Full tourist recovery not seen until 2025
Tourists are returning to San Francisco, but a full recovery won’t come until around 2025, the city’s tourism bureau said Wednesday.
In 2021, visitor volume is expected to reach 15.9 million people, a significant improvement from last year’s 10.2 million, but down 39% from 2019. Spending is expected to rise to $3.9 billion this year from $2.7 billion in 2020, still down 58% from 2019.
Tourism is the city’s biggest industry and a critical economic engine for restaurants, retailers, hotels and other businesses. During last year’s devastation, more than 65,000 jobs supported by tourism were lost.
The city’s hotel occupancy rate has improved to more than 50% this summer, but it’s far from the pre-pandemic days that averaged upward of 80%, according to STR, a hospitality research firm. Daily room rates have grown to $174.93 per night in July, up from a low of $99.53 in April 2020, but below July 2019’s rate of $242.43.
The city’s economy relies on business spending and international visitors, both of which are lagging leisure travel. Companies have delayed office reopenings to the end of this year or 2022, along with travel to San Francisco and other cities.
“We anticipated business travel would return after Labor Day, but that’s not what we’re hearing,” Amanda Hite, president of STR, said during a San Francisco Travel forecast event on Wednesday.
Moscone Center, the city’s largest convention center, was closed to events for the past 15 months and instead housed
the city’s emergency response teams, as well as COVID-19 testing and vaccinations.
Only six events are confirmed in the city for this year, including a California Dental Association event starting Sept. 9 and a scaled-back Dreamforce later in the month, followed by 35 in 2022 and 28 in 2023.
“It’s not all rosy out there, but it’s not all doom and gloom either,” said Nicole Rogers, San Francisco Travel’s chief sales officer.
“The biggest risk we have right now is the delta variant,” Rogers said. “We haven’t seen things go backwards, we’ve just seen a little bit of a plateau.”
The number of hotel room nights occupied by convention attendees is expected to drop below 50,000 this year, down from 121,000 last year and a tiny fraction of the 1.2 million room nights in 2019. The city has allocated $4.6 million to help subsidize conventions for smaller organizers to attract more business.
Kate Sofis, the new director of the city’s Office of Economic and Workforce Development, said she was encouraged that businesses are staying open despite the surge, which will help draw more visitors. The city’s new vaccination mandate for most indoor activities is widely supported by business owners, she said.
“No one is looking at trying to shut down. We are really focused on doing everything we can to keep us all healthy, while staying open at the same time,” she said. “By and large, I have heard almost overwhelmingly positive support by businesses for that, because it helps them continue to operate safely.”
Last year, SFO lost more passengers than any other airport in the U.S. Flights to Asia were severed as the region imposed strict lockdowns, many of which remain in place. The China border, a critical market for SFO, remains closed to non-essential U.S. visitors. During the depths of the pandemic, only four out of 44 airline carriers at SFO were active. Now, 28 are back and the airport is in talks to bring on four new airlines.
“We had hoped to see more improvement this summer, but the delta variant obviously has hit us hard. San Francisco has got some of the bigger challenges in the country right now, because of our dependence on international travel, business travel,” said Joe D’Alessandro, CEO of San Francisco Travel. “I think we’re headed in the right direction.”