By [Concerned Sedona Resident]
(April 11, 2016)
A year ago, Sedona.biz courageously published a series of articles examining the selling of Sedona to the tourism world and the City’s funding of the Sedona Chamber of Commerce to do that. This three-part series looks back at the past year and what has – and has not – changed since “Selling Sedona” was first published. It examines new data about the results of expanded tourism marketing and a diminishing quality of life in Sedona for both residents and tourists alike. And, it looks forward to explore Sedona’s future and the consequences of having more tourists than city infrastructure and the local environment can sustain.
Fundamentally, little has changed in the City’s approach to tourism marketing over the past year. The Chamber’s exaggerated numbers and inflated tourist spending “estimates” continue. So do the tainted surveys, illegal Chamber behavior, promotional targeting of day-tripper traffic (who spend little or nothing), spurious return-on-investment calculations, discrimination against non-chamber member businesses and the City Council’s blind eye to all of this. Resident’s resentment of too many tourists also continues to grow as the quality of life for those who live here declines from tourist overrun. And finally, data continues to verify that residents, not tourists, are the ones who pay the most to fund City services.
For more background information on inflated tourist figures and overstated tourism advertising results see Parts 2 and 3 of the original Selling Sedona series at: http://box5406.temp.domains/~pdxoggmy//editorial-and-opinion/selling-sedona. More information on the Chamber’s continuing violation of their non-profit 501 (c) (6) status is found in Part 4 of that series.
Something that has changed over the past year is the 14% increase in city tax funding of the Chamber this fiscal year with a growth from $1.3 million last year to nearly $1.5 million in the current fiscal year. That increase was based on a similar percentage increase in bed tax revenues in the previous year. A 14% increase is more than double any funding jump provided to any other city-supported organization that serves Sedona residents such as the Sedona Public Library, Adult Community Center and the Humane Society shelter.
But, the really important change from last year is an ability, for the first time ever, to accurately evaluate the real impact of tourism destination marketing in terms of overall sales/bed tax returns to city coffers. This question has plagued the city since it began funding the Chamber of Commerce over two decades ago. This is the first opportunity the city has ever had to accurately address the question of, “Will a major increase in tourism promotion funding result in at least the same increase in sales and bed tax revenue (so the city at least breaks even)?”
The bottom line answer is no! The city actually lost the $.5 million it spent on increased tourism marketing (A tripling of the previous year’s outlay.) and came up an additional $1 million short in total revenue compared to fiscal year 2014. That’s a whopping $1.5 million loss to city coffers in the end.
Here’s how it happened. First, there was actually $1.9 million more in total bed and sales tax revenues collected in fiscal year 2015 over FY 2014 before the increased promotional spending began. That’s just over a 13% jump in actual tax dollars collected. At first glance, one might think, “Wow, spend $.5 million and get $1.9 million back. Sounds like a great success!” And, of course, the Chamber wants you to look no further and believe just that! They take credit for ALL the increase and want you to think that it ALL resulted from their great tourism marketing program.
But, not so fast! There’s way more to evaluating whether city residents got their money’s worth than just total numbers. When one makes the necessary adjustments for impacts of unrelated outside factors a totally different image emerges; specifically, a more accurate set of tax revenue numbers.
First, the city breaks sales tax revenues into seven categories: retail, restaurants and bars, hotel/motel, construction, utilities, leasing and amusements/other services. City staff calculates that 41% of the revenue from all seven categories combined comes from residents, not tourists. So that factor has to be deducted from the 13% increase in sales/bed taxes for 2015 to the actual amount coming from increased tourism promotion.
Next are the impacts of outside economic factors. Last year, with a stabilizing economy, decent weather, declining gas prices and a pent up desire to get out and travel after a long financial recovery, people headed off in droves on trips they had postponed for years.
The Grand Canyon, Sedona’s companion destination, for example, experienced a 25 percent increase in visitors last year – it’s largest tourism numbers ever. This happened without any additional push in travel promotion by the “Canyon.” Other tourist destinations in the western US also experienced in excess of ten percent increases in tourism with no surge in marketing effort. Sedona was the beneficiary of that travel wave as well, a wave that rolled in completely independent of Sedona’s new tourism marketing effort.
