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San Diego hotel/tourism statistics are looking horrible, particularly when compared with performance in other cities. According to Smith Travel Research, local hoteliers' revenue per available room in the week of June 7 to 13 was down a stunning 42.3%, the largest decline in the top 25 markets. Occupancy at San Diego facilities was down 21.2% that week. This was the second worst performance in the 25 major markets: Detroit was down 28.1%. For the week of May 31-June 6, revenue per available room plunged 39.2%, the third largest decline in the top 25 markets. In the total USA that week, revenue per available room was down 22.9%.

One week may not be a good measure, points out La Jolla hotel guru Jerry Morrison. For the full month of May, San Diego occupancy was down 14.2 percent, eighth worst among the 25 major markets. Revenue per available room was down 26.1%, sixth worst among the top 25. The decline in revenue per available room at 26.1% was worse than the drops in Orange County, Los Angeles, and San Francisco in May. "While I am not an economist, it appears that the balance of 2009 and 2010 will be a difficult time for our industry and for the economy as a whole," says Morrison.

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Comments

Fred Williams June 23, 2009 @ 7:32 a.m.

Some questions for you Don...how would this affect the general fund revenue projections?

A lot of the TOT goes into the pot for paying off pet projects of previous politicians. Just how over-commited is this money now? How bad will it get if the next few years see continuing low levels of hotel occupancy?

Thanks,

Fred

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SurfPuppy619 June 23, 2009 @ 7:35 a.m.

I have a GREAT idea-let's raise the TOT tax and expand the convention center at a cost of hundreds of millions.

The expansion will "pay for itself" !!

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JustWondering June 23, 2009 @ 8:33 a.m.

I knew there is GENIUS behind Surfpuppy's thought processes and prolific comments. He already knows how produce a balance sheet to reflect the desired outcome. (wink and nod) good buddy.

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valueinvestingisdead June 23, 2009 @ 8:53 a.m.

People with rentals cannot rent them. Even with the Fair going. Prices on Rentals have to plunge.

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Don Bauder June 23, 2009 @ 9:42 a.m.

Response to post #1: This has to hurt TOT revenue projections. As I recall (and I haven't checked), Sanders's TOT revenue projections were very optimistic. If the tourism business continues this bad, somebody will have to say something. Maybe Donna Frye or Carl DeMaio will comment. Best, Don Bauder

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Don Bauder June 23, 2009 @ 9:46 a.m.

Response to post #2: Trouble is, your sarcastic -- and perceptive -- remark could come to fruition. The convention center expansion task force could say that these are current (2009) numbers, and the expansion won't go online for several years. However, it appears that the task force is finally telling San Diego that it might have to pay for any convention center expansion at a cost of more than $50 million a year. That is a breakthrough. Best, Don Bauder

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Don Bauder June 23, 2009 @ 9:48 a.m.

Response to post #3: SurfPuppy is a satirist. Best, Don Bauder

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Don Bauder June 23, 2009 @ 9:50 a.m.

Response to post #4: I'm not surprised. Best, Don Bauder

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Visduh June 23, 2009 @ 11:51 a.m.

At the risk of being discursive here, are Sanders projections of property taxes likewise optimistic? I'm reading in the U-T that the assessor's office cannot keep up with the flood of folks who want their properties (largely homes, but not just homes) reassessed to current market realities.

As those are done, the property tax take declines more, and when (not if) home prices continue to decline into 2010, won't that worsen? Bad as the projections from many local municipalities are now, the prospects are for them to get worse before they ever start to recover.

We could start to see some real squeezing in the public sector before this is all over.

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SurfPuppy619 June 23, 2009 @ 11:52 a.m.

As I recall (and I haven't checked), Sanders's TOT revenue projections were very optimistic.

=================================================

A gov actor preditcing rosy tax revenue growth, not grounded in even a grain of reality?

I don't believe it! They would not do that to us taxpayers.

