May 28, 2017 (San Diego) Is the economy starting to slow down? There are two indicators that tell us that is just may. The first is this line from the May revision of the City of San Diego budget.
“Franchises Fee Reduction of $726,335 in franchise fees revenue based on updated Fiscal Year 2017 receipts. “
This reduction was not something the city was expecting. We believe we know where some of this reduction is coming from. As we wrote back in February, we expected a reduction in tourism to the United States.
According to San Diego, NBC station tourism is down by 11 percent, with San Diego and Los Angeles being hit the worst.
We are reposting the significant findings from last February’s article.
• The visitor industry employs over 180,000 San Diegans – 13% of the jobs in the county.
• Visitors spend nearly $10.4 billion annually at San Diego businesses and produce $267 million in transient occupancy tax revenues.
• San Diego hosts more than 34.9 million visitors each year, and is a top U.S. travel destination.
• The industry generates more than $704.6 million annually in state and local taxes.
San Diego is very dependent on tourism. Which also brings us to another little-known aspect. unless you are a fan of Comicon. From private conversations, many San Diegans are not able to get badges anymore. This is because the convention is so hot that it means hotels downtown will be filled. Not just downtown, also Fashion and Mission Valley. This will set Comicon for a problem. If the economy is indeed slowing down, as that single line in the May Revision might be pointing to, that might be a problem for Comicon. Why would local fans support a convention that has shunned them for some years? In other words, if the economy is slowing down, a convention becomes the kind of spending that most people choose chose not to do. Especially those outside the area.
Will that mean that the Transient Occupancy Tax the city wants to raise to build up the convention center expansion will truly not materialize? Do city leaders need to start encouraging other sectors of the economy that are less prone to boom and bust economic cycles? Many cases, a slowing economy is first spotted in single lines like the one we quoted. So we will know in a quarter or two.