tourism1

Direct Spending tops $200 million

By: Blake Morlock

They come to Flagstaff from Phoenix, California, Texas, New York, the Midwest, Europe and Japan.

Estimates put their number anywhere between 2 million and 5 million strong a year, depending on whether overnight stays are counted.

They come to ogle the Grand Canyon, raid the service station convenience stores, shop at Wal-mart, grab a fast food lunch, rest their road weary eyes in local hotels and stroll through historic downtown.

They are Tourists, and catering to their needs is Flagstaff’s number one private sector industry. Directly and indirectly, tourism in Flagstaff accounts for more than 20 percent of all business in town.

Hotels and restaurants alone employ 8 percent of all Coconino County workers. Tourism-related business accounts for 12 percent of income within the county, four times the national average. And last year, Flagstaff’s hotel industry alone grossed $55 million. Direct spending by tourists could in Flagstaff could top $200 million this year. Ron Gunderson, assistant to Northern Arizona University President Clara Lovett for economic development, said every tourist dollar in Flagstaff is spent roughly two times.

Paying the Bills

Tourism also pays the bills in Flagstaff.

The 2 percent Bed, Board and Booze tax has annually raised about $3 million. It has paid for Flagstaff Urban Trails, footed the bill for the Route 66 beautification project, bankrolled economic development operations and is now helping to pay for an $8 million parks and recreation improvement plan.

According to the city of Flagstaff, out-of-towners account for about 50 percent of the city's sales tax revenues, and two-thirds of Flagstaff's BBB tax.

That means Flagstaff's visitor’s fund $6 million of the city's annual operating budget - an amount more dm the city's property tax revenues.

But tourism is stagnating in Flagstaff, as competition heats up for traveler dollars. With the prospect of 3,600 hotel rooms being built near the South Rim of the Grand Canyon, Flagstaff s hospitality industry might have to rethink how it packages its 4,600 room with a view toward the future.

But in August 1997, Flagstaff is finishing up its worst tourism summer in a recent memory.

Hotel receipts for the year fell for the first time since the city imposed the Bed, Board and Booze tax back in 1988. For the year, Flagstaffs lodging industry was off 1.2 percent from, fiscal year 1995-96 - the year when there was no winter skiing and, the National Forests closed down under threat of fire.

In June 1997, Flagstaff's hotels went through their worst month on record, falling, 14.2 percent from, June 1996, breaking a record set two, month earlier when the month's revenues fell 13.9.

This could just be a case of oversupply. Tennessee-based Smith Travel Research has tracked Flagstaff's hotel industry for more 10 years. Its research shows that Flagstaffs hotel room supply has increased by 50 percent since 1987. It now stands at more than 4,600 rooms and there, are another 200 scheduled to be by the end of the year.

Brad Ace, director of sustainable economies at the Grand Canyon Trust in Flagstaff, said the slump was bound to happen.

They've been building hotels at such, a rapid rate," he said. "There's no overall plan. It’s pretty clear from (industry actions) that they are looking for drive-by tourism instead of getting into destination tourism."

According to an occupancy rate study by Smith Travel Research, out of Tennessee, Flagstaff's available hotel space has jumped from 2.1 million room nights in 1987 to 3.3 million room nights in 1996, or more than 50 percent.

But demand for those rooms has increased only 30 percent, from 1.6 million visitors in 1987 to 2.1 million in 1996. Consequently, occupancy has fallen every year from a high of 75.8 percent 1987 to 64.2 percent in 1996.

But the industry was able to continue to make money because room rates were ballooning, from $41.59 a night in 1987 to 61.27 in 1996.

CAUGHT BETWEEN TRENDS

Ray Newton, director of the Arizona Hospitality Research and Resource Center, said Flagstaff is caught between trends.

"Part of it is competition - nationally and internationally," he said. "For instance the Las Vegas convention and visitor bureau has a very, aggressive year-round campaign. They are going after the very affluent Baby Boomer crowd. And they are getting them.""