On a serious note, Calpers (75% of board members from public unions) did just this in 1999 when they said they could raise pensions by 50% and it would be paid by "investment returns" and not cost anythign extra beyond what was being paid in 1999(the cost for pensions have increased 10 fold since 1999).

Arnold and the legislatures rosy predictions for our current budget were $24 BILLION! dollars out of balance within 8 weeks of signing the budget (which forcasted a balanced budget).

This is the common pattern and practice of scammers, over estimate income, while under estimating expenses. Then make a run at raising taxes for "the children", for "the disabled", for "the elderly", for "the seals", for "the [insert favorite cause here]".

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SurfPuppy619 June 23, 2009 @ 11:55 a.m.

I'm reading in the U-T that the assessor's office cannot keep up with the flood of folks who want their properties (largely homes, but not just homes) reassessed to current market realities.

I can guarantee you that the % of commercial property owners demanding a lower tax assessment is a higher % than homeowners.

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Visduh June 23, 2009 @ 12:05 p.m.

Response to #11: Then it is even worse for government to meet its revenue projections. It gets wilder the longer we go down this road.

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Don Bauder June 23, 2009 @ 2:34 p.m.

Response to post #9: Good point. The estimates on property tax receipts were too optimistic the last time I looked. Best, Don Bauder

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JakeSD June 23, 2009 @ 5:20 p.m.

The W Hotel is the tip of the iceberg. Other SD hotels and some major hotel chains are in major trouble right now and unless they get capital, they are going under also. Any talk of SD needing hotel space is insane.

Retail sector is getting pounded also. Find a local strip mall and you find tenants who cant pay rent. When those rents fall behind or that space goes vacant, good luck refinancing that property.

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Don Bauder June 23, 2009 @ 9:42 p.m.

Response to post #14: I agree. The hotel business is a disaster. The downtown ones have very low occupancy -- just like the downtown condos. I don't think tourism is coming back for a long time. The picture is gloomy nationwide: today (June 23) another hotel chain, Red Roof, defaulted on debt. Best, Don Bauder

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a2zresource June 24, 2009 @ 8:10 a.m.

After reading the blog with comments, I can see a bright side to all of this once a few of the larger properties are seized on tax arrears:

We may end up with the best homeless shelters on the planet... and a new home for a central library!

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Don Bauder June 24, 2009 @ 8:45 a.m.

Response to post #16: Transforming a luxury hotel into a homeless shelter would seemingly not be so architecturally difficult. But switching a luxury hotel to a library would require some noodling. Best, Don Bauder

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johnegger23 June 25, 2009 @ 2:23 p.m.

The only things that will help San Diego Tourism:

More Strip Clubs (We are losing conventions, and conventioneers must be bored out of there minds).

Push back last call to a reasonable hour like 6am.

Legalize Drugs.

Legalize Prostitution.

Legalize Gambling

If we did all that San Diego would be the #1 travel destination.

Beaches, Sunshine, taco shops and Sea World just aren't cutting it.

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Don Bauder June 25, 2009 @ 5:20 p.m.

Response to post #18: San Diego has to admit that Las Vegas has more convention space and certainly more hookers per capita, although that is a flourishing business in San Diego, too. Legal gambling already goes on at the Indian casinos. Strip clubs are doing well, but are monitored closely. Drugs won't be legalized soon; the prison guards, members of a powerful union, love the laws that put the drug dealers and users behind bars. Best, Don Bauder

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johnegger23 June 25, 2009 @ 7:47 p.m.

"Strip clubs are doing well, but are monitored closely."

Disagreed. For a city of 3 million we only have 15 strip clubs or so. And only one in near downtown (which is really not very busy).

"Legal gambling already goes on at the Indian casinos."

A low end affair. And a drop in the bucket. San Diego exports so much money to las vegas.

The more I think about this it is crazy. Orange County is doing better than us?

San Diego is losing the war for tourist dollars.

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SurfPuppy619 June 25, 2009 @ 9:11 p.m.

A low end affair. And a drop in the bucket. San Diego exports so much money to las vegas.

