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August 25, 2016

Peninsula tourism is flying high as business travel and growth at SFO boost boom times

San Francisco Business Times

Tessa Love

The Peninsula's hospitality boom hasn't showed signs of slowing down yet. With hotel occupancy rates at 81 percent and average daily room rates up 5.6 percent over last year, developers have flocked to the area to get a piece of the action: Three new hotels have opened in the last year and nearly 20 more have been proposed or are already under construction, potentially increasing the current inventory of 17,000 rooms by 18 percent.

"The market has been incredibly strong," said Anne LeClair, president and CEO of the San Mateo County/Silicon Valley Convention and Visitors Bureau. "And the good news is that the hotels are predicting that the remainder of this year will remain strong."

The Bay Area's strong business economy is the main driver for this growth. Fueled by the presence of large tech companies like Facebook and Google - as well as the squeeze for space in San Francisco - more businesses are setting up shop in the area. Office vacancy rates along the Peninsula are at an all-time low of 9.1 percent, according to research by real estate firm Kidder Mathews.

"As a rule of thumb, when your office buildings are full, your hotels will be fuller because there's someone to visit," LeClair said.

Indeed, tourism numbers have been strong. Santa Clara and San Mateo counties saw a dramatic increase in visitor spending in 2015, with Santa Clara at $5.40 billion, a 6.2 percent increase from the previous year, and San Mateo with $3.36 billion, a 5.5 percent increase.

LeClair says much of this growth can be attributed to business travelers, and the hotels in the pipeline confirm this trend. Many are limited service properties, which aim to attract the business traveler. In addition, many are also incorporating high-tech perks, like keyless check-ins, to attract millennial tech workers.

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