San Diego Struggles with Tourism Slowdown, Hotels See Fewer Visitors

Published on December 1, 2025

San Diego is one of the largest consumers of tourist activity in the state of California. However, in 2025, it is being reported that there is a steep decline in tourism activity. Many hotels have reported very low occupancy levels and there are fewer visitors in total. Although it is a city with many wonderful attractions such as the beautiful beaches and Balboa Park, as well as many other great museums, the tourism industry is facing real difficulties and challenges that have led to this significant decline in hotel occupancy rates.

Newly released data indicates a considerable decline in San Diego’s hospitality activity. San Diego’s hospitality activity in the prior years is almost being impossible to match. Significant reservation losses have been reported in San Diego’s central business region, Gaslamp Quarter, and along San Diego’s significant tourist activity coastal region. Other major American cities are experiencing significant tourism rebounds during this time. This is what is most concerning to tourism and hospitality stakeholders for the San Diego region.

Fewer guests at San Diego Hotels

There has been a considerable drop in San Diego hotel occupancy rates relative to the same period last year, mirroring continuing declines in tourism activity. Cancellations and a relative absence of long-term, especially off-season bookings, have contributed to the overall shortages in regional tourism. This has been recognized across the broad spectrum of the industry, in both major chains and boutique hotels. This phenomenon has resulted in the widespread economic stagnation of the tourism industry in the entire city.

San Diego Hotels.

Declining travel spend and external economic conditions, along with increased competition have been outlined by industry experts as major contributory factors to the drop. A lack of demand has made it particularly difficult for hotels who normally cater to tourists for pleasure travel, as well as for business, conference, and convention travel. Hotels typically have few options to promote and discounted rates are less than reasonable.

All Downtown Businesses Affected by the Drop in Tourism

The drop in tourism affects more than just the hotels in Downtown San Diego. Businesses across San Diego, including restaurants, entertainment, and retail, have been experiencing a decrease in sales and visitation due to the foot traffic that is no longer coming in because of a lack of tourism. Revenue has suffered across the board as the amount of spending by San Diego tourists decreases.

Old Town San Diego and Mission Beach have some restaurants that rely on the tourism that travels from all over the country and the world. These restaurants have been forced to change their hours of operation and have had to come up with additional marketing initiatives to offset the decline in tourists that are visiting the area.

Other visitor-oriented services have been impacted as well, including guided tours and sightseeing activities. There are whale watching tours, entertainment cruises, and visits to the San Diego Zoo Safari Park and SeaWorld that are being offered, but with tourists being more selective on their travels, there are fewer bookings. These businesses are being forced to pare down their services and staffing, which has a significant impact on the economy.

Factors Contributing to the Tourism Decline

San Diego’s tourism slowdown can be attributed to a number of factors. One of the biggest issues is the increased activity of competitors like Los Angeles, Las Vegas and Phoenix. These competitors are targeting traveling consumers and are implementing strategies such as aggressive pricing which are causing consumers to choose these cities over San Diego. More marketing-oriented competitors are now San Diego’s biggest tourism competitors.

San Diego tourism also suffers as the travel sector is still affected by the COVID-19 pandemic. More remote and hybrid work environments are causing travel to be more budget-oriented. There also seems to be a travel caution, whether it’s aimed towards long distance travel or just seeking more localized trips. This trend has caused a document drop-off in visitation to San Diego.

Inflation and costs associated with travel are also leading to more travel budget oriented trips. Expenses for airfare, accommodations, food, and activities are leading many budget travelers to opt for stay-cations, a trend San Diego is negatively impacted by. Many cities in the U.S. are experiencing inflation which is leading to a recession in tourism for cities like San Diego that rely heavily on tourism revenue.

San Diego’s Response to the Tourism Slowdown

San Diego is trying to overcome the decline in tourism due to the pandemic with changes in marketing, improving the tourism experience, and trying to capture new tourism-related events. The San Diego Tourism Authority has increased advertising targeting both business and leisure tourism.

The city is launching new advertising campaigns directed at overseas visitors and is trying to capture niche tourism markets, such as eco, cultural, and adventure. San Diego has several museums and cultural festivals and is rich in art to satisfy the preferences of travellers with those interests.

The city is also expanding tourism through the fine arts and cultural festivals. San Diego Convention Centers and Event Spaces are opening to new clients, with the hope of attracting large groups for conventions and trade shows. This helps fill hotel rooms, restaurant seats, and boosts sales for local businesses.

Looking Ahead: Revitalising San Diego Tourism

Given 2025 challenges to the San Diego tourism industry, work continues to revitalize it. The City seeks to attract visitors from high-growth international, family, and millennial travelers seeking culture and outdoor activities.

The City is ideally situated for the draw of San Diego beaches, scenic hiking, and diversified attraction tourism. Innovative, price-competitive strategies offer travelers a flexible range of alternatives and tourism numbers can be expected to increase.

During the downturn, diversifying and enriching visitor experience continues to be a focus for San Diego’s tourism and hospitality industry. With the right strategies, recovery and a leading positioned San Diego destination for travelers will follow.