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Man rock climbing with another man on belay and a woman standing nearby

Courting The Locals Could Be The Key To Keeping Arizona’s Struggling Tourism Industry Viable

For years, state tourism and hospitality enjoyed a healthy dose of success. As the population boomed, so did travel, with out-of-state visitors increasing steadily from 2002 through 2007. But the recession, coupled with a decline in corporate meetings, made 2009 a very difficult year for the tourism and hospitality industry.

Arizona resorts and hotels that promoted staycations as a way to ride out the slow summer months, are now counting on them year-round to remain viable until the economy improves significantly.

“It’s not either/or; what we’re trying to communicate is that a staycation IS a vacation.”
– Debbie Johnson, Arizona Hotel & Lodging Association

“We are seeing more local and regional business to the resort throughout the entire year than ever before,” says Michael Stephens, general manager of the Hyatt Regency Scottsdale. “If ever there was a time to take advantage of some really great offers in-season, this is the year.”

To stimulate in-state travel and help ease the pain of a sharp decline in occupancy, local tourism representatives are turning to residents and spreading the message about the allure of staycations.

“Staycations have been and will continue to be one of the vacation elements that many of our state residents enjoy,” says Rachel Sacco, president and CEO of the Scottsdale Convention & Visitors Bureau. “It’s such a rewarding experience. Throw something in the car and go, but you feel like you’re a million miles away.”

Industry insiders hope that by providing extra incentives and cost-saving measures to local travelers, tourism will get the boost it needs to get through the economic downturn.

“If embraced and harnessed correctly, tourism is the state’s strongest weapon against further economic woes,” says Debbie Johnson, president and CEO of the Arizona Hotel & Lodging Association. “If you’re tired of the economic slump and wish you could do something about it — take a trip, go out to a restaurant, and change the way we think about companies holding meetings. It’s the best way to personally affect the economy and get us moving back in the right direction.”

And the local market is one that can be deeply mined. According to the Arizona Office of Tourism’s (AZOT) year-end summary, the second largest tourist segment was comprised of state residents, with 9.8 million overnight visitors. Although domestic non-residents still made up the largest share of overnight visitors, Arizonans logged an impressive 33 percent of the state’s domestic overnight visitors in 2008.

Industry professionals are sending the message to locals that a staycation is a cost-effective alternative to out-of-state travel — no matter the season.

“Why spend tons of time and money on flights or inflated gas prices when we have such an incredibly diverse state with attractions and amenities that other people travel the globe to experience,” Johnson asks. “It’s not either/or; what we’re trying to communicate is that a staycation IS a vacation.”

Economic Impact

In AZOT’s year-end summary it was reported that direct travel spending in Arizona in 2008 was $18.5 billion. Travel spending also generated 166,900 direct jobs paying $5 billion in earnings. The report also stated that Arizona visitors staying overnight in paid lodging accounted for 41.2 percent of all visitor spending in 2008.

“Choosing a staycation keeps hard-earned money in our state, which generates tax revenues that trickle through the entire Arizona economy,” says Jennifer Wesselhoff, president and CEO of the Sedona Chamber of Commerce.

From the Greater Phoenix area to Tucson and Flagstaff, in-state travel is important to every county, although some rely on it more than others. According to AZOT, travel spending is more critical to the economies of Arizona’s rural counties.

To help Arizona communities and tribal entities with their tourism development and marketing efforts, AZOT is coordinating an educational outreach program called Arizona Tourism University. The university conducts free workshops on tourism topics and offers advice on marketing plans, style guidelines and more.

Last year, AZOT also partnered with the Arizona Hotel & Lodging Association to launch a Web site, www.valueaz.com, dedicated to helping individuals find the best travel deals available.

“We’re trying to help our members get the word out about their great deals, and educate residents that they can and should feel good about spending their money on in-state travel,” says Johnson, who is also president and CEO of the Valley Hotel and Resort Association in addition to serving as the executive director of the Arizona Tourism Alliance.

Deals for Locals

Along with the limping economy, a sharp drop in corporate meetings since 2008 has forced resorts to diversify their brands and market staycations. To that end, hospitality establishments across the Valley and state are pushing incentives aimed at the local community.