Discounting Sedona’s tourism tax revenues by even a very conservative one-third of the increase the Grand Canyon experienced, in addition to the discount for spending by local residents, completely wipes out the 13% of sales/bed tax increase in fiscal year 2015 and a lot more.
Another deduction must also be made to 2015 tax revenues to account for the increase in bed tax rate that took place in the middle of fiscal year 2014. 2015 was the first full year that increase was in place. (It had been effective for only half of fiscal year 2014.) That factor drops more revenue off what can be credited to tourism marketing.
Finally, total bed tax from the Hotel/Motel category did increase last year, but not all of it because more tourists were attracted by more advertising. Sedona room rates were increased by 9% over that time. The impact of raised room rates also has to be deducted when evaluating results from the tourism marketing surge. That impact pushes the real revenue outcome from increased marketing even deeper into negative numbers.
The end result, when one gets down to the bottom line, is a failure of the big marketing surge to even pay for itself, let alone generate any additional new tax revenues. Independent factors over which the City and the Chamber have no control are what really governed changes in tourism tax revenues in fiscal year 2015. Increased tourism advertising had nothing to do with the sales/bed tax increase seen in 2015.
Without the financial boost of outside independent factors like declining gas prices and pent up public travel desires temporarily inflating the revenue totals, Sedona’s tourism tax dollars would have declined in fiscal year 2015 despite a major advertising push. This is a powerful warning that all is not well in Sedonaville. It suggests that the peak of what can be squeezed from tourists has already been reached and exceeded. Like a rocket that burns out it’s fuel but temporarily continues an upwards trajectory before gravity ultimately pulls it downward, Sedona’s tourism economy may temporarily continue an upward trajectory as well, masking reality and blinding many to what must ultimately follow.
Next week: Sedona evolves from destination economy to day-tripper economy.
(Over) Selling Sedona: Decision Points
How Do They Measure Up? Part 1 • Part 2
The Fallacy of Transit
Selling Sedona – One Year Later: Part 1 • Part 2 • Part 3
Selling Sedona, 2015: Part 1 • Part 2 • Part 3 • Part 4 • Part 5 • Epilogue
Sedona keeps repeating the old “problem-reaction-solution” meme. They create a problem (horrible traffic) then the mad-as-hell public reacts, so the “solution” is given — usually something they wanted to happen in the first place (now clamoring for more money for studies and quite possibly a bridge, which will bring a torrent of traffic into a now pristine area (Red Rock Crossing), which will make traffic unmanageable on a slow, windy, tourist-clogged street, bring traffic close to schools (Big Park in VOC and the High School in west Sedona.
Tourist encounter the high volume of traffic, pay the high prices for cheap junk in the uptown trinket shops, experience the high taxes and high hotel fees and never want to come back.
It’s a good thing that the governor has the good sense to bring about SB 1350 which will make banning short-term rentals a thing of the past. Having an affordable option like Airbnb will be a shot in the arm for Sedona — as the home-stay guests are, in general, friendly and out-going and they spend their money in our community. Because short term rentals are not legal right now, this doesn’t mean people aren’t using the service Airbnb or Flipkey provide. It just means that the city is missing out on these important tax dollars that will bring revenue numbers into positive territory. Anyone not supporting a legal short-term rental law are those who work in the hotel industry or those who have bought into the FEAR the hotel industry is pedaling. The hotels feel threatened by the popularity of home-stay units, and they should — they have soaked the tourist for more higher fees and taxes for far too long.
There is one solution that will alleviate some of the 179 traffic, but supposedly ADOT won’t let this happen. C’mon, how much does a sign cost?
There should be a “Welcome to Sedona” sign on the 17 at the Camp Verde exit to the 260. That would put the majority of the traffic through Cottonwood on a 4 lane highway, instead of directing them through 9 round-abouts (that they have no idea how to use).
