SoCalVisitorOutlookf or2007 final

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Slide1: Perspectives on Major Markets Southern California Visitor Industry Outlook Conference - 2006 Tiffany Urness Research Manager, California Tourism October 12, 2006

California Tourism2005: California Tourism 2005 In-State: 279.8 M 80% Out-of-state: 55.5 M 16% Int’l: 14.4 M 4% Source: D. K. Shifflet & Associates Ltd. DIRECTIONS®DESTINATION PERFORMANCE/MonitorSM CIC Research; California Tourism Research

Slide3: 2005 = Banner year for California tourism.

2005 in Review: 2005 in Review US CA Total domestic travel + 4.1% + 6.7% Domestic leisure + 3.2% + 7.1% Domestic business + 6.8% + 5.6% Source: D. K. Shifflet & Associates Ltd. DIRECTIONS®DESTINATION PERFORMANCE/MonitorSM

2005 in Review: 2005 in Review US CA Overseas visitors +6.9% + 14.3% Hotel occupancy rates + 2.9% + 3.8% RevPAR + 8.4% + 10.1% Domestic air travelers + 4.1% + 2.6% Source: CIC Research Inc., Smith Travel Research; Bureau of Transportation Statistics

California Domestic Market Share(% US Person-Stays): California Domestic Market Share (% US Person-Stays) Source: D. K. Shifflet & Associates Ltd. DIRECTIONS®DESTINATION PERFORMANCE/MonitorSM

CA Domestic Volume by Segment(Millions of Person-Stays): CA Domestic Volume by Segment (Millions of Person-Stays) Non-Resident Business Non-Resident Leisure Resident Business Resident Leisure Source: D. K. Shifflet & Associates Ltd. DIRECTIONS®DESTINATION PERFORMANCE/MonitorSM

CA Resident Leisure Volume(Millions of Person-Stays): CA Resident Leisure Volume (Millions of Person-Stays) Source: D. K. Shifflet & Associates Ltd. DIRECTIONS®DESTINATION PERFORMANCE/MonitorSM

CA Non-Resident Leisure Volume(Millions of Person-Stays): CA Non-Resident Leisure Volume (Millions of Person-Stays) Source: D. K. Shifflet & Associates Ltd. DIRECTIONS®DESTINATION PERFORMANCE/MonitorSM

Dynamics Affecting California Travel Trends : Dynamics Affecting California Travel Trends Headline Events Market Conditions California Competitiveness

2006 Travel Industry YTD: 2006 Travel Industry YTD Headline Events Relative normality Restrictions, regulations, and rudeness

2006 Travel Industry YTD: 2006 Travel Industry YTD Market Conditions Higher prices Tapering demand

2006 Travel Industry YTD: 2006 Travel Industry YTD TIA Aug.Travel Price Index + 6.2% Gasoline + 19.6% Lodging + 4.8% Airfares + 5.8% Source: TIA.org, August 2006

Vehicle Miles Driven Vs. Regular Gas Prices : Vehicle Miles Driven Vs. Regular Gas Prices U.S., % change year ago Sources: Department of Transportation,Oil Price Information Service  Vehicle Miles Driven (L) Gas Prices (R)

California Hotel Room Rates Vs. Occupancy: California Hotel Room Rates Vs. Occupancy % change year ago Source: Smith Travel Research; Moody's Economy.com Average Room Rate Occupancy, percentage point difference

California Hotel Room Rates Vs. Occupancy: California Hotel Room Rates Vs. Occupancy Source: Smith Travel Research Average Room Rate (R) % change year ago Occupancy Rate (L) Trendline

2006 Travel Industry YTD: 2006 Travel Industry YTD August YTD US room revenues + 6.8% US average occupancies + 1.1% CA room revenues + 8.2% CA average occupancies + 1.1% Month of August - 1.0% Source: Smith Travel Research

Revenue Passenger Air Miles: Revenue Passenger Air Miles U.S., % change year ago Source: Air Transport Association Domestic International

Feeder Markets: Top States( 2005 Person-Stays) : Feeder Markets: Top States ( 2005 Person-Stays) Arizona Nevada Texas Oregon Washington 9.1 million 7.4 4.0 3.4 2.7 Source: D. K. Shifflet & Associates Ltd. DIRECTIONS®DESTINATION PERFORMANCE/MonitorSM

Feeder Markets: Top Metro Markets( 2005 Person-Stays) : Feeder Markets: Top Metro Markets ( 2005 Person-Stays) 4.4 million 4.0 1.8 1.3 1.2 1.1 1.1 Phoenix Las Vegas Yuma Tucson Reno New York Portland Source: D. K. Shifflet & Associates Ltd. DIRECTIONS®DESTINATION PERFORMANCE/MonitorSM

