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In tough environment for tourist businesses, it helps to stand out

SEDONA – Next to a sign promising red rock views from every room of an inn – walk-ins welcome – and down the street from a trolley service billing itself as “the best first thing to do in Sedona,” Damon Anderson, six-shooter on his hip, marshal badge on his vest, twirls a lasso to lure tourists into Red Rock Western Jeep Tours.

“There is a western feel to Sedona, and we try to keep that feel along with the love of the land and a cowboy ethic,” said Anderson’s co-worker, Paul Piotrowski, who handles sales. “It makes us stand out a bit from everyone else – been doing it for 26 years.”

After steady growth from 2002 to 2007, visitor spending in Arizona dipped slightly in 2008 as the U.S. economy slid. That’s no small issue in a place like Sedona, which in 2008 drew 3.5 million people and to its soaring red cliffs, Old West charm and new-age appeal.

Amid businesses offering tours, T-shirts, curios, snacks, art and jewelry, owners are looking for any edge they can get.

John Tolliver, general manager at the Best Western Inn at Sedona, said he aims to exceed visitors’ expectations by offering packages geared toward a traveler’s specific interest. For example, a new package called Rockstar provides guests interested in hiking with a map of all 143 area trailheads, a discount at a local outfitter and a guidebook to the 10 best hikes.

“All of a sudden that’s a tremendous value to a person who wants to go out and hike all day long,” Tolliver said. “Somebody is thinking about them.”

Sedona still has plenty of visitors, said Jennifer Wesselhoff, president and CEO of the Sedona Chamber of Commerce, but many of them use discounts, reward points, timeshares and frequent flyer miles. And they are tighter with their money, she said.

One sign of that: Wesselhoff said 20 of the 70 galleries here have either downsized or closed over the last 18 months.

“Businesses really need to look internally and figure out what’s working what’s not working and adjust,” Wesselhoff said.

“In my opinion that’s a healthy thing,” she said. “It’s painful, but it’s healthy.”

Tourism generates about 10,000 jobs in this community of 17,000 and provides about 70 percent of the tax revenues. In one indication of the downturn, revenue from Sedona’s hotel-occupancy tax was down 10 percent this summer, Wesselhoff said.

Visitors to Arizona spent an estimated $18.5 billion last year, supporting more than 310,000 jobs, according to a report by the Arizona Office of Tourism.

But that figure dropped from $19.1 billion in 2007 and trailed the $18.7 billion that visitors spent in 2006. For the first quarter of this year, tax revenue generated by lodging, restaurant, retail and amusement declined about 14 percent, the report said.

“People are still traveling but traveling for less amount of time and staying closer to home,” said Mark Stanton, the office’s deputy director.

Besides the economy, H1N1 flu fears are causing people to put off travel, Stanton said, and banks and other companies that received federal bailout money are cutting back on destination meetings perceived by the public as luxurious.

“Meetings really are an economic catalyst and a big part of the tourism industry,” Stanton said. “When you cancel a big meeting, you’re impacting everyone down to the front desk staff to the bartender to the golf pro.”

Tourism in Scottsdale is down 30 percent this year, and events that have been held there for years are being booked elsewhere, a shift that’s expected to cost resorts and hotels about $100 million, said Rachel Pearson, spokeswoman for the Scottsdale Convention and Visitors Bureau. Tourism generated $3.7 billion for Scottsdale last year.

“People are nervous about coming to resort destinations,” Pearson said.

To help compensate, the Scottsdale Convention and Visitors Bureau launched a campaign called Scottsdale’s Room Rate Challenge. Forty area properties are participating in the effort, in which the bureau works to meet or beat the room rate, dates and facility space in competing destinations, Pearson said.

Dennis Hoffman, a professor of economics at Arizona State University’s W.P. Carey School of Business, suggested that business owners market more to the 6 million people already in Arizona.

“It’s any port in the storm,” Hoffman said. “We need to recognize the opportunity the tourism industry has within its own state.”

That’s easier said than done at a place like the Grand Canyon, where a dip in retail and hospitality revenue is consistent with the recession, said Craig Andresen, director of the Grand Canyon Chamber and Visitor’s Bureau.

“Funny thing about people who live in Arizona, (they) just don’t think to make a trip to the Grand Canyon, one of natural wonders of the world,” Andresen said.

To help Arizona residents looking to vacation close to home, the Arizona Office of Tourism has launched Value AZ, a program offering packages and discounts. But the most important thing, according to Stanton, the deputy director, is for Arizona’s tourism industry to look for creative responses to the downturn and for businesses to continue working together.

“We take responsibility for being a economic engine for the state, and we take that seriously,” Stanton said.

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