Category Archives: Employment

Fewer hotel bookings pose challenge in downtown Phoenix

Downtown Phoenix Wyndham Hotel (soon to be Marriott)

[Source: Jahna Berry, Arizona Republic] — The ongoing travel recession and, to some extent, city-built Sheraton in downtown Phoenix are putting pressure on central Phoenix hotels, some hotel owners say.  Tourists are traveling less and spending less, dampening the travel boom that hotel owners hoped would follow last year’s completion of the Phoenix Convention Center’s $600 million expansion.  Properties are responding in a variety of ways:

  • Last week, the Wyndham Phoenix Hotel asked for and received a 20-year tax discount from Phoenix that will save the hotel at 50 E. Adams St. $400,000 annually.  The deal will finish the hotel’s renovation and switch to the Marriott flag from Wyndham, which, the majority owner says, will drum up business.
  • The Lexington Hotel Central Phoenix, 1100 N. Central Ave., is open but is seeking Chapter 11 bankruptcy reorganization, court records show.
  • The Clarendon Hotel is starting a new promotion geared toward business travelers that will give hotel guests $20 cash for each night they stay there.

In the 14 months that it has been open, the 1,000-rooom Sheraton also has changed the market.  Phoenix built the hotel to accommodate larger conventions that were expected to meet there.  Although several groups, including the National Rifle Association, brought tens of thousands of new tourists to Phoenix, those bookings have tapered off.

Nationally, “distressed hotels are the way of the world right now because of the debt that they are carrying and because there is no business,” said Jeff Higley, a spokesman for Smith Travel Research.  “There are hotels that are struggling to meet payroll.”

The Phoenix market has been one of the hardest-hit travel markets in the nation.  From January though November, city hotel occupancy fell 12.6 percent and the average room rate tumbled 15 percent, compared with the same period in 2008.  A key barometer slid 26 percent in the city.  Revenue available per room is the amount of money generated per room excluding extras such as food and spa visits.  Only New York’s RevPar figure dropped more in that period.  It declined 28.1 percent, according to Smith Travel.  [Note: To read the full article, visit Fewer hotel bookings pose challenge in downtown Phoenix.]

Advocacy group stresses importance of local companies

[Source: Luci Scott, Arizona Republic] — For every $100 spent in a chain store, $13 remains in the state.  For every $100 spent in a locally owned business, $45 remains in the state.  That’s the message delivered at a Tempe Chamber of Commerce luncheon Thursday by Kimber Lanning, director of Local First Arizona, an advocacy group promoting local companies.  Chandler officials are well aware of the benefits of local buying; the city began a Shop Chandler campaign this year.  Lanning said the figures came out of an Austin-based Civic Economics Study in 2002.

Lanning, owner of Stinkweeds music store in central Phoenix, said Local First Arizona is starting a campaign to persuade people and companies to shift 10 percent of their spending toward locally owned businesses.  That shift would result in 1,600 new jobs and $15 million in new local wages, she said.

Although national chains employ people too, they don’t give to local charities at the same rate, Lanning said.  And local companies hire other local business people such as attorneys, CPAs, sign makers, and Web designers.  Lanning commended the utility APS for recently signing a contract for supplies with Wist Office Products of Tempe rather than using a national chain.

Lanning said the idea that local is more expensive is a myth.   In comparing prices, she discovered, for example, that a big bag of dog food was $4.30 less at the Noble Beast on Camelback Road than at a big box.  In some cases, the big boxes are cheaper, she said, but “they’ve convinced us it doesn’t pay to shop around.”  She encouraged the audience to, when they’re in the dairy section of a supermarket, to buy locally by picking up Hickmans’ eggs and Shamrock milk.

Supporting local independent businesses not only keeps more money in the area, it also promotes a sense of community and enriches the culture, she said.  “People are living here and telling how great it is where they came from,” she said.  “When you move to Phoenix, you shop in big boxes and eat at national chains, and never feel connected to Phoenix… They’re still from Des Moines even though they’ve lived here 20 years.”  Lanning said when Arizonans go to Chicago, they return talking about the great local pizza place they found; they don’t come back raving about Applebee’s. 

Buying locally and creating a sense of community would help keep young, creative people in Arizona, she said.  “Of the top 10 percent of our graduates, 98 percent leave.  The bottom 50 percent all stay.”

In terms of promoting local procurement, Arizona rates low nationally.  Arizona is one of only three states that doesn’t give preference in purchasing to local businesses, Lanning said.  The other two states are Mississippi and Michigan.  Because other states are loyal to their own, Arizona contractors can be put at a disadvantage, she said.  “Kitchell and Sundt can’t get contracts in California, Nevada and Utah, because those states favor the home team,” she said.  Giving preference to companies in Arizona would also help lure business to the state.  “They look whether they’re going to be favored,” she said.  “We’re thinking like it’s 1985 in terms of economic development,” she said. “We need to shift our thinking.”  [Note: To read the full article, visit Advocacy group stresses importance of local companies.]

