Effect of Recession on Tourism in San Francisco - Essay Example

San Francisco: Recession and its Effect on Tourism Problem ment: Tourism business in San Francisco received a great shock due to the recent recession across the world. Among all the other states of the U.S., the State of California suffered to the greatest extent from the perspective of tourism business and being the fourth most populated and one of the greatest centers of tourist attraction, San Francisco, also faced the heat of recession. Revenue from the tourism industry, being one of the major sources of income for the city, it has been a matter of great importance to revive out of such situation. Thus, several plans have been launched by the tourism department to revive out of the situation. Challenge/Opportunity: According to the available statistical data impact over tourism industry across the U.S. stated since the year 2001 onwards though the rate of declining was not so conspicuous. Observation of Julio Aramberri and Richard Butler disclosed gravity of the situation, “For the transportation and tourism industries, which by September 2001 were already shaken by a deepening USA recession, the impact was immediate and serious. In February 2002, Hilton Hotels reported its net income … had dropped 94% despite aggressive cost-cutting, with the lowest occupancy rates in San Francisco, Washington D.C., and Hawaii.” (Aramberri, Butler, 276) In this context, it is important to mention that fear of terrorist attack and devastation of the 9/11 massacre created such huge impact over the mass psyche across the globe, even among U.S. people that they stopped visiting to most of such places that were at the high risk of under terrorist attack threat. Apart from that, as there was also a sharp decline in the air transportation facilities across from the aviation companies of the United States. As the aviation management industries predicted that there will be sudden fall in the number of passengers, those stopped providing their service to passengers around the world. Consequently, tourists also felt de-motivated to travel. Pondering over all these issues, the “Milkin study predicted for the year 2002 a loss of 1.6 million urban jobs, of which 760,000 would occur in travel and tourism.” (Aramberri, Butler, 276) It is evident from such statistical references that U.S. pervasively suffered from the effects of recession over the travel and tourism industry and places like San Francisco, of which the tourism industry is one of the major sources of income both from the perspective of revenue and earning livelihood for the common citizens. As due to recession there has been a sharp decline in the rate of employment and companies were busy in cost cutting process that is why random firing of employees in different industrial sectors was a regular process. The domestic tourist base has always been a great resource for flourishing San Francisco tourism department. As the State of California was greatly affected by recession and rate of unemployment during this time was 7%, which was even more than the average national rate of 5.9%, it also definitely affected the tourism industry of the San Francisco city. (Gerston, Christensen, 11) Silicon Valley, perhaps the largest industrial zone of the State of California lost more than 200,000 jobs in the year 2003 alone. (Gerston, Christensen, 11) Moreover, impact of the recession was realized in the worst manner as the industries of California were moving out of the State and rate of unemployment was increasing continuously. During the time period of 2006-07 the rate of unemployment reached to the level of 7.7%. (Gerston, Christensen, 11) However, this increasing rate of unemployment across the state was another major challenge that the San Francisco tourism department had to encounter for its survival. However, apart from all these challenges there are several positive reasons for which tourist incline towards visiting the city of San Francisco. According to the estimation of the San Francisco Convention and Visitor’s Bureau, the main reasons for tourists to choose San Francisco as a one of the most favorite places for tourist attraction are, its overall ambiance, total accommodation facilities including all sorts of modern amenities, cultural cosmopolitanism, natural aesthetic appeal and soothing weather. (San Francisco Fact Sheet, 2009, 2) Apart from all these reasons, presence of several historical landmarks in the city and being one of the major centers for eco-tourism as well as modern art, San Francisco is still considered as a major area for tourist attraction both from domestic and international tourist perspective. Mainly people visit this place for vacation or leisure purpose (39.7%), meeting (35.3%) and business purpose (22.1%). Ratio of people visiting San Francisco for other purpose is only (2.9%). (San Francisco Fact Sheet, 2009, 2) So, from such observation it is clear that apart from leisure travel purpose business and meeting purpose travels also brings a huge number of tourists to the city. Now, decline in the rate of tourist visiting to San Francisco has mainly occurred with those people who planned to come to this place for their leisure purpose but for people who need to come here to serve the business or meeting purpose, they simply cannot avoid the situation as such visits are mainly aimed at satisfying their professional needs. Thus, such group of people that constitutes almost 57.4% of the total visitors is definitely an important resource in the hands of San Francisco tourism department to develop the position. Management Solutions: Well facilitated transportation system and accommodation are two primary aspects that an area of tourist attraction is required to fulfill for its prosperity. In the context of accommodation San Francisco offers its visitors altogether 33, 372 rooms at an average rate of $190. It has also been estimated that a person has to pay $175 for his/her each day stay in the city. (San Francisco Fact Sheet, 2009, p. 1 & 4) Both