Economic impacts of Mexican visitors to Arizona: 2001

              THE ECONOMIC IMPACTS OF MEXICAN VISITORS TO ARIZONA: 2001







Alberta H. Charney, Ph.D. and Vera K. Pavlakovich - Kochi, Ph.D.*







July 2002







Economic and Business Research Program Karl Eller College of Business and Public Administration University of Arizona Tucson, Arizona 85721-0108 (520) 621-2291 and fax (520) 621-2150 http://ebr.eller.arizona.edu







*







The authors are, respectively, with the Economic and Business Research Program in the Eller College of Business and Public Administration and the Office of Economic Development at the University of Arizona.







THE ECONOMIC IMPACT OF MEXICAN VISITORS TO ARIZONA EXECUTIVE SUMMARY



Mexican visitors are the largest component of day-trip visits to Arizona. In 2001, over 23 million of Mexican visitors came to Arizona in 10.49 million parties. Almost exclusively (over 99 percent), Mexican visitors come from the neighboring state of Sonora. This is the third study since 1977-78 that in a systematic way measures economic impacts of Mexican visitors' spending to the economy of Arizona. It is based on a year-long survey of Mexican visitors returning from Arizona at six border ports of entry (San Luis, Lukeville, Sasabe, Nogales, Naco and Douglas) and two international airports in Phoenix and Tucson during 2001. With minor modifications the study replicates the research methodology applied in the last study of 1991 impacts, and thus allows for comparison of amounts and geographical distribution of spending between the two periods.







Reasons for visiting



The primary reason for visit is shopping, which accounts for 72 percent of all visitor parties. Work is the primary reason for 14 percent of all visitor parties, while visiting family is the primary reason for 8 percent. Other reasons are vacation, medical, business and personal, accounting between less than 1 percent and 3 percent of visitor parties. In comparison with the 1991 study, shopping as the primary reason for visiting has increased only slightly from 70.8 percent.







Total expenditures and average per party spending



During 2001, Mexican visitors to Arizona spent an estimated $962.9 million. Out of that amount $399 million was spent at Arizona's department stores and other clothing and ware stores, and $239.7 million at grocery stores. These two categories account for about two-thirds of all expenditures. In comparison with the 1991 study, the 2001 expenditures represent a 44.1 percent increase in visitor spending (from $668.2 million). Data suggest that Mexican visitors' spending increased in department and grocery stores, restaurants, gasoline stations, and particularly in air travel and car rental services, although the last two categories account for a relatively small portion of total spending (5.9 percent). The total spending for medical-related services declined in comparison with 1991 study. On average, a visitor party spends $91.7 in Arizona, although there are substantial differences by mode of travel. Pedestrians spend on average $39 per party, compared to ii







$99 per party for visitors entering by motor vehicles and $1,317 per visitor party traveling by air. In comparison with 1991, per party expenditures declined by 8.1 percent, except for visitors entering through Phoenix, San Luis and Sasabe.







Geographic distribution of expenditures



The highest portion of all expenditures (about 31 percent or $301.6 million) is spent in Pima County. Santa Cruz County receives about 25 percent, followed by Yuma County (20 percent), Maricopa County (13 percent) and Cochise County (10 percent). In comparison with the 1991 study, Santa Cruz County has lost its first place to Pima County, while Maricopa County experienced the largest percentage increase in expenditures from $16.4 million in 1991 to $128.6 million in 2001. Both Cochise County and Santa Cruz County experienced a decline in Mexican visitors' spending.







Job and wage impacts in Arizona



Mexican visitors' spending in Arizona generates close to 35,200 jobs and over $628.4 million in wages. These figures include direct jobs and associated wages in retail establishments, eating and drinking places and other sectors directly serving Mexican visitors, as well as jobs and wages generated as these moneys are re-spent in the local economy. In comparison with 1991 study, about 12,800 more direct jobs in Arizona are related to Mexican visitors' spending in 2001. Total direct wage impact increased by 184 percent. These results in parat, however, reflect more detailed and updated models used in 2001 study. The largest job impact is generated in Pima County where close to 9,600 jobs depend on Mexican visitors' spending. In Santa Cruz County and Yuma County Mexican visitors' spending generates over 8,900 and 7,200 jobs respectively. About 3,550 jobs in Cochise County and another 3,160 jobs in Maricopa County depend on Mexican visitors' spending.







Total sales impact



Mexican visitors' spending generates a total of $1.584 billion in sales. This amount includes direct expenditures of $962.9 million and the ripple effect as these moneys were respent in the local economy.







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The largest economic impact of Mexican visitors' spending occurred in Pima County with 33 percent of the total sales impact. Santa Cruz County received 23 percent of the total sales impact, followed by Yuma County (19 percent), Maricopa County (15 percent) and Cochise County (10 percent). Because of pronounced differences among Arizona counties, Mexican visitors' related sales have very different importance in the overall local sales. The percent of taxable sales that are related to Mexican visitors' spending range from as high as 47.3 percent in Santa Cruz County to as low as 0.5 percent in Maricopa County. In comparison with the 1991 study, Pima County appears as the major recipient of Mexican visitors' spending and associated economic impacts. In 1991, the three border counties ? Santa Cruz, Yuma and Cochise ? received more than 80 percent of total expenditures by Mexican visitors. By 2001, their combined share of total sales declined to 62 percent.







Impact of extension of the border zone to 75-mile (including Tucson)



Of all visitors to Tucson, only 12.2 percent did not have the I-94 document; that is, they took advantage of the extension of 75-mile border zone. Data also suggest that those visitors tend to come from more than 50 miles south of the border with Sonora, have lower incomes, and spend less per party than visitors with the I-94.







Other findings



Except for shifts in geographical distribution of spending and associated economic impacts from border counties toward Tucson/Pima County and Phoenix/Maricopa County, the general pattern of Mexican visitors' spending has remained mostly unchanged. The predominant primary reason for visits remains shopping, and generally short (daily) trips prevail. Familial ties play the most important source of information, and the activities during visits are limited to only a few attractions.







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TABLE OF CONTENTS ACKNOWLEDGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LIST OF SPONSORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I. II. III. IV. V. VI. VII. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RESEARCH DESIGN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MEXICAN VISITOR PARTY PROFILES . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL EXPENDITURES AND PER PARTY EXPENDITURES . . . . . . . . GEOGRAPHIC DISTRIBUTION OF EXPENDITURES IN ARIZONA . . . . ORIGIN OF VISITORS AND MONTHLY INCOME BY PLACE OF RESIDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PROFILES OF VISITORS TO SIX ARIZONA CITIES . . . . . . . . . . . . . . . . . viii x 1 4 8 16 23 26 29 33







VIII TOTAL ECONOMIC IMPACTS OF MEXICAN VISITORS ON ARIZONA AND FIVE COUNTIES . . . . . . . . . . . . . . . . . . . . . . . IX. MEXICAN VISITOR SPENDING AS A PERCENT OF TAXABLE SALES, BY COUNTY, AND REVENUE IMPACTS FOR PIMA COUNTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MARKETING INFORMATION ABOUT VISITORS TO PIMA COUNTY AND TUCSON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ANALYSIS OF VISITORS WITH AND WITHOUT I-94 VISAS . . . . . . . . . SUMMARY AND CONCLUSIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . APPENDIX: SURVEY INSTRUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .







36 39 42 47 50 51







X. XI. XII.







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LIST OF TABLES 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. Alien Border Crossings at Six Arizona Border Ports of Entry . . . . . . . . . . . . . Quarterly Sampling Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sample Size by Port of Entry and Transportation Mode . . . . . . . . . . . . . . . . . Summary of Entrants into Arizona from Mexico . . . . . . . . . . . . . . . . . . . . . . . Computation of Alien Parties and the % Parties Used to Weight Data, by Port . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Relationship Between Entry and Exit Port . . . . . . . . . . . . . . . . . . . . . . . . . . . . Party Size and Percent Headed by Males, by Age Group, by Port. . . . . . . . . . Age Distribution, by Port of Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mexican Visitor Parties, by Mode of Transportation, by Port of Entry . . . . . . Length of Stay in Arizona, by Mode . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. Frequency of Nights Spent in Arizona, by Port of Entry . . . . . . . . . . . . . . . . . Overnight Visitors Type of Accommodation . . . . . . . . . . . . . . . . . . . . . . . . . . Monthly Income Distribution, by Mode of Transportation . . . . . . . . . . . . . . . Monthly Income Distribution, by Port of Entry . . . . . . . . . . . . . . . . . . . . . . . . Reason for Visit, by Mode of Travel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reason for Visit, by Port of Entry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reason for Visit, by Length of Stay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Number of Nights, by Reason for Visit, by Mode . . . . . . . . . . . . . . . . . . . . . . Primary Household Occupations, by Mode of Transportation . . . . . . . . . . . . . Total Direct Expenditures of Mexican Visitors in Arizona: 1977-78 vs. 1991 vs. 2001 by Port of Entry . . . . . . . . . . . . . . . . . . . . . Mexican Visitor Parties to Arizona: 1977-78 vs. 1991 vs. 2001 by Port of Entry . . . . . . . . . . . . . . . . . . . . . Mexican Per Party Expenditures in Arizona: 1977-78 vs. 1991 vs. 2001 by Port of Entry . . . . . . . . . . . . . . . . . . . . . Expenditure per Category, 1991 vs. 2001. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Per Party Expenditures, by Category, by Mode . . . . . . . . . . . . . . . . . . . . . . . . Per Party Expenditures, by Reason for Visit, by Mode . . . . . . . . . . . . . . . . . . Spending per Party, Total Spending, by Monthly Income Group. . . . . . . . . . . Spending per Party, Total Spending, by Distance Traveled . . . . . . . . . . . . . . . Spending per Party, Total Spending, Day Trip vs. Overnight Visitors. . . . . . . Seasonality of Mexican Visitors' Travel to Arizona. . . . . . . . . . . . . . . . . . . . . Expenditures by County and City in Arizona, 1991 and 2001 . . . . . . . . . . . . . Origin of Visitors and Monthly Income by Place of Residence . . . . . . . . . . . . Reason for Visit, by Destination City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Party Characteristics and Length of Stay, by Destination City. . . . . . . . . . . . . Visitor Party Cities of Origins, Percent of Parties, Percent of Expenditures, and Expenditures per Party for each Destination City. . . . . . . . . . . . . . Percent of Expenditures, by Category, for Five Major Destination Cities . . . . Direct Economic Impacts, by County, and for Arizona . . . . . . . . . . . . . . . . . . Total Economic Impacts, by County, and for Arizona . . . . . . . . . . . . . . . . . . . Mexican Visitor Spending as a Percent of Taxable Sales, by County . . . . . . . 3 4 5 5 6 7 8 8 9 10 10 11 11 12 12 13 13 14 15 16 17 17 19 20 21 21 22 22 23 24 28 29 30 31 32 34 34 36







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LIST OF TABLES (CONTINUED) 40. Day Trip Parties and Day Trip Visitor Expenditures: Tucson and Pima County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41. Where Mexican Visitors to Tucson Shopped . . . . . . . . . . . . . . . . . . . . . . . . . . 42. Tucson Attractions Attended by Mexican Visitors . . . . . . . . . . . . . . . . . . . . . . 43. How Mexican Visitors Learned About Tucson . . . . . . . . . . . . . . . . . . . . . . . . . 44. Portion of Mexican Visitors with I-94 Visas, by Port . . . . . . . . . . . . . . . . . . . . 45. Percent of Mexican Visitors With and Without I-94 Visas Who Visited Tucson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46. Monthly Income Distribution of Mexican Visitors With and Without I-94 Visas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47. Parties, Expenditures, and Per Party Expenditures of Visitors to Tucson, With and Without I-94 Visas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48. Estimated Impact of the 75-Mile Border Zone on Tucson . . . . . . . . . . . . . . . . 39 40 41 41 42 43 43 44 45







LIST OF FIGURES 1. 2. Map of Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Map of Sonora, Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 27







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ACKNOWLEDGEMENTS Too many individuals contributed their time and knowledge to this project to thank all of them by name. Our greatest appreciation goes to Augustine `Augie' Garcia, Director of the Tucson-Mexico Trade Office of the City of Tucson. It was Augie who managed to assemble the necessary research funds from a wide variety of sponsors and it was he who provided the impetus and inspiration for the study. We also want to thank all of the sponsors to this project. It goes without saying that without their financial support, this project would not have been possible. But the thanks go beyond that. Projects like this are typically sponsored by a few or several entities, yet the information derived from the project benefits much a broader community. A complete list of sponsors follows these acknowledgements. A special thanks is due to Ned Zolman, Director of Budget and Research, City of Tucson, who was instrumental in getting the proposal and contract process started. Three other people in the Tucson-Mexico Trade Office also deserve thanks. Jose Felipe Garcia, Economic Development Specialist, took us to Nogales, introduced us to key personnel with the U.S. Customs Service and the Immigration and Naturalization Service. Amy Echols Starkey, Special Projects Assistant, was our main contact person with the Tucson-Mexico Trade Office. She acted as our liaison with the City of Tucson Office of Procurement to make sure the funds kept flowing, she substantially reduced the administrative responsibilities that we would have otherwise had, and she was absolutely wonderful to work with. We doubt if Amy knows how much she contributed to this study. Also, we would like to thank Martha Tadlock, Administrative Assistant, who provided invaluable accounting assistance throughout the process. Numerous persons with the Immigration and Naturalization Service and the U.S. Customs Service were extremely helpful. We cannot list them all, in part, out of a fear that we will forget someone. Three persons, however, have to be mentioned by name. Joe Agosttini, National Recruiter with the U.S. Customs Service, Department of Treasury, located safe places in Nogales where students could survey, showed us around all the ports of entry around Nogales, and gave us several other contacts needed for the study. Rafael H. Garcia, Chief Inspector, also with the U.S. Customs Service, shared data with us and provided useful insights into border crossing patterns. Lisa Roney, Director of Research and Evaluation, and Johnny Williams, Executive Associate Commissioner for Field Operations, Immigration and Naturalization Service of the U.S. Department of Justice, were instrumental in getting and ensuring funding to this project. Rebecca Kraus, Policy Analyst, was our liaison with INS. Her support of the project and her patience during the project delays were greatly appreciated. Three staff members of the Eller College of Business have to be mentioned. Melissa Manning, Kitty Stoops and Pat Kiser processed all the paperwork needed for car reservations, travel authorizations, and travel reimbursements. It is not an understatement







