A beleaguered Arizona Office of Tourism that faced threats of a zero budget and a merger with the Arizona Department of Commerce welcomes the status quo.

Although like most state agencies another budget battle is in the offing next year, the future of the Tourism Office (AOT) is not as bleak as it was earlier this year.

Not only is the agency buoyed by strong support from the business community and key legislators, but the tourism industry itself appears to be making a recovery.

Consider these statistics for 2002. AOT says tourism: Attracts 27 million visitors a year; contributes $16 billion in domestic and international direct spending, which includes retail, restaurants, lodging and amusement; has a total economic impact of $30 billion; generates nearly $1 billion in tax revenues, nearly $12 billion in payroll income annually, and provides more than 450,000 jobs.

AOT also says the industry bounced back in 2002 to near 2000 levels, bringing in more than $12 billion in domestic direct spending and exceeding the national average in tourism growth. The number of visitors declined slightly, but visitors stayed longer and spent more, the agency says.

Margie Emmermann, AOT director, says she considers tourism to be “an economic development entity.”

It is the hospitality industry, Ms. Emmermann says, that invests in the infrastructure giving Arizona “the quality of life, the quality of place” the state is today.

“We set the stage for what the community is all about,” Ms. Emmermann says, mentioning recreation, entertainment, hotels — all of which are attractive to tourists. “Conference attendees and visitors attracted by all this quality of life today may be your business owner or knowledge worker of tomorrow.”

Lawmakers Support Agency

Despite efforts to deep six AOT in the last session of the Legislature, lawmakers speak well of the agency.

Sen. Bob Burns, R-Dist. 9, chairman of the Senate Appropriations Committee and one who once advocated a merger or a demise for Tourism, says, “I do not expect that to be brought up this time around. A lot of effort was put in last time, and I don’t know that anybody is ready to take that on again.”

When Ms. Emmermann hears that, she breathes a deep sigh of relief. “At least we’ll only be fighting for a budget and not survival, too,” she says. Mr. Burns says he will get together with his staff soon to go over revenue projections and budget needs. “I don’t want the upset stomach just yet,” he says.

Mr. Burns says he has no quarrel with AOT. “I don’t get any specific reports, any bad reports, so no news is good news,” he says. “Their goal is good. Anytime we try to encourage people to come here and spend their money in Arizona, there’s nothing wrong with that.

“It all boils down to the bottom line. We didn’t have any money and we still came up short, and we’re still short.”

Rep. Phil Hanson, R-Dist. 9, chairman of the House Commerce and Military Affairs Committee, was and still is an opponent of merging Tourism and Commerce. “It wasn’t going to save much money, and besides both departments play different roles,” Mr. Hanson says. “One brings in tourists and the other has to do with business, but there is some cross pollination.”

He was referring to tourists who like what they see in Arizona and decide to move their family and their business to the state.

Balancing Old Vs. New West

Ms. Emmermann, who was director of the Department of Commerce for two years before being appointed by Governor Napolitano to head AOT in January, says Tourism and Commerce do complement one another. But getting the right message across can be tricky.

“Other states that have tried joint slogans with commerce and tourism find they don’t work,” Ms. Emmermann says. “We recognize a diversity of audience out there, and we need to differentiate Arizona from other states, recognizing our competitive advantages. The Old West flavor is one of them. You can complement that by introducing the old and the new. Look at some of the ads. We take the Old West flavor with mountains and wide open spaces in the background and a state-of-the art spa or golf course in the foreground.

“We want people to know we are a progressive, high-tech state, yet we have a lot of history and culture that can be experienced,” Ms. Emmermann says.

Speaking of technology, she says AOT understands the world of today.

“We’re very focused on who our target audience is, and we want to deal with them in a high-tech way,” she says. “We do more Internet-based applications in how we reach our customers and how they reach us.”

Ms. Emmermann says relying more on the Internet (the AOT Web site is: www.arizonaguide .com) enables the agency to reduce mass mailings and printing costs and to focus its efforts on attracting “the high value, high net worth consumer that we are targeting.”

Sen. Barbara Leff, R-Dist. 11, chairwoman of the Senate Commerce Committee, likes the direction the Tourism office is taking.

“I’m a huge supporter of AOT, and I think this office under the leadership of Margie Emmermann is going to be extremely successful,” Ms. Leff says. “She is very creative and has breathed new life into the office. I saw the work she did when she led Commerce and I have complete confidence that Tourism will more than pay for itself. It’s a positive investment for the state. We should be increasing their funding.”

Likewise, Sen. Gabrielle Giffords, D-Dist. 28, says the state underfunds AOT. “Generally speaking I’m a big supporter of AOT because the tourism dollars that flow into the state are vital to the Arizona economy,” says Ms. Giffords.

