San Francisco Down, Not Out, After Bad Time : Tourism: A triple punch of earthquake, recession and war hits the city, which fights back with hard-sell marketing.

SAN FRANCISCO —  A bruising triple whammy has humbled the decorous grande dame of destinations.

First, as San Francisco’s nearly $4-billion tourism business was headed for a banner year in 1989, the October earthquake sent visitors and locals scurrying for cover, and they didn’t emerge for months.

As memories of the tremor were fading, the recession kicked in.

Then, Desert Storm struck, decimating travel by Japanese and other overseas visitors who account for a huge chunk of spending in “Baghdad by the Bay,” as San Francisco was fondly called--until Iraqi strongman Saddam Hussein invaded Kuwait, that is.

And to cap it off, the city’s Board of Supervisors--against the grain of public sentiment at the time--declared the city a sanctuary for conscientious objectors, infuriating some flag-waving convention groups that threatened to cancel plans for future visits.

What’s a tourism-dependent city to do?

Sell itself, like never before.

“You probably work twice as hard getting half the business,” said Lovester R. Law, vice president of marketing for the San Francisco Convention & Visitors Bureau.

Hard-sell marketing has come to hotels, restaurants and attractions on Nob Hill, at Fisherman’s Wharf and in Union Square that for years relied on reputations and a steady flow of tourists. Many are offering sharply lower rates, airline-hotel packages, free meals, discount coupons and other incentives.

For the traditionally slow Easter period, the venerable, 600-room Fairmont on Nob Hill touted a bargain-basement rate of $99 a night, down from the usual $139 or $179.

Just down the hill, at Stouffer’s elegant Stanford Court, the occupancy rate has hovered in the mid-40% range, a dismal showing, although the hotel said business picked up in March. Stouffer expects a big boost with a costly new promotion offering customers a free night’s stay at any of its three deluxe California hotels--in San Francisco, Los Angeles and Palm Springs--for every two nights spent at one of the locations.

In February, the 417-room Sir Francis Drake just off Union Square, known for its Beefeater doorman, filed for protection from creditors under Chapter 11, blaming its financial troubles on a slowdown that began with the earthquake. It is promoting a spring rate of $69 a night, down from the normal $90 to $115.

And, in an effort to counteract negative feelings resulting from the supervisors’ sanctuary action, the San Francisco Hilton and the Hotel Group of America, operator of four small hotels, are offering free nights for prisoners of war and other Desert Storm troops.

To be sure, San Francisco is not alone in having to cope with the problems of curtailed travel and a sour economy. But its woes have been complicated by two key factors: lingering effects of the earthquake (notably a fouled-up freeway system that continues to complicate access to Chinatown and some downtown hotels and restaurants) and a huge increase in the number of hotel rooms.

With less than impeccable timing, the San Francisco Marriott opened its 1,500 rooms on Oct. 17, 1989, the day of the 7.1-magnitude Loma Prieta earthquake. And in quick order this month an additional 1,000 rooms will come on line, with the reopening downtown of the 552-room Sheraton Palace after a $150-million renovation and the debuts of the 336-room Ritz-Carlton on the eastern slope of Nob Hill and the 132-room Harbor Court near the waterfront.

By year-end, the city is expected to have 29,600 rooms, up from 27,900 in 1989. Meanwhile, occupancy rates of 50% to 60% are common throughout the city, well down from the mid-70% levels common in less competitive days.

Mary Jo Martin, a principal with the San Francisco office of Pannell Kerr Forster, a consulting firm specializing in the hospitality industry, noted, “Despite everything that happened, 1990 exhibited . . . strong growth in the number of occupied rooms.” However, she added, room rates have not kept up with inflation, and most hotel operators have been forced to discount heavily.

Many observers contend that although visitors still form long lines for cable cars and many restaurants are jammed, the atmosphere is far more subdued than in pre-earthquake, prewar, pre-recessionary San Francisco. Whereas convention business recovered quickly from the quake, discretionary travel has been another story.

“Fundamentally, the earthquake damaged the hotel business in San Francisco, and the hangover effects are still there,” said Bill Kimpton, whose company operates 11 boutique hotels, including the Prescott with its popular Postrio restaurant. Business overall in San Francisco, he added, has been “very weak.”

Although his smallish Kimco hotels have benefited from a trend toward more intimate, less pricey hotels, even his usually successful formula stumbled at Fisherman’s Wharf, hard hit by earthquake- and war-related sluggishness. Kimco’s new Tuscan near the wharf “has been a struggle,” he said. “New hotels at the wharf survive on the overflow from others, and that just hasn’t been there.

“Maybe the summer will pick up and everything will be fine, but I wouldn’t want to bet on it.”

Some waterfront attractions have begun recovering to pre-earthquake strength for unexpected reasons. Pier 39, a complex resembling a New England fishing village, got help from a pack of smelly but amusing sea lions that took up residence in an adjoining marina, to the delight even of locals, who for years had shunned the area.

The Cannery, a collection of shops and restaurants where business plummeted after the quake, benefited surprisingly early this year from the drought, according to manager Chris Martin. Bay Area residents who couldn’t find good local skiing stayed close to home for entertainment.

Even so, merchants are finding business more of a struggle than in days gone by. “I don’t think there’s less people,” said Dennis Dehoney, manager of Cable Car Hallmark at Pier 39. “They’re just spending less.”

If the triple threat has left San Francisco feeling a bit bloodied, it’s safe to say that much of the storied chauvinism has survived intact. A new image advertising campaign created by BBDO San Francisco for the convention and visitors bureau is headlined: “In the beginning God created heaven and Earth. San Francisco took a little longer.”