Officials leading Paradise Valley and Scottsdale’s cash cow to prosperity are now laying out a recovery plan as tourism --- which brings in millions of dollars to the municipalities annually --- has gone astray amid stay-at-home orders across the country.
Paradise Valley is home to nine world-class resorts, while many others call Scottsdale home. 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 of 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 approximately 17% of the town’s General Fund revenue.
Destination and marketing firm Experience Scottsdale holds contracts with both Paradise Valley and Scottsdale to drive tourism into the two municipalities. For several years, the organization has been lauded by city leaders for bringing millions of worldwide visitors ranging from vacationers to company retreats and meetings to the desert.
This spring, however, a much more grim outlook is painted by the tourism firm.
Rachel Sacco, president and CEO of Experience Scottsdale, along with several members of her team, asked to join a May 14 Zoom call with Paradise Valley Town Council and municipal officials to layout their plans to stay afloat, and ultimately, begin getting tourism back safely.
As of April, according to Tourism Economics, the impact of the coronavirus on the tourism industry will result in:
Ms. Sacco says Experience Scottsdale has laid off 20% of its team, and pay cuts have been taken across the board --- including a 30% reduction in her own salary.
“We wanted you to hear firsthand what our plan for recovery is,” Ms. Sacco said during the meeting. “We also wanted to share with you what we’ve been doing over the last few weeks so that not only you have the confidence that we are protecting the destination, we have a plan for our recovery and a plan for all of our resorts to be doing well as well.”
A draft budget for Experience Scottsdale was included in the meeting materials, which shows a reduction of $6.2 million in total revenue and expenses for the organization compared to last year.
The approved 2019-20 budget for Experience Scottsdale was $16.2 million.
The 2020-21 proposed budget is just under $10 million at $9,992,013.
“We have worked really hard to make sure we had funds to do the priority programs you’re going to hear about tonight --- the priority programs that we think will help us recover and also reach those who will travel first back to Paradise Valley,” Ms. Sacco said.
As the months roll on, Ms. Sacco says Experience Scottsdale will adjust its budget accordingly.
“We want to hopefully give you the sense that you have confidence in what we’re doing. We feel very strongly that our recovery for our community will certainly come through --- the tourism industry, we’ve done a lot of research and a lot of planning to make sure that we have programs that we think, as I said earlier, that will help us in our recovery,” Ms. Sacco said.
“We’re ready to roll, we can’t wait for next week to get our first program back on the ground.”
A roll-out will begin for messaging and advertising over the next three to six months. The first campaign begins as Memorial Day approaches on Monday, May 25, to encourage folks in Tucson and southern California to travel to the area.
Caroline Stoeckel, vice president of marketing for Experience Scottsdale, is setting out to make sure the Paradise Valley and Scottsdale destination is top of mind for people as they begin looking for quick getaways.
“Industry research is showing people will be more likely to travel by car in the short term than plane; and drive markets are the most lucrative in the early recovery phase,” Ms. Stoeckel said.
“So thankfully Scottsdale and Paradise Valley are positioned really well going into summer.”
Messaging initially will focus on “staycations,” room rates and activities the whole family can enjoy, Ms. Stoeckel said.
After the summer, the fall and winter campaign --- which Ms. Stoeckel called phase two of recovery --- will still continue on the drivable markets.
Additionally, the recovery plan document lays out a number of strategies Experience Scottsdale will use over the next few months including:
Mountain Shadows General Manager Andrew Chippindall, who was also a part of the meeting, shed some light on activity at ground-zero of the local hotels during this pandemic.
In the past couple of days, Mr. Chippindall says travel agents have begun reaching out asking about health and sanitation guidelines at the local resort.
“What’s really going to keep the hotel profitable is group business, and that’s absolutely vital to our survival,” Mr. Chippindall said.
Mr. Chippindall says they started May with 500 rooms on the books.
“My kind of drop-dead we’re going to close the hotel is around 300 rooms, so we were really skating on thin ice,” he said. “We’ve had 900 rooms on the books at the start of the week, and now we’re at about 1,500 rooms on the books. So, you know, I’ve picked up about 600 rooms in the last three or four days.”
Mr. Chippindall says last May, they ran 5,000 rooms and their rate is down $40 since that time.
“We’re going to miss about 3,500 room nights, if we have what I think will hold for the rest of the month. But we’re definitely heading in the right direction,” he said, pointing to how important it is that pools and gyms are now opening again.
“While it’s great to have drive market over the summer and it’s great to have some luxury travelers coming back, we need to have conferences here. They’re the key that makes the hotel profitable.”
Councilwoman Anna Thomasson asked Mr. Chippindall about room rates, stating she hasn’t heard about rates being reduced significantly.
“We really tried to not go down the road of discounting, the property still hasn’t reached stability by the time this situation happened,” Mr. Chippindall said.
“I at this stage would rather sell one room at $250 because of social distancing, than sell three or four rooms at $99. Our goal has been to keep the rate where it is.”