DRAFT AS OF JANUARY 2017

Transcription

1 DRAFT AS OF JANUARY 2017 SAN DIEGO TOURISM AUTHORITY DESTINATION SALES AND MARKETING PLAN

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3 MISSION To drive visitor demand to economically benefit the San Diego region. VISION Leading San Diego to be the most desirable destination. ABOUT US The San Diego Tourism Authority (SDTA) is San Diego s umbrella destination marketing organization, charged with driving visitor demand and monitoring the health of the tourism industry. SDTA develops sales and marketing programs that promote San Diego as a preferred leisure and meetings destination. In collaboration with San Diego s tourism industry partners, SDTA serves as the collective voice of the destination and aims to keep San Diego top-of-mind. Incorporated in 1954, SDTA is a private nonprofit 501c6 corporation that is governed by a 30-member board of directors composed of industry and non-industry representatives. Funding comes from the City of San Diego Tourism Marketing District, County of San Diego, City of Coronado Tourism Improvement District and private source revenues (membership dues, advertising and events). Investment by the SDTA in sales and marketing of the San Diego brand has resulted in San Diego becoming one of the nation s top travel destinations. STRATEGIC IMPERATIVES Grow visitor demand for San Diego. Strengthen and maximize the San Diego brand domestically and internationally. Deliver consistent value for our customers and stakeholders. Actively inform, advocate and educate on behalf of the visitor industry. Reinforce and support a culture of excellence. 1

4 INTRODUCTION AND OVERVIEW The San Diego Destination Sales and Marketing Plan is a comprehensive plan developed to guide SDTA s sales and marketing programs over the next two years. The goal is to grow inbound travel demand and visitation revenues by boosting brand awareness, building new markets and converting more customers to choose San Diego. This strategic plan has been developed with the San Diego Tourism Marketing District's 20-Year Master Plan in mind. The plan takes into account current market conditions, tourism industry forecasts, SDTA funding resources, Visit California opportunities and Brand USA developments. Annual work plans are then developed to match funding resources to strategic initiatives. EIGHT GUIDING PRINCIPLES USED IN THE DEVELOPMENT OF THE PLAN 1. Drive the maximum hotel room nights for Tourism Marketing District Hotels. 2. Act as the collective voice of the destination and do what individual organizations can t do by themselves. 3. Elevate the San Diego brand and broaden context of San Diego s diverse travel product. 4. Leverage all SDTA s marketing assets across Bought + Earned + Owned in order to increase San Diego s share of voice. 5. Focus on developing new markets and audiences for the destination. 6. Align programs with Visit California and Brand USA in order to maximize efficiency. 7. Deliver strong return on investment for all major programs. 8. Support the membership by providing value and opportunity to effectively reach the marketplace. 2

5 THE TRAVEL AND TOURISM MARKET A GLOBAL TRAVEL MARKET Today s world is more connected and globalized than ever before due to the advancements of technology and the growing access to travel. Developing middle class populations around the world are growing the global travel market to record highs. The World Tourism Organization (WTO) reports that 1.2 billion tourists traveled outside their own country in 2015, up 4.4 percent or 50 million additional tourists. These international travelers made a total economic contribution of $7.2 trillion to the world s GDP and supported 284 million jobs. The travel sector contributes more than twice that of the automotive industry and rivals the banking industry in the world, and is growing at a faster rate than global GDP. Growth in global travel is expected to be mostly generated from the regions of the world that have a fast growing middle class. The WTO forecasts the Asia Pacific region to grow travel GDP by more than 5 percent annually through 2026, compared to 3.5 percent growth in North America, and 2.7 percent in the European Union 1. In 2015, the European Union received 51 percent of the world s international arrivals, followed by the Asia Pacific region at 23 percent. The Americas received just 16 percent of the world s international arrivals. International arrivals in 2015 increased more than 5 percent in Europe, Asia Pacific and the Americas. SHARE OF INTERNATIONAL TOURIST ARRIVALS BY CONTINENT (2015) 60% 50% 40% 30% 20% 10% million 51% Europe 277 million 23% SOURCE: World Tourism Organization million 16% Asia Americas Pacific 54 million 53 million 5% 5% MIddle East TRAVEL AND TOURISM GDP GROWTH BY REGION ( ) Africa South Asia 7.1% 3 1 UNWTO Annual Report 2015 South East Asia North East Asia Sub Saharan Africa Middle East North Africa Latin America North America Other Europe Caribbean Oceana European Union 2.7% 3.7% 3.5% 3.5% 3.4% 3.2% 4.2% 5.2% 4.9% 5.8% 5.6% 0% 1% 2% 3% 4% 5% 6% 7% 8% SOURCE: World Travel & Tourism Council 2016

6 THE U.S. TRAVEL MARKET Americans produced 2.2 billion person-trips in the U.S. in In contrast, international travelers to the U.S. totaled 77.5 million arrivals in The domestic leisure market, which is 79 percent of U.S. person-trips, grew 3.6 percent in 2015 and the business market, which is 21 percent of the domestic market, grew 1.9 percent in All travel generated 1.19 billion hotel room nights in the U.S. in All travel spending in the U.S. reached $947 billion in 2015, of which $814 billion was spent by Americans and $133 billion was spent by international travelers to the U.S. Spending by Americans increased 2.1 percent over 2014, while spending by international travelers declined 2 percent over the same time. This decline, due to the slowing global economy and a stronger dollar, followed five consecutive years of spending growth by international travelers. The Leisure traveler spent $651 billion (69%) and the business traveler spent $296 billion (21%). Within the business market, the meetings and conventions traveler was responsible for $121.9 billion in spending, up 6 percent over The state of California leads all U.S. States with travel spend reaching $124 billion, a 13 percent share of total U.S. travel spend. Florida is a distant second at $85 billion, and the states of Texas and New York follow generating about $66 billion in travel spending. U.S. DOMESTIC PERSON-TRIPS 1, ,000 1,500 2,000 2,500 MILLIONS Domestic Leisure Travel Domestic Business Travel U.S. DOMESTIC SPENDING $651 $ $1,000 BILLIONS Domestic Leisure Travel Spend Domestic Business Travel Spend 4 1 Tourism Economics, San Diego Travel Forecast, August U.S. Travel Association, U.S. Travel and Tourism Overview

7 THE TRAVEL AND TOURISM MARKET U.S. DOMESTIC TRAVEL FORECAST Looking ahead, Tourism Economics forecasts total domestic person-trips growth to slow to 1.2 percent in 2016, and 1.3 percent in In both years, as in years past, leisure travel is expected to grow at a higher rate than business travel. The Tourism Economics forecast points to a stronger labor market and consumer confidence with expected wage growth and accelerated housing activity supporting leisure travel growth, while sluggish global trade, constrained business investment from the strong U.S. dollar along with the Trump presidency policy uncertainty weighing on business travel growth. INTERNATIONAL TRAVELERS International travel contributes a healthy portion to the growth of the nation's travel and tourism industry. The U.S. received 77.5 million international arrivals in Of those, 38.4 million came from overseas markets and 39.1 million were from Canada and Mexico. The United States' share of total international arrivals is 6.5 percent (down from 7.5% in 2000, but up from 6.4% in 2014). Each overseas traveler spends approximately $4,400 when they visit the U.S. and stay on average 18 nights. The highest growth in travel markets through 2020 is forecasted to come from China (129.2% growth) and India (47% growth). Total % change By Purpose Business % change Leisure % change Hotel Room Demand Room Nights % change Domestic Person Trips in the U.S (millions) 77.5 million International Arrivals to U.S Source: Tourism Economics $133 billion International Visitor Spend

8 SAN DIEGO TOURISM AUTHORITY THE U.S. TRAVEL MARKET Canada United Kingdom China South Korea India Japan Taiwan San Diego Mexico Current markets Australia TOP FIVE INTERNATIONAL M ARKE TS TO USA (ARRIVAL S) ARRIVAL S TOP FIVE HIGHGROW TH M ARKE TS THROUGH 2020 FOREC A ST ARRIVAL S ORIGIN OF VISITOR 2015 ORIGIN OF VISITOR PERCENT CHANGE 2014 / 2020 Canada 20.7 million China 129% Mexico and Central America 18.4 million India 47% United Kingdom and Ireland 4.9 million South Korea 36% Japan 3.8 million Taiwan 39% China 2.6 million Australia 26% Source: 2015 U.S. Visitation Report, U.S. Department of Commerce 6 High-growth future Source: U.S. Travel Answer Sheet December 2016 Final

9 THE TRAVEL AND TOURISM MARKET REGIONAL OVERVIEW OF SAN DIEGO TOURISM San Diego is one of the nation s most popular travel destinations, thanks to our temperate climate, natural beauty, diverse activities and ideal location. In 2016, over 34.6 million day and overnight visitors came to San Diego, providing $10.3 billion in direct visitor spending and generating $246 million in hotel transient occupancy tax revenues F A S T F A C T S SAN DIEGO TOURISM INFRASTRUCTURE Market Composition... 88% Leisure, 12% Business (all visitors) Number of Hotels Number of Hotel Rooms....60,611 Number of Hotel Rooms in the City of San Diego... 41,611 Hotel Room Nights Mix... 72% Leisure / Transient, 25% Group, 3% Contract Annual Airline Passengers Million Annual Attendance at Major Attractions Million Total Indian Gaming Properties Casinos Cruise Embarkations ,671 passengers total, 74,729 embarking passengers Number of Golf Courses Number of Arts Institutions...85 Craft Breweries

10 THE SAN DIEGO TOURISM AUTHORITY FY2017 ORGANIZATION BUDGET Private Source $5.7M REVENUE $36 EXPENSES Operations $4.4M MILLION TMD $30.3M Sales / Marketing $31.6M KEY PERFORMANCE INDICATORS (KPIs) FY2016 ACTUALS FY2017 GOALS 1. Market Share of Hotel Room Nights Sold in Western Region Comp Set 16.04% 16.21% 2. RevPar Growth 3.9% 4.7% 3. TOT Collections (City of San Diego)* $202.8 M $216.3 M 4. Visitor Spending Growth 4.8% 5.9% 5. Citywide Room Nights 1,092, , Non-City Wide Group Room Nights (new meetings only) 410, , Earned Media $30.9 M $31 M 8. Co-op Ad Dollars Raised $712,488 $605, Advertising Gross Impressions 1.3 Billion 1.3 Billion 10. Visitor Inquiries 9.3 M 9.4 M 11. Contracted Ad Sales $1.1 M $995,000 * Final to come from City of San Diego 8

11 THE SAN DIEGO BRAND In a world of too many product choices, it is critical to create brands that are memorable and relevant. A strong brand resonates with buyers on an emotional level and creates greater demand. Great brands attract buzz and marketing alliances, making limited dollars work harder in the marketplace. For San Diego, our destination brand is our greatest marketing asset. In 2014, the SDTA embarked on new global brand research with partners SMARI, Smith & Company and MeringCarson. Over 5,000 past and prospective travelers from seven countries (United States, United Kingdom, Canada, Mexico, Japan, Germany and China) were surveyed about San Diego attitudes and perceptions, barriers, product offerings and messaging. The findings reinforced years of prior learning about the San Diego brand and provided new insights into international market challenges. To summarize: In the United States, San Diego is seen as a highly desirable destination second only to Hawaii in terms of aspirational appeal. Internationally, San Diego isn t well known, and it is difficult to compete against a number of iconic must-see destinations. Across all the markets surveyed, our climate and relaxation are key image drivers for San Diego. Every market is somewhat different and should be looked at individually in order for San Diego to best capitalize on opportunities: Close-in markets such as Los Angeles and Phoenix are very familiar with San Diego and need only to hear about what s new in the destination to stimulate interest to travel. Further-out markets such as Chicago and New York know San Diego only at a superficial level (weather) and need awareness plus education to build consideration to visit. Japan and China are more likely to consider Hawaii, whereas the U.K. and Germany are more likely to consider New York. Mexico is a key opportunity market due to high consideration compared to other markets. Consideration for San Diego grows significantly after seeing photos and descriptions of the destination s diverse amenities. San Diego s diverse economic sectors and business culture aren t yet well known. San Diego is seen as a desirable destination for business travel due to the destination s beauty and lifestyle. 9

12 THE SAN DIEGO BRAND THE BRAND PLATFORM In 2014, the San Diego Tourism Authority completed an extensive global research project that explored a variety of measures across domestic and global markets to determine brand position, commonalties, differentiators and motivators by country and region. More than 5,000 travelers throughout seven countries were surveyed and focus groups were conducted in four domestic spot markets. The findings reinforced years of prior learning and ultimately re-confirmed that San Diego s Sunny Outlook brand platform was solid and differentiating. The San Diego brand is built on a foundation of inspired optimism and positivity. Our unique blend of great weather, outdoor lifestyle and friendly people infuses our region with an upbeat, anything s possible attitude. This blend of people + place + climate is what elevates our customers mood and gives us a unique selling proposition in the marketplace. 10

13 THE SAN DIEGO BRAND DIFFERENTIATING PRODUCT MESSAGE As marketing of the destination continues to expand globally into markets where there is less familiarity with San Diego, further context of the destination experience is required to drive consideration. As a result, a differentiating product message was developed to work in combination with the Sunny Outlook brand platform to guide messaging and execution. More than beaches and family attractions, San Diego s diversity of product and people is similar to that of larger, urban cities. Arts, culture, entertainment and culinary offerings abound throughout San Diego s 100 neighborhoods. San Diego s unique blend of vibrant, big city experiences and a year round, laid-back outdoor lifestyle make it California s Beach City. 11

14 THE SAN DIEGO BRAND MAKING OUR ICONS - STORYTELLING FROM THE INSIDE OUT As destination marketers, we focus our time and resources on external audiences. Our goal is to get people to visit San Diego. We want them to get to know the destination, consider it, like it and share their experiences with others. In the eyes of travelers, San Diego has a strong, competitive image*. Sandwiched between Hawaii and Las Vegas for many types of trips, San Diego offers elements of both popular destinations a place as enjoyable as Hawaii and with recreational variety as good as Las Vegas. The diversity of San Diego s visitor experience is what sets it apart. While not the top rated destination in any category measured, San Diego blends the best of most worlds. Travelers have described San Diego as the best of California all in one place. San Diego gets high marks for: Outdoor activities and beauty, but not as strong as Hawaii or the Caribbean Family-oriented activities, but not as strong as Florida or Hawaii Urban features like diverse neighborhoods, a vibrant urban center and great nightlife but not as strong as San Francisco or Los Angeles Craft beer, behind only San Francisco *(Source TNS) 12

15 THE SAN DIEGO BRAND MAKING OUR ICONS - STORYTELLING FROM THE INSIDE OUT As one of the most popular travel destinations in the country, San Diego and its visitor experience is often recognized by media and trusted influencers. San Diego gets credit for a variety of experiences, from the more expected beach and lifestyle accolades to recognition for its hip, urban offerings. A Best of the World" Destination Best Place to Hatch Big Ideas A Top 5 Meeting Destination #1 Buzziest Beach Town #2 Athletic & Active City One of America s Best Cities for Foodies One of America s Coolest Cities One of America s Best Beer Cities 13

16 THE SAN DIEGO BRAND MAKING OUR ICONS - STORYTELLING FROM THE INSIDE OUT Aside from San Diego s many strengths, the destination lacks an icon that makes it a must see destination for travelers. Visual icons help create a distinct image of a place and the lack thereof means San Diego can get overlooked in the consideration process particularly in more distant markets where there is less familiarity. Without a strong visual icon, visitors from more distant markets are less motivated to choose San Diego over other California options. 14

17 THE SAN DIEGO BRAND MAKING OUR ICONS - STORYTELLING FROM THE INSIDE OUT (C0N T) As San Diego s tourism industry partners at the state and national level continue to strategically focus on icons in their global marketing programs, San Diego must develop ways to fit into their storytelling. San Diego must consistently communicate what makes it unique essentially making our icons through cohesive storytelling as a community. Brand USA s Bridge strategy builds upon iconic destinations while introducing new/undiscovered experiences. Disneyland, Hollywood, beaches Yosemite and Napa Wineries are among the top motivating attractions in California (Hall & Partners) 15

18 THE SAN DIEGO BRAND MAKING OUR ICONS - STORYTELLING FROM THE INSIDE OUT (C0N T) San Diego Tourism Authority has developed out assets to help internal teams and external partners properly position the product and experiences that are unique to San Diego. ICON ELEVATOR SPEECHES Cali-Baja cuisine is San Diego s distinct food culture that comes from open collaboration between chefs on both sides of the border. It combines the creativity and freshness emphasized in Californian cooking with the Baja- Mediterranean movement found in Mexico s culinary scene. San Diego is the Craft Beer Capital of America. It s the nation s leading craft beer destinationwith more than 125 breweries, and has defined the popular West Coast-style IPA. San Diego is the sweet spot for golf, with more than 90 courses, including the internationally renowned Torrey Pines Golf Course, and more playable days than anywhere else in the United States. Downtown San Diego s Gaslamp Quarter is one of the hottest nightlife destinations on the West Coast. This historic district, featuring both Victorian-era buildings and modern high-rises, includes 16-walkable city blocks with 180 restaurants, 50 bars and 10 nightclubs. San Diego is the birthplace of California. It s home to the Cabrillo National Monument, a national park which commemorates the historic 1542 landing of Juan Rodriguez Cabrillo, who was the first European explorer to set foot on the U.S. West Coast. Balboa Park is the largest urban cultural park in the United States, a 1,200- acre oasis that hosts 17 museums, beautiful gardens, theaters and the world-famous San Diego Zoo. Its iconic California Tower exemplifies the park s Spanish Colonial Revival architecture and is one of the most recognizable structures in San Diego. Torrey Pines State Natural Reserve, set atop dramatic ocean cliffs above the Pacific, is a coastal wilderness of natural vegetation and sandstone canyons full of walking trails and breathtaking views. It s one of only two locations in the world that grows the Torrey pine tree. Mission Bay Aquatic Park is the largest manmade aquatic park of its kind in the world. The 4,600-acre outdoor playground features recreation on and off the water, from sailing and jet skiing to bike riding and triathlons. 16

19 THE SAN DIEGO BRAND SAN DIEGO FAST FACTS 70 miles of coastline 33 beaches 267 mostly sunny days per year More than 100 diverse neighborhoods 93 public + private golf courses More than 125 craft breweries San Diego County has more biodiversity than any other county in North America San Diego County has more small farms than any other county nationally 18 state parks and 1 federal park o Anza-Borrego Desert State Park is California s largest state park and the largest desert park in the U.S. o Old Town San Diego State Park is the landmark of the first Spanish settlement of the U.S. West Coast o Cabrillo National Monument, a National Park which commemorates the historic 1542 landing of Juan Rodriguez Cabrillo. Mission Basilica San Diego de Alcala was the first mission built in California Birthplace of the triathlon Home to an Olympic Training Center Home to the largest sport fishing fleet in America Home to the USS Midway; the longest-serving U.S. Navy aircraft carrier of the 20th century With Tony Award winning theatres, La Jolla Playhouse and The Old Globe, San Diego is a leading theater producing town with numerous San Diego productions making their way to Broadway Chicano Park, a National Historic Landmark, is home the largest collection of outdoor murals in the U.S. and the largest collection of Chicano murals in the world Home to the world s busiest international border crossing 17

20 THE SAN DIEGO BRAND PROFILE OF SAN DIEGO San Diego is the 8th largest city and 17th largest metropolitan area in the U.S. San Diego s population skews young, with a median age of 35.3 years and the largest millennial population (age 18-34) among major metropolitan areas nationwide. With the 5th highest foreign born population (23.2% of residents), San Diego is one of the most ethnically and culturally diverse places in the nation along with Miami, Los Angeles, San Francisco and New York. More than 100 languages are spoken by San Diego residents, and 22.3% are multilingual non-native English speakers who also speak English very well. RANKING OF SAN DIEGO FOR DEMOGRAPHIC + QUALITY OF LIFE SAN DIEGO RANK TITLE MEASURE %/RATE/GDP/VALUE/#/$ Largest US Metros by Population (2014) 3,263,432 People 5 Median Age (2014) 35.3 Years of Age 1 Percentage of Residents Years Old (2014) 25.4% 5 Foreign-Born Populations (2014) 23.3% 9 Median Household Income (2014) $66, Per Capita Income (2013) $ 51,384 2 Median Home Price ( Q2 2015) $547,800 1 Mean Travel Time to Work (Minutes) (2014) 25.0 Minutes 4 Total Annual Sunshine Hours ( Average) 3,055 Hours Source: San Diego RegionalEDC ( 18

21 THE SAN DIEGO BRAND BUSINESS IDENTITY In order to compete globally, San Diego s destination identity must successfully engage the leisure and business sectors. While San Diego is one of the most preferred leisure vacation destinations in the country, meeting planner research shows that a destination s business identity is also important in the decision to bring a meeting or convention to a city 1. While home to the largest concentration of military in the world, San Diego's innovation economy is anchored by life sciences, communications, cleantech and software industries. With a highly educated workforce, San Diego is recognized globally as a center of scientific breakthroughs and discoveries making it one of the top life sciences markets in the world. A leading high-tech hub in the country, San Diego also ranks first in the nation in patent intensity (patents per thousand employees), granting 3.6 patents per thousand employees in 2013, more than other high-tech regions, including Boston, Austin, Seattle and New York. TALENT & ECONOMIC SAN DIEGO RANK TITLE MEASURE %/RATE/GDP/VALUE/#/$ 9 % Population w/bachelor's or Higher (2014) Ages % 10 % Population w/ Master's/Professional or Higher (2014) Ages % 4 % Population w/doctorate (2014) Ages % 4 6 Percentage of Degree Holder's (Bachelor's+) whose first degree was in Science, Egineering or Engineering-related Field (2014) Multi-Lingual (Non-Native English Speakers who also Speak English "Very Well") Residents Age 5+ (2014) 39.6% 22.3% 13 Unemployment Rate (November2015) Gross Domestic Product (2014) (millions of current dollars) $206, Total Export Value (2014)(current dollars) $18,585,667,916 2 Patents per 1,000 Workers (2013) Total VC Dollars Received (2014) (current dollars) $805,077,600 Source: San Diego RegionalEDC ( DestinationMap Study, STR, Inc. 19

22 THE SAN DIEGO BRAND SNAPSHOT OF KEY INDUSTRIES - (SOURCE: SAN DIEGO REGIONAL ECONOMIC DEVELOPMENT CORPORATION) Tourism Tourism is San Diego s third largest industry and second largest traded economy (behind Research/Technology/Innovation), employing over 183,000 San Diegans (13% of the jobs in the county). In 2016, 34.6 million visitors are projected to have spent $10.3 billion at San Diego businesses generating more than $705 million in total tax revenues for state and local governments. The visitor industry delivers more than $17.1 billion in regional economic impact. Life Sciences San Diego is one of the top life sciences markets in the world with more than 1,100 life sciences companies and 80 research institutes. Life sciences activity accounts for more than $31.8 billion in total economic impact to the region. Venture capital investment in life sciences totaled more than $550 million in 2014 with Biotechnology receiving more than any other industry. Cleantech San Diego is the most concentrated major metropolitan region for cleantech employment in the U.S. The 800 cleantech companies support 25,000 jobs in the sector, the third highest in the state. Clean energy has been named as a top five field prime for job growth in San Diego. Information & Communications Technologies The largest employment cluster in San Diego s innovation economy is the Information & Communications Technologies cluster, with 3,290 companies supporting 67,000 jobs. In 2014, the ICT section accounted for 75% of innovations startups and 22% of total venture capital activity in San Diego. Healthcare San Diego s healthcare industry employs more than 140,000 people. San Diego hospitals hold some of the highest ratings by national publications, such as U.S. News and World Report, for both overall care and unique specialties. The industry is one of the fastest growing and one of the largest employers in the region. Cybersecurity The total economic impact of the cybersecurity industry was $1.9 billion in With more than 7,620 people currently employed by cybersecurity firms, employment projected to growth 13% over the next 12 months. 20

23 THE SAN DIEGO BRAND SNAPSHOT OF KEY INDUSTRIES (CON'T) Aerospace The aerospace, navigation, and maritime technologies cluster employs more than 33,000 people in the region. Aerospace employment in San Diego County has grown by 66.7 percent since Home to the two largest military unmanned aerial vehicle (UAV) manufacturers, Northrop Grumman and General Atomics, San Diego is a hub for UAV technologies for both military and civilian users. Defense Home to the largest concentration of military in the world and largest federal military workforce in the U.S., San Diego s military sector is responsible for approximately 22% of all jobs in the county (328,000). Defense-related activities and spending generated an estimated $45 billion of gross regional product for the county during fiscal year 2015, amounting to 21.5% of the region s total GRP. Maritime With a strong Navy presence and innovative technology firms, San Diego is now a hub for maritime technology. In ,000 San Diegans were employed in the maritime industry, which was projected to add 6,000 jobs by Manufacturing San Diego is home to more than 3,000 manufacturing companies supporting more than 96,000 jobs accounting for 15% of all paid employment in San Diego. The manufacturing sector contributed nearly $8 billion in economic impact to the region in Sports & Active Lifestyle San Diego s sports and active lifestyle industry cluster includes more than 1,200 businesses employing 32,407 people. Action sports manufacturing alone directly employs more than 4,300 people. In 2013, the sports and active lifestyle sector delivered a direct economic impact of $1.35 billion and a total economic impact of $2.24 billion to the region. Universities & Research Institutions Home to world-class academic and research institutions, the San Diego region is recognized globally as a center of scientific breakthroughs and discoveries. San Diego research institutes and universities received a total $761 million of National Institutes of Health funding for research and development during 2014, ranking 8th among all metropolitan areas. The robust cluster of scientific research and development is one of the largest and most significant economic contributors to the San Diego region, generating $14.4 billion in gross regional product. 21

24 THE SAN DIEGO VISITOR INDUSTRY In San Diego, the visitor industry is the second largest traded economy behind the research and innovation economy. A traded economy is defined as an economy that attracts new outside dollars into a region, which residents are not able to generate themselves, and is thus very valuable to an area s quality of life. In 2016, visitors to San Diego County spent $10.3 billion at San Diego businesses generating $705 million in taxes for governments to spend on resident services and infrastructure. Among the over 30 million visitors to San Diego County, 50 percent were overnight guests and 50 percent came for the day. Among the overnight guests, 56 percent stayed in hotels compared to 39 percent in private homes and 5 percent in other paid accommodations such as timeshares, vacation rentals, and campgrounds. Due to the development of sharing economy technologies, companies such as Airbnb have been impacting the growth in the other accommodations segment. Visitors who stayed in Other Accommodations grew 6 percent in 2015 compared to about 3 percent annually over the previous three years. The day market is primarily comprised of Mexican day visitors (26%) and Southern California visitors (74%.) Since the downturn during the 2009 recession, San Diego Visitor volume and spending increased modestly in 2010 and then demonstrated strong growth in 2011, and continued growth through San Diego Visitor Volume Visitor Spending and Visitor Volume Visitors Spending 35.0M $11.3B $12.0B 30.0M $9.9B $10.0B 25.0M $8.0B 20.0M 15.0M 10.0M $6.0B $6.0B $4.0B 5.0M $2.0B 0.0M 32.2M 32.1M 31.8M 31.8M 32.2M 31.6M 31.1M 29.6M 29.9M 31.1M 32.3M 33.1M 33.8M 34.3M 34.6M 35.2M 35.8M (f) 2017 (f) 2018 (f) $0.0B 22 6 CIC Research, Inc San Diego County Overnight Visitor Profile

25 SAN DIEGO VISITOR PROFILE 6 Hotel visitors have always been the most valuable visitor segment as they are responsible for more than two-thirds (68%) of all spending, and their spending reaches a greater number of San Diego businesses. San Diego Visitor Spending $ Billions $12 $10 $8 $6 $9.9 $9.2 $9.0 $8.3 $6.7 $ $4 $2 $0 All Visitor Spending $1.3 $1.4 $0.8 $0.9 $0.9 $1.0 $0.7 $0.7 $0.3 $0.3 Total Overnight Hotel/Motel In-Home Guests Other Overnight Day Visitors Day Vis (Exc Mex) Mexican Day Visit 2015 San Diego County Visitor Profile The 2015 San Diego Visitor Profile Study is a year-long study of the visitor market in San Diego County, and has been conducted for most of the last 30 years, but most recently in The study is an intercept study of about 4,000 visitor groups at 46 locations, which when combined with a San Diego household survey and many third party data creates the picture of the visitor industry economy. San Diego is a top leisure destination in the U.S., consistently ranking in the top 5 Counties in the U.S. in terms of volume of person-days. The mix of business and leisure visitors varies by visitor length of stay and accommodations. Leisure Business Other Hotel Visitors 66% 33% 1% All Overnight 78% 20% 2% All Visitors 87% 11% 2% Day Visitors 94% 4% 2% Private Home Visitors 94% 3% 3% San Diego County Overnight Visitor Profile, CIC Research, Inc. 23

26 THE SAN DIEGO VISITOR PROFILE Visitor Segment Profile Hotel Visitor Profile HOTEL LEISURE HOTEL BUSINESS Visitor Volume Estimate 6.2 million 3.3 million Transportation Personal Vehicle Air Rental car/rv 59% 38% 5% 28% 69% 2% First Visit in 2 years 58% 50% Average Spend per person per trip $ $1, Children in Travel Party 36% 3% Median Age Median HH Income $92,400 $141,000 Average Length of Stay 3.3 nights 3 nights Average Group Size 2.7 persons 1.6 persons Hotel/Motel Leisure Visitor Activities San Diego County Overnight Visitor Profile, CIC Research, Inc. 24

27 THE SAN DIEGO VISITOR PROFILE Visitor Segment Profile Private Home Leisure Visitors Visitor Volume Estimate PRIVATE HOME LEISURE 6.4 million Transportation Personal Vehicle Air Rental car/rv 50% 40% 4% First Visit in 2 years 48% Average Spend per person per trip $ % with Children 31% Median Age 29 Median HH Income $53,100 Average Length of Stay 4 nights Average Group Size 2.1 persons Private Home Leisure Visitors San Diego County Overnight Visitor Profile, CIC Research, Inc. 25

28 THE SAN DIEGO VISITOR PROFILE Visitor Segment Profile Day Leisure Visitors Southern California Day Visitors Mexico Day Visitors (Excluding Mexico) Total 12.7 million 4.4 million Transportation Air Personal Vehicle Rental Vehicle 1% 91% 2% 3% 95% 0% First Visit in 2 years 15% 2% Average Spend Per Person Per Trip $56 $59 Children in Travel Party 34% 28% Median Age of HH Median HH Income $75,700 $70,600 Average Group Size 2.8 persons 3.1 persons So Cal vs Mexico Day Visitors So Cal Day Visitors Mexico Day Visitors San Diego County Overnight Visitor Profile, CIC Research, Inc. 26

29 SAN DIEGO VISITOR PROFILE 6 Visitor Residence Southern California is San Diego s largest market for overnight visitors comprising 32 percent or 5.5 million of all people traveling to stay overnight in San Diego in Arizona is the second biggest origin market with an estimated 2.2 million or 13 percent, and Northern California makes up the third largest market of visitors at 11 percent and an estimated 2 million overnight visitors. While the majority of the leisure travelers reside in the western U.S., business travelers are more likely to be from the Midwest, South Atlantic, and Northeast. LEISURE OVERNIGHT VISITOR PLACE OF RESIDENCE No. CA 11% Other Pacific States 5% Other Mountain States 10% Midwest 5% Northeast 3% All Internatiional 11% SoCal 35% Arizona 15% So. Central 4% So. Atlantic 2% BUSINESS OVERNIGHT VISITOR PLACE OF RESIDENCE No. CA 13% Other Pacific States 3% Other Mountain States 7% Midwest 14% Northeast 12% All Internatiional 9% SoCal 19% Arizona 6% So. Central 9% So. Atlantic 8% San Diego County Overnight Visitor Profile, CIC Research, Inc. 27

30 SAN DIEGO VISITOR PROFILE 6 SAN DIEGO COUNTY VISITOR PROFILE STUDY TRENDS Longer Term Trends for the Market By 2015 the S.D. visitor industry fully recovered and exceeded the volume of visitors and visitor spending that existed prior to the 2009 economic recession. Specifically hotel visitor spending has grown as a proportion of total spending by all visitors in the market. - 62% of total visitor spend in % of total visitor spend in 2015 S.D. visitors are growing a little older across major market segments of day visitor, overnight visitor, hotel business/meetings visitors, and private home guests. Rising trend of more first time visitors to the San Diego market. Economic growth/recovery for the Southern California economy is creating a drive market traffic challenge for San Diego vs 2013 Shifts Following the 2009 recession, the economy did not recover at the same speed for all Americans. Those with higher incomes recovered faster, while lower income households recovered slowly and continue to have difficulty finding and maintaining jobs equivalent to those they held prior to the recession. Overnight Visitors More visitors from California, both from Southern and Northern California More visitors from International Markets, with exception of Canada which declined More air travel and less private car Higher household incomes among hotel guests, lower for private home guests Decrease in length of stay Decrease in visitors with children in group Leisure Hotel Guests Fewer out of Arizona and L.A. County; more out of Riverside and Orange Counties Shorter length of stay, from 3.5 vs 3.2 nights Fewer children in the travel group, thus smaller group size More business travelers adding leisure to their stay 28

