While an economic recovery may not be imminent, blue skies are ahead when one considers the Federal Reserve�s quarter point reduction early this month. This sixth rate cut should provide enough "oomph" for the economy to recover gradually, albeit not in all geographic areas. Moreover, manufacturing appears to be stuck in a slump. 

The fact is, if the economy continues to stumble, the Fed could go back and order another round of rate cuts�275 basis points over six rate cuts this year is a serious attempt at stimulus, but not the last "bullet in the chamber." 

The period from 1996-2000 was clearly a period of unprecedented financial success. That does not mean that we are destined for tough times. We have endured a soft-landing and economic slowdown, one of six in the last thirty years. There are pessimists who come out of the woodwork toward the end of each great run and claim, �it�s over!� 

Agreed... it�s over, but the economic slowdown will likely end within the next 12 months. 

Consumer confidence will slowly climb by the first quarter of 2002 and California might have a delayed reaction since it held up pretty well during the beginning of the slowdown. But good times are ahead�especially in markets that have both growth and diversity in it�s economic sectors. 

Homewood Suites Development, Del Mar, California

Very shortly, our readers and those who follow hotel development in San Diego will see construction of our first owned �ground up� hotel. We chose an extended-stay hotel because the guests stay longer and the amount of business from that segment can be managed to improve yield. The pricing strategy allows higher rates for shorter stays. 

While guests receive breakfast, evening reception and full kitchen suites, the higher occupancy levels compensate for some of those costs. And housekeeping costs are less due to the flexibility to clean rooms less often. 

In addition, we believe that there is substantial unmet demand in this category that will continue to grow in markets where there is growth and where apartment vacancy levels are low...like San Diego's Torrey Hills. 

Demand and growth potential continue to fuel hotel development in this extended-stay segment. Marriott International alone sports four extended-stay brands: Residence Inn, TownePlace Suites, Marriott Executive Apartments, and ExecuStay. Plus, many extended-stay hotels now offer daily rates (which include a queen-sized bed, recliner, free local calls and voice mail, TV, fax delivery, and in some cases a full kitchen) that rival mid-priced hotels with fewer amenities. Despite the sacrifice to hotel services, extended-stay hotels are an attractive alternative for both long-term and short-term travelers. 

Because extended stay hotels target a particular clientele, typically representatives to companies that are relocating or engineers staying for local seminars or conventions, customer marketing has been predominantly through direct sales, trade publications, and mail. Word-of-mouth advertisement has been an effective way to increase demand while keeping prices at a minimum. 

While we believe that in strong markets, independent extended stay hotels can perform well, we selected Hilton�s Homewood Suites for our Del Mar, California project based on ability to get financing, market share and the quality of Hilton�s people and prototypical drawings. Hence, we look forward to construction of the Homewood Suites by Hilton Torrey Hills/Del Mar, the first in San Diego County. 

We are planning to break ground next month and will keep our readers posted. In the meantime, we are also excited about the imminent launch of our new website�watch for an email later this month. 

Rather than re-invent the wheel this month, we suggest you look at the Aries Capital website this month for suggestions on websites. My old friend Craig Johnson stays on top of these as well as anyone. 

Executive Summary of San Diego's Tourism Industry Impact by Robert Rauch

Travel and tourism supports more than 200 million jobs worldwide. This represents about 12 percent of the global workforce, according to the World Travel and Tourism Council (WTTC). By employing approximately one out of every ten workers, travel and tourism is the world�s largest employer and is the largest industry. 

Recently, the San Diego County Taxpayers Association released its study of our region's visitor industry, which confirms the extensive economic benefits that tourism provides to San Diego. One key component of the taxpayers' study is the important impact of the Transient Occupancy Tax, or TOT, on the city of San Diego's budget. 

