Tourism Shakes Up New Business for Restaurants
Restaurants USA, January 1998

A number of factors are boosting both domestic and international tourism in the U.S. And the restaurant and hospitality industries are reaping the benefits.
By Ira Apfel

For the past 27 years Rick Grinnan has made his living along The River Walk, a 1.5-mile park winding along the San Antonio river through the heart of San Antonio, that features restaurants, hotels and entertainment venues. Grinnan rose from waiter to owner of The Republic of Texas Restaurant and along the way witnessed the evolution of The River Walk. He's watched the area grow from a quiet, sparsely visited watering hole for business travelers to a booming destination spot for American and international tourists.

In many ways, River Walk's transformation from tourist backwater to tourist hot spot is a microcosm of the U.S. tourism industry. Domestic tourism has dramatically changed and expanded in the past 25 years, as a strong global economy and more convenient means of travel have made tourism widely available to a record number of Americans and to a growing pool of foreign travelers.

According to the Travel Industry Association of America (TIA) in Washington DC, Americans made nearly 1.2 billion person-trips in 1996, and domestic travel volume was up more than 5 percent through the first six months of 1997. In addition, a record 48.9 million international travelers visited the United States in 1997, according to U.S. Department of Commerce data, and that number is expected to grow steadily through the rest of the century.

What does this mean for the restaurant industry? As Thomas A. Kershaw, owner of Hampshire House Corporation and Bull & Finch Enterprises in Boston, and National Restaurant Association chairman, notes, "Tourists have to eat three meals a day. The more people travel, the more potential customers are out there for the restaurant industry."

Consider a few facts from the Tourism Works for America Council in Washington DC:

International travelers alone generate nearly $67 billion in travel expenditures annually.

Of that $67 billion, 18 percent — more than $12 billion — goes to food-and-beverage expenses.

After final numbers have been tallied for 1997, U.S. commercial food-and-beverage sales are projected to have increased 4.2 percent to $320 billion.

Several factors are contributing to the phenomenon that more foreigners and Americans than ever are touring America. First, more Americans are taking vacations because they can afford to. The national level of unemployment recently fell to 4.6 percent, a 24-year low. The gross domestic product rose 4.9 percent in the first quarter of 1997 and 3.3 percent in the second quarter. Additionally, consumer confidence stands at a 28-year high, according to the Conference Board, located in New York City. In short, the American economy is the strongest it has been in a quarter-century.

"We're expecting the number of tourists to grow, and we assume that there will be an increase in sales for restaurants from tourists," says Mike Pina, manager of media relations for TIA.

Americans become homebodies

The strengthened economy is good news for restaurateurs. Jeffrey Pollack, of the Pollack Group Limited, owns and operates four restaurants in San Francisco. He says that from 20 to 25 percent of his guests are tourists from outside the Bay area. Other visitors come from nearby towns like Hayward to dine at his establishments, which are located in tourist destination spots like Fisherman's Wharf.

"From September of 1991 until the start of 1996, the market was depressed," says Pollack. "But in the spring of 1996, it just popped. Since then, I've been to Europe, back East, New Orleans. I talk to owners of restaurants, and they say that it wasn't any different for them."

Changing demographics have also affected the tourism industry. Today's tourist site may welcome baby-boomer couples with children or empty-nesters — older couples with grown children, who are traveling alone. And today's business conventions aren't held just in major metropolitan areas; convention centers have sprung up all over the nation, and business travelers are just as likely to visit a smaller city like San Antonio as they are a big city like New York.

Operators are adapting to meet the shifting makeup of the tourist market. Grinnan says that businesspeople were the primary visitors to The River Walk from 1970 until roughly 1985. "From 1985 until now, you have corporate travelers and lots and lots of families," he says. The shift in The River Walk's customer base forced Grinnan to change his old operation, the Royal Street Crossing nightclub, to the present-day The Republic of Texas Restaurant. "I was standing on the steps one evening when I saw a family walking by and the parents said, "We wish we didn't have the kids with us, because it looks like fun in there. That just slammed me. Now we're 70 percent food and 30 percent liquor, and our business has tripled."

Global gains

The increase in international travelers is in large part due to strong foreign economies. Despite the recent economic downturn in Asia, the middle class continues to grow on that continent. A growing number of European and South American citizens also increasingly have the financial means to travel abroad. The deregulation of airlines has led to new airline companies, new routes and lower airfares, making air travel more affordable and accessible than before. A weak U.S. dollar has made traveling to America more affordable for foreigners, who remain fascinated by all things American, from the big cities to the Wild West.

The Bull & Finch was just a neighborhood pub in Boston until the early 1980s, when it became the model for a new television show. By the time "Cheers" went into worldwide syndication, Bull & Finch had become one of the most popular tourist attractions for international visitors to Boston. "Our international guests are coming in larger numbers every year," says Kershaw.

International tourists are also traveling beyond America's urban landscape. Montana's Flathead Valley is not exactly a household name in Europe or Asia. But an increasing number of international travelers are making the trek to Flathead Valley, drawn by Glacier National Park, a selection of ski resorts and golf courses, and the mystique of the West. "Our biggest visitor nations are from the United Kingdom, Germany and Japan. They are more affluent markets and they have a really high interest in cowboys," says Cassandra Doss, communications director for the Flathead Convention and Visitor Bureau.

Tourism trickle down

Visitors to Flathead Valley — both foreign and domestic — have had a major impact on the local economy. The Flathead Economic Policy Center estimates the travel industry supports more than 29 percent of all salaried jobs in Flathead County, which counts Kalispell, Columbia Falls and Whitefish as its three largest towns.