31 SAN DIEGO LODGING MARKET Younger generations and new technology are changing the options and the expectations of the travel experience, including lodging. Millennials (whether traveling for business or leisure) expect a local flavor and seamless service via technology. While hotel brands are evolving product and service to meet those demands, the peer-to-peer or sharing economy is also driving change MILLION OVERNIGHT VISITORS 56% 39% 5% Hotel Private Home Other LODGING SUPPLY SAN DIEGO COUNTY LODGING SUPPLY COUNT PERCENT OF TOTAL Hotel Rooms / Condo Hotels 58,849 70% Vacation Rentals -Full Home or Shared Room* 9,000 11% Campground / RV Park 9,185 11% Timeshare/Fractional Ownership 2,256 3% Casino Resorts 2,314 3% B&B/Inns/Health Spa 531 1% Corporate Housing 1,393 2% TOTAL 83, % 29

32 SAN DIEGO LODGING MARKET LODGING DEMAND The San Diego County demand for hotel room nights was million in The San Diego County demand for Airbnb room nights was 431,200 in The Airbnb market demand represented about 2.6% of the hotel demand in San Diego County. Airbnb reports 245,000 inbound guests stayed in San Diego County in 2015 (including San Diegans.) In 2015, 8.7 million visitors stayed in hotels. In the hotel market, an estimated 7% of hotel room nights sold is sold to San Diegans. Airbnb reports that they are seeing 2 times the growth in 2016 compared to 2015, so we could expect these numbers to double in As the largest player, Airbnb continues to share more data on their sales in order to support informed understanding of the segment. Per Airbnb, the vacation rental availability fluctuates based on demand in a market. Thus, the 9,000 available rentals on Airbnb in June 2016, may go up or down depending on month and market dynamics influencing demand and pricing. Almost 70 percent of Airbnb listings in San Diego are rented fewer than 90 days per year and most Airbnb listings are located outside core hotel areas. SAN DIEGO COUNTY AIRBNB SUPPLY DATE ACTIVE LISTINGS ENTIRE HOMES SHARED PRIVATE ROOMS 1/1/2016 7,100 4,600 2,500 6/1/2016 9,000 6,100 2,900 SHARING ECONOMY DEMAND CHARACTERISTICS The number of available and booked rooms on Airbnb will be highly responsive to demand. Peer entry and consumer surplus is greatest in cities with a constrained hotel sector. Main demand drivers for Airbnb are High demand periods Price sensitivity Location Different customer experience 30

33 SAN DIEGO LODGING MARKET AIRBNB GUEST PROFILE Peers offer a different type of product not offered by hotels. However, only about 5% of Airbnb bookers only considered Airbnb. They are shopping all types of accommodations. More prevalent Airbnb use among international guests. Airbnb guests are younger and stay about a day longer than hotel guests in San Diego. SAN DIEGO COUNTY (2015) AIRBNB GUEST SAN DIEGO HOTEL GUEST Average Length of Stay 4.4 nights 3.5 nights Average Party Size 2.5 guests 2.5 guests Average Booker / HH 36 yrs (booker) 47 yrs (HH) Top Origin Markets North America (80%) North America (94%) Europe (13%) Europe (3%) Asia (3%) Asia (1%) Latin America (2%) Private accommodation use by U.S. travelers has grown from 10 percent in 2010 to just over 30 percent in Continued growth in this segment is likely, and according to Phocuswright: 1. This is nothing new. 2. Travelers love it. 3. Rentals are no longer alternative 58% of travelers considered a rental in 2015 compared to 38% in This is not just about Airbnb. The size of our vacation rental business is as big as the whole of Airbnb. Darren Huston, CEO, Booking.com Phocuswright Inc., Douglas Quinby TTRA Presentation June

34 SAN DIEGO LODGING MARKET THE HOTEL MARKET Hotel Room Supply The hotel motel room supply including bed and breakfasts and casino hotels total more than 61,000 rooms in San Diego County. Almost 30 percent of the rooms are independent and not affiliated with a national chain. The largest segments by price are midprice (28%) and luxury (25%). Midscale Chains 7% Luxury Chains 5% Upper Midscale Chains 10% Economy Chains 11% Independents 28% Upscale 16% Economy 13% Midprice 28% Upscale Chains 17% Upper Upscale Chains 22% Budget 18% Luxury 25% STR Chain Scale Mix STR Price Segment Mix San Diego County has been absorbing additional hotel rooms at an average annual rate of 1.25 percent over the last 5 years. An addition 800,000 room nights have been added over the last few years. Hotel Room Night Supply CAGR ( ) = 1.19% Hotel Room Night Supply Supply Millions

35 SAN DIEGO LODGING MARKET ROOM DEMAND Hotel room demand in San Diego County reached a record 16.7 million hotel room nights sold in 2015, up 2.8 percent over Compared to just a few years ago, an additional 1.8 million room nights are sold annually. Hotel Room Night Demand CAGR ( ) = 1.46% Hotel Room Night Demand Demand Millions San Diego County Occupancy and ADR Trend 100% $ $150 75% $ % $ % $100 50% $75 25% $50 $25 0% $0 Group and Transient Occupancy Performance Trend among Luxury/Upper Upscale Properties Only 33

36 SAN DIEGO LODGING MARKET 100% San Diego County Occupancy and ADR Trend 75% 31.6% 50% 25.5% Group Occ Trans Occ 25% 38.0% 46.1% SAN DIEGO ROOM NIGHT COMPOSITION San Diego County generates the majority of the 16.8 million room nights (67%) from the transient / leisure segment. This segment represented 11.3 million room nights sold in The group meetings segment represented 4.1 million or another 24 percent of the market, of which 17 percent is derived from single property meetings. The San Diego Convention Center meetings generate about 6 percent of the hotel room nights. San Diego County Hotel Room Nights Sold Segmentation Millions M 6% 7% 16% 16.2 M 4% 5% 20% 16.8 M 5% 6% 17% Leisure Group Tour Contracted Government Convention Center Groups % 69% 67% Hotel Meetings Leisure Transients Hotel Room Night Segmentation Study, CIC Research and SDTA Research Department

37 SAN DIEGO LODGING MARKET TOP 25 U.S. MARKETS San Diego is a preferred destination and is tracked in STR s Top 25 market reporting. In 2016, San Diego has performed in the top 10 markets for average daily rate and occupancy Top 25 Markets Occupancy CY2016 through November Top 25 Markets Average Daily Rate CY2016 through November New York San Francisco Oahu Island Los Angeles/LB Anaheim/SA San Diego Seattle Nashville Miami/Hialeah Boston Orlando Denver Washington Dallas Tampa/St Pete Atlanta Chicago Philadelphia New Orleans Minn/St Paul Phoenix St Louis Detroit Houston Norfolk/VirgBeach 85.7% 85.2% 84.4% 82.5% 79.1% 78.1% 77.4% 76.3% 76.1% 76.1% 75.9% 75.5% 73.7% 72.8% 72.5% 71.1% 70.8% 70.7% 70.0% 69.8% 68.2% 67.5% 66.9% 63.4% 61.1% New York San Francisco Oahu Island Boston Miami/Hialeah Los Angeles/LB San Diego Seattle Washington Anaheim/SA New Orleans Chicago Nashville Philadelphia Denver Phoenix Tampa/St Pete Minn/St Paul Orlando Houston Dallas Atlanta St Louis Norfolk/VirgBeach Detroit $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

38 SAN DIEGO LODGING MARKET WESTERN REGION COMPETITIVE SET HOTEL ROOM NIGHTS MARKET SHARE Since 2002, the SDTA began tracking market share among a western region competitive set. The forecast developed by STR is based on future supply growth and historic economic and lodging demand cycles. 36

39 SAN DIEGO AIR SERVICE TRENDS As the economy has strengthened, air travel has seen strong growth in recent years. Overall air travel is projected to grow 7 percent in 2015, the best performance since 2010 according to the International Air Transport Association (IATA). With rising demand and lower fuel costs, airlines are finally seeing record profits after decades of losses. IATA predicts global net profits could increase 26 percent to $25 billion in 2015, up from $19.9 billion in In the United States, the last 10 years have seen consolidation dramatically change the airline industry, with 10 airlines merging into just five carriers. Today, four carriers dominate domestic air travel, representing 87 percent of domestic capacity: American (25 percent), Delta (23 percent), Southwest (22 percent) and United (17 percent). (In comparison, in Europe it takes 39 carriers to reach the same level of capacity share.) With consolidation, carriers have streamlined operations to maximize profits. There are 18 large hubs and gateways dominating U.S. air service. Future traffic growth will be driven to, from or through, these large markets. Los Angeles, San Francisco, Seattle, Salt Lake City, Denver and Phoenix are the gateways to the West. According to DiiO Mi, seat capacity is forecast to increase a modest 2.1 percent in the United States and 3.7 percent internationally. With jet fuel now at about half the price it was a year ago, IATA projects that the world s airlines will see the average fare drop 5.1 percent in Looking ahead, industry analysts are keeping an eye toward the opening of Dallas Love Field, increased competition in hub cities (Seattle and Boston), growth in Eastern hubs (Boston, NYC and Washington, D.C.) and the rise of Middle East carriers. SAN DIEGO INTERNATIONAL AIRPORT 2016 ROUTE MAP 37

40 SAN DIEGO AIR SERVICE TRENDS PARTNERSHIP SUCCESSES NEW ROUTES COMMENCED / ANNOUNCED JAPAN AIRLINES CONDOR AIRLINES ALASKA AIRLINES AMERICAN AIRLINES EDELWEISS SEAPORT AIRLINES SOUTHWEST AIRLINES SPIRIT AIRLINES San Diego Tokyo (Narita) San Diego Frankfort (5/17) San Diego Baltimore San Diego Boise San Diego Boston San Diego Kauai San Diego Kona San Diego Mammoth Lakes San Diego Imperial / El Centro San Diego Orlando San Diego Sacramento San Diego Miami San Diego Zurich (6/17) San Diego Imperial / El Centro San Diego Atlanta San Diego Milwaukee San Diego Los Cabos San Diego Portland San Diego Chicago (O Hare) San Diego Denver In 2015, 20.3 million passengers passed through San Diego International Airport (SAN), with 9.7 million deplaning in San Diego. Deplaning passengers grew 6.9% in Millions SAN SEAT ARRIVALS (CAPACITY) SAN INTERNATIONAL SEAT ARRIVALS (CAPACITY) 600, , , , , , ,

41 COMPETITIVE LANDSCAPE The competition facing San Diego is strong, especially in Southern California. The Los Angeles and Orange County / Anaheim areas have been investing in new product and infrastructure to attract visitors and their wallets. Destination Marketing Organizations are also growing sales and marketing dollars available through Transient Occupancy Tax and Tourism Marketing District Assessment funds, all in an effort to bring a greater share of traveler spending to their area for economic development. OVERVIEW OF CALIFORNIA COMP SET International Percent of Overnight Visitors International Air Service (Annual Direct Flight Seats) ANAHEIM LOS ANGELES SAN DIEGO SAN FRANCISCO 21% 22% 11% 30% 103K 3.6M 359K 2.1M Government Business Travel Small Average Large Average Fortune 500 Companies (Individual Business Travel) Group Proportion of Market (Based on STR Segments) 10% 10% 17% 15% Leisure Travel Drivers Disney Hollywood Beach City Icons DMO Total Budget $16M plus Disney Investment $54M $36M $36M 39

42 COMPETITIVE LANDSCAPE LOS ANGELES TRANSPORTATION INFRASTRUCTURE Los Angeles residents passed a half cent sales tax increase in November 2016 to generate more than $120 billion over four decades to fund bus and rail public transportation projects including nearly a dozen new rail lines and twin tunnels through the Sepulveda Pass (405) in an effort to combat traffic congestion. The subway extension to Santa Monica opened in Spring Further, the Los Angeles Airport Expansion project will allow a projected 4 million more passengers to land at LAX annually bringing total passengers to more than 40 million per year. NEW PRODUCT DEVELOPMENT The commercial and residential renaissance in Downtown Los Angeles over the last ten years has been the catalyst to it becoming a world-class destination in itself. According to CBRE, Downtown Los Angeles is steadily becoming a place that can sustain its own tourism segment and continues to be a driving submarket in the region. The development of the LA Live entertainment center and hotels has spurred an additional $6 billion in private investment around the area to capture the interest of residents and visitors alike. HOTELS Los Angeles County will be adding 16 hotel properties with 3,507 hotel rooms in Significant additions include The Wilshire Grand/ InterContinental (900 rooms), Metropolis hotel (350 rooms), James Hotel (286 rooms), Kimpton Hotel (225 rooms), and Waldorf Astoria (170 rooms). InterContinental Los Angeles Downtown Hotel at the Wilshire Grand Center The Wilshire Grand Center is an upscale world-class 73-story skyscraper in the heart of Downtown, Los Angeles. Plans for finished development are set for 2017 where the Wilshire Grand Center will not only boast the 900- Angeles Downtown hotel, but also cutting edge restaurants, businesses, and attractive nightlife offerings. It will be the tallest structure in the Los Angeles skyline, adding to the rich cultural and economic revival of Downtown. room InterContinental Los Metropolis Los Angeles Situated between the sports and entertainment center, L.A. Live and the cultural scene along Grand Avenue, Metropolis puts world class experiences all at your fingertips, from the iconic sports teams of the Clippers, Lakers, Kings and Dodgers to cultural destinations like the Walt Disney Concert Hall, The Music Center, Museum of Contemporary Art, and the city's new Broad Museum. 40

43 COMPETITIVE LANDSCAPE ATTRACTIONS Los Angeles is making more strides on the cultural front with what is being referred to as Museum Row, on Wilshire between Fairfax and La Brea. Currently, L.A. County Museum of Art (LACMA) with the recently added Broad Contemporary Art Museum Building, La Brea Tar Pits and Museum, Craft and Folk Art Museum, and Petersen's Auto Museum are located within walking distance. The Broad Museum with over 2,000 pieces in its collection opened in September of 2015 and has since been placed in the top 15 US art museums in terms of annual attendance by reaching over 820,000 people in the first year. The Peterson Automotive Museum has invested $90 million in renovations and recently re-opened in December of The makeover has allowed the museum to make it more appealing to younger audiences with a trove of technology and pop culture cars from Hollywood. The Academy Museum Currently being built at Wilshire and Fairfax by the Academy of Motion Picture Arts and Sciences, is the new Academy Museum. The Academy Museum will be the world s premiere movie museum exploring the history and magic of what happens on screen. The museum is scheduled to open in George Lucas Museum George Lucas recently selected the City of Los Angeles as home for his $1 billion Museum of Narrative Art. Located in Exposition Park, the Museum is expected to break ground in 2017 with the opening targeted for

44 COMPETITIVE LANDSCAPE ANAHEIM TRANSPORTATION INFRASTRUCTURE Coming in 2018, the Disneyland Resort Eastern Gateway will open providing 6,800 new parking spaces, a new transportation facility, and elevated pedestrian bridge for greater access into the parks. This is the largest infrastructure project in the Anaheim Resort Area in the last 20 years. ARTIC Station Anaheim opened the ARTIC Station in 2014 to create a better rail and bus hub connecting transport with Anaheim points of interest. Convention Center Expansion The 200,000 sq. ft. expansion of the Anaheim Convention center opens in summer of This expansion will bring the facility to 1.8 million square feet in space, maintaining its title as the largest convention center on the West Coast. 42

45 COMPETITIVE LANDSCAPE HOTELS Orange County will be adding seven hotel properties with 1,323 hotel rooms in The most significant addition is the Irvine Spectrum Marriott with 271 rooms. In 2016 and 2017, Huntington Beach has added 3 coastal hotel properties; The Pasea Hotel and Spa by Meritage Collection (250 rooms), Waterfront Beach Resort, A Hilton Hotel (290 rooms currently, with additional 147 all-suites resort tower), and a Springhill Suites (127 rooms) Newport Beach will add The Lido House Hotel (130 rooms) in Waterfront Beach Resort, A Hilton Hotel Beach Huntington This AAA- 4 diamond resort on the beach is being expanded and renovated, adding to the increase in beachfront family friendly resorts in Orange County. The Pasea Hotel and Spa by Meritage Collection Located across the street from the Waterfront Beach Resort, The Pasea Resort and Spa is a high-end hotel that aims to combine modern style with coastal comfort. It opened June The Lido House Hotel A hotel that integrates marina, beach and town. It is referred to as the ultimate, authentic beach house retreat opening at the end of

46 COMPETITIVE LANDSCAPE ATTRACTIONS Disneyland The 60th Anniversary Celebration began in May 2016 and the Disneyland Electrical Parade starts again from January 20 through June 18, A 14-acre StarWars expansion began in 2017 with anticipated completion in In the meantime, the StarWars ride and Season of the Force event will continue. Annual attendance at Disneyland is reported to be 18.2 Million in Great Wolf Lodge Garden Grove A $250 million indoor waterpark and 600 room resort opened in March

47 COMPETITIVE LANDSCAPE SAN DIEGO TRANSPORTATION INFRASTRUCTURE Following the Terminal 2 Green Build, which added 10 new gates, the airport began construction in 2016 on the connected Parking Plaza with 3,000 stalls, and is scheduled to open in As part of the Airport s Master Plan, Terminal 1 will be replaced to optimize operations with minimized walking distances, accommodating international growth with 7 international gates, including 5 wide body gates. The airport does not expect to break ground before Upon completion of the San Diego Airport Master Plan, the facility is expected to have a total of 62 gates to accommodate 16.3 million passengers annually by the year Freeway and rail improvement are also underway. The widening of I-5 between Encinitas and Oceanside will begin in 2017 with completion in Phase 1 of the widening project will add a single carpool in each direction of the 5 freeway from Lomas Santa Fe Drive in Solana Beach to Route 78 in Oceanside. In addition, rail improvements continue with the single-track wooden railroad being replaced with a double-tracked rail across the San Elijo and Batiquitos lagoons in North County. NEW PRODUCT The largest project in the works is the Port of San Diego s Waterfront Embarcadero Development. While shovels are not in the ground, the $1.3 billion Seaport San Diego proposal with plans for hotels, attractions, restaurants, and retail is expected to be transformative to the area. Phase I could open in 2020 pending approvals. 45

48 COMPETITIVE LANDSCAPE HOTELS San Diego will be opening 8 new hotels with 1,157 hotel rooms in 2017 and 12 new hotels with 2,182 hotel room is Unique additions over the next couple years will be The Pendry (317 rooms), The Legoland Hotel (250 rooms), and The Carte Hotel (239 rooms).. The Pendry (Downtown) A luxury boutique hotel developed by the Montage Group that aims pair classic Southern California influence with modern luxury programming and amenities. Open January to The Carte Hotel (Downtown) A Chinese owned hotel with 239 rooms built to achieve LEED silver environmental status. opening August Planned Legoland Hotel (Carlsbad) Legoland is planning another 250 room themed hotel theme park currently scheduled to open in December at the 46

49 COMPETITIVE LANDSCAPE ATTRACTIONS SeaWorld is embarking on its largest expansion in its 52-year history with Ocean Explorer, the new Orca Encounters, the Electric Eel Rollercoaster. Ocean Explorer opening in 2017 The attraction will consist of multiple deep sea discoveries including a submarine ride, new animal experiences, and immersive new world. New Orca Encounters opening in 2017 The new orca experience will engage and inform guests by highlighting the species natural behaviors. The attraction will reflect the natural world and focus on the research, education, care and respect of the creatures. New Electric Eel Roller Coaster opening in 2018 Featuring multiple-launch elements, high energy twists, and heart pounding loops, this coaster will be the tallest and fastest in SeaWorld San Diego history. 47

50 COMPETITIVE LANDSCAPE ATTRACTIONS San Diego Zoo will be opening Africa Rocks, a $68 million project utilizing 8-acres for African plant and animal species. This is the largest expansion in the Zoo s history. Legoland California. Building on the StarWars popularity, Legoland will expand StarWars miniland to feature Star Wars: The Force Awakens, set to open March In addition, Legoland will open Surfer s Bay, a race style waterslide, in summer

51 DESTINATION FORECASTING The SDTA works with Tourism Economics to develop a tourism forecast for the destination. The forecast is typically updated in December and July each year, and provides a future view of the global macro economy down to the San Diego travel market. For the full forecast, see The US economy continues to underperform as a result of weak business investment and sluggish net trade, despite solid employment, and wage and consumer spending growth. Uncertainty will remain a key concern over the coming months as Trump s presidency has caused natural concerns in terms of both the domestic and global economy. Moving forward, domestic leisure travel will lead while businesses remain cautious. International travel is expected to slow, and key risks include a further slowdown in economic growth in China, sub-par growth in consumer spending in advanced economies, and a further deceleration in European economic growth as a result of Brexit. 49

52 DESTINATION FORECASTING Projected growth in 2016 for U.S. domestic travel in both the leisure and business segments is lower than growth seen in Leisure travel will continue to experience growth at the 1-2 percent level through 2020, while business travel actually declined in 2016 (-0.6%) over 2015, and is forecasted to remain under 1 percent per annum through Growth in visits to San Diego is expected to continue but the forecast is for improved growth in 2017 and 2018 growth expanding again to about 2 percent, before the market levels off in 2019 and 2020 to about 1.5 percent. Overnight visitation will expand by 1.0 percent in 2016 and will edge up to 1.9 percent growth in 2017 as global demand remains muted; some further rebound is then expected in 2018 as growth reaches 2.0 percent. Growth in day visits will reach 1.2 percent in As fuel costs remain low and consumers gain confidence, day visits will improve to 1.5 percent in 2017 before easing slightly to 1.4 percent in 2018 as travel costs gradually climb. Visitor expenditures in San Diego are expected to rise 4.2 percent in 2016, ramping up to 5.3 percent in 2017 and easing back to 4.2 percent by San Diego s key feeder markets in the western U.S. are experiencing good GDP growth and lower unemployment, which are important for San Diego s travel demand. SAN DIEGO ANNUAL TRAVEL FORECAST (ANNUAL PERCENT GROWTH, UNLESS STATED) Visits 2.1% 1.4% 1.1% 1.7% 1.7% 1.4% 1.5% Day 1.2% 1.0% 1.2% 1.5% 1.4% 1.3% 1.4% Overnight 2.9% 1.8% 1.0% 1.9% 2.0% 1.5% 1.6% Expenditures 9.7% 7.7% 4.2% 5.3% 4.2% 3.7% 3.9% Day 4.0% 2.0% 2.3% 4.6% 4.0% 4.1% 3.9% Overnight 10.4% 8.4% 4.4% 5.3% 4.2% 3.7% 3.9% HOTEL SECTOR Room Supply 2.1% 1.0% 1.2% 1.7% 1.3% 1.8% 1.1% Room Demand 6.4% 3.4% 1.3% 2.5% 1.7% 1.1% 1.2% Occupancy (%) ADR ($) $ $ $ $ $ $ $

53 DESTINATION FORECAST Specific to the lodging sector, hotel room demand in San Diego will give up its growth premium over the US in 2016 due, in part, to a weaker than expected first half, rising 1.3 percent in for the year. Coupled with 1.2 percent growth in the supply of available rooms, this will weigh on hotel occupancy which is expected to register 76.4 percent in As such, ADR is expected to advance 2.8 percent in 2016 to $154. Looking forward over the forecast horizon, uncertainty in both domestic and international markets will continue to weigh on the San Diego lodging market, as well as the US lodging sector as a whole. Following a flat Quarter 1 in 2016, Quarter 1 of 2017 is forecasted to see a slight decline in occupancy (-0.1%) as supply growth outpaces demand in the quarter. Quarter 2 room demand growth is strongest in 2017 at 5 percent, after which demand growth eases to just over 2 percent in Q3 and Q4. The ADR is expected to average 2 to 3 percent throughout SAN DIEGO HOTEL SECTOR FOREAST BY QUARTER ( ) 2016 Q Q Q Q Q1 Rooms (in million roomnights) Room Supply Room Demand Occupancy 74.5% 79.1% 83.3% 69.0% 74.3% 79.1% 84.7% 70.3% 75.2% 79.5% 84.8% 70.2% (% balance) ADR ($) $144.0 $155.6 $173.1 $140.9 $148.1 $160.6 $178.4 $146.5 $154.1 $ $184.6 $150.4 RevPAR ($) $ $123.0 $144.3 $ 97.2 $110.0 $127.0 $151.1 $103.0 $115.8 $133.0 $156.5 $105.5 (YEAR-TO-YEAR % GROWTH) 2016 Q Q Q Q Q1 Room Supply 0.7% 0.7% 0.9% 2.6% 2.5% 2.1% 1.7% 0.5% 0.8% 1.0% 1.4% 1.9% Room Demand 0.0% -0.2% 3.3% 2.1% 2.2% 2.0% 3.4% 2.5% 2.0% 1.6% 1.5% 1.6% Occupancy (%) -0.7% -0.8% 2.3% -0.4% -0.3% 0.0% 1.7% 1.9% 1.3% 0.5% 0.1% -0.2% ADR 2.2% 2.3% 3.4% 2.8% 2.9% 3.3% 3.0% 4.0% 4.0% 4.1% 3.5% 2.6% RevPAR 1.5% 1.5% 5.8% 2.3% 2.6% 3.2% 4.8% 6.0% 5.3% 4.7% 3.6% 2.4% 2017 Q Q Q Q Q Q Q Q Q Q Q Q Q Q4 51

54 GROWING DEMAND FOR SAN DIEGO TOURISM On May 7, 2013, Mayor Antonio Villaraigosa and Los Angeles Tourism and Convention Board (LA Tourism) President and CEO Ernest Wooden, Jr. announced that Los Angeles has set a new goal to generate 50 million visitors by 2020 (an increase of 22 percent over the next eight years). LA Tourism estimates that an increase to 50 million in total visitation will generate an increase of $14 billion in economic impact for Los Angeles, for a total of $44.5 billion; bring in $238 million in hotel tax revenue to the City; and add 68,000 new jobs to the LA region s workforce for a total of 392,000 jobs supported by the tourism industry in Los Angeles isn t the only destination to identify travel and tourism as an export economy worthy of investment and growth. On September 16, 2013, Chicago Mayor Rahm Emanuel and Don Welsh, president and CEO of Choose Chicago, announced a 2020 goal of attracting 50 million visitors annually and becoming a top-five U.S. city for international visitation. And, at the national level, President Barack Obama created for the first time the National Travel & Tourism Policy with a goal to attract 100 million annual international visitors (from current 66.6 million annually) by 2021 and to encourage more Americans to travel within the United States. As outlined in the National Travel & Tourism Policy 6, growing a destination s tourism economy requires: Promoting the destination. Enabling and enhancing travel and tourism to and within the destination. Providing world-class customer service and visitor experience. Coordinating across government. Conducting research and measuring results. 6. White House, National Travel & Tourism Policy, Task Force on Travel & Competitiveness, May

55 GROWING DEMAND FOR SAN DIEGO TOURISM In its last five-year plan, the SDTA outlined eight key strategies for driving San Diego demand: CORE STRATEGY KEY ACCOMPLISHMENTS Increase market penetration: protect volume markets and grow opportunity markets domestically and internationally. Develop new product: capitalize on events as a tourism draw. Improve air access: partner with the San Diego Regional Airport Authority to build new air access. Make San Diego travel product easily available: strategic management of distribution channels. Improve perceptions about San Diego travel prices: build value through delivery on the Brand Promise. Maintain high customer satisfaction: create oneto-one customer interaction and loyalty through relational marketing. Increase direct sales: grow San Diego s share of the group meetings market. Invest in brand marketing: aggressively promote San Diego to stay top-of-mind. Launched National Cable advertising Expanded Spot Market advertising beyond California and Arizona to include Nevada, Utah, Colorado and Texas Increased international representation to include United Kingdom, Germany, Japan, Mexico and South Korea Identified 20 annual signature events for promotional support Partnered with California Restaurant Association to launch San Diego Restaurant Week and Visit California to develop California Restaurant Month Partnered with the San Diego Brewer s Guild to launch San Diego Beer Week Collaborated with the SDRAA to open direct service from London (British Airways), Tokyo (Japan Airlines), Canada (WestJet) and Mexico (Volaris) Partnered with the major Online Travel Agencies to include more San Diego product in their channels and to develop more promotions to sell San Diego Launched San Diego Certified Travel Specialist program and trained 2,935 travel agents about San Diego Launched October Kids Free San Diego promotion Expanded marketing of San Diego s sub-regions Promoted the diversity and value of meeting in San Diego Expanded leisure, meetings and travel trade customer databases Launched new website in 2012 Grew social media channels and audiences to include Google +, Pinterest, instagram, Facebook, Twitter, YouTube, LinkedIn and destination blog Launched new site inspection program, Experience San Diego, for Group Meetings and grew conversion rate to 81 percent (62% in 2008) FY booked 3.5 million hotel meeting room nights Assumed responsibility for booking Citywide Conventions Developed brand platform and new creative messaging that generated over 50% ad-aware households in key feeder markets Grew SDTA s advertising budget from $1.4 million to $11 million (annual average) FY leveraged the paid media budget with another $96 million in unpaid exposure through public relations, promotions and co-operative advertising 53

56 COMMUNICATIONS LANDSCAPE Today s society is constantly engaged, endlessly entertained. Time spent with major media has increased more than 16 percent over the past five years, with more than half our day (12 hours) spent engaging with various media channels. Ninety percent of all media interactions are screen based, and 90 percent of people use multiple screens sequentially. Americans report spending over 4 hours a day watching television, but it is often in conjunction with their smartphone or their PC/laptop. Digital use has now overtaken other media platforms with nearly 6 hours spent per day by the average U.S. adult. And while we re screen focused, out-of-home and radio media continue to have an impact as adults are spending more time in their cars commuting. Major media trends are being driven by both technology advances and the Millennial Generation: On-demand viewing has taken over time shifted TV has the preferred way to watch TV, especially for Millennials and Gen-X audiences Snapchat has overtaken Facebook in total video views Pokemon Go showed the potential for Mobile to generate consumer interaction Virtual Reality s immersive 360-degree videos are more realistic and attainable than ever Influencer marketing has taken hold as social media use explodes and audiences seek authentic, trustworthy, timely content Native advertising is preferred over other digital advertising, further reinforcing the need for engaging content With the proliferation of media channels and devices, marketers must embrace a multi-layered media approach to reach the always-on-the-go consumer. Research shows that leveraging campaigns across multiple channels significantly increases effectiveness. The SDTA has a large communications program in place to reach, educate and engage customers. By combining Bought, Earned and Owned marketing programs, the SDTA significantly increases San Diego s share of voice in the marketplace: SAN DIEGO TOURISM BOUGHT EARNED OWNED MARKETING PROGRAMS SDTA BOUGHT EARNED OWNED PROGRAM Spend an average of $15 million per year on paid media Generate over $30 million per year in unpaid media coverage for San Diego Web site, Blogs, Social Media Channels, Official Publications, E-Newsletters AUDIENCE 1.3 billion gross impressions 36 billion gross impressions 9.4 million users 54

57 COMMUNICATIONS LANDSCAPE One of the biggest shifts in media consumption is the consumer s ability to watch TV on any screen. The number of connected TV devices will be more than double the number of U.S. Internet households by Smart TV and addressable TV households are rapidly growing: 60 percent of all U.S. households in 2014 to 76 percent by Television is becoming any video, and TVs are becoming any screen. DIGITAL B2C BUSINESS TO CONSUMER Blog.sandiego.org Facebook.com/SanDiego Twitter.com/visitsandiego YouTube.com/visitsandiego Instagram.com/visitsandiego Pinterest.com/visitsandiego Plus.google.com/+sandiego Snapchat.com/add/visitsandiego B2B BUSINESS TO BUSINESS Connect.sandiego.org Twitter.com/sdtaconnect Linkedin.com/company/san-diego-tourismauthority OFFICIAL PUBLICATIONS San Diego Visitor Planning Guide San Diego Meeting Planners Guide E-NEWSLETTERS E-News, consumer E-News, Group Meetings E-News, Travel Trade E-News, Corporate INTERNATIONAL SPECIFIC Twitter.com/visitasandiego (Mexico) Facebook.com/VisiteSanDiego (Mexico) Youtube.com/channel/ UCDLubSdQStzaC9wkacfQ5xg (Mexico) Weibo (China) Sandiego.org.cn (China) Weibo.com/sandiegotourism (China) Facebook.com/SanDiego.International.Japan (Japan) 55

