Tag Archives: economic impact

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Restaurants serve super-sized economic impact

Think about the celebration that occurred after Arizona was awarded  the 2015 Super Bowl.

Much of that excitement came because of the economic impact the Super Bowl will have on the state. But the restaurant industry in Arizona generates revenue equivalent to hosting two Super Bowls a month.

“Restaurants are critical to Arizona’s visitor industry – and vice versa,” said Debbie Johnson, president and CEO of the Arizona Lodging & Tourism Association. “Arizona attracts more than 37 million visitors annually and dining is the No. 1 activity for those visitors. So the success of the two industries are definitely intertwined.”

Arizona’s restaurant industry, which included 8,885 eating and drinking places of business in 2011, is expected to rake in $10.5 billion in sales this year, according to the National Restaurant Association. Arizona’s restaurants also employ 262,200 people, roughly 10 percent of the state’s workforce. That number is projected to grow 15.9 percent by 2023 to 303,800 – translating into 41,600 new jobs in the industry.

“While the Recession claimed 500 Arizona restaurants, the industry that was born out of the recession was stronger and more resilient,” said Steve Chucri, president and CEO of the Arizona Restaurant Association. “From 2007 on, Arizona’s industry sales have grown from $7.9 billion to $10.1 billion (in 2012) with extremely modest growth in the hungrier years of 2008-2010.”

Chucri said Arizona’s rate of restaurant sales growth, while once the top in the nation at 6.2 percent, is starting to fight its way back, growing at a little more than 3 percent each year, boosting this industry’s sales by an estimated $400 million annually.

“I think the restaurant community has stabilized and I sense an increasing confidence in the community,” said Steven Micheletti, CEO of Z’Tejas Southwestern Grill, which has five locations in Arizona and plans to add two more in the next year. “New restaurants are being built and being opened in interesting parts of the city. There is ongoing collaboration between great entrepreneurs happening, creating some great restaurant experiences. Operators are building restaurants in all types of buildings, creating really fun dining environments.”
A lot of the growth in Arizona’s restaurant industry is coming from entrepreneurs and chefs who are giving consumers different and unique dining experiences.
“Some of the strengths in Arizona’s restaurant industry include population growth, strong tourism, unmatched lifestyle and weather, and access to good produce,” said Russell Owens, president and COO of Fox Restaurant Concepts. “With all of these factors working together, there is more appeal for great chefs to come to Arizona to offer innovative new restaurants and fresh ideas. I think we are seeing more creativity today than over the last 20 years and this will positively shape the industry in Arizona for years to come.”

That influx of great chefs and innovative ideas has become an economic engine for the tourism industry.

“Scottsdale has seen a growth in chef-driven, independent restaurants, which are fueling our culinary scene,” said Rachel Pearson, vice president of community and government affairs for the Scottsdale Convention & Visitors Bureau. “Not only do our resorts boast award-winning chefs and restaurants, but now you can drive to every corner of Scottsdale and find unique culinary experiences from well-known chefs.”

Not only are many of the new restaurants that are popping up utilizing fresh ideas and concepts, they are also beginning to increasingly rely on local produce and products to help serve their customers.

“Arizona visitors are really looking for a unique and distinct dining experience that they can’t get back home,” Johnson said. “So trends that we’re seeing in both hotel/resort restaurants as well as off-site restaurants include utilizing local ingredients and offering menu items and experiences that provide a taste of the local community.”

Micheletti has seen an increasing shift to supporting local farmers and growers, but the “Local First” trend doesn’t stop there.
“There’s also a growing influence of local crafted beers and wines,” he said. “Guests really are reading menus and asking questions about ingredients and sourcing. It’s not just about calories anymore.”

In addition to Arizona-grown ingredients, Chucri said one of the most transcendent trends he sees in the industry is the desire for healthy foods.