these expenditure goes up to $355, which is quite high during the days of recession. One of the main reasons for such huge rate of expenditure is that the State of California imposes high rate of tax over tourism business for earning increasing amount of revenue. If the rate of tax can be deceased, automatically there will be sharp decline in the rate of daily accommodation in the city and definitely, it is a quite encouraging factor for attracting more number of tourists even during the time of recession. The state government has already taken such initiatives. Consequently, compared to the year 2007, there has been a considerable hike at the rate of tourist gathering in this place in the year 2008. “While the industry’s growth was moderate in 2008, San Francisco hosted 16.4 million visitors who spent $8.52 billion while in The City. In addition, the industry generated $528 million dollars in tax revenues for the City and County of San Francisco and supported over 72,856 local jobs.” (2008 Visitor Volume and Spending, n.d., p. 1) Looking at the ratios of visitor volume and visitor spending both in the year 2007 and 2008 it cannot be said that there has been a considerable amount of hike but such comparison clearly shows that tourism business of San Francisco is again getting back to its old stature and already showing potential for a great deal of revival in the near future. (2008 Visitor Volume and Spending, n.d., p. 1-3) Lesson Learned/Business Care: Recession can be regarded as an essential unfortunate economic process that affects the sources of income and consecutively lives of the individuals depending over such sources of income. The economic boom that the U.S. experienced definitely received a great shock due to the 9/11 attack and its consequent effects over the whole U.S. economy, especially in the IT sector. As the U.S. economy depended greatly over the IT market, its immediate collapse resulted in unemployment and downfall in all the other sectors that are associated with it. Thus, one of the important lessons learnt from this issue that every industry needs to store sufficient amount of resource that would provide the sector with adequate financial support even during time of such emergency condition. Moreover, when it comes to business care, the travel and tourism related business needs to realize that providing less facilities or derogated range of service to the visitors during that period does not solve the problem. Goodwill is a very important factor in the context of tourism and if that is lost once it is very tough to gain it back. May be it is not possible that tourism business will gain the same amount of profit during the time of recession but it is not acceptable that due to such factor the industry will serve its main source, that is the tourists in a less facilitating manner. If it is needed then some kind of sacrifice in terms of profit has to be endured but the aspect of goodwill cannot be sacrificed under any circumstance. The tourism department of San Francisco has realized this vital issue and tried to serve the tourists accordingly. Consequently, it is also getting positive results since the year 2008 onwards. In the year 2007 when the total amount of tax collection from tourism related business was $497,751 thousand, in the year 2008 there was 6% of increase in the total revenue and the amount reached to the amount of $527,613 thousand. (2008 Visitor Volume and Spending, n.d., p. 3) Why I care: According to the statistical records in the year 2007, more than 56 million international tourists visited several places of tourist attraction across the nation and they have benefited the national economy with $122.7 billion. (2007 Sets All Time International Tourism Record For U.S., 10th March 2008). This information is sufficient to provide us with the information that to which extent U.S. economy is dependent over travel and tourism business. San Francisco, being one of the major places of tourist attraction in the whole nation attracts a great number of both international and domestic tourists and revenue generated out of such huge gathering definitely contributes to the growth of national economic standard. Thus, San Francisco tourism business definitely has a great role to play in stabilizing the national economy. During the recession, as the travel and tourism business of the city was undergoing a decline, it not only affected lives of only those people who depended over such business in that area but in the broader national scenario it also created an ill effect. However, since the year 2007 onwards, as the travel-tourism business market received a new boost in San Francisco backdrop, it also became kind of oxygen supply for the national economy that was suffering due to the recession for such a long time. Being a sensible U.S. citizen, I feel, it is my duty to be concerned about benefit of the general mass of the nation and try to find a way out that would help in developing their situation. I care because the San Francisco tourism business has the potential to develop general economic situation of the county, if not completely reviving it.                                            References   1. Christensen, T., Gerston, L.N., (2008), California Politics and Government: A Practical Approach, Connecticut: Cengage Learning 2. Butler, R., Aramberri, J., (2005), Tourism development: issues for a vulnerable industry, New York: Channel View Publications 3. “2008 Visitor Volume & Spending”, (n.d.), available at: http://www.sfcvb.org/media/downloads/research/2008_spending.pdf, accessed on: 9th September, 2009 4. “San Francisco Fact Sheet”, (23rd July, 2009), San Francisco: San Francisco Convention and Visitors Bureau, available at: http://www.sfcvb.org/media/downloads/travel_media/sf_facts.pdf, accessed on: 9th September, 2009 5. “2007 Sets All Time International Tourism Record For U.S.”, (10th March, 2008), available at: http://www.commerce.gov/NewsRoom/PressReleases_FactSheets/PROD01_005355, accessed on: 9th September, 2009 Read More