Had an outsider popped in for a late July luncheon presentation on San Diego’s place in the national convention arena, he would have walked away believing the region’s hospitality industry was in perfect harmony. By nearly every measure, the Atkins Research Group survey of meeting planners shows San Diego as the nation’s favorite destination for those who book gatherings worth billions. Indeed, analyst Curt Watkins stopped several times during his presentation to tell the audience “you just don’t see these kind of results (elsewhere).” Sometimes, though, perception is not reality. Such is the case in San Diego’s fractured tourism industry, with more casualties likely.

With its weather and attractions like the zoo and beach, San Diego has always been a great place to play tourist. But for the big-bucks meeting market, it came of age in 1989 with the opening of the San Diego Convention Center. As the dollars flowed, the industry’s epicenter shifted to 92101 and plans were quickly pushed forward for an expansion of the center. Hotel owners, nervous that the taxpayer-subsidized center would steal bookings, got most of the marketing function transferred to the San Diego Convention & Visitors Bureau, which was seen as a more impartial business gatekeeper. All was good. The industry shrugged off a 2-cent increase in the hotel bed tax that was used to finance a Balboa Park exhibit of Faberge eggs from the Soviet Union. The next mayor raised the Transient Occupancy Tax another 1.5 cents with city officials promising to boost spending on tourism marketing, which they did. Hotelier Reint Reinders, who had come to town to open the La Jolla Marriott and didn’t want to leave when that gig ended, in 1991 was moved in to run ConVis, with his international flare and sophistication raising the agency’s national cache. The industry was one of the few that stayed stable during the downturn in the early 1990s and it succeeded nicely when the economy began to roar.

Behind those sunny skies, however, darker clouds were rolling in. Litigation delayed by years the opening of the expanded convention center and when it finally took place it was in the shadow of the Sept. 11, 2001 terrorist attacks. In the aftermath, ConVis and the center bragged they had few cancellations. They were quieter that fewer delegates were coming than expected and that new business was slow. At the same time, Internet travel bookings morphed from something used primarily by individuals making vacation plans to a tool for convention and trade show delegates. Carefully set-aside stocks of room nights at “host hotels” that paid for the privilege became guesstimates and business visitors shopped aggressively, and late, and not necessarily for the official hotel.

Facing financial woes, the city of San Diego first stopped increasing its funding of ConVis, then began cutting. The cuts started last year when $1.4 million was trimmed. This year another $2.7 million was taken. The marketing responsibility for the convention center also was taken from ConVis and turned back to the center. City officials saw the move as a way to better protect their investment in the convention center. At the same time, critics of ConVis say the agency had become unfocused, using resources on projects such as the USS Midway aircraft carrier museum, a golf tournament and support for SDSU’s fledgling hospitality program. A small marketing partnership with Indian casinos drew particular ire as the casino hotels pay no hotel bed taxes but compete for business and employees.

ConVis’ chief critic is Bill Evans, president of Evans Hotel Group. He is a formative player, but hardly the only person questioning how ConVis spends its dollars.

The simplified argument is this: Should ConVis primarily market hotels, since about 90 percent of its money comes from hotels, either as TOT money or dues, or should it market the region, knowing that if people come here many will stay in a hotel.

In the middle of all this, a new hotel organization, the Lodging Industry Association was formed by a group of hotel owners whose primary properties are in Mission Valley. The group’s chairman is Terry Brown, whose family owns and runs Atlas Hotels, which has owned and operated the Town and Country Hotel since 1952. Mike McDowell is the executive vice president. Eventually, it played a big role in working with the San Diego firefighters union in placing a measure on the March ballot that would have raised the hotel tax by 2.5 cents to 13 cents on the dollar. Along with fresh money for public safety, the measure would have locked in guaranteed funding, and increases, for ConVis. But it failed, stripping the group of some of its mojo and perhaps making ConVis more vulnerable to funding cuts.

The region’s largest lodging association, the San Diego County Hotel-Motel Association, always has been a quiet, behind the scenes player at City Hall, reflecting the style of its executive director, Rose Marie Starns. Many in the greater tourism industry applauded the Lodging Industry Association for its vocal support on industry issues. (ConVis is prohibited from lobbying.) Over the last two years, the schism between the two hotel groups has widened and it remains that way today, despite some cooperation in talks on remaking the ConVis board.

On big issues, the HMA board has trouble making decisions. Two years ago it flipped back and forth several times on whether to support Proposition E, which required a two-thirds vote for raising special taxes like the TOT. Eventually the board supported Prop. E, which was passed by voters but was overturned by the courts. On Proposition C, which would have raised the TOT in March, the HMA similarly wavered before finally supporting the 2-1/2 cent TOT tax. Voters turned it down, however, in part due to late and large independent expenditures by Doug Manchester, whose businesses include Downtown’s Manchester Grand Hyatt.

Which leads back to ConVis, where Reinders has two years left on his contract. In the national convention industry, Reinders is a player, probably a star. He’s good for business, maybe great, and has deep and very valuable connections. But in San Diego, beside his loyal board members, Reinders’ star has dimmed, fairly or not. He didn’t cause the recession in the travel industry or put City Hall in such a financial pickle that in a year when TOT revenue will rise by $9 million, the city manager saw fit to chop the ConVis budget. When the manager took that action, not one of the eight city council members, nor the mayor, did anything about it.

Now, with a measure to raise TOT likely headed toward the November ballot, where a simple majority is needed for passage, ConVis has to wonder if it will see any of that extra money. Certainly, elected officials would get more community support by spending that money on public safety, not tourism marketing.

Among the things made clear during that late July luncheon was today’s leader in the hospitality marketing businesses isn’t necessarily tomorrow’s. Sometimes, as pollster Curt Watkins says, the competition simply changes the rules. Even if they don’t, it can be tough, as Carol Wallace, president of the Convention Center Corp., noted in remarks before Watkins made his presentation. “The bad news is that every city within our competitive set gets up every morning and schemes about how to take away our business. And they are good at it,” she said. “The good news is we do the same thing — and we are better at it. But the tides are working against us and we need to constantly be on guard and understand the competitive landscape and how it is changing.”

Wallace must face that competition while absorbing a $1.6 million additional expense for her staff with no accompanying funds. But she runs a city-owned building, an investment city officials will want to nurture. ConVis is on its own. Can Reinders and his board convince the city they are managing the smaller organization smartly, or is that something best left to fresh leadership? The next few months should tell. More than Reinders’ is on the line.