CA Indian gaming revenue is now almost as much as Las Vegas gambling revenue. San Diego county has the largest Indian casinos, by revenue volume, in the state.

So it is NOT a "drop in the bucket".

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johnegger23 June 26, 2009 @ 7:13 a.m.

"CA Indian gaming revenue" comes from California.

"Las Vegas gambling revenue." comes from California.

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Don Bauder June 26, 2009 @ 7:16 a.m.

Response to post #20: Indian casinos are definitely hurting now. I am not sure that San Diego can ever compete with Vegas as a sin center. And I am not sure San Diegans would want it to. Best, Don Bauder

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Don Bauder June 26, 2009 @ 7:18 a.m.

Response to post #21: It's not a drop in the bucket, but the bucket is definitely leaking right now. Best, Don Bauder

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Don Bauder June 26, 2009 @ 7:20 a.m.

Response to post #22: There is no doubt that a large percentage of Vegas gambling revenue comes from California. You could probably figure that out from the data on the Vegas website. Best, Don Bauder

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SurfPuppy619 June 26, 2009 @ 7:59 a.m.

"Las Vegas gambling revenue." comes from California.

By johnegger23

Las Vegas gambling revenue does NOT come from CA, it comes from mostly other states-it USED to come from CA, but no more.

John, you need to brush up on your gambling knowledge buddy.

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a2zresource June 26, 2009 @ 8:43 a.m.

Gee... it wasn't that long ago that San Diego was considered a real Navy town, complete with vans of Shore Patrol making the rounds of all the naughty spots on and off Broadway downtown... there were probably a dozen places to grab a quick beer and toss a few tips onto the stage...

Of course, we've grown up since then.

You know, maybe some of those former high rise hotels could be used for vertical farming.

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Don Bauder June 26, 2009 @ 10:35 a.m.

Response to post #26: The Las Vegas tourism industry keeps elaborate statistics. One measure is cars coming in from certain directions. Another is landings at the airport. You can probably get a good read from that site. Also, someone in the industry probably knows the answer to that question. Best, Don Bauder

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Don Bauder June 26, 2009 @ 10:39 a.m.

Response to post #27: If you go back 100 or 120 years, the waterfront was awash in brothels. But for many decades later, there was all kinds of raunchy entertainment for the Navy lads, including hookers galore. Then, of course, one of the reasons for the one-day visits to San Diego was as a way station enroute to Tijuana. Those visits to Tijuana often involved vice. Best, Don Bauder

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johnegger23 June 26, 2009 @ 6 p.m.

SurfPuppy619,

"John, you need to brush up on your gambling knowledge buddy."

Just did:

From April 17, 2009:

"Tourism officials said a greater percentage of Las Vegas visitors are coming from drive markets, with the average daily auto traffic on all major highways into the city down just 1.9 percent to 75,672 average daily trips. The greatest percentage of visitors in February came from Southern California with traffic on Interstate 15 at the Nevada-California border at 34,145 average trips per day, down just 0.1 percent from the previous year."

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SurfPuppy619 June 26, 2009 @ 8:43 p.m.

But your missing the bigger picture-CA Indian casinos have been siphoning off Las Vegas casino traffic since 1992-that is 18 year, to the point where they are very close in overall gambling revenue.

The amount of LV casino visitors may be 50+%, but less than half of that 50+% is coming from So Cal, according to your own numbers, which would put the overall % coming from So Cal at a about 25%.

Indian casinos are grossing close to what LV casinos are grossing, and that money is coming strictly from the local CA markets-not tourists or visitors. People do not fly into CA to gamble at Indian casinos like they do at LV.

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Don Bauder June 26, 2009 @ 9:48 p.m.

Response to post #30: Leave it to the damned fools from Southern California to continue going to Vegas to lose their money. Best, Don Bauder

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Don Bauder June 26, 2009 @ 9:53 p.m.

Response to post #31: Yes, but how much of that Indian casino money is going into the San Diego economy? Yes, they advertise on local media and boost the Padres. But that isn't big bucks. You can definitely argue, however, that the tribes had a very poor existence before the casinos, and now have a higher standard of living. That's positive. Best, Don Bauder

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SurfPuppy619 June 27, 2009 @ 7:39 a.m.

