AZLTA supplement in AzBusiness January-February 2014

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2014

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28 AB | January-February 2014

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OPEN

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When Ken Kendrick came to Arizona in 1989, he left heartbroken.

But he fell in love.Kendrick traveled to the Grand Canyon

state to watch his beloved West Virginia Mountaineers lose to Notre Dame in the 1989 Fiesta Bowl. But the majesty, energy and climate of Arizona left such an impression on Kendrick that he made Paradise Valley his home and became part-owner of the Arizona Diamondbacks in 1995.

“Events like the Tostitos Fiesta Bowl bring two broad areas of economic benefit to the community,” said Robert Shelton,

By MICHAEL GOSSIE

Tourism and commerce groups collaborate to spark Arizona’s economic development

former president of the University of Arizona and current executive director of the Fiesta Bowl. “One is the quantifiable, documentable immediate economic impact — the percentage of people that came from out of state, how many hotel rooms they filled, how much money they spent each day. They are pretty hard and fast numbers.”

The second economic benefit, Shelton said, may be even more important to the long-term economic health of the state.

“Events like the Fiesta Bowl or the BCS Championship game demonstrate that the state of Arizona and the Greater Phoenix area is a destination and is a player at the national level,” Shelton said. “They show you can come and have airport connections everywhere. You can have a business infrastructure. You can have

all the major sporting teams. It’s a way of demonstrating that the fifth-largest city in the country and its surroundings play at the highest level. It’s harder to say four years after we hosted the national championship game that new businesses started up in Phoenix and Tempe and Mesa and Glendale because their CEOs showed up here as alumni at the game, but it does happen.”

Opening dOOrsKendrick’s move to Arizona illustrates

Shelton’s point that tourism has long been a means to an end for generating


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business attraction leads. However, the two industries have recently realized that working together helps to bring more exposure to the state and both are working to collaborate and educate on the benefits of promoting Arizona.

“Arizona’s tourist destinations often serve as a window to our state’s quality of life and open the door to many business and economic development opportunities that contribute to our state’s economy,” said Sherry Henry, executive director of the Arizona Office of Tourism. “Because of this, our agency stays well connected to and collaborates with many economic development organizations, such as the Arizona Commerce Authority, Arizona-Mexico Commission, Arizona Chamber of Commerce, Maricopa Association of Governments, Greater Phoenix Economic Council, Tribal entities, statewide chambers of commerce and convention and visitor bureaus. We’re all in the economic development business. We’re all here to promote Arizona’s assets and encourage growth and development that is important to our state’s vitality.”

The growing synergy between Arizona’s tourism industry and economic development group resulted in a plan to open a trade and tourism office in Mexico City. Economic development experts said the move makes a statement that Phoenix is open for business. Using the office to also promote tourism, particularly travel to take advantage of the Arizona’s superior medical facilities, could help lure Mexican companies to the area.

“Tourism stakeholders have to keep reminding policymakers that a healthy tourism industry isn’t a ‘nice to have’ for Arizona, it’s a ‘need to have,’” said Glenn Hamer, president and CEO of the Arizona Chamber of Commerce and Industry. “Tourism is so closely tied not only to the state’s identity, but to our ability to grow jobs, that we must look for ways to craft responsible policy that promotes the industry. We’re all in the business of jobs.”

WOrking tOgetherWhat the tourism and commerce

industries have done over the last couple years that they had never done before is

work together to create a more cohesive marketing structure to make sure both sides were on the same page to take advantage of opportunities that presented themselves.

“We really provide economic development groups with the opportunities to go out and meet with business leaders,” said Debbie Johnson, president and CEO of the Arizona Lodging & Tourism Association (AzLTA). “So it’s advantageous to have our marketing plans on the same page and to make sure we’re communicating the value of events. We are making sure that when we have an opportunity, we share it with them and when they have an opportunity, they share it with us.”

One of the major unified efforts between tourism and commerce has been joining together on international trade missions.

“We’re going out together — both commerce and tourism – and talking about the advantages of Arizona,” Johnson said. “So it’s not just from a visitor’s perspective or a business owner’s perspective. We bring in both sides of it.”

While tourism and commerce groups

Clockwise from top:Debbie Johnson, Barry Broome,Ken Kendrick,

Robert Shelton,Sherry Henry,

Glenn Hamer (center).

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have started to present a unified front, there is still a middle ground that both groups are trying to find as they try to create success for themselves while balancing the needs of the other side.

