Business Report: Wednesday, December 31 in San Diego

San Diego is maintaining its position as one of the top hotel markets in California, boasting a 12-month occupancy rate of over 70%, which climbed to 72.3% by November 2025. This exceptional performance is attributed to a diverse demand base in the region, driven by factors such as leisure tourism, military and government travel, a busy convention calendar, and consistent corporate engagement.

Although the market experienced a strong surge towards the end of 2024 and the beginning of 2025, recent trends show a moderation in momentum. Weaker domestic leisure demand, along with a decline in government-related travel, resulted in subdued performance during peak months. Data for the 12 months leading up to October revealed a RevPAR change of -0.9%, indicating a slowdown in growth following a period of significant gains. Market participants have also observed a cooling trend in theme park visitation and a stabilization in cruise-related hotel demand after a notable increase in early 2024.

In an effort to address the city’s significant deficit of over $300 million, Mayor Todd Gloria declared a year of austerity and pledged to implement measures to restore financial stability in San Diego. Despite his intentions to streamline operations and enforce stricter budget constraints, the city faced challenges in achieving this goal. Gloria’s actions, which included eliminating key positions, proposing budget cuts to essential services like libraries, and introducing a paid parking plan for Balboa Park, were met with varying degrees of success.

Moreover, the increased power and authority of immigration officials, particularly Customs and Border Protection (CBP) agents, have been a cause for concern among residents of San Diego and Tijuana. Familiar with the forceful nature of border authorities, many individuals living near the border have witnessed instances of violence and abuse of power. This year, the reach of CBP officials expanded beyond the border region and into the interior of the United States, sparking further debates on the need for accountability and oversight in law enforcement.

As the city grapples with financial challenges and residents continue to navigate complex issues related to immigration and border security, 2025 presents an array of opportunities and obstacles for San Diego. By addressing key economic, social, and political concerns, local leaders and community members can work together to foster a more stable and secure future for the region.