Destination marketing organizations and economic development organizations discover evidence that alignment and collaboration ultimately achieves the shared goal local economic progress that reaches industries far beyond immediate travel service providers and suppliers. Research presentation by Adam Sacks, President, Tourism Economics and implications by Andy Levine, President and Chief Creative Officer, Development Counsellors International.

1. DMAI WEBINAR SERIES:
DESTINATION PROMOTION: AN ENGINE OF ECONOMIC DEVELOPMENT
NOVEMBER 6, 2014
■© DMAI

2. International tourist arrivals reached 1.09 billion in 2013
Expected to increase by 3.3% a year from 2010 to 2030 to reach 1.8 billion by 2030
Travel and tourism accounts for 9% of Global GDP
Supports 1 in 11 jobs
6% of world’s exports
Global Tourism Industry

3. Second fastest growing U.S. industry last year
113 million room nights sold in July
Strongest single demand month ever
STR projecting 1.14 billion rooms sold in 2014
79% of DMAI Members, receive 75% of revenues through occupancy taxes
U.S. Tourism Industry

4. Strategic Roadmap
3 Transformational Opportunities
Managing the New Market Place
Building and Projecting the Brand
Evolving the DMO Business Model
Next Steps
Online diagnostic tool kit
NEXTPractices workshops
Marketplace survey
DestinationNEXT

5. DMOs playing an expanded role in the community on broader economic development issues
Research Benefits
Assess the broad economic effects of destination promotion
Help stakeholders understand the catalytic effect of destination promotion
An Engine of Economic Development

6. November 2014
November 2014
Destination Promotion: An Engine of Economic Development
How investments in the visitor economy drive broader economic growth
www.oxfordeconomics.com/engine

7. Thanks to project sponsors
6
Research approach
Interviews
Literature review
Case studies
Statistical analysis

8. Key findings
7
States and cities across the U.S. invested $2 billion in destination promotion last year, which is warranted based on the size of the visitor economy.
However, the dividends of destination promotion extend far beyond the visitor economy.
Why? destination marketing drives broader economic growth by sustaining air service, creating familiarity, attracting decision makers, and improving the quality of life in a place.
As a result, cities and states that prioritize destination marketing and coordinate these efforts with economic development initiatives have experienced significant site relocations and new investments as a direct result.

9. Outline
8
Assessing the visitor economy opportunity
How does destination promotion drive economic development?
Do the economies of successful destinations outperform their competitors?
Call to action

10. Assessing the visitor economy opportunity

11. Spending on travel outpacing income growth
10
-50%
0%
50%
100%
150%
200%
250%
1980 1985 1990 1995 2000 2005 2010
Spending on lodging
Real, per capita GDP and spending on lodging
Percentage change since 1980
200%
Spending on lodging has
increased 200% since 1980 (real,
per capita basis)
75%
GDP has increased 75% since
1980 (real, per capita basis)
Source: Bureau of Labor Statistics; Tourism Economics
 In the span of slightly more than a generation, per capita consumer spending on hotel
stays in the US has increased 200% since 1980, even as per capita GDP – as a
measure of income levels – has increased only 75%..

12. Visitor economy leading jobs recovery
11
92
94
96
98
100
102
104
106
108
110
2006 2007 2008 2009 2010 2011 2012 2013 2014
Visitor economy employment trends
Compared to total nonfarm employment
Index (June 2009=100)
Source: Bureau of Labor Statistics; Tourism Economics
Visitor
economy
Total nonfarm
employment
 As of July 2014, employment in key sectors of the visitor economy was 7.9% ahead of
its June 2009 level, compared to a 6.1% gain for the broader economy.

13. Visitor economy outperforms other “exports”
12
 As economic development strategies are designed to expand the traded base of a
region, growth in the hospitality and tourism sector stands out relative to contraction in
more traditional traded goods sectors, such as plastics; production technology and
heavy machinery; and automotive.
77.4
142.9
250.1
267.5
-600 -400 -200 0 200 400
Information technology and analytical instruments
Automotive
Production technology and heavy machinery
Plastics
Insurance services
Construction products and services
Food processing and manufacturing
Transportation and logistics
Financial services
Marketing, design, and publishing
Oil and gas production and transportation
Hospitality and tourism
Job creation in traded clusters
Net change in jobs 1998 to 2012, in thousands
Note: Graph shows selected traded clusters with 0.5 to 2.0 million jobs in 2012.
Source: US Cluster Mapping Project; Census Bureau; Tourism Economics
Hospitality and
tourism has
generated more
jobs over the
past 14 years
than any other
major traded
cluster of its
size.

