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Tourists Boost Downtown Santa Monica Business

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Harding, Larmore Kutcher & Kozal, LLP

By Moosbrugger
Special to The Lookout

July 22, 2013 -- Tourists have given Downtown Santa Monica retailers an extra boost over the past year, according to a study from the Santa Monica Convention & Visitors Bureau (SMCVB).

And with more marketing dollars to target foreign visitors and the Expo Light Rail line expected to arrive in 2016, the upswing could be a lasting trend, tourism officials said.

Visitors to Santa Monica from outside Los Angeles County jumped 8.4 percent to 7.31 million in 2012 and spending increased 9.6 percent to $1.53 billion, according to the study. Tourism supported 12,225 jobs, up 7.4 percent.

Downtown stores and restaurants were major beneficiaries. The Third Street Promenade was the second most visited venue (after the Santa Monica Pier) and Santa Monica Place ranked fourth behind Santa Monica Beach.

About 77 percent of visitors came to the Promenade, and 48 percent went to Santa Monica Place. Seventeen percent visited other Downtown Santa Monica locations. The top-ranked Santa Monica Pier attracted 86 percent.

Visitors often come prepared to spend freely, particularly international visitors taking advantage of what they consider bargains, said Misti Kerns, president and CEO of the SMCVB. Many foreign tourists fill empty suitcases and trunks with

merchandise they buy to ship back home, she said.

“We have the retailers and brands that international visitors are looking for,” Kerns said.

Restaurant dining and shopping were among the most popular activities for visitors. Seventy-four percent ate in restaurants and 54 percent went shopping, ranking those activities second and fourth in popularity. Sightseeing/exploring Santa Monica ranked first and beach activities was third.

Visitors spent $533 million on shopping/gifts in 2012, up 12.2 percent from 2011. Meals accounted for another $329 million, up 14.3 percent, and beverages took in $169 million, up 11.3 percent.

The increases in spending reflect a major shift from domestic visitors to international travelers. International visitorship soared 33 percent in 2012 and accounted for about 57 percent of the total; U.S. domestic visitors declined 12.6 percent.

Even more dramatic was the spending breakdown: international travelers accounted for 63 percent of spending, compared to 37 percent from domestic travelers.

Kerns noted that international visitors stay longer, spend more and are much more likely to use public transportation. As a result, the SMCVB puts much of its effort into international markets.

That approach seems to be on target. Indeed, international travelers “are our future,” Denise Pirrotti Hummel, founder and CEO of Universal Consensus, told the audience at the Santa Monica Travel and Tourism Summit in May. “International travelers spend double,” said the founder of the cross-cultural consulting and training company.

The international traveler is fueling the growth of the visitor industry in California, said Caroline Beteta, president and CEO of Visit California, the California Travel and Tourism Commission, at the summit.

Hummel believes that Santa Monica will benefit from the planned light rail system because foreign visitors are accustomed to using public transportation.

With the recent creation of a Tourism Marketing District (TMD) in Santa Monica, the budget of the SMCVB will more than double, giving its marketing efforts a big boost.

The increased funding will allow the agency to develop a longer-range plan and delve deeper into some of the markets, such as Australia, that have already been productive, Kerns said. One goal will be to get visitors to stay longer in Santa Monica.

The additional money also would support sales and marketing initiatives targeting untapped and emerging

international markets, such as Brazil, Kerns said.

The TMD includes all Santa Monica lodging businesses with an average daily room rate of $100 or more. The SMCVB administers TMD funds generated by assessments on lodging stays. Kerns said hotels will likely pass along the cost to their guests. The 2013 assessments range from $2 to $4 per night, depending on the room rate.

Downtown Santa Monica hotels play a key role in the TMD. A committee chaired by Steve Farzam of the Shore Hotel governs the Santa Monica TMD. Wolfgang Jonas of the Fairmont Miramar Hotel & Bungalows is vice chair and Angela Rogers of Hotel Carmel is secretary.

Meanwhile, Santa Monica has a strong base to build from, with its lodging

industry boasting a high occupancy rate (85.2 percent in 2012). Not surprisingly, more hotels (totaling about 800 rooms) are planned for development over the next several years.

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