Rising tide: City Council confirms total confidence in Experience Scottsdale

Experience Scottsdale CEO Rachel Sacco at the organization’s 2018 luncheon. The Scottsdale City Council has approved a number of resolution’s for Experience Scottsdale’s 2019-20 fiscal year. (Independent Newsmedia/Arianna Grainey)

With the new fiscal year right around the corner, Experience Scottsdale has gained approval for upcoming tourism event funding programs and a destination marketing plan officials believe is vital in the attraction of visitors to “The West’s Most Western Town.”

The approvals come at a time reported to be an all-time high for Scottsdale’s occupancy levels.

On May 21, Scottsdale City Council approved on consent a total of six resolutions to move forward with:

  • A fiscal year 2019-20 strategic business plan, performance standards and contract budget; and
  • Authorization of five events to use the Tourism Development Fund.

The meeting was held at City Hall, 3939 N. Drinkwater Blvd.

Since 1977, Scottsdale has maintained a destination marketing organization through a public-private partnership with the Scottsdale Convention and Visitors Bureau, doing business as Experience Scottsdale. The organization is made, in part, as the local chamber of commerce and part independent organization.

Experience Scottsdale has and continues to promote the city and the immediate region as a premiere destination to attract visitors and solicit conventions, according to a city staff report. The Town of Paradise Valley also has a partnership with Experience Scottsdale, as the small municipality borders Scottsdale city limits.

The organization has provided long-term development and marketing of Scottsdale and the immediate region through a travel and tourism strategy. Overall, destination marketing services is said to increase the economic benefits of tourism and meetings to Scottsdale, inspire travelers to visit, influence travel throughout the immediate region to increase spending and enhance the visitor experience.

However, not all Scottsdale taxpayers are keen on the inner-workings of the local tourism bureau.

Experience Scottsdale advertising in Montgomery Tunnel. (photo by Experience Scottsdale)

2019-20 destination marketing plan

In August 2017, the City Council approved a five-year designation marketing agreement between the city and Experience Scottsdale. Monitored by the city’s contract administrator through quarterly performance measures, programming updates and financial reports, the agreement continues to ensure that city funds are used for the program of work as presented in a destination marketing guide, the city staff report stated.

The terms of the agreement also call for an annual audit and year-end financial reports.

Beginning its third of five years, the agreement requires an annual destination marketing plan that will be used to implement next fiscal year’s program of work. The fiscal year begins on July 1.

The plan includes the FY 2019-20 strategic business plan, proposed performance standards and contract budget, which was reviewed and unanimously recommended by the Tourism Development Commission, the staff report stated.

Areas of focus for Experience Scottsdale in FY 2019-20 to drive new visitation and meetings to the city include:

  • Refreshing the Absolutely Scottsdale campaign as part of the destination brand’s continuous evolution to appeal to current and future travelers. The advertisements, which will begin appearing in fall 2019, will offer an authentic sense of place and target Scottsdale’s core customers to key target markets;
  • Continuing its summer campaign to drive additional visitation from Memorial Day through Labor Day. Experience Scottsdale is also extending its summer meetings rebate program through 2022 and investing in lead generation tools that strategically target planners with summer business opportunities;
  • Expanding efforts to reach international audiences by partnering with the Arizona Office of Tourism for the second year to leverage marketing conducted by Brand USA, the nation’s official destination marketing organization. Initiatives are focusing more on the United Kingdom to support increased, non-stop international air service to Phoenix Sky Harbor International Airport;
  • Expanding the parameters of its Site See and Fly Free program, which invites planners with active Requests For Proposals to explore Scottsdale and growing its outreach to local planners; and
  • Focusing on earned digital media strategy by targeting specific digital outlets with pitches and press trip invitations throughout the year.

Lastly, Experience Scottsdale will continue to work with the city to promote its venues, such as WestWorld and Scottsdale Stadium.

The city’s tentative FY 2019-20 budget forecasts bed tax revenue at $21,530,228.

Fifty percent of the total revenue derived from the bed tax, per voter approval, is used for destination marketing to promote tourism forecasted at $10,765,114, which is planned for and included in the Tourism Development Fund budget.

The remaining 50% is allocated among tourism research, support for tourism-driven events, tourism-related capital projects and other eligible uses including 50 percent of the Fiesta Bowl expenditure of $174,833.

The destination marketing plan staff report states a table showing Experience Scottsdale’s expenses versus similar destination marketing organizations.

“… Experience Scottsdale has kept its non-program costs (personnel and admin/general) within a competitive range as determined by market conditions and applicable policies,” the staff report states.

“Non-program costs (based on Experience Scottsdale’s audited financials) were 43 percent of their budget, leaving 57 percent for programs, well above the average for all DMOs and just above average for DMOs with $10 million-plus budgets.”

According to the city staff report, the outlook for Scottsdale’s tourism market area is positive.

Bed-tax-paying hotels and resorts concluded 2018 with positive year-over-year increases in all major hotel metrics — including a 2.4% increase in occupancy, 3% increase in average daily rate and a 5.5% increase in revenue per available room. This outpaces the growth seen by many of the Top 25 U.S. markets in average daily rate and revenue per available room, the staff report states, noting that Scottsdale’s occupancy level has reached an all-time high.

The staff report states, that as reported by Smith Travel Research, occupancy for Scottsdale’s bed-tax-paying hotels and resorts year-to-date through February 2019 is up 1.2% over January-February 2018. Year to date average daily rate is up 5.2% and revenue per available room is up 6.5%. In addition, the city’s treasurer’s office reported fiscal year bed tax revenue to date up 18% through February 2019.