14. Visitor economy outperforms other “exports”
13
Since 1998, the hospitality and tourism as a traded cluster has expanded employment by 9.8%, compared to an actual decline in traded clusters in aggregate of -0.8%.
-5% 0% 5% 10% 15% 19982000200220042006200820102012Traded cluster employment gains over timeIndex, cumulative percentage points of employment growth since 1998Hospitality and tourism traded clustersAll other traded clusters in aggregate+ 9.8% -0.8% Source: US Cluster Mapping Project; Census Bureau; Tourism Economics

15. The need for destination promotion
14
Collective destination marketing overcomes three unique challenges that the visitor economy faces
Challenge
DMO Solution
The visitor economy is fragmented across industries
Destination promotion provides the scope and strategic vision supporting a wide array of businesses
The primary motivator of a trip is usually the experience of a destination
Destination promotion articulates the brand message that is consistent with consumer motivations
Effective marketing requires scale to reach potential visitors across multiple markets
Destination promotion pools resources to provide the economies of scale and marketing infrastructure required to generate impact

16. How does destination promotion drive economic development?

17. The four channels of DMO catalytic impact
16

18. #1 – Building transport networks
17
Extensive research supports the strong connection between air service and economic growth
A 2003 study analyzed 91 metro areas in the US and found that a 10% increase in passenger enplanements leads to a 1% increase in employment in service-related industries.
At the metro level, air passenger volumes have been found to be a strong predictor of future population growth and employment growth.
“The largest economic benefit of increased connectivity comes through its impact on the long-term performance of the wider economy.”
Air Transport Action Group

19. #1 – Building transport networks
18
Destination promotion develops inbound travel, supporting expanded service, with greater frequency of connections to a greater number of destinations
Airlift is one of the top criteria for site selectors
“Air service is profoundly important to corporate investment and location decisions… “This is one of tourism’s most significant contributions since the levels of air service at New Orleans far exceed what local demand could support.”
Stephen Moret, Secretary, Louisiana Economic Development

20. #2 – Raising the destination profile
19
Destination promotion strongly supports economic development through brand development, raising awareness, and building familiarity
“If we do it right, the ideal brand will transcend the visitor market and support all economic development.”
Hank Marshall, Economic Development Executive Officer, City of Phoenix Community and Economic Development Department
“We share the same objective with Positively Cleveland. Cleveland is a great place to live and we need to get investors to see it.”
Tracy Nichols, Director of Economic Development, City of Cleveland
“Every tourist that comes through here is a potential business lead.”
Jeff Malehorn, President & CEO, World Business Chicago

21. #2 – Raising the destination profile
20
Familiarity is critical in attracting investment
In a 2014 survey by Development Counsellors International, 13% of executives with site selection responsibilities state that their perceptions of an area’s business climate were influenced by leisure travel and 37% reported influence by business travel.
Director of Cleveland Economic Development Tracey Nichols states, “As Positively Cleveland pushes its campaigns, people get the message that Cleveland is cool. And as people visit, they experience the reality.”
“As we talk to prospects, they mention past visits and good experiences. This is our open door”
Ben Teague, Executive Director, Economic Development Coalition for Asheville-Buncombe County

22. #2 – Raising the destination profile
21
“You can never expose people enough. Once they come, we’ve got them.” Jeff Malehorn, World Business Chicago. “Tourists are familiar with New York, San Francisco, and Los Angeles, but not as familiar with Chicago… Every tourist that comes through here is a potential business lead.”
A significant portion of Louisiana Economic Development (LED) efforts are focused on less familiar parts of the state. Kyle Edmiston, Assistant Secretary of the Louisiana Office of Tourism explains, “Louisiana is a diverse place. Our destination marketing generates exposure to the parts of the state that have been most ripe for economic development and where LED’s most significant wins have been located.”
World Business Chicago credits the work of Choose Chicago in helping lift the city’s TripAdvisor users rank to number two among top US destinations in 2014.

