Tag Archives: tourism alliance

Enchantment Resort in Sedona - AZ Business Magazine Jan/Feb 2011

Studies Show That Every Dollar Invested In Tourism Returns At Least Double That Amount

Forests of Saguaro cacti lit by fiery red and orange sunsets, gun-toting cowboys staging shoot-outs, and the Grand Canyon’s striated walls looming over the Colorado River.

One would think these distinctly Arizona images could sell themselves. Unfortunately, Arizona’s tourism industry is learning the hard way that it takes more than just the state’s natural beauty and attractions to bring in visitors — it takes dollars.

“That’s why we need to be out there marketing Arizona, reminding people about what a great, wonderful, warm, welcoming destination we are,” says Debbie Johnson, executive director of the Arizona Tourism Alliance and president and CEO of the Arizona Hotel & Lodging Association.

The recession caused Arizona’s once vibrant tourism industry to flounder, and in 2009, the stigma related to the corporate meetings industry continued the industry’s downward spiral.

“We weren’t just feeling the pain like everybody else. We were getting hit much more significantly than the nation overall,” says Mitch Nichols, president of Nichols Tourism Group, which provides research services to the tourism industry.

Visitor spending in Arizona decreased 10.6 percent, while the nation saw a decrease of just 4.4 percent, from 2007 to 2009. Additionally, Arizona lost $780 million in potential visitor spending because its share of national travel expenditures dropped from 2005 to 2008, according to Nichols Tourism Group.

In early 2010, the state Legislature dealt the industry a one-two punch when it passed SB 1070 and redirected funds from the Arizona Office of Tourism’s (AOT) budget to the general fund.

The Legislature redirected the tourism formula fund, which is composed of 3.5 percent of the state’s bed tax, 3 percent of the state’s amusement tax, and 2 percent of the state’s restaurant tax. This redirection will take approximately $28 million away from AOT over the 2011 and 2012 fiscal years.

In November 2010, the Center for American Progress, a progressive think tank, announced more bad news for Arizona’s tourism industry. In a study, it was reported that the controversial SB 1070 bill had cost the state $141.4 million in lost spending.

However, the industry isn’t down for the count.

Led by the Arizona Tourism Alliance, the tourism industry is campaigning to reclaim the budget, which it believes will help pull Arizona out of the recession and return millions of visitors to Arizona.




Arizona Inn in Tucson

Photo: Arizona Inn




While the long-term effects of SB 1070 on the tourism industry are hard to quantify, the budget redirection is projected to cost Arizona big.

Even the most conservative estimate puts the state’s losses at $26.7 million, but “actual revenue losses could potentially be many times this amount,” according to an independent study by Elliot D. Pollack & Co.

Nichols Tourism Group estimates the state could lose as much as $1.6 billion.

“You’re not finding $14 million. You’re creating a much bigger hole that will have to be funded in the future,” Nichols says.

The redirection of money decimated AOT’s marketing budget, allowing other states to sneak in and steal Arizona’s market share. These states recently discovered the tourism industry’s power to pull a state out of the recession.

“Some of our key competitors, California in particular, got much more aggressive in terms of the resources they were spending to try and convince visitors to choose California,” Nichols says.

Arizona is becoming out of sight, out of mind, and statistics prove it, Johnson adds.

From January to August 2010, the daily rate for Arizona hotel rooms declined 4.4 percent, while the nation’s daily rate only declined by 1 percent, and California’s daily rate declined by 1.1 percent, according to Nichols Tourism Group.

“Too often there’s a mindset that people will come whether or not you advertise. And we’ve got to increasingly ensure that kind of mindset does not carry the day,” Nichols says.

To remedy the industry’s declining revenue, Arizona’s Legislature needs to be reminded of what tourism means to the state. Tourism brings in revenue that funds education and many of the public services that are necessary during recessionary times.

The return on investment for every dollar spent on tourism marketing is seven to one, out-of-state studies show, according to the Pollack study.