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to say that they were required to generated piles of paperwork to get the student surveyors to the border each week. They also managed the several fund accounts associated with this project. So much gratitude goes to the four diligent students that stayed with the project and surveyed every week of the calender year of 2001: Eleanora Sanchez, Victor Valdez, Raul Rojas, and Keith Mueller. Keith also acted as the coordinator who scheduled trips to each port of entry, contacted port authorities to get permission to survey, alerted port of entry personnel of survey team arrivals, made car reservations at the University's car pool, and handled some of the paperwork. This project would not have been possible with out these dedicated students. Two other students came on board toward the end of the project to enter data and to do some additional data work, such as coding occupations from the survey and determining distance to the border of various Mexico cities and towns. These two students, Juan Esparza and Andrew Woodard, helped to get the data analysis started at a fast pace. Thanks go to Mark Zupan, Dean of the Eller College of Business and Public Administration, who has consistently supported research applicable to Arizona. Also, we need to thank Marshall Vest, Director of the Economic and Business Research Program, for his support of the project and his willingness to release substantial amounts of personnel time to do the analysis. Finally, gratitude go to my predecessors, Nat deGennaro and Randall Hopkins, who undertook the two earlier studies of Mexican visitor studies. Nat's first study set the standard for those of us who followed and Randy's study has literally been used as the blueprint for the current analysis. Alberta H. Charney and Vera K. Pavlakovich-Kochi May 2002







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LIST OF SPONSORS Diamond: Contributors of more than $20,000 U.S. Department of Justice, Immigration and Naturalization Service University of Arizona, Eller College of Business and Public Administration, and the Economic and Business Research Project (in-kind services) Platinum: Contributors of $10,000 or more Arizona Office of Tourism City of Tucson Metropolitan Tucson Convention & Visitors Bureau Gold: Contributors of $1,000 or more El Imparcial Premier Hotel Group Westcor Shopping Centers Silver: Contributors of $500 or more Foothills Mall Tucson Airport Authority Bronze: Contributors of $150 or more Pima Heart Physicians Viscount Suite Hotel







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I. INTRODUCTION Travel and tourism are an important industry in the Arizona economy and undoubtedly, Mexican visitors are the largest component of day-trip visitors to Arizona. The contribution of Mexican visitors' spending to the economy of Arizona has long been recognized, although data to demonstrate the extent of that importance are not readily available. Tourism is a difficult industry to study, because tourism and tourism expenditures are inextricable from the economic activity of Arizona residents. For example, most tourism activity occurs in the retail and service industries and there is substantial data for these industries. However, none of the traditional sources of data, e.g., the Bureau of Economic Analysis and the Bureau of the Census, U.S. Department of Commerce, the U.S. Department of Labor, decompose services and trade economic activity into activity generated by US residents vs. non-U.S. residents. Therefore, special studies have had to be conducted periodically to assess travel and tourism. In 1977-78, DeGennaro and Richey (1978) conducted the first study of the economic impact of Mexican Visitors to the Arizona Economy. They estimated that Mexican visitors spent more than $315 million in 1977-78 in the Arizona economy. This study was updated and expanded by Hopkins (1992) for calendar year 1991. In this study, Mexican visitors to Arizona were estimated to have spent $688.3 million, generated 12,407 jobs and $142.9 million in wages for Arizonans. In another study, Pavlakovich and Kim (1991) focused only on the maquiladora industry in Sonora's border towns and estimated that maquila employees alone spent directly about $33.6 million in Arizona in 1989, accounting for between 6.1 and 10.6 percent of total monthly retail sales in Arizona's border communities. More recently, Pavlakovich, Charney, Vias and Weister (1997) have estimated that about $41 million was spent in Arizona's stores by Sonora and Sinaloa's growers and their families in 1995-96, generating 918 jobs, $10.3 million in wages and total sales of $88.6 million. A study of overnight visitors to Pima County was conducted by Charney and Leones (1997). They focused on overnight visitors because this category of visitors could be identified by at randomly selected hotels and at randomly selected homes of Pima County residents. They estimated for 1995-96 that total overnight visitors spent $909 million in Pima County. By limiting the definition of `visitors' to overnight visitors, this study did not capture the economic impact of the day-trip visitor. Undoubtedly the largest component of the day-trip visitor to Arizona is the Mexican visitor. With six Arizona cities and towns located on the border with Mexico, there are very close economic and familial ties between Arizona and Mexico. The ties are so close that a set of indicators have even been developed to measure the activity of the "border region" (Pavlakovich-Kochi and Sonnett, 2001). This study is designed to update the last comprehensive study conducted in 1991. Since then a number of major events took place that might have affected the volume, geography and expenditure pattern of Mexican visitors to Arizona. First of all, the North American Free Trade Agreement (NAFTA) was inaugurated in 1994 to gradually eliminate import tariffs between the United States and Mexico (and Canada) during a period of 15 years. Under NAFTA, many U.S. products, including a variety of consumer goods, have become available in Mexico, and thus presumably diminished the need for some cross-border outshopping by Mexican visitors.







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Another event that profoundly affected Mexican visitors was the 1994-95 peso devaluation, which reduced the average purchasing power of Mexican residents by 40 percent. Experience with previous devaluations has shown that it takes several years before the purchasing power of the general population approximates the previous level, if at all. The last decade has seen continuous expansion of the maquiladora sector in Sonora's border cities (Nogales, San Luis and Agua Prieta), as well as in Sonora's interior cities (Hermosillo, Guaymas and Ciudad Obregon). Although a majority of employees receive minimum wages, there has been a growing percentage of Mexican nationals among technical and administrative positions. It is expected that maquiladora employees continue to constitute an important component of cross-border shoppers in Arizona's border communities. The last decade also has been marked by increasing cross-border cooperation between Arizona and Sonora, traditionally the major source of Mexican visitors to Arizona. In 1993, under the auspices of the Arizona-Mexico Commission and its sister organization, Comisi󮠓onora-Arizona, a binational strategic economic development project was initiated (PavlakovichKochi and Sonnett, 2001) with a major goal to promote economic linkages by facilitating movement of goods, services, people and information between the two states. Although a direct contribution of these new developments on the flows of visitors from Sonora is difficult to assess, there is no doubt that this increased government-supported cooperation has provided a new impetus for cross-border business interactions. Furthermore, this increased awareness of opportunities from a closer cooperation within the NAFTA framework has spun a number of local and regional initiatives, such as the City of Tucson's Mexico Trade Office. The recent extension of Arizona's "border zone" to 75 miles to include Tucson exemplifies an increased interest in encouraging more visitors from Mexico, and Sonora in particular, to come and do business in Arizona. The Immigration and Naturalization Service (INS) of the U.S. Department of Justice provides data on border crossings at Arizona's six border ports of entry (BPOE). Data are reported for "aliens," which is interchangeably used with "non-U.S. citizens." Although it is assumed that a majority of alien crossers are residents of Sonora, in this part of the study we will continue to use the INS terminology. Table 1 shows the number of aliens crossing the US-Mexico border from 1977 through 2001. Border crossings of non-US citizens have increased 16.5 percent since 1991, although there have been occasional year-to-year decreases during the decade. The Immigration and Naturalization Service (INS) data show a 10.7 percent decline between 2000 and 2001. This decline is due to a combination of factions. First, the 2001 recession in the US was mirrored by a recession in Mexico. Mexico's Indicator of Industrial Activity showed declines from February 2001 through January 2002. Mexico's Overall Index of Economic Activity showed very low growth rates during the first four months of 2001, followed by negative growth from May through January 2002 (Mexican System of National Accounts, obtained from The Conference Board Mexico Business Cycle Indicators). Mexico's recession was further impacted by the events of September 11, 2001, which was evidenced by comparatively larger declines in both the Index of Industrial Activity and the Overall Index of Economic Activity during September of 2001. Border crossings in late 2001 may have also been impacted by the change in visa formats.







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Mexican residents not getting the new visa cards before September 30, 2001 would not have been able to cross until at least they met with INS officials and filed new paperwork. Table 1 Alien Border Crossings at Six Arizona Border Ports of Entry*



Alien Annual Border Percent Crossings Change 13,314,500 14,393,600 8.10 15,004,800 4.25 16,229,700 8.16 17,542,700 8.09 16,840,100 -4.01 14,734,500 -12.50 15,368,100 4.30 14,097,300 -8.27 14,417,000 2.27 14,667,000 1.73 17,438,900 18.90 20,419,400 17.09 Alien Border Crossings 20,821,800 19,648,799 17,947,288 18,845,883 23,198,614 22,347,355 21,614,258 23,241,839 23,965,361 24,318,630 25,651,566 22,899,843 Annual Percent Change 1.97 -5.63 -8.66 5.01 23.10 -3.67 -3.28 7.53 3.11 1.47 5.48 -10.73







Year 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989







Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001







*The border cities include Douglas, Lukeville, Naco, Nogales, San Luis and Sasabe. Source: U.S. Department of Justice, Immigration and Naturalization Service. Unpublished Data







This study measures the impacts of the Mexican visitors on the economy of Arizona in 2001. It provides a) estimates of the total economic impact of Mexican visitors on the Arizona economy and its counties, b) estimates of total direct expenditures of Mexican visitors to Arizona, c) estimates of visitor spending, by type of expenditure and by party, and d) visitor profiles of Mexican visitors both by port of entry and by destination city/county. This study also e) collects data regarding Mexican visitor activity in Tucson that was not included in the previous study, f) estimates day-trip Mexican visitor expenditures and trip patterns, and examines the impact on Tucson of the 75 mile border zone.







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II. RESEARCH DESIGN Mexican visitors were surveyed as they exited at all six ports of entry/exit along the Arizona US-Mexico border and at Arizona's two major commercial airports. Surveys were administered via interviews by bilingual University of Arizona students throughout the 2001 calender year. The sampling schedule (Table 2) used in this study follows closely to that used in the 1992 study, with the addition of trips to the Phoenix International Sky Harbor Airport. Table 2 Quarterly Sampling Schedule



Week 1 2 3 4 5 6 7 8 9 10 11 12 Trip 1 Nogales Nogales Nogales Nogales Nogales Nogales Nogales Nogales Nogales Nogales Nogales Nogales Trip 2 Lukeville Douglas Naco San Luis Sasabe Douglas Lukeville San Luis Naco Douglas Sasabe San Luis Trip 3 Tucson Airport Phoenix Airport Tucson Airport Phoenix Airport Tucson Airport Phoenix Airport







Copies of the survey in both English and Spanish are in the Appendix. The survey is very close to that used in the 1992 study. Two types of questions were added, however. The first set asks questions designed to identify activities and patterns of Mexican visitors who visit Tucson. A second set of questions was designed to assess the effect of expanding the border zone to 75 miles. Initially, there was a question that asked each visitor if they had an I-94 Visa. Many of the respondents (even those that had one) did not immediately recognize the term `I94.' To solve this problem, the question was changed to ask if they had the type of visa that would permit them to travel to Phoenix. A `yes' answer to this question is equivalent to having an I-94 Visa. The survey sample size is 2,612. Table 3 shows the sample decomposed by port and by mode of travel. In this study, no attempt was made to stratify the sample to match actual border crossings by aliens at each port of entry. Rather, the traditional survey method is used: visitation data is analyzed by port, and weighted across ports according to border crossing data obtained from secondary sources. This is comparable to conducting a perfectly designed stratified sample. Determining weights to use for the study was straightforward, except for pedestrian border crossers. The INS provides data for border crossings, by port of entry, for both US citizens and aliens. This data is provided for each port of entry along the US-Mexico border and at international airports. Airport data is provided specifically for flights departing Mexico and 4







landing at major airports in Arizona. Table 4 summarizes border crossing figures from the INS for 2001. Table 3 Sample Size by Port of Entry and Transportation Mode



Port of Entry Douglas Lukeville Naco Nogales San Luis Sasabe Tucson Phoenix Total Motor Vehicle Transportation Mode Pedestrian Air 304 75 89 13 95 0 918 46 746 29 13 6 0 0 0 0 2,165 169 Total 0 0 0 0 0 0 156 122 278 379 102 95 964 775 19 156 122 2,612







Table 4 Summary of Entrants into Arizona from Mexico



Border Crossing Figures for six Arizona Cities 2001 Aliens as % Total U.S. Citizens Aliens of Crossings 5,994,636 2,390,011 3,604,625 60.13% 1,366,866 1,003,968 362,898 26.55% 1,041,503 215,628 825,875 79.30% 14,088,506 2,845,166 11,243,340 79.81% 8,684,818 1,895,443 6,789,375 78.18% 96,225 22,495 73,730 76.62% Aliens by Port as % of all Aliens 15.64% 1.57% 3.58% 48.77% 29.45% 0.32%







Douglas Lukeville Naco Nogales San Luis Sasabe







Air Passenger Arrivals from Mexico at Arizona Airports 2001 Total U.S. Citizens 14,775 30,470 476,893 340,623 31,779,917 Aliens 15,695 136,270







Tucson International Airport Phoenix Sky Harbor Int'l Airport Totals







Aliens Aliens as % by Port as % of Crossings of all Aliens 51.51% 0.07% 28.57% 0.59% 72.54% 100.00%







8,728,109 23,051,808







Source: Immigration and Naturalization Service, Unpublished Data







The U.S. Customs Service also provides data on the number of individuals crossing the border into the US through the six border towns in Arizona. They also provide data on the number of vehicles crossing the border, disaggregated by mode of travel (trucks, trains, buses, passengers and other vehicles). However, the U.S. Customs Service does not decompose their







5







estimates of border crossers into alien vs. U.S. citizen crossings, so their data were not useful for the present study. In addition to the INS border crossing data shown in Table 4, the INS provided separate data on the number of pedestrians crossing at each port. It is necessary to separate pedestrian traffic from persons in vehicles because pedestrians tend to have smaller party sizes and spend less per visit. Unfortunately, the INS does not collect the pedestrian data separately for U.S. citizens and aliens. Therefore, the assumption was made that the ratio of U.S. citizen pedestrians to alien pedestrians is the same as the ratio of all U.S. citizen crossings to all alien crossings, by port. Discussions with individuals at INS indicated that this assumption is reasonable. Table 5 Computation of Alien Parties and the % of Parties Used to Weight Data, by Ports



Persons/ Aliens Douglas Passengers Pedestrians Lukeville Passengers Pedestrians Naco Passengers Pedestrians Nogales Passengers Pedestrians San Luis Passengers Pedestrians Sasabe Passengers Pedestrians Tucson International Airport Phoenix Sky Harbor Int'l Airport Totals



1 2 1







Alien Parties 1,688,506 306,672 130,741 12,753 325,347 31,280 3,392,233 1,489,334 1,748,842 1,239,111 38,931 1,238 8,134 81,495 10,494,618







% Parties across Ports 0.1609 0.0292 0.0125 0.0012 0.0310 0.0030 0.3232 0.1419 0.1666 0.1181 0.0037 0.0001 0.0008 0.0078 1.0000







Party







2







3,154,840 449,785 330,524 32,374 753,436 72,439 8,070,410 3,172,930 4,311,154 2,478,221 71,873 1,857 15,695 136,270 23,051,808







1.87 1.47 2.53 2.54 2.32 2.32 2.38 2.13 2.47 2.00 1.85 1.50 1.93 1.67 2.20







Source: Immigration and Naturalization Service Source: Computed from survey results.







