SAN DIEGO – As 2025 began, the mantra in San Diego’s tourism market became “flat is the new up” while the industry grappled with lower demand, rising costs and challenges from foreign and domestic policy changes.
As the region enters 2026, experts from the San Diego Tourism Authority (SDTA) agreed that, while more uncertainty is expected, they are cautiously optimistic given San Diego’s strong foundation as a destination and key upcoming openings and developments.
That sentiment is reflected in a major change to SDTA’s marketing strategy for the city.
After 14 years, SDTA’s “Happiness is Calling” campaign will transition to a campaign led by the slogan “Come to the Bright Side.”
“This is a different way to take a look at the promise of San Diego,” SDTA COO Kerri Kapich said. “‘Come to the Bright Side’ is taking a look at why San Diego and travel to San Diego makes you feel different, regardless of your purpose.”
According to Hotel Guru Hospitality Insights, San Diego’s hotel market is expected to experience a RevPAR growth of 1.5% in 2026, driven by 2% supply growth, 2% demand growth and 1.5% ADR increases. These numbers make for a slow start in Q1, with the added cost pressures in areas like labor, insurance, water, sewer and energy.
“The projections looking forward that are basically flat for the year,” Evans Hotels President and CEO Robert Gleason said. “I think we continue to be challenged, both in occupancy and in the rate that we’re able to charge for hotel rooms. One thing I try to focus on is that occupancy in San Diego is still significantly below pre-pandemic levels, and it is occupancy that drives employment in hospitality and also creates demand in all the other businesses in the tourism sector.”
Market Considerations
According to SDTA Chief Sales Officer Kavin Schieferdecker, leisure travel is expected to remain soft going into 2026.
An analysis by Luxury Link revealed that overall vacation prices are up 14.5% nationwide. The cost of a four-night family trip to San Diego has outpaced the national increase, rising by 19.1%. The largest contributor to that increase was lodging, which rose in cost by 23.4%.
Considering a decline in leisure travel, SDTA said that the industry is shifting its focus to group travel, particularly business-related travel.
“We’re in a softer stage the next six months, coming out of the gates in 2026,” Schieferdecker said. “But you see, without that group base, the market can’t drive higher rates overall, which impacts our tourism and occupancy taxes and other things in the city. So everyone really understands the value of group.”
From a leisure perspective, SDTA is still focused on marketing to San Diego’s drive market of about 15 million people, particularly in the Southern California and Arizona regions. To that end, Kapich said that strategizing special offers, providing itinerary ideas and building awareness are key objectives.
“It’s really about what is moving that market to action,” Kapich said. “How do they profile? What do we need to tell them? And how do we tell them?”
Uncertainty regarding foreign and domestic policy is one challenge that the industry has its eye on this year.
Beyond that, the implementation of San Diego’s Hospitality Minimum Wage Ordinance is set to kick in this summer. Starting on July 1, the minimum wage for hospitality workers will increase to $19.00 per hour for employees working in hotels with 150 or more guest rooms and event centers. The ordinance will phase annual wage increases, with the goal of reaching a minimum wage of $25.00 per hour by 2030.
With rising labor costs in mind, Gleason said that hotels in San Diego are considering how to implement cost-efficiency into their models. He cited technological improvements — like mobile check-in, mobile room keys and text requests to service teams — as ways that hotels can become more efficient.
“Our challenge is to try and continue to provide a guest experience that is commensurate with the rate that people are paying,” Gleason said. “To continue to provide a great value and a great guest experience, but to be able to do it in a efficient way. For us that means that, in food and beverage outlets, we might be open a little bit later in the morning or close a little bit earlier in the evening. In some cases, we’re not open for all meal periods or all days of the week. We’re continuing to find ways to be more efficient with our operations and to provide technological solutions that are requested by guests and are also things that make their experience more convenient.”
What to Look Forward to
Despite challenges, SDTA’s cautious optimism comes from the anticipation of new openings and events in the coming year.
For the first time, from June 19 to 21, NASCAR will host a special street course race at Naval Base Coronado to celebrate the Navy’s 250th birthday. According to SDTA, the event is expected to attract about 50,000 attendees each day.
Early this year, the San Diego Zoo Wildlife Alliance is planning for the opening of its “largest and most transformative” exhibit, called the Denny Sanford Elephant Valley. The 12.75-acre exhibit will provide a habitat for the park’s eight elephants and an immersive environment for guests to visit them in.
SDTA leadership also foresees economic boosts from spillover tourism at the 2026 FIFA World Cup, hosted in Los Angeles. The organization also mentioned excitement at the announcement of TED hosting its annual flagship conference in San Diego starting in 2027.
“We’re still a destination that people really want to come to because of the assets that we have here, from hotels to cultural assets to the burgeoning culinary scene,” SDTA CEO Daniel Kuperschmid said. “I think that continues to push us forward. And I think towards the back end of [the] year, things will start to right size and we’ll capitalize on major events, starting early in the year.”
San Diego Tourism Authority
FOUNDED: 1954
CEO: Daniel Kuperschmid
HEADQUARTERS: San Diego
BUSINESS: Nonprofit mutual benefit corporation with nearly 1,000 members promoting San Diego
EMPLOYEES: 72
BUDGET: $47.9 million for FY25
WEBSITE: sandiego.org
CONTACT: 619-232-3101
SOCIAL IMPACT: San Diego Tourism Authority’s Tourism Accelerator program seeks to promote diversity, equity, and inclusion in the tourism industry.
NOTABLE: SDTA’s mission is to drive visitor demand to economically benefit the San Diego region with a vision of leading San Diego to become the most desirable destination.
Born and raised in San Diego, Madison takes great pride in local storytelling. Her coverage at the San Diego Business Journal includes tourism, hospitality, nonprofits, education and retail. An alumna of San Diego State University’s journalism program, she has written for publications including The San Diego Union-Tribune and The San Diego Sun. At the 2024 San Diego Press Club awards, Madison was recognized for her exemplary profile writing. She was also a speaker for the 2023 TEDx Conference at Bonita Vista High School. When she’s not working on her next story, Madison can be found performing music at a local restaurant or on one of San Diego’s many hiking trails.