“We have chosen to be creative in positioning ourselves with a variety of different package options,” says Michael Hoffman, managing director of the Boulders Resort & Golden Door Spa.

The Boulders has created a series of adult-centered activities, including rock climbing, hiking and spa treatments, to lure Arizona’s adult community.

Even resorts that are synonymous with exclusive luxury are now a more affordable option for locals.

“The staycation enhances our business,” says David Richard, area director of sales and marketing for Starwood Hotels, a hotel and leisure company that owns the Phoenician. “(Staycations) are more important than ever in building occupancy. They serve as a catalyst for increasing business across the entire resort.”

Richard also notes that staycations allow the local community to experience the Phoenician at a much more attractive price point.

And the Valley staple is not the only high-end resort to recognize the importance of attracting residents during these dismal economic times. The Arizona Biltmore — a presence in the Valley since 1929 — also has set its sights on increasing its staycation market.

“We actually started marketing toward the Arizona market even before the downturn,” says Andrew Stegen, general manager of the Arizona Biltmore.

In addition to traditional advertising, the Biltmore has successfully utilized social media and Internet specials as a way of alerting locals about deals and promotions.

“It creates an opportunity for a lot of people to visit our resorts who in other circumstances see it as inaccessible because of price,” Stegen says.

Beginning on May 22, summer rates for the luxurious resort start at $99 a night. In addition to these reduced rates, the Biltmore offers numerous cost-saving options, including all-inclusive golf packages, spa specials and restaurant deals. Stegen is certain that with more exposure, staycations will change the way residents view travel.

“It’s helped us introduce a great luxury product to people who have not thought of us as a vacation destination before,” he asserts.

The Sanctuary Camelback Mountain Resort & Spa also has developed many promotional efforts focusing on staycations. Special deals are e-mailed exclusively to individuals who follow the resort online.

“The value is so great right now,” says Michael Surguine, general manager of the Sanctuary. “(With a staycation) you wind up getting a lot more vacation hours for your buck.”

Another resort offering incentives to residents is the Hyatt Regency Scottsdale Resort and Spa at Gainey Ranch. Last year, the resort launched its Shades of Summer program, which offered deals to families, including free meals, Camp Hyatt activities for kids and giveaways. The resort is planning to have similar incentives this summer.

“Our success was really built on adding value,” aknowledges Michael Stephens of the Hyatt Regency Scottsdale. “I will say that the Hyatt Regency Scottsdale has never been this affordable all year round than this year.”

Arizona Amenities

Thanks to the deals now being offered at local hotels and resorts, Arizonans can take advantage of the state’s abundant natural endowments. According to AZOT, exploring the state’s wonders is one of the top activities for resident travelers. Overnight residents were more likely to take part in hiking or backpacking — 15.1 percent versus 11.4 percent for overnight, non-resident tourists. Residents also led the pack in camping and fishing activities.

“Our diversity offers everything from the desert, lush forests, riparian terrain and mountains, to lakes and streams, and some of the most beautiful backdrops in the Southwest,” says Wessellhoff of the Sedona Chamber of Commerce.

Wessellhoff adds that while staycations help Arizonans save money, they also allow residents to experience things they typically take for granted or simply never had time to fully appreciate before.

Heather Ainardi, director of the Flagstaff Convention & Visitors Bureau agrees: “In economic downturns, people often look for more ‘real’ and natural experiences, and Arizona is very well positioned to offer travelers an authentic experience.”

The Future of Staycations

While the economy begins its slow trek back, staycations remain a viable option for local individuals and families looking for a special travel experience at affordable prices.

More importantly, it is this type of local travel that can stimulate the hospitality industry and help it survive the recessionary downturn. From Phoenix residents escaping the summer heat of the Valley for a cooler retreat in Flagstaff or Sedona to Tucsonans heading to the Valley’s golf resorts and restaurants — every destination has something to offer local travelers.

“Regardless of the economic climate, or perhaps because of it, people will want to get away from it all and enjoy some leisure time,” says Richard of Starwood Hotels.

