But in August and September, when L.A. hotels exceeded that threshold for the first time since Covid-19 struck, it provided a glimmer of hope.
It also signaled just how far L.A.’s tourism economy had sunk: The city’s leisure and hospitality sector last year lost a quarter of its workforce, or an estimated 137,150 jobs, according to Los Angeles Tourism.
The job of reviving the city’s decimated hospitality industry falls on Burke. As the organization’s CEO, he is essentially L.A.’s chief marketer.
Burke had served as L.A Tourism’s chief operating officer since 2016. He was named interim chief executive in April, a title that was made permanent in July.
The nonprofit is the official destination marketing and sales organization for Los Angeles. It contracts with Los Angeles World Airports and the city of Los Angeles, and collects dues from more than 1,000 members.
Over the course of two interviews with the Business Journal in December and January, Burke laid out what’s at stake for local tourism.
Set the stage for us. How important is tourism to L.A.?
In 2019, we were coming off of nine straight years of record growth and visitation. We welcomed over 51 million visitors. Of that, about 7.5 million were international visitors. That generated direct spending of about $25 billion into our local business community.
We worked with Oxford Economics to look at total economic impact of that because everyone who is employed in our industry, they obviously then generate more revenue into local businesses, and the total impact was $36 billion in 2019. There was a huge advantage to us as Angelenos.
How does that translate into the local economy?
When a guest stays at a hotel in L.A., they pay a 14.5% transient occupancy tax. Last year, $323 million went to the city of L.A.’s general fund because of that tax being paid by visitors staying in hotels. That goes directly to essential services, like street repairs, sanitation, arts and cultural programming, and recreational activities. Every single L.A. household pays almost $900 a year less in taxes because of the tax and revenue generation of tourism.
We were expecting 2020 to be another record-breaking year. The initial forecast had called for us to grow to well over 52 million visitors and see continued growth out of the international market and total economic impact approaching $40 billion.
And what is the state of the tourism economy now?
It’s been a devastating impact. Travel and tourism obviously was hit first and hit hard. We’ve lost $14.5 billion in direct visitor spending in 2020, and we anticipate reaching $10.1 billion in total visitor spending for the year. Job losses are now 1 in 4.
What about bed taxes?
There’s been a 60% reduction in visitor spending and a comparable reduction in transient occupancy taxes.
That’s a bleak picture. Given the impact of Covid, did you give a second thought to accepting the chief executive position?
No, not at all. Any time there’s been any type of major economic downturn, L.A. travel and tourism has always been one of the things that leads economic recovery and that brings people back to work. And (during the pandemic), I’ve seen so much selflessness, so much collaboration. Hotels hosted first responders and over 4,000 members of our homeless community. I’m incredibly proud to represent Los Angeles.
There was a bit of reprieve over the summer, but it’s not safe to travel now. Who are you even trying to reach today?
Historically, our emphasis has been on international, then long-haul domestic, then local. Pre-pandemic, we marketed heavily internationally, because international visitors to Los Angeles are by far the most lucrative. They stay longer; they spend more. We have an office in the U.K. that’s celebrating its 21st anniversary. We’ve been in China for over a decade, with offices in Beijing, Shanghai, Guangzhou and Chengdu. We just opened an office in India this year. The numbers are staggering: A decade from now, India will likely be a larger market than China.
Because of the pandemic, that has really been inverted. The first market that’s going to come back is local. It’s going to be Angelenos. And one of the most important things is getting our neighbors, our friends, our family members back to work. That’s what gets me excited about our industry — we’ve become one of the largest employment sectors in L.A. County. In 2019, there were almost 545,000 Angelenos working in travel and tourism-related careers.
What about L.A. Tourism itself as an organization? What have you had to deal with as the CEO?
We essentially paused all promotional campaigns. We reduced the organization by about two-thirds globally. What we tried to do was, for a lack of a better word, take a surgical approach to it. We retained a core group of staff in every one of our functional areas. (For example) from a marketing perspective, we retained core members of our digital team, which has been pushing out information on safety protocols for each of the sectors in our industries; they are looking to L.A. Tourism for safety protocols. On our communications team, our core members are working to answer inquiries from around the globe about what California’s pandemic status is and what’s open.
How are you advocating for public health and the abstinence of the things that drive L.A.’s economy while also fulfilling your mission of boosting the economy?
We have to be guided by the course of the pandemic. We appreciate that stay-at-home orders have been a hardship for so many of our members. Whatever we can do to make sure we don’t overwhelm our hospital system has to be our collective responsibility. Our goal is not to be premature and rush to reopening.
What have you done to strike that balance?
What we did in August was launch a program called “L.A. Love.” We put together over 100 special offers for local businesses to make it more affordable for Angelenos to staycation, and get out and explore other parts of the city.
For the first time, we included takeout and delivery options in Restaurant Week. The numbers were smaller than we’d seen in the past, but we had 300 participating restaurants over an extended, three-week period.
What impact can locals have?
A lot of people were asking, “What can we do to support our local business community?” Well, if every employed Angeleno — and that’s important because some people don’t have the means to do this right now — were to just support three local restaurants and visit three local attractions and have one three-night hotel stay, that would allow us to recover over 21,000 jobs in L.A. County. Obviously, we have to hit the pause button right now, but we will see that bounce back again.
How long will it take for the tourism economy to get back to where it was before Covid-19 hit?
It will probably take about 3.5 years. You have to look at consumer confidence. Do I feel safe traveling? Can I afford to travel? Am I allowed to travel? It will really be Angelenos that come first. A lot of them will take day trips to start, which won’t be generating revenue for the hotels, and as a result won’t be generating that tax income for the city through the transient occupancy tax.
Once we start to see wide distribution of vaccines is when we’ll see a significant return of overnight visitation, and that will probably start to rebound in the first quarter of 2021. In the second and third quarters, we’ll see people starting to feel more comfortable flying again. Airlines will require testing. They’re even doing things like “air bridges” to reduce quarantine periods. You can be out of quarantine in less than five days.
2020 was the most difficult year on record, but by the time we get through the first quarter of 2021, we’ll be able to say we’re rounding a corner.
What can you do in the meantime?
Our digital and brand marketing teams are already putting together our campaigns, so when we’re able to start promoting again, we’ll be ready. Our goal is to have the spring campaign done at the end of February. I can’t tell you a lot about the creative concepts yet because we’re keeping it close to the vest, but it’s focused on the fact that we know there is tremendous pent-up demand for travel.