Newton also said the powerful U.S. dollar makes travel relatively cheap for Americans to go overseas,

And the recession-wracked economics of Germany and Japan make trips from overseas more expensive. He added that domestically, travelers are looking for package deals and are taking shorter trips than the old trend of a station wagon full of kids crossing the country.

He said Flagstaff would be well served to continue catering to the people who are coming here now.

"You build a tourism product 'to fulfill visitor expectation," Newton said.

He suggested adding more theme events and bolstering a things-to-do -list for Flagstaff in order to stay competitive.

Slow visitation at the Grand Canyon could also be to blame.

BBC Research and Consulting recently completed a critique of the Kaibab National Forest's Environmental Impact Statement concerning a planned community near Tusayan.

In the report, BBC noted that visitation rates have been flat over the last three years and the same is happening

at Grand Teton, Rocky Mountain, Yellowstone, Yosemite and Zion national parks.

But finding the impact of tourism in Flagstaff is a mind-numbing exercise.

First, there is a question of what, exactly. Defines a tourist?

Is a Navajo coming from Moenkopi to shop at Wal-Mart or Flagstaff Mall a tourist? What if they spend the

night?

Is a Phoenician who drives up every weekend to see a friend a tourist? What about summer residents? Or drivers who stop for gas and a quick burger at a local restaurant?

"The problem is that it is almost impossible to figure out how many tourists there are," said Tom Combrink, a researcher with Northern Arizona Hospitality and Research Center.

Without knowing how many tourists actually visit Flagstaff, Combrink said, getting a grip on the industry's total

impact is futile.

HOTELS GIVE HINT

But the hotels in Flagstaff Five some hint to the number.

The University of Arizona study detailed the trips to Flagstaff by 863 tourists staying in Flagstaff hotels.

These tourists spend an average of $61.93 per person, for each day in Flagstaff.

Here's how that breaks down;

The average person $23.08 on a hotel room

They also spent $16.12 on meals.

Each day in Flagstaff these tourists spend $7.19 on gas.

Then for each tourist in Flagstaff, the rest of the community earned about $15.50.

In an occupancy study done for the city of Flagstaff, the city's 4,600 hotel rooms were 64.2 percent full in 1996.

Simply assuming that each room averaged two people and those people spent $60 a night in Flagstaff tourists are injecting $130 million into the local economy.

But getting to that number takes in a lot of assumptions.

First, it applies the spending from the University of Arizona survey to all people in Flagstaff. But the U of,

A study only surveyed tourists staying at pricier hotels, it was, voluntary and it was conducted during March and

April of this year.

"You're always going to run into problems with voluntary surveys," Combrink said. "Plus to do a study like this, you really need to take samples over the course of a full year."

Flagstaff Convention and Visitor's Bureau director Marilee Fowler said her office is putting together a similar study using the U of A model but asking questions of visitors staying at the economy destinations.

Her office believes tourists spend close to $100 a day, not $60, and that day-trippers, condo dwellers and people staying with friends also should be counted.

If those people are cranked into the formula and the new daily spending figure is used, tourists could be injecting more like $200 million a year into the Flagstaff economy, not $130 million

But the University of Arizona Study does provide a glimpse at Flagstaff's tourism unlike any other that has been done in recent years, in providing a glimpse of who Flagstaff's visitors are.

While the Grand Canyon is a major draw for international tourists, Flagstaff grabs a good number of its tourists from Phoenix and other locations within a day’s drive.

Most of those surveyed had been here before and another 54 percent said they plan on coming back soon.

The choice visitors were those with a household income of more than $70,000, and one-quarter come from Arizona. And nearly half the visitors questioned said Flagstaff was their only destination.

And 55 percent said they were in town to enjoy what Flagstaff had to offer, while only 15 percent said they were just passing through on the way to somewhere else.

But their trips weren't long, as 80 percent were in town for one or two nights, a length of stay that local officials would like to double.

But they are coming back: 54 percent of the tourists said planned to return sometime soon.

Source: Arizona Daily Sun; August 24, 1997; pg. 1

[Class]