58 THE LEISURE TRAVEL MARKET MARKET OVERVIEW Leisure travel has been in a growth mode. Leisure now represents five times the volume of business travel trips (1.7 billion person-trips versus 459 million respectively) and accounts for 79 percent of all domestic persontrips. In 2015, leisure travel grew by 3.6 percent compared to business travel at 1.9 percent due to favorable economic conditions and Americans seeing travel as a key leisure activity. Leisure travel comprises many segments: visit friends and family (35%), getaway weekend (16%), general vacation (11%) and other leisure (38%). Trips are evenly split between day trips (51%) and overnight (49%). Nearly 46 percent include a stay at a hotel/motel or resort. DKS&A reports that 95 percent of traveling Americans stay within the U.S. and mostly travel within their home states. The average distance traveled is now 250 miles one way by car, 100 miles less than seven years ago. The top states for domestic leisure travel are California, Texas and Florida. Leisure visitors are critical to San Diego s tourism industry, as they represent 87 percent of all visitors and 73 percent of all hotel/motel room nights sold. Being the most populous state (over 38 million residents), it is no surprise that California represents the highest volume of travelers to San Diego. Yet, it is out-of-state residents and international visitors who contribute the highest per-person spending due to longer length-of-stay patterns and use of hotels, motels and resorts. NUMBER OF OVERNIGHT VISITORS TOTAL SPEND PER VISITOR Southern California Visitor 4.2M $339 Midwest Visitor 1.4M $698 United Kingdom Visitor 107,000 $614 (Total SD Trip) International Visitor 1.8M $657 (Total SD Trip) Japan Visitor 79,000 $1,189 (Total SD Trip) DOMESTIC FEEDER MARKETS According to the U.S. Travel Association, more than half (52%) of travelers live in the top 10 states (CA, TX, FL, NY, IL, OH, PA, MI, NC, GA). Four of those same states also claim the largest share of visitors: California (11%), Florida (8%), Texas (7%) and New York (5%). For San Diego, the 13 Western states represent 76 percent of all PROTECT leisure overnight visitors to San Diego. On an annual basis, the SDTA analyzes all DMAs (designated market areas) Los Angeles-Long Beach, CA Phoenix-Mesa, AZ targeted based on their market size, economic conditions, San Francisco-San Josepropensity to travel, past travel performance, media Oakland, CA affordability and access. Key feeder markets are then Sacramento, CA identified as PROTECT or GROW. Sal Lake City, UT Las Vegas, NV GROW Seattle, WA Portland, OR Denver, CO Dallas-Ft Worth, TX Chicago, IL New York City, NY 56

59 THE LEISURE TRAVEL MARKET INTERNATIONAL MARKETS With International inbound travel exceeding 77 million in 2015, the SDTA has a separate program of work to grow San Diego s share of international arrivals (See International Plan). Through Tourism Economics, international countries are assessed based on current visitor volume, economic conditions, access opportunities and costs. Tourism Economics International Market Allocation Platform ranks the following countries in priority order for San Diego tourism development: 1. Canada 2. United Kingdom/Ireland 3. China 4. Mexico 5. Japan 6. Australia/New Zealand 7. Scandinavia 8. Germany, Austria and Switzerland 9. France 10. South Korea 11. Brazil 12. India 13. Benelux 14. South America 15. Middle East 57

60 THE LEISURE TRAVEL MARKET LEISURE TRAVEL TARGET AUDIENCE The U.S. Census estimates the United States population at over 318 million people and the number of households at nearly 125 million. In general, travelers profile as younger, more affluent, better educated and more likely to own a home than the average. At such a large audience size, it is imperative to narrow down San Diego s target audience so that the program of work can be more efficient. Through MRI database analysis and the CIC visitor profile, targets are selected by demographics and past hotel/motel visitation, then further refined through psychographic data to determine the most targeted audience profile groups (personas). Overnight Stays 66.4 Million Domestic Overnight Leisure Travelers, 2+ nights spent in hotel/motel in past 12 months for personal/vacation trip Overnight Stay with a San Diego State of Mind 41 Million Personas San Diego State of Mind Always looking for new ways to live a healthier lifestyle and opportunities to explore and learn new things. Having fun and being in tune with nature are very important. Choose vacations that offer active/ adventure experiences. LEISURE TRAVEL TARGET AUDIENCE 41M TOTAL U.S. leisure travelers, hotel/motel stay and "choose vacations with lots to do" 14M TRAVEL WITH CHILDREN 27M ADULT ONLY 44% 34% 17% 35% 15% 37% MILLENNIAL GEN X BOOMER 58

61 THE LEISURE TRAVEL MARKET LEISURE TRAVEL TARGET AUDIENCE VARIETY SEEKERS VACATION MOTIVATORS Status Higher social status lifestyle that impresses Pay extra for brands Goal to be top of profession PASSIONS Physical fitness Healthy Lifestyle Personality Risk-taking Center of attention Self interest, putting themselves first Sophisticated Cooking and Beer Values Philosophy is to have as much fun as possible Seek adventure and risk Stimuating experiences Variety in everyday life Friends most important Environmentally conscious Prestige Enviable experiences Feel special Beauty / Fashion Cars Liberation Unique and interesting experiences Enjoy life to the fullest Vacation Travel Excitement Sense of exhilaration Challenge to try something new Sports 59

62 THE LEISURE TRAVEL MARKET INSIGHTS AND OPPORTUNITIES RISE OF THE MILLENNIALS Millennials (born between 1977 to 1996, age 21 to 39) now represent the largest population segment of domestic and international travelers to California according to Visit California. More Millennials (46%) travel with children compared to older generations Gen-X (34%) and Baby Boomers (19%). As Millennials are now entering their wealth accumulation years, they continue to prioritize experiences over material goods and are heavy travel consumers. With all three generations now in the travel audience target, marketing programs must go beyond traditional demographics (e.g., age, gender, geography, HHI) to tap into audience commonalities, passions and interest segments. GENERATION YEARS BORN POPULATION SIZE GENERATION Z MILLENNIAL GEN-X BABY BOOMERS AGE AGE AGE AGE MILLION 75.4 MILLION 65 MILLION 74.9 MILLION SAN DIEGO S BEACH-CITY APPEAL ALIGNS TO TRAVEL DESIRES The most popular travel destinations for U.S. travelers are beaches, off the beaten path, urban cities and mountains. San Diego, with its beach city appeal, is perfectly aligned with Millennials who more likely to prefer beach vacations and urban city experiences. TOP U.S. DESTINATIONS Beach Destinations Off the Beaten Path Urban Cities Mountainous Destinations 56% 48% 47% 39% Millennials prefer beach and urban city distinations, compared to baby boomers that are still 31% more likely to visit somewhere off the beaten path. 60 Source: 2017 Travel Trends surveyed by CHOICE Hotels

63 THE LEISURE TRAVEL MARKET CONVERGENCE OF BOUGHT, EARNED AND OWNED MEDIA CHANNELS With the growth of digital media channels and the rise of new media voices, there is now a convergence of Bought, Earned and Owned Media. Increasingly online media channels are offering native advertising to satisfy audiences desire for more authentic content and advertisers need to better educate and entertain potential customers. Bloggers and social media influencers now rival traditional journalists for share of audience and trustworthiness. As multiple screens become the norm and customers consume numerous media types all at the same time, advertisers must break through all the clutter with relevant, entertaining story telling. And with the rise of new technologies, marketers must continually look for what new tools (i.e., Virtual Reality and Live Streaming) will best promote their brand. DESIRE FOR UNIQUE AND PERSONALIZED EXPERIENCES Local, unique, handcrafted, authentic, off the beaten path. These are the experiences most desired in today s overcommercialized world. Travelers are seeking to see a destination like a local, from exploring neighborhoods to enjoying regional cuisine. Travelers are interested in peer-to-peer offerings, tailored itineraries and self-selection options that give them an opportunity to fulfill their unique interests. SOUTHERN CALIFORNIA COMPETITION Over the past few years, Anaheim and Los Angeles have seen their tourism infrastructure grow with major new attraction additions, new hotel product and new air service. Visitor volumes have grown in both of these competitive markets, and each is seeing a shift in its visitor mix (longer length of stay, more leisure travelers). Disneyland is adding new Frozen and Star Wars attractions, while Universal Studios Hollywood completed its major expansion with the opening of Harry Potter in As Southern California destinations add more products and expand their tourism infrastructure, San Diego faces both a threat and an opportunity. 61

64 THE LEISURE TRAVEL MARKET SWOT Analysis STRENGTHS 1. The San Diego Brand relevant, diverse, desirable 2. Ideal climate, natural amenities 3. Large population base in California, Arizona and Nevada 4. No large customer perception barriers to overcome 5. Diverse tourism product 6. Family-friendly attractions, especially for younger children 7. Rise of authentic experiences, from Cali-Baja cuisine to craft beer to unique neighborhoods to arts 8. Earned and Owned media programs extend Paid media presence nearly 3:1 9. SDTA programs deliver strong ROI WEAKNESSES 1. The Paid media budget hasn t kept up with rising media costs (up 26% since 2010) 2. No top-of-mind awareness beyond close-in markets 3. Media budget is strained trying to protect traditional closerin volume markets while building new markets 4. San Diego is so diverse message fragmentation 5. Media proliferation makes it more expensive to reach travelers 6. Traffic into San Diego 7. While San Diego is highly preferred, it is not considered best in class for any one attribute 8. San Diego lacks a distinct icon or identifier that makes it a must-see destination OPPORTUNITIES was a record breaking year for San Diego tourism 2. SDTA is launching new ad creative based on the Beach-City messaging 3. Research shows interest and likelihood to visit strongly increase when exposed to breadth of what San Diego offers 4. October Kids Free San Diego continues to differentiate San Diego and drives incremental business off-season 5. Steady U.S. economic outlook over the next two years 6. Emerging markets including international 7. Millennials and Gen-X audiences 8. Population growth in California and the West 9. New Rodriguez Field bridge at TIJ 10. Brand USA collaborations 11. Visit California s Dream Big initiative and increase in operational budget (from $50 million to $100 million annually) 12. Bleisure travel segment provides opportunity to extend length of stay and overall spending 13. Capitalize on growing long-haul travel volume to Los Angeles and Anaheim THREATS 1. Zoos and aquariums are under attack 2. Limited infrastructure and product development when Southern California competitors are developing 3. Rise of new global destinations 4. Economic uncertainty in the Eurozone and Asia 5. Proliferation of new TMDs (over 80 in California) creates more destination marketing competition 6. Growth in San Diego s homeless population 7. Maintenance of city s aging infrastructure (street repairs, cleanliness) 62

65 THE LEISURE TRAVEL MARKET KEY STRATEGIES AND TACTICS 1. Align San Diego marketing programs with Visit California and Brand USA, capitalizing on their respective $100 million and $200 million global marketing programs. Position San Diego as the best of everything California has to offer all in one place. 2. Generate maximum hotel/motel visitor volume for the destination by protecting existing volume markets and building opportunity markets. 3. Invest in research and database analysis to focus marketing programs, dollars and timing against the destination s best travel prospects. a. Conduct deeper analysis of the Los Angeles Designated Market Area to determine if a threat exists due to growing traffic and rise of competitive destinations. b. Update the new market development matrix, evaluating market potential versus market cost. c. Update the five-year San Diego Tourism forecasting model. d. Continue to invest in core visitor industry performance intelligence such as the CIC Research San Diego County Visitor Profile, Smith Travel Research San Diego Hotel Market Analysis and OTTI Overseas Travel Arrivals. e. Continue program measurement tracking, including TNS Return on Investment Advertising Studies and OTA Analysis. f. Align database analysis with online marketing to profile customers across the OWNED and SHARED media channels (website, digital, destination blog, YouTube, social media). 4. Launch new advertising creative and media strategies based on the Beach-City messaging. 5. Build on the impact of the 2016 advertising campaign. a. Incorporate national and regional layers to effectively reach the existing volume markets while building opportunity markets. b. Due to declining effective media buying dollars, concentrate Brand Advertising media spending in the January June time period to ensure strong peak travel seasons and run Promotional media during the September December time period to support the shoulder seasons. c. Utilize a multimedia mix (e.g., television, digital, out-of-home, print) to effectively break through the clutter and reach targeted audiences. d. Target audiences through a persona-based approach and develop new content to build the brand story. e. Raise over $500,000 annually in cooperative funding. f. Adjust the advertising program based on insights from the Spring and Fall TNS Advertising Return-on-Investment Studies. 63

66 THE LEISURE TRAVEL MARKET KEY STRATEGIES AND TACTICS (CONT.) 6. Increase San Diego s share of voice and leverage the paid media budget through unpaid EARNED media programs. a. Public Relations produce $30+ million annually in unpaid editorial. Expand paid advertising s reach by targeting new markets and audiences. Continue to pitch the diversity of product as well as what s new in the destination. Continue to target the gay/lesbian niche and build upon U.S. Hispanic/Spanish-language outreach. b. Unpaid Media Promotions generate over $1 million annually in unpaid media promotions that extend the San Diego brand message in key geographic markets. 7. Connect with travelers and communicate the depth of San Diego travel experiences through OWNED and SOCIAL media channels. a. With Sandiego.org now on a responsive platform (converged desktop, tablet and mobile versions), invest in new visuals and campaigns to grow audiences. b. Continue to build new content working with travel writers and users to generate compelling experiences. c. Showcase the destination and SDTA members by driving more traffic to all channels. d. Partner with outside publications to produce the San Diego Official Travel Guide (San Diego Magazine), San Diego Golf Map (San Diego Certified) and San Diego Pocket Map (Where Magazine). 8. Deepen alliances with community partners to promote the breadth of San Diego s travel product: a. Arts and Culture City of San Diego Commission for Arts and Culture b. Craft Beer San Diego Brewer s Guild c. Food California Restaurant Association, San Diego Chapter d. Attractions Major attraction partners e. Major events Community and event organizers 9. Partner with the major Online Travel Agencies to increase awareness of San Diego and grow sales of hotel room nights for the TMD. a. Through RFP, select key OTAs to run paid media and promotions both domestically and i nternationally. Effectively reach travel prospects by running high-profile placements; deploying competitive destination targeting; developing geo-targeted campaigns; and affinity targeting. b. Conduct reservation agent training on the San Diego travel product and experience. c. Facilitate bringing together OTA market managers and SDTA members to grow San Diego product inclusion in OTA channels. 10. Assist visitors with planning their San Diego trip through: a. Sandiego.org The Official Travel Resource for the San Diego Region. b. Visitor publications. 64

67 THE LEISURE TRAVEL MARKET KEY STRATEGIES AND TACTICS (CONT.) c. Visitor services in the form of phone and responses to visitor inquiries. 11. Continue to market to the Travel Trade as a means of influencing transient travel to the destination. a. Major Travel Partners continue to target the top-producing travel agencies through sales calls and direct marketing. Seek opportunities for partners to increase promotion of San Diego to their customers. b. Airline Vacation Offices partner with key airlines to develop packages and promotions. c. Industry Support continue to participate in major industry shows such as NTA and SYTA to show San Diego tourism support and build new business. 12. Partner with the San Diego Regional Airport Authority to develop and support new air service, especially international routes. 13. Increase international marketing programs and investment to capitalize on both the Visit California and Brand USA global marketing programs. a. Create individual country plans for each major international market that is targeted. b. Ensure a foundational layer of international development with In-Country Representation, Travel Trade Development and Public Relations. c. Offer the sandiego.org web site in in multiple languages and Google translate options. d. Run localized social media campaigns as feasible. e. Host travel trade and media FAMs to grow education among key influencers. f. Deploy incremental funding from the TMD for long-range international market development using the Tourism Economics Market Allocation Platform (See International Marketing Plan). 65

68 THE GROUP MEETINGS MARKET MARKET OVERVIEW The Convention Industry Council reported in their 2014 Economic Significance of Meetings Study that 224 million people participated in meetings which generated direct spending of $280.4 billion and $28 billion in federal, state, and local taxes. US Travel Association s Meetings Mean Business research continues to highlight business leader opinion that face-to-face meetings are critical to professional development and career success, best accomplish team building and networking objectives, and deliver ROI to business executives and positive business outcomes. The Tourism Economics forecast for business travel overall, including meetings, projects the slowdown in growth from 1.9 percent in 2015 to just 0.6 percent in 2016 and 0.9 percent in While U.S. economic fundamentals are strong, business investment has been constricted mainly due the uncertainty of President Trump s future domestic and international policies. This U.S. policy uncertainty against the continued globalization of companies, which is driving global meetings growth, equates to conservative business spending. According to STR, Inc. the top 25 markets in United States sold an estimated 45.7 million group room nights in the last 12 months through November 2016, flat (+0.35%) to the 12 months prior. These group room nights are defined as a block of 10 sleeping rooms or more, and can range from weddings and reunions to large conventions at convention centers. Among Upscale/Upper Upscale/Luxury hotel properties with meeting space, these group room nights represent 32 percent of the room nights sold in the top 25 markets. Due to the high spending of the meetings customer in the destination and at the hotel, attracting this business is highly desirable and very competitive. The most valuable groups in terms of attendance and spending often require the city and hotel to provide discounts and incentives to be selected for the business. TOP 10 U.S. CITIES BASED ON MEETINGS & EVENTS ACTIVITY According to CVENT, San Diego ranked 5th in terms of meeting bookings via their platform, which is high among a list of Tier 1 primary destinations. San Diego was ranked 4th in 2015, but was taken over by Atlanta in ORLANDO, FL 2. CHICAGO, IL 3. LAS VEGAS, NV 4. ATLANTA, GA 5.SAN DIEGO, CA 6. NEW YORK, NY 7. WASHINGTON, DC 8. DALLAS, TX 9. NASHVILLE, TN 10. NEW ORLEANS, LA SOURCE: CVENT,

69 THE GROUP MEETINGS MARKET THE SAN DIEGO GROUP ROOM NIGHTS SOLD The San Diego Tourism Authority conducts a hotel room night segmentation study each year to understand the composition by segment of the hotel room night market. Meetings and conventions are held throughout San Diego County, with events held at the award-winning San Diego Convention Center or at one of the region s 115 convention/conference hotel properties as defined by hotels with 2,500 sq. ft. of meeting space or more. In 2015, group meetings accounted for 23 percent or 4.1 million of the 16.8 million total room nights sold in San Diego County. The majority of the meetings market in San Diego is the single-property hotel meeting, which accounted for 2.8 million room nights. Per this study and post-convention reports, citywide convention blocks contributed an estimated 956,000 room nights in The remaining 345,000 group room nights are from the leisure group tour segment. SAN DIEGO CONFERENCE AND CONVENTION PROPERTIES, DISTRIBUTION BY MARKET 4.05 MILLION ROOM NIGHTS SOLD IN CONFERENCE HOTELS 100% Leisure Group Tour 8% 80% 21% San Diego Convention Center Groups 23% Single- Property Meetings 69% 60% 40% 28% Government Other Group Tour and Travel SMERF Association Corporate 20% 35% Source: 2015 CIC Research Hotel Room Night Segment Study (2014 data) 0% SINGLE-PROPERTY HOTEL MEETINGS Single-property hotel meetings are critical to the tourism industry, and represent the largest share (23%) of group business in San Diego County. Thousands of association, corporate, and SMERF groups provide primary business during midweek and off-peak seasons. Single-property meetings range from trainings, internal meetings, Board meetings, product launches, and incentive trips to large conferences. These meeting attendees are a valuable traveler due to a high average per person spend of $1,306 in San Diego. The SDTA sales team targets NEW meetings held by state, regional and national associations and corporations with various meeting types. NEW meetings are defined as those that have not met in San Diego within the last 5 years. The SDTA sales team distinguishes itself as the only team in the country with a NEW business only goal, which keeps the focus on finding new customers for the destination. The team produced more than 410,000 NEW business room nights in FY16 for San Diego. 67

70 SAN DIEGO CONVENTION CENTER The San Diego Convention Center hosts on average more than 50 primary events each year and brings in approximately 600,000 attendees annually, making it one of the most popular convention destinations in the nation. In 2016, 66 citywide conventions were held with a projected $1.2 billion in regional impact. Medical meetings continue to be a sweet spot for San Diego as they represented four of the top five spots in 2016 in terms of economic generation, following ComicCon International in the top spot. Attracting conventions to San Diego is critical for the local economy, because delegates to a convention in San Diego stay in hotels and leave behind, on average, $1,506 per person per trip. San Diego is a highly desired location for meeting planners, and the services provided by the SDCC staff and surrounding hotels are the best in the country. The SDTA sales team has been aligned to focus on generating the greatest regional impact possible for the destination and works in partnership with the San Diego Convention Center operations team to service each account with proven high San Diego standards. To that end, the SDTA team production focuses on large citywide conventions booking at least 18 months out. The SDTA team has surpassed their production goal for the last 2 fiscal years by contracting more than 1 million room nights for future years. The years 2016 through 2019 are historically strong years with an estimated 700,000 to 820,000 hotel room nights blocked in the year for these conventions. SDTA PRIMARY SALES TEAM ARRIVALS PRODUCTION AS OF 1/7/2017 Thousands Current Tentatives Total Room Nights Current Tentatives Total Room Nights Definite Conventions 20K 101K 96K 84K 50K 73K 108K 71K 741K 697K 702K 735K 647K 624K 650K 819K 728K 749K 637K 561K 560K 487K 466K 502K 470K On the competitive front, the largest convention centers in the U.S. are in Chicago and Orlando, which have 1.2 million and 1.1 million sq.ft. of contiguous on-site exhibit space, respectively. Currently, the San Diego Convention Center s total contiguous on-site exhibit space is 525,000 sq.ft., positioning it as the 22nd largest meeting space in the U.S., and behind the West Coast competitors of Anaheim and Las Vegas. In June 2017, the Anaheim Convention Center expansion will open, adding another 200,000 square feet to its on-site space. 68

71 SAN DIEGO CONVENTION CENTER While other cities have moved on expansions, the proposed San Diego expansion continues to face obstacles. In 2009, community stakeholders began planning to expand the San Diego Convention Center. It was clear that the center was one of the most popular in the nation, with high demand that would enable the facility to host multiple large conventions over the same dates. It was also clear that some longtime clients, such as Comic-Con would eventually outgrow the current facility. After extensive customer feedback and community review, a proposed contiguous expansion of the San Diego Convention Center was proposed and approved by the California Coastal Commission in October The proposed expansion would have created the largest contiguous exhibit space (750,000 sq. ft.) on the West Coast and the fifth largest in the nation behind Chicago, Orlando, New Orleans and Las Vegas. Unfortunately, in August 2014, the Fourth District Court of Appeals ruled against the hotel tax plan to finance the expansion. Currently, the mayor and city leaders are working to determine what next steps can be taken to move an expansion project forward. Then in 2016, in an attempt to build a new Chargers football stadium, the Chargers organization put forth a ballot measure that would use a TOT increase to fund the majority of expenses of a new stadium build, eliminating the chance to expand the Convention Center with TOT dollars. The ballot measure failed with the majority of San Diegans rejecting the Chargers plan. As of January 2017, tourism leaders and the City of San Diego continue to look for a solution to expand the Convention Center to meet customer needs and deliver greater regional impact for San Diego residents. The expansion will continue to be the biggest challenge for the SDTA sales team. For convention meeting planners who book on average five years or more in advance, the fate of the expansion has created a great deal of uncertainty as to how much space will be available and whether there will be construction impacts. Meanwhile, other cities, including key competitors San Francisco, Anaheim, Denver, Las Vegas, Atlanta, and Boston, are moving forward with their construction projects and wooing San Diego s customers. PROPOSED EXPANSION The proposed Phase 3 design for the San Diego Convention Center expansion is simple, functional and flexible. The expansion aligns with the floor levels of the existing building to provide a contiguous design that maximizes traffic flow and allows attendees to transition seamlessly from one area to another. This proposal would mean San Diego would have the largest contiguous exhibit hall and the largest ballroom on the West Coast. 69

72 THE GROUP MEETINGS MARKET WHERE WE COMPETE - SITE SELECTION According to the 2013 Destination MAP study conducted by STR, Inc., meeting planners ranked San Diego the #1 convention site, and the #2 business meeting site and vacation destination. Hawaii was the top vacation destination, and Chicago was the top business meeting site. San Diego is strongest with association planners, compared to corporate planners, as association planners gave San Diego the #1 spot for business meeting site as well. The number of corporate planners who say they are holding a major meeting in San Diego over the next third years fell from 25 percent in 2009 and 21 percent in 2011, to 19 percent in San Diego ranks in the top 10 for actual meetings held. Meeting planners main site consideration criteria can be grouped into three areas: environmental, recreational and logistical. San Diego excels in the environmental and recreational items, but falls a bit in the rankings when it comes to logistical items such as cost and air access. San Diego s reputation as a top meeting and convention destination is due to the desirability of the place, along with its world-class facilities, sophisticated meetings community and award-winning CVB services. The most important information sources related to geographic site selection are past experience, reputation/image of city and attendee feedback. Site Selection Considerations Percentage Listing Consideration as Very SITE Important SELECTION in Geographic CONSIDERATIONS: Site Selection Site Selection Destination Considerations MAP 2013Percentage Listing Consideration as "Very Important" in Geographic Site Selection Destination MAP 2013 Attribute Category Good hotels 87% Logistical Travel costs to loaction 81% Environmental Recreational Food and lodging costs 81% Convenient airline service Easy for delegates to get to 81% 80% Good value for the money 73% Security / crime rate Number of hotel rooms available Clean / attractive city Attractiveness of conference hotels Willin to make financial / other concessions Good restaurants 66% 66% 64% 62% 62% 57% HOW MEETING Information PLANNERS Sources Very USE INFORMATION and Somewhat Important Percentage of Respondents Indicating an Information Source is Very or Somewhat Important Information Sources Very and Somewhat Important Destination Percentage MAP 2013 of Respondents Indicating an Information Source is Very or Somewhat Important Destination MAP 2013 Past experience Reputation/image of location Attendee feedback Colleague recommendations Hotel chain / conference hotel site Destination websites Hotel rating / user review sites Convention center websites Business contacts at location Travel magazine articles Trade magazine articles incoming 92% 8% 81% 19% 84% 15% 66% 33% 66% 32% 59% 35% 53% 40% 44% 42% 32% 53% 11% 65% 10% 63% 12% 55% Very Important Somewhat Important 70

73 THE GROUP MEETINGS MARKET MARKET TRENDS THE REBOUND IS OVER The slowdown in the travel market in 2016 is forecasted to continue for the years ahead, and that slowdown will be especially noticeable for business travel. The growth surplus that hotel room demand experienced over GDP growth for the last few years was historically abnormal and is now coming to an end as GDP growth again exceeds hotel room demand. While business travel is forecasted at flat to slight growth for next few years, it remains vulnerable to economic and policy shifts, which are now of greater concern under President Trump. This vulnerability can also be seen in the Business and Leisure trip propensity index decline over time for business trips per employee. While the importance of meeting face-to-face is understood, in reality most meeting planners will be using flat budgets to plan essential meetings with fewer attendees. BUSINESS AND LEISURE TRIP PROPENSITY HOTEL ROOM DEMAND BY SEGMENT MEETINGS TRENDS 1 The 2017 American Express Meetings and Events Forecast identified global trends of the meetings market to include continued corporate expansion organically and through mergers and acquisitions globally to continue driving growth in training and internal meetings as companies need to align staff across the globe for success. However, within the global market place, the following trends have been identified for North American meetings in the coming year. HOLDING STEADY Following the strong growth of last two years, expectations are for a leveling off of meetings activity. Meeting length and budgets are expected to remain unchanged as well (+0.8%), following the largest forecasted spend increase in 2016 over last four years. CONTENT OVER NUMBERS As the number of meetings stabilizes, meeting planners will be focused on content-level innovations. One expert suggests meeting planners need to think more strategically about content, offering to attendees in terms of meeting experience, and how they stimulate and engage attendees 1 American Express 2017 Global Meetings and Events Forecast 71

74 THE GROUP MEETINGS MARKET LEANER AND FOCUSED Planners will be scrutinizing the attendee list to keep costs in check. With flat budgets, and higher air and hotel costs, meeting planners are expected to look at consolidating meeting types and using unique properties with a focus on only value-adding activities. EXTENDING THE ENGAGEMENT Mobile and social apps will be used to keep attendees engaged before, during, and after the meeting. LOCATION Second-tier destinations are on the rise. While large cities will still dominate, planners who expect to hold meetings in second-tier locations have been increasing, up from 20% in 2016 to 27% expected in As costs and availability in top tier cities become more of an issue, planners are looking to second tier cities such as Salt Lake City and Nashville, where airlines have created new routes and costs are lower. GROUP HOTELS AND RATES Meeting planner expectations are that group hotel rates in North America will remain in check at 3.7 percent growth over However, they also predict hotel space availability to decline 0.4% in Mid-tier properties remain in high demand, but there is growing emphasis on unique property choices. GROUP PRICING GROWTH TREND PROPERTY TYPE SELECTION FOR MEETINGS CHANGE PROPERTY TYPE USAGE CHANGE GROUP HOTEL RATES % GROUP HOTEL RATES % RESORTS 18% LUXURY 17% MID-TIER PROPERTIES 49% LOWER TIER 8% NON-TRADITIONAL MEETING FACILITIES 7% CRUISES 2% THE "IN" AND "OUT" IN Meeting planner expectations are that group hotel rates in North America will remain in check at 3.7 percent growth over However, they also predict hotel space availability to decline 0.4% in Mid-tier properties remain in high demand, but there is growing emphasis on unique property choices. IN JEANS AND CASUAL DRESS FACEBOOK LIVE THEATER IN THE ROUND RETARGETING ADS CONNECTION RECEPTIONS GMO-FREE PRODUCE TSA PRE-CHECK CALENDAR APPOINTMENT REQUESTS ALEXA PHONE ALARM REAL NEWS OUT NECKTIES EXPENSIVE VIDEOS LECTERNS AND PODIUMS MASS MARKETING SIT-DOWN DINNERS PROCESSED FOOD SHOELESS AIRPORT SECURITY CHECK FORMAL INVITATIONS SIRI ALARM CLOCK FAKE NEWS 72

75 THE GROUP MEETINGS MARKET SWOT Analysis STRENGTHS 1. San Diego is home to a sophisticated, highly regarded meetings industry 2. World-class convention center In desirable location 3. Strength and reputation of the SDTA sales and services team 4. Diversity of location, product and price 5. Nontraditional meeting venues 6. Brand recognition and destination amenities that draw record-breaking attendance 7. Friendly destination 8. Convenient airport location with most meetings hotels and the Convention Center within 10 minutes of the airport. 9. Year-round climate 10. San Diego s innovation economy that attracts high-tech and medical meetings WEAKNESSES 1. Weak corporate base 2. Not a hub city for airlines 3. Limited direct air service from key East Coast markets 4. Limited number of direct International flights as companies and their meetings globalize 5. Destination and hotel meeting product widely spread out 6. Destination not centrally located in the U.S. 7. Reputation of being an expensive city with airfares having also increased significantly OPPORTUNITIES 1. San Diego Meeting Certified program delivers destination excellence 2. Hotel sales team focus on developing new business for the destination 3. Sub-region marketing enables prospecting of niche verticals 4. San Diego s sustainable practices and reputation 5. West Coast corporate base 6. Leisure advertising in new markets such as New York, Chicago, and Dallas raises destination profile 7. San Diego Regional Airport Terminal 1 Redesign and Upgrade 8. New Marketing campaign "Speaking of San Diego" that shows the evolution of the destination and all It has to offer the meeting attendee 9. Hotel Sales site inspection conversion rate of over 90% 10. Tijuana Rodriguez Airport's new cross border bridge (CBX) expedites international arrivals via Mexico THREATS 1. Increased competition and convention and visitors bureau budgets to incentivize planners 2. Growth in San Diego s homeless population 3. Maintenance of city s aging infrastructure (street repairs, cleanliness) 4. Delay in expanding the San Diego Convention Center puts a ceiling on room night growth 5. Convention Center expansions In competitive cities 73

76 KEY STRATEGIES AND TACTICS CITYWIDE 1. Continue to advocate for contiguous on-site expansion of the San Diego Convention Center in order to meet customer needs and ensure growth of citywide room nights for the destination. 2. Due to the expansion delay and uncertainty, shift sales and marketing to best maximize utilization of the existing facility and generate the greatest hotel room night demand. a. Focus on filling open dates within the next ten years. b. Capitalize on MINT, Top Medical Meetings, Competitive Calendars and top 250 Trade Shows List databases to uncover new accounts. c. Host prospective clients in San Diego to familiarize them with the convention center package. d. Secure medical citywide rotations by booking multi-year contracts. 3. Monitor developments in the West Coast convention centers (such as San Francisco s Moscone Convention Center and Anaheim), as improvements in these centers pose a threat to our base of business. Evaluate developments at other centers (such as Boston Convention Center), that offer key vertical segments an alternative destination. 4. Leverage SDTA sales teams synergies to increase market intelligence, establish stronger sales presence and better service key customers. a. Continue collaboration between the Citywide and Hotel Meetings sales teams in order to achieve new savings, garner business referrals, and identify new prospects and sales opportunities. b. Work a collaborative plan to maximize trade show presence, sales trips and industry events. c. Analyze each account to see if there is citywide potential (or single property potential). 5. Secure facility revenue through Group Contract Agreements and Guidelines. Offer reduced or discounted deviations from the standard license fee rates if needed to secure core business over need periods and holiday dates. a. Continue to partner with the San Diego Convention Center facility team in site visits and negotiations to ensure that revenue and booking goals are achieved. b. Develop deeper understanding of the center s operational costs in order to best qualify future business opportunities. c. Maximize the SDCC catering food and beverage and audiovisual contracts for revenue generation, and hold clients accountable for meeting expectations. 6. Identify and support conventions that align with San Diego s business strength and identity to grow further destination awareness. 74