Final weights used in the study combine survey results on party size with the INS data for alien crossings and the alien portion of pedestrians. This is necessary because the survey was conducted as per party interviews at ports of entry/exit. Therefore, numbers of alien border 6







crossings had to be converted to number of parties prior to developing the weights used to convert sample survey results to estimates of all Mexican visitors entering Arizona. To compute the final weights used in the study, the number of aliens reported by the INS, by port, by mode (pedestrians vs. passengers), were divided by the corresponding party size computed from survey results to estimate the total number of parties. The first column in Table 5 repeats the INS data on alien border crossings, disaggregated by mode, and the second column reports the persons per party figures obtained from the survey. The number of alien parties is computed in the third column. The shares of total parties, across ports, by mode, are used to weight survey results. In this study, visitors were interviewed as they exit the US at Arizona ports. Some travel survey studies have collected data as visitors enter a region, requiring visitors to project their travel expenditures. However, exit interviews are considered a more accurate form of data collection. The INS data used to calculate the weights used this study report the number of entrants to the US, rather than the number of out-bound Mexican visitors. It is conceivable that Mexican visitors enter the US through one port and leave through a different port, particularly for visitors arriving by air. To examine the extent of this problem, each party interviewed in the study was asked where they entered the US. Very few reported that they entered at a different port than where they were exiting (Table 6). Only 0.3% of exiting Mexican visitors report entering at a different US ports, an inconsequential percentage. Therefore, INS entry data can be used to weight survey data across ports, with little loss of accuracy. Table 6 Relationship between Entry and Exit Port % Entering and Exiting Through Port of Entry Parties Interviewed Same Port Douglas 379 100.0 Lukeville 102 98.0 Naco 95 97.0 Nogales 964 99.9 San Luis 775 99.7 Sasabe 19 94.7 Tucson 156 100.0 Phoenix 122 100.0 2,612 99.7 Total Another concern was whether there were significant numbers of aliens crossing the border who were not from Mexico. Discussions with INS and with marketing personnel at both airports indicated that this was also an inconsequential issue.







7







III. MEXICAN VISITOR PARTY PROFILES Mexican visitor parties consist of 2.20 persons per party, including 1.55 adults, 0.24 adolescents and 0.41 children (Table 7). Almost 56 percent of all Mexican visitor parties are headed by males. There are some surprising variations in party size, composition of parties, and the percent headed by males across ports of entry. Visitors entering through Lukeville have the largest party size (2.53 persons) and visitors entering at the Phoenix Sky Harbor International Airport have the smallest party size (1.67 persons). Males head 72 percent of the parties at the Phoenix airport, but only 45.7 percent of those entering at Lukeville. Table 7 Party Size and Percent Headed by Males, By Age Group, by Port



Port Douglas Lukeville Naco Nogales San Luis Sasabe Phoenix Tucson All Ports Adults Adolescents Children Total 1.42 0.22 0.15 1.81 0.34 0.41 2.53 1.78 1.58 0.26 0.47 2.32 0.26 0.49 2.30 1.55 0.23 0.46 2.32 1.62 0.16 0.15 1.84 1.53 1.43 0.15 0.10 1.67 1.45 0.35 0.13 1.93 1.55 0.24 0.41 2.20 % Headed by Males 54.1% 45.7% 47.4% 54.1% 60.2% 61.3% 72.1% 51.3% 55.9%







Table 8 Age Distribution, by Port of Entry



Port Douglas Lukeville Naco Nogales San Luis Sasabe Phoenix Tucson All Ports Age Groups (Percent of Row Total) 18 or under 19-25 26-35 36-45 46-59 60 or older SUM 4.18 6.59 28.40 24.81 29.43 6.59 100 0.00 9.90 29.35 50.17 5.80 4.78 100 0.00 0.00 21.05 52.63 26.32 0.00 100 0.61 10.59 30.45 38.65 16.68 3.03 100 1.35 5.56 29.04 46.18 16.54 1.11 100 0.51 0.00 31.16 37.69 30.82 0.00 100 1.64 13.11 24.59 34.43 22.95 3.28 100 0.00 12.82 29.49 19.23 38.46 0.00 100 1.48 7.78 29.50 39.10 19.11 3.02 100







The bulk of Mexican visitor parties entering Arizona have party heads aged between 26 and 59. The largest number of parties is aged 36-45 (39.10 percent). The portion of visitor parties headed by persons aged 60 or older is 3 percent and very few adolescent parties (headed







8







by persons 18 or under) enter the U.S. (1.48 percent). Parties entering through the port of Douglas are the most likely to be headed by adolescents (4.18 percent) and the most likely to be headed by persons 60 or older (6.59 percent). Using data from Table 5 above, the number of Mexican visitor parties arriving by each mode of travel (motor vehicle, pedestrian, and air) are summarized in Table 9. Almost 70 percent of all Mexican visitor parties arrive in Arizona by motor vehicle and almost 30 percent walk across the border at one of the six U.S.-Mexico ports of entry along the Arizona border. Less than 1 percent (0.85 percent) of all parties fly into Arizona. Sasabe has the lowest percentage of parties walking across the border (97.94 percent drive across). The three cities with the highest percentages of pedestrian crossings are those ports with relatively large cities on the Sonoran side of the border: Douglas, Nogales, and San Luis. Table 9 Mexican Visitor Parties, by Mode of Transportation, by Port of Entry



Number of Parties, by Mode Motor Vehicle Pedestrian Air 1,688,506 130,741 325,347 3,392,233 1,748,842 38,931 0 0 7,324,600 Total Parties Percent of Parties, by Mode Motor Total Vehicle Pedestrian Air Parties 84.63 91.11 91.23 69.49 58.53 96.92 0.00 0.00 69.79 15.37 0.00 8.89 0.00 8.77 0.00 30.51 0.00 41.47 0.00 3.08 0.00 0.00 100.00 0.00 100.00 29.35 0.85 100 100 100 100 100 100 100 100 100







Mode Douglas Lukeville Naco Nogales San Luis Sasabe Tucson Phoenix Total







306,672 0 1,995,178 12,753 0 143,494 31,280 0 356,628 1,489,334 0 4,881,567 1,239,111 0 2,987,953 1,238 0 40,169 0 8,134 8,134 0 81,495 81,495 3,080,388 89,629 10,494,618







Over 96 percent of all Mexican visitors are day-trip visitors. In Table 10, day-trip visitors are designated as spending zero nights. The survey asked visitors `How many days were you in the U.S.?" This question, while seemingly clear, resulted in different interpretations of what constituted a `day.' Persons who entered and exited on the same day responded that they spent a `day' in the U.S. Similarly, persons who spent one night in the U.S. responded that they spent a `day' in the U.S. To resolve this confusion, data coding changed the definition of length of stay from number of `days' to number of `nights.' Then the number of nights was computed by subtracting the date of entry from the date of exit from the U.S. Using this scheme, all daytrip visitors spent `0' nights. Less than 4 percent of all Mexican visitor parties spent one or more nights in Arizona (Table 10). Air travelers are the exception of course. The majority of air travelers spent 3-7 days in Arizona and over 19 percent spent 8 or more days. Only 6.83 percent of air travelers are `day-trip' visitors.







9







Table 10 Length of Stay in Arizona, by Mode



(Percent of Column Total) Motor Vehicle Pedestrian Nights in Arizona 0 1 2 3-7 8 or more Total 96.90 1.02 1.28 0.70 0.10 100.00 96.78 0.03 3.19 0.00 0.00 100.00 6.83 8.94 13.38 51.50 19.34 100.00 96.10 0.80 1.94 0.93 0.24 100.00 Air All Modes







Similar results are shown in Table 11, which gives the frequency of nights spent in Arizona, by Port of Entry. The two airport entries show a majority of visitors spending 3-7 days with most of the other ports have mostly day-trip visitors. The exception is the Sasabe port; only 77.39 percent of its visitors are day-trip visitors; rather, 7.54 percent spend 1 night in Arizona and 15.08 percent spend 2 nights. The populations of both Sasabe, Arizona and Sasabe, Sonora are small. The visitors entering through Sasabe tend to come from further inside Mexico than the immediate border community, with the result that they spend more time on their trips. Table 11 Frequency of Nights Spent in Arizona, by Port of Entry



Nights Spent in Arizona 0 1 2 100.00 0.00 0.00 95.22 4.78 0.00 100.00 0.00 0.00 94.22 1.21 3.51 99.06 0.24 0.47 77.63 7.46 14.91 6.56 9.84 13.11 9.62 0.00 16.03







Douglas Lukeville Naco Nogales San Luis Sasabe Phoenix Tucson







3-7 0.00 0.00 0.00 0.91 0.24 0.00 50.82 58.33







8 or more 0.00 0.00 0.00 0.15 0.00 0.00 19.67 16.03







Sum 100 100 100 100 100 100 100 100







Of the 3.9 percent of all Mexican visitors that spend the night in Arizona, over 78 percent stay in hotels and almost 21 percent stay with friends or family (Table 12). The very small share that stays in `other' accommodations stay in a house, but it is not known if the `house' is rented or owned by the Mexican visitor. Tables 13 and 14 show the income distribution of Mexican visitors, by mode, and by port, respectively. The income categories for these tables were based on the 1991 Mexican Visitor Study. Between 1991 and 2001, Mexico introduced `new' pesos, each worth 1,000 of the `old' pesos. Therefore, we used income categories similar to those used in the 1991 study, but







10







divided them by 1,000. In addition, to allow for inflation and increases in real income of Mexican residents, the top income category was added.







Table 12 Overnight Visitor Type of Accommodation



Type of Accommodation Hotel Friends/Family Other Total Percent of Column 78.31 20.65 1.04 100.00







Table 13 Monthly Income Distribution, by Mode of Transportation



(Percent of Column Total) Income Categories (Pesos) 1,0002,0005,0002,000 5,000 10,000 2.53 11.11 1.72 5.01 26.62 34.79 3.72 28.80 38.00 28.15 9.74 34.90







Mode Motor Vehicle Pedestrian Air All Modes







1000 or Less 0.73 1.12 3.44 0.87







10,00020,000 17.26 21.70 26.40 18.63







20,000+ 14.85 3.13 54.99 11.79







Sum 100 100 100 100







The income distribution of Mexican visitors, by mode, is shown in Table 13. Most Mexican visitors have monthly household incomes between 2,000 and 10,000 pesos (63.7 percent). The largest portion of monthly household income falls between 5,000 and 10,000 pesos (34.9 percent). It is not surprising that air travelers have the highest incomes (54.99 percent have incomes over 20,000 pesos per month). Less than 20 percent of all air travelers have incomes less than 10,000 pesos per month. Pedestrians show the lowest incomes of the three modes, as expected. The highest frequency of pedestrians' incomes is in the 2,000-5,000 peso category (34.79 percent). Approximately 3 percent of pedestrians have monthly incomes over 20,000 pesos. The income distribution of visitors entering the U.S. in motor vehicles closely resembles the overall income distribution because almost 75 percent of Mexican visitors enter Arizona using this mode.







11







Table 14 Monthly Income Distribution, by Port of Entry



(Percent of Column Total) Income Categories (Pesos) 1000 1,0002,0005,000Port of Entry or Less 2,000 5,000 10,000 Douglas 0.00 2.44 31.79 54.49 Lukeville 0.00 4.67 66.52 26.09 Naco 5.26 68.42 21.05 0.00 Nogales 7.65 33.03 33.73 1.71 San Luis 0.16 2.81 13.49 27.39 Sasabe 0.51 0.00 22.88 31.36 Phoenix 3.78 1.89 3.77 9.43 Tucson 0.00 0.00 3.21 12.82 All Visitors 5.01 28.80 34.90 0.87 10,00020,000 7.05 2.72 5.26 15.63 32.91 30.33 26.42 26.28 18.63







20,000+ 4.23 0.00 0.00 8.26 23.24 14.91 54.72 57.69 11.79







Sum 100 100 100 100 100 100 100 100 100







The monthly income distributions of Mexican visitors in Table 14 show some interesting differences across ports of entry. In particular, visitors entering through San Luis have the highest income distribution among the six US-Mexico border ports of entry. Over 23 percent of all visitors entering through San Luis have household incomes in the highest bracket (20,000+ pesos per year). Douglas, Lukeville and Naco have visitors with the lowest incomes. Only 2.72 percent of visitors entering through Lukeville, 5.26 percent of visitors entering through Naco, and 11.28 percent of visitors entering through Douglas have incomes over 10,000 pesos per month. Among all visitor parties, 72.28 percent enter Arizona for the primary purpose of shopping (Table 15). Among pedestrians, 83.41 percent cross the border to shop and 68.06 percent of motor vehicle passengers come to shop. Work is the second reason for crossing the border. Overall, 14.41 percent of all visitor parties enter Arizona to work, and workers represent 17 percent of all parties that enter Arizona by motor vehicle. Air travelers, representing less than 1 percent of all visitor parties, enter Arizona for a variety of reasons: 29.21 percent visit family, 20.53 enter on business, 18.73 come to the U.S. to vacation, 10.77 come to shop, and 6.99 percent come for personal reasons. Table 15 Reason for Visit, by Mode of Travel



(Percentages of Row Total) Reason for Visit Visit Family Vacation Shopping Medical Business Personal Mode Motor Vehicle Pedestrian Air Total 8.51 5.33 29.21 7.76 2.45 2.18 18.73 2.51 68.42 83.41 10.77 72.28 0.28 0.00 2.93 0.22 1.66 0.63 20.53 1.52 0.93 0.01 6.99 0.72 Work 17.00 8.44 4.96 14.41 Other 0.75 0.01 5.87 0.58 Sum 100 100 100 100