“The tendency towards more healthful items for the entire family illustrates that consumers are looking to restaurants for more than an indulgent special occasion meal,” he said. “Restaurants are becoming a part of consumers’ daily lives, an extension of their family. Whether it be a compliment dish for Easter dinner, a post-Little League party, or a got-home-too-late-to-cook family dinner, restaurants have infused themselves into the fabric of families everyday lives … a trend that is certain to stick around.”

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Navajo Generating Station worth Billions to Navajo Nation

The Navajo Generating Station in northern Arizona will help contribute nearly $13 billion to the Navajo economy and help support thousands of jobs from 2020 through 2044 – if agreements can be reached to keep the plant operating beyond 2019 – according to a study prepared for the Navajo Nation and Salt River Project by the L William Seidman Research Institute at the W.P. Carey School of Business at Arizona State University.

Located on the Navajo Nation, near Page, NGS is one of the largest and most important suppliers of electricity in the Southwest.

According to the ASU report, Navajo Generating Station and Kayenta Mine: An Economic Impact Analysis for the Navajo Nation, NGS and the Kayenta Mine, the plant’s coal supplier, will contribute $12.94 billion to the Navajo Nation economy through sustained jobs and wages if the plant was to remain operational through 2044.

NGS currently employs about 518 people, nearly 86 percent of whom are Native American.  The Kayenta Mine has more than 400 employees, of whom about 90 percent are also Native American.

“I have been saying we need to protect existing jobs on the Navajo Nation,” said Navajo Nation President Ben Shelly.  “This study shows that the plant and the mine not only support existing jobs at the plant and mine, but support other jobs in the area.”

The ASU report examined the direct, indirect and induced economic impact of NGS and Kayenta Mine on the Navajo Nation using the IMPLAN model employed by the state of Arizona to examine various economic projections.  A full copy of the report is available at www.ngspower.com.

The study on the plant’s economic impact on the Navajo Nation is separate from a 2012 study from ASU that concluded that NGS and the Kayenta Mine will provide more than $20 billion in economic contributions throughout the state for the period measured from 2011 to 2044.  The new study examined the economic effects exclusively for the Navajo Nation.

Despite its economic importance, a number of significant challenges threaten the future viability of NGS.  To ensure future operations of NGS, the plant’s lease and various rights of way with the Navajo Nation must be extended and the coal supply contract with Peabody Energy renegotiated prior to any additional costly emission controls from the EPA.

The plant’s lease and various rights of way with the Navajo Nation are set to expire around 2019 and the Navajo Nation Council is currently considering legislation to extend them.  In addition, the plant’s owners are also renegotiating the coal supply contract with Peabody Energy.  Perhaps most significantly, the U.S. Environmental Protection has proposed additional and costly environmental rules to address regional visibility.

NGS is a coal-fired power plant that provides electricity to customers in Arizona, Nevada and California, and energy to pump water through the Central Arizona Project.  The participants in NGS include the plant’s operator, SRP; the U.S. Bureau of Reclamation; Arizona Public Service Co.; Los Angeles Department of Water and Power; Tucson Electric Power Co. and NV Energy.

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Arizona university research has $1 billion impact

A new report shows that Arizona’s economy benefits by more than $1 billion from research at the state’s public universities.

To put that in perspective, that is the economic impact equivalent of hosting more than four Super Bowls a year.

The Arizona Board of Regents recently released its research report that covers 2012. It details the economic impact of research at Arizona State University, Northern Arizona University and the University of Arizona.

Board chairman Rick Meyers says the research leads to inventions, patents and start-up companies that fuel the private sector and create jobs.

Examples of ongoing research include a technique to detect bone loss, the science of placebos and the discovery of new treatments for disease.

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AZ Business Magazine January/February 2013

AZ Business Magazine January/February 2013

Tourism hits a home run

Michael GossieOne of the greatest holiday gifts I will ever get my parents were tickets to the 2007 Fiesta Bowl between Oklahoma and Boise State. My parents are tough to buy for, they don’t need anything, but they love sports. So even though they aren’t fans of either team, they love live sports.