“Tourism is about getting people here to enjoy themselves,” said Barry Broome, president and CEO of the Greater Phoenix Economic Council (GPEC). “We’re about getting people here to do business with us. A lot of people don’t want to take a trip to the Biltmore to get a pitch from GPEC.”

Building On successTo further enhance the symbiotic bond

between tourism and commerce, Broome said economic development groups need to align themselves with the tourism industry and coordinate the branding in a way that conveys Arizona’s strengths as a tourism hot spot as well as the message from GPEC, the ACA and other economic development groups.

“The thing tourism does for us is it gives a quality of life brand,” Broome said.

“We talk to CEOs and ask them what they know about the market and they give us the tourism brand. ‘We know you’re a great place to visit. You have wonderful resorts. It’s a place that’s fun to golf. It’s great hiking and biking.’ The tourism piece gives us an advantage from the standpoint that we get to augment our quality of life position in the industry sectors through tourism.”

To further utilize the strength of hospitality to enhance economic development in Arizona, Broome said he would like to see the tourism industry interweave into their marketing message a theme that promotes Arizona as a hub for technology and export industries so tourism and commerce could lift their economic bases more aggressively together.

“The other piece that would be really awesome would be if convention organizers — when they have the leaders of industry associations in their space — could work with GPEC to present a case to those CEOs while they are here,”

Broome said. “There’s not enough of that happening. We need help from the tourism industry to get inside those rare opportunities, but at the same time we have to respect the fact that the tourism industry is trying to show those people a good time and entertain them.”

While both commerce and tourism leaders said there is no way to place a value on the marketing muscle the Valley gets when it is showcased during the Fiesta Bowl or the Super Bowl in 2015, the value generated by the growing collaboration of tourism and commerce may pack a long-term economic impact that exceeds the impact of mega-events.

“It’s important for us to continue to build upon the relationships we’ve set in place with economic development groups,” Henry said. “It’s all about telling the Arizona story. The more people who understand what Arizona has to offer as a place to live, work and visit, the more we can contribute to the economic success of our state.”

Jewel of the desert: The Arizona Biltmore has been attracting business leaders and celebrities since 1929. Marilyn Monroe said the Biltmore had her favorite pool and famed song composer Irving Berlin wrote “White Christmas” while sitting poolside at the Arizona Biltmore.

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36 AB | January-February 201436 AB | January-February 2014

If you ask the experts, Arizona should be THE go-to destination for mega-events.

“In terms of the physical infrastructure and the experience, Arizona is certainly at the top,” said Robert Shelton, executive director of the Fiesta Bowl and former president at the University of Arizona. “We have fantastic resorts to host alumni, major university donors, VIPs and teams. We have a stadium that is second to none — not only because of the newness and the seating and the sight lines, but also for the

field itself, which can roll out and allow the teams to play on real grass. So you have the stadium, the places for alumni parties, the perfect climate. All of that infrastructure is really strong.”

Arizona can show visitors an amazing time, but what it can’t do is show organizers the money. Whether it’s the state tourism office’s budget compared with other competitive states or the ability to bid on mega-events such as the BCS Championship game, the Final Four, the Super Bowl or national political

conventions, the opportunities for Arizona to play in these arenas and reap the economic benefits are endless. The question is, experts said, can we come up with the cash to compete with other destinations?

“Hosting events like the Super Bowl, the Tostitos Fiesta Bowl, the Waste Management Open and NASCAR races provide great opportunities to showcase Arizona’s signature beauty and diverse activities to a worldwide audience,” said Sherry Henry, executive director of the Arizona Office of Tourism. “Vibrant

Game changerExperts say a special events fund could help the state win big economically with mega-eventsBy MICHAEL GOSSIE

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Game changer© AZBIGMEDIA 2014


images of Arizona’s wonderful weather, unforgettable scenery and exciting attractions are broadcast to millions of people throughout the world, enticing them to discover more about our amazing destination.”

Those showcase events also pack a tremendous economic punch. In 2011, the last time the Valley hosted the BCS Championship, the Center for Competitiveness and Prosperity Research at ASU’s W. P. Carey School of Business estimated that the Valley’s festival of college football events — the BCS National Championship game, the Fiesta Bowl, and the Insight Bowl (now the Buffalo Wild Wings Bowl) — had an economic impact on Arizona's overall economy of $354.6 million. When the state hosts the Super Bowl again in 2015, the estimated economic impact could exceed $500 million.

