1 October 29, 2010 California Tourism Outlook Dan Mishell Director, Research California Travel & Tourism Commission

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3 California Tourism Mission California has over 100 destination marketing organizations, and over 50 tourism business districts. (CTTC, Civitas) CTTC provides a statewide platform for promoting the California brand to leisure travelers. MISSION: To develop and maintain marketing programs in partnership with the state’s travel industry that keep California top- of-mind as a premier travel destination.

4 California’s Leisure Visitors 36 million non-resident leisure person-trips in 2009 $24 billion in spending by non-resident leisure travelers Sources: DK Shifflet & Assoc.; US Dept. of Commerce; CIC Research, Inc., Stats Canada

5 Domestic Leisure Overview Six primary states account for nearly half of non-resident visits and 1/3 of non-resident spending in California. Sources: DK Shifflet & Assoc.; TNS TravelsAmerica

6 International Market Overview, 2009 Mexico Total 6.3million visitors $760 million spending Sources: US Dept. of Commerce; CIC Research; Stats Canada; CTTC

7 California Lodging Inventory Sources: Smith Travel Research

8 Confidence Has Stabilized, but at a Low Level Sources: ABC News, Washington Post Consumer confidence index The New Normal

E2011F2012F Unemployment rate CPI Real personal disp. income Real consumer spending Real GDP Total after-tax profits % change yr ago except unemployment rate The New Normal Recovery Will Proceed at a Tepid Pace Sources: Moody’s Analytics, BLS, BEA

10 China and India will remain growth leaders Economies in Japan and Western Europe will be slower to recover Australia shows no signs of slowing New Normal – GDP

11 Projected Changes in US Traveler Behavior in Next 12 Months 1 in 4 Americans spending less, staying with friends &relatives, and driving instead of flying Source: SMARI The New Normal

12 Consumer Trends Recovery consumers are redefining value in a new era of consequences Consumers want transparency, trustworthiness and authenticity. The definition of “luxury” is morphing and now consumers want meaning along with material goods The New Normal Compiled from: The New Experience of Luxury Synovate 06/10, : PwC The New Consumer Paradigm: Permanent or Fleeting 10/09, Brand Keys 02/10, A Darwinian Tale The Futures Co 11/09

13 Forecast Overview Stronger than expected recovery in 2010 to date Visits will moderate in the second half of the year against headwinds from the economy and comparisons to late 2009 The economic outlook is marred by uncertainty

14 CA Hotel Regional Occupancy Source: Smith Travel Research Business and international travel are up Leisure travelers trading up from day to overnight Gateway Rural Other

15 Strong start to 2010… International arrivals up 14% through June

16 Domestic Forecasts

17 Domestic Forecasts

18 International Forecast

19 International Forecast

20 Spending Forecast

21 Spending Forecast

22 Expenditures recover ahead of visits

Total Visits4.0%3.1% Domestic Visits3.8%2.9% International Visits6.2%5.9% Total Spending7.4%5.6% Domestic Spending6.8%4.8% International Spending10.5%9.0% California Travel Forecast Summary Source: Tourism Economics

24 tourism.visitcalifornia.com/research Full Forecast Available Online