Another idea (which I’m sure the business owners in uptown and the city council would fight) would be to make the outlet shops in the VOC in to a mini uptown with the same kinds of trinkets and restaurants. Many tourists would still travel that far, but this solution would significantly reduce the uptown nightmare. I don’t hold much hope for this solution as the “Money Grubbers” have louder voices than the sensible and practical citizens of this community.
And now our “community” pool will not open until 21 May because of maintenance.
This maintenance that could have been performed the winter or very early Spring.
Just another example of the city’s concern with its residence. I know several swimmers who are driving the 34 miles, round trip to Cottonwood to swim since they have a beautiful facility. What is wrong with this picture?
Can’t spend money on the pool, the council had to spend $39,000 on a trash study that nobody wants.
From: Steve Segner, President, Sedona Lodging Council
I am writing to you regarding SB 1350 as a concerned citizen, owner of a hotel, and President of the Sedona Lodging Council.
Sedona has worked hard to balance the needs of its citizens with those of its visitors. Our city is currently struggling with an influx of traffic, and delays on Highway 89A are not uncommon. Sedona has two state highways that converge to one lane uptown, creating the potential for heavy congestion when tourist crowds swell. SB 1350 would allow over 1,000 new rooms to be available for rent on a nightly basis, and adding that quantity of rooms would generate more traffic than Sedona roads are equipped to handle.
This bill would cause several other problems for the residents and businesses of Sedona. By signing SB 1350 into law, Governor Ducey would effectively usurp the planning and zoning powers from local governments and transfer these functions to the state under the guise of a new shared economy. This loss of control would wreak havoc on Sedona and all of Arizona’s smaller towns.
A recent study of Airbnb conducted by Pennsylvania State University revealed an explosion of multi-unit operators who account for nearly 40 percent of Airbnb’s revenue. This indicates that many homes are being rented full-time as if they were hotels, rather than once or twice a month as Airbnb and others would have us believe.
Sedona hotels and bed and breakfasts must comply with all local ordinances and zoning regulations. They are inspected by the fire department as well as city and state officials to ensure that they are safe and have adequate parking. If enacted, SB 1350 would allow Airbnb to essentially operate without regulations. Hotels may only be built in commercially zoned areas. With this proposed law, properties operating like hotels would be legal in ALL neighborhoods.
This bill only covers municipalities and does not address HOAs. Therefore, homeowners renting their properties as hotels could circumvent HOA rules. As a result, HOAs would be powerless to protect many of their constituents. Neighborhoods could suffer the negative consequences of excessive rentals, party houses, and other problems that could create a nuisance for homeowners. This would amount to an injustice for the many homeowners who, for good reason, do not want to be subjected to the side effects of the Airbnb concept.
If signed into law, SB 1350 would also allow Airbnb to work under the “honor code” in regards to taxes. Fair tax collection would not even come close to the amounts that hotels must collect. Hotels are taxed at a higher rate, and are required to maintain transparency and accountability in collecting taxes. Will Airbnb operators be required to account for revenues at the same standards as hotels?
Realtors are telling us that people are now considering buying large five to seven-bedroom homes with the intention of renting them out as B&Bs or even wedding venues. In addition to threatening to disturb the peace of the neighborhoods in which these homes are located, this could begin a trend of determining home values based upon potential rental income rather than location and other traditional factors. With home values in Sedona tied to the rental market, prices could skyrocket to the point that they would no longer be affordable.
The State of Arizona talks about states’ rights and fights any federal government regulations, claiming that the State knows what is best for its residents. I believe that local governments are in a better position to understand what is best for their residents and businesses than a government 100 miles away.
Steve Segner, Sedona Lodging Council
O My freaking G-O-D! There isn’t a single item in this letter that can be attributed to a regular everyday honest-to-goodness Sedona resident. So that’s it? You don’t like residents? Is this why you are in favor of a National Monument? No more residents? That’s what you want?