23. #2 – Raising the destination profile
22
Denver, Cleveland, Louisiana, and Phoenix are all coordinating brand development and messaging across various platforms.
Asheville, NC recently attracted New Belgium, the Colorado-based brewer, including a $175 million local investment. The development win, was in part, because New Belgium’s leadership saw benefits of associating its brand with a destination with clear recognition for its year-round activities and familiarity among visitors.
“We are learning a lot from Visit California by how they brand California and how to take their model and apply it to economic development.”
Brook Taylor, Deputy Director, Governor’s Office of Business and Economic Development

24. #3 – Targeted conventions and trade shows
23
By securing meetings, conventions and trade shows for local facilities, DMOs attract the very prospects that economic development agencies target. These events create valuable exposure among decision makers and create direct opportunities for economic development agencies to connect with attendees.
World Business Chicago has an assigned staff member who focuses on trade shows and conventions, recognizing that each visiting delegate presents the potential of a new headquarters or distribution center.
“Our EDO doesn’t have to fly to DC or China. The low hanging fruit is coming here for events.”
Steve Moore, CEO, Greater Phoenix CVB
“The attendees of the IAMC forum are the very business location decision makers we target every day.”
Jay Foran, Team NEO’s Senior Vice President for Business Attraction

25. #3 – Targeted conventions and trade shows
24
Conventions generated idea sharing and innovation, helping to establish a destination’s position within a particular industry cluster.
Asheville (outdoor sports), Cleveland (bio-science)
Opportunity identified on three fronts:
1.Target events that are of strategic interest to economic development
2.Coordinate DMO and EDC efforts for major events
3.Gain an audience with executive and other decision makers to showcase assets (e.g. “California Pavilion” at major medical convention, co-hosted by Go-Biz and Visit California)
“Economic clusters and conventions have become synergistic”
Tom Clark, Metro Denver Economic Development Corporation

26. #4 – Raising the quality of life
25
Channel of impact: The visitor economy supports amenities and a quality of life that attract investment in other sectors.
An academic paper from 2008 found that, across150 cities, destinations that attracted more leisure visitors over a ten year period grew faster in terms of population and employment.
Boeing’s decision to relocate its headquarters to Chicago was heavily influenced by the cultural assets and vibrancy of the city.
“Traveler attractions are the same reason that CEOs choose a place.”
Jeff Malehorn, President & CEO, World Business Chicago
“Nine million visitors came to Asheville last year. They support an amenity base—which provides a desirable lifestyle—that that is larger than our population will support.”
Stephanie Brown, Executive Director of the Asheville CVB

27. #4 – Raising the quality of life
26
The Denver Economic Development Corporation (EDC) works with Visit Denver to develop attractions. The development of leisure attractions in lower downtown Denver has been instrumental in the relocation of 20,000 residents to the area.
Asheville’s recent win of a $125 million investment from GE Aviation was heavily influenced by its quality of life scores related to both outdoor activities and a vibrant downtown.
“Amenities… are important elements of the ability of cities to attract both firms and people.”
Richard Florida
Cities that attracted greater numbers of leisure visitors also attracted a greater share of college educated residents.
Gerald A. Carlino and Albert Saiz, Beautiful City: Leisure Amenities and Urban Growth,

28. Do the economies of successful destinations outperform their competitors?

29. Stronger visitor economy = growth
28
Cities with a higher concentration of visitor-related activities and employment have historically grown faster over the past decade.
Each 1.0 percentage point increase in the share of visitor economy jobs corresponds to total job growth over a nine year period that is 3.0 percentage points stronger.
Los AngelesChicagoHoustonSan FranciscoPhoenixSan DiegoDenverClevelandSan AntonioAustinAsheville-10% -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0% Visitor economy and total employment growthGrowth in total employment 2004 to 2013Visitor economy job share in 2004Source: Bureauof Labor Statistics; EMSI; Tourism EconomicsMiamiGrowth 2013Baton Rouge

30. Growth in travel spurs broader growth
29
Econometric tests show that employment shifts in the visitor economy are followed in subsequent years by sustained changes in growth in other parts of the economy.
Analyzed 237 cities over a period of 23 years
A 10% increase in visitor-related employment relative to the US average would result in 1.5% rise in broader employment in the short-run, also relative to the US average.
By the fifth year, this increase in visitor economy market share has driven incremental growth of 3% in the rest of the economy.
0% 2% 4% 6% 8% 10% 12% 12345Visitor-related employmentOther employmentModeled increase in visitor activity% increase over baselineYear

