To measure the area of a rug, both the length and width are taken into account. In measuring the effect of tourism in the state of Arizona, more than one indicator must be considered. With a volley of available indicators and the heavy seasonality of the tourist industry, it becomes a confusing quagmire and a measure of the health of tourism in the state is lost. Addressing this issue is the new Tourism Barometer, a multi-faceted and comprehensible look at tourism in Arizona. It should be noted that comparative indices could be created for other states so that the Arizona Tourism Barometer could be used to compare the performance of Arizona's tourist industry with other regions.
By providing an aggregate look at the health of the Arizona travel and tourism industry, the Arizona Tourism Barometer is a useful tool for those in industries affected by the number of visitors coming to the state and the amount of money they spend. The barometer makes it obvious that travel and tourism are still suffering in Arizona.
Review of Other Travel and Tourism Indicators
In 1978, M.E. Bond and Bill McDonald of the Bureau of Business and Economic Research (BBER) at Arizona State University produced the first Tourism Barometer for Arizona. It was a quarterly measure of activity levels at national parks, state parks, various other parks, some private attractions, enplanement and deplanement passenger counts from Arizona's two international airports, and vehicle counts at agricultural inspection stations along the Arizona borders. While person counts at national parks, state parks and international airports is still available, visitor counts and vehicle counts are no longer kept or published when it comes to the other parks or agricultural inspection stations.
In 1984, Timothy Hogan and Tom Rex of the BBER developed a county-specific model of tourism based in part on the work of Bond and McDonald and also in part on a one-time survey that was undertaken during the 1979-80 fiscal year. In that survey, detailed information was collected about mode of travel, length of stay, trip expenditures and destinations of visitors to Arizona.
Currently, the Arizona Hospitality Research and Resource Center at Northern Arizona University produces a document entitled Monthly Tourism Indicators. Included in the monthly publication are data on gross sales from various industries, passenger counts at Phoenix Sky Harbor and Tucson International, visitor counts at national and state parks, and various lodging indicators including occupancy rates and rates per room. A measure of tourism employment based on specific and constant weights within an assortment of SIC industries is included as well. While the information is detailed, it is not seasonally adjusted; therefore, year-over-year percentage changes are used to make comparisons. Seasonal adjustment allows a more timely month-to-month analysis to be made. In addition, fundamental changes in the patterns of activity are difficult to ascertain with the data in a disaggregated form.
Construction of the Barometer
The Arizona Tourism Barometer consists of four indicators that capture different aspects of tourism activity. Each indicator is equally weighted, seasonally adjusted and standardized. The reference point of 100 is set at June 1994 because that is the month showing the least movement during the sample period. The Tourism Barometer begins in April 1990 and is reported on a monthly basis.
Since Arizona ranks tenth in the nation as a destination for overseas visitors, non-resident arrivals to the United States are used as a measure within the barometer. Before the September 11, 2001 terrorist attacks, information from the port-of-entry arrival records (I-94) forms, collected by the Immigration and Naturalization Service was readily available as nonresidents enter the county; these forms include the destination of the entrant. Since the terrorist attacks, release of information has been delayed at the INS. Aggregate figures of non-resident arrivals that come from the same source are still released in a timely fashion. Since the two data sets show close to perfect correlation, the broader series acts as an excellent proxy for the I-94 detail.
Because of the phenomenal attraction of the Grand Canyon, one of the seven natural wonders of the world, national park visitation is also used as a component in the barometer. This is a measurement of visitors coming to the park on a recreational basis and is kept by park rangers at the individual parks. Not only Grand Canyon Park visitation is taken into account, but also recreational visitation at the 20 other national parks in Arizona. Tourism that takes place within the state as well as tourists that arrive from outside Arizona are captured in this count. While a tourist may be counted at more than one park, adds a dimension of time spent touring Arizona not captured fully by the other components.
To provide a measure of the impact of tourism in dollars, hotel and motel revenue is included in the barometer. In addition to recreational tourism, this measure includes business travelers. Conventions, trade shows and other business travel is an important component of visitation to Arizona. The volume of hotel and motel revenue is deflated using the consumer price index for urban areas.
Another component in the barometer is the number of air carrier landings reported by the FAA, which has been shown to correlate highly with the level of economic activity in the local area as well as to the passenger volume. In this gauge, data from 14 airports across Arizona are reported. Air carrier landings covers activity from airlines such as American, Delta and Southwestern, but does not include unscheduled, on-call air transportation such as air taxis.
Historical Behavior of the Barometer
The Tourism Barometer's recent low point of 87.1 in November 2001 was matched only in March 1993 when the barometer fell to 87.0. A historic high of 128.7 was reached in November 2000.
The barometer was on a downward trend before the recession officially began. The recession of 1990-91 had less to do with tourism and more to do with a housing price bubble as evidenced in the tourism barometer. The national park visitation and hotel and motel components were a negative influence on the barometer as Arizona entered the recession, but recovered midway through the recessionary period. During the last three months of the recession, reduced overseas visitation brought the barometer downwards.
The barometer experienced a sharp drop early in 1993. Phoenix Sky Harbor Airport, the largest of Arizona's airports, was undergoing construction on one of its two runways during the spring of 1993. This limited air transportation for a time, particularly when it was necessary to close the one remaining runway, causing air traffic to be diverted to other airports. At the same time, financial difficulties at Northwest Airlines reduced its passenger counts; the airline was bailed out by its employees later in the year. This curtailment of air traffic is evident in the barometer, but the effect was short-term. The barometer resumed its upward movement from the beginning of 1994, lasting until 1996,with just a few disturbances on the way.
April to October 1996 was a period of cyclical weakness in the economy. Some economists contend that because of improvements in inventory control instituted in the early 1990s, recession was avoided. This weakness becomes particularly evident in May 1996, when all components of the barometer showed a negative trend. The barometer reading fell to 112.8 from 117.6 in April and 119.1 in March of that year.
In September 1997, the Asian financial crisis made the news when a wave of currency devaluations made its way through Thailand, the Philippines, Malaysia and Indonesia, causing consternation about the health of the Asian economies. The overseas visitation, hotel and motel revenue and air carrier landings components of the tourism barometer continued in a negative trend from October 1997 until August 1998, reflecting the economic ills abroad. A period of strong tourism growth followed, lasting through 2000.
At the beginning of 2000, a decline in the barometer is evident with the national park visitation and hotel and motel revenue components taking the blame. Soon, air carrier landings became negative as well, forcing the barometer further into its downward movement. In June 2001, the barometer reached a low not seen since February 1999 and the nation's economy would soon be declared by the National Bureau of Economic Research to have been in recession since March.
The slowdown in the economy intensified after the terrorist attacks on September 11, 2001, which had a devastating effect on tourism. The barometer fell to 109.7 in September and to 94.2 in October, the largest decline seen over such a short period of time. In November, the decline continued with the barometer falling to 87.1, a level not seen in almost eight years. Of the more concern is the continuing behavior of the barometer. Since November 2001, some improvement in tourism is seen, but the barometer remains at a level below the July 1994 reference point. Only 11.9 points of the 41.1 points lost between December 2000 and November 2001 have been regained.
