Hotel reservations are down in California, and so are the revenues. But it's not all bad news.

If you've booked a hotel room in California lately, you'll be painfully aware that your basic fee doesn't include costs that cities tack onto a stay in the form of Transient Occupancy Taxes (TOT). Destinations and their tourism marketing branches have voiced concerns about a drop in hotel bookings since the Fall 2008, and the worry isn't all about how the hotel owners are handling the drop in revenue. With reservations ranging from  5 to 50% less, and cancellations of conferences coming in,  those who count on TOT such as cities and nonprofit conference and visitors bureaus may feel some pain as less money trickles in this year.

You wouldn't know it by the Google ad placements, however. As bookings slip, we're seeing more California beach destinations amp up their pay per click (ppc) advertising, and some that have never played the ad game are now entering the fray.

What you're seeing is a shift in spending, according to one president of a destination management organization at a beach in California, who asked us not to reveal his name. He said that his agency took some of the advertising monies allocated to print media and radio spots for the upcoming summer season, and began spending them on pay per click, trying to lure in travelers who are undecided about their spring vacations.

"We couldn't just sit back and watch the competition place these ads without giving it a try ourselves," he said. And there's the rub. With less money coming in and less to spend, marketers are becoming more clever about how to convert lookers into bookers for vacations.

We examined the annual budgets of various cities around California and observed nearly across the board that projections for hotel bookings and revenues for 2009 were overestimated. To smaller cities that don't spend much on promotions, the impacts may be less noticeable but to the big five: Los Angeles, San Jose, San Diego, San Francisco and Anaheim /Orange County,  there's some pain and aspirin doesn't seem to fix it.

Add to that  the reduction in TOT that funds not only the tourism organizations, but city projects, and you can understand why there's so much focus on the numbers of travelers staying overnight in hotels in cities in California.

What's most interesting about this trend is that even the hotel analysts didn't see it coming. Once the hotel numbers started coming in and were crunched by companies such as PKF Consultants or Dean Runyan Associates, the story changed, as did the time table for predicted recovery.

While unemployment is at a high in California, and 85% of travelers in California originate from the state, there are still lots of people working, and California beaches offer one of the most desirable vacations in the U.S., if not the world, so the selling points will help during the upcoming months when tourism peaks from May to September.