31. Call to Action

32. 31
#1: Coordinate economic development and destination promotion
■EDOs and DMOs are both in the business of marketing a place.
■The decisions that they aim to influence are different;
■However, the audience they market to and the products they promote have significant overlap.
Call to action

33. 32
Air Service Development
Airports and economic development agencies can benefit from the support of DMOs in efforts to add new service.
Brand Building
The best destination brands are broad in reach and impact. Coordination between DMOs and EDOs is essential for maximum impact.
Communication
A platform for regular communication between the DMO and EDO builds bridges for sharing ideas and working together.
Collaboration on Bids
For important investment bids, EDOs can leverage DMO expertise to make the best possible pitch.
Targeted Conventions
Strategic targeting of events and event attendees can result in the development of clusters and provide direct marketing opportunities for EDOs.
Best practices in DMO-EDO coordination

34. 33
“Ideally, Economic Development and our CVB would collaborate even more.”
Ben Teague, Executive Director, Economic Development Coalition for Asheville-Buncombe County
Perspectives on DMO-EDO coordination
“Community and Economic Development and the Phoenix CVB are highly complementary organizations”
Hank Marshall, Economic Development Executive Officer, City of Phoenix Community and Economic Development Department
“I can’t imagine running World Business Chicago without support from Choose Chicago.”
Jeff Malehorn, President & CEO, World Business Chicago

35. 34
#2. Prioritize destination promotion
■In addition to attracting visitors, destination promotion fuels economic development by supporting a high quality of life, building transportation networks, raising awareness, and attracting decision makers.
■Therefore, destination promotion should be upheld as a vital component of a city’s or state’s economic development strategy.
Call to action

36. November 2014
November 2014
Destination Promotion: An Engine of Economic Development
How investments in the visitor economy drive broader economic growth
www.oxfordeconomics.com/engine

37. Five Practical Ways for
DMOs & EDOs To Work Together
Andy Levine
DMAI Webinar 11/6/2014

38. POLL
On a scale of 1 to 5, rate the quality of your relationship with the partner organization (economic development or destination marketing) in your community:
5 Superb…Love Working With Them
4 Pretty Good
3 Okay
2 Could be Better
1 Ugh…We Don’t Play Well Together
JOY: I’LL LET YOU FIGURE OUT HOW TO PROGRAM THIS INTO GO-TO-WEBINAR

39. DMOs and EDOs: Differences and Similarities
The Market
1,600,000,000 “person trips” in 2013 (US Only)
5,786 location decisions in 2013 (US only)
Source of Funding
Regular stream of bed tax revenues
Mix of public & private sources (budget approval & fundraising)
Goals
•Job creation
•Economic well-being of the community
•Better quality of life
•Job creation
•Economic well-being of the community
•Better quality of life
Destination Marketing Organizations
Economic Development Organizations

40. 1. Conduct Joint Marketing Missions
•Combine forces & travel together to promote your community in key markets
•Manage a mix of separate & combined special events, media interviews and influencer meetings

41. 2. Influence the Business Traveler (when in your hometown)
•Identify “choke points” business travelers pass through (airport business lounges, upscale hotels, limo services)
•Look for creative ways to communicate your community’s business message
55.0%
43.6%
37.0%
0%
10%
20%
30%
40%
50%
60%
Dialogue with Industry Peers
Newspapers and Magazines
Business Travel
Influencing Executive Perceptions: Leading Sources of Information

42. 3. Collaborate on Tourism-Related Investment
Denver gets a new international air destination: Panama City
•Work together to pursue hotel and attraction investments that benefit the community
•Focus on advancing “air lift” to your region

43. 4. “Strategic Conference” Pursuit
•Identify and pursue conferences that align with a community’s target clusters
•Pursue business conferences that reach executives with site selection responsibilities

44. 5. Align Your Brands
•Should communities adopt a single brand? No!!!
•Collaborate closely to develop complimentary messages and graphic design

45. Summing It Up
1.Conduct Joint Marketing Missions
2.Influence the Business Traveler (when in your hometown)
3.Collaborate on Tourism-Related Investment
4.Strategic Conference Pursuit
5.Align Your Brands

46. Your Questions, Answered…
■© DMAI

47. DMAI WEBINAR SERIES:
TOURISM IMPROVEMENT DISTRICTS:
NATIONAL SURVEY RESULTS REVEALED
NOVEMBER 19, 2014
2:00 PM EST
■© DMAI