Tourism Provides Most of Sedona’s Tax Revenue


March 15, 2019


yogaWith the success of the SIFF and Sedona MTB Fest, it’s time to rejuvenate with the Sedona Yoga Festival March 14-17 then witness superstar pianist Yuja Wang at the Performing Arts Center March 24 with Chamber Music Artistic Director Nicholas Canellakis. Small cities rarely attract events such as these. We’re fortunate a robust tourism industry makes them possible.

Now, there is more good news: tourism contributes even more of our city tax revenues than previously estimated. A new analysis by the City of Sedona shows 77 percent of sales tax revenues come from visitors, while Sedona residents pay 23 percent.

The last study in 2014 estimated visitors contributed 65 percent and 35 percent by residents.

The analysis was particularly rigorous – separating Uptown retail from retail in other parts of the city. For example, there was differentiation between amusement-category businesses catering to visitors (tours), versus those that do not (movie theaters). Surveys were conducted to businesses, tax data was analyzed by seasons, and Census and other databases were used to extract meaningful conclusions.

For another example, in the Restaurant and Bars category, 24 Sedona restaurants provided an estimate of the percentage of visitors compared to residents in their customer base. The data was also evaluated based on the lowest month’s tax revenues for the category (February) and determined the incremental increases each month over the lowest month (tax revenues averaged 36% higher than the lowest month). The study estimates that residents pay 18 percent of total restaurant and bar taxes while visitors pay 82 percent. Imagine, without visitor spending, Sedona might have 80% less restaurants!

A similarly thorough analysis for health and personal-care stores estimated tax sources as 51 percent residents and 49 percent visitors.

Some categories are presumably 100 percent visitors, such as short-term rentals. Others, such as permits related to churches, were presumed to be 100 percent local. We divided many other categories by percentages based on data, surveys, and local knowledge.

We know tourism can make us feel loved to death with overcrowding, traffic and environmental concerns, and as we move toward sustainability, we keep tourism’s economic impact in mind as part of a sustainable balance – finding the ‘sweet spot’.

Importantly, we saw sustainable tourism elements at work during major spring festivals.

• At the Sedona MTB Fest, riders avoided wet trails to prevent damage and donated bikes to West Sedona School elementary students.
• The Sedona Lodging Council, a Chamber Affinity Group, collectively paid to provide the Sedona MTB Fest a free shuttle, helping mitigate the impacts of two excellent events being help over the same weekend (which we all know isn’t ideal). The shuttle helped to keep cars off the road which meant less congestion during a busy weekend.
• SIFF participants are an excellent example of the ‘less is more’ group we strive for – visitors who stay longer and share an awareness of our environment and quality of life.

Combined with the latest news on how tourism pays most of our sales taxes, keeping our taxes low (or in the case of city property tax, nonexistent), it’s clear our tourism-based economy is thriving while we make progress on sustainability. That’s what a balanced approach is all about!

–Jennifer Wesselhoff, President/CEO