by Lisa A. Grimaldi | February 01, 2011

Like other sectors of the meetings industry, destination management organizations are faced with enormous challenges today. Topping the list: dwindling funds. Revenue from hotel bed or occupancy taxes, which typically accounts for more than half of DMO funds, dropped by a national average of 14.5 percent in 2009, then dipped another 2 percent in 2010, according to the Washington, D.C.-based Destination Marketing Association International. Among other woes: political pressure, increasing competition and heightened public scrutiny.

Of necessity, many DMOs are reinventing the way they do business. On the following pages, M&C profiles five bureaus now facing some type of crossroads. Their challenges include absorption into a state agency, drastic budget cuts and sluggish business.

Atlantic City Convention & Visitors Authority
A combination of declining gaming revenues and a state governor restless for change has left the Atlantic City Convention & Visitors Authority, the organization that markets the city and its convention center, in a seemingly precarious position.

The harsh reality for Atlantic City is that gross revenues from its 11 casino resorts have declined by an estimated $1 billion since 2007, thanks to a faltering economy and encroaching competition from Internet gaming and casinos opening in neighboring states.

Last July, Gov. Chris Christie officially backed a plan put forward by the state's Gaming, Sports and Entertainment Advisory Commission, which called for the creation of a tourism district to be administered by a new agency that also would be charged with overseeing the city's meetings and conventions business. One stated goal was to grow convention revenue by at least 30 percent per year by 2015.

In November, the New Jersey Senate offered up bill S11, which calls for the establishment of an Atlantic City Tourism District to be administered by the existing Casino Reinvestment Development Authority, and for the transfer of the Atlantic City Convention & Visitors Authority and its functions to the CRDA.

Founded in 1984, the CRDA steers the 1.25 percent tax revenue that the state's 11 casinos pay to reinvest in public service projects such as senior centers, housing and schools. The CRDA currently has a staff of 28 and annual budget of about $4 million, compared to the ACCVA's staff of 58 and budget of $11 million (funded by a room tax of $1 to $2, based on type of property).

Executive director Thomas D. Carver, who has been at the helm of the CRDA since 2005, says handling the city's convention and meetings business "is not something we asked for; the ACCVA does a good job."

At press time, the measure had passed the state Senate and the Assembly, before heading to Gov. Christie for his signature. Though he is expected to eventually sign it, a state official who asked to remain anonymous told M&C that Christie most likely will request some revisions. The official said the governor has wanted to dissolve the ACCVA all along, but state legislators would like to retain the bureau as a separate division within the CRDA.

Obviously, this is not the most secure of times for the ACCVA. "What I hear changes daily," says Jeffrey Vasser, president of the bureau since 2002. Not surprisingly, he would prefer his agency to remain as a stand-alone division under the reorganization, "so the structure is still intact for customers and prospective customers."

Both Vasser and the ACCVA's vice president of convention sales, Gary Musich, see a bright side to the new arrangements. Since the scope of the tourism district will increase, they foresee more marketing funds to attract conventions and visitors. "If you want to grow, you have to invest in the product," notes Musich. "We are now competing with cities that have sales forces three times the size of ours." The bureau currently has eight reps, whose efforts account for 48 percent of group rooms sold in the city.

To help bolster the ACCVA's viability, Vasser and Musich have been compiling statistics and sharing their successes with government officials and the public. For example, at the end of October 2010, more than 440,000 attendees had signed up for conventions scheduled through 2015, an increase of 73 percent compared with the total for the same period as of October 2009. The delegates are projected to spend more than $169 million.

Vasser acknowledges that his job could be in jeopardy. In fact, neither he nor other ACCVA staffers have contracts. "Who knows what the future will hold for me, but for next few years my role is to help my team transition into the new group," he says. "These are interesting times. But uncertainty is nothing compared to opportunity."