What they got from that gift was the experience of seeing one of the greatest games in college football history — the teams scored 22 points in the final 1:26 of regulation and 15 points in overtime, culminating with Boise State completing three do-or-die trick plays to win the game in an upset.

What’s great for the tourism industry in Arizona is that we can give those memories to visitors on a regular basis. Between Cactus League baseball, college football bowl games, the Waste Management Open, NASCAR events at PIR and the Super Bowl coming again in 2015, the Valley is a sports memory-making machine. Sports also have an economic impact on Arizona that adds up to billions of dollars annually.

In this issue of Az Business magazine, we talk about the merger of the Arizona Tourism Alliance and the Arizona Hotel & Lodging Association to form the Arizona Lodging & Tourism Association (AzLTA), the political and economic power the new group will have, and how they will continue to utilize sporting events as a catalyst to attract more tourism dollars to the state.

Their initiatives are working. My father has already told me he’s coming in from New York this month to play some golf and check out the Waste Management Open.

Michael Gossie Signature

Michael Gossie, Managing Editor

Read more articles from this issue.

Take it with you! On your mobile, go to m.issuu.com to get started.

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Phil Mickelson, Bubba Watson set for Phoenix Open

Two-time champion Phil Mickelson and Masters winner Bubba Watson have committed to play in the Waste Management Phoenix Open.

The news of the popular PGA players’ participation should be an economic boost for business. The 2012 Waste Management Phoenix Open pumped $222 million into Arizona’s economy — with direct sales tax revenue estimated to be $8.2 million — and non-local attendees spent an average of $300 per day.

Defending champion Kyle Stanley, 2011 winner Mark Wilson and 2010 champion Hunter Mahan also are entered in the Jan. 31-Feb. 3 event along with Rickie Fowler, Nick Watney, Carl Pettersson, Nicolas Colsaerts and Lucas Glover.

Mickelson won at TPC Scottsdale in 1996 and 2005. The former Arizona State star will open his season Jan. 17-20 in the Humana Challenge in La Quinta, Calif.

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Youth Soccer Tournament To Add $10M To Valley Economy

What has almost 500 legs and is worth $10 million? Would you believe a youth soccer tournament in the middle of June?

Tournament officials estimate an economic impact of more than $10 million to the Valley when the top 248 Boys and Girls US Youth Soccer teams from Region IV compete in the West Championships June 18-24 at the Reach 11 Sports Complex, 2425 E. Deer Valley Rd., Phoenix.

“We are thrilled to host the US Youth Soccer Region IV Championships after a successful 2011 National Championships at Reach 11.” said Leslie Johnson, executive director of Arizona Youth Soccer Association. “We had great feedback after the event last year and look forward t hosting another high class tournament and again positively impacting out community.”

Round robin games, in which teams play each other once, begin June 18 and continue through June 20. Teams will take a break on June 21 before continuing with quarterfinal matches on June 22. June 23 is the first day of semifinals with the finals set for June 24.

The four regional winners will send U-14 and U-19 boys and girls teams to the 2012 US Youth Soccer National Championships July 24-29 at Manchester Meadows in Rock Hill, S.C.

The yearlong competition that begins with more than 185,000 players will end with one winner in each of the six age groups.

For more information on the US Youth Soccer National Championship Series, visit championships.usyouthsoccer.org.

Phoenix Convention Center

Conventional Wisdom – Catering To Phoenix Visitors

Debbie Cotton has gone from helping people travel around Phoenix to trying to convince people to travel to Phoenix.

Cotton, the former director of the Phoenix Public Transit Department, is about six months into her role as director for the Phoenix Convention Center.

“The biggest difference for me is that each day is very different,” says Cotton, who replaced John Chan, who became community and economic development director for the City of Phoenix. “Each customer of the Convention Center has their own set of individual needs, so we have to come in here and reinvent ourselves every day so that we can fulfill our clients’ needs.”

