President and CEO
Greater Phoenix Convention and Visitors Bureau
What is the outlook of tourism in Arizona and the Valley as you see it?
Tourism is a $17 billion industry here, and it is strong enough to have absorbed some body blows over the past couple of years. The recession hurt. The “AIG effect” hurt. Backlash from SB 1070 hurt. People are still worried about the economy, and large groups are still a little trigger shy.
But we are seeing a few positive signs. Business travel is inching upward. Room rates are rising a little. In Phoenix, the metric we use to assess the financial performance of our hotels indicated improvement in 2010 versus 2009. So far this year, the BCS Championship Game gave the Valley’s hotels a boost in January, spring training provided its annual injection of visitors in March, and the MLB All-Star Week is going to be a huge asset for us in July. But the outlook is not as rosy as it’s been painted in some media accounts. We still have a lot of ground to make up.
How is the Greater Phoenix CVB performing in this environment, and how would you define the CVB’s role in the local economy?
In fiscal year 2010, our sales staff booked over 400,000 future delegates into the convention center and hotels across the Valley. These delegates will spend over $525 million when they get here — that’s direct spending, and it doesn’t include what the family and friends who accompany them will spend. If you were to look at the CVB’s future bookings in terms of corporate portfolio, that “portfolio” would be valued at $2.4 billion. That’s how much direct spending is attached to the future delegates we’ve booked, and that’s the price you could expect to get for the CVB if it were “sold.” Of course, we’re not for sale — we’re a nonprofit. But I think the analogy helps people get their heads around how vital the visitors industry is to the local economy.
What obstacles are currently facing the visitors industry, and what are some future challenges for the Greater Phoenix CVB?
The economy’s signs of recovery give us reason for optimism — but that optimism has to be tempered with a measure of caution. Group business may gradually climb back to pre-recession levels, but spending probably will rise at a slower rate. In that way, this recovery will somewhat mirror the industry’s post-9/11 recovery, albeit with a more gradual climb out of the bottom, because the recession affected all industries, not just ours.
Also, as the cost of oil continues to rise, so does the cost of air travel. Airlines have gradually decreased their capacities, switching to smaller planes and fewer flights. This can increase the cost of air travel and inflate travel times, both of which factor into a business’ decision about where to hold a meeting or convention. It’s something we play close attention to because Phoenix is a fly-in destination. Another challenge for us arose this past September, when the GSA recommended that federal agencies substitute teleconferencing and webcasts for face-to-face meetings whenever possible. Suppliers will likely follow suit, and that’s not good for our industry.
Within the CVB itself, one of our greatest challenges is budgetary. The formula funding we created back in 1998 will yield a million dollars less for us in the next fiscal year than it did in this fiscal year. We have lost four sales people this year, and we have not been able to replace them. We also lost half of our Prop 302 funds to the Legislature, which hinders our ability to market the destination to a national and international audience.
Has the Greater Phoenix CVB seen improvements since the passing of SB 1070? How so?
It’s been about a year since SB 1070 was passed, and in that time we’ve lost six definite conventions. We’ve lost only two since last July, when (federal) Judge (Susan) Bolton’s ruling blocked some of the bill’s most controversial provisions. Our sales team spent a lot of time and energy holding onto some of our large conventions and rebooking others. It’s the pipeline we are most concerned about, and at the close of the calendar year, our booking pace had slowed by 36 percent over last year’s pace — and last year was a recession year.
The fact that 19 other states have introduced immigration bills similar to SB 1070 has taken a little of the heat off us. It’s hard to quantify how much convention business we aren’t even getting considered for due to concerns over the bills. We do know that large, diverse associations are more risk averse than smaller, corporate meetings. Those smaller meetings have started to return to the Valley.
How will the All-Star Game and the MLB FanFest at the Phoenix Convention Center impact Phoenix’s economy and tourism?
The All-Star Game and the events surrounding it — the Home Run Derby, the Legends & Celebrity Softball Game, and FanFest at the convention center — are expected to inject $67 million of direct spending into Arizona’s economy. This estimate does not include local production expenses by national and international broadcast media, nor does it take into account hospitality expenditures by sponsors for receptions, parties and banquets.
The fact that All-Star Week arrives in town during summer, our traditional low season, magnifies its economic benefit to the community and provides us a grand-scale opportunity to show leisure travelers and meeting groups that visiting Phoenix in summertime is fun. And it’s the latest in a growing list of mega sporting events whose presence here proves that large and diverse groups and events are welcome and successful in Arizona.
What are your thoughts on the Arizona Office of Tourism’s “In One Word — Arizona” marketing campaign that launched in November?
Well, using just one word is economical, and that’s a good thing. Seriously, though, it’s a beautiful campaign that dramatically captures the beauty of our state. The existence of such a campaign is absolutely essential. Tourism is a $17 billion asset for Arizona. That asset must be trumpeted; that asset must be leveraged; that asset must be cared for. We all know AOT has been devastated by state budget cuts. If there’s one word that should be applied to AOT’s funding, that word is “restoration.”
What are your thoughts on the new Westin Phoenix Downtown and the rest of the downtown hotels and how they can potentially attract more tourists and business travelers?
Westin is a trusted brand, and the new hotel is a wonderful addition to downtown. Many of the conventions we book at the CVB are what we call “citywide conventions.” What that means is, they are big enough so that their attendees and their families spread out to multiple hotels. With the addition of the Westin, there are now more than 2,700 guest rooms within walking distance of the convention center. And more are on the way: A boutique Kimpton hotel — another trusted brand — is scheduled to open in CityScape early next year. So we’ll have the Sheraton, the Hyatt, the Wyndham, the Westin and the Kimpton right in the city’s core, all near the convention center, all near stops for the light rail, all near CityScape. For years we tended to talk about downtown in the future tense — as in, “It’s going to be great.” Downtown is now all about the present tense. It is great, and the catalyst to making it that way was the visitors industry.