ASU economics and tourism experts speak
While the Phoenix Metro isn’t always a top destination during Arizona’s hot summer months, the state’s coolest destinations are, like the Grand Canyon, ranked third by US News and World Report’s “Best Family Summer Vacations” List.
But despite the valley’s high temperatures, the allure of traveling and enjoying leisure and entertainment activities in the state exists and contributes to the state’s overall tax revenues. In 2019, before the pandemic, Arizona’s estimated tax revenue from accommodation, restaurants and bars, retail and entertainment was well over $ 67 million in June alone. according to the Arizona Tourist Board. So what is Arizona’s summer economic forecast for 2021 after a year of cautious pandemic?
To answer these questions, ASU News reached out to Dennis hoffmann, professor in the Department of Economics of WP Carey Business School and the director of the L. William Seidman Research Institute, and Nicolas sage, assistant professor at the School of Community Resources and Development in the Watts College of Public Service and Community Solutions, on what it will take for Arizona’s tourism industry to rebound.
Question: As COVID-19 guidelines ease, will summer travel demand be stronger this year and will Arizona begin to experience an economic rebound?
Hoffmann: Travel is resuming across the country, but the impact for this summer in Arizona remains a bit cloudy compared to last summer. While the pandemic has dampened travel by Arizona residents, it is likely that a higher share of Arizona resident travelers stayed in the state rather than California, the typical summer destination.
Historically, Arizona slows down considerably during the summer months as people travel out of state or just stay home and avoid the heat. I expect this summer to be closer to normal, but maybe not quite normal. Historically, the winter and spring months are the most important for tax revenue generated by tourists. The stimulus money paid in the spring may help boost spending this summer, but I expect a below average year for people traveling from out of state / country to the Grand Canyon. Expect summer 2022 for essentially a full return to normal.
Q: How long will the hospitality and travel industry continue to enforce COVID-19 safety practices? Do you think these practices will encourage tourism?
Wise: While the mask’s mandate has been relaxed, and public health experts advise that you no longer wear a mask indoors if you are fully vaccinated, this does not apply to transport. Because the travel and hospitality industries see people congregating nearby, wearing a mask at airports and during flights is expected to continue at least until September 13 of this year. year, according to the TSA. The same goes for public transport, and it is prudent to wear a mask in taxis or shared shuttles, as this is how many people are likely to travel from the airport to their hotel.
With tourism and hospitality, you interact with people from across the country and around the world, and the policies can be very different, depending on the origin of the person. It seems like every business is setting guidelines and continuing to practice COVID security practices to make sure everyone feels safe on their terms, but a challenge is balancing that with what consumers want, demand, and desire. . Consumers may see the vaccine as a quick fix to get back on a trip and can make plans, but I think consumers will also know that the hotels and restaurants in the destinations they visit are keeping them safe. I don’t think this will deter tourism, but it will encourage it as maintaining safety practices for many could be that peace of mind they seek as they look to get out and visit new places again. But we have to keep in mind that different companies have different policies and practices.
Q: The hospitality industry is struggling to find workers. Will this have an impact on the possibility of an economic rebound this summer?
Hoffmann: The challenge of employment in the hospitality industry is unlikely to become serious until fall and winter, when the seasonal tourist season is in full swing. Hotel companies struggled to find help this spring. People continue to be reluctant to work in people-oriented companies. Child care costs are also a concern. And it is likely that a significant portion of hospitality workers are undocumented. This adds another friction. I also feel that people are reassessing the professional activities they have chosen, considering changing jobs, retraining, etc.
Wise: Many of the most vulnerable people in our society who before the pandemic held low-paying jobs in the tourism and hospitality industries have seen jobs cut as companies had to save money and preserve their finances. . Not everyone has had the opportunity to use this past year to hone their skills or return to college or university. This detrimental decline has put families working in hourly paid jobs in a difficult situation with no opportunity or financial resources to invest in training or education, or to use their savings to invest in a business to capitalize on at home. to come up.
Now is the time to reflect on social inequalities and to work towards developing policies focused on equity and justice in order to guarantee opportunities for local communities and not just for businesses. As the demand for jobs returns, the number of tourists increases, profits are made again – what sustains this growth is a workforce that enables these businesses and industries to grow. move forward to meet consumer demand.
Q: What kind of travel incentives are tourists likely to see from hotels, airlines and other businesses?
Wise: The tourism and hospitality sectors have been among the hardest hit sectors, and several airlines have extended their loyalty rewards by one year so consumers don’t lose their loyalty benefits. It can be difficult for a business to offer many incentives due to the financial losses from 2020 to 2021. Consumers are recognizing this, and as travel opens up more and more, what businesses can do, c is to give back this feeling of welcome to consumers. Demand is increasing, which may again provide new opportunities for businesses in the destination. I think businesses in destinations will offer incentives – because they want to attract new and existing customers to their service offering. For airlines and hotels, this is an opportunity to take back their services because they are central to how we get to somewhere and then we have to stay somewhere.
Q: How will domestic tourism demand compare to international tourism?
Wise: International flights have been restricted since the pandemic. This means that the prices of international flights might not be as competitive. As airlines examine research trends and determine where people want to go, they will likely respond by expanding their service offerings. For now, I think that initially domestic tourism will benefit from this period of recovery due to the regular services that were maintained during the pandemic. As airlines expand international routes, this may trigger more competition among airlines to cater more to international tourism in the future.
Q: How long will it take Arizona to recover from the damaging decline in tourism in 2020?
Wise: This is a difficult question, and time will tell. This will likely happen in different phases across the state depending on a destination’s ability to welcome tourists again. You could say that we are already seeing a rebound in parts of the valley. For example, it was reported in the news that there are now more restaurants open in Phoenix than before the pandemic. The number of people passing through airport security to board flights has increased dramatically since the same period last year, when you consider TSA daily passenger numbers. We’re still not at 2019 numbers, but the increases over the past few months are certainly evident.
There is also a noticeable difference in the number of people in the city. Scottsdale resorts have been reported to see increased demand as people look to get out and travel again, with some resorts reaching 90% capacity in recent weekends. Times of decline are times to really strategize, and we’re seeing this with the construction of new hotels during the pandemic. These projects create and maintain jobs in the construction industry, as well as planning for new restaurants and landscaping, as these business owners or investors anticipate the right time to open.
Hoffmann: There is every reason to believe that the spring of 2022 will see tourist numbers return to 2019 levels. This will be welcome for industry participants and set the stage for future growth trends that correspond to prior levels. the pandemic. But any indication that the virus is making a comeback or that vaccines are becoming less effective will drastically stifle growth in this area. But with each passing month, memories of the pandemic should fade and travel preferences should reappear.
Photo from the top of the Grand Canyon courtesy of Pixabay.com. Media relations officers Jimena Garrison and Nikai Salcido contributed to this article.