Successful tourism marketing programs
Not sure what a tourism district can really do? Read on for an introduction to some of the most successful tourism districts and their marketing programs.
Case Study: Billings, Montana Tourism Business Improvement District
Billings, Montana is the home of Yellowstone National Park and a natural tourist destination. Despite Yellowstone and many other well-known tourist attractions, Billings’ hotel occupancy in 2007 was 62.2%. Billings’ hotels were marketed with $200,000 generated from bed taxes – well below the $1 million average spent by its competitive set. And as in many destinations, the bulk of bed-tax funding had been diverted from marketing by the city. Needing a new approach to funding marketing, hotels crafted a plan to create tourism improvement districts. At the hotels’ request, the state in 2007 modified existing business district laws to allow formation of tourism districts.
Montana’s tourism district law is unique in that starting the formation process requires a weighted petition signed by 60% of the district hotels based on the hotels’ physical footprint. Once petitions have been submitted the local government can create the district. When enacted, the district assessment is imposed on the land owner and collected with property taxes, based upon a per-room per-night fee.
In Billings, a $0.75 per-room per-night tourism district assessment went into effect in 2007, and generated 400,000 additional marketing dollars. That year, according to a 2010 study conducted by Randall Travel Marketing, lodging demand increased 4.3%, occupancy increased 3%, and average daily rates increase 9.2%. Lodging revenue grew from $62.2 million in 2007 to $63.18 million in 2008. In 2009, the district assessment was increased to $1.00 per-room per-night, to generate an estimated $526,000 in 2009-2010.
Billings’ TBID funds have been used to enact a multitude of marketing and sales programs. An improved tourist-centric website was launched, which garnered 91,591 unique visitors during the first quarter of 2010-2011. The Randall study was commissioned to learn more about Billings’ strengths and weaknesses in the tourist market and allow for maximum utilization of tourism marketing funds. Dedicated staff work to attract business meetings and convention visitors, and improve off-night and off-season occupancy.
In 2012, it was reported by the Billings Gazette that Billings’ Tourism Business Improvement District has successfully boosted business for local hotels and motels, increasing occupancy by 22 percent over the past three years. Tourism researcher Judy Randall reported that in the first nine months of 2012, at least 77 percent of the 4,000 hotels rooms in Billings were booked.
In addition to benefiting the lodging industry, TBID marketing programs have had a notable impact on state and local government revenues. The Randall study found that every bed-tax dollar invested in promoting Montana yielded $3.50 in state and local tax revenue. Further, once Montana advertised in a market, awareness of the state as a destination rose 5-10 fold; those who saw Montana advertisements were 3 times more likely to plan travel to the state. The increase in marketing due to TBID funds will help continue and grow this phenomenon, for the benefit of the lodging industry and state.
Case Study: San Diego Tourism Marketing District
Sunny San Diego, California may not seem like a destination in need of a TID – in fact, you had probably visited San Diego long before it created a TID in 2007. But, what you may not know is that the San Diego tourism industry began suffering from a diminishing availability of public funds for destination marketing in the early 2000s. By 2003, San Diego’s lodging industry was actively investigating alternative methods of funding marketing programs. After dozens of meetings to consider their options, lodging businesses decided to create a TID. In 2005, a consultant was hired and TID formation began.
Following the typical TID formation pattern, a steering committee was designated to guide the project. Over two years, the steering committee and consultant worked with the City of San Diego to secure adoption of an ordinance allowing TID formation (a method of enacting enabling legislation available in some jurisdictions), reached out to lodging business owners, and successfully navigated the City approval process. In 2007, the committee’s efforts resulted in formation of the San Diego Tourism Marketing District.
With the TID as a stable funding force for destination marketing, the San Diego CVB successfully launched the hugely popular “Happy Happens” advertising campaign. Over its first five years, the District provided more than $25 million a year in marketing funds to the San Diego Convention and Visitors Bureau, the San Diego Film Commission, the San Diego Sports Commission, and numerous other tourism-related organizations and events. A total of $112 million was deployed, directly supporting sales of 15 million hotel room nights worth $2.18 billion. For every dollar spent by the TMD, the return on investment was an impressive average of $19.50.
The District was initially created for a five-year term, and included only hotels with more than seventy rooms. In 2012, hoteliers expanded and renewed it for a forty year term. The renewed district includes all hotels in the City of San Diego, with smaller hotels paying a .55% assessment and larger hotels paying 2%. It is expected to raise at least $30 million annually to continue the highly successful marketing efforts.
Case Study: Napa Valley Tourism Improvement District
The breathtaking Napa Valley is home to some of the world’s finest wineries, restaurants, and hotels; it is the ultimate luxurious getaway destination. Despite its many tourist attractions, the Napa Valley found itself at a competitive disadvantage with its neighbors. The Valley was surrounded by competitive destinations outspending its $500,000 tourism marketing budget. With looming government budget cuts threatening the Valley’s already inadequate marketing funds, it was time for a new approach.
In 2009, the Napa Valley Destination Council (formerly the Napa County Convention and Visitors Bureau) began looking for ways to increase funds for marketing initiatives. The Destination Council knew many competitors had created tourism marketing districts, quickly determined a TBID was the best approach for the Valley, and initiated the district formation processin September 2009.
Napa Valley encompasses the entire county of Napa, including the cities and towns of Yountville, Calistoga, St. Helena, American Canyon, and Napa. With over 200 lodging businesses spread across nearly 800 square miles, the Valley presented unique complications to the district formation process; bringing several distinct destinations with differing characteristics together in one district was a complex challenge. An extensive outreach process was undertaken to reach lodging business owners and build consensus. Hoteliers recognized the need for collaboration and cooperation, and ultimately joined forces to create the Napa Valley Tourism Improvement District in July 2010.
With an annual budget slightly over $2 million, the Napa Valley Tourism Improvement District has just begun to implement new and exciting tourism marketing programs. A portion of the funds raised are dedicated to local marketing efforts in the district’s individual cities, allowing for creative and specialized tourist attraction efforts. In Yountville, a portion of the district’s funds were utilized to open an ice rink; while lodging businesses in the City of Napa used funds to promote a downtown art walk. Local marketing efforts, supplemented by a valley-wide tourism marketing program, have created new opportunities for Napa Valley lodging businesses.
“Our district 'leveled the playing field' with the competition.”