Panel of MPI Students

The Meetings Industry Is On The Offensive To Counter Negative Perceptions

When individuals and organizations meet, solutions are created, ideas are shared, business initiatives are crafted and skills are learned. Such meetings are crucial to North American business success, even more so in a dynamic, faltering, global economy. In an increasingly faceless world, effective human connections are a powerful business weapon.

The EventView 2009 study reveals that for the fourth year in a row senior sales and marketing executives in North America believe meetings and events have the highest ROI of any marketing channel. EventView is produced through a collaboration of the Meeting Professionals International Foundation, the Event Marketing Institute (EMI) and the marketing agency George P. Johnson (GPJ). EventView is the meetings industry’s longest-running global report on event marketing trends.

“This first report of the 2009 series shows that CMOs (chief marketing officers) and senior marketers believe events are the most effective medium to engage customers and move them to purchasing behavior,” says Bruce MacMillan, president and CEO of MPI. “While we’ve seen event marketing mature as an effective marketing channel for several years, the benefits become heightened in an uncertain economy. Marketing decision makers have clearly taken notice.”

Of the company executives questioned in the 2009 Business Leader Survey commissioned by the U.S. Travel Association (USTA), 82 percent say they believe business travel is important to achieving their businessresults.

“It’s a classic trade-off between short-term cost reductions and long-term value,” says Daniel Diermeier, a professor at the Kellogg Business School at Northwestern University. “During times like these, many companies will go too far, and actually cut back on the activities that would best position them to compete in the future.”

Another study from USTA shows that 87 percent of Americans who have attended an out-of-town meeting or convention for work say it is important to running a strong business. Meetings are far more than a collection of speeches or talking points. They are an opportunity for people of similar interests to come together and share their stories about how they are coping, as well as what they are doing to increase business, says leadership coach John Baldoni, who writes the Leadership at Work blog for Harvard Business Publishing.

Meetings and events are also strategic tools that deepen employee relationships and contribute to the overall health of companies. According to a Harvard Business Review survey, a 5 percent increase in employee retention can generate a 25 percent to 85 percent increase in profitability. Travel events show employees they are valued. If employees are only committed to the paycheck, their allegiance can be compromised when they are offered a higher salary elsewhere.

Additionally, meetings and events are essential to motivating sales forces, rewarding high performers, communicating new company initiatives and attracting top talent. According to a 2008 study by the Wharton School at the University of Pennsylvania, responsible, well-designed and well-executed meetings and training sessions have yielded significant benefits. Such benefits include improved company culture, increased employee retention and more highly engaged and satisfied employees. These companies generate better overall returns in the stock market, with firms on the list of the 100 Best Companies to Work For earning up to five times as much return as their competitors.

According to USTA, business travel in general has become a $240 billion industry due to the real value and measurable benefits derived from the collaboration and cooperation that can only occur when people meet face-to-face.

Phoenix, which covers 517 square miles, is the fifth-largest city in the country with a population of more than 1.57 million people. The Greater Phoenix Convention & Visitors Bureau (GPCVB) has accreditation from the Destination Marketing Accreditation Program, an international accreditation program developed by the Washington, D.C.-based Destination Marketing Association International.

“We are pleased to be recognized in the destination-marketing community for providing outstanding services in accordance with international standards and benchmarks in this field,” says Steve Moore, president and CEO of the GPCVB.

Unfortunately, adds Brent DeRaad, executive vice president of the Scottsdale Convention & Visitors Bureau, “the positive Arizona attributes we worked so hard to promote as a business destination are being used to portray Arizona in a less positive light. Our meeting planners are telling us they’re hard pressed to ‘sell’ our destination up the chain of command since there is a perception that the Valley is a hotbed of negative media activity, as well as a desirable leisure destination. Regardless of our state-of-the-art meetings facilities, easy air accessibility and the great values our resorts are extending, we’re losing business to destinations facing less scrutiny.”

Since October 2008, four national news stories have featured TARP (Troubled Assets Relief Program) recipients or federally funded organizations holding meetings at resorts. Three out of the four meetings scrutinized on the national stage were held at Phoenix-Scottsdale properties. As a result, planners charged with staging legitimate, privately funded meetings are fearful to bring them to Arizona and are canceling and downsizing programs. In fact, ArizonaGuide.com reports that some planners are willing to spend more to host their meetings in alternate destinations that are not receiving negative media scrutiny and are not perceived as leisure markets.

