Action

Support industry coalitions which are building a case for additional aid for tourism businesses, as well as American Rescue Plan Federal replacement revenues for lost hotel tax revenues. (For example, provide access to data/evidence and connections.)

Support local, small businesses — particularly micro, minority-owned and unbanked businesses — to apply for direct aid and technical assistance.
Encourage industry players to pool funding and resources (for example, to purchase PPE or for marketing activities).

Explore opportunities to make cost cutting savings by partnering, delivering through others, and/or merging operations.

Background

The pandemic has placed enormous budget pressure on municipal governments, threatening deep and potentially lasting cuts to programming. The U.S. Travel Association and Tourism Economics estimates that the depressed level of travel spending has caused a loss of $64 billion in federal, state, and local tax revenue since March 1 2020.

Many DMOs and convention centers rely on hotel tax revenues for a large share of their operations. From 2020 to 2025, hotel tax revenues in 25 largest US cities are estimated to fall short of 2019 levels by approximately $6.1 billion.

As a result, DMOs and municipal governments may need to refinance debt that is repaid by hotel tax revenues if reserves are insufficient to cover existing debt service obligations. They may also need to temporarily close convention centers, delay convention center expansion projects, and/or reduce DMO operations unless American Rescue Plan funds can be used, alternative revenue sources can be found, or hotel tax revenues recover.

Some cities are implementing temporary measures. For example, McCormick Place Convention Center in Chicago has traditionally accessed taxes from restaurant and hotel sales, car rentals and airport departures, as well as the State of Illinois’ sales tax. When sales taxes dropped in 2020, the Center tapped into a reserve fund to help pay back its debt. In 2021, it plans to refinance its debt to replenish the fund.

Guidance

Bloomberg Associates has created a tactical guide on new sources of operating funding for economic development programming, some of which may be relevant for programming to support your tourism economy.

Cities may also want to look at alternative DMO funding models, which do not rely on hotel or sales tax.

For example, Julie Heart from CFO by Design has suggested a shared-services model between local convention bureaus, Chambers of Commerce and economic development councils.

Under this model, the convention bureau would develop branding and creative services for the city, the Chamber would educate local businesses on the value that tourism and meetings bring to the destination, and the economic development council would work with the convention bureau to attract industry, businesses and talent to the city.

Other cities, such as London (UK) have gone further, merging their agencies to better promote the city with one voice while achieving significant cost savings. In 2011, London merged its tourism and convention bureau with its business attraction, international student attention, and small business support programs, generating more than £2m initial savings.

A similar model was followed in Topeka, Kansas. The Greater Topeka Partnership combined the economic development agency, Chamber of Commerce, BID and tourism agency, which combined office space and eliminated redundancies (such as multiple contracts with the same vendor). The organizations also coordinated their plans and activities to create jobs and attract visitors.

We are also seeing more partnership working between local and state/national DMOs. For example, Destination Canada and Destination BC announced a partnership last year to help local DMOs market domestically.

Background:

As we adapt to the new reality, destinations need to stimulate and capture the little demand that currently exists, and be ready to capitalize on pent up demand as things return to “new normal.”

Messages and promotions will, therefore, need to be relevant, given the behavior that specific consumers have developed during the pandemic. Has a traveler flown yet? Stayed in a hotel yet? Left their home state yet? Are they nervous to do so? What are their biggest concerns?

Despite consumers saying that they are concerned about the privacy of their personal data, there is plenty of evidence that they are very willing to trade personal information for benefits or rewards — particularly monetary compensation, promotion incentives, and discounts based on their interests, and convenience and speed in using services.

Personalized marketing technology has advanced rapidly in recent year and many brands — from Amazon29 to Target30 — have used behavioral targeting and predictive modelling to take marketing to a whole new level.

Travel and tourism industry examples of data tools to help personalize marketing, target sales, and/or enhance customer service, include:

• London Heathrow Airport’s Connected Spaces project, which enables the airport to better identify, understand, and engage with customers across all touchpoints of the airport.
• Virgin Hotel’s Customer Wi-Fi and Business Intelligence platform, which allows the hotel to acquire new customers, target sales offers, build loyalty with personalized communications, create campaigns based on contextual data, understand customers better through new insights, and refine audience segmentation.
• Singapore National Research Foundation’s Virtual Singapore software, which can analyze visitor movements, with multiple applications for destination management.
• Lufthansa’s Big Data Engine, which allows the airline to offer personal services, as well as upsell to customers.