Air Travel Vs. Air Fares To CaliforniaFrom Phoenix: Air Travel Vs. Air Fares To California From Phoenix Source: U.S. Department of Transportation, O&D Survey

Air Travel Vs. Air Fares To CaliforniaFrom Las Vegas: % change year ago Source: U.S. Department of Transportation, O&D Survey Fares From Las Vegas Trips From Las Vegas Air Travel Vs. Air Fares To California From Las Vegas

Air Travel Vs. Air Fares To CaliforniaFrom Portland: Air Travel Vs. Air Fares To California From Portland % change year ago Source: U.S. Department of Transportation, O&D Survey Fares From Portland Trips From Portland

Air Travel Vs. Air Fares To CaliforniaFrom New York: % change year ago Source: U.S. Department of Transportation, O&D Survey Fares From New York Trips From New York Air Travel Vs. Air Fares To California From New York Source: U.S. Department of Transportation, O&D Survey

Air Travel Vs. Air Fares To California from Seattle: Air Travel Vs. Air Fares To California from Seattle % change year ago Source: U.S. Department of Transportation, O&D Survey Fares From Seattle Trips From Seattle Source: U.S. Department of Transportation, O&D Survey

Air Travel Vs. Air Fares To CaliforniaFrom Chicago: % change year ago Source: U.S. Department of Transportation, O&D Survey Fares From Chicago Trips From Chicago Air Travel Vs. Air Fares To California From Chicago Source: U.S. Department of Transportation, O&D Survey

Slide28: Canada Mexico 81%

Top CA International Markets(2005): Top CA International Markets (2005) Mexico (Air/Land) 3,796,000 Day visitors 4,800,000 Canada 1,060,000 UK 778,000 Japan 722,000 Australia 313,000 Germany 309,000 Source: CIC Research Inc.

International Visitors Vs Arrivals: California Visitors: Estimates based on in-flight surveys of non US residents reporting a California visit, supplemented with DHS data. International Visitors Vs Arrivals California Arrivals: Non US residents arriving in California as their first US port of entry.

Int’l Visitors Vs Arrivals at California Ports of Entry(Percent Chg 04-05): Int’l Visitors Vs Arrivals at California Ports of Entry (Percent Chg 04-05) Visitors Arrivals Total Overseas 14.3% 5.8% China 44.6% 21.7% Mexico (Air) 21.3% 14.0% Australia 20.8% 10.6% So. Korea -7.7% 2.0% Japan 14.6% -5.0% UK 12.3% 2.1% France 21.4% 19.8% Germany 12.4% 8.4% Source: DHS Port of entry arrivals, Form I-94; CIC Research Inc.

Value of U.S. Dollar Vs. Foreign Currencies: Value of U.S. Dollar Vs. Foreign Currencies Index: January 2003 = 100 Source: The Federal Reserve Board Euro Peso Yen Pound Canadian $

Canadian Travel Vs Exchange Rates: Canadian Travel Vs Exchange Rates Source: Fedgazette, Federal Reserve Bank of Minneapolis, July 2006

Value of Euro VS German Arrivals in CA: Value of Euro VS German Arrivals in CA Index: January 2003 = 100 Source: Federal Reserve Board; DHS Port of entry arrivals, Form I-94 Euro German Arrivals

CA Overseas Visitor Market Share1994 - 2005: CA Overseas Visitor Market Share 1994 - 2005 Source: CIC Research Inc.

European Visitors to California(1999-2005): European Visitors to California (1999-2005) Source: CIC Research Inc.

Asian Visitors to California(1999-2005): Asian Visitors to California (1999-2005) 1999 2005 Source: CIC Research Inc.

International Visitors Entering CA*(Percent Chg 05-06 July YTD Prelim.): International Visitors Entering CA* (Percent Chg 05-06 July YTD Prelim.) *Port of Entry Arrivals -14.9% -13.3% Source: DHS Port of entry arrivals, Form I-94

All Overseas Arrivals in CA*: All Overseas Arrivals in CA* *Port of Entry Arrivals % change year ago Source: DHS Port of entry arrivals, Form I-94

Asian Arrivals in CA*: Asian Arrivals in CA* *Port of Entry Arrivals % change year ago Source: DHS Port of entry arrivals, Form I-94

European Arrivals in CA*: European Arrivals in CA* *Point of Entry Arrivals % change year ago Source: DHS Port of entry arrivals, Form I-94

