All signs point to rosier S.F. hotel industry

San Francisco’s hotel industry is by all accounts on the rebound, a fact highlighted by next week’s four-day Oracle OpenWorld Convention, which is expected to draw its largest attendance yet.

Tourism is San Francisco’s No. 1 industry and every year The City collects 14 percent on all room charges. Last year, The City brought in $174 million in hotel taxes, with most going into the operating budget.

A recent report by the PKF Consulting firm shows that the average rate of hotel rooms will steadily climb from $167 this year to $212 in 2010. The report also shows hotel occupancy staying at 78 percent for the next four years. San Francisco’s hotel occupancy dropped to 65 percent in 2002, following the dot-com bust and the Sept. 11, 2001, attacks, according to the report. In 2000, room rates were at $169.74, then declined to $144.81 just three years later.

“San Francisco has been in recovery mode all these years,” said Charysse O’Donnell, director of sales and marketing for the Ritz-Carlton. “We’re finally moving in the positive direction.”

The Oracle convention, which will run from Oct. 21 to 26 at the Moscone Center, is only more good news for the hotel industry. Every hotel room in The City is booked, according to Joe D’Alessandro, the head of the San Francisco Convention and Visitors Bureau. He said 42,000 people will attend the convention, which will generate between $10 million and $15 million in hotel and sales taxes. Overall, the convention is expected to add $60 million to San Francisco’s economy, he said.

Kimberly Kuchman, operating manager with the 96-room York Hotel, was not surprised to learn of the rosy forecast. She first noticed the industry had rebounded in July when the hotel did an additional $30,000 compared to July 2005. “We’ve surpassed our targets by thousands of dollars more," she added.

Kuchman said business has picked up because “people have just gotten comfortable with traveling again” since Sept. 11 and the subsequent threat of terrorism. Last year San Francisco saw 15,700,000 visitors, and this year D’Alessandro anticipates 16 million.

Industry officials say the hotel industry has picked up in San Francisco as the overall economy has rebounded, resulting in more business travelers and tourists alike.

D’Alessandro, however, was a bit wary of the forecast. “We are experiencing a very strong year,” he said. “But it’s still very fragile. The industry and the economy are very volatile and impacted by world events. … If things continue as they are going, we think 2007 will be a strong year, too.”

Hotel industry’s

rebound by the numbers

Year Average room rate

2000 $169.74

2003 $144.81

2006 $167 (projected)

2010 $212 (projected)

Year Occupancy rate

2000 81.7%

2002 65.4%

2006 78% (projected)

2010 78% (projected)

Source: PKF Consulting:

Historical and Projected

Market Performance Report

jsabatini@examiner.com

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