At a meeting between the Sedona City Council and the Sedona Chamber of Commerce on March 29, Councilman Brian Fultz queried whether the city was getting a good return on its investment from its annual contribution to the chamber’s Uptown visitor center.

“In a world of limited resources, I want to see us spend our dollars most effectively that achieves the objectives that we mutually want between the business community and the city,” Fultz said. “If we had 150,000 visitors walking through the visitor center over the course of a year, and we have, conservatively, 3½ million tourists here, that means the visitor center is serving 4% of the visitors that come to Sedona, and they’re already here. And I just wonder out loud, would you rather spend $600,000 — which, by the way, is about 38% of the entire budget committed to the tourism bureau this year — do you want to spend that much of the budget on serving people who are already here, as opposed to attracting people you’re saying you want to make aware of this community.”

“We’re spending a large chunk of money serving a very small percent of the visitors to our town,” Fultz added. “There’s no sacred cows.”

Fultz raised the questions: What ROI does the city get from its investment in the visitor center? How does that compare with its ROI for other city programs, such as the trailhead shuttle?

Visitor Center

Measuring how many visitors are in Sedona and monitoring what they do is difficult. The lack of precise data about visitor behavior has been a frequent point of debate between the chamber and the council, with council members often requesting data that may not be possible without a dedicated, paid study.

The visitor center serves 200 to 500 tourists daily, with 500 to 600 per day typical during Sedona’s high season in March and April, and roughly 150,000 tourists per year.

This is half as many as it served prior to the COVID-19 pandemic. The number of visitor center walk-ins fell from 282,220 in Fiscal Year 2019 to 157,721 in Fiscal Year 2020. During the most recent full fiscal year, the visitor center assisted 135,840 walk-ins and 11,550 calls.

The city’s budget for the visitor center was $510,000 in FY20, $410,000 in FY21, $520,178 in FY22 and $542,984 in FY23. Cost per visitor to the city on the basis of the FY22 budget and number of visitors served was $3.53.

The majority of tourists who walk into the visitor center ask for either directions or for recommendations for a dining establishment or other activity, according to the chamber. Chamber data shows that 81% percent of tourists shop while in Sedona and 80% eat at one of the city’s restaurants.

If 70% of 150,000 visitors spend an average of $50 each — the average cost of a meal at an upscale restaurant like those in Uptown — as a result of a visitor center recommendation, the visitor center will create $5.25 million in sales and a corresponding amount of sales tax revenue for the city. The average amount of economic activity generated by a visitor to Sedona is $286.

Calculated at the lower Yavapai County sales tax rate, the city’s 2023 investment in the visitor center would be fully repaid through sales tax revenues if the visitor center generated $5,512,528 in economic activity. $5.5 million represents about one half of one percent of Sedona’s tourist-generated economic activity.

The city has traditionally expected a substantial return on its investment in the chamber’s destination services program as a whole, although it has lowered its expectations over the past four years:

• In FY20, the city budgeted for $2,492,500 in payments to the chamber and $1,870,127 in visitor-generated revenues as a result of that investment, for a return rate of 75%.
• In FY21, the city budgeted for $2,446,060 to the chamber and $1,596,251 in revenues, for a return rate of 65%.
• In FY22, the city budgeted for $2,100,000 to the chamber and $1,107,584 in revenues, for a return rate of 53%.
• In FY23, the city budgeted for $1,670,211 to the chamber and $135,386 in revenues, a return rate of 8%.

Trailhead Shuttle

From March 2022, when service was inaugurated, through March 2023, Sedona’s trailhead shuttles saw 283,000 boardings. A round trip counts as two boardings, so the shuttle served roughly 140,000 people, similar to the number served by the visitor center. Like the visitor center, the shuttle serves only tourists who are already in Sedona and does not play a role in attracting visitors of any specific type to the city.

In fiscal year 2023, the city’s budget for its transit program was $2,598,390 — not including an additional $75,000 in transit marketing funds paid to the Chamber of Commerce to promote the shuttles — bringing the program’s total cost to $2,673,390. On Oct. 12, the council discussed the likelihood that the program’s FY24 budget would be in the neighborhood of $4 million. Cost per visitor to the city on the basis of the current year’s budget is $19.09.

As the city does not charge riders for using the free trailhead shuttles, and as riding the shuttle takes visitors out of town to put them on trails rather than keeping them in town to spend money in businesses, the city’s return on its investment for the trailhead shuttle system is zero.

Sedona Transit Manager Robert Weber did not respond to inquiries about what the shuttle’s calculated ROI was.

“Our ROI comes from all the residents telling us they appreciate our work to restore their neighborhood, from the over 283,000 passenger boardings we saw in a year and from the emissions reduction of 286 metric tons of CO2 in the first year,” city communications manager Lauren Browne stated.

Sedona’s Climate Action Plan states that the city’s total estimated annual greenhouse gas emissions are 165,800 metric tons.

Weber has said that the purpose of the trailhead shuttles and the city’s related proposal for a microtransit system is to eliminate parking complaints from residents and to gather data to inform future transit operations rather than to relieve congestion or provide the city with a return on its investment.

“They weren’t deployed, really, to help traffic,” Weber told council regarding the trailhead shuttles on Oct. 12. “They were deployed at the request of the citizens … to deal with these public safety issues and return some of these neighborhoods to some semblance of normalcy, and I think they did that, and that’s what they were designed to do.”

“It’s almost like firing a probe that covers your entire city,” Weber said of the microtransit system during the council’s January priority retreat. “The problem with our community is that we don’t have any data because we don’t have a transit system. So I think this is a great way to start.”

At a council meeting on Nov. 15, Weber explained that public transit systems do not normally come close to breaking even. Of the fare-based microtransit proposal, he said, “I would be happy to see at least 15% fare box recovery from our operating costs, which would be a nice start.”

‘Apples and Oranges’

When asked about the discrepancy between the shuttle’s 0% ROI compared to the more substantial ROI provided by visitor center, Fultz said, “You’re trying to compare apples and oranges. They’re two very different objectives … neither of those expenditures are intended to drive a specific ROI.”

“It was not about any type of a financial ROI,” Fultz added. “It’s a very difficult comparison to make and not one that I would consider germane.”

At the March 29 meeting, Councilman Pete Furman referred to the tourism bureau’s promotion of the trailhead shuttle as “probably one of the most important jobs that I would think you have this year, and I’m disappointed to see … that we’re not properly motivating our partners out there to dig in and use these things.”

“Certainly there is no fare-box recovery for the shuttle system at this time,” Furman said afterward in regard to the shuttle’s lack of financial return. “But I think there is immense value in getting cars off the streets … Sedona is striving to become a ‘park once and walk, bike or use the transit system’ kind of place. For visitors and residents both.”