Experience Scottsdale anticipates its total FY 2019-20 operating revenue budget to be approximately $16,237,126, of which the city contract, true-up payment and 50 percent of the Fiesta Bowl contract amounts of $11,214,947, accounting for 69% of the total operating budget.

Anticipated revenue from other destination sources amounts to $3.9 million, while the private sector and other revenue is $1.2 million.

Revenue stemming from Paradise Valley is nearly $1.8 million for FY 2019-20; an increase from $1.5 million last fiscal year.

On average, Experience Scottsdale’s annual direct economic impact is $247 million, according to a 2018 study.

The organization’s tourism promotions directly generate an average of $31.4 million in annual state and local tax revenue; in addition, the research also revealed that Experience Scottsdale’s marketing contributes to a positive overall impression of the area.

Tourism event funding programs

In addition to the destination marketing plan approval, Scottsdale City Council voted unanimously on five tourism event funding programs.

The resolutions include authorization of the following programs and authorizing the mayor to execute individual agreements with each event producer for:

  • The event venue fee funding program;
  • The community event funding program;
  • The matching event advertising funding program;
  • The multi-year community event funding program; and
  • New event development funding program subject to City Council approval of such agreements and authorizing staff to use the new event development guidelines to evaluate whether an event qualifies for funding.

At an April 16 Tourism Development Commission meeting, the governing body unanimously recommended the five programs.

Funding for all five programs will be available from the annual allocation from the Tourism Development Fund for events and event development and carry over funding, the staff report stated.

In FY 2018-19, a total of 32 events were funded with an allocation of $1 million from a total of $1.8 million available for event development.

The tentative FY 2019-20 budget forecasts bed tax revenue to be $21.5 million; 9% of the total revenue derived from the bed tax, per City Council approved ordinance, is used for events and event development forecasted at $1,937,721, and is planned for and included in the tourism development fund FY 2019-20 budget. In addition, funds may be allocated for events from carryover funding from the Tourism Development Fund.

Questioning the narrative

Prior to City Council’s May 21 vote on the Experience Scottsdale programs and plan, Scottsdale resident Sandy Schenkat made a public comment on the items.

Sandy Schenkat

According to Ms. Schenkat, city officials have ignored her requests for two years related to Experience Scottsdale’s performance and bed tax funding audit. She says she felt compelled to use her allotted three-minute public comment period to bring the issue to residents’ attention.

“… I have questioned the use of bed tax collections funding Experience Scottsdale,” she said. “Scottsdale Convention Visitors Bureau engaged citizens in 2010 to increase bed tax from 3% to 5% through Prop 200. This increase was proposed as a way to keep property taxes low by increasing bed tax to bring in more tourism.”

Ms. Schenkat says it appears the 5% tax increase has helped the Experience Scottsdale employees’ salaries.

“Tax Form 990 for fiscal year 16-17 indicated Ms. Sacco’s salary at $575,000. Her six vice presidents earned from $172,000 to $273,000 during that period,” Ms. Schenkat said.

“In 2016, the city did an audit and revealed Ms. Sacco earned almost $450,000.”

Experience Scottsdale provided their 2016 Tax Form 990 to the Independent, which shows Ms. Sacco’s base compensation is $353,683; and the six vice presidents’ salaries range between $113,838 and $200,003.

The other columns of the Tax Form 990 include non-guaranteed compensation only paid out if incentive goals are reached; other reportable compensation such as a company car; and nontaxable benefits like health insurance and a 401(k) match. The culmination of all the figures presented on the tax form do add up to nearly $575,000, however Experience Scottsdale officials say that’s not the same as salary.

Experience Scottsdale Director of Community Affairs Stephanie Pressler points out Ms. Sacco has led the organization for 33 years, overseeing 45 full- and part-time employees; and the six vice presidents have each been with the organization for more than 10 years.

Ms. Schenkat says the City Council approved the five-year contract in 2017 with approximately $10 million annually being paid to Experience Scottsdale.

She cited a Guidestar.org report, which publishes the Tax Form 990, and many other convention bureaus throughout the country. Ms. Schenkat states that Tampa Bay, Florida, an income-comparable city, reported their CEO’s earnings at $361,000; while Austin, Texas pays their CEO $312,000.

“We also feel strongly that we should be compared to DMOs with similar-sized staff and budgets,” Ms. Pressler said in an email to the Independent.

According to the Tax Forms 990 available on Guidestar.org, Visit Tampa Bay’s CEO, Santiago Corrada’s base salary for the same time period was $234,761. Published news reports show he started his position in May 2013.

Austin, Texas’s visitors bureau hired Thomas Noonan in April 2016, after former CEO Robert Lander retired. The 2017 Tax Form 990 available on Guidestar.org for Mr. Noonan shows his base salary is $213,492.

“The annual bed tax ‘pot of gold’ of almost $20 million is being shared with (the) Tourism and Development Commission for city tourism events. The TDC chairperson is also on the board of Experience Scottsdale,” Ms. Schenkat said.

“Most all of the TDC members are also members of Experience Scottsdale. Therefore, my conclusion is that the $20 million of bed tax is totally controlled by the Experience Scottsdale board. I think it is time for another audit of this no-bid contract non-profit organization.”

Ms. Schenkat says the total funding for five years will be in excess of $100 million.

“The city needs to be more prudent with bed tax funding,” she said, noting that she believes the tax payers of Scottsdale have been “hood winked” by Prop 200.

Editor’s Note: This is an updated version to a story published at 9 a.m. on June 5, to reflect base compensation salary for Experience Scottsdale’s directors and comparative figures for Tampa Bay, Florida and Austin, Texas visitor and convention bureaus.

Northeast Valley News Editor Melissa Rosequist can be e-mailed at mrosequist@newszap.com or can be followed on Twitter at twitter.com/mrosequist_.

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