77 KEY STRATEGIES & TACTICS HOTEL MEETINGS GROUP SALES 1. Continue the business strategy by focusing sales team members on new customer acquisition and services team members on Assist and Repeat business. 2. New customers are defined as meetings that haven t met in San Diego previously and/or meetings that haven t met in San Diego in the last five years. 3. Assists are defined as supporting hotel members as they work with a meeting planner to sell San Diego versus another destination, when we did not generate the lead. 4. Repeats are defined as groups that return to San Diego annually and need our assistance in hotel consideration (e.g., Surf Cup, USMC graduation, Nomads Soccer, etc.). 5. Strategically place sales resources in key source in all key markets markets in the West Coast, Midwest, Washington, D.C., Southeast and East Coast. 6. Continue direct marketing programs, including lead generation promotions and monthly campaigns to top accounts and prospects. 7. Capitalize on the new Beach-City positioning to raise awareness of San Diego s business culture, diversity, and world-class amenities 8. Fully leverage social media platforms such as LinkedIn and Twitter to prospect new customers and maximize attendance. 9. Hold in-market events for San Diego in primary and secondary markets to introduce San Diego to new customers 10. Build Site Inspection training program for hotels to deliver consistently high levels of destination-wide sites and conversion. 11. Support members by broadening the responsibilities of the site services team to assist hotels and ensure we keep it in San Diego. 12. Reimagine customer experience programs (a/k/a FAMS) to offer more personalized and creative options to entice and convert meeting planners. 13. Continue to build upon the San Diego Meeting Certified program to ensure destination excellence across the hospitality community. Create a competitive selling advantage by touting the only in San Diego certification program. 75

78 INTERNATIONAL MARKET DEVELOPMENT 2015 INTERNATIONAL MARKETS AND VOLUME With the growth of international travel to the USA, states and cities have sought to capture their share of these highly lucrative visitors. Visit California is one of the nation s preeminent Destination Marketing Organizations (DMOs) and has a robust program of work dedicated to international market development. In 2015, Visit California estimates there were 17.0 million international visitors to the state. Of those, 7.8 million were from Mexico, 1.5 million from Canada and over 7.6 million from overseas countries. Overseas visitors to California grew an estimated eight percent in Los Angeles hosted the third-most overseas visitors of any U.S. city in 2014, trailing only New York and Miami. San Diego has also seen growth in the number of international visitors as reported by the U.S. Department of Commerce and CIC Research, Inc. In 2015, total international visitation to San Diego grew 4.2 percent to 6.3 million visitors, while all overseas (excl. Mexico and Canada) grew 12 percent to 1.2 million. San Diego s share of California s overseas visitation did increase from an estimated 14.6 percent in 2014 to 15.3 percent in With the exception of Canada, San Diego s largest international market which declined 12 percent, all top international markets produced greater visitation to San Diego. In 2015, the largest increases in visitation came from the United Kingdom (+36%), Germany (+45%), and Japan (+27%). China and Australia visitation to San Diego saw the lowest growth rates at three percent and 13 percent respectively ARRIVALS U.S. 1 CALIFORNIA SAN DIEGO Total International 77,510,282 17,000,000 6,293,000 Mexico 18,413,649 7,800,000 4,749,000 Day NA NA 4,393,000 Overnight* NA NA 356,000 Canada 20,704,701 1,500, ,000 TOTAL OVESEAS 38,391,932 7,600,000 1,159,000 United Kingdom 4,900, , ,000 Germany 2,271, , ,000 China 2,591,333 1,162, ,000 Japan 3,758, , ,000 Australia 1,450, ,000 98,000 France 1,752, ,000 45,000 Brazil 2,218, ,000 43,000 South Korea 1,764, ,000 36,000 India 1,125, ,000 33,000 1 Source: U.S. Dept. of Commerce 76

79 INTERNATIONAL MARKET DEVELOPMENT GOAL To grow international visitation to San Diego to stimulate more hotel room night demand and greater economic benefit for the San Diego community. FROM 5.9 MILLION INTERNATIONAL ARRIVALS IN 2014 TO 7.1 MILLION INTERNATIONAL ARRIVALS IN 2020 CORE OBJECTIVE To create awareness of the San Diego brand and increase consideration to travel. KEY STRATEGIES 1. Identify priority markets for San Diego marketing investment. 2. Align San Diego marketing programs with Visit California and Brand USA in order to maximize efficiency. 3. Partner with the San Diego Regional Airport Authority and other Southwestern regional transportation partners to increase access to San Diego. 4. Make San Diego travel product more easily available in international markets. 5. Build a communications foundation that delivers key messaging for each of the priority markets. 6. Invest in research and tracking to support the international program of work. 77

80 INTERNATIONAL MARKET DEVELOPMENT BRAND USA PROGRAM OVERVIEW Founded in 2010, Brand USA is a public-private marketing partnership. Public dollars are generated through fees collected by the Electronic System for Travel Authorization (ESTA) and private entities. The San Diego Tourism Authority and Visit California are partners with Brand USA and work collaboratively to support international market development. Brand USA develops market specific programs, consumer and co-op programs, brand experience programs and affinity programs in over 18 countries worldwide: IN-COUNTRY OFFICES CONSUMER BRAND EXPERIENCE PILLARS AFFINITY REPRESENTATION Mexico and Central America Mexico Outdoors Expedia Canada Canada Neighborhoods, Towns & ADARA Cities United Kingdom and Ireland United Kingdom Road Trips Trip Advisor Germany, Austria, Switzerland Germany Pop Culture & Entertainment Essentially America China China Sojern Japan South Korea Taiwan, Hong Kong, Southeast Asia Japan Australia/New Zealand Brazil India India Brazil Australia South Korea France Program-of-work opportunities include in-country offices, trade shows, media relations, familiarizations (FAMs), consumer direct marketing, digital campaigns and content initiatives. Many of these opportunities are made available for partner cities and states to participate with Brand USA on a fee or in-kind basis. For more information, please see The San Diego MAP recommended an allocation of 85 percent of all marketing budget toward domestic 78

81 INTERNATIONAL MARKET DEVELOPMENT VISIT CALIFORNIA PROGRAM OVERVIEW Visit California is a nonprofit organization with a mission to develop and maintain marketing programs that keep California top-of-mind as a premier travel destination. California competes with New York and Florida for market share of international travelers. In 2015, the state s tourism industry voted to increase its assessment in order to more than double Visit California s operating budget. During FY17/18, Visit California is projected to deploy $115.9 million to promote the California brand. Nearly 45 percent of the Visit California annual budget is dedicated to international market development, including brand advertising in top-priority markets. Visit California breaks its global activity down into three tiers: TIER ONE CONSUMER BRAND MARKETS: AUSTRALIA, BRAZIL, CANADA, CHINA, MEXICO AND UNITED KINGDOM Visit California invests heavily in direct-to-consumer advertising and promotional programs. A concentration of paid media activity supports trade and public relations initiatives. TIER TWO CONSUMER CONTENT MARKETS: FRANCE, GERMANY, JAPAN AND SOUTH KOREA Visit California invests in direct-to-consumer media to drive traffic to its owned channels to augment trade and public relations initiatives. TIER THREE TRADE AND PUBLIC RELATIONS MARKETS: INDIA, ITALY, MIDDLE EAST AND SCANDINAVIA Visit California reaches the consumer indirectly through trade and public relations initiatives and works closely with Brand USA to maximize its investment. TIER 1 TIER 2 TIER 3 PAID Digital Media Television Out-of-Home Search Engine Marketing Search Engine Marketing OWNED Social Media Website Publications Social Media Website Publications Website Publications EARNED Public Relations Travel Trade Public Relations Travel Trade Public Relations Travel Trade For more information, see 79

82 INTERNATIONAL MARKET DEVELOPMENT SAN DIEGO TOURISM PROGRAM OVERVIEW The San Diego Tourism Authority (SDTA) is San Diego s umbrella Destination Marketing Organization (DMO) charged with stimulating inbound travel to grow San Diego s tourism economy. San Diego competes with other California cities and iconic U.S. cities for share of the international travel market. In FY 2016, the San Diego Tourism Marketing District dedicated additional funds to the SDTA to expand its international marketing program. In FY 2018, the SDTA will have a total operating budget of over $37 million, with close to $3.5 million dedicated to international market development. In April 2015, the SDTA engaged Tourism Economics to develop an International Market Allocation Platform. Visit California and Los Angeles Tourism & Convention Board both use Tourism Economics to prioritize international markets. The Market Allocation Platform (MAP) scores and ranks origin markets across comparable metrics of opportunity, cost and risk. For the San Diego MAP, 19 origin markets were evaluated. TOP 15 COUNTRIES EVALUATED Canada U.K. and Ireland Mexico China Japan Australia and New Zealand Scandinavia Germany, Austria and Switzerland France South Korea Benelux Brazil South America Italy India FRAMEWORK Realizable Return Opportunity Propensity Value Cost Marketing Access Relative ROI Potential Index Risk Allocation Constraints Access 80

83 INTERNATIONAL MARKET DEVELOPMENT markets and 15 percent for international markets in the balanced risk scenario. Based on MAP findings, there are six priority markets for San Diego Tourism development. The six priority markets represent 90 percent of all international arrivals to San Diego: 1. Canada 2. United Kingdom and Ireland 3. China 4. Mexico (air) 5. Japan 6. Australia and NZ SDTA uses a layered approach to international market development. Business-to-business efforts through travel trade and public relations serve as an efficient baseline to extending the San Diego brand. SDTA partners with San Diego Regional Airport Authority to develop and support new air access to the market. Owned channels, including local language web and social media, serve as the foundational layer for consumer direct communications. Cooperative marketing programs with Brand USA and Visit California are added in order to maximize efficiency and position San Diego as a must-visit destination within a California or Southwest itinerary. Budget affording, advertising and promotions are layered into top primary markets to reach the consumer directly. Each country is profiled and evaluated to optimize marketing strategies and investment. MARKET MARKETCLASSIFICATION MARKETING MIX PRIMARY 1. Canada Priority Target Travel Trade / Public Relations / Consumer Advertising / Brand USA Co-op 2. United Kingdom/ Ireland Priority Target Representation (TTD and PR) / Travel Trade /Public Relations / Consumer Advertising / Brand USA Co-op 3. China Priority Target Representation (TTD and PR) / Website hosted in China / Social Media / Travel Trade / Public Relations / In-language Brochure and Videos / Brand USA Co-op / Air Route Development 4. Mexico Priority Target California Alliance Representation / Dedicated Web Page on SDTA site / Social Media / Travel Trade / Public Relations / In-language Brochure and Videos / Brand USA Co-op 5. Japan Priority Target Representation (TTD) / Dedicated Web Page on SDTA site / Social Media / Public Relations / Travel Trade / Consumer Promotions / In-language brochure and videos 6. Australia / New Zealand Priority Target Australia Representation (TTD and PR) / Travel Trade / Public Relations / Brand USA Co-op SECONDARY 7. Scandinavia Service Visit California Sales Missions / Visit California Public Relations 8. Germany, Austria and Switzerland Service Representation (TTD) / Dedicated Web Page on SDTA site / In-language brochure / Visit California Sales Missions / Visit California Public Relations / Air Route Development 9. France Service In-language brochure / Visit California Sales Missions / Visit California Public Relations 10. South Korea Service In-language brochure / Dedicated Web Page on SDTA site / Visit California Sales Missions / Visit California Public Relations 11. Brazil Service In-language brochure / Visit California Sales Missions / Visit California Public Relations ON THE RADAR 12. India Watch and See Visit California Public Relations 13. Benelux Watch and See 14. South America Watch and See 15. Middle East Watch and See 81

84 INTERNATIONAL MARKET DEVELOPMENT POSITIONING SAN DIEGO As marketing of the destination continues to expand globally into markets where there is less familiarity with San Diego, further context of the destination experience is required to drive consideration. Potential travelers need tangible reasons and iconic imagery that clearly communicate why San Diego is a must-see destination. For these long-haul markets, the Brand Platform is combined with a Differentiating Product Message to better position San Diego in the consumer mindset. In the eyes of consumers, San Diego has a strong, competitive image. Sandwiched between Hawaii and Las Vegas for many types of trips, San Diego offers elements of both popular destinations a place as enjoyable as Hawaii and with recreational variety as good as Las Vegas. San Diego gets high marks for: Outdoor activities and beauty, but not as strong as Hawaii or the Caribbean Family-oriented activities, but not as strong as Florida or Hawaii Urban features like diverse neighborhoods, a vibrant urban center and great nightlife but not as strong as San Francisco or Los Angeles Craft beer, behind only San Francisco While San Diego doesn t rank first in any product/attribute measured, it ranks higher in more attributes than any other competitive destination researched. It is the sum of San Diego s experiences that set it apart. San Diego blends the best of most worlds. More than beaches and family attractions, San Diego s diversity of product is similar to that of larger, urban cities. Arts, culture, nightlife/entertainment and culinary offerings abound throughout San Diego s 100 neighborhoods. San Diego s unique blend of vibrant, big city experiences and a year round, laid-back outdoor lifestyle make it California s Beach City. 82

85 INTERNATIONAL MARKET DEVELOPMENT BRAND PLATFORM: The Emotional Differentiator DIFFERENTIATING PRODUCT MESSAGE: The Rational Differentiator CLIMATE + PEOPLE + PLACE CREATES A LIFESTYLE/VIBE INSPIRES OPTIMISM & POSITIVITY A UNIQUE BLEND OF VIBRANT BIG CITY EXPERIENCES + YEAR-ROUND, LAID-BACK OUTDOOR LIFESTYLE BIG CITIES ARE ASSOCIATED WITH DIVERSITY (OF PRODUCT AND PEOPLE) BUT ARE NEVER DESCRIBED AS LAID-BACK; SAN DIEGO IS BOTH, UNLIKE ANYPLACE ELSE. 83

86 SAN DIEGO TOURISM AUTHORITY INTERNATIONAL MARKET DEVELOPMENT COUNTRY PLANS FOR PRIORITY MARKETS 84

87 CANADA PLAN MARKET OVERVIEW 2016 Population 1 Total population: 36.6 million Urban Population Percent: 81% Nearly 5 million Millennials aged 25 to 34 in Canada 2 CANADA Vancouver POPULATION 2.5 MILLION Calgary Toronto Montreal POPULATION 6.1 MILLION POPULATION 4.1 MILLION TRAVEL TO THE UNITED STATES The United States is a go-to destination for Canadian travelers, who perceive it as a holiday destination that is diverse, friendly, adventurous, energetic. 3 Sixty percent of all Canadian overnight international trips in 2015 were to the U.S. 4 CANADIAN VISITATION ACCOUNTS FOR 27% OF INBOUND TRAVEL TO THE U.S. In 2015 Canada s 20.7 million overnight visitors to the U.S. represented just over a quarter of all international travelers to the U.S. Due to the weakened exchange rate of the Canadian dollar against the U.S. dollar, both visitation and spending from Canada have been on the decline since And while Canada maintained its lead in inbound travel volume to the U.S. during 2015, the U.S. Travel Association predicts 2016 visitation to have declined by an additional eight percent; in which visitation from Canada will have likely been eclipsed by Mexico. Despite economic uncertainty travel to the U.S. remains highly desirable to Canadian visitors. Seventy percent of Canadian travelers surveyed during 2016 indicated they are likely to travel to the U.S. within the next year. 5 California, Florida, New York and Hawaii remain the top states for Canadian travel interest to the U.S , 6 Visit California, FY16/17 Marketing Plan, Canada Market Blueprint 3,5,7 Phocuswright Inc, on behalf of Brand USA, U.S. Travel Association, Travel Market Profile: Canada 85

88 CANADA PLAN TRAVEL TO CALIFORNIA For the State of California, Canada is the second largest international market, with 1.48 million visitors projected for 2015 and 1.43 forecasted for California offers strong airlift and reasonable airfares, a variety of product offerings and favorable weather. 6 The Los Angeles area (including Anaheim) and San Francisco dominated Canadian vacation interest for California at 71 percent and 66 percent in San Diego is ranked third at 42 percent, up slightly from DESTINATION INTEREST IN CALIFORNIA (2016) CANADIAN VISITORS TO SAN DIEGO Canada is San Diego s top international feeder market for overnight visitation with an estimated 385,000 visitors during 2015 (CIC Visitor Profile) and the number one priority international market for investment according the Tourism Economics MAP. Visitation to San Diego had been growing since 2010, but has since seen a decline similar to other U.S. cities mainly due to the unfavorable exchange rate. TREND OF CANADIAN VISITORS TO SAN DIEGO 500, , , , , , , , , , , , , , , ,

89 CANADA PLAN CANADIAN VISITOR PROFILE The primary purpose of more than half (57 percent) of Canadian visitors is for a vacation or leisure purposes. Canadians stay an average of 4.5 nights in San Diego and spend $873 per person per trip. About seven in 10 stay in hotels and for half of them, it is their first trip to San Diego. About one in five travel groups are traveling with children. PURPOSE OF TRIP Visit Friends/ Relatives 14% Business/ Convention/ Meeting 27% Other Purpose 3% Pleasure Vacation 57% KEY VISITOR CHARACTERISTICS TO SAN DIEGO Average Planning Time in Days 13 weeks Average Nights in San Diego 4.5 nights Average Spending in San Diego $873 per person/trip Median Age 46 Male / 41 Female Stayed in Hotel/Motel 68% First Trip to San Diego 52% Arrived by Air 85% Median Household Income $123,500 % of parties traveling with Children 17% CANADA VISITOR ACTIVITIES CANADA VISITOR SPENDING Canadians staying in hotels spend the most money on accommodations, followed by food and beverage, shopping, and entertainment and recreation. Total average spending in San Diego per Canadian hotel visitor per trip is U.S. $1,030. While the activity list is varied, the top 3 activities for Canadians while on their trip to San Diego are theme parks and attractions, relaxing at the beach or bay, and urban city and nightlife. Two-thirds visit an attraction or theme park even though only 17 percent are traveling with children. TOP ACTIVITIES ON TRIP TO SAN DIEGO TOTAL SPENDING IN SAN DIEGO PER CANADIAN VISITOR BY CATEGORY ALL CANADIAN VISITORS HOTEL/MOTEL VISITORS Accommodations $278 $345 Food / Beverages $164 $173 Entertainment and Recreation $87 $112 Ground Transportation $45 $54 Shopping, Gifts, and Other Purchases Exhibitor and association events $125 $142 $76 $107 Other $98 $97 Total Per Person Per Trip $ 873 $1,030 Theme parks/attractions 64% Relaxing at the beach or bay 50% Urban/city nightlife and Dining 48% Shopping 46% Arts and cultural activities 32% General sightseeing group tours 28% Historic/Heritage site 16% A cruise 14% Water sports and activities 12% Local Craft Beer Tasting / Tours 8% Hiking/climbing/biking 8% Physical wellness activities (spa, massage, yoga, etc.) 6% Spectator at a sporting event 6% Gambling 5% Play golf 4% 87

90 CANADA PLAN DESTINATION SELECTION PERSONAL CONSIDERATIONS When planning an international vacation, rest and relaxation, seeing the world s most unique attractions/icons, knowledge/understanding of other cultures, satisfying a sense of adventure and connecting with nature are the among the most important considerations for Canadian travelers 9. PERSONAL CONSIDERATIONS FOR INTERCONTINENTAL HOLIDAY 2016 PRODUCT & EXPERIENCE MOTIVATORS Among Canadian travelers likely to visit the U.S., beaches, cultural/historic attractions, local lifestyle/culture, culinary experiences, shopping and urban attractions/nightlife are considered the most motivating destination attributes. With a growing foodie culture, culinary offerings such as locally sourced quality ingredients, special experiences and well-known chefs are a strong draw for travel to California. 11 Canadian travelers visiting California are most motivated San Francisco and Napa, followed by Disneyland and beaches. U.S.DESTINATION SELECTION MOTIVATORS (2016) TOP 10 MOTIVATING CALIFORNIA FEATURES San Francisco 47% Napa Valley Wineries 38% Disneyland 33% Beaches 32% Highway 1/California Coastline 29% San Diego 29% California Redwoods 23% Hollywood 21$ Universal Studios Hollywood 21% Los Angeles 19% 88

91 CANADA PLAN DESTINATION AWARENESS Unaided awareness of San Diego as a travel and tourism destination is relatively strong in Canada despite limited paid advertising in the market. According to the most recent TNS Omnibus survey conducted July 2016, four out of ten Canadians have seen, heard or read communications about taking a San Diego vacation in the last year. Television and online video generate the highest recall. Additionally, 41 percent of those surveyed also indicated they are considering a visit to San Diego during a future trip to the United States. Those considering San Diego plan to also visit another destination during their trip; namely Los Angeles (62 percent), Las Vegas (50 percent), and San Francisco (46 percent). Very few, just four percent, plan to only visit San Diego during their trip. 100% ALMOST FOUR IN 10 ARE CONSIDERING SAN DIEGO FOR A FUTURE TRIP 75% 50% 44% 41% 25% 0% 5% I ve never heard of San Diego, California I have heard of San Diego, but I am not considering a visit on a trip to the United States I am considering a visit to San Diego for a future trip to the United States 7% 5% I intend to visit San Diego on my next trip to the United States I have recently visited San Diego on a trip to the Unites States, and am not intending to return for some time 89

92 CANADA PLAN SAN DIEGO PRODUCT & EXPERIENCE MOTIVATORS While zoos/wildlife/aquariums, sightseeing opportunities, beaches, scenic driving and shopping are among the top image perceptions for San Diego among Canadian travelers, San Diego s temperate year-round climate is considered the most motivating destination attribute. This is followed by the region s scenic beauty, relaxed atmosphere/vibe and the many activities for visitors of all ages. 12 TOP FIVE MOTIVATORS GREAT YEAR-ROUND CLIMATE 51% BEAUTIFUL SCENIC PLACE 44% LOTS TO SEE AND DO 34% RELAXING ACTIVITIES FOR ALL AGES 23% 21% Research shows consideration for travel to San Diego increases 14 percent with exposure to the destination experience/offering. The following itinerary images were particularly appealing to Canadian travelers. Source: 2014 Global Brand Research Study, Strategic Insights 12 SMARI on behalf of San Diego Tourism Authority, Global Research,

93 CANADA PLAN TARGETING CANADA MEDIA TARGET Visit California, together with its global brand agency, MeringCarson, and global media buying agency, Carat, developed a global target audience profile, which was then refined by country to take into account local nuances and media consumption habits. GLOBAL TARGET AUDIENCE ATTRIBUTES Adults 18+ Affluent: Top 33% household income Passionate about or regularly travel abroad Travel by air for vacation at least once annually Vacation decision making involvement CANADA SPECIFIC Median Age: 46 $124k median HHI More likely to be married (60% / Index 131) More likely to have children (59% / Index 109) Information and sports junkies Light on social networking big on interaction Gain fulfillment by experiencing and disconnecting AIR MARKET Three Canadian markets have direct flights to San Diego. The largest directly served market out of Canada is Toronto, followed by Calgary and Vancouver. DIRECT FLIGHTS TO SAN DIEGO FROM CANADA DESTINATION AIRLINE ANNUAL ARRIVALS ANNUAL SEATS SEATS/WEEK Calgary, AB, CA Westjet , Toronto, ON, CA Air Canada ,304 1,333 Vancouver, BC, CA Westjet 55 8, Vancouver, BC, CA Air Canada ,

94 CANADA PLAN INSIGHTS AND OPPORTUNITIES TRIP TYPES In terms of party type, trips to California are more like to be family and couples trips. However, groups of friends trips have higher potential out of Canada than other international markets. PARTY TYPES FAMILY TRIPS COUPLES TRIP GROUP OF FRIENDS TRIPS GIRLS TRIPS SINGLES TRIPS MULTI-GENERATIONAL TRIPS 10% GUYS TRIPS 9% 14% 14% 21% 35% 43% TRAVEL TIMEFRAME March, July and August are peak months for international travel out of Canada. Furthermore, when asked when they plan to take their next international holiday, those likely to visit the U.S. indicate they will do so during summer months June, July and August. 14 MONTH TRAVELED ON PAST INTERCONTINENTAL TRIPS (2016) MONTH LIKELY TO TRAVEL NEXT U.S. HOLIDAY (2016) January February March April May June July August September October November December January February March April May June July August September October November December 92

95 CANADA PLAN DESTINATION SELECTION, RESEARCH AND BOOKING The Canadian market is similar to the U.S. travel market. While fragmented, the web, personal recommendations from friends/family and travel professionals, print media and broadcast media generate the most inspiration to travel to a particular destination. Most Canadian travelers begin the research process with one or more destinations already in mind: Thirty-five percent have already decided on a destination and 46 percent are deciding between a few destinations. 15 For destination selection, search engines, online travel agency websites and traveler review websites are used most often. Fifty-three percent of Canadian travelers decide on their travel destination between three and twelve months in advance of their departure date. 16 DMO websites, printed and online guides, OTAs, and travel review sites are then used to gather more information, along with input from family and friends. OTAs and supplier sites are most used when booking. Air and lodging are most commonly booked separately. Approximately 22 percent of bookings include pre-packaged holidays and guided tours and 21 percent include custom packages with choice of specific flight and hotel. Booking windows to the U.S. vary by type with the majority of air travel (67%) and lodging (60%) booked between one and five months out. The air travel booking lead time for California is a 31-day median. 17 TOUR OPERATORS Over 60 tour operators package California in the Canadian market. 18 TOP TOUR OPERATOR CLIENTS FOR SAN DIEGO Travelbrands (15 brands under umbrella) Travel Agent/ Wholesaler Flight Centre / GOGO Worldwide Vacations Travel Agent/Wholesaler Carlson Wagonlit Travel Travel Agent Merit Travel Group - Wholesaler Air Canada Vacations Travel Agent/Wholesaler Westjet Vacations Travel Agent/Wholesaler UNIGLOBE Travel Agent Phocuswright Inc, on behalf of Brand USA, Visit California, FY16/17 Marketing Plan, Canada Market Blueprint 93

96 CANADA PLAN CANADIAN ECONOMIC FORECAST Tourism Economics Forecast - December 2016 Update Canada s economic forecast is slightly dimmer in the wake of Donald Trump s U.S. presidential victory. Due to Canada s heavy reliance on exports to the United States as a source of growth, uncertainty regarding trade protectionism will constrain Canada s economic development. Mr. Trump s push to approve the Keystone XL oil pipeline should provide some positive impact on Canada s economy, but not enough to outweigh the weaker exports and domestic demand it relies on. GDP growth is forecasted to increase by 1.7 percent in 2017, but the pace of growth is likely to remain lackluster overall. For Canadians, the exchange rate is not expected to improve much through Canada: Exchange rate per US$ F'cast Source: Oxford Economics 94

97 CANADA PLAN SWOT Analysis STRENGTHS Beaches and climate Family attractions Diverse activities to see and do Outdoor lifestyle and relaxed vibe Sporting and cultural events Mexican heritage + Cali-Baja culture WEAKNESSES Mild rather than hot climate Mature market been there, done that Lack of all-inclusive beach resorts OPPORTUNITIES Good air access from Canadian cities Kids free promotion / Canadian Thanksgiving Craft beer / Food culture Extended business travel Two nation vacation Culinary offerings Millennial travel THREATS Disney Mexico beach vacations Desert destinations Cost and poor exchange rates 95

98 CANADA PLAN KEY STRATEGIES AND TACTICS 1. Align marketing programs with Visit California and Brand USA, capitalizing on strategic opportunities. Position San Diego as California s Beach City vacation experience. 2. Generate maximum hotel/motel visitor volume for the destination by further penetrating top Canadian DMAs: Vancouver, Calgary, Edmonton and Toronto. Consider national layers as affordable. 3. Broaden image perceptions to improve appeal and drive consideration a. Further hone messaging by experience pillars to align with what matters and motivates travel: Outdoor Recreation, Culinary, Culture, Entertainment and Attractions. 4. Focus PAID consumer direct marketing programs on influencing destination selection. Flight media and spending during the shoulder season. a. Television advertising (cable and/or spot) extended from the SDTA domestic campaign b. Digital advertising campaign for brand awareness during the Visit California campaign period; including digital video, display, social and SEM tactics c. Online Travel Agency campaign with the Expedia Group d. Budget permitting participate in Visit California and Brand USA co-op and affinity programs 5. Build EARNED media exposure for San Diego through media outreach, hosting and pitching. a. Assign a PR team member to manage the Canadian market b. Continue to build relationships with traditional and social media contacts c. Hold desk-side meetings, host media in market and invite media for destination FAMS d. Develop new story ideas for key experience pillars: Family Fun, Outdoor Recreation / Sports, Arts & Culture / History, Cali-Baja Experience, Signature Events and Dining / Nightlife 6. Continue to build OWNED media exposure with content specific to the Canadian traveler. 7. Increase San Diego s exposure to the Travel Trade market via events, education and promotions a. Highlight San Diego craft beer at key industry events through member donations b. Participate in Visit California Travel Trade sales missions to grow presence and establish positioning within the state marketing initiatives c. Work with Visit California to correctly position San Diego in their new Specialist training platform. Research the potential for a dedicated San Diego module within the program. d. Promote the San Diego badge on Brand USA s online USA Discovery training program to educate and certify travel agents as San Diego destination experts e. Continue to deliver the best California experience on Canadian Travel Trade familiarization tours with top trade partners f. Build partnerships with key trade partners for San Diego travel promotions to their customers and request specific tracking metrics of how promotions affected room night production YOY g. Request that trade partners share yearly room night production h. Meet with top-producing tour operators at IPW to discuss potential trade marketing promotions 8. Partner with the Canadian travel trade to support new package development and promotion of San Diego travel product. a. Target top-producing agencies through direct marketing and sales calls when SDTA staff is in-market b. Develop relationships with the travel trade - including large established tour operators, younger, new operators and the high-end, self-drive wholesalers 9. Support the San Diego Regional Airport Authority in their efforts to support the Westjet and Air Canada flights from Vancouver, Calgary and Toronto and any other flight opportunities that may arise from Canada 96

99 CANADA PLAN 2017 / 2018 PROGRAM OF WORK FLOWCHART CANADA PROGRAM JULY-SEPT OCT-DEC JAN-MAR APR-JUN Paid Advertising Television Digital (Video & Display) SEM OTA Public Relations Media Calls FAMS Pitches / Releases Visit California Mission Owned Channels Localized Website Promotional Pages Facebook Community Management Consumer Travel Trade Development Trade Shows San Diego Specialist Training Travel Partner Promotions FAMs Sales Mission 97

100 UNITED KINGDOM/IRELAND PLAN MARKET OVERVIEW Population Total Population: 64 million Urban Population percent: 92% Population by Age: M M M M M POPULATION 727,000 POPULATION 1.0 MILLION POPULATION 7.1 MILLION TRAVEL TO THE UNITED STATES Although there are concerns about the Brexit impact on outbound travel to the United States, in the medium term the United Kingdom will remain the number one overseas market for inbound travel to the U.S. with 4.9 million visitors in In the short term, the growth forecasts are tempered with 2016 projected to be flat and 2017 seeing a decline of one percent. 2 In the longer term, China is expected to overtake the UK as the number one overseas market by One in four UK trips outside of Europe are to the U.S. which is by far the most popular long-haul travel destination of UK residents. 3 Within the past two years, travel to the U.S. was more than three times the next most visited countries of Australia and Canada. 4 The history and culture that bind the two countries and the positive image UK residents have of the U.S. will keep the United States a highly desirable destination for UK residents. Among intercontinental travelers, 44 percent say they would proactively recommend the U.S. to others and another 30 percent say they would tell people positive things about it if asked. Further, just over one-third (35%) of UK travelers surveyed by Brand USA during 2016 indicated they are likely to travel to the U.S. within the next year. 5 California, New York, Florida and Hawaii remain the top states for UK travel interest to the U.S U.S. Department of Commerce, OTTI Forecast of International Travel to the United States 3 U.S. Travel Association, Travel Market Profile: United Kingdom 4,5,6 Phocuswright Inc, on behalf of Brand USA,

101 UNITED KINGDOM / IRELAND PLAN TRAVEL TO CALIFORNIA DESTINATION INTEREST IN CALIFORNIA (2016) For the State of California, the United Kingdom is the fourth largest international market and second largest overseas market, with 705,000 visitors in 2015 and 739,000 forecasted for The 5.4 percent projected growth in 2016 is strong compared to the flat growth rate expected for the United States overall. The UK has not recovered from its peak visitation of 843,000 visitors in 1998, although the market has seen steady increases since The Chinese market overtook the UK in terms of visitation in in California offers strong airlift with 115 weekly nonstop flights and new low-cost carriers are beginning to enter the market, a variety of product offerings and favorable weather. Barriers to visitation include travel time for young families, multiple U.S. trips, and exchange rates. 8 The San Francisco and Los Angeles area (including Anaheim) dominated United Kingdom vacation interest for California at about 75 percent for both during San Diego is ranked third at 33 percent. 9 UNITED KINGDOM VISITORS TO SAN DIEGO For San Diego, the United Kingdom is the top overseas market with 146,000 visitors in 2015, and the number two priority international market for SDTA investment. Similar to Germany, there has been fluctuation in volume over the last ten years in part due to economic cycles, but considerable growth of 36 percent was estimated in San Diego s share of United States volume has averaged two to three percent over the last ten years. VOLUME TREND OF UNITED KINGDOM VISITORS TO SAN DIEGO 200, , , ,000 74,000 92,000 82,000 90, ,000 92,000 87,000 96, ,