Catering to convention-goers’ needs are more important than ever. To compound the hit that the economic downturn placed on the convention industry, Arizona’s tough stance on illegal immigration has put the state in a negative light in some decision-makers’ eyes, and an incident where a lesbian couple was asked to leave a downtown restaurant ignited a social media firestorm.

“People are very aware of some of the social unrest we’ve had in the community,” Cotton says. “That is one of the things that people have questions about when we talk with them about coming to Phoenix.”

If you look at the numbers, the controversies don’t seem to have an impact on tourism’s bottom line. A report from Dean Runyan Associates shows that gross sales at state hotels have increased more than 12 percent since 2010, and travel spending in Arizona has increased 7.9 percent since 2009. Gov. Jan Brewer signed SB 1070 — the strictest anti-illegal immigration measure in recent history — into law in 2010.

“In the next five years, we will have 900,000 delegates come through the Convention Center doors with an economic impact of $1.3 billion,” Cotton says. “That is a slight increase from the previous five years.”

A $600 million expansion project that tripled the size of the Convention Center and was completed in 2009 has raised the profile of both the center and the convention industry in Phoenix. In 2010, the Convention Center received the Inner Circle Award from Association Meetings Magazine, which ranked the facility as one of the 15 best Convention Centers in the nation for service excellence. And in April, the Phoenix Convention Center was ranked seventh among the best U.S. convention centers by Business Review USA.

“The addition of ASU and CityScape have given downtown more vibrancy and a youthful exuberance that has really made a difference for visitors,” Cotton says. “People want to play and have fun here. We need more of that.”

To get the Convention Center to the next level, Cotton and her staff plan to launch a redesigned website and use social media — Twitter and Facebook — to engage their customers and increase their speed to market.

“One of the things that we’ve found creates a more dynamic experience for visitors are the Downtown Phoenix Ambassadors,” Cotton says of the orange-shirt-wearing, information-wielding walking concierges of downtown. “We want to get them more involved on the front end so that we differentiate ourselves from other communities. Once we get them here, we know they will come back.”

To help fill some of the vacancies the Convention Center has on the books, Cotton instituted a sales training program that will complement the comprehensive guest experience training that the staff has undergone since the center was expanded.

“We have been so busy over the last few years with our growth, that we didn’t have time to slow down and focus on some of the finer details,” Cotton says. “Now that things have slowed down and our expansion is complete, we have more time to incorporate training, build leads and close deals. Now it’s time for us to become the best of the best.”

For more information on the Phoenix Convention Center, visit the Phoenix Convention Center’s website at phoenix.gov/phxpccd.html.

tucson airport

Study Puts Tucson Airport’s Economic Impact At $3.2 Billion

A new study shows Tucson International Airport (TIA) brings an annual economic impact of more than $3.2 billion to the region.

The study was commissioned by the Tucson Airport Authority (TAA) and conducted by MBA students from the Eller College of Management at the University of Arizona. It has been more than 10 years since TAA conducted such an analysis.

“These updated findings provide an accurate and current picture of the job creation and economic activity brought about by TAA’s ongoing operations, significant infrastructure investments and partnerships with more than 100 tenants. We take great pride in helping to improve the economic vitality and quality of life in southern Arizona,” said TAA President/CEO Bonnie Allin.

The airport’s direct, indirect and induced economic effects are included in the total. Direct impact is generated as a result of employment and operation of the airport and tenant businesses. The Eller MBA consulting team calculated a total annual direct impact of $1.7 billion stemming from payroll, goods and services purchased by the airport and airport businesses, expenditures on capital improvement projects and payment of local taxes from airport activity.

The remainder of the $3.2 billion total is attributed to indirect and induced impact.

Indirect impact includes money spent at the airport and in the community by airport patrons, plus revenue generated by businesses that chose to locate in the region because the airport is integral to their operations.