Yes, but how much of that Indian casino money is going into the San Diego economy?

San Diego County has more Indian gambling revenue than any other CA economy. Of the 55 tribes that have gambling (majority of which are small casinos), San Diego has 3 of the largest Indian casinos in the state.

The casino money does not go into the San Diego economy-it goes into the Indians' Yes, but how much of that Indian casino money is going into the San Diego economy/pocket/campaign slush fund. Did you know that homes on Indian lands do NLT pay property taxes of any kind to the counties?

I have always said, and this backed up 100%, that gambling revenue-any gambling revenue- harms the economy becuase that revenue is not the product of labor-either physical or mental. Gambling takes AWAY from money that would go into the economy-like a child's education fund, durable goods, housing payments which in turn supports more housing and development, which in turn drives the economy forward.

I have never gambled because I know for a fact that gambling breaks down the social fabric that binds society together, allowing society to function.

It would be like opening a legalized and taxible crack house-you could get customers all day long, and along with the customers tons of tax revenues-but the harms caused outweigh the benefit in taxes 10,000 to 1.

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Don Bauder June 27, 2009 @ 10:40 p.m.

Response to post #34: I agree: gambling is a lose-lose proposition, both for the individual who indulges and for the society at large. So much of the money from the winners (casinos) is either skimmed or shipped offshore. I think one of the saddest commentaries on our culture (second to the massive debt, excessive consumption, and gambling on derivatives) is the obsession with casino gambling and on lotteries. Best, Don Bauder

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SurfPuppy619 June 28, 2009 @ 2:47 p.m.

Don, do you think money is skimmed in Indian casinos today???

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Don Bauder June 28, 2009 @ 5:15 p.m.

Response to post #36: It's still skimmed in Vegas. Indian casinos? Since some are run by Vegas personnel, I would not doubt it a bit. Best, Don Bauder

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johnegger23 June 28, 2009 @ 10:13 p.m.

"Indian casinos are grossing close to what LV casinos are grossing"

Possibly.

Keep in mind, most revenue in Las Vegas is non-gaming related.

Bottom line is San Diego is losing the tourism war.

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Don Bauder June 29, 2009 @ 6:04 a.m.

Response to post #38: San Diego and other cities are losing convention business, and sin-based business, to Vegas. San Diego could reach family travelers with its assets such as the Zoo, Wild Animal Park, Sea World, beaches and the weather, but has concentrated its money on taking convention business from Vegas. It has been a bad strategy. Best, Don Bauder

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johnegger23 June 29, 2009 @ 9:35 a.m.

Response to post #39: Well Said.

Remember when Vegas tried to be a family destination?

They switched up that bad strategy pretty quick.

Miami Beach is a great example for San Diego to follow.

Which would you rather have?

High rolling Gambler from Asia or California dropping large amounts of money on Gambling, Entertainment, restaurants and exotic dancers. (Las Vegas)

European/ Latin American Playboy dropping big cash to pick up Models. (Miami Beach)

or

Family of 5 from a small town in the midwest or Arizona looking to spend $1200 on a 6 week family vacation (San Diego).

The choice is ours.

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Don Bauder June 29, 2009 @ 11:13 a.m.

Response to post #40: Yes, Las Vegas for awhile tried to appeal to families. The person who ended it was Oscar Goodman, current mayor. He's seen drinking martinis around the Vegas night spots every evening. He spends part of his summers in Coronado. He was a Mafia lawyer before becoming mayor, defending some of the most notorious Mafiosi. He defended Roger Hedgecock in his second J.David-related trial. Best, Don Bauder

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SurfPuppy619 June 29, 2009 @ 12:32 p.m.

Which would you rather have?

High rolling Gambler from Asia or California dropping large amounts of money on Gambling, Entertainment, restaurants and exotic dancers. (Las Vegas)

European/ Latin American Playboy dropping big cash to pick up Models. (Miami Beach)

or

Family of 5 from a small town in the midwest or Arizona looking to spend $1200 on a 6 week family vacation (San Diego).