12







Table 16 Reason for Visit, by Port of Entry



(Percentages of Row Total) Reason for Visit Visit Family Vacation Shopping Medical Business Personal 6.80 0.00 70.56 0.00 0.96 0.00 0.00 84.30 0.00 0.00 0.00 10.92 5.00 0.00 85.00 0.00 5.00 0.00 7.92 4.34 75.00 0.22 1.49 0.60 7.67 1.17 68.81 0.31 0.86 1.33 7.97 1.03 67.61 0.00 14.91 0.51 27.42 19.35 9.68 3.23 22.58 6.45 47.20 12.42 21.74 0.00 0.00 12.42 7.76 2.51 72.28 0.22 1.52 0.72







Douglas Lukeville Naco Nogales San Luis Sasabe Phoenix Tucson Total







Work 21.39 4.78 5.00 9.47 19.77 7.46 4.84 6.21 14.41







Other Sum 0.29 100 0.00 100 0.00 100 0.97 100 0.08 100 0.51 100 6.45 100 0.00 100 0.58 100







Reason for visit varies substantially by port (Table 16). Douglas and San Luis have the highest percentages of visitor parties entering Arizona to work (21.39 and 19.77 percent, respectively). In contrast, only 9.47 percent of visitor parties entering through Nogales enter to work. The overwhelming stated reason for entering the U.S. at Lukeville, Naco and Nogales was to shop (84.30, 85.00, and 75.0 percent, respectively). Interestingly, the highest percent of visitors crossing at the U.S.-Mexico border that come for `business,' enter through Sasabe. Sasabe is a small port and few of the visitors entering through Sasabe come from the border community of Sasabe, Sonora. Note the distinction between visiting for `business' and visiting for `work.' Visiting for `work' is related to coming into the U.S. because they have a job in the U.S. Visiting for `business' is coming for a business trip, such as a conference, meeting with clients, or coming to make purchases for a business back in Mexico. Table 17 Reason for Visit, by Length of Stay



(Percentages of Row Total) Reason for Visit Visit Family Length of Stay Overnight Stay Day Trip Total 23.22 7.09 7.76 7.82 2.30 2.51 55.19 73.00 72.28 0.64 0.20 0.22 6.30 1.33 1.52 2.58 0.64 0.72 2.42 14.91 14.41 1.83 0.53 0.58 100 100 100 Vacation Shopping Medical Business Personal Work Other Sum







The reason for visit determines, in part, length of stay (Table 17). Shopping represents 72.28 of the reasons for trip given by day trip visitors, followed by work (14.41). Shopping is the reason given by only 55.19 percent of the overnight visitor parties, followed by 23.22 percent who gave `visit family' as reason for trip. 13







The computed number of nights spent, by mode, by reason for visit, are presented in Table 18. At first, this table can be confusing to interpret because it reports `number of nights,' rather than `number of days.' For example, the number of nights spent by all parties visiting family, is 0.23 nights. This means that most family visits are day trips (0 nights) and that, on average, parties spend 0.23 nights. Pedestrians make almost all day trips, but occasionally they make an overnight stay for the primary reason for shopping. Air travelers spend the most nights in Arizona if they are visiting family or on vacation (7.67 and 7.62 nights, respectively). However, shopping and medical purposes also result in relatively long stays (6.66 and 5.95 nights). Note that air passengers who don't declare a specific reason (the `other' category), spend 21.45 nights, on average, in Arizona. Please note that if a visitor, such as an air traveler, is simply passing through, the number of nights spent in Arizona is `0.'







Table 18 Number of Nights, by Reason for Visit, by Mode



(number of nights) Reason for Visit Mode Motor Vehicle Pedestrian Air All Parties Visit Family 0.23 0.00 7.67 0.23 Vacation Shopping Medical Business Personal 0.19 0.00 7.62 0.23 0.04 0.08 6.66 0.11 0.00 0.00 5.95 0.07 0.19 0.00 4.45 0.23 0.04 0.00 3.77 0.10 Work 0.13 0.00 3.42 0.12 Other 0.04 0.00 21.45 0.28







Table 19 provides a breakdown of primary household occupations, by mode. Classifying the respondents' stated occupation proved to be difficult. In particular, when asked for their occupation, they gave a mix of occupation and employment industry. For example, they may say factory worker, but not say what type of job within the factory they held. Or, they may have said `supervisor,' but did not indicate what they supervised or in what type of industry they worked. Similarly, a respondent may have said `city worker,' but not stated their actual occupation. Therefore, when classifying respondents' occupations, a mix of occupation and industry classifications had to be used. Note that the occupations in this table are not necessarily the occupation of the head of the visitor party. Rather, this is the primary occupation of the household represented by the visitor party. Thus, if a housewife was visiting Arizona with her children, the primary occupation of the household would be that of her spouse. Air travelers were most likely to be professionals, proprietors, or skilled workers. Pedestrians were predominantly factory or unskilled workers, while those entering by motor vehicle were most likely to be unskilled workers.







14







Table 19 Primary Household Occupations, by Mode of Transportation



(Percent of Column Total) Motor Vehicle 9.43 3.57 1.81 15.42 37.67 0.76 3.69 11.72 3.38 6.75 3.80 1.88 0.11 100







Professional Proprietor Clerical Skilled Worker Unskilled Worker Student Education Trade Services Factory Government Retired Other Total







Pedestrian 6.62 0.00 8.59 13.76 21.10 0.00 6.75 1.88 8.39 31.09 0.00 0.00 1.81 100







Air All Modes 25.99 9.07 19.77 2.87 3.95 3.38 9.88 14.79 8.49 34.64 5.93 0.64 5.93 4.33 7.91 8.95 3.95 4.49 4.25 12.20 1.98 2.79 1.98 1.38 0.00 0.47 100 100







15







IV. TOTAL EXPENDITURES AND PER PARTY EXPENDITURES Table 20 presents total direct expenditures of Mexican visitors to Arizona, by port of entry, for 1977-78, 1991, and the current study year, 2001. Total estimated direct expenditures by Mexican visitors to Arizona in 2001 was $962.9 million, an increase of 44.1 percent over estimated expenditures in 1991. Total expenditures did not increase for all ports of entry. In particular, total visitor expenditures for parties entering through Douglas, Lukeville, Naco and Tucson showed declines in total expenditures. The percent change in expenditures of Mexican visitors entering Phoenix was enormous (13,785 percent change), but represents a relatively small share of total direct expenditures in Arizona (approximately 12 percent). Nogales and San Luis, the two largest ports of entry, have shown very strong growth in direct expenditures since 1991 (46.2 and 48.2 percent, respectively). To understand the source of these increases and declines, expenditures are decomposed into change in the number of parties and change in the expenditures per party in the following two tables (Tables 21 and 22). Table 20 Total Direct Expenditures of Mexican Visitors in Arizona



1977-78 vs. 1991 vs. 2001 by Port of Entry (Millions of Dollars) 1977-78 26.1 7.3 6.7 168.8 99.0 0.8 2.0 4.7 315.3 Percent Change 1991-2001 -29.9 -21.9 -0.5 46.2 48.2 831.7 13,785.3 -69.3 44.1







Port of Entry Douglas Lukeville Naco Nogales San Luis Sasabe Phoenix Tucson Total







1991 140.9 17.7 31.0 343.8 131.1 0.5 0.8 22.6 668.2







2001 98.8 13.8 30.8 502.5 194.2 4.7 111.1 6.9 962.9







The Tucson International Airport has lost substantial traffic from Mexico to Phoenix Sky Harbor International Airport (Table 21). The number of parties flying from Mexico directly to Tucson declined by 59.1 percent, while the number of parties flying to Phoenix has increased 11,542 percent. Thus, most of the change in total direct expenditures for Phoenix and Tucson is associated with the change in parties flying to those airports. A small portion of the 21.9 percent decline in total expenditures of Mexican visitors entering through Lukeville is associated with a decline in visitor parties (-6.0 percent in visitor parties). Douglas, on the other hand, had an increase in visitor parties of 59.5 percent between 1991 and 2001, meaning that the decline in total expenditures of visitors entering this port is due to substantial declines in per party expenditures. Overall, the number of Mexican visitor parties increased 52.2 percent since 1991, compared to a 44.1 percent increase for total expenditures. This difference in growth rates means there had to be an overall decrease in per party expenditures between 1991 and 2001.







16







Table 21 Mexican Visitor Parties to Arizona



1977-78 vs. 1991 vs. 2001 by Port of Entry Percent (Thousands of Parties) Change 1977-78 1991 2001 1991-2001 713.6 1,251.1 1,995.2 59.5 131.8 152.7 143.5 -6.0 238.0 356.6 49.8 228.9 73.0 2,892.4 2,821.0 4,881.6 2,333.9 2,405.6 2,988.0 24.2 25.4 6.7 40.2 499.5 2.9 0.7 81.5 11,542.1 7.3 19.9 8.1 -59.1 6,336.2 6,895.7 10,494.6 52.2







Port of Entry Douglas Lukeville Naco Nogales San Luis Sasabe Phoenix Tucson Total







Table 22 shows a decline in per party expenditures of Mexican visitor of 8.1 percent. Average per party expenditures declined for visitors entering all ports except San Luis, Sasabe and Phoenix. Phoenix's strong growth in per party expenditures is due, in large part, to the capture of business travelers and vacationers that used to fly into Tucson. Visitors entering through Sasabe are spending more per party, but very few parties pass through Sasabe so this increase has a very small impact on total Mexican visitor spending in Arizona. San Luis' increase of 19.3 percent in per party expenditures, combined with a 24.2 percent increase in Mexican visitor parties, results in total expenditures for travelers entering San Luis of 48.2 percent. Table 22 Mexican Per Party Expenditures in Arizona



1977-78 vs. 1991 vs. 2001 by Port of Entry (Dollars) Port of Entry Douglas Lukeville Naco Nogales San Luis Sasabe Phoenix Tucson Total 1977-78 36.63 55.57 29.16 58.37 42.41 29.73 674.04 639.68 49.77 1991 2001 112.64 49.51 115.80 96.39 130.34 86.47 121.86 102.94 54.50 65.01 68.05 115.97 1,164.11 1,363.06 1,135.24 851.76 99.82 91.75 Percent Change 1991-2001 -56.0 -16.8 -33.7 -15.5 19.3 70.4 17.1 -25.0 -8.1







Lower per party expenditures for Tucson are explained largely by the change in reason for visit since 1991. Business travelers and persons coming for medical purposes now by-pass Tucson and fly directly to Phoenix. Phoenix has the advantage for these travelers both in terms 17







of the number of flights into Phoenix from Mexico and, sometimes, ticket price. Thus, the traveler that flies into Tucson is most likely to visit family, shop, vacation, or to come for personal reasons (see Table 16 above). This type of traveler spends less than those traveling on business or for medical purposes. The declines in per party expenditures for visitors entering through Douglas and Nogales are a concern because a) the declines in per party expenditures are substantial (-56.0 and -15.5 percent for Douglas and Nogales, respectively, and b) Nogales and Douglas are the largest and 3rd largest ports of entry. Part of the decline in per party expenditures for Douglas and Nogales may be artificial due to differences in methods used in the 1991 and 2001 study. In particular, in the 1991 study, the sample was stratified to closely approximate the number of visitors entering each port, without regard to whether they crossed in a motor vehicle or on foot. Implicitly, pedestrian and motor vehicle passenger visitors were weighted according to how many happened to be interviewed in the 1991 study. In this study, the total number of parties, by port and by mode, were estimated and used as weights to generalize the survey results to the INS border crossing data. In particular, in this study, an estimated 15.4 percent of visitor parties entering through Douglas were pedestrians, so the Douglas estimates for per party visitor expenditures are a weighted average of pedestrian and motor vehicle passenger per party visitor expenditures. In the 1991 study, no pedestrians were surveyed, so the 1991 Douglas per party expenditure figure represented only visitors that crossed by motor vehicle. Similarly, pedestrians represented 22.6 percent of Nogales' surveyed parties in 1991, but pedestrian parties make up 30.5 percent of estimated parties in the present study. Per party expenditures for pedestrians is substantially less than per party expenditures of persons traveling by motor vehicle (see Table 24 below), so under-weighting pedestrian parties resulted in artificially high per party expenditures for Douglas and Nogales in the 1991 study. A second reason per party expenditure parties could have declined since 1991 is that the survey year of this study (2001) was, unfortunately, a recession year in both the U.S. and Mexico. And third, it is possible that Mexican residents make more frequent trips to the U.S. but spend somewhat less on each trip. Table 23 presents expenditure, by category for 1991 and 2001. Department store purchases make up by far the largest expenditure category, representing 41.4 percent of all Mexican visitor expenditures. Food purchases make up the second largest category (34.4 percent), which is comprised mostly of grocery purchases (24.0 percent of the total) and restaurant purchases (9.5 percent of the total). Transportation-related expenditures represent 13.4 percent of the total, with gasoline and auto-related expenses representing more than half of this category. Total estimated expenditures on medical-related categories declined 70.9 percent since 1991 and total business expenditures declined by 58.5 percent. Again, a portion of the decline in expenditures on medical and business-related expenditures may be artificial and due to the under-weighting of pedestrians in the 1991 study. Per party expenditures for pedestrians on medical categories was zero in this study. In addition, pedestrian per party expenditures on business-related expenditures was only $2.07 per party. Under-weighting pedestrians in 1991 would have resulted in artificially high expenditures for medical and business-related categories. The under-weighting of pedestrians in 1991 would also







18







have artificially increased all expenditure categories that are higher for motor vehicle passenger parties than pedestrian parties, which is virtually every category (see Table 24). Thus the percent growth in expenditures between 1991 and 2001 may be understated in this study. Table 23 Expenditure per Category, 1991 vs. 2001



(Thousands of Dollars) % of Percent Column Change Total 1991-2001 1.3 -6.5 34.4 90.5 9.5 218.8 24.9 65.1 13.4 422.8 7.5 245.5 4.5 1,345.5 1.4 1,883.1 41.4 79.5 0.7 -70.9 0.3 -84.4 0.4 -30.6 0.1 -69.8 6.4 -58.5 2.4 -72.0 100.0 39.9







Expenditure Type Lodging Total Food Restaurants Groceries Total Transportation Gasoline or Auto Air Travel Car Rental Department Stores Total Medical Doctors Hospitals Medicine Total Business All Other Total







1991 12,934 173,971 28,788 145,183 24,627 20,987 2,969 671 222,312 24,105 15,745 5,205 3,155 148,238 82,069 688,256







2001 12,096 331,498 91,782 239,717 128,739 72,515 42,918 13,306 399,086 7,012 2,449 3,611 953 61,480 22,958 962,870