Most San Diegans are unaware of the TOT or its significance on their lives because it is, after all, paid for by visitors who spend the night in one of San Diego's hotels or motels. This year the bed tax will generate more than $100 million for the city of San Diego. (This is in addition to tens of millions of dollars in other general fund revenues like sales tax, property tax, rents, etc. generated by visitor spending. By comparison, in 1980, TOT receipts totaled $10 million; in 1995, $57 million 

A significant portion of the TOT is used to supplement the city's General Fund and underwrite basic municipal services, such as road repair and park maintenance. These revenues also help fund cultural events, arts organizations and community-based programs throughout the city. In addition, the TOT provides funding to hire police officers for our neighborhoods, train firefighters and promote economic development. 

The TOT also helps to maintain many of the amenities that are enjoyed not only by tourists, but also by San Diego-area residents, such as Balboa Park, Mission Bay Park and the San Diego Trolley. The TOT is the source of funding for the expansion of San Diego's enormously successful Convention Center. The expansion project, presently under way, will ensure the center's continued competitiveness for years to come. (Reinders, May 10, 1999). 

Perhaps most importantly, the jobs created by the tourism industry cover a broad array of skilled labor, unskilled labor and management, most of which include significant benefits. A recent study, soon to be published by UCSD Extension examined benefits offered to hospitality employees at San Diego hotels. All hotels responding to the survey offered health benefits to employees. </

Tourists create the need for a San Diego amenity package that could not be supported without the tax revenue created by tourism. These amenities include but are not limited to the arts, museums, restaurants and attractions. The impact that tourism has on these venues can be determined by reading the Taxpayers Association report. The end result of this amenity package is a strong global and national reputation and a better quality of life. 

According to Philip Kotler, "tourism's most visible benefit is direct employment in hotels, restaurants, retail establishments, and transportation. A second but less visible benefit consists of support industries and professions such as finance, insurance, legal, accounting, utilities, education, caterers, florists, agriculture, wholesalers, telecommunications, construction and many more throughout the economy. 

Many of these indirect jobs pay considerably more than the visible employment opportunities such as restaurant personnel. The third benefit of tourism is the income effect as tourist expenditures are wages and salaries of the employees in the direct and indirect industries and are spent throughout the local economy. The indirect sales of support industries and the income effect of the employee spending their wages and salaries make up the economic multiplier effect of the direct visitor spending. 

Governments use economic impact models to estimate overall employment gains in goods and services consumption resulting from tourism multipliers. Tourism�s fourth benefit is state and local revenues derived from taxes on tourism." 

Tourism helps shift the tax burden to nonresidents. In San Diego County, Legoland California opened its� doors in March 1999, after years of local public opposition. It has already stimulated the development of resorts and amenity packages to serve locals and visitors alike. Without these attractions, local residents would not have the "amenity package" that comes with tourist activity. 

Today, 231 million people around the globe - some 10% of the total workforce - are employed in jobs, which exist because of the demand, generated by Travel and Tourism. The diversity of Travel and Tourism, and its flow-through effect create jobs across the entire economy. 

While the general perception recognizes direct jobs in hotel, airlines and travel service companies, there are a myriad of jobs created both upstream with suppliers such as aircraft construction, border services, and the like, and �down-stream� in areas such as retail, service stations, clothing manufacturers, food suppliers, and so forth. The former depends on travel company purchases; the latter are driven by travelers� expenditure. 

Travel and Tourism has a number of outstanding characteristics as a job creator. These include: 

• Very high flow-through effect across the economy; 
• Higher employment growth potential than any other industry, generally; 
• Creation of a wide range of jobs 
• Large number of entry-level jobs for young people, particularly first time employees; 
• Part-time or seasonal jobs for people requiring flexibility because of study or family responsibilities; 
• Low-cost job-generating capacity in areas of high structural unemployment � city centers and rural communities; 
• Ability to rapidly stimulate jobs in particular regions through promotion or infrastructure provision; 
• Predominance of jobs in small and medium-sized enterprises-the backbone of the market economy; 
• Generally fair wage levels; and 
• High proportion of export-related jobs. 