But she says, “A lot of people who travel to the Grand Canyon are not aware that it’s in the state of Arizona. It goes to show that we need to do a better job to attract tourism dollars. It’s a good clean industry.”

Working With A Tight Budget, Fewer Employees

Recognizing the state’s tight budget, Ms. Emmermann says she won’t seek an increase next year from the current general fund appropriation of approximately $9 million. She says the Nevada tourism office receives about $13 million from the state, which is in addition to the $130 million spent by the Las Vegas Convention and Visitors Bureau.

Hawaii’s state office leads with $56 million, and nearby New Mexico’s tourism appropriation is $14 million, according to the National Council of State Tourism Directors. “We are not one of the better funded tourism offices,” Ms. Emmermann says. This year the agency received an additional $3 million as a result of Prop. 302, the Indian gaming measure. The money can only be used for marketing purposes, and cannot be spent on out-sourcing and contracts with the private sector, Ms. Emmermann says. In recent years, the number of AOT employees has been reduced to 25 from 32, which Ms. Emmermann characterizes as “a dramatic hit” for a small agency.

Funding Formula

She along with tourism industry leaders favor putting the agency on a funding formula based on a certain percentage of taxes paid by hotels, restaurants and amusement attractions. An effort a couple of years ago died in the Legislature.

If AOT had been on that formula the agency would have received slightly more than $11 million this year instead of $9 million, Ms. Emmermann says. “The formula would be pegged to the success of that industry,” she says. “It would fluctuate depending on how well the industry does. I would welcome that. It would make us a little bit more competitive with states we are
trying to draw visitors from.”

She agrees it could be a less stable source of revenue, but adds, “We are very confident that the industry in Arizona is rebounding from the stress of previous years and has nowhere to go but up. As the industry performance gets better so would our ability to increase our funding.”

Salaries In Question

The only negative Ms. Leff hears about tourism is that many of the jobs it creates are low paying. “But often it’s a first step for people,” she says.

Ms Emmermann agrees there are some low paying jobs, such as housekeeping positions, in the hospitality industry, but says, “There are jobs at all levels. Many general managers start out in entry-level jobs. College students take some of these jobs while they’re going to school. Then they move on to other positions.

“But it’s not just the hotels. It’s the attractions and all of the services that go into the hospitality industry. The telephones, telecommunications, the electricity generated, the linens, all the other businesses that are critical components. Without our visitors, many businesses would not be here today.”

Rep. Debbie McCune Davis, D-Dist. 14, a member of the House Commerce and Military Affairs Committee, considers AOT of “critical importance if Arizona is going to rely on tourism as an economic engine.”

She says the office coordinates what otherwise would be a disjointed effort by individual communities to attract tourists. Ms. Davis applauds Ms. Emmermann for “her ability to build positive relationships.”

Ms. Emmermann says the Tourism Office is “the voice of Arizona and the only entity that has the resources to market the state globally.”

Travel Habits Since 9-11

In the wake of the war in Iraq, the terrorist attacks of Sept. 11, 2001, and health fears stemming from SARS (severe acute respiratory syndrome), “we know travel behavior has changed a lot,” Ms. Emmermann says. “People want to stay closer to home,” she says. “There are more family vacations. They don’t book their travel so far in advance. They are using the Internet more as a tool to make their travel plans.”

With all that in mind, AOT is taking a close look at regional travelers, particularly residents of California, which provides 28 per cent of Arizona’s visitors, and is stressing in-state travel by Arizonans, who account for 24 per cent of the state’s tourists, Ms. Emmermann says.

“We’re doing more to partner with Arizona communities,” she says. The effort is paying off. Just last month the Travel Industry Association of America recognized AOT as an innovative leader among state tourism offices. The agency received a Mercury Award in the Co-op Marketing category for a promotion targeting Chicago residents. Partners in the campaign included Phoenix, Scottsdale, Tempe and the Mesa Convention and Visitors Bureau.

Another accomplishment, Ms. Emmermann says, is the creation of a Kidzone site on the agency’s Internet site. It targets 4th and 5th graders who are required to write a report on Arizona.

The Kidzone site has games as well as facts and trivia about the state. For example, kids can click on an interactive button and discover the state fish (Apache trout) or the state bird (Cactus wren). Also, children may get a virtual passport. Their passport gets “stamped” each time they visit a different page focusing on a region.

Previously the agency had been receiving as many as 30,000 requests a year for student packets. “They can customize their own packets,” Ms. Emmermann says. “We’re hoping that this is something kids from all over will get so jazzed up about that they will tell their parents, ‘We need to go to Arizona.’” —