Costa Mesa tourism industry showing signs of life after pandemic near-death experience

With California businesses and events poised for a June 15 comeback, cities impacted by stinging losses in tourism dollars during the pandemic, caused partly by record-low hotel occupancy rates, are now looking to rebound. Costa Mesa is no exception.

Travel Costa Mesa, a nonprofit marketing organization that boosts Costa Mesa tourism by engaging outside interest in local businesses and events, estimates citywide hotel occupancy fell from an average of nearly 80% in 2019 to about 42% in 2020. By February of this year, that rate hovered just over 30%.

Fewer people booking rooms at local hotels has caused a steep decline in the transient occupancy tax revenue coming into city coffers from an additional 8% bed tax above the cost of a nightly hotel room rate.

That tax brought about $8.6 million into the city’s general fund in fiscal year 2018-19. One year later, that revenue source had shrunk to $6.58 million.

By the June 30 close of this fiscal year, the city anticipates it will receive just $4.77 million, according to figures provided by the Finance Department.

The pandemic closure of popular attractions, like South Coast Plaza’s carousel as pictured in March 2020, severely impacted tourism and the revenue it generated.

(File Photo)

With out-of-town trips halted by recurring coronavirus surges and fears of transmission, Travel Costa Mesa’s own financial picture similarly suffered a pandemic-related shortfall.

Once operating with an annual budget of $2.7 million, officials forecast in February a budget of just $786,382. TCM President Paulette Lombardi-Fries said the group’s small staff of six took 40% pay cuts from April through October just to survive.

“COVID hit us in mid-March (last year), and by April, it was bad,” she recalled Thursday. “2020 was just an incredibly difficult year for the hospitality industry.”

Travel Costa Mesa operates from funds received through a special partnership with 11 local hotels, which pay an additional 3% above the occupancy tax in exchange for being promoted by the group’s marketing efforts through a city-approved Business Improvement Area (BIA) agreement.

But even in the past few months, as the novel coronavirus rates continue to decline and more people are vaccinated against COVID-19, the tourism business finally seems to be gaining steam.

Lombardi-Fries said since February’s grim budgetary prognosis, more people have been making Costa Mesa a weekend destination, perhaps due to its proximity to major tourist attractions like Disneyland and Orange County coastlines.

“Leisure business is looking excellent,” she added.

The recent uptick in occupancy, and the BIA dollars that come with it, caused Travel Costa Mesa to adjust its budget estimate upward, to $956,000.

Corporate conferences, international tourism and business trips, however, are continuing to lag, leaving those in the local tourism industry unclear as to when business might return to pre-pandemic norms.

Travel Costa Mesa spokeswoman Jenny Wedge said that despite the temporary salary cuts and decline in out-of-town business, she and fellow staff members pivoted to become a de facto clearinghouse of vital coronavirus-related information for local business owners and their clientele.

“We were pretty much busier than ever, because we were trying to support the city and local businesses that were still open,” Wedge said Thursday. “Usually, our outreach would be to people outside our area, but no one was traveling, so we turned local.”

Lombardi-Fries is confident that, by continuing to foster local connections and collaborations within Costa Mesa’s business sector, Travel Costa Mesa and the city will soon be on the road to economic recovery.

“Now more than ever, it’s important for us to work closely with every arm of tourism in our city to drive the success we once saw,” she said.

Support our coverage by becoming a digital subscriber.