On the heels of the dotcom implosion, new concerns hover over San Francisco’s economy. The economic impact of United Airlines declaration of Chapter 11 bankruptcy on the Bay Area remains to be seen. The airline employs 14,000 people at SFO, and is responsible for half of the airport’s passenger traffic.

Meanwhile the Bay Area’s tech companies are glancing nervously across the Pacific. Industry pundits are predicting that Chinese manufacturers will evolve into a source of serious competition for Silicon Valley over the next decade.

The economic slowdown has upped the competitiveness ante for the San Francisco area, and its all-important hospitality industry, for one, is responding aggressively. Although hotel occupancy (69.6 percent) was up, rates ($143.72) were down for September 2002 compared to September 2001, when occupancy was at 58.3 percent, and rooms averaged $151.99

San Francisco’s new competitiveness is paying off, even as Moscone Convention Center expands its capacity with the opening of Moscone West in the spring. “We’re looking toward a good convention year,” says Mark Theis, VP of convention sales and services. “We’re actually in the plus zone today compared to years previous.”

Theis offers this sense of perspective. “Everyone can look at San Francisco and say, ‘They’re hurting so badly.’ We had the biggest gain two years ago, so we’re going to be perceived as having the biggest drop. Our occupancies were up in the ceiling because of the high-tech boom. In reality, we’re not that much more crippled than any other city.”

Says Steve Ginsberg, senior reporter for the San Francisco Business Times. “A lot of people are spending time at very fancy health clubs, like Sports Club LA in the Four Seasons. It used to be the expensive restaurants. People are out of work, networking around exercise machines. You get yourself a new job or maybe an investor.”

San Francisco’s sense of business attire has changed since the dotcom bust, says Ginsberg. “A lot of that casual stuff is back in the closet. People are rediscovering ties, suits and short hair. The dotcom era made us a very casual city for a short time. The culture’s changed. It’s more formal.”

Although commercial real estate development has come to a virtual standstill, not everyone is daunted by the economic slowdown. Marin County–based LucasFilm is moving ahead with construction of its $300 million, 900,000-square-foot Letterman Digital Arts Center within the Presidio, once an Army base and now a park. The complex will house six of filmmaker George Lucas’ companies, including Industrial Light and Magic, Lucas Online and game company Lucas Arts.