Despite mayor’s optimism, downtown Phoenix feels real estate, consumer stress

[Source: Mike Sunnucks, Phoenix Business Journal] — Phoenix Mayor Phil Gordon extolled the economic resilience of downtown Phoenix [last] week during this annual “State of Downtown” speech.  Gordon said Arizona State University’s expansion of its downtown campus, construction of the mixed-use CityScape project, and the light rail system are helping the area. He also said while sales tax revenue is down citywide, it is up 13 percent in downtown Phoenix.  “Yes, it’s been a tough year economically for everyone.  You’ve heard all about it, read all about and felt it,” Gordon said.  “But in spite of it all, we’ve still got a lot going on in downtown Phoenix.”

Notwithstanding the mayor’s optimism, downtown Phoenix faces some economic problems.  High-rise condominium developers face questionable financial futures because of troubles with pricing and occupancy.  The Hotel Monroe redevelopment at Central Avenue and Monroe Street remains stalled, and the boarded-up building has become a haven for pigeons.  The total amount of vacant space in downtown Phoenix stands at 1.05 million square feet — up from 630,400 square feet in the first quarter of 2007, according to Colliers International.  The downtown vacancy rate is 13.8 percent, compared with 8.5 percent in first-quarter 2007, according to Colliers.

Downtown also is feeling the effects of pulled-back consumer spending.  A number of downtown businesses have closed because of the recession, including Weiss Guys Car Wash at Grand Avenue and Van Buren Street and the China Inn restaurant at the Colliers Center.

The two downtown pro sports teams also face economic challenges.  The Arizona Diamondbacks had a poor season on the field and drew about 381,000 fewer fans than in 2008, according to ESPN.  The Phoenix Suns have gotten off to strong start on the court — but, like other sports teams, they face hurdles in attracting and keeping fans during the consumer doldrums.  [Note: Read the full article at Despite mayor’s optimism, downtown Phoenix feels real estate, consumer stress.]

The Economic Minute: Phoenix and the Recovery, or Beyond Ground Zero

[Source: Knowledge@W.P. Carey] — In this edition of The Economic Minute, economist Dennis Hoffman says that Arizona could be called “ground zero of the worst recession since World War II.”  The hard economic fact is that Arizona depends on in migration to keeps its economy vibrant, and the state is not exactly a people magnet right now.  But, Hoffman said, this is not the first time the shine has disappeared from Arizona sunshine.  The early ’90s were similar, but the decade that followed was a boom.  Hoffman advised that smart businesses should be preparing for the uptick.  Dennis Hoffman is director of the L. William Seidman Research Institute at the W. P. Carey School of Business.  The Economic Minute is presented at the monthly Economic Club of Phoenix luncheon.  Click here to listen.

Census release ranks Arizona’s poverty rate 13th highest in nation

[Source: Christine Rogel, Cronkite News Service] — Arizona’s poverty rate stood at 14.7 percent in 2008, 13th highest in the nation, according to U.S. Census Bureau data released Wednesday.  In all, 935,000 Arizonans were estimated to live in poverty, defined by the federal government as less than $14,489 per homeowner under 65.  That was up from 876,000 in 2007. “It’s worrisome because behind the numbers are real people and families struggling, and during the recession it has gotten worse,” said Timothy Schmaltz, coordinator for Protecting Arizona’s Family Coalition.  “We’re living in a state where we have food boxes, but they’re smaller than they were a year before because they are serving more people.”

The national poverty rate was 13.2 percent in 2008, up from 13 percent in 2007.  Mississippi had the highest rate at 20.8 percent; New Hampshire’s was lowest at 7.8 percent.  In Arizona, Yavapai and Greenlee counties had rates that fell below the national average: 12.9 percent and 11.3 percent, respectively.  Maricopa County’s rate was 13.4 percent.  The report said that one in three Apache County residents lived in poverty, giving that county the 45th-highest rate among more than 3,000 counties analyzed in the report.

Elizabeth Segal, professor of social work at Arizona State University, said that cuts in social services due to the state’s budget crisis have exacerbated the problem of poverty.  She said early childhood education is key.  [Note: Read the full article at Census release ranks Arizona’s poverty rate 13th highest in nation.]

Viewpoint: A Desert Shade of Green?

[Source: Alec Appelbaum, The Faster Times blog] — The stubborn fact of urban investment in this century involves density.  We can forget about economic growth outstripping environmental cost if we don’t invest in ways to reward people for living, working and playing close together.  That can mean big opportunities for suburban office parks, rural town centers and old-style cities, but it also means some awkward transitions for cities whose layout relies on excessive driving.  Consider downtown Phoenix.

I just went there for the annual expo of the US Green Building Council, which I suspect chose the locale as a Lenin-shipyard proclamation of their message’s reach.  And downtown Phoenix is a warren of womblike hotels and a massive conference center, with artificial efforts at urbane charm.  This includes a greeter simpering scoldingly at me when I run across the street, homeless men on aluminum benches, and a prerecorded voice telling me to “enjoy the greening of downtown Phoenix.”  The simperer reveals how underpopulated downtown remains, and the homeless hint at how underfunded the social network remains.  But the salient thing is that powerful somebodies want downtown Phoenix to not be horrible.

