Valley, state leisure hospitality sector rebounding

Business and convention travel remains a challenge


It’s resort season in the Valley and state. That means it’s cool enough here to want to get away from the freeze over there.

This year’s resort season, at least in the Valley, will include Super Bowl LVII in February in Glendale. College bowl games, the Waste Management Phoenix Open and a host of other regional events also take place during resort season, plus the annual return of Cactus League baseball.

This year's big events in the wake of the COVID-19 pandemic whether tourism in the state and Valley has bounced back from pre-pandemic levels.

So far, the data look optimistic, local experts say.

“We were hit worst and first in spring 2020. Overnight, both leisure and business travel screeched to a halt. But we're resilient. We're creative. As leisure travel came back, popular travel markets like Arizona were ready to go.” said Nicole LaSlavic, vice president of government affairs for the Arizona Lodging and Tourism Association.

One of the most popular Valley location for tourists is Scottsdale, with its resorts, high-end shopping and world-class restaurants. It too has seen leisure travel bouncing back.

"According to hotel research company STR, year to date through September, Scottsdale-area hotels and resorts experienced 62% occupancy, a 16.6% increase over the same period in 2021 but a 12.3% decrease from the same period in 2019," said Stephanie Pressler, director of community and government affairs for Experience Scottsdale. "Though we’re not quite back to pre-pandemic levels, Scottsdale’s tourism industry continues to recover. STR forecasts 2023 will be even stronger for Scottsdale-area hotels and resorts, with a predicted occupancy of 68.9% for the year."

Experience Scottsdale will be promoting what it calls "Scottsdale Super Season."

"January through March will be full of tourism-driving special events, including Super Bowl LVII," Pressler said.

While leisure travel is bouncing back, questions remain about business travel, with conventions and business gatherings a growing part of the region's travel portfolio prior to the pandemic.

“We need business travel to pick up to pre-pandemic levels, but our sources tell us we're getting there, with a strong pipeline of inquiries from major event and convention planners," LaSlavic said.

Pressler stated that Experience Scottsdale’s leads for future meetings business have far outpaced pre-pandemic levels."

With the return of visitors, the hospitality industry will have another problem on its hands: staffing, LaSlavic said.

"What we're concerned about: The labor crunch," she sad. "Even with concerns about the potential for a recession in 2023, there are plenty of good-paying jobs in tourism and hospitality.”

The Arizona Office of Tourism is using the pre-pandemic year of 2019 as the benchmark to measure Arizona tourism industry's current state.

A look at 2021 statistics shows the hospitality industry already was rising to 2019 levels. It also is eclipsing the national return.

“In calendar year 2021, overnight visitors spent $23.6 billion across Arizona, which is 92% of the all-time high mark set in 2019,” according to an Arizona Office of Tourism report. “The nation as a whole recovered 76% of 2019 spending levels in 2021. This state visitor spending equals $64.7 million spent per day in Arizona by visitors during 2021. Total overnight visitation showed similar results, with Arizona welcoming 40.9 million visitors in 2021, representing 87% of the benchmark 2019 level. The nation recovered 85% of overnight visitation in 2021.”

And with the most recent AOT statistics available, 2022 is looking  stronger, at least for the leisure travel sector. Through August 2022 over the same period in 2021:

  • Spending on lodging is up 37.7%
  • Spending on amusements and activities is up 38.4%
  • Spending on restaurants is up 18.6%
  • Passenger traffic at all Arizona airports is up 21.8% (32.8 million vs 26.9 million)

Maricopa County benefits the most from tourism. According to AOT, state and local taxes generated by tourism in Maricopa County during 2021 reached more than $1.27 billion. Pima County came in a distant second with almost $194 million.

To help capture more money from Valley tourism, more hospitality properties are being built in the Valley.

“This month there are 27 properties under construction in the Phoenix metro area that are bringing 400 rooms online,” Coddington said. “There are actually seven hotels projected to open by the end of 2022. And then you (the Ritz-Carlton Paradise Valley, The Palmeraie) coming in late 2023.”

The 20-acre Ritz-Carlton Paradise Valley, The Palmeraie will offer 215 guest rooms and suites, including a 7,400-square-foot Presidential Casita featuring six bedrooms, as well as other resort luxuries.

The 11-story, 265-room Caesars Republic Scottsdale is set to open in late 2024 adjacent to Scottsdale Fashion Square.

“Now, when you look at the other segments such as meetings and conventions, business travel, we still have work to do in that sector and then in international visitors and international overseas visitors we’re still working on building the recovery there,” said Josh Coddington, director of communications and PIO for the Arizona Office of Tourism.

Super Bowl

Super Bowl LVII obviously will goose travel numbers in parts of the Valley more intertwined with the game, such as host city Glendale, as well as Scottsdale, Downtown Phoenix, Mesa and Tempe. Coddington said the big game, along with other “mega” sporting events, will play a critical role in the recovery of the business travel and convention sector of the hospitality industry.

When Super Bowl XLIX came to the Valley in 2015, it generated more than $719 million in  revenue and brought in more than 120,00 visitors, according to AOT.

In a report by Micronomics Economic Research and Consulting, last year's Super Bowl in Los Angeles was estimated to produce economic benefits between $234 million and $477 million. Additional tax revenue for the region was estimated between $12 million and $22 million.

The report also estimated millions of additional tax dollars would go to the state and that the game generated between 2,200 and 4,700 new jobs in the Los Angeles region.

Cactus League

Arizona State University’s W.P. Carey School of Business conducts an economic impact report on the Cactus League during even years.

In the last report under pre-pandemic conditions in 2018, the report found spring training generated a total impact of $644 million, as well as about 6,400 jobs annually and $31.9 million in state and local tax revenues.

In 2019, right before the pandemic, the Cactus League said it drew an average of 7,900 fans per game, the highest in three years.

The 2020 season was canceled midway through because of the coronavirus pandemic and as a result, the total economic impact generated was nearly cut in half to $363 million.

 In 2021, Cactus League stadiums were at 25% capacity because of COVID protocols. In 2022, fan attendance averaged about 5,587 per game as the  season was delayed and shortened because of a lockout between Major League Baseball and the MLB Player’s Association. 

WM Phoenix Open

The 2017 WM Phoenix Open pumped about $389 million into Arizona’s economy according to an economic impact study released by the Arizona State University W.P. Carey School of Business.

Since 2010, when WM became title sponsor of the open, the tournament has raised nearly $100 million for local charities, including $3.8 million from the 2021 tournament.

“Organizations like Visit Phoenix work with meeting planners and conventions planners to encourage them to book their meetings in Arizona or in the greater Phoenix area,” Coddington said. “When those planners can look at an event like the Super Bowl and say, ‘Hey the NFL has chosen Arizona multiple times for their event which is one of the biggest events on the planet,’ then they can be confident as a meeting planner in choosing Arizona because they know that we will consistently deliver a great event.”

Tourism, Arizona, Valley, Phoenix, Glendale, Scottsdale, Mesa, Tempe, Chandler