102 UNITED KINGDOM / IRELAND PLAN UNITED KINGDOM VISITOR PROFILE Just under two-thirds (63%) of UK visitors travel to San Diego for leisure or vacation purposes, and another quarter (24%) for business purposes. The high percentage who stay in hotels (80%), combined with an average length of stay of five nights and average per person trip spend in the U.S. of $1,519 makes the UK the most valuable overseas market. Most UK travelers to San Diego have been to the U.S. previously and rarely do they have children in the travel group (13%). 10 PURPOSE OF TRIP Other Purpose 1% Visit Friends/ Relatives 18% Business/ Convention/ Meeting 24% Vacation/ Holiday 63% KEY VISITOR CHARACTERISTICS TO U.S. Average Planning Time in Days Average Air Booking in Days Average Nights in San Diego Average Party Size Average Spending per Trip in U.S. Median Age Average Number of Destinations Visited 4.0 Used a Package 17% 168 days 132 days 5 nights Stayed in Hotel/Motel 80% First Trip to U.S. 13% % of Parties Traveling with Children 13% 1.7 people $1,519 per person 45 Male 33 Female UNITED KINGDOM VISITOR SPENDING ON TRIP TO U.S. THAT INCLUDED SAN DIEGO The average UK per person per trip spending in the U.S. is $1,519. The amount only spent in San Diego on the U.S. trip is not known. With 80 percent of UK visitors staying in hotels, the majority of the spending is represented by hotel visitors. Unlike most visitors, UK visitors spend a little more on food and beverages ($441) than on accommodations ($428). UK visitors also outspend other visitors in the entertainment and recreation category at $248 per person per trip. VISITOR SPENDING IN THE U.S. Per Visitor / Trip (U.S.) $1,519 SPENDING BY CATEGORY PER VISITOR, PER TRIP Accommodations $428 Food / Beverages $441 Additional Air Transportation in U.S. $72 Entertainment and Recreation $248 Ground Transportation in U.S. $83 Shopping, Gifts, and Other Purchases $247 Total Per Person Per Trip $1,

103 UNITED KINGDOM / IRELAND PLAN UNITED KINGDOM VISITOR PROFILE Activities are broad due to the UK visitor including an average of four destinations their trip. Nine in ten UK visitors were sightseeing and shopping. These general activities are following by over half visiting a national park or monument and small towns characteristic of a common western region drive trip. Just under half took a guided tour and visited historic locations. TOP ACTIVITIES ON TRIP IN U.S. ACTIVITIES ALL VISITORS TO SAN DIEGO FROM THE U.K Sightseeing 94% Shopping 90% National Parks/Monuments 57% Small Towns/Countryside 50% Guided Tour(s) 48% Historical Locations 44% Experience Fine Dining 41% Amusement/Theme Parks 39% Art Galleries/Museums 32% Casino/Gamble 29% Cultural/Ethnic Heritage Sights 26% Sporting Event 21% Concert/Play/Musical 19% Nightclubbing/Dancing 18% Camping/Hiking 12% 101

104 UNITED KINGDOM / IRELAND PLAN DESTINATION SELECTION PERSONAL CONSIDERATIONS When planning an international vacation, rest and relaxation, seeing the world s most unique attractions/ icons, knowledge/understanding of other cultures, satisfying a sense of adventure and connecting with nature are the among the most important considerations for UK travelers. 11 PERSONAL CONSIDERATIONS FOR INTERCONTINENTAL HOLIDAY (2016) PRODUCT & EXPERIENCE MOTIVATORS Among UK travelers likely to visit the U.S. local lifestyle/culture, cultural/historic attractions, shopping, beaches, urban attractions/nightlife, and theme parks are considered the most motivating destination attributes. 12 The number of diverse neighborhoods and cultural districts in San Diego align well with what appeals to the UK traveler. U.S. DESTINATION SELECTION MOTIVATORS (2016) 102

105 UNITED KINGDOM / IRELAND PLAN DESTINATION AWARENESS Unaided awareness of San Diego as a travel and tourism destination is relatively strong in the UK despite limited paid advertising in the market. According to the most recent TNS Omnibus survey conducted July 2016, four out of ten potential visitors in the UK have seen, heard or read communications about taking a San Diego vacation in the last year. Television and online video generate the highest recall. Additionally, 33 percent of those surveyed also indicated they are considering a visit to San Diego during a future trip to the United States. Those considering San Diego plan to also visit another destination during their trip; namely Los Angeles (68 percent), San Francisco (58 percent), and Las Vegas (55 percent). Very few, just two percent, plan to only visit San Diego during their trip. ALMOST THREE IN 10 ARE CONSIDERING SAN DIEGO FOR A FUTURE TRIP 13 SMARI on behalf of San Diego Tourism Authority, Global Research,

106 UNITED KINGDOM / IRELAND PLAN SAN DIEGO PRODUCT & EXPERIENCE MOTIVATORS San Diego s beautiful scenery, temperate year-round climate, relaxed vibe, vibrancy, and creative side are considered the most motivating destination attributes. 13 TOP FIVE MOTIVATORS BEAUTIFUL SCENIC PLACE 39% RELAXING GREAT YEAR-ROUND CLIMATE VIBRANT ATMOSPHERE 33% 31% 36% ARTISTIC / CREATIVE 25% Research shows consideration for travel to San Diego increases 13 percentwith exposure to the destination experience/offering. 14 The following itinerary images were particularly appealing to UK travelers. 104

107 UNITED KINGDOM / IRELAND PLAN TARGETING UNITED KINGDOM MEDIA TARGET Visit California, together with its global brand agency, MeringCarson, and its global media buying agency, Carat, identified a global target audience profile, which was then refined by country to take into account localized audience nuances and media consumption habits. GLOBAL TARGET AUDIENCE ATTRIBUTES Adults 18+ Median Age: 44 Affluent: Top 33% Household income 58k Pounds - Median HHI UNITED KINGDOM SPECIFIC Passionate about or regularly travel abroad More likely to be married (59% / Index 128) Travel by air for vacation at least once annually More likely to have children (52% / Index 93) Vacation Decision Making Involvement AIR MARKET The British Airways (BA) flight began service in June 2011, and was the first overseas direct daily flight from Europe since Due to the success of the flight and load factors over 85 percent, British Airways increased the size of the airplane on the route to accommodate more passengers and a first-class cabin. The BA flight schedule also allowed passengers from 51 other European destinations to connect in London providing the more convenient and relaxed customs entry to the U.S. at SAN. DIRECT FLIGHTS TO SAN DIEGO FROM UNITED KINGDOM ORIGIN AIRLINE ANNUAL FLIGHT ARRIVALS ANNUAL SEATS SEATS/WEEK LONDON BRITISH AIRWAYS ,566 2,165 HEATHROW 105

108 UNITED KINGDOM / IRELAND PLAN INSIGHTS AND OPPORTUNITIES TRIP TYPES While almost half perceive a trip to California to be great for families and couples, just 13 percent of UK visitors who visited San Diego had children in their travel group. PARTY TYPE MULTI-GENERATIONAL TRIPS 14% FAMILY TRIPS COUPLES TRIP 47% 46% GIRLS TRIPS 8% GUYS TRIPS 6% GROUP OF FRIENDS TRIPS 17% SINGLES TRIPS 12% TRAVEL TIMEFRAME June through September, the summer months, are peak months for travel from the United Kingdom for an intercontinental trip. Furthermore, those likely to visit the U.S. indicate that they would do so during those same summer months. 15 MONTH TRAVELED ON PAST MONTH LIKELY TO TRAVEL INTERCONTINENTAL TRIPS (2016) NEXT U.S. HOLIDAY (2016) January February March April May June July August September October November December January February March April May June July August September October November December Phocuswright Inc, on behalf of Brand USA, 2016

109 UNITED KINGDOM / IRELAND PLAN DESTINATION SEARCH, AWARENESS AND BOOKING While fragmented, the UK traveler mostly uses the web, personal recommendations from friends/family, and print media to obtain the most inspiration to travel to a particular destination. The web far surpasses any other source at 67 percent use. Most UK travelers begin the research process with one or more destinations already in mind: thirty-seven percent have already decided on a destination and 48 percent are deciding between a few destinations. 17 For destination selection, traveler review websites, search engines, online travel agency, and airline sites are used most often in that order. Just over half (55%) of UK travelers decide their travel destination between three and twelve months in advance of their departure date. 18 DMO websites, printed and only guides, OTAs, and travel review sites are then used to gather more information, along with input from family and friends. OTAs and supplier sites are most used when booking. About seven in ten book their air and lodging separately. Approximately 21 percent of bookings include pre-packaged holidays and guided tours and 23 percent include custom packages with choice of specific flight and hotel. Booking windows to the U.S. vary by type with the majority of air travel (62%) booked between three and twelve months out and lodging (58%) booked between one and five months out. TOUR OPERATORS Over 60 tour operators package California in the United Kingdom market. 19 TOP TOUR OPERATORS CLIENTS FOR SAN DIEGO Trailfinders Travel Agent/Wholesaler British Airways Holidays OTA Virgin Holidays Travel Agent US Air Tours Wholesaler Jac Travel - Wholesaler Gold Medal - Wholesaler Titan Travel Group Tour Funway Holidays Wholesaler / Travel Agent Flight Centre UK Wholesaler/Travel Agent Phocuswright Inc, on behalf of Brand USA, Visit California, FY16/17 Marketing Plan, Canada Market Blueprint 107

110 UNITED KINGDOM / IRELAND PLAN UNITED KINGDOM ECONOMIC FORECAST TOURISM ECONOMICS FORECAST - DECEMBER 2016 UPDATE Economic data available continue to suggest that activity has been largely unaffected by June s Brexit referendum result. In particular, consumer demand has remained very strong, with annual retail sales growth at its strongest in 14 years in October. However, this probably represents the high-water mark for the consumer, with the impact of the sharp depreciation of sterling likely to steadily pass along the supply chain and push up inflation in In the next few years, the United Kingdom plans to create the National Productivity Investment Fund, which will spend 23 billion over the next five years on housing, research & development and economic infrastructure projects, with the aim of boosting productivity growth. However, investment levels will be the same over the next six years as they were in the previous, which does nothing to support demand in Overall, the UK GDP is expected to grow very mildly the next few years, with an average growth around 0.8% a year. A decline in visits from the UK due to the weakened pound and anticipated drag on demand post-brexit is expected to be felt a bit more in

111 UNITED KINGDOM / IRELAND PLAN SWOT Analysis STRENGTHS Scenic beauty and climate Beaches and bays Desert and state parks Family attractions Dining and nightlife Mexican heritage + Cali-Baja culture WEAKNESSES Lack of awareness and familiarity Low consideration for future travel Flights into LA cheaper Lack of all-inclusive beach resorts OPPORTUNITIES British Airways direct flight SAN ease of customs at arrival Local, authentic experiences Events (sporting, music, cultural) Two nation vacation Culinary offerings Millennial travel UK affinity with large sporting events in San Diego over next couple of years (CONACAF Gold Cup Soccer, Extreme Sailing, Breeder s Cup) Luxury market 109

112 UNITED KINGDOM / IRELAND PLAN KEY STRATEGIES AND TACTICS 1. Align marketing programs with Visit California and Brand USA, capitalizing on strategic opportunities. Position San Diego as California s Beach City vacation experience. 2. Continue with in-country representation through Black Diamond to support program of work in consumer direct promotions, media relations and travel trade development. 3. Generate maximum hotel/motel visitor volume for the destination by focusing programs in England and Ireland. 4. Further hone messaging by experience pillars to align with what matters and motivates travel: Outdoor Recreation, Culinary, Culture, Entertainment and Attractions. 5. Promote new international events to be held in San Diego that have affinity with UK luxury niche markets such as Extreme Sailing and Breeders' Cup. 6. Focus consumer direct marketing programs, dollars and timing during the Visit California (January April) campaign windows. a. Further hone target for paid programs to focus on the Millennial/Gen-X priority audience of adults traveling without children b. Digital advertising campaign for brand awareness and education; including digital video, display, social and SEM tactics c. Online Travel Agency campaign with the Expedia Group d. Budget permitting, participate in Visit California and Brand USA co-op and affinity programs 7. Build EARNED media exposure for San Diego through media outreach, hosting and pitching. a. Continue to build relationships with traditional and social media contacts b. Hold desk-side meetings, media hosting and inclusion in media FAMs c. Develop innovative media pitches to position San Diego as the true Southern California experience d. Create new story ideas for the key experience pillars: Outdoor Recreation / Sports, Arts & Culture / History, Signature Special Events and Dining / Nightlife e. Work in partnership with other brands / media channels / social sites to build awareness 8. Build OWNED media channels to support the San Diego brand message. a. Curate content that speaks to the U.K. / Ireland traveler b. Further develop out social media channels 9. Increase San Diego s exposure to the Travel Trade market via events, education and promotions a. Highlight San Diego craft beer at key industry events through member donations b. Participate in Visit California Travel Trade sales missions to grow presence and establish positioning within the state marketing initiatives c. Attend key trade shows such as WTM in London d. Continue to promote the San Diego badge on Brand USA s online USA Discovery training program to educate and certify travel agents as San Diego destination experts e. Work with Visit California to correctly position San Diego in their new Specialist training platform. Research the potential for a dedicated San Diego module within the program. f. Continue to deliver the best California experience on UK Travel Trade familiarization tours with top trade partners - Host the final night for the 10 year anniversary of the UK Super FAM to 110

113 UNITED KINGDOM / IRELAND PLAN KEY STRATEGIES AND TACTICS (CON'T) g. Build partnerships with key trade partners for San Diego travel promotions to their customers and request specific tracking metrics of how promotions affected room night production YOY h. Request that trade partners share yearly room night production i. Inclusion in Black Diamond s monthly Trade newsletter with theme relevant topics. 10. Partner with the UK travel trade to support new package development and promotion of San Diego travel product. a. Target top-producing agencies through sales calls and direct marketing by Black Diamond throughout the year and when SDTA staff is in-market b. Develop relationships with the travel trade - including large established tour operators, younger, new operators and the high-end, self-drive wholesalers c. Obtain an analysis from Black Diamond on San Diego s presence in UK brochures as compared to our California competitors prior to WTM 11. Assist the San Diego Regional Airport Authority in their efforts to support the British Airways flight from London-Heathrow and any other flight opportunities that may arise from the UK 2017 / 2018 PROGRAM OF WORK FLOWCHART UNITED KINGDOM AND IRELAND Paid Advertising Digital (Video & Display) OOH SEM OTA Public Relations PROGRAM JULY-SEPT OCT-DEC JAN-MAR APR-JUN Media Calls FAMs Pitches/Releases Visit California Missions Owned Channels Dedicated Website Landing Page Localized Website Promotional Pages Facebook Community Management Consumer Travel Trade Development Sales Calls Trade Shows San Diego Specialist Training Travel Partner Promotions FAMs Sales Mission 111

114 UNITED KINGDOM / IRELAND PLAN IN COUNTRY SAN DIEGO REPRESENTATION COMPANY PROFILE Black Diamond was founded in 1992 and has an expert team working across a variety of specialist capabilities covering every communications discipline in the travel and lifestyle sectors. Their knowledge and expertise transcends public relations, travel representation, event management and crisis communications to include website development and creative campaigns, as well as media planning and buying. Black Diamond Travel comprises strong, well respected and award-winning representation and PR divisions that service over 25 accounts, including an NTO (Brand USA), Visit California, DMOs, airlines, hotel chains and attractions. Since inception, Black Diamond has become an invited member of Worldwide Partners Inc. and the Global Agency Partnership; we are also a certified advertising agency with the IPA - Institute of Practitioners in Advertising. SDTA CONTRACTED SCOPE OF WORK Travel Trade Sales Calls & Training Trade and Consumer Shows Co-op Marketing and Integrated Promotions Brochure Analysis In-Market Trade Education Trade Communication Public Relations Press Office Function Story Development and Placement Sales Missions and In-Market Events 112

115 GERMANY, SWITZERLAND AND AUSTRIA PLAN MARKET OVERVIEW POPULATION GERMANY Total population: 80.9 million Urban population: 77 percent Population by Age: 0-14 years 10.5 M M M M M SWITZERLAND Total population: 8 million Urban Population 73.6 percent Population by Age: M , M M M AUSTRIA Total population: 8.2 M Urban population: 66.3 percent Population by Age: M , M M M POPULATION BY LARGEST METRO AREAS HAMBURG BERLIN 1. BERLIN 3.4 M 2. HAMBURG 1.7 M 3. MUNICH 1.3 M 4. ZURICH 342 K 5. GENEVA 184 K 6. BASEL 164 K 7. VIENNA 1.7 M 8. GRAZ 222 K 9. LINZ 181 K MUNICH LINZ VIENNA ZURICH BASEL GENEVA GRAZ 113

116 GERMANY PLAN TRAVEL TO THE UNITED STATES Germany, the sixth-largest inbound travel market to the U.S. with million arrivals, accounted for roughly six percent of the 38 million overseas arrivals to the U.S. in German travelers surveyed perceive the U.S. as a vacation destination that is diverse, adventurous, forwardthinking, energetic, friendly, open-minded and trendy. Consideration for travel to the U.S. is strongly motivated by natural features/landscapes and landmarks, sightseeing options. 2 Despite being added to Global Entry in 2016, only slight growth (up one percent) is forecasted through Germany is projected to slip to the seventh-largest inbound market as strong growth out of South Korea (up 39 percent) moves up to the sixth ranking. 3 LIKELIHOOD OF TRAVEL TO UNITED STATES (2016) Travel to the U.S. by German visitors is more of a future consideration compared to San Diego s other priority international markets. Just under a quarter of German travelers surveyed by Brand USA during 2016 indicated they would consider traveling to the U.S. within the next year. Whereas 28 percent consider traveling within two to five years and 21 percent may consider traveling at some point in in the distant future. 4 In order of preference, California, New York, Florida and Hawaii remain the top states for German travel interest to the U.S. 5 U.S. Travel Association, Fact Sheet: International Inbound Travel to the U.S. (2015) 2 Phocuswright Inc, on behalf of Brand USA,

117 GERMANY PLAN TRAVEL TO CALIFORNIA Germany is the seventh largest international market for the State of California, with 436,000 visitors and $715 million in visitor spending in Visitation and spending are both forecasted to increase through 2020 to 503,000 visitors and $834 million. According to Brand USA, San Francisco and the Los Angeles area (including Anaheim) dominated German vacation interest within California at 82 percent and 63 percent in At 32 percent, lesser known San Diego is prioritized below other areas in California that offer beach vacations and mountain areas. San Diego s share of the Germany visitor volume to California is currently at 26 percent. DESTINATION INTEREST - CALIFORNIA (2016) 4-5 Phocuswright Inc, on behalf of Brand USA, Visit California, FY16/17 Marketing Plan, German Market Blueprint Source: Hall & Partners, August

118 GERMAN PLAN GERMAN VISITORS TO SAN DIEGO 7 German market visitation has been fickle over the last ten years. Visitation has swung from a low of 32,000 in 2006 to a high of 122,000 in 2015, fluctuating up and down over the years in between. 150,000 TREND OF GERMAN VISITORS TO SAN DIEGO 112, ,000 50, ,000 50,000 57,000 44,000 78,000 86,000 60,000 71,000 77, GERMAN VISITOR PROFILE Two-thirds of German travelers to San Diego travelled for vacation purposes and stayed in hotels for an average 10.2 nights in the U.S. The majority of visitors (90 percent) travelled without children in the group and only five percent purchased a travel package for the trip. On average, Germans visited 4.7 destinations while in the U.S. and between percent visited national parks and small towns. The western region fly-drive vacation combining city and national park destinations is most common with the German market. German travelers are also very young with a median age of 33 for males and 27 for females. Over the average 10 day trip, Germans spent $2,188 per person. KEY VISITOR CHARACTERISTICS PURPOSE OF TRIP Business/ Convention/ Meeting 12% Visit Friends/ Relatives 14% Other Purpose 9% Holiday Vacation 65% KEY VISITOR CHARACTERISTICS TO U.S. Average Planning Time in Days Average Air Booking in Days Average Nights in San Diego Average Party Size 156 days 114 days 10.2 nights 1.8 people Average Spending per Trip in U.S. $2, Median Age Average Number of Destinations Visited 33 Male / 27 Female Used a Package 5% Stayed in Hotel/Motel 68% First Trip to U.S. 31% % of parties traveling with Children 11% U.S. Department of Commerce, OTTI 116

119 GERMANY PLAN GERMANY VISITOR PROFILE. GERMANY VISITOR SPENDING BY CATEGORY Accommodations $749 Food / Beverages $493 Additional Air Transportation in U.S. $124 Entertainment and Recreation $292 Ground Transportation in U.S. $119 Shopping, Gifts, and Other Purchases $411 Total Per Person Per Trip $2,188 TOP ACTIVITIES ON TRIP TO U.S. Sightseeing 92% Shopping 88% National Parks/Monuments 70% Small Towns/Countryside 61% Historical Locations 56% Amusement/Theme Parks 46% Casino/Gamble 41% Guided Tour(s) 41% Experience Fine Dining 33% Art Galleries/Museums 28% Nightclubbing/Dancing 27% Cultural/Ethnic Heritage Sights 26% Sporting Event 23% Concert/Play/Musical 22% Camping/Hiking 21% 117

120 GERMANY PLAN DESTINATION SELECTION PERSONAL CONSIDERATIONS When planning an international vacation, seeing the world s most unique attractions/icons, rest and relaxation, knowledge/understanding of other cultures and connecting with nature are among the most important considerations for German travelers. 8 Beyond the gateways cities themselves, German travelers visiting California are most motivated by Hollywood/Beverly Hills, the Golden Gate Bridge, beaches, the Redwoods/Yosemite and Death Valley. PERSONAL CONSIDERATIONS FOR INTERCONTINENTAL HOLIDAY (2016) TOP 10 MOTIVATING CALIFORNIA FEATURES San Francisco 50% Los Angeles 39% Hollywood 35% Golden Gate Bridge 33% Beaches 33% California Redwoods 30% Death Valley/Deserts 26% Disneyland 23% Beverly Hills 23% Yosemite/Half Dome 19% PRODUCT & EXPERIENCE MOTIVATORS Among German travelers likely to visit the U.S., cultural/historic attractions, urban attractions/nightlife, shopping, nature and culinary experiences, are considered the most motivating destination attributes. According to Visit California, beach holidays are the most preferred vacation type followed by short/weekend city getaways, multi-destination trips, culture and adventure vacations. 10 U.S. DESTINATION SELECTION MOTIVATORS (2016) 8-9 Phocuswright Inc, on behalf of Brand USA, Visit California Marketing Plan, FY16-17 Germany Market Blueprint 118

121 GERMANY PLAN DESTINATION AWARENESS As could be expected, Germans are less familiar with San Diego than the larger California gateway cities of Los Angeles and San Francisco. Two-thirds of Germans know nothing to a little about San Diego highlighting the need for destination awareness in the market. San Francisco Los Angeles San Diego I know a lot about this destination I know a fair amount about this destination I know a little about this destination I know very little about this destination I've only heard the name SAN DIEGO PRODUCT & EXPERIENCE MOTIVATORS While nightlife/entertainment, shopping, scenic driving, sightseeing and zoos/wildlife/aquariums are among the top image perceptions for San Diego among German travelers, San Diego s beauty/scenery, great year-round climate and vibrant atmosphere are considered the most motivating destination attributes. TOP FIVE MOTIVATORS Research shows consideration for travel to San Diego increases with 16 percent exposure to the destination experience/offering. 12 The following itinerary images were particularly appealing to German travelers. 119

122 GERMANY PLAN TARGETING GERMANY MEDIA TARGET Visit California, together with its global brand agency, MeringCarson, and its global media buying agency, Carat, identified a global target audience profile, which was then refined by country for tier one priority markets to take into account localized audience nuances and media consumption habits. Germany is considered a tier two market for Visit California with limited direct-to-consumer media. Market activity is focused on driving traffic to owned channels and augmenting trade and public relations efforts. GLOBAL TARGET AUDIENCE ATTRIBUTES Adults 18+ Affluent: Top 33% household income Passionate about or regularly travel abroad Travel by air for vacation at least once annually Vacation decision making involvement Source: Visit California FY16/17 Marketing Plan AIR MARKET Following the success of the British Airways (BA) direct flight from London, two new European airlines are now starting to test the market and begin seasonal direct service to San Diego. Port of Entry data from the U.S. Department of Commerce indicated a large percentage of the passengers on the London BA flight originated from Germany and Switzerland. Condor Airlines will begin seasonal summer service in May 2017 catering to the German vacation market, and Edelweiss will begin service twice per week from Zurich in June 2017 for both the business and leisure traveler. DIRECT FLIGHTS TO SAN DIEGO FROM GERMANY AIRLINE START DATE ORIGIN FREQUENCY SEATS Condor Airlines May 2017 Edelweiss Airlines June 2017 Frankfurt, Germany Zurich, Switzerland 2x per week/3x week (summer) 250 2x per week

123 GERMANY PLAN INSIGHTS AND OPPORTUNITIES TRIP TYPES In terms of party type, nearly 60 percent of German travelers said they would most likely take a couples trip to California, followed by about one-quarter-third who indicated family trips. PARTY TYPE TRAVEL TIMEFRAME July, August and September are peak months for international travel out of Germany. Furthermore, when asked when they plan to take their next international vacation, those likely to visit the U.S. indicate they will do so during summer months June through September. 14 MONTH TRAVELED ON PAST MONTH LIKELY TO TRAVEL NEXT U.S. HOLIDAY (2016) INTERCONTINENTAL TRIPS (2016) January February March April May June July August September October November December January February March April May June July August September October November December 121

124 GERMANY PLAN DESTINATION AWARENESS, SEARCH AND BOOKING GERMANY Digital environments are the most used source of information for travel inspiration in Germany followed by personal recommendations from friends/family and printed guide books. Most Germans travelers begin the research process with one or more destinations already in mind: twenty-one percent have already decided on a destination and 58 percent are deciding between a few destinations. For destination selection, search engines, traveler review websites and online travel agency websites are used most often, followed by airline, travel guide and destination marketing organization websites. Sixty-one percent of German travelers decide on their travel destination between three and twelve months in advance of their departure date. 15 Air and lodging for U.S. trips are most commonly booked separately, but pre-packaged/guided tours and custom packaging with choice of specific flight and hotel are popular in Germany (22 percent and 21 percent). Three to five months out is the most common booking window for air travel (45 percent), lodging (42 percent), pre-packaged/guided tours and custom packages (both 38 percent). OTAs are used most often when booking air, lodging, pre-packaged tours and custom packages, but travel agents are a close second for packaged product. Air is also booked direct on travel provider sites. 16 Of those traveling by air, 12 percent of German travelers flew with charter airlines. 17 SWITZERLAND The media landscape in Switzerland is fragmented, driving the need for programs with multiple touch points. Paid media is dominated by print and television. Despite well-established internet and smart phone penetration, the online advertising market is still small but growing. Digital video is the fastest growing segment of digital ad spend. Web comparison and online review sites are the most relevant touch points for travel planners followed by brand websites, television advertising, newspaper advertising and magazine advertising. 19 TOUR OPERATORS While more than 65 tour operators package California in the German-speaking market, 10 main operators control approximately 80 percent of the long-haul travel market. 1 SDTA's top tour operator cllients are included below. GERMANY Dertour (part of Rewe Touristik) FTI TUI Meier s Weltreisen (part of Rewe Touristik) Neckermann Reisen Explorer Fernreisen Canusa Touristik CRD America Unlimited Faszination Fernreisen SWITZERLAND TUI Suisse Kuoni (part of Rewe Toruistik) MTCH (Skytours & Hotelplan) Knecht Reisen 1 18 Visit California, FY16/17 Marketing Plan, Germany Market Blueprint 5-16 Phocuswright Inc, on behalf of Brand USA, 122

125 GERMANY PLAN ECONOMIC OUTLOOK TOURISM ECONOMICS DECEMBER 2016 UPDATE In response to a weaker than expected 2016 Q3 GDP outturn in Germany, 2017 is forecasted to have a modest slowdown to 1.4 percent GDP growth in Thereafter, Germany GDP growth is likely to slow further, reflecting the economy s weak potential prospects. Encouragingly, domestic demand remains solid. Inflation is expected to grow by 1.8 percent in 2017, while the labor market recovery continues. The GDP forecast growth in Switzerland remains unchanged at 1.6 percent in The positive impact of robust manufacturing production, a high backlog of orders, falling unemployment, and foreign trade growth, helps counteract the negative effect of uncertainty from Trump s election win. Overall, the Eurozone is forecasted to grow 1.4 percent in It appears the spillover effects of Brexit on the Eurozone economy remain limited, while the initial signs of the Trump victory do not show any major adverse impacts on the Eurozone growth as a whole. 123

126 GERMANY PLAN SWOT Analysis STRENGTHS Beaches Scenic beauty with vast expanses Outdoor activities Nightlife/entertainment Nature/state parks - Anza Borrego, Torrey Pines History + Hispanic heritage Cabrillo National Monument, Old Town Cali-baja cuisine Local, craft beer Trendy neighborhoods, great shopping and exciting nightlife Great beach destination with perfect climate year round and a relaxed Southern California lifestyle and vibe, which is the German traveller s perception of California Easy for first timers (US) to get around and discover the city as distances between the hotels, the city centre, the attractions and the beach are within accessible in around 15 min WEAKNESSES San Diego is not as popular as the Gateways Los Angeles and San Francisco so many of the typical 2-3 weeks Western US itineraries do not go further south than LA San Diego is often included with only one night or even just offered as a day trip from LA. OPPORTUNITIES New direct flights from Frankfurt and Zurich More relaxed customs entry into U.S., and growth from global entry Growth in demand for luxury travel by middle-class Ideal start and end for a typical 2-3 week Western US trip World-renowned icons such as Seaworld, San Diego Zoo, USS Midway Museum THREATS Disney/San Francisco Mexico beach vacations Desert destinations National Parks Canadian National Parks (Free during 2017) 124

127 GERMANY PLAN KEY STRATEGIES AND TACTICS 1. Align marketing programs with Visit California and Brand USA, capitalizing on strategic opportunities. Position San Diego as the California "Beach City" vacation experience. 2. Continue with in-country representation through MSI to support progam of work in Travel Trade Development. 3. Generate maximum hotel/motel visitor volume for the destination by focusing programs in cities with close proximity to those with air access. 4. Focus consumer direct marketing programs, to align with new flight promotion. a. Online Travel Agency campaign b. Digital advertising campaign for brand awareness 5. Investigate opportunities to co-op with other gateway cities, including Los Angeles and San Francisco to position multi-destination itineraries. 6. Build EARNED media exposure for San Diego through media outreach, hosting and pitching. a. Continue to build relationships with traditional and social media contacts b. Hold desk-side meetings, media hosting and inclusion in media FAMs c. Develop innovative media pitches to position San Diego as the true Southern California experience d. Create new story ideas for the key experience pillars: Family Fun, Outdoor Recreation / Sports, Arts & Culture / History, Signature Special Events and Dining / Nightlife 7. Build OWNED media channels to support the San Diego brand message. a. Curate content that speaks to the German traveler 8. Increase San Diego s exposure to the Travel Trade market via events, education and promotions a. Highlight San Diego craft beer at key industry events through member donations b. Participate in Visit California Travel Trade sales missions to grow presence and establish positioning within the state marketing initiatives c. Work with Visit California to correctly position San Diego in their new Specialist training platform. Research the potential for a dedicated San Diego module within the program. e. Continue to deliver the best California experience on German Travel Trade familiarization tours with top trade partners f. Build partnerships with key trade partners for San Diego travel promotions to their customers and request specific tracking metrics of how promotions affected room night production YOY g. Request that trade partners share yearly room night production h. Increase San Diego s exposure to German consumers and travel trade by partnering with other MSI California clients to have MSI represent us at various trade shows throughout the region 9. Partner with the German travel trade to support new package development and promotion of San Diego travel product. a. Target top-producing agencies through sales calls and direct marketing by MSI throughout the year and when SDTA staff is in-market 125

128 GERMANY PLAN b. Develop relationships with the travel trade - including large established tour operators, younger, new operators and the high-end, self-drive wholesalers c. Attend key trade shows such as ITB in Berlin d. Obtain an analysis report from MSI on San Diego s presence in German brochures as compared to our California competitors prior to the ITB Tradeshow in March 10. Assist the San Diego Regional Airport Authority in their efforts to support the Condor Airline flight from Frankfurt and any other flight opportunities that may arise from Germany a. Request promotional co-op funding from the TMD to support the Condor flight in the second year of its operation 11. Promote the San Diego badge on Brand USA's online USA Discovery training program, Visit California's STAR and our own San Diego Specialist programs to educate and certify travel agents as destination experts / 2018 PROGRAM OF WORK FLOWCHART GERMANY PROGRAM JULY-SEPT OCT-DEC JAN-MAR APR-JUN Owned Channels Dedicated Website Landing Page Facebook Community Management Consumer Public Relations Media Calls FAMS Pitches / Releases Travel Trade Development Sales Calls Trade Shows San Diego Specialist Training Travel Partner Promotions FAMs Sales Missions 126