In a June letter to White House Chief of Staff Rahm Emanuel, Senate Majority Leader Harry Reid (D-NV), asked for assistance to reverse an informal federal policy prohibiting and discouraging government meetings and conferences in cities that are too leisure oriented. Emanuel agreed by saying “federal policy should not dictate the location where such government events are held. Our view on the issue of government travel is not focused on specific destinations, but rather on the justification for and the cost-benefit ratio of the individual exercise.”

The USTA declares that companies receiving taxpayer dollars need to be responsible, transparent and accountable. To that end, the travel community has developed a clear meetings-and-events policy these companies should adopt. Although this policy is intended for companies receiving emergency lending from the federal government, other companies interested in adopting these guidelines may choose to alter metrics based upon industry size, company size and market sector. The general USTA policy statement says “the CEO shall be responsible for implementing adequate controls to assure that meetings, events and incentive/recognition travel organized by the company serve legitimate business purposes and are cost justified.”

USTA President and CEO Roger Dow says “… corporate and government meetings have come under attack in the media and among some members of Congress seeking to portray meetings as excessive and unnecessary. The net effect has been cancellation of thousands of meetings, the termination of tens of thousands of jobs and the loss of billions of dollars of spending for the American economy.”

According to MeetingsMeanBusiness.com, each meeting and event traveler spends an average of $1,000 per trip.

“(Travel for business meetings and events) drives the whole hospitality industry in America, and that industry isn’t fat cats; it’s waiters and dishwashers, maids and cooks, event staff and hotel clerks — blue-collar workers who belong to unions,” writes New York Times columnist Thomas L. Friedman. Investor’s Business Daily columnist Kathy E. Read adds, “Those who get hammered — the reservation clerks, maids, baggage handlers, waiters and tour guides — are the little guys and gals whom (President) Obama’s stimulus package is supposed to put back to work.”

The tourism industry is one of Arizona’s largest revenue generators. The Arizona Office of Tourism (AOT) reports that in 2008, the state hosted 37.4 million visitors, including 32.4 million domestic and 5 million international travelers. AOT Director Sherry Henry explains that although the combined visitation equates to a net decrease of 3.3 percent, or 1.2 million fewer visitors from 38.6 million in 2007, the travel and tourism industry is resilient and continues to generate billions of dollars for the state’s economy.

Based on Arizona Department of Revenue data, gross sales for four key sectors of the meeting and travel industry are down 13 percent year-to-date as of May 2009, with corresponding state tax collections down almost 14 percent.

“Arizona’s visitor spending brought in $18.5 billion in direct travel expenditures in 2008, underscoring the fact that the travel and tourism industry is a major economic driver for our economy,” Henry says. “In the wake of our current economic situation, our industry brings revenue into the state that supports the quality of life of all Arizona residents.”

Last year, visitor spending generated $2.6 billion in local, state and federal tax revenues. Furthermore, the tourism industry is critical to both job creation and revenue generation for the state, supporting nearly 170,000 jobs and generating $5 billion in direct earnings.

According to Henry, unlike other industries, taxes generated by travel industry spending are paid by visitors rather than residents. These visitors bring new money to Arizona’s economy and generate revenue in all 15 counties, validating the economic importance the travel and tourism industry has across the entire state.

The Arizona Hotel & Lodging Association (AzHLA) conducted a poll of select members in the Phoenix-Scottsdale area and determined that canceled or downsized meetings have resulted in lost revenue easily topping $100 million — equating to a minimum of $11 million in tax revenues not funneling to city and state budgets or critical public programs such as education.

“Meetings account for more than 70 percent of most resort revenues,” says Arizona Hotel & Lodging Association President and CEO, Debbie Johnson. “When we lose those revenues, all Arizona taxpayers suffer; our pools are closing early, we’re losing our precious teachers and we’ll likely face a tax increase on the next ballot election. Many of those issues could have been avoided with the tax revenues from those lost visitors.”