REPORT FROM THE U.S.—It’s been three months since Arizona Governor Jan Brewer signed legislation that would give the state power to enforce strict immigration provisions. Today the law goes into affect.  

Boycotts have threatened the tourism industry in the state, but data suggests that hotels have been relatively unscathed so far. Occupancy in the state is up 5.2% for June year to date, and increases have actually been improving since the beginning of the year, according to STR data. Occupancy for June YTD was 59.0%, compared to 56.0% the previous year.

“In general, data doesn’t yet disprove anything, and the Phoenix numbers really mirror national numbers,” said Jan Freitag, VP of global development, STR.

Room demand for the state is up 7.9% June year to date. 

While 2009 was a tough year, making the year-over-year comparisons easier, it would appear immigration debate has not stifled hotel improvements this year.

Looking forward

Though future bookings data suggest a slight drop in performance in the Phoenix hotel market, it is likely too early to tell whether the immigration issue will have a profound impact, according to data provided by Rubicon.

For the next 12 months, total occupancy for the Phoenix market is down 2% and new business added is down 15% compared to the same time last year, according to Rubicon data.

“The immigration law and travel boycott has not had a tremendous effect on Phoenix hotel business, but it is likely too early to tell,” said Lauren Rotchford, marketing manager for Rubicon.

Yesterday U.S. District Judge Susan Bolton granted a preliminary injunction, stating that immigration enforcement is the responsibility of the federal government. The injunction temporarily blocked a requirement that police check the immigration status of people stopped for such routine infractions as traffic violations if police suspect they are in the U.S. illegally. It also blocked a requirement for police to detain individuals until legal status was clarified.

Arizona plans to appeal the decision in what could be a long legal battle.

In a move that could ease tourism tension, U.S. Rep. Raul Grijalva, who many hoteliers said started the problem with his calls for a convention boycott to protest the new immigration law, yesterday rescinded the call for boycott and encouraged national groups to return their conventions to the state, according to a story in The Arizona Republic.

But with the law’s toughest provisions in limbo, the long-term effects are difficult to predict.

“Group business (large meetings and conventions) is typically booked months in advance, so we may not see the repercussions until next year,” Rotchford said. “However, hoteliers likely expected a better year than 2009, and they aren’t seeing that in group business this year.”

As of 1 June, group booking occupancy numbers are down 19.4% in July, down 34.2% in August and down 34.6% in September versus the same period last year, according to Rubicon figures. October occupancy is down 23.3% year over year, November is up 16.6% and December is down 29.5%.

At this time, group ADR for the forward-looking six months was down 4.1% year over year, dropping from last month when it was down 3.7%.

Transient business bookings continued to improve with occupancy numbers up year over year for every month through the end of the year, Rotchford said. For the next six months, transient occupancy is up 9.9% year over year, but transient ADR for the next six months is down 5.1% year over year.

While occupancy and demand are better than last year (on easy comparables), it is difficult to know if the recovery would have been stronger without the immigration brouhaha, Freitag said.

“Overall our numbers suggest that Phoenix is very much on track with the nation,” he said. “Demand is up, supply is up a little bit and occupancy is fairly strong. … But the impact should not be underestimated. It’s fair to say there has been some impact on group business, but our data doesn’t show it yet.”