I'm going to go for option #2, with the "Models"!

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SurfPuppy619 June 29, 2009 @ 12:48 p.m.

Yes, Las Vegas for awhile tried to appeal to families. The person who ended it was Oscar Goodman, current mayor. He's seen drinking martinis around the Vegas night spots every evening. He spends part of his summers in Coronado. He was a Mafia lawyer before becoming mayor, defending some of the most notorious Mafiosi. He defended Roger Hedgecock in his second J.David-related trial.

I didn't know Goodman defended Hedgecock in the J David scandal...wow, that's cool.

Goodman defended both Anthony "The Ant" Spilotro and Frank "Lefty" Rosenthal back when Lefty was running the Stardust Hotel-which in the 70's had the most hotel rooms in the world for a single hotel (over 1,000). Goodman plays himself in the movie "Casino".

Lefty was probably the most well connected Mafia guy Las Vegas has ever seen. Lefty knew all the politicans and was very close to MANY of the federal judges in Las Vegas, including having one (currently sitting) federal judge in his daughters wedding.

Lefty just died a few months back-he was living in Orange County after LV and then Mimai FL for the final years of his life-he ran a handicapping website. Good stuff here.

http://frankrosenthal.com/

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Don Bauder June 29, 2009 @ 11:29 p.m.

Response to post #42: If the Miami models can play Scrabble, I opt for #2 also. Best, Don Bauder

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Don Bauder June 29, 2009 @ 11:32 p.m.

Response to post #43: Yes, Spilotro was a Goodman client. And you're right: it's Tony the Ant, not Tony the Aunt. Best, Don Bauder

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johnegger23 June 30, 2009 @ 5:21 p.m.

"I'm going to go for option #2, with the "Models"! By SurfPuppy619"

and

"Response to post #42: If the Miami models can play Scrabble, I opt for #2 also. Best, Don Bauder"

Ha.

Unfortunately for San Diego, so do many people looking to drop heavy money on a vacation.

It has been going on for a while.

Miami Beach had boutique hotels starting back in 1994-1995.

We came into that market in 2002? (with a cheap imitation, W hotel)

San Diego, could learn a lot from Miami Beach as far as creating an environment that is fun and people want to travel to.

Now they are talking about gaming on Miami Beach.

The place really does cater to nightlife, hotels and tourism.

And of course models.

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Burwell June 30, 2009 @ 10:25 p.m.

I didn't know Goodman defended Hedgecock in the J David scandal...wow, that's cool.

==========

And if you don't know who Allen Glick and Tamara Rand are, you don't know Jack.

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Burwell June 30, 2009 @ 10:32 p.m.

Tamara Rand was the woman who was shot in the head in the movie "Casino". She was murdered at her Mission Hills estate in San Diego.

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Don Bauder July 1, 2009 @ 7:56 a.m.

Response to post #46: I can't think of anything worse for San Diego than gambling and more hookers. Best, Don Bauder

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Don Bauder July 1, 2009 @ 7:59 a.m.

Response to post #47: Glick and Rand are two important characters in San Diego history. The last I knew, Glick had left the country (he was in the Philippines). Rand had left the planet. Best, Don Bauder

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SurfPuppy619 July 2, 2009 @ 12:24 p.m.

And if you don't know who Allen Glick and Tamara Rand are, you don't know Jack.

By Burwell

I knew who Glick and Rand are-in fact we have discussed them here on this blog before.

I also know Goodman, I just did not know he represented Hedgecock

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Don Bauder July 2, 2009 @ 7:59 p.m.

Response to post #51: He was Hedgecock's second lawyer. The first jury went 11-1 against Hedgecock. The second time, it was 12-0 against, but then the appeals court found a technical flaw and wanted it tried a third time. DA Ed Miller figured it wasn't worth it, since Hedgecock resigned from office. Best, Don Bauder

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