Director of Research Visit California

Dan Mishell

Our mission: Create desire for the California experience

Research objectives •  Measure travel to and within California

•  Business insights

•  Program performance

•  Knowledge base

•  Industry platform

Source: Tourism Economics, Dean Runyan Associates

CONSUMER REVENUE $122.5B JOBS 1.06M STATE & LOCAL TAX REVENUE $9.9B

Tourism’s economic impact 2015

Domestic = 93% of visits, but international =20% of spending

80%

20%

93%

7% Domestic International

263.4 million person-trips

$122.5 billion in spending

Source: DK Shifflet & Associates, U.S. Department of Commerce, CIC Research Inc., Dean Runyan Associates

U.S. origins grouped into CA resident, primary western, and long-haul markets

Sources: DK Shifflet & Assoc.; TNS TravelsAmerica

Six primary western markets account for 50% of non-resident visits and 1/3 of non-resident spending

California’s global visitor appeal

Source: U.S. Department of Commerce; CIC Research Inc.; BEA; Tourism Economics

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Can

ada

Chi

na

UK

Aus

tral

ia

Japa

n

Mex

ico

Air*

Ger

man

y

Fran

ce

S. K

orea

Mid

dle

East

Indi

a

Sca

ndin

avia

Bra

zil

Ital

y

Mill

ion

s

Thou

san

ds

2016 Visits (projection)

2020 Visits (forecast)

2016 Spend (projection)

2020 Spend (forecast)

Travel spending is at an all-time high

Source: Dean Runyan Associates

CA room demand is at record-level too

Source: Smith Travel Research

59.7%

74.7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Travel indicators are up in 2016, and outpace those for the U.S.

Source: Smith Travel Research

California U.S. Lodging (Aug YTD) Occupancy +1.1% -0.2% Average daily rate +6.1% +3.1% Revenue per available room +7.3% +2.9% California airport traffic (Aug YTD) Domestic +5.8% International +10.1% Overseas arrivals (Mar YTD) +9.0% +5.1% Welcome Center traffic (Aug YTD) +1.9% Leisure & hospitality employment (Aug/Sep) +3.4% +2.4%

Occupancy growth has slowed, but room rate growth is still strong for most CA regions

Source: Smith Travel Research

Occupancy Aug YTD % Chg

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

ADR Aug YTD % Chg

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0% CA Central Coast Central Valley Deserts Gold Country High Sierra Inland Empire LA County North Coast Orange County Shasta Cascade SD County SF Bay Area

Some foreign currencies are starting to recover after 2+ years of steady decline

Source: Pacific Exchange Rate Service – Prof. Werner Antweiler

2016 growth in CA arrivals are led by Asia and Middle East

Source: U.S. Department of Commerce, National Travel & Tourism Office Form I-94

Asia Middle East Europe Oceania Mexico* South America

Total Overseas

YTD % Change 13.3% 6.7% 6.3% 3.2% 3.1% -1.2% 9.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

California International Port-of-Entry Arrivals from World Regions (March YTD 2016 Year-Over-Year Percent Change)

Moderate growth in visits are projected for 2016 and 2017

2016 2017 Overall visits +2.2% +2.5% Domestic +2.2% +2.5% International +2.8% +3.6% Overseas +5.1% +5.0%

Source: U.S. Dept. of Commerce; StatsCan; CIC Research, Inc.; Tourism Economics

Growth in visitor spending is forecast to outpace growth in visits

2016 2017 Overall spending +3.6% +4.1% Domestic +3.5% +3.8% International +4.2% +5.1%

Source: U.S. Dept. of Commerce; StatsCan; CIC Research, Inc.; Tourism Economics

2-3% growth in domestic travel is forecasted for CA through 2020

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

08 09 10 11 12 13 14 15 16F 17F 18F 19F 20F

CA Domestic Day and Overnight Visits% growth

Source: Tourism Economics, DKSA

Domestic Overnight (blue)

Domestic Day (dark blue)

Total Domestic (gray)

3.5%

2.3% 2.6% 2.5% 2.3% 2.3%

5.9%

2.7%

1.5% 1.9%

1.4% 1.6%

0%

1%

2%

3%

4%

5%

6%

7%

2015 2016f 2017f 2018f 2019f 2020f

Paid Non-paid

AN

NU

AL

% C

HA

NG

E

Source: Tourism Economics, TNS Global, STR

Stays in paid accommodations are projected to grow more than non-paid stays

3-5% growth in international travel is forecasted for CA through 2020

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

08 09 10 11 12 13 14 15 16F 17F 18F 19F 20F

US California

CA International Inbound TravelAnnual % change

Source: Tourism Economics

China, South Korea and India forecasted to lead % growth through 2020

0 3 6 9 12 15

BrazilJapan

CanadaUnited Kingdom

FranceMexico

GermanyItaly

ScandanaviaAustralia

Middle EastIndia

South KoreaChina

Projected international visits by marketAverage annual % growth, 2015-2020

Source: Tourism Economics

Biggest potential for spending growth is among international travelers

8090

100110120130140150160170180190200

07 08 09 10 11 12 13 14 15 16F 17F 18F 19F 20F

Domestic International

Expenditures and Visits DivergingIndex, 2007 = 100

Source: Tourism Economics

Solid lines = visitorsDashed lines = expenditures

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