129 GERMANY PLAN IN COUNTRY SAN DIEGO REPRESENTATION The SDTA contracts with MSI in Germany. Switzerland was added to the contract in 2016 when promotion of the two new seasonal flights from Frankfurt and Zurich began. MARKETING SERVICES INTERNATIONAL (MSI) COMPANY PROFILE Marketing Services International (MSI) founded in 1990, is a leading tourism marketing, PR and destination company within the German-speaking market providing strategic, operational and creative services across all communications and sales channels. MSI has an outstanding reputation in the German-speaking travel industry as the most reliable, credible, co-operative, innovative and faithful business partner which understands both, the interests of its clients as well as the exigencies of the travel industry in-market. MSI has an extensive portfolio of clients including Brand USA and Visit California. The company has been leveraging California as a must-go destination for Germans for 21 years, promoting the Golden State in all its abundance. SDTA CONTRACTED SCOPE OF WORK Two dedicated staff members Travel Trade Representation/Activities Sales Calls/Training Event Exhibition and Travel Trade Shows Promotions Public Relations / News Releases Market Intelligence Reporting 127

130 CHINA PLAN MARKET OVERVIEW POPULATION Total Population: 1.36 Billion 1 Urban Population: 59 percent Population by Age: M M M M M POPULATION BY LARGEST METRO AREAS 1. GUANGZHOU: 44.3 M 2. SHANGHAI: 36 M 3. CHONGQING: 30.2 M CHINA 4. BEIJING: 21.5M 5. HANGZHOU: 21.1 M 6. WUHAN: 19.7 M XI'AN CHENGDU WUHAN CHONGQING Beijing TIANJIN JINAN Shanghi HANGZHOU 7. CHENGDU: 18 M 8. TIANJIN: 16 M 9. XI'AN: 13.6 M 10. JINAN: 13 M Guangzhou EXPLOSIVE GROWTH The sheer volume of potential visitors from China is staggering. With a population nearing 1.4 billion and one of the world s fastest-growing major economies, China has quickly become the world s largest source market for travelers. Though leisure travel accounts for 63 percent of China s total outbound travel, Brand USA projects that in 2016, China will overtake the U.S. as the number one business travel market in the world and will generate 20 percent of global business travel spending. Furthermore, government travel is decreasing as a result of the central government s anti-corruption policy, which is limiting official overseas travel

131 CHINA PLAN TRAVEL TO THE UNITED STATES While the third-largest overseas inbound travel market to the U.S. in 2015, China is one of the fastest growing source markets and the leading international market for visitor spending as of 2015 when it eclipsed Canada. 3 The double-digit growth out of China is forecasted to continue due to the 10-year U.S. visa policy. Visitation is projected to grow from 2.6 million in 2015 to 3.0 million in 2016 and 5.7 million in 2021, when China is forecasted to become the largest overseas source market for the U.S. 4 Chinese travelers surveyed perceive the U.S. as a vacation destination that is diverse, energetic, open-minded, creative, optimistic and trendy. Consideration for travel to the U.S. is strongly motivated by natural features/landscapes, landmarks and sightseeing options and leisure attractions like dining, shopping and nightlife. 5 Fifty-six percent of Chinese travelers surveyed by Brand USA during 2016 indicated they are likely to travel to the U.S. within the next year (30 percent within the next six months and 26% within six twelve months). 6 California and New York are top states for Chinese travel interest to the U.S. followed by Hawaii and Washington. TRAVEL TO CALIFORNIA Visitation to California out of China grew 310 percent between 2009 and With 1.16 million projected visitors to California and $2.595 billion in visitor spending in 2015, China is now California s number one overseas market for both visitation and spending and Visit California s number one priority market for investment. 8 Significant growth is projected to continue with 2.13 million visitors to California and $4.84 billion in spending forecasted by According to Brand USA, the Los Angeles area (including Anaheim/Disneyland) and San Francisco dominated vacation interest within California at 86 percent and 82 percent in San Diego was ranked third at 31 percent along with other beach areas in California at 30 percent. 10 San Diego s share of the Chinese visitor volume to California is currently at nine percent Visit California, China Market Overview 3-4 U.S. Travel Association, U.S. Department of Commerce and Oxford Economics 5-6, 10, 10 Phocuswright Inc, on behalf of Brand USA, Visit California, FY16/17 Marketing Plan 8-9 Visit California, China Market Blueprint 129

132 CHINA PLAN CHINESE TRAVEL TO SAN DIEGO Like most other places in the world, San Diego is also seeing an explosion in Chinese visitor volume. The number of Chinese visitors has grown tenfold over the last ten years. In 2015, China fell back to San Diego s fifth largest international market and third largest overseas market. In 2014, China was on the heels of the United Kingdom, and expected to overtake it as the number one overseas market to San Diego in However, both the United Kingdom (146,000) and Germany (112,000) spiked in 2015, regaining their top positions. CHINESE VISITOR ESTIMATES TO SAN DIEGO 150, ,000 83, , ,000 50,000 9,000 20,000 17,000 15,000 19,000 25,000 36,000 50, CHINESE VISITOR PROFILE TO CALIFORNIA 11 Unfortunately, the sample sizes of Chinese visitors to San Diego are too small to profile. The profile of the Chinese visitor California is the closest proxy to understanding trip characteristics. About half of Chinese visitors to California arrive for vacation purposes and seven in ten stay in hotels. The average length of stay in California is 17.2 days with an average per person per day spend of $127. PURPOSE OF TRIP Other Purpose 12% Visit Friends/ Family 15% Business/ Convention/ Meeting 28% Vacation/ Holiday 49% KEY VISITOR CHARACTERISTICS TO CA Average Planning Time in Days 69 days Average Air Booking in Days 43 days Average Nights in CA 17 nights Average Party Size 2.1 people Average Spending per Trip in CA $2,191 per person Median Age 38 male / 34 female Average Number of Destinations Visited 3.0 Used a Package 32% Stayed in Hotel/Motel 69% First Trip to U.S. 47% 130

133 CHINA PLAN Compared to all overseas visitors to California, travelers from China are more likely to: Have a decidedly shorter trip planning and advance airline booking horizon Select an airline based on non-stop flights Make use of an inclusive travel package including attractions/events/entertainment, meals, guided tours, or a tour guide for the entire trip Be on their first trip to the U.S. Visit Los Angeles as part of their trip Experience fine dining and visit art galleries/museums while in the U.S. Spend more while in the U.S. and California Spend a higher percentage of their travel dollar on gifts and souvenirs in the U.S. Use a credit card to make purchases Have a lower average annual household income Conversely, visitors from China are less likely to: Travel to California for vacation/holiday purposes Use an airline as a trip planning source Book their air trip with the airlines directly or with a travel agency office Use a taxicab/limousine for transportation in the U.S. 11 Visit California, Characteristics of Travelers from China to California

134 CHINA PLAN DESTINATION SELECTION PERSONAL CONSIDERATIONS When planning an international vacation, rest and relaxation, seeing the world s most unique attractions/ icons, connecting with nature, increasing knowledge/understanding of other cultures, and staying in one s comfort zone are the among the most important considerations for Chinese travelers 12 PERSONAL CONSIDERATIONS FOR INTERCONTINENTAL HOLIDAY (2016) PRODUCT & EXPERIENCE MOTIVATORS Among Chinese travelers likely to visit the U.S., nature/ecotourism, urban attractions/nightlife, shopping, culinary experiences and cultural/historic attractions are considered the most motivating destination attributes. 13 U.S. DESTINATION SELECTION MOTIVATORS (2016) Phocuswright Inc, on behalf of Brand USA, 2016

135 CHINA PLAN DESTINATION SELECTION Chinese travelers to California find Southern California attractions like parks and beaches the most motivating. Disneyland, Hollywood and Universal Studios are the top motivators. According to Visit California, the newly affluent Chinese travelers place greater emphasis on acquiring things, with the majority (58 percent) citing shopping as the top consideration for booking a trip. Furthermore, 39 percent of their spending in California is used for gifts and souvenirs higher than any other country. Chinese travelers are becoming increasingly sophisticated. While group tours and fixed itineraries still dominate, there is a growing segment of FIT travelers looking to get beyond the gateway cities and iconic places. TOP 10 MOTIVATING CALIFORNIA FEATURES DISNEYLAND HOLLYWOOD UNIVERSAL STUDIO LOS ANGELES BEACHES SEAWORLD GOLDEN STATE BRIDGE CALIFORNIA REDWOODS SAN FRANCISCO HIGHWAY 101/CA 32% 30% 28% 26% 25% 25% 24% 23% 26% 39% DESTINATION AWARENESS As could be expected, awareness of San Diego is low compared to the large iconic cities of San Francisco and Los Angeles. Just over half (52%) know little about San Diego. However, the other half says they know a fair amount (33%) or a lot (15%). 14 Hall & Partners on behalf of Visit California, Visit California, China Market Blueprint Phocuswright Inc, on behalf of Brand USA,

136 CHINA PLAN SAN DIEGO PRODUCT & EXPERIENCE MOTIVATORS SDTA s global research project indicated gambling/casinos, golf, opportunities to visit Mexico, exploring the desert and camping were among the top image perceptions for San Diego among Chinese travelers. However, San Diego s scenic beauty is considered the most motivating destination attribute followed by opportunities for relaxation, great year-round climate, and San Diego s hip and trendy vibe, which was selected by more than a quarter of Chinese travelers. 17 BEAUTIFUL SCENIC PLACE 42% RELAXING 36% GREAT YEAR-ROUND CLIMATE HIP AND TRENDY TRIP EXPERIENCE WORTH THE MONEY 23% 26% 30% TOP FIVE MOTIVATORS Research shows consideration for travel to San Diego increases 24 percent with exposure to the destination experience/offering. The following itinerary images were particularly appealing to Canadian travelers SMARI on behalf of San Diego Tourism Authority, Global Research,

137 CHINA PLAN TARGETING CHINA CHINESE OUTBOUND TRAVELERS The rapid economic development of China has created an expanding middle class and a new wealthy elite for which travel has become a status symbol. Visit California identified two travel target groups that have emerged, the "developed" (25%) and the "developing" (75%). The "developed" group is comprised mostly of the wealthy elite who are travelling the world and are big spenders in the luxury categories as a way to demonstrate their success to others. These developed travelers are the target for long-haul destinations. The developing group is mostly represented by the growing middle and upper classes, and have price as the number one priority. Overall, the Chinese long-haul traveler is rapidly evolving to a younger and more educated consumer. Three-fourths of China s long-haul FIT and luxury markets are now ages 24 to 40, and eight in ten hold undergraduate degrees. The exploding market segment accounts for 75 percent of China s FIT market and 73 percent of its luxury market. MEDIA TARGET Visit California, together with its global brand agency, MeringCarson, and global media buying agency Carat, developed a global target audience profile, which was then refined by country to take into account local nuances and media consumption habits. GLOBAL TARGET AUDIENCE ATTRIBUTES Adults 18+ Affluent households Passionate about or regularly travel abroad Travel by air for vacation at least once annually Vacation decision making involvement CHINA SPECIFIC Median Age: 34 Top 25% household income A/B social class More likely to be married (68% / Index 125) More likely to have children (30% / Index 131) Media flexibles Comfortable consuming a variety of content for all purposes Television and digital have the highest frequency of usage 135

138 CHINA PLAN AIR MARKET California has 110 weekly nonstop flights from China connecting Beijing, Shanghai, Guangzhou, Wuhan, Chengdu and Changsha to San Francisco, San Jose and Los Angeles. In 2016, United Airlines launched a new flight from Hangzhou to San Francisco (three per week). For San Diego, China direct service is a priority for the SDRAA and SDTA, and talks are underway with a few Chinese airlines since direct service is a critical path to growing hotel visitation from the market. CHINA LAX ROUTE Air China Beijing LAX United/Delta/China Eastern Shanghai LAX 'China Southern 'Guangzhou - LAX CHINA TOKYO SAN ROUTE Japan Airlines Beijing Narita SAN Japan Airlines Shanghai Narita SAN Japan Airlines Hong Kong Narita SAN Japan Airlines Taipei Narita SAN CHINA TIJUANA ROUTE Aeromexico Shanghai-Tijuana (Tue-in, Sat-out, once a week) CHINA HAWAII SAN ROUTE Hawaiian Airlines Beijing HNL SAN China is also serviced by numerous airlines though western U.S. cities like San Francisco and Seattle that have connecting flights to San Diego. CROSS BORDERXPRESS The opening of the Cross BorderXpress (CBX) in December 2015 now allows for customs clearance and direct access into San Diego via a pedestrian bridge without having to exit the airport and cross the land border. CBX reports that 74 percent of TIJ passengers cross the border. Within 10 months of opening, one million passengers used the bridge to cross into the U.S. and the forecast for 2016 is 1.3 million users. The CBX bridge now adds TIJ to the list of airports that can support Southern California s air service needs. TIJ expects to expand the airport footprint by 25 percent, and begin to lure new air service from Asia and South America now that the airport s catchment area includes Southern California. Specifically, the bridge supports the current entry into the U.S. by Chinese visitors on the Aeromexico Shanghai-Tijuana-Mexico City triangle service. 136

139 CHINA PLAN INSIGHTS AND OPPORTUNITIES TRIP TYPES In terms of party type, two-thirds said they would most likely take a family trip to California, followed by just over one-third who said couples trips. Interestingly another one-third also said groups of friends trips; higher than any other international market. There is also a growing number of students, families and youth groups traveling, looking to expand their education in America. PARTY TYPES FAMILY TRIPS 67% COUPLES TRIPS GROUP OF FRIENDS TRIPS 36% 34% MULTI-GENERATIONAL TRIPS GIRLS TRIPS SINGLES TRIPS GUYS TRIPS 10% 9% 7% 7% TRAVEL TIMEFRAME According to Brand USA, October is by far the top month for international travel out of China due to National Day Golden Week, China s longest public holiday, which runs October 1 7. The next largest consideration for travel is for Summer Holiday when there are long school breaks for students and many parents also spend their paid annual leave during this period. Furthermore, when asked when they plan to take their next international vacation, those likely to visit the U.S. indicated July (24 percent), May and August (both 23 percent) and October (22 percent). 21 MONTH TRAVELED ON PAST MONTH LIKELY TO TRAVEL NEXT U.S. HOLIDAY (2016) INTERCONTINENTAL TRIPS (2016) January February March April May June July August September October November December January February March April May June July August September October November December 137

140 CHINA PLAN DESTINATION SELECTION, RESEARCH AND BOOKING While most Chinese travelers begin the research process with a few destinations already in mind (70 percent), when compared to other international markets, fewer travelers have already decided on a destination when they begin planning (15 percent). 22 The web, personal recommendations from friends/ family and advice from travel professionals are used most often. Unlike other markets where search dominates, online travel agency websites are used most often (72 percent), followed by search engines (57 percent), travel guide websites (54 percent), social networking sites (45 percent) and finally traveler review sites (41 percent). For now and the coming decade, the majority of travel to the U.S. is mostly packaged tours (70%). However, it is expected that FIT travel will continue its rapid growth as the number of younger, wealthier Chinese are choosing to travel independently. 23 With the increase in FIT travel, the planning window for Chinese travelers is much shorter than other international markets. Thirty-nine percent select their destination one to two months out and another 23 percent three to five months out. 24 The booking window itself is also very close to departure. Air, prepackaged and custom package booking windows are pretty evenly dispersed between one to two weeks, three to four weeks and one to two months out. Thirty-six percent of lodging is booked one or two weeks before departure. 25 Visit California indicates more than 70 percent of travel to California is still booked through tour operators and retail agencies. Online travel agency websites are by far the most popular source for booking air, lodging, pre-packaged holidays/guided tours and custom packages. 26 According to Brand USA, air and lodging are most commonly booked separately. Approximately 33 percent of bookings include custom packages with choice of specific flight and hotel and 28 percent of bookings include pre-packaged holidays and guided tour packages. 138

141 CHINA PLAN TOUR OPERATORS There are over 1,500 outbound travel agencies currently operating in China. The top 20 travel agents handle over 80 percent of outbound package tours. 27 TOP TOUR OPERATOR CLIENTS FOR SAN DIEGO OPERATOR GZL Guangzhou Tiantian Holiday Travel Service Guangzhou Nanhu International Travel Service America International Travel Services Ctrip International Travel Services Galaxy Tour Beijing UTour International Travel Service Beijing CAISSA International Travel Service Beijing China Youth Travel Services Beijing China International Travel Services Beijing China Travel Services Beijing Bye City International Travel Shanghai Jinjiang International Travel Service Shanghai Utour International Travel Service Shanghai China Travel Service Shanghai China International Travel Service Shanghai China Youth Travel Services Shanghai Spring International Travel Service Guangdong China Travel Service VTour Travel Service Zhejiang DESCRIPTION Wholesaler Wholesaler / Receptive Wholesaler Wholesaler / Receptive OTA Wholesaler / Receptive Wholesaler / Retailer Wholesaler Tour Operator / Retailer Tour Operator / Retailer Tour Operator / Retailer OTA Tour Operator / Retailer Wholesaler Tour Operator / Retailer Tour Operator / Retailer Tour Operator / Retailer Wholesaler / Retailer Tour Operator / Retailer Wholesaler TOP MICE CITS Mice CTS Mice CYTS Mice TOP OTAs Tuniu Qunar ELong Alibaba Travel 22, Phocuswright Inc, on behalf of Brand USA, , 27 Visit California, China Market Blueprint 139

142 CHINA PLAN CHINA ECONOMIC FORECAST TOURISM ECONOMICS FORECAST - DECEMBER 2016 UPDATE In 2017, China should benefit from a possible pick-up in U.S. growth stemming from more expansionary fiscal policy under President Trump. However, the increase in uncertainty and the risk of China-specific trade restrictions will weigh on exports. Overall, China is expected to see a slight improvement in the export outlook in 2017, helped by some strengthening of global demand and the 8 percent trade-weighted depreciation in the renminbi. Updates to the forecast are done in June and December. The latest forecast can be found at CHINA: GOODS EXPORT AND IMPORT VOLUMES 140

143 CHINA PLAN SWOT Analysis STRENGTHS Close enough to Los Angeles to grow San Diego overnight stays within Southern California trip Scenic beauty and beaches Shopping outlet centers and malls Birthplace of California USS Midway Museum Friendly laid-back vibe Hispanic heritage Culinary offering Safety Cleanliness Easy/convenient transportation + walkable OPPORTUNITIES Huge growth of visitors to California Chinese visitors are venturing out of major cities and brands San Diego s internationally renowned public universities student groups and student / family trips October Golden Week and January February Spring Festival / Lunar New Year travel promotions The Southwest / California Traveler Itineraries that include Los Angeles, Las Vegas and San Francisco The Second or Repeat U.S. Trip Traveler Independent, second-time visitors who have already been to the iconic destinations Chinese travelers strong interest in high-end restaurants, shopping and gambling, all of which San Diego offers JAL flight and ease of SAN customs Close proximity to Mexico appeals to Chinese visitors who are seeking another country stamp on their passport Co-op / packaging with other south west destinations (i.e. Palm Springs) Co-op marketing opportunities with Aeromexico to promote CBX to Chinese market WEAKNESSES Lack of awareness by Chinese consumer Name confusion due to spelling ( Santiago, Chile ) No direct flights between San Diego and China San Diego room rates are high for budget-conscious Chinese travelers No large Chinese-American community No recognizable icons like the Hollywood sign or the Golden Gate Bridge Currently a day visit market (attractions) THREATS Growing budgets in competitive DMOs Large iconic, still-to-be-seen U.S. destinations like New York City, Las Vegas and Chicago Slowdown in emerging market economies Past California visitors interest in visiting other states on second trip 141

144 CHINA PLAN KEY STRATEGIES AND TACTICS 1. Align marketing programs with Visit California and Brand USA, capitalizing on strategic opportunities. Position San Diego as an iconic California beach city with must-see visitor attractions. 2. Continue with in-country representation through Aviareps China to support a program of work in trade development, media relations, digital platforms and social media. a. Beijing office representation b. Shanghai office representation 3. Build recognition of San Diego and reinforce the standard spelling to eliminate confusion with Santiago, Chile. 4. Support existing and develop new travel partners that create and promote overnight stays versus day visits for San Diego. 5. Collaborate with local tourism partners to hold China Ready programs for local hospitality companies to ensure that Chinese visitors are properly accommodated when visiting San Diego. 6. Focus promotional efforts to impact two key travel periods: October s Golden Week and January / February s Spring Festival / Lunar New Year. Target adults during Golden Week and families with students during Lunar New Year. 7. Due to budget constraints, focus consumer direct programs on digital platforms and social media. Use OWNED channels and digital campaigns to build awareness and educate the traveler on the destination. a. Chinese language website b. Weibo social media campaigns c. Youku video channel d. Brand USA online video content e. Visit California online promotions 8. Assess additional social media program of work potentially launching a WeChat page and/or Lofter profile 9. Build EARNED media exposure for San Diego by developing and implementing an annual publicity plan: a. Build relationships with traditional and online media contacts b. Develop pitches to position San Diego as an iconic California beach city bordering Mexico c. Create new story ideas for Family Fun / Attractions, Outdoor Recreation / Sports, Signature Special Events, and Shopping. d. Hold desk-side meetings, media hosting and inclusion in media FAMs. 10. Increase San Diego s exposure to the Travel Trade market via events, education and promotions a. Highlight San Diego craft beer at key industry events through member donations b. Participate in Visit California Travel Trade sales missions to grow presence and establish positioning within the state marketing initiatives c. Attend key trade shows where Chinese clients will be in attendance IPW, Active America China, Go West Summit 142

145 CHINA PLAN d. Continue to work with Chinese Receptive Tour Operators in Los Angeles to build San Diego overnight opportunities e. Submit RFP to host the Active America China Summit in San Diego in March/April of 2018 f. Hold annual SDTA Asian Client luncheon in Los Angeles and invite top Chinese Receptive and Tour Operators who are based in the LA-region to attend g Attend the Best Western Asian Client Appreciation Dinner and Tour America Chinese New Year client events to continue networking with LA-based Chinese clients h. Participate in Visit California s Club California training program to educate Chinese travel agents in Tier 1 & 2 cities i. Promote the San Diego badge on Brand USA s online USA Discovery training program to educate and certify travel agents as San Diego destination experts Visit CA Star Program own specialist training programs j. Work with Visit California to correctly position San Diego in their new Specialist training platform. Research the potential for a dedicated San Diego module within the program. k. Continue to deliver the best California experience on Chinese Travel Trade familiarization tours top trade partners l. Build partnerships with key trade partners for San Diego travel promotions to their customers and request specific tracking metrics of how promotions affected room night production YOY m. Request that trade partners share yearly room night production 11. Partner with the Chinese travel trade to support new package development and promotion of San Diego travel product. a. Target top-producing agencies through sales calls and direct marketing by Aviareps China throughout the year and when SDTA staff is in-market b. Develop relationships with the travel trade - including OTAs, large established tour operators, younger, new operators and high-end, self-drive wholesalers c. Obtain an analysis report from Aviareps China on San Diego s presence in Chinese brochures and websites as compared to our California competitors prior to IPW 12. Assist the San Diego Regional Airport Authority in their efforts to obtain non-stop flights from China 13. Establish partnerships with airlines that have flights that connect well to San Diego a. Promote the daily Japan Airlines flight via Tokyo which connects well with some Chinese cities b. Promote the Beijing and Shanghai non-stop flights to Tijuana on Aeromexico, where travelers can utilize the Cross Border Xpress (CBX) to cross directly into San Diego c. Develop relationships with airlines flying into regional hubs (LAX, SFO, HNL) to grow San Diego package inclusion. d. Promote joint San Francisco San Diego, Los Angeles San Diego, Las Vegas San Diego and Tijuana, Mexico San Diego itineraries 143

146 CHINA PLAN 2017/2018 PROGRAM OF WORK FLOWCHART CHINA PROGRAM FALL WINTER SPRING SUMMER Owned Channels Dedicated In-Language Website Weibo Community Management YouKu Community Management Consumer Public Relations Media Calls FAMs Pitches/Releases Visit California Missions Travel Trade Development Sales Calls Trade Shows San Diego Specialist Training Travel Partner Promotions FAMs Sales Mission Club California Training 144

147 CHINA PLAN IN COUNTRY SAN DIEGO REPRESENTATION COMPANY PROFILE AVIAREPS was founded in Germany in 1994 with the aim of meeting the growing demands of the aviation and tourism representation market. Today, the AVIAREPS Group is the world's leading tourism and destination marketing company with over 90 tourism accounts in its client portfolio. In addition, the AVIAREPS Group has a rapidly growing Trade & Retail promotion division to represent cities, states, nations, retailers, and trade associations seeking to boost trade flows from around the world. Supplementing these core businesses, clients seeking international marketing support also tap into our other major service divisions - public relations, advertising, IT solutions and financial services. AVIAREPS has established a worldwide network of self-owned offices totaling over 60 offices in 45 countries, ensuring pinpoint market access for clients and local AVIAREPS teams on the ground in all key markets around the world ready to act on behalf of clients. SDTA CONTRACTED SERVICES IN CHINA MANAGERS Sales & Marketing Manager Beijing PR Manager Beijing Sales & Marketing Manager Shanghai PR Manager Shanghai SCOPE OF WORK Sales Calls and office visits Destination bidding support Fulfillment Center FAM Trip organization Educational Seminars / In-house training Trade Show Collateral Production/ Distribution 145 Response to trade & consumer inquiries

148 MEXICO PLAN MARKET OVERVIEW POPULATION Total population: 130 million Urban Population Percent: 77% It should be noted that as a border state, Baja California (over three million residents) is a large feeder market for day visitors to San Diego. Tijuana is the largest city in Baja, with over 1.5 million residents. TRAVEL TO UNITED STATES The U.S. is highly desirable to Mexican travelers who perceive it as a vacation destination that is diverse, trendy, down-to-earth, open-minded and adventurous. Mexico s 17.1 million overnight visitors to the U.S. during 2014 represented almost 23 percent of all international travelers and eight out of every nine overnight outbound trips from Mexico visitation from Mexico increased almost 17 percent over 2013, and travel by air rose six percent to an all-time high of 2.4 million Mexican visitors. Eighteen point four million Mexican travelers visited the U.S. in 2015, and Mexican visitation is expected to increase by three to four percent per year for the next five years thereafter. 4 Mexico has historically been the second-largest inbound travel market to the U.S., after Canada. But the stable and significant growth out of Mexico since 2010 coupled with economic uncertainty and visitation declines out of Canada, will likely result Mexico inbound surpassing Canada in Seventy-four percent of Mexican travelers surveyed by Brand USA during 2016 indicated they are likely to travel to the U.S. within the next year. California, New York, Florida and Hawaii remain the top states for Mexican travel interest to the U.S & 5 Phocuswright Inc, on behalf of Brand USA, U.S. Travel Association, International Inbound Travel Market Profile: Mexico, Visit California, FY16/17 Marketing Plan, Mexico Market Blueprint 146

149 MEXICO PLAN TRAVEL TO CALIFORNIA California s proximity to Mexico is a distinct advantage. Mexico is by far the largest international market for the State of California, with travel projected at 7.6 million visitors and $2.9 billion in spending in DESTINATION INTEREST CALIFORNIA CITIES (2016) When adjusting for air travel only, Mexico drops to California s sixth largest market with 579,000 forecasted for 2016 and 651,000 for Average spending per outbound trip for Mexicans is low compared to other Latin American countries. 7 Similar to visitors from Canada, the Los Angeles area (including Anaheim) and San Francisco dominated vacation interest within California. San Diego was ranked third at 49 percent. San Diego s share of the Mexican visitor volume to California is currently at 61 percent. TRAVEL TO SAN DIEGO Mexico is the largest international market for San Diego. Among San Diego's the 6.3 million international visitors, almost five million are from Mexico. However, Mexican day visitors, arriving for leisure (non-work) purposes, comprise 4.4 million, or 70 percent. The Mexican overnight segment is an estimated 365,000 visitors, or six percent of all international. Mexican overnight visitors to San Diego totaled an estimated 356,000 in 2015, a slight dip from the four years of growth coming out of the recession. According to the Tourism Economics MAP, shifting global economic conditions indicate that Mexico has great potential to grow overnight visitation in future years. All Overseas 1,159,000 18% Canada 385,000 6% Mexico Day 4,393,000 70% Mexico Overnight 356,000 6% VOLUME TREND OF MEXICAN VISITORS TO SAN DIEGO 400, , , , , , , , , , , , , , ,

150 MEXICO PLAN MEXICO OVERNIGHT VISITOR PROFILE 8 Forty-five percent of Mexican overnight visitors stated that the primary purpose of travel to San Diego was to visit friends and family. Another 42 percent visited for pleasure or vacation purposes, and eight percent arrived for business purposes. While shopping is a core activity for Mexican travelers, only three percent said it was thei primary purpose. On average, overnight visitors stayed 3.4 nights and almost all had been to San Diego previously. About two-thirds visited only San Diego on their trip to the U.S. and in terms of hotel use, 30 percent reported staying in a hotel. One-third of travel groups had children, which is higher than all San Diego overnight visitor groups at 22%, and higher than all other international markets. PURPOSE OF TRIP KEY VISITOR CHARACTERISTICS Average Planning Time in Days Average Nights in San Diego Average Party Size 4.6 weeks 3.4 nights 2.6 people Average Spending in San Diego $ Median Age 42 Male / 38 Female Vacationers Who Visited Only San Diego 64% Stayed in Hotel/Motel 30% First Trip to San Diego 7% % of parties traveling with children 33% San Diego County Visitor Profile Study, CIC Research, Inc. 148

151 MEXICO PLAN On average, overnight visitors spent $395 per person per trip in San Diego, compared to $435 for all San Diego overnight visitors. Accommodations, meals and beverages and shopping are categories with highest spending. Aligned with other research on the Mexican traveler, relaxation at beach or bay is the top activity followed by urban city nightlife and shopping.. Visiting attractions rounds out the top four, which are all above 50 percent. Accommodations Food / Beverages Additional Air Transportation Entertainment and Recreation Ground Transportation Shopping, Gifts, and Other Purchases Exhibitor and association events ALL OVERNIGHT VISITORS $42 $67 $14 $22 $10 $58 $9 HOTEL/MOTEL VISITORS $143 $99 $17 $28 $22 $59 $27 Total Per Person Per Trip $223 $395 ACTIVITY LIKELY TO DO ON TRIP TO CA Relaxing at the beach or bay 57% Urban/city nightlife and Dining 57% Shopping 54% Theme parks/attractions 52% Arts and cultural activities 26% Historic/Heritage site 9% Fishing (ocean or lake) 6% Water sports and activities 5% Gambling 4% Hiking/climbing/biking 3% MEDIAN HOUSEHOLD INCOME While Mexican visitors have a varied median income, 27 percent have an income of $80,000 or greater. 40% 35% 35% 30% 25% 20% 15% 10% 5% 8% 10% 11% 9% 8% 15% 5% 0% Under $20,000 $20,000 - $29,999 $30,000 - $39,999 $40,000 - $79,999 $80,000 - $99,999 $100,000 - $124,999 $125,000 - $149,999 $150,000 or more 149

152 MEXICO PLAN DESTINATION SELECTION PERSONAL CONSIDERATIONS When planning an international vacation, rest and relaxation, knowledge/understanding of other cultures, seeing the world s most unique attractions/icons, satisfying a sense of adventure and connecting with nature are the among the most important considerations for Mexican travelers. 9 PERSONAL CONSIDERATIONS FOR INTERCONTINENTAL HOLIDAY: 2016 Among Mexican travelers likely to visit the U.S., cultural/historic attractions, culinary experiences, local lifestyle/culture, urban attractions/nightlife, shopping and beaches are considered the most motivating destination attributes. Mexican travelers to California are most motivated by Disneyland and SanFrancisco, followed by Hollywood and Los Angeles. 11 U.S. DESTINATION SELECTION MOTIVATORS (2016) TOP 10 MOTIVATING CALIFORNIA FEATURES Disneyland 47% San Francisco 38% Hollywood 33% Los Angeles 32% Napa Valley Wineries 29% Universal Studios Hollywood 29% San Diego 23% Shopping Outlet 21$ SeaWorld 21% Beverly Hills 19% 9-10 Phocuswright Inc, on behalf of Brand USA, Hall & Partners on behalf of Visit California,

