Visit California CEO Update: California Tourism Month

-"The mission of the California Lodging Industry Association is to promote, protect and advance the interests of lodging owners and their management teams statewide, and to provide a network of resources to support member efficiency, profitability and professionalism.”-

May 3, 2023

Dear Industry Partners,

Visit California and partners across the state will celebrate California Tourism Month in May by delivering a simple message: Tourism is back and delivering value for all Californians.

Two powerful pieces of Visit California-commissioned research released this spring prove the point:

· The annual economic impact report prepared by Dean Runyan Associates shows visitors spent $135 billion in California in 2022, bringing the state 93% of the way back to pre-pandemic levels. Tourism jobs (1.1 million) and state and local taxes paid by visitors ($12 billion) reached more than 90% of pre- pandemic levels in 2022. Projections from Tourism Economics show visitor spending will exceed 2019 levels this year.

As always, the economic impact report breaks down the numbers by county, and I hope you will share them with your local media, tourism partners and civic and governmental opinion leaders in your destination.

· Secondly, community sentiment research prepared for Visit California by Destination Analysts shows a majority of Californians believe tourism creates a better quality of life in their region and that the benefits of tourism outweigh the problems. This is a good story to share: More than 70% of residents said they believe tourism generates local business opportunities and provides jobs to residents. Big majorities say they appreciate the dining, shopping and recreational opportunities in their communities.

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Analysts Say Hotel Fundamentals Strong Despite Complicated Comparisons, Economic Challenges

By Bryan Wroten

Hotel News Now

As the hotel industry's publicly traded companies prepare to report first-quarter earnings, investors will be closely watching for any signs that recent economic troubles are having an impact on performance.

Despite concerns over inflation, rising interest rates, bank failures and other challenges to the overall economy, hotel industry analysts expect executives at hotel brand companies and real estate investment trusts will have mostly positive reports for the first quarter because the industry fundamentals are still strong.

That is because people, either for work or play, are still traveling.

Investor Concerns

Michael Bellisario, director of equity research and senior analyst at Baird, said there continues to be a bid-ask spread between management teams and industry contacts who say there are no signs of slowing or fundamental weakness and the investors who don’t believe them. Investors see a booking window that’s still short and are keeping an eye on a recession.

U.S. hotel TRevPAR highest on record in March

U.S. hotel total revenue per available room (TRevPAR) was the highest for any month on record, according to STR‘s March 2023 P&L data release.

March 2023 per-available-room metrics (% change from March 2022)

GOPPAR: US$95.12 (+14.5%)
TRevPAR: US$238.22 (+17.5%)
EBITDA PAR: US$71.07 (+14.4%)
LPAR (Labor Costs): US$74.43 (+23.4%)

“Revenues and profits improved for a second consecutive month with each of the key profit-and-loss metrics showing double-digit growth year over year,” said Raquel Ortiz, STR’s director of financial performance. “The increase in TRevPAR prevented labor costs from placing further pressure on GOPPAR. Profit margins continue to be strong even with those increased labor costs as total revenues are growing and other expenses are being managed through reduced services, lower employment levels and adjusting operations.”