Stephen Marquesen, owner of the Back Room Restaurant, Inc., in Columbia Falls, Montana, estimates that nearly 40 percent of his restaurant's summer business comes from tourists. "We don't do anything different for tourists," the Flathead Valley businessman says. "But if we keep the locals happy, the tourists are happy, because most of our tourist business comes from referrals. Tourists will ask the locals where they can go to eat, and they'll send them to us."

The restaurant and tourist industries have grown hand in hand. As an example, the opening of the first restaurant on The River Walk, the Royal Street Crossing, coincided with San Antonio's hosting the 1968 World's Fair. "Then Hyatt built a hotel," says Grinnan, "and a couple of more restaurants opened along The River Walk. Now there are 40 restaurants along the river."

Along the way, restaurants have grown to be more than just places where tourists eat. As the Bull & Finch illustrates, many tourists treat dining out as an integral part of their travel experience. So they'll visit Boston and go to the Bull & Finch to have a burger while surrounded by "Cheers" memorabilia, or they'll stroll around San Francisco's Fisherman's Wharf and choose to eat in one of Pollack's restaurants. In fact, all four of Pollack's restaurants were chosen for their locations and for their exterior and interior look, which evokes "Old" San Francisco. "Julius' Castle is 75 years old, and it's the only restaurant in San Francisco that is a historical landmark," says Pollack of one of his establishments. "It is a draw in itself."

Even though those restaurants rely heavily on tourist business, Kershaw points out that establishments that don't attract a large tourist clientele still benefit from the growth in tourism and the economic boost it can bring to their town. That's because local businesspeople who do a brisk tourist trade will have more discretionary income for dining out. "It's important to build a local business; but recognize that visitors to your market can add to your bottom line in a big way," he says. "And many restaurants that do not serve tourists do serve the truck drivers who deliver food to tourists, or to the retail clerk who sells memorabilia to tourists."

Tug-of-war over tourists

As the number of tourists who travel in America grows, so does the competition for their dollars. Cities like San Antonio, which are smaller than New York or San Francisco, are in the process of upgrading their facilities and attractions to appeal to visitors from around the world.

San Antonio's convention center will double in size, to 440,000 square feet by 2001. The landlocked city located deep in the heart of Texas even opened a Sea World water park and aquarium in 1988. "Tourism injected about $3.15 billion to the San Antonio economy in 1995, so you can see why it's so important for us to compete," says Carol Morgenthaler, acting director of visitor marketing for the San Antonio Convention and Visitors Bureau.

Even smaller tourist sites like Flathead Valley have also stepped up their efforts to attract tourists. Flathead Valley has added golf courses to attract golfers during the summer and a jazz festival in October to increase business during its slower fall season. "In October we focus on the Glacier Jazz Stampede, and we focus on our restaurants," says Doss. "And when we hold press trips for travel writers, we do showcase some of our restaurants." The efforts have led to more visits from international travelers, especially those from nearby Canada.

One way cities have stepped up their marketing efforts is through the combined power of the restaurant and hotel industries. "We always have somebody on our commission who is with the local restaurant association and we have marketing people from the restaurant industry as well," says Morgenthaler. In Flathead Valley, the Flathead Convention and Visitors Bureau works with the state of Montana's travel organization, "Travel Montana," to promote itself. Travelers can learn about Flathead Valley's tourist attractions, lodging and dining offerings in a promotional magazine published by the bureau. And in Boston, Tom Kershaw makes sure his establishment is featured in tourist guides and publications for visitors.

Here are some tips to help bring tourists to your restaurant's door.

• Participate in your local chamber of commerce and/or visitors bureau. Those organizations can tell you who is visiting your town, when they are to visit and what their tastes are. For example, the San Antonio Convention and Visitors Bureau produces a booklet of upcoming conventions, which includes information on The Republic of Texas Restaurant. Grinnan hopes to befriend the meeting planners who will then steer conventioneers to his restaurant. Kershaw worked with the Greater Boston Convention and Visitors Bureau to found two tourist-related organizations: the Massachusetts Visitor Industry Council and the Massachusetts Tourism Coalition.



• Advertise in tourist-oriented publications. Every city has one or more publications that offer dining and entertainment suggestions for out-of-town visitors. Hotels also often put guides to city attractions in guests' rooms. Travelers use these guides as referrals; and a well-designed advertisement could boost your establishment's business. To raise its visibility, Bull & Finch distributes promotional brochures to 150 locations around Boston, including hotels and tourist attractions, and it advertises on sightseeing trolleys.



• Work with hotel concierges. Travelers often rely on hotel staff for restaurant referrals. You can have concierges steer business your way by getting on their preferred restaurant lists. Invite concierges in for a meal at your restaurant and supply free menus to their hotels. Jeffrey Pollack makes a point of setting aside tables at all four of his restaurants in case hotel concierges call at the last minute on behalf of their guests. What's more, Pollack instructs his staff to honor every concierge reservation request — no matter when the call is made.



• Be friendly. Visitors will return to your restaurant over the course of their stay if they know that your establishment offers a combination of great service and food. And when they return home, they are likely to recommend your restaurant to others.

A profitable journey

The tourism boom is a boon to the restaurant industry. Tourists — whether they are from the United Kingdom or the United States — are potential customers. "I work as a volunteer for the American Red Cross, so I travel often," says Grinnan. "People will ask where I am from and I'll tell them San Antonio and they'll ask where, and I'll tell them The Republic of Texas Restaurant on The River Walk. They'll say 'I've been there' and my jaw will drop to the floor. Word travels." And with the right promotions, the word tourists hear could be to eat in your restaurant.

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