Both per party expenditures and expenditures, by category, differ substantially by mode of travel (Tables 24 and 25). Pedestrians spend an average of $39.31 per party, compared to $98.56 per party for visitors entering by motor vehicles and $1,316.65 for visitors traveling by air. Pedestrians spend most of their money on groceries and in department stores (approximately 80 percent). Parties traveling by motor vehicle spend most of their money in department stores ($45.75 per party), with a lesser amount on groceries ($24.95 per party). They spend $9.34 in restaurants and $10.40 on transportation, mostly on gasoline and auto-related expenditures. Air travelers, representing less than one percent of total parties, spend most of their money on transportation ($509.37), followed by spending at department stores ($316.63), on business ($205.25), and on food ($125.50) and lodging ($125.50). Per party expenditures vary both by mode and by reason for visit (Table 25). Per party expenditures range from $13.00 for a pedestrian traveling for business in Arizona to $2,050 for an air passenger visiting Arizona for medical reasons. Overall, Mexican visitors who come to Arizona spend the most if they are here for medical reasons. This category, however, represents a small portion of overall expenditures because less than one-quarter of 1 percent of all visitor parties entered for medical purposes. The reader should not confuse the per party expenditures of Table 25 with the per party expenditures reported in Table 24 showing expenditure categories 19







by mode. Table 24 shows average expenditures across all parties, disaggregated by mode. Table 25 shows expenditures per party, by reason for visit. For example, pedestrians who give shopping as their primary reason for visit spends $41.37 per visit, as shown in Table 25, but pedestrians on average spend only $39.31 because the latter figure includes expenditures by all pedestrian parties, some of which spent less than $41.39. There were no pedestrian visitor parties that gave their primary reason for visit as `medical,' thus the `non-applicable' in that category in Table 25. The `0' in the `other' category for pedestrians indicates pedestrians who gave `other' as their reason for visit, but who spent nothing in Arizona on their visit. Table 24 Per Party Expenditures, by Category, by Mode



(Dollars per Party) Mode Categories Lodging Total Food Restaurants Groceries Total Transportation Gasoline or Auto Air Travel Car Rental Department Stores Total Medical Doctors Hospitals Medicine Total Business All Other Total Motor Vehicle 1.19 34.17 9.30 24.88 10.37 8.77 0.00 1.60 45.11 0.86 0.24 0.49 0.13 5.00 1.55 98.56 Pedestrian 0.00 22.59 3.98 18.61 1.35 1.35 0.00 0.00 12.76 0.00 0.00 0.00 0.00 2.07 0.55 39.31 Air 37.65 125.50 125.50 0.00 509.37 13.17 478.84 17.36 316.63 7.38 7.38 0.00 0.00 205.24 110.41 1,316.65







It is interesting to analyze total expenditures, by income group. Table 26 shows that perparty spending ranges from $38.24 for parties with household incomes between 1,000 and 2,000 pesos to $238.58 per visitor party earning over 20,000 pesos per year. Parties in households earning over 20,000 pesos per year represent only 12.20 percent of total visiting parties, but they represent over one-third (33.08 percent) of total spending in Arizona by Mexican visitors. Similarly, parties earning less than 5,000 pesos per year constitute approximately one-third of visitor parties (34.14 percent, the sum of the three lowest income groups) but represent less than 19 percent of total expenditures in Arizona.







20







Table 25 Per Party Expenditures, by Reason for Visit, by Mode



(number of nights) Reason for Visit Mode Motor Vehicle Pedestrian Air All Parties N.A. is non-applicable. Visit Family 70.18 50.44 1,368.83 75.53 Vacation Shopping 101.52 27.49 1,368.50 102.00 Medical Business Personal Work 128.29 13.00 1,732.61 144.39 Other







114.05 144.93 41.37 N.A. 1,817.59 2,050.00 107.49 174.65







36.92 68.48 41.36 20.00 22.28 0.00 580.74 378.80 1,137.50 46.24 57.72 54.28







Table 26 Spending per Party, Total Spending, by Monthly Income Group



1000 or Less Per Party Expenditures $ Percent of Total Parties (% of Row Total) 1,0002,000 Income Group (Pesos) 2,0005,0005,000 10,000 10,00020,000 Over 20,000







Sum







47.341







38.24







55.74







74.75







127.41







238.58







N.A.







0.78







4.87







28.49







34.89







18.77







12.20







100







Percent of Total Expenditures (% of Row Total) 0.69 N.A. is Not Applicable







1.97







15.93







25.59







22.73







33.08







100







Table 27 demonstrates that per party expenditures increase with distance traveled. Visitors traveling more than 500 miles spend $568.51 per party while those traveling 50 or few miles spend $77.87 per party. This table also demonstrates that fewer parties visit Arizona the further they have to travel. Less than one percent of all visitor parties to Arizona travel more than 500 miles, while over 94 percent of all parties travel less than 50 miles. Although parties traveling more than 500 miles represent only 0.69 percent of parties, they represent 8.53 percent of total spending in Arizona of Mexican visitors. The 94.01 percent of visitors traveling 50 or fewer miles to the border spend 76.34 percent of total spending.







21







Table 27 Spending per Party, Total Spending, by Distance Traveled



Distance Traveled (Miles) 50 or 51Fewer 200 Per Party Expenditures $ Percent of Total Parties (% of Row Total) 201500 More than 500







Sum







77.87







262.85







399.47







568.51







N.A.







94.07







2.77







2.47







0.69







100







Percent of Total Expenditures (% of Row Total) 76.34 N.A. is Not Applicable







10.34







4.78







8.53







100







Table 28 Spending per Party, Total Spending, Day Trip vs. Overnight Visitors



Day Trip Visitors Per Party Expenditures$ Percent of Total Parties (% of Row Total) Percent of Total Expenditures (% of Row Total) N.A. is Not Applicable Overnight Visitors Sum







72.72







220.71







N.A.







96.14







3.86







100







89.15







10.85







100







An analysis of per party expenditures, number of parties and total expenditures for day trip visitors also shows the importance of the higher income, longer-stay visitor (Table 28). Overnight visitor parties (1 or more nights) spend an average of $220.71 per trip while day trip visitors spend an average of $72.72 per party per trip. Thus, although overnight visitors represent only 3.86 percent of all visitor parties, they represent almost 11 percent of all Mexican visitor expenditures in Arizona.







22







Table 29 shows the seasonality of Mexican Visitors' travel to Arizona. The first column shows the total number of aliens entering Arizona, by port, by month, as reported by the INS. Average party size was computed, by month, from survey data, and used to convert total aliens, by month, to total parties. Total expenditures and expenditures per party are also presented, by month. December has the highest number of border crossings (aliens), the largest number of parties, and the most expenditures. In December, over a million parties enter Arizona and each of those parties spend over $150 per party, on average, for a total of almost $159 million in expenditures. The weakest months for Mexican visitor travel to Arizona are September and October. September and October have the fewest border crossings, the fewest visitor parties, and the lowest expenditures of all months. This finding is not surprising given the events of September 11, 2001 and the fact that the format of the border crossing cards changed in September 2001. It is not possible to tell from the data how much of the reduced visitation and spending is due to normal seasonality or to the other extraordinary occurrences. The remaining nine months are difficult to categorize. Unexpectedly, May had the highest per party expenditure of all months except December. A possible explanation for this is that there are three holidays during May in Mexico: Teacher's Day, Mother's Day, and Cinco de Mayo. In addition, May is the month in which employers pay `utiladades' to their employees. These payments are a form of profit sharing, required by law in Mexico. Table 29 Seasonality of Mexican Visitors' Travel to Arizona



Total % Across Average a Aliens Months Party Size January February March April May June July August September October November December Total



a







Total % Across Total % Across $ Per Party, Parties Months Expenditures Months By Month 913,286 962,411 958,079 911,660 872,401 852,181 782,021 808,200 692,793 757,179 928,266 1,056,140 10,494,617 8.70 9.17 9.13 8.69 8.31 8.12 7.45 7.70 6.60 7.21 8.85 10.06 90,749,231 85,670,208 76,369,897 76,192,344 95,740,164 71,155,563 72,085,683 62,426,498 45,485,345 50,161,396 77,937,009 158,896,868 9.42 8.90 7.93 7.91 9.94 7.39 7.49 6.48 4.72 5.21 8.09 16.50 100 99.37 89.02 79.71 83.58 109.74 83.50 92.18 77.24 65.65 66.25 83.96 150.45 91.75







2,008,684 2,043,426 2,225,163 2,034,679 1,900,663 1,873,772 1,770,867 1,854,247 1,562,097 1,457,364 1,995,684 2,325,162 23,051,808







8.71 8.86 9.65 8.83 8.25 8.13 7.68 8.04 6.78 6.32 8.66 10.09 100







2.20 2.12 2.32 2.23 2.18 2.20 2.26 2.29 2.25 1.92 2.15 2.20 2.20







100 962,870,204







INS Data







23







V. GEOGRAPHIC DISTRIBUTION OF EXPENDITURES IN ARIZONA Table 30 provides information on where Mexican visitors spend their money within Arizona and provides a comparison between the 1991 study results and the present study results. Note that this table differs from all the previous results presented by port. Data presented by port is a summary of the characteristics and spending of persons who enter through each of the ports. In Table 30, the data is presented according to where the expenditures were stated to have occurred. In 1991, Santa Cruz County had the highest share of expenditures of Mexican visitors. In the present study, the highest portion of expenditures goes to Pima County. Pima receives almost one-third of all Mexican visitor expenditures. Mexican visitor expenditures in Pima County are estimated to have increased by almost 178 percent since 1991. The largest percent increase in expenditures occurred for Maricopa County (683 percent increase), due predominantly to the large increase in flights from Mexico to the Phoenix Sky Harbor International Airport. Table 30 Expenditures by County and City, 1991 and 2001



1991 2001 Expenditures Expenditures Percent (Thousands (Thousands Change of Dollars) of Dollars) 1991-2001 164,263 16,419 108,506 268,470 130,598 0 688,256 96,753 128,634 301,598 243,738 191,158 990 962,870 -41.10 683.44 177.96 -9.21 46.37 N.A. 39.90 2001 Percent of Total Expend. 10.0 13.4 31.3 25.3 19.9 0.1 2001 City Visitor a Parties 2001 2001 % of City $ Per City Visitor Visitor Parties Party 20.5 1.3 14.2 33.2 26.9 0.1 3.8 100 44.63 904.83 201.19 69.42 67.09 118.35 91.02







County Cochise Maricopa Pima Santa Cruz Yuma Other Counties Outside Arizona Total City Douglas Nogales Phoenix San Luis Tucson Yuma Other Cities Total



a







2,167,994 142,164 1,499,085 3,510,958 2,849,109 8,369 401,313 100.0 10,578,992







141,631 268,470 16,419 61,960 98,760 68,637 32,379 688,256







79,423 243,738 128,599 67,104 292,395 123,772 27,841 962,870







-43.92 -9.21 683.23 8.30 196.07 80.33 -14.02 39.90







1,845,212 3,510,958 139,820 1,645,647 1,365,824 1,201,118 807,258 63,155 100.0 10,578,992







8.2 25.3 13.4 7.0 30.4 12.9 2.9







17.4 33.2 1.3 15.6 12.9 11.4 7.6 0.6 100







43.04 69.42 919.74 40.78 214.08 103.05 34.49 91.02







City Visitor Parties include visits of a party to more than one city. Thus City Visitor Parties exceeds Total Visitor Parties shown in other tables. N.A. is not applicable.







24







Cochise and Santa Cruz Counties showed declines between the 1991 and 2001 study. This is due predominantly to the decline in per party expenditures for Douglas and Nogales, discussed above. This is consistent with the declines in expenditures shown for Douglas and Nogales shown in the lower half of Table 30. Note that the expenditures provided for major cities coincide closely with the corresponding county figures. For example, Maricopa County is estimated to have received 128.6 million dollars of Mexican visitor dollars and Phoenix is estimated to have received almost all of that. This does not mean that these expenditures occurred within the city limits of the City of Phoenix. The typical Mexican visitor doesn't know where the city limits of Phoenix are. So when they say they spent money in `Phoenix,' it means they spent it somewhere in the urbanized area surrounding the City of Phoenix. The reason that not all expenditures in Maricopa County occur in `Phoenix' is that a few visitors specified some other area within Maricopa County. Similarly, expenditures in `Tucson' represent the bulk of expenditures in Pima County. The difference between Pima County and Tucson is that other Pima County destinations were mentioned, e.g., Ajo, Sasabe, and Lukeville. When the analysis on what visitors to Tucson did and where they shopped is presented, a breakdown of the `Tucson' expenditures will be examined. Note that the number of `parties' to each of the destination cities is defined differently in Table 30 than in earlier tables. Also note that total number of `parties' is slightly larger in Table 30 than previously reported. The reason for this is that some parties visited more than one Arizona city. When examining the geographic distribution of where expenditures occur, these parties have to be counted for each city they visited. Thus, the number of `city parties,' as they are referred to as in Table 30, exceeds the total number of parties reported in Table 5.







25







VI.







