The tourism industry was thrown for a loop in 2020 as occupancy rates dropped as out of state visitors lessened and the normally high economic impact from Arizona’s resorts and attractions took a large hit unlike any in recent years. However, Scottsdale, one of the state’s biggest hospitality hot spots, continued to attract residents and visitors with the completion and openings of new hotels, restaurants and renovations of mixed-use properties, such as Fashion Square.
According to the City of Scottsdale’s annual tourism study, in 2019 Scottsdale-area hotels and resorts experienced a record-breaking 70.7 percent annual occupancy. That year, the city welcomed 11 million visitors who generated $3.3 billion in economic impact and $54.7 million in taxes. In 2020, the occupancy rate dropped to 40.1 percent. Hotel research company STR forecasts that Scottsdale-area hotels and resorts will experience just 49.5 percent occupancy in 2021, which could change as the pandemic evolves throughout the year.
“The pandemic came on the heels of one of the strongest years on record for Scottsdale’s tourism industry, and at the start of 2020 we were projected to have another really strong year and see growth at our hotels and resorts in occupancy, rate and revenue,” said Stephanie Pressler, director of Community Affairs for Experience Scottsdale, the city’s tourism bureau.
“Our high season is January through April, so we did really well the first few months of the year. Then COVID hit and in March a lot of our hotels closed for a bit. Since August 2020, we’ve been seeing occupancy levels plateauing around 30 to 40 percent,” Pressler said.
Although occupancy levels were lower than in years past, Pressler said Scottsdale resorts, hotels, restaurants and other businesses have implemented new health and safety protocols to ensure people feel safe and welcomed when in the city.
“It has been a challenging time, but this is a resilient industry. We are hopeful for the future, and Scottsdale is known for our luxury brand,” she said. “I think the interest in some of these new projects coming to Scottsdale, both the ones that opened in 2020 and ones that will be online in the coming years, speaks to the strength of our tourism industry and our brand.”
Matt Shock, project executive for DPR Construction, the general contractor on AC Hotel Scottsdale North, which opened in January 2021, said DPR was the first company in Arizona to execute and deliver a prefabricated structure for Marriott and the hospitality industry, which could usher in a more efficient construction model for future similar projects. “It proved that prefabrication and modular construction is a viable option, especially in this market, and this project showcased that compared with other projects,” Shock said.
Construction on the 88,000-square-foot, 165-room, six-story boutique hotel in the heart of Scottsdale was completed in June 2020. DPR delivered the project in 13 months — three months quicker than the average construction timeline for the AC Hotel brand.
Prefabricating the the top five floors of the structure reduced manpower onsite and helped keep construction on budget. The use of Digital Building Components offered several advantages, including preserving cost certainty associated with framing, finish and quality. Installing a panelized steel structural system with load-bearing walls improved building longevity and allowed for the creation of a taller building with more guest rooms. Offsite manufacturing of the load bearing structure also helped minimize disruption to the adjacent resort.
The building features a holistically designed lobby with high-end finishes, centralized bar, modern lounge area, a co-working space for professionals, five levels of luxury guest rooms and a pool.
“AC Hotel Scottsdale North is a boutique lifestyle hotel,” Shock said. “It caters to the business traveler in an area that is really dominated by full-service resorts. It is ideally located in a great area next to Kierland Commons, and it’s got a ton of adjacency to the existing Westin property at Kierland,” Shock said.
“It was also interesting because the owner, Host Hotels and Resorts, typically only does luxury products, so I think it’s a testament that a number of national hospitality developers are looking at the range of product types they have within their portfolio and are trying to find which one is going to be the right value-add based on the submarket that it’s in.”
In addition to AC Hotel Scottsdale North, Canopy by Hilton Scottsdale Old Town completed construction in 2020. The 204,810-square-foot, seven-story, 177-room hotel in downtown Scottsdale opened in October 2020.
Mark Beal, director of construction for Ryan Companies, the general contractor of Canopy Scottsdale, said the construction timeline stayed on schedule because COVID protocols with social distancing and safety procedures were implemented. “We were very deliberate about educating our subcontractors and tradespeople onsite about social distancing and did aggressive cleanings by shift. We were fortunate that we were able to maintain our construction momentum.”
Canopy Scottsdale has a signature restaurant, an American brasserie inspired by the Southwest, as well as Outrider Rooftop Lounge, Old Town’s newest rooftop pool and bar on the hotel’s seventh floor offering views of Camelback Mountain. The interiors combine dramatic natural elements, such as a variety of wood and metal tones incorporated throughout, with curated artwork by local artists. The guest rooms blend a midcentury modern aesthetic with the simplicity of nature while paying homage to the city’s distinctive surroundings.
Beal said Canopy Scottsdale was an exciting project for Ryan Companies because of its location in Old Town Scottsdale. “The hotel sets the bar for top-notch amenities, and its location draws people. The rooftop bar is second to none, so we were really appreciative of our partnership with Miller Global (owner of Canopy) and being selected to bring this new hotel to Old Town Scottsdale.”
Canopy Scottsdale provides tourist accommodations among nearby galleries, cultural venues, entertainment and retail. Situated at the northeast corner of First Street and Marshall Way, the project is immediately east of the Museum of the West and within the Scottsdale Arts District.
Mixed-use areas like Old Town Scottsdale are hubs of activity and attract both residents and visitors to experience hotels, activities and restaurants in close proximity.
“Old Town is really the heart of our community and has so many opportunities. It adds to what we can offer people who want to come here and have experiences and memories,” Pressler said. “Throughout the pandemic, I think people have realized they might have taken travel for granted in the past; and our new campaign, called ‘Extraordinary Moments. Lifelong Memories,’ is focused on highlighting the memories you make when you travel to Scottsdale with all the things you can do here.”
The tourism industry in Scottsdale has a lot of opportunities to recover as the pandemic evolves. “One of the things that will benefit us as a destination as we come out of the pandemic is having so many wide open spaces, hiking opportunities and the beauty of the desert,” Pressler said. “People feel rejuvenated when they come here. They can be outside and can stay at a casita-style resort where there are open-air hallways, so they have distance between themselves and other guests.”
In addition, Pressler said meetings and events could be a first step toward attracting more visitors to the area later this year once people are vaccinated and feel more comfortable traveling again.
“Meetings and conferences are important to Scottsdale’s tourism industry. They help fill our hotels and resorts, but those groups also are filling our restaurants and going to our attractions. Those events probably won’t be coming back online until the third or fourth quarter of 2021.”
Although the tourism industry and Scottsdale hospitality did take a large hit in 2020, there is optimism about how new developments, such as the AC Hotel Scottsdale North and Canopy by Hilton Scottsdale Old Town, add value to Scottsdale’s already dynamic tourism landscape.
“In the past few years before the pandemic, we were seeing growth year after year for our tourism industry; new restaurants and hotels; and renovations at hotels, restaurants and Fashion Square, so there was a lot to be excited about then. 2020 paused that excitement, but we are hopeful that we’ll be able to get back to that, as consumer poll surveys show people are feeling more confident to start to plan trips later in the year,” Pressler said.
“This is a resilient industry. We’ve experienced a lot of strife before and overcome different things in the past, and I think we’ll emerge stronger from this. It will just take time to get there. At Experience Scottsdale, we’re hopeful that the work we do will also help the industry recover as well.”