Higher room rates, reduced visitor spending, reduced investment
GLENDALE, ARIZ. – A new analysis from Applied Economics finds that Glendale could be slammed with a loss of between “$1.4 million to $2.9 million in cumulative declines in sales tax collections over the next five years from lower hotel occupancy and corresponding reductions in visitor spending” if Proposition 499 were to pass in November.
“You don’t have to be an economist to know that Proposition 499 would be bad for Glendale,” Save Glendale Jobs Chair Kim Grace Sabow said. “Higher room rates and reduced visitor spending mean that overnight Glendale would become a less competitive travel destination. As the report makes clear, the bad ideas in Proposition 499 have already been tried in California. Why would we want to bring California’s failed experiment to Glendale, Arizona?”
From the report:
- Higher rates, lower occupancy: A portion of the increase in operating costs from higher labor costs at hotels is typically passed through to guests in the form of higher room rates. This leads to lower occupancy in a competitive environment where travelers can choose other accommodations in other cities.
- Decreased visitor spending: To the extent that lower occupancy results in fewer total visitor days, there could also be a decrease in visitor spending on restaurants, retail, entertainment and local transportation.
- Fewer visitors: The report examines economic models that show between 136,000 and 276,000 fewer annual visitor days per year by the end of fiscal year 2029 compared to current levels.
- Sales tax declines: The reduction in visitor days associated with lower hotel occupancy could result in an estimated $1.4 million to $2.9 million in cumulative declines in sales tax collections over the next five years from lower hotel occupancy and corresponding reductions in visitor spending in Glendale. The estimated sales tax loss equates to 1% to 2% of current annual city sales tax collections.
- Reduced investment: The decrease in hotel profitability related to wage increases and limitations on room attendant cleaning levels can impact the level of future hotel construction activity.
“Glendale has a thriving tourism sector, but it will be put at tremendous risk if Proposition 499 passes,” Grace Sabow said. “And as this new report shows us, when tourism is harmed, so is the rest of the economy. This organized labor boondoggle deserves to be soundly rejected by Glendale voters.”