Tourism

‘Staycationers’ keep resorts afloat during pandemic

Posted 8/27/20

Without typical summer travelers, corporate meetings, weddings, events or even dinner parties, Phoenix’s hospitality industry is being challenged with booking their rooms. They turned to the …

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Tourism

‘Staycationers’ keep resorts afloat during pandemic

Posted

Without typical summer travelers, corporate meetings, weddings, events or even dinner parties, Phoenix’s hospitality industry is being challenged with booking their rooms. They turned to the locals.

The “staycation” isn’t a new idea, but it is being leaned on heavily by the hospitality industry this summer.

Officials from two Valley resorts say staycations have been key to keeping their business running for the time being. But, Monday-Wednesday, the properties are pretty barren.

Despite predicting — and preparing for — empty resort rooms this summer while the country hunkered down, hospitality experts say occupancy rates were about half of a typical summer, equating to less tax funds in municipal coffers.

Numbers provided by Paradise Valley Chief Financial Officer Douglas Allen show occupancy tax collections for the municipality, March to June, is down 63% — or $1.2 million.

Further, in April, the occupancy tax was down 92%, garnering only $43,948 compared with the year prior, when April 2019 brought in $546,705.

But, some Valley resort officials say, during tough times is when creativity comes alive.

“Places like Paradise Valley, tourism is very important because you have to be mindful that our bed taxes fund a lot of the money the town has to spend — same with Scottsdale,” Mountain Shadows Vice President and General Manager Andrew Chippindall said. “Tourism is a big economic driver, and I think we got hit the hardest.”

Hotel occupancy: 31%

Paradise Valley is home to nine world-class resorts, with many more calling Scottsdale home. A 2018 lodging report shows Scottsdale, at that time, had 50 resorts across the city totaling 8,875 rooms.

The Town of Paradise Valley makes a majority of its revenue through sales tax and hotel occupancy tax. In the 2019-20 fiscal year budget, sales tax accounted for $15.9 million in revenue; while bed tax totaled $4.6 million.

More specifically, between March 2019 to June 2019, the town collected more than $5.3 million in all revenues directly tied to local tourism.

This accounts for about 17% of the town’s general fund revenue.

In Scottsdale, previous years’ bed tax exceeded $19 million annually.

Destination and marketing firm Experience Scottsdale holds contracts with both Paradise Valley and Scottsdale to drive tourism into the two municipalities.

“Summer is our slow season, but even then we normally see nearly 60% average occupancy at our hotels and resorts in June, July and August. Occupancy has been much lower this summer, averaging 31% occupancy in June and July,” said Stephanie Pressler, Experience Scottsdale director of community affairs.

The August occupancy rates are not yet available, Ms. Pressler noted.

James Anderson, the JW Marriott Desert Ridge Resort & Spa director of sales and marketing, says they also are experiencing about 30% occupancy on the weekends.

In May, Experience Scottsdale President & CEO Rachel Sacco presented a “recovery plan,” part of which focused on reaching Arizonans as potential customers, as well as people in neighboring states to book summer getaways.

The thought at the time was that while not everyone was comfortable flying during COVID-19, driving to Phoenix was still a viable advertising option.

Ms. Pressler says, soon after their plan was released, things changed.

“When we released our recovery plans in early May, Arizona was in a much different place with the COVID-19 crisis. Though we were initially optimistic that we could launch a successful summer campaign targeting locals after Memorial Day, we knew it was not in the best interest of our industry or our community to run a marketing campaign as cases began spiking and as Arizona made national headlines,” Ms. Pressler says.

The tourism firm pulled back all its paid advertising, though they continued to meet with planners and travel professionals to focus on the future rather than summer vacation.

“Experience Scottsdale won’t have a full picture of the impact on our summer season until we receive August data next month. However, we do know that for June and July, average occupancy was down 47% year over year and revenue per available room was down 46% year over year, according to STR,” she said, pointing to a global tourism industry data and research platform.