ORIGIN OF VISITORS AND MONTHLY INCOME BY PLACE OF RESIDENCE







Table 31 provides a list of the states and cities from which Mexican visitors originate. Over 99 percent of all Mexican visitors to Arizona are from the State of Sonora. Small percentages of visitors originate in Baja (0.45 percent) and Sinaloa (0.26 percent). The Mexico border cities of Nogales, San Luis Rio Colorado, and Agua Prieta generate the bulk of visitors to the U. S. State of Arizona. Nogales contributes more than half (56.48 percent) of all the Mexican visitors to Arizona, San Luis Rio Colorado contributes 25.47 percent, and Agua Prieta accounts for 10.45 percent. Hermosillo and Magdelena are the two non-border cities that originate the most visitors (2.62 and 1.33 of visitor parties, respectively). Figure 1. Map of Mexico







Source: UT Library Online, University of Texas at Austin







26







Figure 2. Map of Sonora, Mexico







Source: Gobierno del Estado de Sonora Visitors from Sinaloa, by far, have the highest incomes. Almost 84 percent of all Sinaloa visitors have monthly incomes over 20,000 pesos. One would expect that visitors from nearborder cities would have lower income distributions than visitors that have to travel longer distances to the border. Generally, this pattern holds. Visitors from Nogales and Douglas have relatively low income distributions (27.6 and 12.8 percent, respectively, have incomes over 10,000 pesos per month) compared to say, Huatabampo or Hermosillo, where visitors have to







27







have the resources to get to the border (66.6 and 59.1 percent, respectively have incomes over 10,000 pesos per month). However, visitors from San Luis Rio Colorado, a Mexican border city, have a surprisingly high income distribution, with over 60 percent of visitors earning over 10,000 pesos per month. Table 31 Origin of Visitors and Monthly Income by Place of Residence



Percent of Visitor Parties 1000 or Less Income Category 1000- 2000- 5000- 10,000- Over 2000 5000 10,000 20,000 20,000 (Percent of Row Total) 0.0 2.8 0.0 17.6 7.7 24.4 0.0 12.6 23.0 36.2 13.0 20.6 46.4 19.3 3.4 6.1 23.0 16.3 83.6 42.4







State in Mexico Baja Sonora Sinaloa SUM







SUM







0.45 99.02 0.26 0.28 100.00







0.0 1.0 0.0 0.6







100 100 100 100







City in Mexico Agua Prieta Caborca Guaymas Hermosillo Huatabampo Magdelena Mexicali Naco Nogales Ciudad Obregon San Luis R.C. Santa Ana Sonoyta Other Cities SUM 10.45 0.27 0.14 2.62 0.20 1.33 0.31 0.28 56.48 0.62 25.47 0.33 0.32 1.19 100.00 0.0 0.0 0.0 0.1 0.0 5.0 0.0 0.0 1.5 0.0 0.3 0.0 0.0 0.2 1.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.4 5.7 2.1 20.0 7.7 7.5 28.0 24.9 97.7 23.0 0.0 15.0 0.0 37.5 29.0 67.3 11.9 0.0 71.4 13.3 57.3 0.0 0.0 17.8 33.3 40.0 22.2 50.0 38.5 4.7 25.1 59.9 17.6 27.0 8.0 49.7 0.0 33.2 33.3 25.0 55.6 12.5 17.7 0.0 26.7 0.0 3.3 7.1 4.8 25.4 2.3 25.9 33.3 15.1 22.2 0.0 9.9 22.3 34.0 20.2 0.0 44.7 100 100 100 100 100 100 100 100 100 100 100 100 100 100







28







VII.







PROFILES OF VISITORS TO SIX ARIZONA CITIES







Visitor profiles are developed in this section for six major destination cities in Arizona. Reasons vary substantially across destination cities. Visitors to both Phoenix and Tucson show much stronger family ties to their visitors than other destination cities, with 19.6 percent of visitors to Phoenix and 14.2 percent of visitors to Tucson giving `visit family' as their primary reason for their visit. Shopping is the primary reason for the visit for between 71.4 and 76.9 percent of Mexican visitors to all destination cities except Phoenix. For visitors to Phoenix, shopping is less important, representing 38.2 percent of the reasons for visiting that metro area. Business, visiting family and vacation are much more important reasons given by Mexican visitors to Phoenix than any other destination city. Work is cited as the primary reason for relatively high percentages of visitors to destination cities located along the border: Douglas, San Luis, Yuma, and to a lesser extent, Nogales. Table 32 Reason for Visit, by Destination City



(Percent of Row Total) Visit Family 4.3 5.1 19.6 14.2 6.5 8.0 Vacation 0.0 3.9 13.5 4.7 0.9 1.2 Shopping 71.4 75.9 38.2 76.9 71.8 72.9 Medical 0.0 0.2 1.8 0.3 0.0 1.0 Business 1.1 1.4 17.4 0.8 0.4 1.7 Personal Work Other SUM 0.0 22.9 0.3 100 0.8 11.5 1.2 100 5.1 1.8 2.6 100 0.1 2.8 0.3 100 1.3 19.1 0.1 100 1.2 14.0 0.0 100







Douglas Nogales Phoenix Tucson San Luis Yuma







Table 33 presents the number of parties visiting each destination city, party size, and length of stay. Tucson's 1.366 million visitor parties come in relatively large parties, with 2.66 persons per party. This is somewhat surprising, given that the average party size entering Arizona through Nogales is 2.30 (Table 7). When Mexican visitors stop at the border cities of Douglas, Nogales, and San Luis, visitor parties are relatively small (1.80, 2.18, 2.05, respectively). But when they come further inland, to Tucson and Yuma, it represents more of a family trip to many Mexican visitors and this is reflected in the larger party sizes for these nonborder cities. Because relatively high numbers of visitors to Phoenix are on business or vacation, compared to other destination cities, their party size is smaller than, for example, Tucson. The longer the trip and the more expensive the trip, the longer the visitor party is expected to stay at the destination city. This is shown clearly in Table 33. Almost 88 percent of visitors to Phoenix spend at least one night in Phoenix and the average length of stay is 5.53 nights. Over 16 percent of visitors to Tucson spend at least one night in Tucson and the average length of stay for all Tucson visitors is 0.44 nights. Again, this can be difficult to interpret because it is in `nights' and not `days.' The 0.44 means that those 16 percent of Mexican visitor







29







parties who spend the night, they spend approximately 2.75 nights here. The rest of Mexican visitor parties are day trippers, who do stay overnight in Tucson. Table 33 Party Characteristics and Length of Stay, by Destination City



Number of Parties Douglas Nogales Phoenix Tucson San Luis Yuma 1,845,212 3,510,957 139,820 1,365,824 1,645,647 1,201,118 Party Size Average Length of Stay (nights) 0.00 0.01 5.53 0.44 0.00 0.03 Percent Stayed 1 Night or More 0.00 0.84 87.72 16.12 0.00 1.37







1.80 2.18 2.11 2.66 2.05 2.62







Table 34 presents the cities of origin for the visiting parties to each of the six Arizona destination cities. It is not surprising that the bulk of Mexican visitors to Arizona come from the State of Sonora. Between 98.8 and 99.0 of all Mexican visitor parties to Douglas, Nogales, Tucson, San Luis and Yuma come from the State of Sonora. Because a majority of Phoenix' Mexican visitor parties fly into Phoenix, Phoenix receives visitors from all parts of Mexico. Only 53.46 percent of Phoenix visitors are from Sonora. For the three Arizona cities closest to the border: Douglas, Nogales, and San Luis, very high percentages (95.11 to 98.3 percent) of their visitors are from the Mexico city immediately across the border: Agua Prieta, Nogales, and San Luis R.C., respectively. As distance is increased, the percentage coming from the closest border city diminishes. Only 88.13 percent of Yuma visitors are from San Luis R.C. As the distance increases, this percentage diminishes further; only 78.58 percent of Tucson's visitor parties are from Nogales. For Phoenix, the border communities of Nogales and San Luis combined comprise only 18.28 percent of visitor parties. Generally, expenditures per party are related to the distance traveled. Visitors from Mexican cities located the farthest from the border tend spend the most per party. Distance decreases the number of trips this party will make, but it tends to increase the amount spent when they do make a trip. Visitors to Douglas from Agua Prieta spend 43.16 per party, but visitors from Esqueda spend $49.89. Visitors to Nogales from Nogales, Mexico, spend $64.53 per trip, but visitors from Hermosillo spend $96.20, visitors from Caborca spend $335.27, and visitors from Magdalena spend $189.59 per trip. Similarly, visitors to Phoenix from Nogales and San Luis spend $280.30 and $248.33, respectively, but visitors from farther distances tend to spend over $1,000 per trip. There are exceptions to this general rule, of course, but spending per party and distance traveled are clearly related in Table 34. In Table 35, expenditures are broken down by categories for each of the six Arizona destination cities. Visitors to the three border counties of Cochise, Santa Cruz and Yuma







30







Table 34 Visitor Party Cities of Origins, Percent of Parties, Percent of Expenditures, and Expenditures per Party for each Destination City



Mexico State of Origin Percent of Parties Across States Mexico Cities of Origin Percent of Percent of Parties Expenditures Per Party Across Across Expenditures Cities Cities ($)







U. S. City of Destination Douglas







Sonora Sinaloa Other Nogales Sonora Nayarit Other







98.89 1.11 0.00







Agua Prieta Navajoa Esqueda Other Nogales Magdalena Hermosillo Caborca Santa Ana Huatabampo Other Hermosillo Nogales Guadalajara Mazatlan Tepic Chihuahua Mexico City San Luis Puerto Penasco Other Nogales Hermosillo Ciudad Obregon Agua Prieta Sonoyta Naco Other San Luis R.C. Mexicali Other San Luis R.C. Sonoyta Mexicali Other







98.22 1.11 0.67 0.00 95.11 1.70 1.60 0.43 0.43 0.21 0.53 16.06 13.24 11.93 8.12 7.96 5.97 5.63 5.04 4.91 21.14 78.58 5.50 4.60 4.11 1.56 1.39 4.26 98.29 0.71 1.00 88.13 10.69 0.78 0.39







98.84 0.39 0.77 0.00 88.41 4.65 2.21 2.05 0.61 0.56 1.51 19.11 4.03 17.36 6.33 14.32 7.75 5.00 1.36 1.74 30.19 59.76 12.79 4.58 6.65 1.78 3.08 11.35 96.65 1.99 1.36 95.01 3.28 0.85 0.86







43.16 14.97 49.89 N.A. 64.53 189.59 96.20 335.27 98.97 183.10 197.51 1,094.30 280.30 1,337.87 716.75 1,655.26 1,195.08 816.11 248.33 325.93 1,313.20 162.80 498.16 213.17 346.38 245.12 475.04 570.38 40.10 114.00 55.55 111.09 31.60 112.28 225.45







99.87 0.11 0.02







Phoenix Sonora Jalisco Sinaloa Nayarit Chihuahua Federal District Other 52.46 15.07 8.701 8.036 6.027 5.186 4.52







Tucson Sonora Sinaloa Other 98.89 0.56 0.55







San Luis Sonora Baja Other Yuma Sonora Baja Other 98.82 1.173 0.007 99.00 1.00 0.00







31







spend relatively large percentages of their total spending on groceries (51.0, 40.9 and 26.8 percent, respectively. The portion spent on restaurants is relatively uniform across counties, ranging from 7.9 percent of total expenditures of Pima County visitors to 16.8 percent of expenditures of Cochise county visitors. Airfare is significant only in Maricopa County (29.5 percent), although car rental represents 4 percent of expenditures in Pima County. Gasoline and automobile-related expenditures range from a low of 3.6 percent of visitor expenditures for Maricopa County to a high of 13.2 percent for Cochise County. Table 35 Percent of Expenditures, by Category, for Five Major Destination Counties



Cochise Lodging Food Restaurants Groceries Transportation Gasoline & Auto Airfare Car Rental Department Stores Medical Hospitals/Clinics Doctors Medicine Business Other SUM 0.0 16.8 51.0 13.2 0.0 0.0 17.6 0.0 0.0 0.0 0.2 1.1 100.0 Maricopa 3.7 10.4 0.3 3.6 29.5 1.0 29.4 0.2 0.1 0.1 14.9 6.8 100.0 County Pima 2.0 7.9 14.1 8.0 1.7 4.0 53.9 0.1 0.0 0.1 4.3 3.9 100.0 Santa Cruz 0.6 8.3 40.9 6.7 0.2 0.0 38.0 0.1 0.0 0.2 4.8 0.2 100.0 Yuma 0.0 10.1 26.8 8.2 0.0 0.0 48.8 1.9 0.7 0.1 2.7 0.7 100.0







Department stores, which include major non-mall stores, such as Target, Wal-Mart, KMart and Super K-Mart, are important components of spending in all counties, but especially for Pima County. Almost 54 percent of all Mexican visitor expenditures in Pima County are at department stores. For Cochise, Santa Cruz and Yuma Counties, visitors coming to shop are purchasing a mix of groceries and department store items; for Pima County, visitors coming to shop are predominantly shopping at department stores. Medical-related expenditures represent a small percentage of overall spending. In Yuma County, medical expenditures are 2.7 percent of total expenditures, but in the other counties it is less than 0.4 percent. Business expenditures are highest for visitors to Maricopa County. These expenditures include both purchases and attendance at conferences.







32







VIII. TOTAL ECONOMIC IMPACTS OF MEXICAN VISITORS ON ARIZONA AND FIVE COUNTIES To estimate the effect of Mexican visitor spending on the overall economy of the Tucson area, an input-output, or interindustry, model of five counties and the state of Arizona were used. Input-output models are used to estimate multipliers, or what are known as direct, indirect and induced impacts. In this case, the direct effects are sales (output), income, and employment generated directly by the dollars spent by Mexican visitors, e.g., restaurant sales, jobs and income. Indirect impacts are the sales, income and employment that result from other firms in the local economy selling to the restaurants, such as food distributors. Induced effects are the sales, income and employment created as workers in the first two categories spend their wages and salaries locally. Total impacts are the sum of the direct, indirect, and induced effects. The input-output model used in this analysis is called IMPLAN (Input-Output Model for Planning and Analysis). Originally designed by the U.S. Forest Service, IMPLAN was further developed at the University of Minnesota and a private firm is currently maintaining the model and updating the data sets necessary to run the model. In this study, the 1999 IMPLAN model was used to estimate economic impacts. The model provides a snapshot of a county's economy at one point in time. The impacts it estimates are medium-run impacts (impacts that might be expected to occur within five years of the shock of the economy). There are separate IMPLAN models for the State of Arizona and each of the five counties impacted the most by Mexican visitor spending: Cochise, Maricopa, Pima, Santa Cruz, and Yuma. For the state model, IMPLAN breaks the region's economy into 528 sectors with the most detail in manufacturing and less detail in service-oriented sectors. IMPLAN models for relatively small counties, such as Santa Cruz and Cochise, have fewer than 528 sectors. Direct economic impacts, by county, are reported in Table 36. In total, Mexican visitor spending of almost $963 million creates 25,102 direct jobs and pays almost $406 million in direct wages to Arizona workers. Direct impacts vary across counties, from 2,077 jobs in Maricopa County to 7,343 jobs in Santa Cruz County. Note that direct impacts, by city, are the same as total expenditures provided in Table 30. Indirect and induced impacts for cities cannot be computed. The size of the direct job impact in an individual county depends on the mix of expenditures in that county and the wages in that county. In Table 36, these differences can be observed by comparing Maricopa and Cochise counties. Maricopa County is the largest metropolitan area in the state, containing the cities of Phoenix, Scottsdale, Mesa, Glendale, and many others. Maricopa County has the highest wage rates in the state. Cochise County is a border county with a mix of relatively small cities, such as Sierra Vista, Wilcox, and Douglas. The wage rates in this comparatively rural county are substantially lower than those in Maricopa County. The consequence of the large difference in wage rates is that a million dollars of direct spending in Cochise County generates more direct jobs than a million dollars of direct spending in Maricopa County. The $96.7 million of direct spending in Cochise generates more jobs than the $128.8 million spent in Maricopa County.







