OPTIMISM ON ECONOMY LAX, RUNAWAY PRODUCTION ARE PROBLEMS.

Byline: Gregory J. Wilcox Staff Writer

Los Angeles will see continued expansion of film and television production work, a rebound in tourism and continued appreciation of home prices, an industry panel said Wednesday at a regional economic forecast.

Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., which hosted the session, notes that while things look good over the short term, pitfalls abound, including the possible closure of Los Angeles Air Force Base, the poaching of the entertainment business and the business climate.

``I'm cynically optimistic about the Southern California economy,'' he said, noting aerospace employment is positive again and the region will add jobs the next two years.

And three executives taking the pulse of three industries critical to the region noted that continued strength is expected from tourism, the housing industry and the region's signature industry, entertainment.

It breaks down like this:

--Tourism, which attracted a record 24.3 million overnight visitors last year, is the region's second biggest economic engine and is responsible for $12 billion in direct spending.

Nancy D. Sidhu, an LAEDC senior economist, said that hotel occupancy increased 7 percent last year and room rates increased 6 percent. Occupancy at downtown hotels increased 13 percent and rates were up 7 percent and in the San Fernando Valley, occupancy jumped 6 percent and rates 5 percent.

The Valley is now the No. 2 tourist destination in Los Angeles behind Hollywood.

``This section of the economy is cooking along very nicely,'' she said.

But the drawback is Los Angeles International Airport, which ranks near the bottom of a survey of international travelers, she said.

``Travel bookers don't like sending customers to places that annoy them. Los Angeles doesn't have an image problem, it's got a product problem,'' Sidhu said, noting that the region has lagged behind in building the kind of infrastructure visitors demand.

A hotel is also needed near the convention center to help boost that kind of business, she said.

G.U. Krueger, an economist at Irvine-based Institutional Housing Partners, said that market fundamentals do not point to a scenario of a real estate bubble bursting.

A leak may appear, though.

``I don't think prices will come down, just slower rates of appreciation. But we call it a bubble. We don't have to overdramatize it and get all bent out of shape,'' he said.

Nor is it unusual in the Los Angeles area for housing demand to always outpace supply or for prices to make big year-over-year gains, he said, citing data going back more than a century.

Periods of price gains are far longer than price slides. And the county faces land constraints on new building so prices have more room to rise.

``I don't believe we have bad fundamentals in Los Angeles,'' he said.

--Steve MacDonald, president of the Entertainment Industry Development Corp., said last year brought records for total filming days and permits and that business looks good for 2005.

The pilot season shooting schedule, which starts next month and extends into April, looks like it will be strong. It costs about $2 million and eight production days to shoot an episode of a one-hour drama, delivering a huge economic boost to the region over the course of a year.

But MacDonald said that most of the big budget projects - films costing $100 million and up - are made outside of Los Angeles.

And while film, television and commercial production increased last year, Los Angeles still faces big challenges from foreign locales and other states, which offer lots of incentives.

MacDonald said that the economy loses about $44 million when a show opts for a locale outside of Los Angeles.

Now local leaders need to figure out what they can do here to help even out the competition.

``We don't have to match it dollar for dollar but we need to think about what we can do to keep our signature industry here,'' he said.

Gregory J. Wilcox, [phone]

greg.wilcox(at)dailynews.com