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Napa Valley expects visitor surge this summer, but not full recovery
Economy

Napa Valley expects visitor surge this summer, but not full recovery

From the Napa Valley Wine Insider Digest: May 29, 2021 series
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V. Sattui Winery’s concierge station for greeting guests and outdoor tastings.

A concierge station at V. Sattui Winery. Weekend visitation continues to improve, winery president Tom Davies said, but the winery has not yet returned to its 2019 numbers. Forecasts suggest a full recovery could be four years away, though industry groups said in interviews California's public health prognosis and reopening could speed that up. 

Napa Valley is well-positioned to receive an influx of visitors this coming summer, experts say, but true economic recovery remains out of reach for the near future.

Hotel occupancy in Napa County dropped as low as 12% in April of last year, the Register previously reported, down from a pre-pandemic weekly average of between 75% and 80%. Visitation recovered as the county’s wine industry reopened for business last June, but suffered under a secondary lockdown through late 2020 into 2021.

Initial predictions from groups like Visit California suggested local and state tourism sectors would probably not fully recover until 2024 or 2025.

Though Visit California’s latest forecasts affirm that three-to-four-year timeline, California’s progress in containing the pandemic has “vastly improved the outlook for the tourism and hospitality industry,” Visit California CEO Carolina Beteta wrote in an emailed statement. Some destinations will seek quicker recoveries than others, she wrote, adding the “long term outlook for California as a whole has brightened from some of the bleakest estimates of last year.”

“It is possible for the four-year timeline to shorten … especially if more Californians choose to keep their travel dollars within the state,” Beteta wrote. “Visit California’s research shows 75% of Californians have taken action to plan a trip in the past week, highlighting the pent-up demand we all know is out there.”

Gov. Gavin Newsom’s announcement that the state would lift most if not all COVID-related restrictions on its businesses come June 15 has also acted as a welcome boon for Napa Valley’s hospitality sector, according to Merryvale Vineyards Devin Joshua, who heads direct to consumer sales for the winery. While visitation has not yet recovered to 2019 levels – Joshua declined to give specific numbers – business has picked up observably over the past few weeks, he said.

“I really think that the ‘making up for lost time’ aspect of wine hospitality is a thing – people feel it, they miss it, they want to get back to it,” Joshua said. In light of Gov. Newsom’s announcement, out-of-state visitors can “feel confident they won’t have the rug pulled out from under them” if they do choose to visit, Joshua added, a sense that also extends to weddings Merryvale hosts at its estate vineyards.

“If things go as we think they’ll go, we can plan accordingly, and not have to give up business unnecessarily,” he said.

Weekend traffic has been particularly strong in Napa over the past few weeks, according to Visit Napa Valley President & CEO Linsey Gallagher. Weekend hotel occupancy is averaging between 80% and 90%, she said, a boost she attributes to the state’s imminent reopening and the widespread availability of vaccinations. Midweek traffic, fueled in large part by corporate events and gatherings, is what is currently missing from the equation, Gallagher said. California began allowing group event bookings after more than a year of restrictions on April 15.

“The lead time on corporate business is much longer than a leisure guest, who might decide on a Wednesday that they’d like to come up on a Friday,” Gallagher said. “These events are planned six months… to two years in advance. That’ll change a little, but because that pipeline is such a longer lead time, it’ll take time for that business to recover. It doesn’t turn back in the way leisure can.”

Weekday hotel occupancy remains at about 20%, meaning weekly occupancy averages within Napa County are at about 50%, according to Gallagher. Pre-pandemic weekly averages were more regularly between 75% and 80%, she said.

The surges in weekend visitation seem to be driven primarily by “drive market” tourists, who come from areas like San Francisco and Sacramento, according to V. Sattui president Tom Davies, who said each weekend at the winery over the past month had been increasingly busier. There is “absolutely” pent-up demand among consumers in that group, he said.

“On our busy days, we are nearing pre-pandemic numbers – it’s busy,” he said. “That’s why I’m hoping we’ll end up having a great summer. (But) we know those out-of-state visitors are not quite here yet, because our weekdays are still fairly quiet.”

Each time Napa Valley has been struck by a disaster – whether wildfires or the 2014 earthquake – it has taken between two and three years to regain pre-disaster international and even out-of-state visitation levels, Davies said. But pent-up demand could serve as a tailwind of sorts for the wine and hospitality industries, he added, which could see a resurgence of weddings, vacations and other events that were put on hold.

Visit Napa Valley’s Gallagher, asked if the pent-up demand from “drive market” guests was at risk of drying up in the future, said her organization was anticipating demand would eventually slow. As the valley begins to see increasing numbers of guests from Southern California and other nearby Western states, “that will sort of net us to stay where we are,” she said.

The economic analysis provider Tourism Economics projects domestic visitor spending will return to 76% of 2019 levels this year; by 2022, 94%, Visit California's Beteta wrote. Total spending, including international travelers, will hit 87% of 2019 levels by 2022, she wrote. 

California does have work to do, Beteta added, noting California’s market share of national tourism dropped almost 26% last year, “the largest decline of any U.S. destination.” Staffing also remains a challenge for most of the valley’s businesses.

V. Sattui, for example, could host additional guests if only it had the staff to accommodate them, according to Davies. Wildfires, which have historically resulted in declines in tourism for Napa, remain a pressing concern in 2021, wine industry members have said.

State officials confirmed mid-day Friday that social distancing and capacity limits would be lifted June 15. It’s not clear what additional guidance might be given to businesses after that date, Gallagher said.

“We are anxiously awaiting that, and I am actively in conversation with elected officials in Sacramento on that front,” she added. “At the same time, we’re really celebrating being able to gather again, and to be able to do that safely.”

After a one-year hiatus due to the COVID-19 pandemic, Napans might be surprised to see the Wine Train rolling again through the valley. Here's the footage of one recent sighting.

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You can reach Sarah Klearman at (707) 256-2213 or sklearman@napanews.com.

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Wine Industry Reporter

Wine industry reporter at the Napa Valley Register.

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