33







Table 36 Direct Economic Impacts, by County, and for Arizona



County Direct Spending (Thousands of $) 96,753 128,634 301,598 243,738 191,158 990 962,871 962,871 Direct Jobs Direct income (Jobs) (Thousands of $) 2,822 2,077 7,038 7,343 5,794 29 25,102 25,102 43,754 49,777 122,008 108,451 81,491 352 405,834 405,834







Cochise Maricopa Pima Santa Cruz Yuma Other Counties SUM Arizona







Table 37 Total Economic Impacts, by County, and for Arizona



County Total Output (Thousands of $) 140,148 210,951 474,053 338,298 281,265 1,470 1,446,186 1,584,155 Total Jobs Total Income (Jobs) (Thousands of $) 3,551 3,162 9,589 8,981 7,237 37 32,558 35,179 57,527 79,931 181,211 137,705 110,663 498 567,534 628,418







Cochise Maricopa Pima Santa Cruz Yuma Other Counties SUM Arizona







Total economic impacts are reported in Table 37. The $962.9 million in direct Mexican visitor spending in Arizona `multiplies' to a total sales impact of $1.58 billion, 35,179 jobs, and $628 million in income. Again, economic impacts vary across counties. Each county has a different expenditure mix and different multipliers so the impacts are not proportional to the distribution of the original sales. Note that, although Santa Cruz County had the largest direct sales of the five counties, Pima County has the highest total impact of the five counties. The reason for this is that multipliers tend to increase with the size of a region. The size of a multiplier depends on two factors: the extent of interindustry linkages within the region and the amount of leakage from the region at each round of spending. Interindustry linkages have to do with how much businesses purchase from one another within the local economy. Generally, these linkages are much 34







stronger for large metropolitan areas or states than they are for small counties. Leakage refers to what portion of dollars spent by consumers is retained in the community for the next round of spending. The smaller the county or region, the larger the leakage, and therefore, the smaller the multiplier. Note that the total economic impacts for Arizona exceed the sum of the economic impacts for the counties. This is due to the fact that the models used in this analysis are noninteractive; rather, they are free-standing separate county and state models. When economic activity occurs within a county, a county economic impact model will only assess the additional economic activity generated within that county. But, in fact, there are `spillover' impacts that accrue to other counties within the state. Generally these spillover impacts accrue to more urbanized counties within the state, such as Pima County or Maricopa County. For example, when jobs and wages are created in Cochise County, persons in Cochise County put more money into their local banks, which pay workers who also put their money into local banks. Usually, the banks that are located in smaller regions have their headquarters and central offices located elsewhere. In this state, bank headquarters may be located in Pima County, but are most likely located in Maricopa County. Thus, in addition to the impact on the banks in Cochise County, small impacts are felt in Pima and Maricopa Counties that are not captured by any of the freestanding county models. Similar spillovers occur for most other sectors, e.g., retailing, service stations, services.







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IX.







MEXICAN VISITOR SPENDING AS A PERCENT OF TAXABLE SALES, BY COUNTY, AND REVENUE IMPACTS FOR PIMA COUNTY







Table 38 shows the percent of taxable sales in each county that is attributable to Mexican visitor spending. In this table, Mexican visitor spending, by county, is compared to Arizona Department of Revenue taxable sales figures. In order to make this comparison, several steps had to be taken to be sure the two sets of numbers are compatible. First, gasoline sales are removed from the Mexican visitor spending. Gasoline sales are taxable under the fuel tax, but they are not taxable under the `sales tax' of Arizona. Second, each expenditure category was multiplied by a percentage that represents the portion that is taxable in Arizona. For example, medically-related expenditures (doctors, medicine and hospitals) and groceries are not taxable in Arizona. `Car maintenance' is a mix between automotive parts and labor. In Arizona, the labor portion of maintenance expenditures is not taxable, so it is assumed that 65 percent of this category is taxable. The category, `business expenditures' may include some items for resale in Mexico, so it is assumed that only 80 percent of that category is taxable. In addition, a small adjustment was made for expenditures at casinos in Pima County because those are not taxable by the state of Arizona (attraction attendance will be discussed in a later section). When all adjustments were made, the resulting `taxable' Mexican visitor expenditures were compared to total taxable sales in each county, reported by the Arizona Department of Revenue. In Maricopa County, Mexican visitor spending represents approximately one-half percent of total taxable sales. This relatively low percentage is not surprising, given the distance 250 mile distance between Maricopa County and the U.S.-Mexico border and given the extremely large size of the Maricopa County economy. In contrast, `taxable' Mexican visitor spending represents 47.3 percent of the sales tax base of Santa Cruz County. Clearly, this county is very dependent on the spending of Mexican residents. Mexican visitor spending represents 12.4 percent of Yuma's sales tax base, 5.9 percent of Cochise County's tax base and 3.8 percent of Pima County's tax base. Table 38 Mexican Visitor Spending as a Percent of Taxable Sales by County



Percent of Taxable Sales Attributable to Mexican Visitors Cochise Maricopa Pima Santa Cruz Yuma 5.9 0.5 3.8 47.3 12.4







36







In addition to computing the percentages of taxable sales in each county attributable to Mexican visitors, more complete revenue impacts are computed for Pima County. Revenue impacts associated with Mexican visitors are computed using the Pima County Tax Revenue Model. This model is an extensive spreadsheet that embodies: state and local tax rates; state to local revenue-sharing formulas; current and recent tax collections from a variety of revenue sources for the city, county and state; parameters derived from economic theory and analysis; and state, county and local economic characteristics, such as population, employment, and income. By inputting Mexican visitor expenditures and total wages generated by those expenditures, the revenue model computes several categories that accrue to the State of Arizona, Pima County and the City of Tucson governments. The model does not calculate revenues that accrue to local school districts or local special districts. A detailed description of the Pima County revenue model is available from the authors. The model computes both direct and induced revenue impacts. Direct revenue impacts are revenues paid by the Mexican visitors when they make purchases. While direct revenues are generated by the industry being analyzed, induced revenues are generated when local income is spent in the county. When an industry hires workers, the payroll is spent and taxes are paid in the form of income taxes, sales taxes, property taxes, vehicle license taxes, etc. In addition, when a basic industry (such as restaurants that sell to Mexican residents) expands, the output and work force of other industries that sell to the basic industry also expand. Workers in these technically linked industries also spend their money in the community and generate revenues. These revenues associated with the total change in wages affected by tourism are `induced' revenues. Before revenues could be computed, the `taxable' Mexican visitor expenditures that occur in Pima County had to be further disaggregated into those that occurr in the City of Tucson, those that occur in other Pima County cities, and those that occur out in the county. This allocation was made by using information obtained by the survey on where Mexican visitors shopped and what attractions they attended in Pima County. This type of marketing information is discussed in more detail in a later section. Revenues generated by Mexican visitor spending is in Table 39. The State of Arizona receives over $10.8 million directly from their spending. Pima County receives $1.73 million, the City of Tucson receives almost $4.05 million, and other incorporated areas in Pima County receive $262,000. The largest direct revenue sources for all levels of government are associated with the city sales tax and the state sales tax, which is also shared with Pima County and cities within Pima County. Smaller amounts of revenues are generated by HURF (the Highway User Revenue Fund), the county's hotel/motel tax and the city's bed tax. Induced revenues, generated through employee spending are also presented in Table 39. The State of Arizona receives $8.6 million in induced revenues from Mexican visitor spending, while Pima County receives $2.1 million and the City of Tucson receives $1.896 million. Other incorporated cities within Pima County receive approximately $123,000. In total, Mexican visitor spending generates $29.6 million in revenues to the State of Arizona, Pima County, the City of Tucson and other incorporated areas in Pima County. Of this







37







amount, the state receives almost 66 percent, the City of Tucson receives 20 percent, Pima County receives 13 percent and other incorporated areas receive a little over 1 percent. Table 39 Pima County Revenue Impacts of Mexican Visitor Spending



Direct Government Revenues Induced Revenues Total Revenues







(Thousands of dollars) State of Arizona Pima County City of Tucson Other Cities in Pima TOTAL 10,888 1,730 4,045 262 16,924 8,622 2,103 1,896 123 12,744 19,510 3,833 5,940 384 29,668







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X. MARKETING INFORMATION ABOUT VISITORS TO PIMA COUNTY AND TUCSON Over 85 percent of all parties to Pima County are day trip visitors (Table 40). Day trip visitors spend over $235.7 million in Pima County, which is 78.2 percent of all Mexican visitor spending in the county. The numbers are similar for Tucson. Recall that `Tucson' does not refer to the City of Tucson; rather it refers to the general Tucson metropolitan area and only excludes non-Tucson cities in Pima County that are specifically mentioned by Mexican visitors, e.g., Ajo, Lukeville, Sasabe. Table 40 Day Trip Parties and Day Trip Visitor Expenditures: Tucson and Pima County



Pima County Number of Day Trip Parties % of Total Parties Expenditures by Day Trip Visitors % of Total Expenditures 1,278,861 85.3% Tucson 1,145,599 83.9%







235,767,663 226,572,989 78.2% 77.5%







Table 41 shows where Mexican visitors shopped. Interestingly, the 76.24 percent that visited one or more malls is almost identical with the percent of visitors that gave `shopping' as their primary reason for visiting Tucson (76.9 percent in Table 32). This means that almost every party that came to Tucson to shop visited at least one mall. The most popular mall for Mexican visitors is the Tucson Mall, with 68.91 percent of all Mexican visitors shopping there. Since 76.24 of all Mexican visitors went to one or more malls, 90 percent of all Mexican visitors who come to Tucson for the primary reason of shopping, visit Tucson Mall. Because the sum of the percentages that visit specific malls (e.g., Park Place, Tucson Mall) is 136.57, the survey figures imply that Mexican visitors who come to shop visit an average of 1.79 malls. In addition to mall shopping, substantial numbers of visitors went to non-Mall stores, particularly Target, Super K-Mart/K-Mart, Ross, Mervyn's, and Home Depot. Table 42 presents survey results relating to what attractions were attended by Mexican visitors. More than 25 percent of all Mexican visitors went to Casino of the Sun and almost 21 percent went to Desert Diamond Casino. When the survey results are combined, 33.4 percent of all Mexican visitor parties went to one casino or the other and some went to both. Although onethird of all Mexican visitors went to a casino, they spent relatively little at the casinos. In the table that decomposes Pima County expenditures into categories (Table 34), casino spending would appear either in the `other' category or the `restaurant' category. A separate analysis was conducted in which `restaurant' expenditures and `other' expenditures were computed for visitor parties that stated that they went to one or more casinos. This analysis indicates that casino visitors spent, at most, $6.9 million at casino restaurants and $4.0 million in `other' expenditures. These figures represent a maximum because these estimates represent all restaurant and `other' expenditures by visitor parties that stated that they visited casinos. However, these visitors could







39







also have eaten at non-casino restaurants and spent money on other non-casino items. Even if all $10.9 million is attributed to casinos, it represents only 3.61 percent of all Mexican visitor expenditures in Pima County. Thus, although one-third of Mexican visitor parties go to the casino, less than 3.61 percent of Mexican visitor spending is at the casinos. In the revenue analysis, it was assumed that half of the $10.9 million was non-taxable casino expenditures. Table 41 Where Mexican Visitors to Tucson Shopped



Malls One or more Malls Park Place Tucson Mall Foothills Mall El Con Mall Non-Mall Stores Mervyn's Best Buy Ross Target Home Depot Grainger's Super K-Mart/K-Mart Costco Wal-Mart Other 76.24 38.69 68.91 22.03 6.94







4.39 1.35 6.43 11.25 4.32 0.81 9.97 2.45 0.54 2.91







In addition to visiting casinos, 5.18 percent of Mexican visitors mentioned that they visited the University. Unfortunately, there is no way of knowing what they do at the University, e.g., visit friends/relatives attending the University, visit one of the attractions on campus. Beyond casinos and the University of Arizona, the Arizona-Sonora Desert Museum, Old Tucson Studios, and Reid Park Zoo are the three most popular attractions for Mexican visitors, receiving 3.52, 3.49 and 2.53 percent of visitor parties, respectively. The question regarding how/where Mexican visitors "found out about the attractions that the Tucson area has to offer" had a very low response rate (approximately 40 percent). It seemed as though respondents had difficulty answering because most felt that they had `always known' about Tucson. Of the 40 percent of visitors that responded to this question, over 84 percent said they learned of Tucson from friends or family and 8 percent didn't remember or didn't know where they learned about Tucson (Table 43). Periodicals, television, and radio announcements were noted by 2.4, 2.4 and 1.4 percent of visitors, respectively. Although visitors were asked to identify which periodical, which television station, and which radio channel, few identified the particular source of the information. No specific ratio stations were mentioned, but the television station Telemundo was mentioned. Responses who said they learned about attractions in Tucson







40







in `other' ways included reading billboards, passing by Tucson, and learning from people at work. Table 42 Tucson Attractions Attended by Mexican Visitors



Tucson Attraction Percent of Visitor Parties 25.52 20.94 5.18 3.52 3.49 2.53 0.54 0.39 0.27 0.27 0.27 0.27 0.27 0.02 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00







Casino of the Sun Desert Diamond Casino University of Arizona Arizona-Sonora Desert Museum Old Tucson Studios Reid Park Zoo Mt. Lemmon A Mountain Sabino Canyon Tucson Mountain Park Biosphere 2 Pima Air and Space Museum Tucson Botanical Gardens Colossal Cave Catalina State Park Davis-Monthan AFB Downtown Arts District Fort Lowell Museum Kitt Peak Saguaro National Park San Xavier Mission Titan Missile Museum Tohono-Chul Park Tucson Convention Center







Table 43 How Mexican Visitors Learned About Tucson



Friends of Family Don't Remember or Don't Know Periodical Television Radio Announcement Magazine Article Previously Lived in Tucson Travel Guide 84.45 7.90 2.40 2.40 1.43 0.71 0.71 0.00







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XI. ANALYSIS OF VISITORS WITH AND WITHOUT I-94 VISAS Beginning in December 1999, the border zone was extended from 25 to 75 miles, effectively making the Tucson area a border town. Mexican residents could travel to Tucson on the same `laser visas' they had used to travel to Nogales, Douglas and San Luis. As of that date, they did not have to obtain the higher-level I-94 visa to travel to Tucson. Initially, the survey questionnaire asked whether Mexican visitors had an I-94 visa. It quickly became clear that the I-94 terminology was not familiar to border crossers, so the question was changed to ask whether or not they had the type of visa that would allow them to travel to Phoenix. This revised way of asking the question was well understood. Almost 80 percent of all Mexican visitors to Arizona have an I-94 visa (Table 44). Obviously, all visitors that enter Arizona by plane have an I-94 visa. The percentages of visitors with I-94 visas vary across U.S.-Mexico border points of entry. Sasabe has the lowest percentage of visitors with I-94 visas (60.18 percent) and Naco has the highest percent of visitors with an I-94 visa (89.47 percent). Table 44 Portion of Mexican Visitors with I-94 Visas, by Port



Port of Entry Percent with I-94 Visas 79.00 73.54 73.04 89.47 84.14 60.16 100.00 100.00 79.80







Nogales Douglas Lukeville Naco San Luis Sasabe Phoenix Tucson All Ports







Table 45 compares the percent of visitors with an I-94 visa who travel to Tucson with the percent of visitors who do not have an I-94 visa, by port. Of those with an I-94 visa, 14.64 percent visit Tucson. Of those without an I-94 visa, only 6.68 percent travel to Tucson. This result suggests that persons without I-94 visas are either unaware of the INS change which permits them to travel as far as Tucson or that parties who do not have an I-94 visa are inherently different than those with an I-94 visa. Further analysis will compare income distributions of those with and without I-94 visas and will examine how much each group spends in an attempt to understand why higher percentages of parties who do not have an I-94 visa don't visit Tucson.