From our experience, very few cities or DMOs have the resources or know how to imitate leading retail or tourism players.

Fortunately, there are specialist tourism, ad-tech agencies, such as California’s Sojern and Adara, which offer digital travel marketing solutions and can deliver tourism marketing campaigns which microsegment audiences at scale.

Some DMOs, however, do have ambitions to become truly data-driven organizations, by building data solutions specifically for their destinations.

Bloomberg Associates has provided past advice to governments and DMOs which are seeking to understand each visitor — their behaviors and expectations — in order to provide a personalized experience.

It has been our experience that they have often struggled to progress these goals beyond individual marketing campaigns which offer personalize content. This is largely due to aversion to risk, limited technical skills, and/or legacy technology stacks.

Cities and DMOs should, therefore, approach this topic with their eyes open.

Below, we share some principles for DMOs that are thinking to build destination data platforms, which are drawn from our own consulting experience. We have also included, at Appendix 3, an infographic, which shows what an end-to-end data management platform solution could look like.

How To Adopt This Approach:

Engage a local partner to create, initially, an internal dashboard/insights platform. E.g., Start by talking to your local National Neighborhood Indicators Partnership partner (if you have one), a local university, or community college.

Explore how you can complement existing data sets with third-party (including private sector) data and closer-to-real-time data.

Engage local industry players to understand what insights would help them to thrive.

Recognize that different tourism organizations will have different levels of tech and data literacy, so prioritize a very simple and intuitive user interface.

Distribute the platform for beta testing and get feedback as quickly as possible.

Once your platform has been released, take the time to publicize it and train industry organizations for different use cases. Continue to host training sessions as the product evolves.

Background

Site visits should be followed up within 24 hours with a communication outlining how you plan to address the employers’ needs — for example, by sharing information and advice, unblocking an obstacle, and/or providing access to assistance, contacts, networks and/or a sales opportunity.

Action:

Work with local communities to develop marketing campaigns which will give residents and nearby travelers reasons to explore your destination’s “off the beaten track neighborhoods”.

Background:

Travel restrictions to and from countries combined with insecurity regarding crowded airport terminals and flights mean that domestic tourism is likely to recover much more quickly, and local holiday options and weekend staycations are increasing in popularity.

Even before the pandemic, the U.S. domestic tourism market was worth nearly U.S.$ 1 trillion. Since 2020, many destinations have focused on growing domestic tourism, including programs to encourage residents to explore their own cities. These include initiatives focused on marketing and promotion, as well as financial incentives.

Examples:

• As part of its All In NYC campaign, New York City’s NYC&Co created weekend neighborhood guides, such as Exploring Black-Owned Harlem, and a Tour Your Own City program, to encourage residents to explore different parts of the city.
•  London created “Because I’m a Londoner” citywide campaign to inspire a recovery in consumer spending by encouraging residents to responsibly rediscover the capital and support local businesses, organisations, areas and places. It also created the London Alliance, a community of 500+ businesses, which were provided with free assets to use as part of the campaign. The campaign increased consumer confidence by 5% and led to a 43% uplift in frequency of going out.
• Toronto, Canada created a program called Bag of Toronto, which encouraged residents to purchase goods from different city neighborhoods. Cleveland created a similar program, called Cleveland in a Box.
• Visit Houston marketed coupons and deals on its Houston Experience Marketplace to local residents. The marketplace is delivered in partnership with Bandwango’s technology platform, and generates income for the DMO.
• Geneva, Switzerland gave overnight visitors gift cards preloaded with 100CHF (~$110) which could be used at a range of hotels, restaurants, cafes, bars and on activities around the city.
• Explore France partnered with cities to create a campaign #CetÉtéJeVisiteLaFrance, to inspire its citizens to explore 21 city-regions across the country.
• Little Rock convention bureau partnered with the local historic association to create a series of audio guides for walking and driving tours. The tours have been enjoyed by students doing remote learning and will be marketed for visitors to come.

Guidance:

Bloomberg Associates has created a “how to” guide to create a neighborhood tourism campaign, which can be found at Appendix 2.

We have also created a “how to” guide to segment your target audience, which can also be found in the Appendix.

We are not, therefore, able to share a case study of emerging good practice by a DMO at this time.