Napa Valley tourism seeing rebound from pandemic

Napa Valley’s tourism industry — the second-largest employer in the county — is showing signs of recovery, but also is plagued by a lack of staffing, like other businesses.

“In addition to the looming threat of wildfires and its impact, we're challenged by the ability to staff back up and provide service levels that are expected of our luxury destination,” said Linsey Gallagher, president and CEO of Visit Napa Valley, noting the situation is not unique to the region. “But for us, that's going to be what has the greatest impact on our ability to fully recover and return both revenue and economic contributions to what they were prior to the pandemic.”

Gallagher spoke during the Business Journal’s Impact Napa Conference, held virtually Aug. 10.

Gallagher said the last three years of trends — the most recent available — illustrate in a number of ways how Napa Valley’s tourism industry performed before and during the pandemic. She also addressed recovery and projections going forward.

Gallagher said Visit Napa Valley’s most recent visitor impact study, completed in 2018 by market-research firm Destination Analysts, shows the “high watermark that we are aspiring to return to as we come through the other side of COVID” and other crises like wildfires that impact the region.

In normal times, Napa Valley annually sees 3.85 million visitors — 80.8% coming from within the country and 19.2% from around the globe. Of those visitors, 64.5% come for the day and 35.5% stay overnight, Gallagher said, pointing to data from the San Francisco-based Destination Analysts. But it’s the overnight visitors who spend the most, with nearly 70% contributing to Napa’s economy, she noted.

“Normally, tourists spend $2.23 billion when they visit us here in the Napa Valley,” Gallagher said about the most recent data.

Looking at visitor volume last year in Northern California’s Wine Country, which includes Sonoma County, there was a 44% decline, with recovery projected to take between two and three years before getting back to 2019 levels, Gallagher said, referring to data from the San Francisco Travel Association and Tourism Economics, a Wayne, Pennsylvania-based firm that tracks travel trends around the globe.

From a lodging standpoint, Gallagher noted the county’s hotel occupancy rates last year dropped to 41%, compared to an average 70% occupancy pre-pandemic.

Meanwhile, the average daily room rate last year was nearly $267, about double the rate in the entire Bay Area, she said.

“As soon as we were able to safely start welcoming guests again, our occupancy rates rebounded, but certainly the average daily rate recovered to pre-pandemic levels almost immediately,” she said.

Visitor spending in the region last year declined by 62%, largely driven by the loss of international travelers, Gallagher said. Because of that dip in international travel, it’s expected to take another four to five years to bring that segment of visitors back to 2019 revenue levels, she added.

"But based on what we've seen over the course of the past summer as we've safely returned to welcoming guests once again, I do believe that Napa Valley is going to track ahead of these projections,” Gallagher said.

She was joined at the conference by Ryan Klobas, CEO of the Napa County Farm Bureau, who discussed winery insurance coverage and related legislation; and Jill Techel, who reflected on her 15 years as mayor of Napa after having retired in December. A replay of the conference is available for a limited time.

Cheryl Sarfaty covers tourism, hospitality, health care and education. She previously worked for a Gannett daily newspaper in New Jersey and NJBIZ, the state’s business journal. Cheryl has freelanced for business journals in Sacramento, Silicon Valley, San Francisco and Lehigh Valley, Pennsylvania. She has a bachelor’s degree in journalism from California State University, Northridge. Reach her at cheryl.sarfaty@busjrnl.com or 707-521-4259.