Dear Governor Ducey, I just want to live in my own kingdom, with everyone bowing down to my rules. I don’t want neighbors, because they will likely have friends and that means guests. Residents can only entertain those that I say they can entertain, and they certainly can’t spend the night! The only visitors that can spend the night are those who stay the night in my hotel, eat in my restaurant, and purchase the cheap crap I’m selling. As a city, we’ve tried VERY hard to curtail anyone who wants to have fun and have banned most music venues, especially those with a dance floor. We’re old and retired here and music after 8 pm at night is just too too much. We’ve looked into Airbnb and we do not like it — not one little bit! The company is now in countries around the world and they have more money than the Marriott — the growth has been phenomenal and residents enjoy having extra money. We just can’t have that in our little “small town” tourist berg because someone might park on the street. Airbnb is a complete nuisance because it’s taking away from Chamber businesses and we can’t have that either. Even though those staying at a residence might spend more money than a tourist staying at a hotel, I just can’t stand the fact that the draconian laws we have worked so hard to put into place will be ignored under SB1350. So, Governor Ducey, mind your own business. This here town belongs to me and my chamber buddies and we think your “good ideas” to improve the economy pale in comparison to what we have in mind. I mean, how else will we be able to provide jobs and money for our friends? We are against this bill and any other forward-thinking ideas you may have.
Opinion: Selling Sedona – One Year Later
sellingsedonaBy [Concerned Sedona Resident]
(April 11, 2016)
If what your writing is correct why no name ?
Every newspaper in America list the writers and comments from the parties involved.
So lets all keep in mind this is a un named Opinion.
Donna, remember less is more. In your next article shorten it up.
Just sayen Steve Segner
Agreeing with Steve Segner, in my opinion publishing information of this magnitude without appropriately identifying the source invalidates the credibility of what obviously was a great deal of research and effort. What a shame.
Speaking of anonymity, should “Deep Throat” have revealed his name to the Washington Post?
yes, but we knew Bob Woodward and Carl Bernstein
This is more like a hit and run,
If the facts are true then use a name,
Why should Concerned Sedona Resident provide a name? This is Sedona. Perhaps he or she doesn’t want to be vilified, or harassed, or possibly face vexatious litigation. I respect Concerned Sedona Resident’s decision to remain anonymous and don’t intend to be influenced by individuals with hidden agendas who do not.
In reply to Michael Schroeder re City spending $39K on trash issue. It is now $59K and will be as high as $75K. I spoke with the official in Fountain Hills in charge of their trash collection department. They have 27,000 residents and spent nothing on an outside consultant when they decided to reduce down to one trash hauler. They had an internet survey, paper surveys people could fill out at City Hall and held open houses. Did it all themselves while our City is willing to go up to $75K. Not one Council member asked for a breakdown of what the $39,000 would be spent on to simply ask for bids from three trash haulers. If Fountain Hills could accomplish their goal with no outside consultant costs then it surely makes our City Council look extremely incompetent by not instructing City Staff to do the same. Meanwhile the $20K telephone survey was totally inadequate. Questions were biased and downright stupid. Taylor Waste customers have been called “biased” and treated like we are stupid because the great majority of those polled were Taylor customers. If Patriot and Waste Management had the business acumen to send a letter to their customers advising them of the situation then the City would have received hundreds of more emails and phone calls opposing. Obviously if Taylor has nearly 60% of the business in Sedona then the majority of those who contacted City Hall were there customers..
We were accused of not wanting to recycle and derided at the City Council recent meeting as not wanting to recycle. This was extreme misrepresentation by the Consulting company and City Staff. Many Taylor Waste customers choose that company not just based on the best customer service but because they do much more and better recycling than the other companies. So just who is doing most of the recycling in Sedona??? Certainly not Waste Management or Patriot but, their customers were not ridiculed for using the companies that recycle far less and in a dirtier manner. Our city residents recycle more than San Diego and many other Cities but, we are being treated like we are not educated on the subject and need rehabilitation by City Hall to do even more. The day is coming as confessed by a City Council member and Sedona Recycles that “composting” is on the horizon. Will all this end with RFID chips in our garbage cans spying on us to make sure we are recycling? With the current City Council you can bet on that. They do it in California and even Bisbee, Az.