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December 28, 2009 Industry News
Scottsdale Hotels Continue to Feel Recession's Impact
The latest research on Scottsdale’s tourism sector shows more declines in key lodging numbers. Smith Travel Research stats show continued decreases in occupancy, average daily room rate and revenue per available room (RevPAR) for October, the most recent data available. Scottsdale’s occupancy in October was 61.4 percent, a slight decrease of 2.7 percent from the same month last year. Also for October 2009, average daily room rate was $136.79, a major decrease of 21 percent from a year ago. RevPAR decreased an even larger 23 percent to $83.97. Year-to-date, Scottsdale’s occupancy is down 10.7 percent from 2008, and room rates are down 20 percent. RevPAR is down a massive 28.3 percent. The prolonged recession has caused a marked drop in consumer spending, and top tourist destinations like Scottsdale have felt the brunt worse than many cities. (Phoenix Business Journal, Dec. 21)
The Commerce Department says that international visitors spent an estimated $10.3 billion on travel to, and tourism-related activities within, the U.S. during the month of October-nearly $1.6 billion less than was spent in October 2008, a decline of 13%. Total international visitor spending is down $18.6 billion, or 16%, year-to-date from January through October. October 2009 marks the 12th consecutive month in which U.S. travel and tourism-related exports were lower when compared to the same period of the previous year. (Special to TA; Travel Advance, Dec. 23)
When it comes to luring convention- and conference-goers this winter, Arizona's resort towns may be too much fun for their own good. Tourism officials say business groups have been avoiding popular destinations from Hawaii to Florida out of fear that it will look as if they're having too good of a time amid a recession. As a result, they are making the economic downturn worse for the already battered travel industry in cities such as Phoenix, Scottsdale, Tucson, Reno, Las Vegas, Orlando and Palm Springs, Calif. More than 80 business meetings have been canceled in the past year in Phoenix alone, resulting in more than $23 million in lost revenue, said Douglas MacKenzie, spokesman for the Greater Phoenix Convention and Visitors Bureau.
In Scottsdale, hotel bookings for business meetings are down 25 percent to 30 percent from last year, said Brent DeRaad, executive vice president of the Scottsdale Convention and Visitors Bureau. "There's no question that the economy has had an enormous impact, but it's more than that," DeRaad said. "What we're hearing from companies is that they'll choose a Midwestern city like Minneapolis or Detroit instead of Scottsdale, even if the rate is the same or more, just because they're worried about perceptions."
Alarmed by the loss of revenue to their cites, resort-area lawmakers, including Rep. Harry Mitchell, D-Ariz., and Senate Majority Leader Harry Reid, D-Nev., are pushing legislation that would prohibit federal agencies from adopting internal policies that discourage holding meetings and conferences in resort towns. They hope their bipartisan bill, the Protecting Resort Cities from Discrimination Act, will be approved in early 2010 and will encourage private companies to return to the sun and fun instead of choosing less glamorous locations for the sake of appearance. The bill is awaiting action in House and Senate committees. Arizona GOP Sens. John McCain and Jon Kyl have not taken a position on the bill. The bill's supporters say they do not expect to face any significant opposition.
"All we're saying is don't discriminate just because a place happens to be a nice resort area," said Mitchell, one of the legislation's original sponsors. "Just get the best value for your dollar."
Right now, some companies are paying more to look like they're getting less, said Rep. Dean Heller, R-Nev., a co-sponsor of the bill. "We've had companies canceling conferences in Reno or Las Vegas and paying three times as much money to move their meetings to San Francisco, just to try to avoid the perception that they were going to a resort." Click here to read complete article. (Arizona Republic, Dec. 23)
Optimistic news about the economy approach ridiculous levels as observers sometimes desperately look for positive signs but there are some very sound reasons for thinking the trend is up:
- “Business travelers appear to be moving back to the front of the plane, showing positive signs companies may likely be feeling more optimistic about the economy,” says American Express Business Travel on its Business Travel Monitor North America,
- AAA says travelers journeying 50 miles or more away this holiday season total almost one third of the population, or a number that is up almost three percent over last year. “More Americans traveling during the winter holidays is another sign consumers are continuing to grow more confident in their personal financial situations,” said Glen MacDonell, AAA's director of travel services.
- More than one third of consumers intend taking more leisure vacations next year while more than half plan the same amount of trips, according to Travel Ticker’s 2010 Travel Intentions Survey. Only six percent of consumers plan on taking less leisure trips in the new year. "The feedback we received from our 2010 Travel Intentions Survey further supports Travel Ticker's belief that if consumers find a great deal, they will be inspired to travel," said Barbara Messing, Vice President of Travel Ticker.
The site says 18- to 30-year-olds are leading the charge on planning more leisure trips. This age group is followed by 38 percent of 65+ year-olds and more than 32 percent of 31-65 year-olds, who also plan on taking more leisure trips in the upcoming year. More free time and inspiring deals are cited as top reasons for more leisure trips in the new year. Said Christa Degnan Manning, director of Global Services for Amex on the improved outlook for business travel: “This is an encouraging sign for the business travel industry because it indicates increasing demand as well as willingness to pay for premium products, which help with supplier profitability and their ability to provide consumer discounts.” Most observers think business travel will have to be more robust before the overall travel economy will improve. (Travel Mole e-Newsletter, Dec. 24)