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Economy

Report: Coronavirus Could Cause 50% Drop In California Travel Spending

The Gaslamp Quarters in downtown San Diego on March 16, 2020.
Bennett Lacy
The Gaslamp Quarters in downtown San Diego on March 16, 2020.
Report: Coronavirus Could Cause 50% Drop In California Travel Spending
Listen to this story by Erik Anderson.

The coronavirus pandemic will cost California more than 600,000 jobs by the end of the month and could cause travel spending statewide to drop in half by the end of the year, according to a new report by Tourism Economics.

The study, commissioned by the state's nonprofit tourism booster Visit California, said the pandemic will erase 10 years of growth in visitor spending, state and local tax revenue, and job creation.

All told, the statewide impact could be as high as $72 billion, the report said. If the state mitigates the impact of the virus, losses could be limited to $58 billion.

San Diego will not get by unscathed — the region has a significant tourism sector that touches a lot of businesses.

Video: Report: Coronavirus Could Cause 50% Drop In California Travel Spending

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“They include the hotel-motel industry,” said Ray Major, San Diego Association of Government’s chief economist. “They include the restaurant industry. It also includes some of the transportation like Uber and what people get around in. Entertainment. Theme parks. Those type of things. All are going to have problems recovering.”

California will lose 613,000 tourism jobs by the end of the month cutting the economic sector’s California workforce in half, the report concluded. Overall travel spending in California could be down 40% to 50% at the end of the year.

A big question is how quickly those tourism jobs will come back. If many of the job losses are permanent, it would have a devastating ripple effect, Major said.

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“If that industry doesn’t come back then there is a good chance that the (hotels and motels) won’t need as many employees,” Major said. “The restaurants, if they have social distancing and can only have half as many tables they may not need as many servers or as many line cooks. And so those restaurants might hire back 50 percent or 75 percent of the staff that they had before.”

The tourism industry was growing at an annual rate of more than three percent over the last ten years. Those gains were wiped out in just two months.

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