In San Diego, visitor spending of nearly $5 billion in 2000, generated a total economic impact (direct, indirect, and induced) of over $11 billion in regional sales, which includes over $2 billion in household income (wages and salaries). The total employment generated (direct, indirect, and induced) was nearly 120,000 jobs (full and part-time). 

The nearly 25 million leisure visitors (including 10 million day visitors) to the county represented nearly 90 percent of all visitors, but only 72 percent of total visitor spending. Each commercial visitor (business, convention, conference or meeting) spends about 3.5 times as much as a leisure visitor. 

Spending in San Diego from out-of-county visitors� results in an expansion of the local economic base that would not have occurred in San Diego County, if these visitors had not come. These sales to visitors are like exports that are purchased with non-local dollars and are a net addition to the local economic base. 

In contrast, retail sales generated by a new shopping center in San Diego that serves local residents does not increase the local economic base. The discount center, supermarket or drugstore of a typical shopping center is satisfying existing demand within the region and is not an engine for driving increased sales or multiplier effects. A new shopping center, while satisfying the needs of everyday living, will only result in taking market share from other existing stores in the region unless there is an increase in total wages and salaries within the local economy. 

CONCLUSION 

According to CIC Research, the City captures two-thirds of the direct visitor spending and about 54 percent of the total countywide indirect sales impact resulting from the $5 billion direct visitor spending in 2000. As a result of capturing over half of the county's indirect sales generated by visitor spending, the total sales multiplier for the City is about 2.39 compared to 2.28 countywide. The $3.1 billion in visitor spending generates a total of $7.3 billion in sales for the City (direct, indirect and induced). 

At any level of analysis, the overall fiscal impact from visitor spending is positive for the City of San Diego. 

Update: the Wonders of Wireless, Where is it? by Joseph Esplago

In the age of computers, wireless communications is a major commodity for the hospitality industry. Whether for business or for leisure, travelers need to access the internet. Providing the fastest and easiest connections will mean an edge on competition and easily draw in a large customer base. And with internet-ready cell phones and browser-enabled hand-held devices being developed, there will be a huge increase in demand to stay on top of the technology game. 

Companies like Bluetooth are developing technology that will allow communications between different wireless technologies and communication from a broader range. Imagine being able to make hotel arrangements as you step onto the premises of a hotel. The dream of being able to upload files from your laptop to your cell-phone is flying around the internet. But before you start ripping out ethernet ports to make way for new wireless wonders, consider the current state of wireless technology. 

The buzzword for wireless inter-device communications is �Bluetooth�. Bluetooth is an Ericsson development group specializing in this field of telecommunications. They have already developed a few devices with chips that can interact with select Bluetooth systems. But due to disheartening failures at demo shows, Bluetooth has been unable to show its reliability to the world. Another problem that Bluetooth faces is 802.11. 

802.11, named after the engineering frequency standard for wireless transfers, has been the leader of wireless communications in the United States. Several companies have started incorporating 802.11 in its systems. But 802.11 seems to lack the unified incorporation of wireless devices that Bluetooth has. Unfortunately, the 802.11 and 

Bluetooth systems are incompatible with each other. And until one side begins to show more promise or a hybrid system is developed, many in the hospitality industry probably will not invest in these new systems. 

Another major consideration is the development of 3G phones. �Third-generation�, cell phones with internet capacity, have also experienced setbacks in their progress. 3G phones are the potential backbone to the new Bluetooth and 802.11 systems because of their increased capacities over existing cell phones. Recently, NTT Mobile Communications (NTT DoCoMo), one of the leaders in 3G development, recalled several new 3G handsets. 

Several problems including short battery-life, overheating, software problems, failure to receive Java applets, and general transfer failures manifested in the prototype units. With NTT DoCoMo�s first attempt showing unsatisfactory marks, it appears that people will have to wait for 3G a little while longer. 

Recent news shows that several problems haunt the development of free-flowing wireless communications. Until these gremlins are dealt with or a new option brings integrated communications closer to consumer reality, there is not a necessity for hoteliers to change from high-speed communications and existing internet conventions.