business and tourism here in Long Beach in a number of ways, but mainly with our water taxi service and Passport bus service downtown,” said Marketing Manager Kevin Lee.
The water taxis, AquaLink and AquaBus, partner with Catalina Express in the summer months to offer this service, which saw a 36 percent increase in ridership in 2012. Stops are made at the Queen Mary, Aquarium, Belmont Pier and Alamitos Bay.
Moreover, the downtown Passport bus service has seen a 10 percent increase in use over the last year. “This is a popular service for our local residents, but is a huge benefit to those traveling to Long Beach,” Lee said. “The CVB makes a point to let potential travelers and convention business know that they can ride the bus downtown for free.”
The Harbor And Waterfront
Carnival Cruise Lines has made Long Beach a departure home for many years, and the benefit is evident in the fact that it carried about 340,000 passengers to Baja and the Mexican Riviera in 2012. And with this success, Carnival is expanding its cruise destinations to include two 15-day Hawaii trips in April and September 2013.
“Hawaii is a very sought-after destination,” spokesperson Vance Gulliksen said in an e-mail. “Offering a series of Hawaii cruises from Long Beach provides consumers with yet another attractive destination to visit from a convenient western U.S. homeport.”
In addition, Carnival will welcome the arrival of the 2,124-passenger Carnival Miracle to Long Beach in 2013, “which will operate seasonal seven-day Mexican Riviera cruises from Long Beach featuring the seaside resort town of Puerto Vallarta and a special two-day visit to beautiful Cabo San Lucas,” Gulliksen said. “These cruises will be offered in April 2013 and from October 2013.”
Of course, drug-cartel violence in Mexico continues to place a caveat on cruises headed there. “There has been a large reduction in cruise capacity from the West Coast over the last several years,” Gulliksen said. “Safety concerns related to the significant issues with violent crime in Mexico have been, and continue to be, an issue in driving demand for West Coast cruises.”
For something a little closer to home, many visitors and residents alike enjoy frequent trips to Santa Catalina Island via Catalina Express. With eight vessels in its fleet, the Express is able to provide about 30 daily departures on a normal summer day, and about 60 per week in the winter months, with 40 basing out of Long Beach and the rest from a new terminal on the San Pedro waterfront.
The Express operates 365 day a year, “no matter what, rain or shine,” said Elaine Vaughan, vice president of sales and marketing.
Though 2012 was a good year, including a four percent increase in passengers, moving the corporate offices to Long Beach and opening a new terminal in San Pedro, the year was not without its obstacles. “We always have challenges,” Vaughan said, and fuel prices were the leading case this past year.
But with Catalina remaining such a popular destination – with sailing, golf, beaches, casinos and seemingly hundreds of other things to do – Vaughan expects 2013 to be just as good as 2012. “I’m expecting another pull forward,” she said.
The installation of the USS Iowa to the San Pedro waterfront at the Port of Los Angeles’ Berth 87 was a big addition in 2012. Tours and programs take place at the warship every day except Thanksgiving and Christmas.
Whale watching and harbor tours also remain popular draws for visitors to Long Beach, and Harbor Breeze Cruises serves them well. “We had an absolutely fantastic year,” said owner Dan Salas, adding that passenger counts were up 15 percent in 2012. Moreover, walk-up business on weekends grew 15 to 20 percent, he said.
Whale watching tours grow more popular every year, and “it helps that the blue whales are showing up in abundance here in Southern California,” Salas said. Harbor Breeze is adding a new state-of-the-art catamaran to its fleet in 2013 to serve growing interest in whale watching tours. The vessel will cover more ocean and offers better chances at catching a glimpse of the great fish – err, mammal. “There’s going to be nothing like it in the world,” Salas said. “It’s a great big roll of the dice. But we are very confident of what we see here with the new attitude in Long Beach.”
Salas said Long Beach is great place to do business because its beaches, waterfront, harbor area, parks, dining and entertainment options make it an attractive destination city like no other in the region. Conventions also are a big upside. “The image of Long Beach of years past is gone,” he added. “A new Long Beach has emerged and we’re headed in the right direction.”