In addition to pulling in revenue, the tourism industry directly and indirectly employs around 300,000 Arizonans, about 10 percent of the state’s work force.

Two key pieces of Arizona’s future, the economy and the work force, depend upon tourism. If the budget is restored, and soon, Arizona can rebound to pre-recession numbers within five years, Johnson says.

“Our destination has shown … that we can come back from adversity,” Johnson says. “We saw that after 9/11. (We were) one of the top five destinations, in terms of rebounding. I think we’re going to see that again because of what we have to offer, because we do have such a strong industry here. We’re a united industry. We work together and we come together in times like this. I think you’re going to see Arizona rebound.”

AZ Business Magazine Jan/Feb 2011

Steve Chucri, president and CEO Arizona Restaurant Association - AZ Business Magazine Jan/Feb 2011

Q&A Steve Chucri, President and CEO Arizona Restaurant Association

-In 2002, Steve Chucri was lobbying at the state level when the Arizona Restaurant Association president and CEO position was presented to him. Chucri now uses his political and lobbyist backgrounds to help Arizona’s restaurant industry navigate today’s tough issues. An executive committee board member with the Arizona Tourism Alliance, Chucri discusses strategies to create workable solutions to many issues affecting his industry.

Could the recession have been worse for the restaurant industry?
I always think it can be worse, because you don’t know worse unless you’re in it. That being said, yes, the economic hit, the recessionary hit to our industry was substantial. It may not be as substantial as to other elements of the tourism industry, but when you have the closing of restaurants double from normal times during this recessionary time, that’s pretty substantial. … I’m not going to say we were the worst or we were the most impacted, but there has been a huge impact from the most experienced restaurateur to the novices of the industry. Both were equally hit.

How have the arizona restaurant Association and the arizona tourism alliance been working together to get through the recession?
Restaurants over the recent years have become more and more dependent on tourist dollars. The receipts show that. About 25 percent of our receipts from restaurants are coming from tourists. … I think what we’ve been able to work on with both organizations is how do we continue to work together and make Arizona a destination? We’re becoming more and more known for our culinary fare.

Second to that, we’ve also worked legislatively together to ensure we’re not being targeted for miscellaneous taxes and we’re not getting targeted as an industry when it comes to funding issues, especially the Arizona Office of Tourism.

What challenges do you see facing the restaurant industry in 2011?
I see an increase in costs. We’ve been fortunate to maintain costs at a low level because of the recession, but I’m getting concerned that if things do start to pick up we will see costs starting to rise. I feel as though the smallest of things, the profitability of a restaurant, is very, very low and it doesn’t take much. You can’t just go to your menu and start raising prices in an economy like this. … I think we’re going to make a real push to see how we can get rid of that CPI (consumer price index) component with the minimum wage, but I don’t want to dwell too much on that, as we’re still in the strategic phases.

On the good side too, I believe that people are going to realize, yes we’re in a recessionary time but restaurants essentially are on sale right now. … I see people also realizing, like I said on the positive side, that it isn’t all that expensive to go out to eat.

How has Arizona’s restaurant industry been recovering from the recession?
In many, many ways, across many segments of our industry, it’s been at a snail’s pace. … I will tell you that 2010, from the quick-serve industry all the way to fine dining, it has been better than 2009. Now, that’s not universal, but the increases we are seeing are at a snail’s pace.

I think the wish, if there was one, of the industry would be that growth would pick up a little more quickly. Not at the crazy pace we were going at back in 2006, 2005, but something that is more meaningful and can be measured. … I think that restaurants are doing all they can to make sure that happens by offering these terrific deals and really using a lot of ingenuity and happy hours.

Restaurants are really good at incentivizing and getting people to come in. I think we’ll always continue to see that happen. … If restaurants can grow and if our industry can grow back up to the 4 percent or 5 percent and it’s sustainable each month and it’s sustainable on a consistent basis, you’d see a lot of smiles on restaurateurs’ faces.

Arizona Business Magazine Jan/Feb 2011