153 MEXICO PLAN DESTINATION AWARENESS MEXICAN FAMILIARITY WITH SAN DIEGO Overall, familiarity for San Diego is weaker than for Los Angeles and San Francisco, but almost 40 percent say they know a lot or a fair amount about San Diego, which is relatively strong compared to other international markets. SAN FRANCICSO 13% 26% 36% 14% 11% LOS ANGELES 20% 35% 29% 9% 7% SAN DIEGO 15% 23% 33% 18% 11% I know a lot about this destination I know a fair amount about this destination I know a little about this destination I know a very little about this destination SAN DIEGO PRODUCT & EXPERIENCE MOTIVATORS While shopping, zoos/wildlife/aquariums, theme/waterparks, nightlife/entertainment and experiencing a distinct food culture are among the top image perceptions for San Diego among Mexican travelers, San Diego s many activities for visitors of all ages is considered the most motivating destination attribute. This is followed by a trip experience worth the money, a great place to take kids, lots to see and do and the artistic and creative side of the destination. TOP FIVE MOTIVATORS ACTIVITIES FOR ALL AGES 43% TRIP EXPEREINCE WORTH THE MONEY GREAT PLACE TO TAKE KIDS 30% 34% LOTS TO SEE AND DO ARTISTIC / CREATIVE 24% 23% 151

154 MEXICO PLAN Research shows consideration for travel to San Diego increases 24 percent with exposure to the destination experience/offering. The following itinerary images were particularly appealing to Mexican travelers. TARGETING MEXICO MEDIA TARGET Visit California, together with its global brand agency, MeringCarson, and its global media buying agency, Carat, identified a global target audience profile, which was then refined by country to take into account localized audience nuances and media consumption habits. For Mexico, Visit California s base target audience represents eight percent of Mexico s 18+ population or 5.6 million well-educated, affluent consumers. The family audience represents 2.2 million people. GLOBAL TARGET AUDIENCE ATTRIBUTES MEXICO SPECIFIC Adults 18+ Median Age: 39 Affluent: Top 33% household income More likely to be married (54% / Index 150) Passionate about or regularly travel abroad More likely to have children (70% / Index 140) Travel by air for vacation at least once annually Abridged media users Vacation decision making involvement Use media as an escape Big users of television and digital Source: Visit California FY16/17 Marketing Plan 152

155 MEXICO PLAN AIR MARKET The Mexican traveler has always had air access to San Diego via two main airports, San Diego Regional Airport (SAN) and Tijuana Rodriguez Airport (TIJ) located across the border in Mexico. Most Mexican travelers fly into TIJ because the access from Mexican cities is greater and the cost is lower compared to SAN. However, the Tijuana airport was less convenient as passengers were required to leave the airport and then cross via the land border, which can take hours. In December 2015, the Cross Border Xpress (CBX) opened, which now allows travelers arriving at TIJ the opportunity to clear customs and cross the Mexico- U.S. border directly via a pedestrian bridge. This bridge has created opportunity not only for more Mexicans to travel to San Diego, but for international flights from Asia and South America to arrive at TIJ for a San Diego bound trip. Within 10 months of opening, one million passengers used the bridge to cross into the U.S., and the forecast for 2016 is 1.3 million users. SAN SCHEDULE U.S. airlines with SAN routes from Mexico are mainly targeted toward the American vacationer to Mexico. DESTINATION AIRLINE ANNUAL ARRIVALS ANNUAL SEATS SEATS PER WEEK Puerto Vallarta, MX Alaska , San Jose Del Cabo, MX Alaska , Spirit (Seasonal) , TIJ SCHEDULE Tijuana-Rodriguez Airport operates 653 flights per week from 24 Mexican cities. All flights have more than 100,000 seats available. Direct flights operate at least once per day from the primary target markets of Guadalajara, Mexico City and Monterrey. DESTINATION AIRLINE FLIGHTS PER WEEK SEATS/PER WEEK Mexico City Aeromexico 36 5,274 Interjet 14 3,300 Volaris 36 5,682 Guadalajara Aeromexico 14 2,436 Interjet Volaris 37 6,348 Culiacan Aeromexico 7 1,218 Interjet Volaris 25 3,600 Shanghai, China Aeromexico

156 MEXICO PLAN INSIGHTS AND OPPORTUNITIES TRIP TYPES In terms of party type, two-thirds said they would most likely take a family trip to San Diego, followed by over one-third who said a couples trip would be likely. Thus, targeting the family market is a priority in this market. In addition, young urban professionals without kids are a key target for San Diego. PARTY TYPES School schedules were recently updated to include a shorter, five week summer vacation but with additional school breaks throughout the year providing an opportunity for more long weekend trips by Mexican travelers; an opportunity for San Diego based on its proximity. 15 TRAVEL TIMEFRAME March, June, July, August and December are peak months for international travel out of Mexico. Furthermore, when asked when they plan to take their next international vacation, those likely to visit the U.S. indicate they will do so during summer months June, July and August as well as in December. 16 MONTH TRAVELED ON PAST MONTH LIKELY TO TRAVEL NEXT U.S. HOLIDAY (2016) INTERCONTINENTAL TRIPS (2016) January January February February March March April April May May June June July August September July August September October November December October November December Visit California, FY16/17 Marketing Plan, Mexico Market Blueprint 16 Phocuswright Inc, on behalf of Brand USA, 2016

157 MEXICO PLAN DESTINATION SELECTION, RESEARCH AND BOOKING Most Mexican travelers begin the research process with one or more destinations already in mind: twentyeight percent have already decided on a destination and 56 percent are deciding between a few destinations. 17 For destination selection, search engines, traveler review websites and airline websites are used most often, followed by online travel agency websites and social networking sites. Fifty-six percent of Mexican travelers decide on their travel destination between three and twelve months in advance of their departure date. 18 DMO websites, printed and online guides, OTAs, and travel review sites are then used to gather more information, along with input from family and friends. OTA and supplier sites are used equally for booking air, but lodging is most often booked on an OTA site. Air and lodging are most commonly booked separately. Approximately 31 percent of bookings include custom packages with choice of specific flight and hotel and 29 percent of bookings include pre-packaged holidays and guided tour packages. Booking windows to the U.S. vary by type with the majority of air travel (55%) and lodging (53%) booked between one and five months out. 19 TOUR OPERATORS Over 35 operatorspackage California in the Mexican market. 20 TOP TOUR OPERATORS CLIENTS FOR SAN DIEGO Dream Destinations Ofertas Turisticas Megatravel Julia Tours Corporate Travel Services American Express Price Travel Despegar.com.mx Travelocity.com.mx Best Day Travel Wholesaler/Travel Agent Wholesaler/Travel Agent Wholesaler/Travel Agent Wholesaler/Travel Agent Wholesaler/Travel Agent Travel Agent OTA OTA OTA OTA 155

158 MEXICO PLAN MEXICO ECONOMIC FORECAST TOURISM ECONOMICS FORECAST - DECEMBER 2016 UPDATE Following a Trump presidential victory in the United States, the GDP forecast of Mexico is forecasted to grow 2.1 percent in 2017 and 2.2 percent in This is lower than the previous forecast due to uncertainty, a weaker peso, and tighter monetary policy on the Mexican economy. A weaker peso will lead to higher inflation and lower growth for disposable incomes in Mexico. Inflation is expected to peak at 3.7 percent in Q2 of Updates to the forecast are done in June and December. The latest forecast can be found at 156

159 MEXICO PLAN SWOT Analysis STRENGTHS Geographic neighbor and border Proximity/convenient to get to San Diego Family-oriented product and activities Cultural and historic connections Perceived as good value Trendy SoCal lifestyle Cali-Baja cuisine Diverse shopping Nightlife/entertainment options WEAKNESSES Perceived as typical border town Lack of awareness of weather and natural beauty Overshadowed by Los Angeles (entertainment capital) and San Francisco (shopping and dining) SeaWorld not unique to San Diego Florida and Texas parks well known Growing luxury travel market as consumer income for the high-end market continues to increase OPPORTUNITIES Cross Border Xpress from Tijuana Airport Latino Film Festival (Mexican films and actors) Dia del Niños promotion/kids "FREE" Promo Bilingual staff can jump start relationships with media and travel trade Partnership opportunities Brand USA, Visit CA, CA Alliance Southern California vacation itineraries THREATS Economic conditions in Mexico Attraction promotion of San Diego as a day trip from Anaheim 157

160 MEXICO PLAN KEY STRATEGIES AND TACTICS 1. Align marketing programs with Visit California and Brand USA, capitalize on strategic opportunities. Position San Diego as California s Beach City vacation experience. 2. Evaluate the return-on-investment of adding in-country representation beyond the existing California Alliance program to further develop the travel trade market. 3. Build awareness of San Diego s upscale coastal beauty and diverse urban amenities to reduce negative border town misperceptions. 4. Support existing and develop new travel partners that create and promote overnight stays versus day visitors for San Diego. 5. Focus promotional efforts to sync with Visit California and Brand USA efforts to impact destination need periods in December and spring. 6. Grow San Diego s online presence in key digital and OWNED channels. a. Hire a Spanish-language digital partner to audit and update web content b. Create new Spanish-language content videos or translate existing content c. Build on organic and community management of Spanish-language social media sites (Facebook and Twitter). Budget affording, expand audience and engagement with paid foundational social. e. Partner with Brand USA and Visit California on content development and distribution f. Reposition San Diego and develop robust content on Visit California and Brand USA Mexico websites g. Evaluate effectiveness of paid campaigns/promotions with online travel agencies 7. Build EARNED media exposure for San Diego through media outreach, hosting and pitching: a. Leverage SDTA bilingual/bi-literate staff to build media relationships b. Make media calls in Mexico City, Guadalajara and Monterrey c. Develop pitches to position San Diego as a luxury coastal city with diverse amenities, vibrant dining and nightlife, and trendy appeal. d. Create new story ideas for holiday and spring travel e. Create new story ideas that target the multi-generational, family and Millennial/Gen-X audience segments f. Seek out opportunities to extend earned media through promotions and social influencers g. Host an annual media FAM for journalists on assignment from Mexico 8. Should incremental tourism development budget become available through the Tourism Marketing District, launch PAID consumer direct advertising in Mexico a. Focus nationally; targeting affluent consumers b. Expand the audience reach of organic programs with paid search and paid social plans c. Align advertising with heaviest Visit California in-market support (Feb-May); taking into consideration vacation planning for Easter and Summer vacations d. Ensure campaign visibility by focusing on high reach and affinity media channels including Pay TV and digital video e. Layer in digital media tactics including display and native content, including but not limited to paid influencers Phocuswright Inc, on behalf of Brand USA, Visit California, FY16/17 Marketing Plan, Mexico Market Blueprint 158

161 MEXICO PLAN KEY STRATEGIES AND TACTICS 9. Increase San Diego s exposure to the Travel Trade market via events, education and promotions a. Highlight San Diego craft beer at key industry events through member donations b. Participate in California Alliance Travel Trade sales mission to grow presence and establish positioning within their marketing initiatives c. Plan at least two dedicated SDTA sales missions to Mexico per year to target top-producing agencies through sales calls d. Participate in tradeshows where top Mexican clients will be in attendance IPW, La Cita and RTO Summit Orlando e. Promote the San Diego badge on Brand USA s online USA Discovery training program, Visit California STAR and San Diego's own Specialist program to educate and certify travel agents as San Diego destination experts f. Work with Visit California to correctly position San Diego in their new Specialist training platform. Research the potential for a dedicated San Diego module within the program. g. Continue to deliver the best California experience on Mexico Travel Trade familiarization tours with top trade partners - including participation in the California Alliance MEGAFAM h. Build partnerships with key trade partners for San Diego travel promotions to their customers and request specific tracking metrics of how promotions affected room night production YOY i. Request that trade partners share yearly room night production j. Distribute a quarterly What s New Travel Trade e-newsletter to SDTA s list of Spanish-speaking partners and through partner distribution systems 10. Partner with the Mexican travel trade to support new package development and promotion of San Diego travel product a. Continue to develop relationships with the travel trade - including large established tour operators, younger, new operators and high-end, self-drive wholesalers b. Highlight great shopping opportunities to be added to airline and wholesaler packages 11. Leverage SDTA bicultural staff to develop important long-term relationships with key officials 12. Assist the San Diego Regional Airport Authority in their efforts to bring non-stop flights from Mexico to SAN Airport 13. Capitalize on the Cross Border Xpress access to San Diego from Tijuana Airport (TIJ) a. Work with TIJ Airport, airlines and government officials to promote the CBX 14. Focus on Kids Free promotion and activities in the Fall due to high percentage of families traveling to California 159

162 MEXICO PLAN IN COUNTRY COOPERATIVE PARTNERSHIP COMPANY PROFILE CA Alliance coordinates the efforts of Wholesalers to promote California tour products and travel services through a series of trade shows, media exposure, website, co-op marketing, and more. The program started ten years ago and has been a tremendous success generating opportunities, incremental stays and added exposure from the developing markets. The objective of the California Alliance is to establish a permanent ongoing marketing effort to promote travel from the Latin American Tourism Market. Targeted is the most important economic and natural feeder market to Southern California, which is Mexico. A marketing plan has been programmed and scheduled to include the most productive promotional travel professional and consumer events in Latin America for the tourist industry. Additional goals include national specialized media campaigns directed to the consumer through mass media editorials. All members of the CA Alliance are represented by a staff of professionals in both the Guadalajara and Mexico City offices. Membership includes: Increased exposure and awareness by consumer, travel agents, wholesalers and media of the partners Brochure distribution Presence in the annual California Alliance Magazine Press release distribution FAM organization Event exhibition /Sales Calls/ Training Current Partners: San Diego Tourism Authority, SeaWorld San Diego, LEGOLAND California, Universal Studios Hollywood, San Diego Zoo & Safari Park, Fashion Island Mall, Irvine Spectrum Shopping Center, Catalina Express, Five Star Tours, the ALO Hotel Orange, Westfield Travel Collection and USS Midway Museum, Cross Border Xpress. 160

163 MEXICO PLAN 2017/2018 PROGRAM OF WORK FLOWCHART MEXICO PROGRAM JULY-SEPT OCT-DEC JAN-MAR APR-JUN Owned Channels Dedicated Website Landing Page Facebook Community Management Consumer Public Relations Media Calls FAMs Pitches/Releases Visit CA events Travel Trade Development Sales Missions Trade Shows San Diego Specialist Training Travel Partner Promotions FAMs 161

164 JAPAN PLAN MARKET OVERVIEW POPULATION Total population: 127 million Urban Population Percent: 95% Population by Age: M M M M M TRAVEL TO THE UNITED STATES TOTAL U.S. ARRIVALS FROM JAPAN The Japanese economic boom in the 1980s and 1990s elevated Japan to the second largest economy in the world after the United States. In 2008, China eclipsed Japan to move into the number two spot. Although still the third largest economy in the world, the last 15 years have been rocky in terms of economic growth and strength of the yen, which has hampered growth in travel as well. Japanese arrivals to the U.S. totaled an estimated 3.72 million in 2015, which is an increase over 2014, but flat compared to Growth in travel to the U.S. has been anemic over the last 10 years, and volume has yet to surpass the high in Direct spending by Japanese travelers to the U.S. has hovered around $17 billion over the last four years. 2 The U.S remains the top travel destination for intercontinental Japanese travelers by two to three times other countries. In 2016, a Brand USA survey of Japanese intercontinental travelers indicated a past two year visitation of 42 percent for the U.S. compared to 10 to 20 percent for other countries. 3 Thirty-six percent of Japanese travelers surveyed by Brand USA during 2016 indicated they are likely to travel to the U.S. within the next year (17 percent within the next six months and 19% within six twelve months). Hawaii, New York, California, and Florida remain the top states for Japanese travel interest to the U.S US Department of Commerce, NTTO, 2015 Market Profile: Japan 3-4 Phocuswright Inc, on behalf of Brand USA, 2016 Japan 162

165 JAPAN PLAN TRAVEL TO CALIFORNIA CALIFORNIA DESTINATION INTEREST Japan was California s largest overseas market throughout the 1980s and 1990s, but fell to a 10 year low in 2003 following the 9-11 terrorist attacks and SARS crisis. Unfortunately, the market fell to another low of just 439,000 visitors in 2009, a year when California s share of U.S. Japanese arrivals hit a low of 15 percent. 5 Since 2010, Japanese visitor volume has been fluctuating between 500,000 and 600,000 annually, and in 2015 Japan is currently California s fourth largest overseas market behind China, United Kingdom, and Australia. Japanese spending in the state is estimated at $1.18 billion. 6 San Diego s share of the Japanese visitor volume to California was 19 percent in Not surprisingly, San Francisco and the Los Angeles area (including Anaheim) dominate vacation interest within California with seven in ten expressing interest in visiting those cities. San Diego is a distant third at 43 percent. TRAVEL TO SAN DIEGO Japan is the sixth largest international market and fourth largest overseas market for San Diego. Over the last ten years, San Diego visitation has fluctuated mostly between 70,000 and 80,000 visitors annually. In 2015, Japanese volume reached 100,000 visitors, almost double the low of 55,000 in VOLUME TREND OF JAPANESE VISITORS TO SAN DIEGO 150, ,000 82,000 77,000 88,000 75,000 73,000 58,000 55,000 89,000 67,000 79, ,000 50,

166 JAPAN PLAN JAPAN OVERNIGHT VISITOR PROFILE 7 Just over half (53%) of Japanese visitors to San Diego travelled primarily for leisure purposes (41% for vacation and 12% to visit friends and family), while another third arrived primarily for business. Similar to China, 13 percent visited San Diego for other purposes such as education. Nearly all Japanese visitors travelled without children and most were on a repeat trip to San Diego (80%). In terms of accommodations, 85 percent stayed in hotels for an average 5.3 nights. The Japanese visitor is also young, with a median age of 43 for males and 30 for females. PURPOSE OF TRIP KEY VISITOR CHARACTERISTICS Visit Friends/ Relatives 12% Business/ Convention/ Meeting 35% Other Purpose 13% Vacation/ Holiday 41% Average Planning Time in Days 99 days Average Air Booking in Days 60 days Average Nights in San Diego 5.3 nights Average Party Size 1.9 people Average Spending per Trip in U.S. $1, Median Age 43 Male / 30 Female Average Number of Destinations Visited 2.2 Used a Package 32% Stayed in Hotel/Motel 85% First Trip to U.S. 20% % of parties traveling with children 10% While the total per person per trip spending was just over a thousand dollars ($1,024), one-third was spent of accommodations, and half on food and beverage and shopping. General sightseeing and shopping were core activities for eight in ten Japanese visitors while in San Diego, while theme parks were visited by just 23 percent. Fewer than two in ten visitors did any other activity. SPENDING BY CATEGORY (per visitor / trip) Accommodations Food / Beverages Additional Air Transportation in U.S. Entertainment and Recreation Ground Transportation in U.S. Shopping, Gifts, and Other Purchases TOTAL SPENDING PER PERSON PER TRIP San Diego County Visitor Profile Study, CIC Research, Inc. PER PERSON PER TRIP $322 $295 $59 $58 $70 $220 $1,024 TRIP AND ACTIVITY CHARACTERISTICS ALL OVERSEAS VISITORS TO SD FROM JAPAN ACTIVITIES EXPERIENCED WHILE IN THE U.S. Sightseeing 81% Shopping 78% Experience Fine Dining 37% Amusement/Theme Parks 23% National Parks/Monuments 18% Guided Tour(s) 17% Historical Locations 16% Cultural/Ethnic Heritage Sights 13% Small Towns/Countryside 12% Golfing/Tennis 12% Sporting Event 10% Art Galleries/Museums 9% Nightclubbing/Dancing 5% Concert/Play/Musical 4% Casino/Gamble 3% 164

167 JAPAN PLAN DESTINATION SELECTION PERSONAL CONSIDERATIONS When planning an international vacation, rest and relaxation, seeing the world s most unique attractions/ icons, knowledge/understanding of other cultures, and staying within my comfort zone are the most important considerations for Japanese travelers. 9 PERSONAL CONSIDERATION FOR INTERCONTINENTAL HOLIDAY (2016) PRODUCT & EXPERIENCE MOTIVATORS Among Japanese travelers likely to visit the U.S., dining or gastronomy is the top motivator for selecting a destination. Food culture is followed by shopping, cultural/historic attractions, beaches, and the local lifestyle/culture. U.S. DESTINATION SELECTION MOTIVATORS (2016) Phocuswright Inc, on behalf of Brand USA, 2016

168 JAPAN PLAN DESTINATION AWARENESS Compared to iconic destinations of Los Angeles and San Francisco, San Diego fairs decently among Japanese travelers in terms of knowledge. About one-third know at least a fair amount about San Diego compared to about half who said the same thing about Los Angeles and San Francisco. SAN DIEGO PRODUCT & EXPERIENCE MOTIVATORS While sightseeing, experiencing a distinct food culture, beaches, scenic drive, and zoos/wildlife/aquariums are among the top image perceptions for San Diego among Japanese travelers, a beautiful, scenic place is considered the most motivating destination attribute. This is followed by the great year-round climate, relaxing, lots to see and do and being multicultural. TOP FIVE MOTIVATORS BEAUTIFUL SCENIC PLACE 52% GREAT YEAR-ROUND CLIMATE 47% RELAXING 42% LOTS TO SEE AND DO 31% MULTICULTURAL 23% SAN DIEGO ITINERARY PHOTOS TOP 10 SELECTED BY JAPANESE TRAVELERS 166

169 JAPAN PLAN TARGETING JAPAN MEDIA TARGET 12 Visit California, together with its global brand agency, MeringCarson, and its global media buying agency, Carat, identified a global target audience profile, which was then refined by country to take into account localized audience nuances and media consumption habits. Japan is considered a tier two market for California with limited direct-to-consumer media. Market activity is focused on driving traffic to owned channels and augmenting trade and public relations efforts. GLOBAL TARGET AUDIENCE ATTRIBUTES Adults 18+ Affluent: Top 33% household income Passionate about or regularly travel abroad Travel by air for vacation at least once annually Vacation decision making involvement AIR MARKET California has 11 weekly non-stop flights from Japan to the cities of San Francisco, Los Angeles, San Jose and San Diego. Japan Airlines began direct service to San Diego in December 2012 with the new 787 Dreamliner. Japan is number one in terms of foreign owned companies in San Diego helping to fill business class and keeping the route successful. DIRECT FLIGHTS TO SAN DIEGO FROM JAPAN DESTINATION AIRLINES ANNUAL ARRIVALS ANNUAL SEATS SEATS PER WEEK TOKY0 JAPAN AIRLINES ,076 1, Visit California FY16/17 Marketing Plan 167

170 JAPAN PLAN INSIGHTS AND OPPORTUNITIES TRIP TYPES 1. In terms of travel party, senior couples (50 70 yrs old) are a primary target as they are 40 percent of outbound travel. 2. In addition, young, first-time travelers (20 25 yrs old) and families are a primary target. PARTY TYPES MULTI-GENERATIONAL TRIPS FAMILY TRIPS COUPLES TRIPS GIRLS TRIPS GUYS TRIPS GROUP OF FRIENDS TRIPS SINGLES TRIPS 4% 7% 10% 14% 20% 36% 48% TRAVEL TIMEFRAME Past trip travel months are more varied compared to other countries. The most popular months for intercontinental trips over the past two years were August, January, May, and December. These months are in line with major national holidays of August O-bon, May Golden Week, and the New Year holiday in December and January. Furthermore, when asked when they plan to take their next international vacation, those likely to visit the U.S. indicate they will do so August, September, and May, but very few over the New Year s holiday. 13 MONTH TRAVELED ON PAST MONTH LIKELY TO TRAVEL NEXT U.S. HOLIDAY (2016) INTERCONTINENTAL TRIPS (2016) January February March April January February March April May June July August September October November December May June July August September October November December 168

171 JAPAN PLAN DESTINATION SELECTION, RESEARCH AND BOOKING Most Japanese travelers begin the research process with one or more destinations already in mind: 30 percent have already decided on a destination and 51 percent are deciding between a few destinations. 14 For destination selection, online travel agencies, search engines, airline websites, and traveler review websites are used most often. Fifty-six percent of Japanese travelers decide on their travel destination between three and twelve months in advance of their departure date. 15 OTA and supplier sites are used equally for booking air, but lodging is most often booked on an OTA site. Air and lodging are most commonly booked separately. Approximately 35 percent of bookings include custom packages with choice of specific flight and hotel and 37 percent of bookings include pre-packaged holidays and guided tour packages. Booking windows to the U.S. vary by type with the majority of air travel (66%) and lodging (63%) booked between one and five months out. 16 TOUR OPERATORS Over 25 operators package California in the Japan market, the following are SDTA's top tour operator clients. OPERATOR JAL Pak /J-Pak HIS JTB/JTBI NTA TTA KNT/Kintestu Hankyu Club Tourism ATS DESCRIPTION Wholesaler Travel Agent / Wholesaler Travel Agent / Wholesaler Travel Agent / Wholesaler Tour Operator / Wholesaler Tour Operator / Wholesaler Tour Operator / Wholesaler Group tour Tour Operator Phocuswright Inc, on behalf of Brand USA, 2016 Japan 169

172 JAPAN ECONOMIC FORECAST TOURISM ECONOMICS FORECAST - DECEMBER 2016 UPDATE The GDP growth forecast for Japan has been raised due to the last two years being stronger than previously estimated. A stronger outlook for both exports and business investment, coupled with ongoing support from the latest fiscal package, GDP expects to grow by one percent in The yen has depreciated by around 10 percent against the USD since the Trump victory and is now expected to widen further during the next two years. The changing nature of the U.S. economic policy and the expectation that the Bank of Japan will defend the 10 year government bond yield target of around zero percent, will force the JPY to depreciate to versus the USD by the end of 2017 and remain weak through Updates to the forecast are done in June and December. The latest forecast can be found at 170

173 JAPAN PLAN SWOT Analysis STRENGTHS Scenic beauty, beaches and deserts Historic and cultural offerings such as Balboa Park, Cabrillo National Monument and Old Town Shopping outlet centers and malls Close proximity to Mexico appeals to Japanese visitors who are seeking another country stamp on their passport Close enough to Los Angeles to grow San Diego overnight stays within Southern California trip Japan has more companies in San Diego region that any other Asian country WEAKNESSES Lack of awareness by Japanese consumer No recognizable must-see icons like the Hollywood sign or the Golden Gate Bridge OPPORTUNITIES Japanese visitors are venturing out of major cities and brands Japanese travelers strong interest in local food culture and golf JAL Flight and easy SAN customs In-market representation and bilingual staff THREATS Growing budgets in competitive DMOs Large iconic, still-to-be-seen U.S. destinations like New York City, Las Vegas and Chicago Japanese economic issues Vacation time constraints Past California visitors interest in visiting other states on second trip 171

174 JAPAN PLAN KEY STRATEGIES AND TACTICS 1. Align marketing programs with Visit California and Brand USA. Position San Diego as an iconic California beach city with must-see visitor experiences. 2. Continue with in-country representation through Aviareps Japan to support program of work in travel trade development and reactive public relations. 3. Build awareness of San Diego s geographic location relative to Los Angeles and Mexico. 4. Develop new San Diego only packages and convert day trips to overnight. 5. Participate in Brand USA marketing opportunities to raise destination awareness. a. Participate in multi-channel promotions and co-op opportunities to leverage marketing dollars 6. Build EARNED media exposure for San Diego through Visit California, Brand USA, AVIAREPS and Japan Airlines opportunities for media hosting and pitching. a. Provide Visit California with branded assets to sell San Diego 7. Build OWNED media channels content, distribution and traffic. a. Create in-language content to engage travelers b. Online promotions to build traffic c. Develop social media campaigns to educate agents and consumers on San Diego travel product via the San Diego Japanese Facebook page 8. Develop additional in-language marketing assets and collateral 9. Increase San Diego s exposure to the Travel Trade market via events, education and promotions a. Leverage SDTA bilingual staff to deepen relationships with travel trade. b. Highlight San Diego craft beer at key industry events through member donations c. Organize a dedicated San Diego mission to Japan with sales calls/training to top trade clients and possibly media exposure for San Diego member hotels & attractions to attend d. Promote the San Diego badge on Brand USA's online USA Discovery training program, Visit California's STAR and our own San Diego Specialist Programs to educate and certify travel agents as destination experts e. Participate in Visit California s Club California training series to grow presence and establish positioning within state marketing initiatives. f. Invite LA-based Japanese clients to SDTA s annual Asian Client Luncheon in Los Angeles in February g. Continue to deliver the best California experience on Japanese Travel Trade familiarization tours with top trade partners h. Build partnerships with key trade partners for San Diego travel promotions to their customers and request specific tracking metrics of how promotions affected room night production YOY i. Request that trade partners share yearly room night production j. Utilize 3rd party Japanese language publications (LightHouse and Yu-Yu) both in-market and in San Diego 10. Partner with the Japanese travel trade to support new package development and promotion of San Diego travel product. 172

175 JAPAN PLAN a. Target top-producing agencies through sales calls and direct marketing by Aviareps Japan throughout the year and when SDTA staff is in-market b. Develop relationships with the travel trade - including large established tour operators, younger, new operators and the high-end, self-drive wholesalers c. Maintain existing and develop new relationships with Japanese Tour Operators based in the LA region. 11. Host one of the monthly Agent Kai (the LA-based Japan Tour Operator Association) meetings in Torrance d. Obtain an analysis report from Aviareps Japan on San Diego s presence in Japanese brochures as compared to our California competitors prior to IPW 12. Continue to work with our Japanese Good Will Ambassador, Ms. Takeda, to promote San Diego to her social media followers by introducing San Diego experiences to her 13. Assist the San Diego Regional Airport Authority in their efforts to support the Japan Airlines flight from Tokyo and any other flight opportunities that may arise from Japan 2017/2018 PROGRAM OF WORK FLOWCHART JAPAN PROGRAM JULY-SEPT OCT-DEC JAN-MAR APR-JUN Owned Channels Dedicated Website Landing Page Facebook Community Management Consumer Travel Trade Development Sales Calls Trade Shows San Diego Specialist Training Travel Partner Promotions FAMs Sales Mission Club California Training 173

176 JAPAN PLAN IN COUNTRY COOPERATIVE PARTNERSHIP Founded in September 1999, the Tokyo office serves as the Asia regional headquarters of AVIAREPS. The main office is situated in the heart of Tokyo, and AVIAREPS Japan also has an office in Osaka for regional promotions in the Kansai region. Years in business: 16 (founded in September 1999) Number of employees: The AVIAREPS Japan office currently employs over 40 full-time tourism marketing and PR professionals, all of whom are multilingual international travel industry specialists. SDTA CONTRACTED SCOPE OF WORK Representation/Activities Sales Calls & Training Event Exhibitions, Workshops and Consumer Shows Promotions Market Intelligence Reporting E-Newsletter FAM Trips PR Activities Social Media 174

177 AUSTRALIA / NEW ZEALAND PLAN MARKET OVERVIEW POPULATION Total population: 23.7 million Urban Population Percent: 89% Population by Age: M M M M M TRAVEL TO THE UNITED STATES In 2015, the United States surpassed Australia s closest neighbor New Zealand to become the number one international travel destination for Australians. 2 Of the 14 million long-haul outbound trips, the United States received 10 percent. 3 For the United States, the 1.5 million arrivals from Australia represented four percent of the inbound overseas market, which is similar size to South Korea and France. Australia is the sixth largest overseas market, but is one of the top travel spenders averaging $6,215 per person per trip in the U.S. While the market is small, arrivals to the U.S. are forecasted to grow 28 percent between 2015 and Just 20 percent of Australian travelers surveyed by Brand USA during 2016 indicated they are likely to travel to the U.S. within the next year. Australians are mostly positive about the U.S. as 31 percent say they would proactively promote the U.S. to others, and another 34 percent said they would say positive things if asked. They perceive the U.S. to be diverse, adventurous, energetic, and friendly. California, New York, Hawaii, and Florida remain the top states for Australian travel interest to the U.S US Travel Association, 2015 Travel Market Profile: Australia 4 US Department of Commerce, NTTO, Forecast for International Travel to the United States ( ) 5 Phocuswright Inc, on behalf of Brand USA, 2016 Australia 175

178 AUSTRALIA / NEW ZEALAND PLAN TRAVEL TO CALIFORNIA California is well positioned to attract much of that growth as it is the closest state geographically, and there is an affinity with the brand. Australia was California s third largest overseas market in 2015 after China and the United Kingdom. A record 610,000 Australians visited California spending $977 million in However, California has been losing share to other states over the last ten years, and currently has a 44 percent share of Australian inbound visitors, well below the high of 55 percent in San Diego s share of the Australian visitor volume to California was 16 percent in Not surprisingly, the Los Angeles area (including Anaheim) and San Francisco dominate vacation interest within California with more than seven in ten expressing interest in visiting those cities. San Diego is a distant third at 34 percent. DESTINATION INTEREST IN CALIFORNIA (2016) TRAVEL TO SAN DIEGO Australia is the seventh largest international market and fifth largest overseas market for San Diego. Over the last ten years, San Diego visitation has more than doubled from 40,000 to 98,000 in The spike in 2010 volume mirrored the increase to the U.S. overall in However, U.S. and California volume continued to grow following the spike, whereas San Diego declined. VOLUME TREND OF AUSTRALIA VISITORS 100,000 50,000 40,000 43,000 43,000 43,000 79,000 57,000 70,000 71,000 82,000 98,