Ms. Pressler says forecasts by STR show Scottsdale and Paradise Valley will only see a 40% average occupancy for the entirety of 2020.

“{That} does not indicate we will experience a rebound in the remaining months of the year. Of course, as we’ve come to expect with the pandemic, that could easily change,” she said.

Now seeking: resort guests

Mr. Chippindall says Mountain Shadows’ smaller size was beneficial to keeping its doors open, but several employees were still laid off.

From cleaning rooms, to operating with a skeleton staff, to seeding the golf course grass — each aspect of the resort was altered to remain open, Mr. Chippindall says.

“A lot of resorts and hotels did close. We stayed open,” he said. “The sad- and downside of that, is we really minimized our staffing and figured out a way to run the hotel to the bare bones, but keep the doors open in a hope that when we did get back to what we thought was going to be more normalized business, would be easier to reopen an open hotel than reopening a closed hotel.”

Prior to Mountain Shadows, Mr. Chippindall worked at Sanctuary on Camelback Mountain before going to Hotel Valley Ho for more than a decade.

“My assistant, who I laid off, had worked for me since 2005, but I worked with her at Sanctuary since 2001,” Mr. Chippindall said.

“When you have to let people like that go — and it’s happened on many levels — it’s really tough because you’ve become part of a family.”

Mr. Chippindall is hopeful for a small bump in occupancy on Labor Day weekend, while he says a tiny amount of corporate business is trickling in again.

“We’ll still have the same situation where the weekdays are quiet, and we’ll still do a lot of the staycations on the weekend,” he said.

“We are starting to see a small trickle of corporate business coming back, meaning not group corporate, but individual corporate travelers.”

For how long can the Arizona resorts maintain this skeleton, Thursday-Sunday, local staycation operation?

“I can speak for my own area — we’ve brought our expenses and most of it is payroll, down to bare bones, bare minimum,” Mr. Chippindall said.

“It’s certainly sustainable until the end of the year. Everyone is asking the same questions: What’s going to happen with Barrett-Jackson, Waste Management golf, spring training? I think all of us have some ideas of how they’re going to happen, but no one knows for sure.”

Global brand leans local

While Mountain Shadows Resort is locally owned and operated, JW Marriott Phoenix Desert Ridge carries a global brand with it. But, Mr. Anderson says his focus still is on reaching the local community.

“For the time being, it’s local for local, and really getting creative with how we partner with and create value for our local customers,” Mr. Anderson said.

Unlike Mountain Shadows, the Desert Ridge JW Marriott was closed for three months, from April 3 until the Fourth of July holiday.

In an effort to reach local customers, in August the resort kicked-off a new package through the end of the year offering learn, work and play opportunities for families to bring their home offices and virtual classrooms to a new setting.

“We’re seeing our demand on the weekend from our loyal and valued local staycation guests,” Mr. Anderson said. “Where we’re excited to see growth is Monday to Thursday, during the week when people want to get away but need to stay attached to Zoom calls and school.”

Mr. Anderson says right away, he began seeing families tucked away in different corners of the resort working or learning.

“We had one family that stayed for nine nights because they were able to have their boys in fifth grade and third grade seated in these super comfortable chairs, they had their set-ups with their screens and Zoom calls. Mom was around the corner at tables running her business from her laptop,” Mr. Anderson said.

“We’ve got 240,000 square feet of space here at the resort, and all of our wide-open spaces outside to take advantage of, use creatively.”

The boys’ recess during their stay? Floating in the lazy river.

Options including a pool complex, suites and adjoining guest rooms gives resort guests flexibility to accomplish their daily responsibilities while socially distancing.

“We’re doing well with it, and we’re promoting with through the fall and the end of the year. We’re excited to see how it grows — we’ve seen steady occupancy growth both on the weekend and the weekday from this package and our other efforts, so we’re optimistic for what it’s going to bring,” Mr. Anderson said.

The weekday occupancy at the Marriott is climbing, Mr. Anderson said, at 12%-13% while the weekend occupancy is in the 30% range.

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