Yes, there are posted instructions on how to cross a street and security guards at the convention hall say I won’t find a bathing suit at the downtown mall.  But I do find one, and there are sidewalks, and the womblike hotels have balconies overlooking actual blocks and streets.  On day two of my visit, I started to get the trendline.  I saw the new light rail glide past the four old buildings, the “clean cab” company rolls around.  But standing on the Sheraton balcony, I saw again that there’s no waterline or mountains to define the horizon.  Without barriers to physical growth on all sides, it will take natural disaster or political will to make places like Phoenix develop strong centers.  Nature will provide the disasters.  Then what?

We’ll have to see whether trends in urbanizing lead to scalable industries.  It dawned on me late on my 24-hr sojourn that the Compass restaurant on 21 (”turning the direction of SW cuisine,” say elevator ads) is a rotating rooftop.  Forty years ago, these were as thorough an urban inevitable as a downtown ballpark is now.  And as I passed Phoenix’s massive and retroish Chase Field, I wondered naifishly: when people need affordable housing and good jobs, why is there enough room downtown for a fat square brick ballpark?  The riddle’s solution involves homes, business incentives for clean manufacturing, and policies that monetize the pleasures of close proximity.  Each city in America will need to work up its own formula.  As I flew home to New York in a November hurricane, I couldn’t quite rouse that old Northeastern smugness.  And that’s a hopeful sign.

Job sprawl high in metro Phoenix

[Source: The Urbanist] — This graph is a jobs index comparing the jobs located more than 10 miles from CBDs to jobs located within three miles of CBDs.  The dark blue sections show the difference in this ratio between 1998 and 2006.  For instance, the ratio for Phoenix is 1:1, meaning Phoenix experienced 100 percent more growth at its urban boundaries than it did in its city center. The lightest areas show the values for cities within the Northern California megaregion.  [Note: Read the full article at Job sprawl in the megaregion.]

Arizona cities drop in Milken Institute’s Best Performing Cities Index

The Milken Institute Best Performing Cities Index ranks U.S. metropolitan areas by how well they are creating and sustaining jobs and economic growth.  The components include job, wage and salary, and technology growth.  How did the Arizona communities (MSAs) of Flagstaff, Phoenix, Prescott, Tucson, and Yuma perform?  Results here.

Phoenix must do more with less, new city manager says

[Source: Scott Wong, Arizona Republic] — David Cavazos has been appointed to succeed City Manager Frank Fairbanks, who is retiring Thursday after nearly 20 years.  Cavazos, a deputy city manager who started with Phoenix 22 years ago, discussed some of the changes he would like to make, the city’s financial woes and how he plans to get past a 2006 travel-abuse scandal that still haunts him.

What kinds of changes can we expect at City Hall? We have to look at the very best person for every job, that everything has to be based on merit and credentials and that we’re going to look both internally and externally for support.  We (the council and I) talked about innovation.  People need to be able to do more with less.  They need to not only be willing to change but be a champion for change.  They need to adapt to change.  One of the things I’ll be focused on is how can we partner with the private sector to do the things that we may not do as well as the private sector.  We got to look at outsourcing.  We got to work very closely with employees, with our labor groups.

The city closed a record $270 million shortfall earlier this year, largely by eliminating jobs and making cuts to services.  Now we hear that this year’s budget gap has widened again by as much as $95 million.  How do you fix that? “We need to work very closely with the mayor and council.  What are the priorities?  Obviously, public safety, neighborhoods, infrastructure, economic development.  (We have to ask) what do we absolutely have to do?  What services are the most important to the community?  The public hearings are very important, talking to people, getting their input and then realizing there will have to be some streamlining.  I think you’ll see some of it at the top, probably right here in the City Manager’s Office.

Is it certain there will be layoffs? I believe that we are going to have reductions in staffing.  There is no way to get around that.  You are going to be able to do some with lease-purchase and hopefully things get better.  [Note: Read the full article at Phoenix must do more with less, new city manager says.]

Phoenix, Los Angeles lead list of job losers

Shedding jobs, not pounds...

[Source: G. Scott Thomas, Phoenix Business Journal] — Los Angeles continues to suffer the nation’s worst employment losses, with 220,000 of its jobs disappearing during the past year, but Phoenix was hit with the biggest percentage drop, according to a report issued Wednesday morning by the U.S. Bureau of Labor Statistics.  Phoenix lost 8.0 percent of its job base during the past year.  The runners-up for that unhappy distinction were Detroit (down 7.8 percent) and Boise, Idaho (down 7.6 percent).

Los Angeles registered the largest raw decline of any labor market between September 2008 and the same month this year.  New York City and Chicago were close behind with respective year-to-year losses of 216,400 and 207,800 jobs.  Ninety-nine of the nation’s 100 biggest markets experienced declines.  The sole exception was the McAllen-Edinburg area on the Texas-Mexico border, which added 3,100 jobs in the past 12 months. [Note: Read the full article at Phoenix, Los Angeles lead list of job losers.]