Internet Travel Monitor - Marketing, Research & Tech
March 8, 2017
Political Threats Force U.S. Tourism Boards to Examine Their Roles
Tourism marketing funding in at least seven U.S. states is in jeopardy of getting reduced or cut altogether as destination marketing organizations face calls from state legislators and constituents to become more transparent with spending.
Visit Florida’s debacle with Miami rapper Pitbull’s $1 million contract with the state has rustled feathers throughout the destination marketing sector, led to the departure of three C-suite executives (including ex-CEO Will Seccombe who Skift spoke with earlier this month), and resulted in members of the Florida House of Representatives moving to eliminate the organization’s funding.
But Visit Florida — one of the top-funded tourism boards in the U.S. — is only the latest example of a state tourism organization fighting for its existence.
Florida, Connecticut, and Massachusetts face tourism marketing budget cuts and Hawaii’s state legislature proposed a bill last month to make the Hawaii Tourism Authority more transparent with how it spends public funding to promote the state. Colorado and Pennsylvania have seen steep tourism budget cuts while Washington State is weighing whether to bring back tourism promotion.
Colorado, for example, saw visitation drop 30 percent after it eliminated funding for tourism promotion in the 1990s but has since reinstated its tourism budget. Pennsylvania’s state tourism marketing budget decreased more than 77 percent between 2009 and 2015, dropping from $32.5 million to $7.3 million.
With all the political discourse and debate over tourism marketing budgets one must wonder — what is the role of a destination marketing organization in promoting tourism?
Skift spoke to tourism boards across the U.S., including two in Florida, to get their perspectives on why their existence is necessary and how they’re working to convince local legislators and taxpayers that the work they do directly benefits residents in destinations they represent.
We used Visit Florida as the backdrop to our conversations as the organization’s fight represents others playing out in state houses and city halls in the U.S. and abroad.
THE ROLE OF DESTINATION MARKETING ORGANIZATIONS
Detroit, Michigan established a convention and visitors bureau in the 1890s to help promote itself as a convention city and meeting point — one of the earliest examples of a tourism marketing organization.
Milton Carmichael, a reporter for the Detroit Journal, wrote in 1896, “During the past few years Detroit has built up a name as a convention city, delegates coming from hundreds of miles, manufacturers holding their yearly consultations around our hotels, and all without any effort on the part of the citizens, or any special attention paid to them after they got here. They have simply come to Detroit because they wanted to….Can Detroit by making an effort, this year secure the holding of 200 or 300 of these national conventions during the year of ’97. It will mean the bringing here of thousands and thousands of men from every city in the union…and they will expend millions of dollars with the merchants and the people of the ‘City of the Straits.'”
Getting local businesses aligned around tourism is one of the most important jobs of a tourism board, “In that article, he not only pointed out the obvious value of this business to Detroit but argued that local businesses should band together to organize a formal and organized promotion of Detroit as a desirable convention destination to get more of this business,” wrote Professor Robert C. Ford of the University of Central Florida in a 2007 research paper.
Beginning in the 1980s, tourism boards played a role in trying to revitalize areas of downtown that had deteriorated from decades of urban flight. “A convention center could anchor urban renewal of a city as it would attract hotels, restaurants, and other support industry development to replace a decaying area,” Ford wrote. “Further, it could provide employment in well-paid construction jobs and provide an ongoing source of employment in the completed facilities.”
Tourism boards produce varying results in helping locals reap the rewards of travelers passing through their towns.
While running marketing campaigns across various platforms is a significant part of a tourism board’s functions, marketing campaigns are far from the only responsibilities of these organizations. “Marketing pushes a person from hoping to go to actually coming,” said Patty Jimenez, a spokesperson for Visit Jacksonville in Florida.
Many tourism boards claim their main purpose is to support and promote economic development in communities and that tourism marketing dollars are direct investments in local economies.
That’s also the view of Jorge Pesquera, CEO of Discover the Palm Beaches, the tourism board for the Palm Beaches, Florida. “At the end of the day what we do here is economic vitality which results in job retention and job expansion,” said Pesquera. “This Visit Florida battle is a bit of an affront to destination marketing considering there are university courses on destination marketing.”
Charging hotel bed taxes, for example, is a popular way for cities to collect funds from tourists to pay for economic development projects they otherwise couldn’t afford. Many tourism boards are funded either in large part or exclusively by these bed taxes.
And promoting cities, regions and states as places to live is equally important as marketing them as vacation destinations, according Source Cincinnati, an organization funded by 13 business and civic organizations including the Cincinnati Convention & Visitors Bureau that was created to garner earned media for Cincinnati, Ohio.
Securing placements in local and national publications is indeed a priority for tourism boards. As Pesquera put it, “when destinations are out of site they are out of mind.”
Source Cincinnati’s mission is to portray a bigger picture of the city and is different than the city CVB’s marketing efforts in that it’s focused on telling stories that build the region’s reputation as an attractive place for business, talent and visitors, said Susan Lomax, a spokesperson for the organization.
Lomax said the organization’s efforts in promoting economic development led the city to make Source Cincinnati a permanent arm of the convention and visitor’s bureau in 2016 when its temporary, three-year contract was due to expire. “The stories we’re trying to tell include Cincinnati’s new startup ecosystem, it’s neighborhood revitalization, new lifestyle offerings, business development – and how all of the parts are coming together to create new momentum and vibrancy.”