Australia and Mexican Air Arrivals in CA*: Australia and Mexican Air Arrivals in CA* *Point of Entry Arrivals Source: DHS Port of entry arrivals, Form I-94 % change year ago

Trends to Watch : Trends to Watch Generation divide Solo travel Nature travel (tamed) Voluntourism

California’s Age Wave 2000 - 2010: California’s Age Wave 2000 - 2010 Millions Source: Pulse Marketing/Newbridge Partners The 45 to 64 Segment grows from 20 to 25 Percent of the Population

The Way We Look -- 2000: The Way We Look -- 2000 War Babies Depression Kids Boomers 1936-1945 1965-1976 1946-1964 Pre 1935 1977-1994 1995 + Millions Source: Pulse Marketing/Newbridge Partners Generation Y Generation X Generation Z

The Way We Look -- 2010: The Way We Look -- 2010 War Babies Depression Kids Boomers 1936-1945 1965-1976 1946-1964 Pre 1935 1977-1994 1995 + Millions Source: Pulse Marketing/Newbridge Partners Generation Z Generation Y Generation X

Visits to CA State/National Parks (Domestic Person-Stays): Visits to CA State/National Parks (Domestic Person-Stays) Source: D. K. Shifflet & Associates Ltd. DIRECTIONS®DESTINATION PERFORMANCE/MonitorSM

Visits to CA Theme/Amusement Parks (Domestic Person-Stays): Visits to CA Theme/Amusement Parks (Domestic Person-Stays) Source: D. K. Shifflet & Associates Ltd. DIRECTIONS®DESTINATION PERFORMANCE/MonitorSM

Seasonal Outlook 2006-2007: Seasonal Outlook 2006-2007 Source: D. K. Shifflet & Associates Ltd. DIRECTIONS®DESTINATION PERFORMANCE/MonitorSM

CA Business vs Leisure Travel Seasonal Trends and Outlook (Millions of Domestic Person-Stays): CA Business vs Leisure Travel Seasonal Trends and Outlook (Millions of Domestic Person-Stays) Source: D. K. Shifflet & Associates Ltd. DIRECTIONS®DESTINATION PERFORMANCE/MonitorSM Fall Spring Summer Winter

Travel by California Residents Seasonal Trends and Outlook (Millions of Domestic Person-Stays): Travel by California Residents Seasonal Trends and Outlook (Millions of Domestic Person-Stays) Source: D. K. Shifflet & Associates Ltd. DIRECTIONS®DESTINATION PERFORMANCE/MonitorSM Fall Spring Summer Winter

Travel by Non-Residents Seasonal Trends and Outlook (Millions of Domestic Person-Stays): Travel by Non-Residents Seasonal Trends and Outlook (Millions of Domestic Person-Stays) Source: D. K. Shifflet & Associates Ltd. DIRECTIONS®DESTINATION PERFORMANCE/MonitorSM Fall Spring Summer Winter

Slide54: Forecast Key CA domestic origin markets will slow but growth is still above US average Source: BEA, Global Insight

Slide55: Income, housing wealth, and debt begin to apply pressure… Savings rate is currently below zero and (w/o/ rising housing wealth) unsustainable… Time for the consumer to regroup, retire debt, and get spending back in line with income growth (Percent change) Prepared by: Global Insight

Income, housing wealth, and debt begin to apply pressure… : 34% overvaluation is trigger point for major price correction. Income, housing wealth, and debt begin to apply pressure… U.S. Metro Areas with 34%+ Housing Overvaluation Housing wealth has provided consumers with the confidence to add debt and spend more… California’s key domestic feeder markets are poised for a correction. Source: Global Insight

Slide57: US and California business travel should remain strong… US corporations are flush with cash and profits are relatively strong Leading to a rise in bricks & mortar, equipment, and… travel spending Prepared by: Global Insight

Slide58: Growth in Personal Income Only one of California’s top 10 feeder markets is a slower growth state (NY)… Bodes well for U.S. non-resident leisure travel… Source: Global Insight;; D. K. Shifflet & Associates Ltd. DIRECTIONS®DESTINATION PERFORMANCE/MonitorSM

Slide59: Most of CA’s largest metropolitan feeder markets are growing faster than the US average… Source: Global Insight;; D. K. Shifflet & Associates Ltd. DIRECTIONS®DESTINATION PERFORMANCE/MonitorSM

Slide60: California Competitiveness Previously ranked 28th, heading up to 6th place $50 million may place in top 3

Slide61: 2004-2005 Projected State Tourism Office Budgets compiled by TIA

Slide62: www.visitcalifornia.com Travel Industry: Research & Statistics Research@cttc1.com