Induced impact, also known as the multiplier effect, is based on an economic principle that quantifies how revenue generated by airport activities grows as it cycles through the community. For example, when TAA hires a local construction company for a project, the company hires additional employees, who increase demand for goods and services in the region through spending their salaries. The businesses they patronize hire additional workers, and the process repeats.

Similarly, 13,000 workers are directly employed at TIA. Indirect and induced effects of airport employment bring the total to 35,000 local jobs supported as a result of the airport’s presence in the community.

The UA graduate students are part of the Eller MBA’s experiential learning program, which allows the students to participate in a strategic consulting project. TAA is one of the College’s 12 clients this year, including Raytheon, Microsoft and Intuit, said Eller College of Management Director for Experiential Learning Nannon Roosa.

“This program is the cornerstone of our MBA’s first year,” Roosa said. “Projects like these challenge students to apply core business skills to address a real-world business issue.

“Eller’s innovative curriculum, combined with pioneering research, distinguished faculty, excellence in entrepreneurship and social responsibility, has brought international recognition to the program,” she added.

The report helps to demonstrate the importance of TIA to a strong local economy, which is useful in regional business recruitment and retention efforts, as well as air service development initiatives. TAA will share the findings from this study for inclusion in an Arizona Department of Transportation (ADOT) study that will quantify the statewide impact of aviation, as well as other economic development groups such as TREO, the Arizona Commerce Authority, local chambers and the Metropolitan Tucson Convention & Visitors Bureau.

For more information on the Tucson International Airport, visit their website at flytucsonairport.com.

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17 Percent Of State Tax Revenue Comes From Auto Sources

A new report from a leading industry research group reveals that more than 17 percent of Arizona’s total tax revenue is generated by the auto industry and from the state’s drivers and auto owners.

In a nationwide study released this week, the Center for Automotive Research in Ann Arbor, Michigan found that in 2010 the State of Arizona collected more than $1.74 billion from car owners, dealers, drivers and auto industry workers, totaling a full 17 percent of the total tax revenue for the state. Arizona ranks in the top third of all states in percentage of tax revenues generated by the auto industry. The national average is 13 percent.

“This study confirms that the U.S. auto industry has a huge economic impact in Arizona and across the nation,” said Mitch Bainwol, President and CEO of the Alliance of Automobile Manufacturers. “Between taxes and fees paid by auto owners, income taxes paid by auto industry workers, fuel taxes paid by drivers, and corporate taxes paid by dealerships and other auto related businesses, the automotive sector is contributing a very significant share of revenue to the budgets of every single state.”

“In Arizona, families and businesses paid $723 million in sales taxes on new and used vehicles, service and parts,” said Bobbi Sparrow, President and CEO of the Arizona Automobile Dealers Association. “Add in another $201 million in registration and license fees, and Arizona drivers are kicking in a major share of the state’s tax base every year.” Specifically, in calendar year 2010, the State of Arizona collected:

• $382 million in new vehicle sales taxes
• $240 million in used vehicle sales taxes
• $101 million in sales taxes on auto parts and services
• $797 million in taxes from fuel sales
• $201 million in registration, licensing and title fees
• $19 million in business and employee taxes from dealerships, manufacturers and suppliers

The production and sale of cars is a massive economic driver for the US economy. National revenues from car sales alone totaled over $564 billion in 2010, an increase of 17 percent from the previous year. The manufacture and sales of parts, along with repairs and service, account for another $173 billion in economic activity. So, automobiles drive more than $735 billion into the economy each year.

“In this country, 8 million people are employed directly and indirectly as a result of the manufacture, sale and repair of automobiles,” added Bainwol. “Those 8 million people earn $500 billion in compensation. These are American families living all over this country. In many communities, they form the backbone of local and even state economies. And as jobs are added, these numbers will climb. So auto policy is central to the economic vitality of virtually every state.”

For more information on the Center for Automotive Research’s report, visit their website at cargroup.org.