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Table 45 Percent of Mexican Visitors With and Without I-94 Visas Who Visited Tucson



Port of Entry Percent of Parties Percent of Parties With I-94 Visa Without I-94 Visa Who Visited Tucson Who Visited Tucson 27.98 15.54 3.76 11.76 20.12 11.99 5.00 90.38 14.64 14.07 10.82 0.00 0.00 0.00 0.00 N.A. N.A. 6.68







Nogales Douglas Lukeville Naco San Luis Sasabe Phoenix Tucson All Ports N.A. means Not Applicable







Monthly incomes of Mexican visitors are substantially lower for those without I-94 visas than for those with I-94 visas (Table 46). Over 43 percent of visitors with an I-94 visa have monthly incomes over $10,000 pesos per month compared to only 24 percent of those without an I-94 visa. Similarly, less than 26 percent of visitors with an I-94 visa have monthly incomes less than 5,000 pesos, but almost 40 percent of visitors without an I-94 visa have incomes below 5,000 pesos. Table 46 Monthly Income Distribution of Mexican Visitors With and Without I-94 Visas



(Percent of Row Totals)







Income Groups (in Pesos) Less than 1,000 With I-94 Visa Without I-94 Visa 0.80 0.67 10002,000 1.98 6.04 2,0005,000 23.08 33.19 5,00010,000 30.71 35.89 10,00020,000 20.25 13.78 Over 20,000 23.18 10.44 SUM







100 100







The relative income distributions between parties with and without the I-94 visa suggest that the price of I-94 visas may be a factor in who has and who does not have an I-94. Similarly,







43







the lower income distribution also explains at least part of why a lower portion of persons without the I-94 travel to Tucson than persons with the I-94. The friction of distance is harder to overcome for individuals with comparatively low incomes. Of all Mexican visitor parties to Tucson, 87.83 percent have their I-94 visa and 12.17 percent do not. Expenditures per party are lower for visitors without the I-94 visa than for visitors with the I-94 visa, which is consistent with relatively lower incomes for visitors without the I-94. Visitors without I-94 visas represent 9.80 percent of total expenditures to Tucson. Table 47 Parties, Expenditures, and Per Party Expenditures of Visitors to Tucson, With and Without an I-94 Visa



With I-94 Visa Percent of Parties Percent of Expenditures Per Party Expenditures ($) N.A. means Not Applicable. 87.83 90.20 215.86 Without I-94 Visa 12.17 9.80 169.19 Sum 100 100 N.A.







In addition to the income characteristics of parties with and without an I-94 visa, the length of trip was also examined. It was extremely interesting to learn that virtually all visitor parties to Tucson, who traveled without an I-94 visa, came from more than 50 miles beyond the U.S.-Mexico border. In other words, the entire 9.8 percent of expenditures in Tucson made by parties without an I-94 visa traveled from areas within Mexico further than 50 miles from the border. Conversely, every Mexican visitor party that visited Tucson from cities and towns close the U.S.-Mexico border (50 or fewer miles from the border) had an I-94 visa. Apparently, there is a convenience factor involved in obtaining the I-94 for parties that do not reside near the border. Because of the distance these parties have to travel to get to the U.S.Mexico border, they would be expected to make fewer trips. Because they would be expected to make fewer trips, having the I-94 visa is more expensive (both in terms of time and money) on a per trip basis. Obtaining an I-94 visa could be onerous for low-income individuals that live more than 50 miles from the border. Conversely, it is convenient for persons living within 50 miles of the border to make numerous trips into Arizona, so having the type of visa that lets them travel anywhere in the state is worthwhile. Tables 44 through 47 describe how much parties with and without I-94 visas spend and provide income distributions for each group. Table 48 presents the results of questions relating to a) whether or not the visitor party made more trips in 2000 than in 1999, b) the city visited in the additional trips, c) how many more trips they made in 2000 than in 1999, d) 44







and how much more they spent per year in 2000 than in 1999 as a result of the increased trips. The purpose of these questions was to assess the impact of the increase in the border zone from 25 to 75 miles, but the low response rates reduce their usefulness in making inferences from the responses. One reason for this was the complexity of the questions. In early 2001, in the beginning of the year of the survey, these questions ask visitors to compare the number of trips and spending during the previous year with the number of trips and spending during the year before that. By the end of the 2001 survey year, the questions are essentially asking them to compare their visits and spending two years ago with visits and spending three years ago. As a result, the response rate substantially diminished for these comparative questions. Table 48 Estimated Impact of the 75-Mile Border Zone on Tucson



With I=94 Visa Estimated Number of Parties to Tucson Number in sample that responded to question about whether they make more trips Percent of respondents who say they make more trips Percent of those who make more trips who report where they went Percent of those who say where they went who report number of previous/current trips Previous number of trips per year Current number of trips per year Previous expenditures per year ($) Current expenditures per year ($) Difference in expenditures per year ($) 1,089,928 Without I-94 Visa 275,896







2,355







152







5.11







18.24







76.60







48.19







79.00 10.01 23.03 218.86 600.76







66.33 3.42 5.91 269.80 604.84 335.04







Relatively small shares of visitors reported that they make additional trips (Table 48). Among visitors with I-94 visas, 5.11 percent reported making more trips in 2000 than in 1999, compared to 18.24 percent of visitors without I-94 visas. Following this question, the response rates substantially diminished. Following down the column for visitors who did not have I-94 visas, of the 18.24 percent who responded to whether they made more trips, only 48.19 percent stated where they went on those increased trips. Of these, virtually all indicated their additional trips were to Tucson. Of that 48.19 percent, only 66.33 percent indicated the previous and current number of trips and the previous and current spending per year. 45







The diminishing response rates as more and more specific information is requested make it risky to generalize to the whole sample. For example, if each of the percentages are applied to the total sample (152) of parties that did not have I-94 visas, there are only 9 parties left to use to estimate the increase in spending from 1999 to 2000. If one were to multiply a) the difference in dollar amounts reported ($335) times b) the percent of parties reporting that they made additional trips following the change in the border zone (18.24 percent), and c) the total estimated number of parties to Tucson that do not have I-94 visas (275,896 parties), an estimate of $16.86 million is obtained. This figure can be interpreted as an estimate of increased expenditures in Tucson made by individuals as a result of the increase in the border zone to 75 miles. The $16.86 million figure is approximately 5.77 percent of the 2001 estimated Mexican visitor expenditures in Tucson. Recall however, that this estimate is based on extremely low response rates to these questions.







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XII. SUMMARY AND CONCLUSIONS The results of this study demonstrate the economic importance of Mexican visitor spending to Arizona's economy. More than 25,000 wage and salary jobs in Arizona at eating and drinking establishments, retail establishments and other spending-related sectors are directly attributable to Mexican visitor spending. Through local purchases of supplies by businesses and the spending of income derived from visitor-related jobs, the visitors generate another 10,000 jobs in Arizona in 2001. These jobs account for more than $628 million in income in the state and $1.584 billion in sales. The largest economic impact of Mexican visitor spending occurred in Pima County. A large county that includes Tucson and extends all the way to the U.S.-Mexico border, Pima receives 29 percent of the total job impact, 33 percent of the total sales impact, and 32 percent of the total income impact. Santa Cruz County, the border county that contains Nogales, the largest port of entry into Arizona, receives the second-largest share of the total impact: 28 percent of total jobs, 23 percent of total sales, and 24 percent of total income. Yuma County receives 22 percent of jobs, 19 percent of total sales, and 18 percent of total income; Maricopa County receives 10 percent of the jobs, 15 percent of total sales, and 14 percent of total income; Cochise County receives 11 percent of the jobs, 10 percent of total sales, and 10 percent of total income. Mexican visitor spending represents a staggering 47.3 percent of total taxable sales in Santa Cruz County. Mexican visitor spending represents 12.4 percent of taxable sales in Yuma County, 5.9 percent in Cochise County, 3.8 percent in Pima County, and 0.5 percent in Maricopa County. The larger the county, in terms of population and income, and the further away the county is from the border, the smaller the share of total taxable sales attributable to Mexican visitor spending. Over 23 million Mexican visitors come to Arizona in 10.49 million parties. They come in parties of 2.20 persons that include 1.55 adults, 0.24 adolescents, and 0.41 children. Almost 70 percent of all visitor parties enter via motor vehicle across the U.S.-Mexico border and over 29 percent walk across. Less than one percent of all Mexican visitor parties to Arizona fly into the state. Over 96 percent of all Mexican visitor parties are day-trip visitors; less than 4 percent spend one or more nights in Arizona. Approximately 0.8 percent spend one night, 1.94 percent spend two nights, and 1.17 percent spend more than 3 nights. Of the relatively few who spend one or more nights in Arizona, 78.31 percent stay in hotels and 20.65 percent spend the night with family and friends. The primary reason for visit is shopping, which accounts for 72.28 percent of all visitor parties. Work was cited as the primary reason for visit by 14.41 percent of all visitor parties and visiting family was cited by 7.76 percent of all parties. Other reasons, such as vacation, medical, business, personal and other represented between 2.51 percent and 0.22 percent of primary reasons for their visits.







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Over 99 percent of Mexican visitor parties come from the State of Sonora in Mexico. More than 56 percent of those come from Nogales, Sonora, 25.47 come from San Luis Rio Colorado, 10.45 percent come from Agua Prieta, and 2.62 percent come from Hermosillo. The remainder comes from 20 or more other cities scattered mostly through Sonora, but also from Sinaloa and Baja, California. Marketing information for visitors to Pima County indicate that day trip visitors from Mexico represent 85.3 percent of all visitor parties and 78.2 percent of all expenditures. This means that day trip visitors spend $235.7 million dollars in Pima County. Over 76 percent of all Mexican visitor parties visit one or more malls in Pima County. Almost 69 percent of all visitor parties visit Tucson Mall, 38.69 visit Park Mall, 22.03 percent visit the Foothills Mall and 6.94 percent visit El Con Mall. Construction activities at El Con Mall during 2001 may attribute to the relatively low rate of visitation. One-third of all Mexican visitor parties to Pima County visit one or the other of the two casinos in Pima County, but these visits represent less than 3.6 percent of total Mexican visitor spending in Pima County. Only 3.52 percent of Mexican visitor parties go to the ArizonaSonora Desert Museum, 3.49 percent visit Old Tucson Studios, and 2.53 percent visit Reid Park Zoo. Most of the remaining attractions in Tucson were not visited at all by Mexican visitors or had extremely low visitation rates. The bulk of visitors learn about Tucson from friends and family. Combined, these results suggest that additional marketing efforts may be useful to both attract visitors to Tucson and to provide information on attractions in Tucson, which may keep the Mexican visitor here for a longer period of time. Separate analysis for Pima County indicates that Mexican visitor spending in that county alone generates almost $30 million in revenues that accrue to the state government, Pima County government, the City of Tucson and other incorporated cities within the county. Of this $30 million, $16.9 million are revenues generated at the time Mexican visitors spend their money in Tucson. The remaining $12.7 million is in induced revenues, or revenues that are generated as workers, who are directly or indirectly related to Mexican visitor spending, earn and spend in the community. The State of Arizona receives almost 66 percent of the $30 million in revenues, Pima County receives 13 percent, the City of Tucson receives 20 percent, and other incorporated areas receive a little over 1 percent. Almost 80 percent of all Mexican visitor parties had an I-94 visa, which would permit them to travel deep into the U.S. The other 20 percent do not have an I-94 visa, which permits them to travel 75 miles beyond the U.S.-Mexico border. Parties without I-94 visas have lower incomes than parties with I-94 visas, suggesting that the price of the visa may be an issue for some families. Of all visitors to Tucson, 12.17 percent do not have an I-94 visa. They spend $169.19 per party, which is lower than the $215.86 spent by parties with I-94 visas. Parties without an I-94 visa accounted for 9.80 percent of all spending in Tucson. An interesting finding was that all visitors to Tucson who did not have an I-94 visa came from more than 50 miles beyond the U.S.-Mexico border. Conversely, virtually all Mexican visitors to Tucson that come from within 50 miles of the U.S.-Mexico border have their I-94 visas. These results suggest that for lower income families that live further than 50 miles from the border, the I-94 visa is expensive on a per trip basis, given that the frequency of trips decreases with distance.







48







It is interesting to contrast the Mexican visitor with other tourists to Pima County. Mexican visitors come primarily to shop, so their visits are short (mostly day trips) and focused (they do relatively little else other than shop). In contrast, other visitors to Tucson spend between 4.8 nights for hotel visitors to 7.8 nights for visitors to private homes. These other visitors to Tucson come primarily for business, leisure, or a mix of business and leisure, and they attend many of the attractions in and around Tucson. In order to increase Mexican visitor spending, marketing efforts should focus on how to convert some of our day trip Mexican shoppers into overnight tourists.







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REFERENCES Charney, A. H. and J. Leones (1997). Tourism in the Tucson Metropolitan Area: Characteristics and Impacts of Overnight Visitors, 1995-96. College of Business and Public Administration and College of Agriculture, University of Arizona. DeGennaro, N. and R. Richey (1978). The Economic Impact of Mexican Visitors to Arizona, Final Report. Division of Economic and Business Research, College of Business and Public Administration, report prepared for the Arizona Office of Tourism. Govierno del Estado de Sonora, Map of Sonora, Mexico, http://216.122.245.170/turismo/default.htm. Hopkins, R. G. (1992). The Economic Impact of Mexican Visitors to Arizona. Economic and Business Research Program, Col