In Florida, however, a few state representatives feel their districts haven’t benefited from Visit Florida’s work and that certain parts of the state see more returns than others from tourism investment. “Incentives are unfair to millions of Floridians who will never see the benefits of a single dollar from incentives,” said Representative Paul Renner, speaking February 8 at a subcommittee hearing on the bill to eliminate Visit Florida’s funding on. “I believe this bill will get us back on economic prosperity.”
Tourism boards can’t promote their destinations or economic development without securing funding through the blessing of local politicians, said John Percy, CEO of Niagara USA, the tourism board promoting travel to the Niagara Falls, New York region.
Having someone on staff with political experience has been vital to the organization’s future, said Percy. “It used to be that we spent 20 to 40 percent of our time with elected leaders,” he said.
Talking to politicians is part of daily work lives at Niagara USA, said Percy. “Now you’re looking at 50 to 70 percent of our time spent with elected leaders or in the political realm on a local, state and national level,” he said.
Percy said educating local politicians about the benefits of tourism is only half the battle — listening to what’s going on in their worlds is also key. “Because a lot of time the only funding increasing in communities are the tourism funds,” said Percy. “That pot of money looks very attractive to municipalities when other funding is dropping but tourism funding is increasing.”
Niagara USA, when proposing budgets to politicians, has found that using percentages to explain their work in tandem with dollars has been helpful. “It changes their whole perception because sometimes there’s a wild perception out there that too much is spent on salaries in our organization because we are quasi-public,” said Percy.
“We are a private organization but you are always quasi-public because our tax dollars run through municipalities,” he said.
The region is also in a unique bi-national situation where many travelers, when planning a trip to Niagara Falls, usually picture the falls but don’t consider there are two sides in two different countries with distinct identities.
What is a tourism board’s role in this situation? Promoting differences in nearby cities and attractions remains a challenge and strength of the organization as Niagara Falls, Canada struggles with its tourism funding. “We have to wipe away those geopolitical boundaries and work outside of those,” said Percy. “We have to work inside those within our communities but on the consumer site they don’t care about the geopolitical boundaries and we have to give the consumer what they want.”
Visit Jacksonville, like many tourism boards, negotiates its contract with local authorities and is currently in the process for this year. “This year our tourism development council is actually thinking about separating our bid into three different components,” said Jimenez.
“That means that we would have three different contracts — one to manage visitor centers, one to manage convention sales and one to manage marketing. We’ve been one entity for 20 years but imagine what three could do?” she said.
VISIT FLORIDA’S CASE: AN OUTLET TO THE WORLD
Country, regional or state tourism boards generally act as larger-scale mouthpieces for their smaller cities and destinations.
In Florida, smaller or lesser known destination marketing organizations such as Visit Jacksonville said they couldn’t compete with more popular destinations if Visit Florida disappeared.
“Because of Visit Florida, we’re not competitors with other destinations in Florida,” said Jimenez for Visit Jacksonville. “I know all the PR reps at Visit Florida and we work together to tell people to visit Miami but then go here. We work together as destination marketing organizations to make sure it’s a regional experience as opposed to just one destination.”
Regional, national or international trade shows are often too expensive for smaller tourism boards, independent hotels or tour operators to attend without support from a larger marketing arm. Both Pesquera and Jimenez said their organizations can attend reputable trade shows because of Visit Florida.
A national tourism marketing organization such as Brand USA is also a plus for smaller destinations, though Jimenez said Visit Jacksonville works with Brand USA more for advertising than marketing. “We go to shows with Brand USA that are bigger and more international because our budget has limitations,” said Jimenez. “Of course, we work closely with Visit Florida because it’s easier to access within our own state. But if you have somebody who can amplify your message, why not use it?”
TOURISM BOARDS’ FUTURE IN THE TRUMP ERA
Tourism boards have always faced funding battles and have had to justify their existence even if their numbers add up and they help generate the amount of tourist taxes they commit to.
But the ascendance of President Trump, the Tea Party and other nationalist movements across the U.S. and Europe has certainly emboldened some communities to rethink how they’re spending public money and whether they should reallocate tourism marketing funds elsewhere.
When asked what he thinks his marketing budget will look like this year in light of Trump and national politics, Percy said Niagara USA is “really in a wait and see mode.”
Other states such as California have plenty of tourism marketing funds to work with and aren’t overly concerned about the coffers running dry.
But if Visit Florida’s funding is eliminated, for example, that sends a powerful message to other cities and states from the U.S.’ most popular tourist destination about how to consider tourism marketing funds and the role of tourism boards.
“If Visit Florida is cut, we could go from our record of 7.3 million visitors this year in the Palm Beaches to possibly 4.2 million, spending could decrease a couple billion dollars in Palm Beach County and roughly 30,000 jobs could be lost,” said Pesquera.
Roger Dow, CEO of the U.S. Travel Association, said during public testimony for the bill to defund Visit Florida last month that, “This is not a zero-sum game. Pennsylvania cut their tourism marketing budget by $20 million and lost $600 million in tax revenue. Colorado lost more than $135 million in revenue when they cut their tourism marketing. If you pass this bill you will become an income tax state or [have to] cut other services.”
Posting record visitation and/or visitor spending is one of the highest accomplishments a tourism board can achieve each year. At the same time, when millions of more people visit Florida each year, for example, many politicians wonder why tourism marketing is necessary if the state is already popular.
Tourism boards have taken on more functions in recent decades but promoting economic development has been a consistent theme for the sector since its beginnings.
Convincing lawmakers that locals benefit from tourism marketing has become increasingly important for ensuring tourism boards’ survival.
Copyright 2017 Skift. All rights reserved. From http://www.skift.com. By Dan Peltier, Skift.
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