TOURISM: Temecula-area hotels weather economic storm

By CHRIS BAGLEY - Staff Writer | Saturday, December 13, 2008 6:08 PM PST ∞

The national recession that began late last year has hammered Riverside County's lodging business with particular fury, though people in the industry say vineyards and other local attractions have helped to shield the Temecula area from the worst of it.

Hotels are suffering most notably from a slowdown in business-related travel, managers and analysts in Southwest County say. Developers and construction managers were still arriving last summer and fall as office buildings and shopping centers continued to prop up the economy, one analyst noted.

But commercial development has slowed with the rest of the region's economy, and probably accounts for much of the lodging industry's recent weakness, he said.

Tourist travel has also slowed, but much less dramatically, Southwest County managers and analysts said. The area's status as a driving destination means that it's getting vacationers who decided to forgo longer trips to Los Angeles, for example, or to foreign countries, even as other people skip vacations altogether.

The average occupancy level in hotels in Southwest County and surrounding areas fell to 52 percent in September and October, from about 62 percent in the same two months of most recent years, according to Smith Travel Research, which tracks the industry nationwide. The Nashville, Tenn., company groups the area with most others of Riverside County, but treats the Palm Springs and Riverside-San Bernardino areas separately.

Ontario International Airport, the region's largest, logged 5.4 million passengers in the first 10 months of the year, down 10 percent from 2007.

The situation in Temecula and Wine Country is less glum, said Kimberly Adams, director of the Temecula Valley Convention and Visitors Bureau. Adams said the area's average occupancy rate was about 66 percent in the first 10 months of the year, compared with 58 percent in the larger area tracked by Smith.

Temecula's relative strength highlights efforts by Adams' group to pitch the area as a closer and cheaper alternative to gambling vacations in Las Vegas and corporate retreats in Las Vegas and Phoenix, said Jason Curl, general manager of Temecula Creek Inn, which sports a 27-hole course.

"A lot of these companies are not going to buy airline tickets for attendees to fly to some of these top-tier cities," said Doug Leiber, a hotel-industry consultant and former manager at the inn.

Curl said his business is off by about 15 percent, less than other moderately upscale golf resorts. The hotel, nearby Pechanga Resort & Casino and several wineries in the rolling hills east of the city have become popular venues for weddings, a segment of their business that Curl said is recession-resistant.

The recent downturn follows a half-dozen years of solid growth in Southwest County's hospitality sector. Several motels, numerous wineries, and a winery-resort combo have sprouted. Pechanga has become the area's largest employer and Southern California's largest casino.

The hospitality and leisure sector had continued to grow in 2006 and early 2007, as many other industries in Riverside County were putting on the brakes. It has also contracted less dramatically than other parts of the local economy since last year ---- by about 1 percent compared with nearly 3 percent in the private sector as a whole. One of the largest job cuts has been at Pechanga, which cut its work force from 4,770 to about 4,400 this fall.

Embassy Suites Hotel Temecula Valley Wine Country has been able to hang on to leisure travelers by keeping its prices down, General Manager Tom DeMott said.

"People are so sensitive to pricing that we want to make sure we're competitive," DeMott said.

Contact staff writer Chris Bagley at (951) 676-4315, Ext. 5444, or cbagley@californian.com. Bagley blogs about local economic trends at http://bizblogs.nctimes.com.

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