San Jose business tourism takes a major hit

May 6, 2022

Business travel is down in the United States due to COVID-19, but San Jose is suffering more than other major cities.

Business leaders laid out the city’s predicament at a press conference Thursday at the San Jose Chamber of Commerce. According to a report by the American Hotel & Lodging Association (AHLA), hotel business travel revenue in the United States is expected to be 23% lower than pre-pandemic figures from 2019.

San Jose relies heavily on business travel revenue and is expected to bring in nearly $590 million this year, down 51.8% from 2019. In terms of declining revenue, San Jose is faring worse than ‘Oakland, Chicago and Boston, but better than San Francisco or New York, according to the report.

Chip Rogers, president and CEO of AHLA, said San Jose is also expected to see a 16% drop in leisure travel. He pointed out that the drop in business travel will have a wider impact on the city.

Rogers said San Jose is expected to lose about $750 million in economic activity in 2022 compared to what the city gained from business travel in 2019.

Chip Rogers, President and CEO of the American Hotel & Lodging Association, San Jose Chamber of Commerce President and CEO Derrick Seaver, and Team San Jose Vice President Laura Chmielewski, speak on May 5 about the decline in business travel to San Jose. Photo by Eli Wolfe.

Like other major cities, the pandemic has hit San Jose hard. Businesses, especially in the city center, have been temporarily – and in some cases permanently – closed due to public health restrictions and a massive drop in foot traffic.

Norman Y. Mineta International Airport in San Jose, near downtown, is seeing more travelers, but the holiday peak saw 300,000 fewer passengers than before the pandemic. Team San Jose, a nonprofit that manages tourism in the city, reported zero dollars in revenue in 2021, with officials citing the closed convention center as a major contributing factor.

However, there are signs that San Jose’s economy is recovering. Unemployment is down in Silicon Valley. San Jose is considering permanently closing the streets of San Pedro Square to vehicular traffic, which some business owners say will attract more customers. Hilton San Jose recently opened the South Bay’s largest hotel, Signia, to replace the iconic Fairmont.

Laura Chmielewski, vice president of Team San Jose, said the city still lacks 14,000 hotel and hospitality jobs from pre-pandemic levels, though she added 2,000 on last month. She acknowledged that business and group travel are slowly recovering, making it important for the city to invest more in destination marketing. She noted a campaign last year to invite leisure travelers to San Jose yielded a return on investment of $30 for every dollar spent.

“It’s paying off,” Chmielewski told San Jose Spotlight. “If you gave me a dollar last year, we only returned four dollars in taxes, and that’s not even talking about the revenue that went to small businesses, hotels, attractions and retail.”

Chmielewski said some cities have invested in destination marketing for decades, in the case of San Francisco shortly after the 1906 earthquake. She stressed that it’s vital for elected leaders to allocate funds for more tourism.

Derrick Seaver, president and CEO of the San Jose Chamber of Commerce, said Team San Jose and the business community want to cultivate both leisure and work travelers. He noted that better messaging about various tourist attractions in San Jose, such as the Winchester Mystery House or Santana Row, could help attract curious visitors in and out of the state.

Seaver said San Jose faces competition from states such as Texas, Florida and Arizona, where more lenient COVID-19 rules have made it easier to promote tourist destinations. Santa Clara County only recently lifted its indoor mask mandate for businesses.

“I think we just need this consistent message that we’re open for business, we’re moving forward and we’re not going to back down,” Seaver told San Jose Spotlight.

Contact Eli Wolfe at [email protected] or @EliWolfe4 on Twitter.

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