“The Fiesta Bowl and the BCS Championship game come at what we call ‘our quieter times,’” said Debbie Johnson,

president and CEO of the Arizona Lodging & Tourism Association (AzLTA). “What we get from those games from a media point of view is huge. You have people sitting in Chicago, watching the BCS Championship while it’s snowing outside and they say to themselves, ‘I think I'm going to go to Arizona next January.’ That’s the kind of advertising and marketing that we just cannot buy if we wanted to.”

So how does Arizona get more mega-event dollars flowing into the state? Officials have to bid on them, like they have successfully done recently with the 2011 Major League Baseball All-Star Game, 2015 Super Bowl and 2016 college football National Championship game.

“How the bidding process works is we put together an LOC — a local organizing committee — made up of business leaders, industry leaders and those leaders in the community that can make things happen,” Johnson said. “Usually, we’re bidding against various cities, depending on what the event is. The main thing you

have to figure out is if you can meet the hotel room block and whether or not you can raise the dollars that are requested. There is always money that is needed to support a mega-event.”

To generate the dollars needed to bid on an event, Johnson said the tourism industry comes up with a chunk of it, private industry comes up with some of it and the rest comes from groups that see the benefits in hosting mega-events in Arizona.

“There really is good support for the mega-events we bring into the state,” Johnson said. “The problems arise when you’re hosting many events. It becomes harder and harder to get those funds. It’s one thing if you’re just looking yo host a Super Bowl every six or seven years. It becomes a challenge when you’re also looking to host a BCS Championship game, a Major League Baseball All-Star Game and the Final Four. That’s when raising those dollars becomes a challenge.”

Where Arizona faces an even more difficult challenge, Shelton said, is when

“Vibrant images of Arizona’swonderful weather, unforgettable scenery and exciting attractions are broadcastedto millions of people throughout the worldenticing them to discover moreabout our amazing destination.”

–Sherry Henry

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it’s bidding against states like Texas that have special event funds.

“If an event can document a certain amount of economic impact, then the state has a pot of money that it returns to the event organizers in recognition of that economic impact,” Shelton said. “So the state doesn’t put out any money unless the economic impact is there. That really helps, because staging these mega-events — whether it’s a Final Four or a Super Bowl — takes some money to put them together.”

Arizona does not have a special events fund, but experts said the state needs to establish a long-term economic strategy that includes some kind of funding mechanism to bid on and attract events that pack a major economic punch.

“It’s getting harder and harder to come up with the funds needed to successfully bid on these mega-events,” Johnson said. “We can do it every six or seven years, but we cannot do it every year or every

couple years, which would give us the greatest economic benefit.”

Johnson said it’s critical for Arizona to create a special events fund because the impact goes beyond filling up hotel rooms and pumping up the tourism industry.

“It’s about all the people that come in for the event and generate a significant amount of tax revenue,” she said. “It’s about bringing money into the state that offsets our own residents’ tax liabilities. It brings positive recognition to our state and advertising that you cannot buy otherwise. Plus, it brings in people who often end up moving their businesses here. There is story after story about people who came to Arizona for an event, fell in love with the state and moved their business to Arizona.”

For the state’s most recent bid for the 2016 college football National Championship game, Shelton said the honorary board included Sen. John McCain, Gov. Jan Brewer and five mayors. Shelton pointed out that many political

leaders already support the state’s efforts to attract more mega-events and are already putting their names on the line to attract more big-money events to the state.

“From a financial perspective, the state would benefit in the short, medium and long run by establishing a special event fund where they wouldn’t be spending money that they don’t have,” Shelton said. “They would just be allocating a portion of the new revenue that would come in as the result of the economic impact from a mega-event. That’s the kind of thing that needs to happen so we can play on a level playing field. From that level playing field, we can say, ‘You’re going to have great weather. You’re going to experience great resorts and dining and nightlife. You’re going to have opportunities to visit Sedona and the Grand Canyon.’ All the things that make Arizona special then get featured if we can bid competitively on these mega-events.”

"We have a stadium that is second to none,not only because of the newnessand the seating and the sight lines,but also for the field itself,which can roll out and allow the teams

to play on real grass."–Robert Shelton

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Az Business Magazine is proud to host the 7th Annual Health Care Leadership Awards this April. We’ll honor the individuals and organizations that have made strides in

helping Arizonans receive better health care.

Register at AzBusinessMagazine.com

For information on sponsorships, individual tickets and corporate tables, please email: [email protected] or call 602-277-6045.

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AZLTA supplement in AzBusiness January-February 2014

Documents

state of arizona

university of arizona

climate of arizona

arizona diamondbacks

economic development

arizona chamber of commerce

arizona commerce authority

arizona office of tourism