179 AUSTRALIA / NEW ZEALAND PLAN AUSTRALIAN/NEW ZEALAND OVERNIGHT VISITOR PROFILE 6 The travel profile is based on Australian and New Zealand travelers together due to small sample sizes in the overseas profile study. These travelers will be referred to as Australians to keep simple. Australians are a valuable traveler to San Diego because more than eight in 10 arrive for vacation purposes, stay in hotels, and spend $2,705 on average per trip. Just 10 percent arrive for business purposes. For most Australian leisure visitors to California, San Diego was not a destination on their trip (85%). 7 Australians who did visit San Diego spent half (4.3 nights) the nights in San Diego of the 9.5 average nights stayed in California. MAIN PURPOSE OF TRIP Business/ Convention/ Meeting 10% Vacation/ Holiday 82% Visit Friends/Relatives 8% Average Planning Time in Days Average Air Booking in Days Average Nights in San Diego Average Party Size KEY VISITOR CHARACTERISTICS 218 days 149 days 4.3 nights 2.1 people Average Spending per Trip in U.S. $2, Median Age Average Number of Destinations Visited 41 Male / 40 Female 4.6 Used a Package 16% Stayed in Hotel/Motel 85% First Trip to U.S. 36% % of parties traveling with children 26% San Diego County Visitor Profile Study, CIC Research, Inc. 7 Visit California, Characteristics of Travelers From Australia to California

180 AUSTRALIA / NEW ZEALAND PLAN AUSTRALIAN/NEW ZEALAND OVERNIGHT VISITOR PROFILE 6 On average, Australians who visited San Diego spent $2,705 per person on their trip to the United States. About 30 percent of that spending was on accommodations followed by 21 percent on meals and beverages. Compared to other overseas markets, Australians spend more on additional air travel ($200) to get them to the average 4.6 destinations visited on a trip to the U.S. Just about all Australians do sightseeing and shopping, but seven in 10 also visit theme parks. Six in 10 visited national parks, historic locations, and went on guided tours. SPENDING BY CATEGORY (per visitor / trip) Accommodations Food / Beverages Additional Air Transportation in U.S. Entertainment and Recreation Ground Transportation in U.S. Shopping, Gifts, and Other Purchases TOTAL SPENDING PER PERSON PER TRIP PER PERSON PER TRIP $ 810 $588 $200 $447 $ 148 $ 512 $2,705 TRIP AND ACTIVITY CHARACTERISTICS Activities Experienced while in the U.S. ALL OVERSEAS VISITORS TO SD FROM AUSTRALIA/NEW ZEALAND Sightseeing 96% Shopping 95% Amusement/Theme Parks 72% Guided Tour(s) 66% National Parks/Monuments 61% Historical Locations 61% Small Towns/Countryside 51% Experience Fine Dining 43% Art Galleries/Museums 42% Concert/Play/Musical 39% Casino/Gamble 35% Cultural/Ethnic Heritage Sights 30% Sporting Event 26% Nightclubbing/Dancing 21% American Indian Communities 16% San Diego County Visitor Profile Study, CIC Research, Inc. 7 Visit California, Characteristics of Travelers From Australia to California

181 AUSTRALIA / NEW ZEALAND PLAN DESTINATION SELECTION PERSONAL CONSIDERATIOS When planning an international vacation, seeing the world s most unique attractions/icons, rest and relaxation knowledge/understanding of other cultures, and satisfying a sense of adventure are the most important considerations for Australian travelers. 8 PERSONAL CONSIDERATION FOR INTERCONTINENTAL HOLIDAY (2016) U.S. DESTINATION SELECTION MOTIVATORS (2016) Among Australian travelers likely to visit the U.S., cultural/historic attractions is the top motivator for selecting a destination. The local lifestyle/culture, shopping, and urban attractions are motivating for about half of travelers Phocuswright Inc, on behalf of Brand USA, 2016 Australia 179

182 AUSTRALIA / NEW ZEALAND PLAN MARKET INSIGHTS FROM VISIT CALIFORNIA Despite a weakening dollar, Australians' intention to travel internationally has stayed steady throughout the year; however, travelers from this market will be seeking "value for money" (not necessarily cheap) holidays as a result of the exchange rate California is seen as a journey rather than an escape; travel motivators are exploring, experiencing and enriching, rather than recharging and relaxing Australians like event-focused holidays, specifically music, sporting and cultural events Australians are sophisticated and mature travelers; they want to do and see more and explore beyond the gateways With Australia offering similar vacation experiences, unique, brag-worthy, only in California experiences are important to Australian travelers (compact diversity sets California apart) Australians make travel a priority, and taking 4+ weeks of annual leave for a long-haul vacation is the norm High number of first-time visitors The "Great Outdoors" is a priority, with Australian travelers interested in immersing into the natural environment TARGETING AUSTRALIA MEDIA TARGET 10 Visit California, together with its global brand agency, MeringCarson, and its global media buying agency, Carat, identified a global target audience profile, which was then refined by country to take into account localized audience nuances and media consumption habits. GLOBAL TARGET AUDIENCE ATTRIBUTES Adults 18+ Affluent: Top 33% household income Passionate about or regularly travel abroad Travel by air for vacation at least once annually Vacation decision making involvement AUSTRALIA SPECIFIC Median age: 37 Median HHI: $125K Less likely to be married Less likely to have children Heavy consumers of online video Content creators; mobile as a means to share 180

183 AUSTRALIA / NEW ZEALAND PLAN AIR MARKET California has 79 weekly non-stop flights from Australia to the cities of San Francisco and Los Angeles. San Diego does not have direct service from Australia at this time. AUSTRALIA VIA LAX ROUTING American/Qantas Delta/Virgin Australia American/Qantas United American/Qantas Delta Delta/Virgin Australia United AUSTRALIA VIA SFO ROUTING United Airlines Brisbane, QL, AU Brisbane, QL, AU Melbourne, VI, AU Melbourne, VI, AU Sydney, NS, AU Sydney, NS, AU Sydney, NS, AU Sydney, NS, AU Sydney, NSW 181

184 AUSTRALIA / NEW ZEALAND PLAN INSIGHTS AND OPPORTUNITIES TRAVEL TIMEFRAME The most popular months for intercontinental trips over the past two years were June, July, December, and January aligning with winter and summer vacation periods. Furthermore, when asked when they plan to take their next international vacation, those likely to visit the U.S. indicate they will do so in June, July and August. 11 MONTH TRAVELED ON PAST MONTH LIKELY TO TRAVEL NEXT U.S. HOLIDAY (2016) INTERCONTINENTAL TRIPS (2016) January February March April May June July August September October November December January February March April May June July August September October November December 182

185 AUSTRALIA / NEW ZEALAND PLAN DESTINATION SELECTION, RESEARCH AND BOOKING Most Australian travelers begin the research process with one or more destinations already in mind: thirtythree percent have already decided on a destination and 43 percent are deciding between a few destinations. 12 For destination selection, search engines, traveler review websites, airline websites, and online travel agencies are used most often. Sixty percent of Australian travelers decide on their travel destination between three and 12 months in advance of their departure date. 13 OTA and supplier sites are used equally for booking air, but lodging is most often booked on an OTA site. Air and lodging are most commonly booked separately by eight in 10 Australian travelers. Just 19 percent of bookings include custom packages with choice of specific flight and hotel and 22 percent of bookings include pre-packaged holidays and guided tour packages. Booking windows to the U.S. vary by type with the majority of air travel (66%) and lodging (56%) booked between three and twelve months out. 14 TOUR OPERATORS More than 15 trade companies package California in the Australian market. 15 The top tour operator clients for SDTA are: OPERATOR DESCRIPTION Infinity Holidays / Flight Centre Travel Agent / Wholesaler Qantas Holidays Travel Agent / Wholesaler Creative Holidays Venture Holidays Freestyle Holidays Excite Travel Corp (Contiki / Trafalgar / Insight) Globus /Cosmos Scenic/Evergreen Wholesaler Wholesaler Wholesaler Wholesaler Group tour Group tour Group tour 183

186 AUSTRALIA ECONOMIC FORECAST TOURISM ECONOMICS FORECAST - DECEMBER 2016 UPDATE With consumer spending continuing to increase despite weak wage growth, and employment rising, GDP growth is expected to reach to 1.8percent in 2017, before accelerating to 2.9percent in There are also signs of external demand improvement, which are driven by increases in key commodity prices, in addition to a recent expanding Liquid Natural Gas capacity and a stronger demand from China. With interest rates in Australia on hold and the U.S. Federal Reserve signaling rate increases this year, the Australian Dollar is expected to weaken in the near term, to around AUD 1.40 per USD in Q Updates to the forecast are done in June and December. The latest forecast can be found at 184

187 AUSTRALIA / NEW ZEALAND PLAN SWOT Analysis STRENGTHS Scenic beauty, beaches and deserts Historic and cultural offerings such as Balboa Park, Cabrillo National Monument and Old Town Close proximity to Mexico has appeal Distinct food culture, Cali-Baja cuisine and craft beer Nightlife/entertainment/live music OPPORTUNITIES Australians like event-focused holidays; specifically music, sporting or cultural events Australians are seeking to get beyond the gateways, and San Diego can capitalize on the volume of travelers through Los Angeles Airfare costs are much lower than a few years ago Family offerings...kids Free San Diego Co-op with other So-Cal destinations WEAKNESSES San Diego is seen as having a similar lifestyle No recognizable must-see icons like the Hollywood sign or the Golden Gate Bridge San Diego tourism hasn t had presence yet in this market THREATS Growing budgets in competitive DMOs Large iconic, still-to-be-seen U.S. destinations like New York City, Las Vegas and Chicago Phocuswright Inc, on behalf of Brand USA, 2016 Australia 15 Visit California, FY16/17 Marketing Plan, Australia Market Blueprint 185

188 AUSTRALIA / NEW ZEALAND PLAN KEY STRATEGIES AND TACTICS 1. Align marketing programs with Visit California and Brand USA. Position San Diego as California's Beach City vacation experience. 2. Continue with in-country representation through Gate 7 to support program of work in media relations and travel trade development. 3. Build awareness of San Diego s geographic location in the Southwest Corner (Los Angeles, Palm Springs, Las Vegas, Phoenix / Grand Canyon) and bordering Mexico. 4. Build EARNED media exposure for San Diego through media outreach, hosting and pitching. a. Continue to build relationships with traditional and social media contacts. b. Hold desk-side meetings, media hosting and inclusion in media FAMs. c. Develop innovative media pitches to position San Diego as the true Southern California experience. d. Create new story ideas for the key experience pillars: Family Fun, Cali-Baja Experience, and Dining / Nightlife 5. Evaluate OWNED media channels content, distribution and traffic for opportunity to educate and engage Australian travelers. a. Content and promotions to engage travelers b. Online promotions to build traffic 6. Increase San Diego s exposure to the Travel Trade market via events, education and promotions a. Highlight San Diego craft beer at key industry events through member donations b. Organize a dedicated San Diego mission to Australia with sales calls/training to top trade clients and possibly media exposure for San Diego member hotels & attractions to attend c. Continue to promote the San Diego badge on Brand USA s online USA Discovery training program to educate and certify travel agents as San Diego destination experts d. Promote the San Diego badge on Brand USA's online USA Discovery training program, Visit California's STAR and our own San Diego Specialist Programs to educate and certify travel agents as destination experts e. Continue to deliver the best California experience on Australian Travel Trade familiarization tours with top trade partners f. Build partnerships with key trade partners for San Diego travel promotions to their customers and request specific tracking metrics of how promotions affected room night production YOY g. Request that trade partners share yearly room night production 7. Partner with the Australian travel trade to support new package development and promotion of San Diego travel product. a. Target top-producing agencies through sales calls and direct marketing by Gate 7 throughout the year and when SDTA staff is in-market b. Develop relationships with the travel trade - including large established tour operators, younger, new operators and the high-end, self-drive wholesalers d. Obtain an analysis report from Gate 7 on San Diego s presence in Australian brochures as compared to our California competitors to be delivered prior to IPW 186

189 AUSTRALIA / NEW ZEALAND PLAN 8. Assist the San Diego Regional Airport Authority in their efforts to secure direct flights from Australia and/ or New Zealand a. Capitalize and develop relationships with airlines flying into regional hubs (LAX, SFO ) to grow San Diego package inclusion. 9. Evaluate Brand USA opportunities to raise destination awareness. a. Participation in multi-channel promotions b. Identify additional co-op opportunities to leverage marketing dollars c. Provide Brand USA with branded assets to sell San Diego 2017 / 2018 PROGRAM OF WORK FLOWCHART AUSTRALIA Owned Channels Facebook Community Management Consumer PROGRAM JULY-SEPT OCT-DEC JAN-MAR APR-JUN Public Relations Media Calls FAMS Pitches / Releases Visit California Mission Travel Trade Development Sales Calls Trade Shows San Diego Specialist Training Travel Partner Promotions FAMs Sales Mission 187

190 AUSTRALIA / NEW ZEALAND PLAN IN-COUNTRY REPRESENTATION COMPANY PROFILE Gate 7 founded in 1998 is a multi-award-winning marketing agency specializing in travel and tourism representation Down Under. Based in Sydney, with a territory spanning Australia and New Zealand, Gate 7 delivers exceptional sales, marketing and public relations results to its A-list tourism client portfolio. Gate 7 also represents Brand USA and Visit California. SDTA CONTRACTED SCOPE OF WORK Travel Trade: Dedicated account manager Planning of annual market strategy Sales Calls & Travel Trade Outreach FAM Trip organization In-Market Visits Trade & Consumer Show participation Special Projects Reporting Public Relations: Dedicated account manager Market Intelligence Planning of media target list and activities Media Calls and Outreach Media FAM trip organization In Market Visits Trade & Consumer Shows target media lists and support Special Projects Reporting 188

191 189 SAN DIEGO TOURISM AUTHORITY

192 INTRODUCTION In 2016, the City of San Diego updated the San Diego Tourism Marketing District (TMD) to include lodging properties of 70 rooms or more only. This is the 3rd version of the highly successful district where the intent is to fund sales and marketing programs that deliver room nights to assessed businesses and ROI to stakeholders. The TMD covers the City of San Diego and will be in place until 2052 (39.5 years starting in 2013). As the City of San Diego is a large geographic area with multiple experiences, the TMD has sought programs to provide incremental support to boost sub-market lodging performance. In the SDTA s 2012 White Paper on "Growing San Diego Tourism Market Share", increased promotion of sub-regions was identified as a key growth strategy to lift overall market performance. The following sub-regions have been identified in the current TMD management plan: 1. Pt. Loma Peninsula (Shelter Island, Point Loma, Airport) 2. Mission Bay 3. Mission Valley 4. La Jolla 5. North Coastal (UTC, I-5 Corridor adjacent to Del Mar) 6. North Inland (I-15 Corridor) SUB-REGIONS, ROOM COUNTS, AND REVENUES PER SMITH TRAVEL RESEARCH REGION NUMBER OF HOTEL ROOMS (STR) % OF TOTAL ROOMS ESTIMATED LODGING REVENUE 2015 % OF TOTAL REVENUE Downtown 13,573 36% $752M 45% Pt. Loma Peninsula 4,515 12% $171M 5% Mission Bay 3,128 8% $168M 5% Mission Valley 8,713 23% $289M 21% La Jolla 1,791 5% $117M 7% North Coastal (UTC, I-5 Corridor) 4,017 11% $209M 12% North Inland (I-15 Corridor) 2,270 6% $79M 5% Grand Totals 38, % $1.8B 100% *tracked sub-regions do not total to 100% of the inventory in the City of San Diego due to the South Bay area not being included in the above. STR data are not TMD definition of 70 rooms or more. Data as of November

193 SUB-REGION SALES AND MARKETING PLAN THE CASE FOR SUB-REGION MARKETING: SAN DIEGO TOURISM MARKETING DISTRICT HOTEL PERFORMANCE The increased promotion of sub-regions is a key growth strategy to increase overall lodging sales for the district. In terms of regional lodging performance, Downtown San Diego traditionally outperforms other sub-markets. San Diego is a beach city destination with a strong downtown urban core. With the world-class San Diego Convention Center, waterfront amenities, corporate business hub, and nearby airport, Downtown San Diego traditionally outperforms all other areas of the district. As the downtown core fills, business is pushed into outlying areas was a peak year for San Diego s tourism economy. There were nearly 34 million visitors to San Diego, and direct spending increased 7.7 percent to $9.9 billion. Hotel/motel visitors grew 2.5 percent to 9.6 million, and hotel occupancy in the county reached 76.3 percent. Through November 2016, four sub-regions have averaged over 80 percent occupancy, with the La Jolla area achieving the high of 82.7 percent. In terms of the average daily rate, the La Jolla area also reports the high at $232.05, followed by Downtown, which is a few dollars short of $ STR REPORTING, SAN DIEGO LODGING PERFORMANCE: JANUARY NOVEMBER 2016 SAN DIEGO TMD AREAS CYTD PERFORMANCE 2016 % Occupancy % Occupancy YOY ADR %ADR YOY RevPAR % RevPAR YOY City of San Diego 80.1% 0.36% $ % $ % Downtown 82.1% 0.55% $ % $ % Pt. Loma Peninsula 81.0% 1.54% $ % $ % Mission Valley 78.6% -0.54% $ % $ % Mission Bay 81.5% 0.63% $ % $ % La Jolla 77.5% -1.18% $ % $ % North Coastal (UTC, I-5 Corridor) North Inland (I-15 Corridor) 82.7% 0.93% $ % $ % 75.5% 1.87% $ % $ % 191

194 SUB-REGION MARKETS UTC/ NORTH COUNTY COASTAL I-15 CORRIDOR/ NORTH COUNTY INLAND LA JOLLA/ COASTAL MISSION BAY MISSION VALLEY OLD TOWN PT. LOMA/AIPORT SHELTER ISLAND HARBOR ISLAND DOWNTOWN SAN DIEGO BAY Pacific Ocean MEXICO 192

195 SUB-REGION SALES AND MARKETING PLAN LODGING PROPERTIES BY SUB-REGION GREATER THAN 69 ROOMS. DOWNTOWN NAME OF ESTABLISHMENT ROOMS Manchester Grand Hyatt San Diego 1628 San Diego Marriott Marquis & Marina 1362 Hilton San Diego Bayfront Hotel 1190 Wyndham San Diego Bayside 600 Omni San Diego Hotel 511 Westin Gaslamp Quarter, The 450 The Westin San Diego 436 Hard Rock Hotel San Diego 420 Embassy Suites Hotel San Diego Bay - Downtown 337 DoubleTree Hotel San Diego Downtown 333 San Diego Marriott Gaslamp Quarter 306 Hilton San Diego Gaslamp Quarter 282 The U.S. Grant 270 Marriott Vacation Club Pulse, San Diego 264 Renaissance San Diego Downtown 258 Courtyard by Marriott -San Diego Downtown 245 Residence Inn - San Diego Gaslamp 240 Hotel Solamar San Diego 235 The Westgate Hotel 223 Four Points by Sheraton San Diego Downtown 220 The Sofia Hotel 211 Hotel Indigo - San Diego Gaslamp Quarter West Hotel 208 NAME OF ESTABLISHMENT ROOMS Friendship Hotel 70 Homewood Suites San Diego Bayside 160 Hilton Garden Inn San Diego Downtown/Bayside 204 Pendry San Diego 317 SpringHill Suites San Diego Downtown/Bayfront 253 Courtyard San Diego Gaslamp/Convention Center Residence Inn San Diego Downtown/Bayfront 147 Hotel Z 96 Motel 6 - San Diego Downtown 105 Comfort Inn Gaslamp 103 Embassy Hotel 80 La Pensione Hotel - Little Italy 75 Inn at the Park 74 Friendship Hotel 70 Homewood Suites San Diego Bayside 160 Hilton Garden Inn San Diego Downtown/Bayside 204 Pendry San Diego 317 SpringHill Suites San Diego Downtown/Bayfront 253 Courtyard San Diego Gaslamp/Convention Center Residence Inn San Diego Downtown/Bayfront 147 Hotel Z

196 SUB-REGION SALES AND MARKETING PLAN PT. LOMA PENINSULA (SHELTER ISLAND / PT. LOMA / AIRPORT) NAME OF ESTABLISHMENT ROOMS Sheraton San Diego Hotel & Marina 1044 Wyndham Garden San Diego Near SeaWorld 316 Holiday Inn San Diego Bayside 291 Best Western Plus Island Palms Hotel & Marina 219 Hilton San Diego Airport - Harbor Island 211 Courtyard by Marriott - San Diego Airport Liberty Station 200 Humphreys Half Moon Inn 182 Days Inn & Suites - SeaWorld San Diego 159 Homewood Suites by Hilton - San Diego Airport Liberty Station 150 Good Nite Inn - Sea World 149 Kona Kai Resort & Spa 129 Heritage Inn Sea World 119 Best Western Yacht Harbor Hotel 111 Consulate Hotel San Diego 110 Bay Club Hotel & Marina 105 Howard Johnson Express Inn 98 Ramada Limited San Diego Airport 80 Old Town Inn 73 Motel 6 - San Diego Airport 72 Holiday Inn Express - Sea World Area 70 MISSION BAY NAME OF ESTABLISHMENT ROOMS Paradise Point Resort and Spa 462 Hyatt Regency Mission Bay Spa & Marina 430 Hilton San Diego Resort & Spa 357 Bahia Resort Hotel 320 Catamaran Resort Hotel 315 The Dana on Mission Bay, BW Premier Collection 271 Blue Sea Beach Hotel 128 Holiday Inn Express-SeaWorld Beach area 113 La Quinta Inn & Suites San Diego Mission Bay 88 Ocean Park Inn 73 Pacific Terrace Hotel 73 MISSION VALLEY NAME OF ESTABLISHMENT ROOMS Town & Country Resort Hotel & Convention Center 954 Crowne Plaza San Diego 417 San Diego Marriott Mission Valley 352 Hilton San Diego Mission Valley 349 Courtyard by Marriott San Diego Mission Valley 317 Best Western Seven Seas 307 DoubleTree by Hilton San Diego Mission Valley 300 Days Inn San Diego Hotel Circle Near SeaWorld 280 Sheraton Mission Valley San Diego 260 Courtyard by Marriott San Diego Central 245 Four Points by Sheraton San Diego 225 Handlery Hotel San Diego 217 DoubleTree by Hilton San Diego - Hotel Circle 217 Portofino Inn & Suites San Diego Hotel Circle 216 Four Points by Sheraton San Diego - SeaWorld 206 Motel 6 - Mission Valley 204 Mission Valley Resort 202 Comfort Inn & Suites Zoo SeaWorld Area 200 Best Western Plus Hacienda Hotel Old Town 199 Residence Inn by Marriott San Diego Mission Valley 192 Hampton Inn Mission Valley 182 Courtyard by Marriott San Diego Old Town 176 Hilton Garden Inn San Diego Mission Valley/Stadium 175 La Quinta Inn & Suites San Diego SeaWorld/Zoo 169 Extended Stay America San Diego - Hotel Circle 166 Ramada Inn - Kearny Mesa 150 Hampton Inn San Diego - Kearny Mesa 147 Super 8 San Diego Hotel Circle 144 Residence Inn by Marriott - San Diego Central 144 Extended Stay San Diego - Mission Valley 141 Kings Inn 138 E-Z 8 Motel of Old Town 127 Quality Suites Mission Valley SeaWorld Area 126 Holiday Inn Express - Airport at Old Town 125 Fairfield Inn & Suites San Diego Old Town 125 EZ 8 Premier Inns 107 Extended Stay America - San Diego Mission Valley Stadium

197 SUB-REGION SALES AND MARKETING PLAN 195 MISSION VALLEY (CON'T) NAME OF ESTABLISHMENT ROOMS The Atwood 96 Days Inn Suites Mission Valley 81 Howard Johnson Express San Diego Zoo 80 Sommerset Suites Hotel 79 La Quinta Inn - Old Town 79 Hotel Iris 135 SpringHill Suites Mission Valley 118 Hilton Garden Inn San Diego Old Town/SeaWorld 177 LA JOLLA NAME OF ESTABLISHMENT ROOMS Hilton La Jolla Torrey Pines 394 Estancia La Jolla Hotel & Spa 210 The Lodge at Torrey Pines 170 Inn By The Sea at La Jolla 129 La Jolla Shores Hotel 128 La Valencia Hotel 113 La Jolla Cove Suites 111 Hotel La Jolla, Curio Collection by Hilton 108 La Jolla Beach & Tennis Club 98 Grande Colonial Hotel 93 Empress Hotel of La Jolla 73 NORTH COASTAL (UTC I-5 Corridor) NAME OF ESTABLISHMENT ROOMS Hyatt Regency La Jolla at Aventine 419 San Diego Marriott La Jolla 360 Embassy Suites Hotel San Diego - La Jolla 340 Residence Inn by Marriott - La Jolla 288 San Diego Marriott - Del Mar 284 Hilton San Diego - Del Mar 257 Sheraton La Jolla Hotel 252 Fairmont Grand Del Mar 249 DoubleTree by Hilton San Diego - Del Mar 224 HYATT house San Diego / Sorrento Mesa 194 Country Inns & Suites - San Diego North 180 Residence Inn by Marriott - Sorrento Mesa 150 Courtyard by Marriott - Sorrento Mesa 149 Extended Stay San Diego - Sorrento Mesa 135 Staybridge Suites - San Diego - Sorrento Mesa 131 Homewood Suites by Hilton San Diego - Del Mar 120 Pleasant Inn 86 Hilton Garden Inn San Diego - Del Mar 80 Holiday Inn Express Hotel & Suites Sorrento Valley 79 NORTH INLAND (includes I-15 Corridor) NAME OF ESTABLISHMENT ROOMS Rancho Bernardo Inn 287 Courtyard by Marriott San Diego Rancho Bernardo 210 Hilton Garden Inn San Diego - Rancho Bernardo 200 Radisson Suite Hotel-Rancho Bernardo 180 Holiday Inn - Rancho Bernardo 178 Doubletree Golf Resort San Diego 174 Holiday Inn San Diego North Miramar 155 SpringHill Suites by Marriott-Rancho Bernardo/Scripps 137 Comfort Suites San Diego Miramar 132 Residence Inn by Marriott - Carmel Mtn. /Rancho Bernardo 124 La Quinta - Scripps Poway 120 Staybridge Suites - San Diego Rancho Bernardo Area Best Western Plus San Diego Miramar Hotel 105 Residence Inn By Marriott San Diego Rancho Bernardo/Scripps P Holiday Inn Express - Mira Mesa

198 SUB-REGION SALES AND MARKETING PLAN SAN DIEGO TOURISM BRAND UMBRELLA AND POSITIONING FOR SUB-REGIONS Sub-regions and iconic neighborhoods expand the depth of what San Diego has to offer potential customers, and provide reasons for current customers to come back to San Diego to discover something new. Since 2010, the SDTA has worked with various communities to develop Unique Selling Propositions and marketing opportunities under the broader San Diego brand umbrella. These programs have been built upon the destination plan in order to create synergy and efficiency, and to capitalize on opportunities to grow new business. Research shows that the San Diego brand image is a combination of the people + place + climate that inspires optimism and a Sunny Outlook. Known as an iconic beach city in California, the laid-back lifestyle is combined with world-class city amenities. Each sub-region has a unique experience under this broader brand umbrella: REGION POSITIONING TAGLINE LOGO SAN DIEGO The people + the place + the climate inspire optimism. San Diego owns a Sunny Outlook. HAPPINESS IS CALLING SUB-REGION POSITIONING TAGLINE LOGO MISSION VALLEY Connects San Diego, joins people and places, easy access, convenient activities, easy-going, comfortable POSITIVELY IN THE MIDDLE OF IT ALL LA JOLLA World-class, sophisticated setting, unparalleled physical beauty, upscale charm, casual elegance THE JEWEL BY THE SEA MISSION BAY Energizes and recharges, active relaxation, outdoor recreation, friendly, welcoming, vibrant GOOD VIBES ON THE WATER 196

199 SUB-REGION SALES AND MARKETING PLAN REGION POSITIONING TAGLINE LOGO POINT LOMA PENINSULA Tranquil bayside retreat, nautical heritage, serene, authentic WHERE INSPIRATION SETS SAIL NORTH COASTAL Epicenter of innovation and ideation, work-play lifestyle, creative A VIBRANT KIND OF CHILL NORTH INLAND Country setting, open, relaxed, rustic, welcoming WIDE OPEN WONDERFUL The SDTA has developed not only taglines but also logos, sizzle videos, photography and marketing campaigns for each of the six sub-regions. These assets can be found at Media Silo or through the MemberNet portal at sandiego. 197

200 SUB-REGION SALES AND MARKETING PLAN SUB-REGION MARKETING PROGRAM OBJECTIVES 1. Increase overall group and transient room night demand for San Diego Tourism Marketing District properties through promotion of the TMD s distinct sub-regions. 2. Raise awareness of and preference for San Diego s sub-regions by showcasing the differentiating products and experiences for the six defined sub-markets outside the Downtown urban core. 3. Continue to partner with the TMD Board and Sub-Regional Hotel Advisory Committee on program of work development. (Note: program of work must be consistent with the stated goals and objectives of the SDTA to the extent they comply with the requirements of the TMD management plan, and shall utilize proven marketing and media channels.) 4. Continue to build off the overall destination sales and marketing plan in order to create synergy and efficiency. KPIs 1. Sub-Region Occupancy and YOY Growth 2. Sub-Region ADR and YOY Growth 3. Sub-Region RevPAR and YOY Growth Source: as reported by STR for defined sub regions Single Property Hotel Room Nights, New Business In FY 2016, the hotel meetings sales team exceeded the team goal of 390,000 new room nights and booked 410,992 room nights or 105.4% of goal for the destination. Room nights booked in the six sub-regions in FY2016 are as follows: CITY OF SAN DIEGO REGION NEW DEFINITE ROOM NIGHTS DOWNTOWN 190,508 POINT LOMA, HARBOR ISLAND & SHELTER ISLAND 57,792 MISSION BAY/BEACHES 38,646 MISSION VALLEY/OLD TOWN 47,521 LA JOLLA 20,024 NORTH COASTAL 4,162 NORTH INLAND 10,

201 SUB-REGION SALES AND MARKETING PLAN SUB-REGION SALES AND MARKETING PLAN TARGET AUDIENCES: PRIMARY 1: Domestic Leisure Travelers Luxury: Adults 25-64, HHI >$100K, Top DMAs, Adult Indulgence Target Economy: Adults 25-54, HHI >$50K, Top DMAs, Outdoor Recreation and Family Fun Targets PRIMARY 2: Meeting Planners, Corporate and Association Small regional corporate meeting planners and small regional associations, emerging corporate meetings SECONDARY: Meeting Planners, Group Specialty Markets Military, Government, Education, Multicultural, Clubs/Hobby Groups, Religious, Fraternal/Social and Service Groups TERTIARY: International leisure travelers Priority markets are Canada, Mexico, the United Kingdom, China Japan and Australia. 199

202 SUB-REGION SALES AND MARKETING PLAN KEY STRATEGIES AND TACTICS: LEISURE TRAVELERS 1 Continue tour and travel development to build more leisure group sales opportunities for sub-region stakeholders. 2. Partner with the major Online Travel Agencies to develop campaigns and promote sub-regions during need periods as identified through market assessment. 3. Advertise San Diego sub-regions through targeted media outlets that reach the upscale leisure and budget-conscious traveler targets. Run advertorial style creative that showcases different regions, products and experiences in order to better educate customers. 4. Continue with a dedicated public relations program to generate earned media exposure for the subregions including pitches specifically matching neighborhood product offerings to media outlets. 5. Work with Visit California and Brand USA to include sub-regions in international media pitches and hosting opportunities where appropriate. 6. Continue the social media campaigns featuring sub-regions and engage hotel members to participate in sweepstakes, promotions and amplification campaigns. 7. Continue adding rights-free creative assets to the Media Silo library for use by sub-region lodging properties. Expand to include general destination assets. 8. Provide quarterly reporting to all stakeholders and planning input sessions with Sub-Regional Hotel Leadership. 9. Distribute a promotional calendar of sub-region marketing campaigns including advertising, social media promotions, PR opportunities and OTA campaigns to all participating lodging properties. 200

203 SUB-REGION SALES AND MARKETING PLAN KEY STRATEGIES AND TACTICS: MEETING PLANNERS 1. Continue development of new customer acquisition programs including partnering with media companies and third-party resources to identify new business prospects and developing direct marketing programs to grow audiences. 2. Support sales lead generation through marketing, social media promotions, trade shows and industry event attendance. 3. Continue to work with sub-region hotels to identify specific need dates for sales team focus. 4. Build customer relationships through customized site visits and in-market/to the customer San Diego events that showcase the diversity of the San Diego region. 5. Ensure sales and service team deployment and specialty assignments support sub-region lodging properties group meeting needs. 6. Work with key media partners to identify customers that have not booked San Diego in the past but could book a sub-region hotel. Bring the customers together on three to four FAM trips per year. 201

204 202 SAN DIEGO TOURISM AUTHORITY

205 Funded in part by the San Diego Tourism Marketing District with City of San Diego Tourism Marketing District assessment funds.