Update: Destination Marketing Organizations

Times have been tough, and destination marketing organizations, also known as convention and visitor bureaus, have not been immune. Among challenges DMOs have faced are reduced hotel room tax collections (the average decline from 2008 to 2010 was 16 percent), cuts in funds provided by local and/or county and state governments, and increased scrutiny and accountability from CVB boards and politicians.

But by last summer, some welcome news finally could be discerned: According to the 2011 Profile of Destination Marketing Organizations compiled by the Washington, D.C.-based Destination Marketing Association International, CVB budgets had stabilized (the average budget in 2011 came to $2.8 million) and in some instances actually saw funding increases for the first time since 2008. Other DMOs that had been under the gun from local authorities have managed to restore a measure of credibility and turn around business.

On the following pages, M&C details how three major DMOs have weathered one of the most challenging periods the industry has ever faced.

Visit Florida When Gov. Rick Scott took office in Florida last January, he inherited a state budget with an $3.6 billion shortfall and a mandate to create 700,000 jobs. A key aspect of the CEO-turned-governor's plan called for the dissolution of several state divisions, including Visit Florida, and rolling their combined functions into a single economic development organization, Enterprise Florida Inc. The proposal propelled Chris Thompson, Visit Florida's CEO, into the professional fight of his life.

"It's fun to tell story now," Thompson says. "It certainly wasn't when we were in the middle of it, and I was wondering if we were going to survive."

Thompson, who has led the organization since 2009, had just 60 days to make a case for Visit Florida's continued existence before the state House was set to vote on the proposal last spring. "We were in a difficult situation. As a state organization, we couldn't lobby ourselves," he explains. "We had to walk a fine line and were dependent on the state's industry at large -- hotels, attractions, restaurants -- to defend our 15-year success story."

The industry mobilized its forces: Florida House committee members received 25,000 e-mails from tourism and hospitality trade union members who "told them how Visit Florida and the industry drives investment and strategic thinking," says Thompson.

He calls the e-mail blitz "the turning point" of the ordeal. "It created a pause in the legislature. They saw there really was something to this," he says.

Visit Florida's members and supporters also drove home some hard ROI statistics. They pointed out how Visit Florida touches, via its website, advertising and other means, 37 percent of visitors to the state. They also reminded the governor and lawmakers that tourism is the state's largest industry, employing more than a million workers whose jobs cannot be outsourced. And they shared research that shows how for every hotel room that opens in Florida, a new job is created.

The end result: Visit Florida is alive and well, with just a few minor adjustments. The organization no longer is a state office, but rather an independent, autonomous entity that has a contract with Enterprise Florida, the state's new economic development arm. (The state remains Visit Florida's main partner and funding source, notes Thompson.)

The other change: Visit Florida's budget was increased by 31 percent -- from $26.7 million to $34.9 million.

Santa Fe Convention & Visitors Bureau When the Santa Fe Convention Center debuted in 2009, hopes were high that the stunning, LEED Gold-certified facility would finally bring the community some citywide convention business and help fill its 1,500 downtown hotel rooms.

However, the economy was in shambles; the number of conventions booked fell short of the local industry's expectations; and the city's CVB, responsible for selling the center as well as the destination, found itself under fire. The city was so concerned about booking shortfalls that it hired an independent firm, the Spokane, Wash.-based Radcliffe Co., to conduct an audit of the bureau's functions and try to boost flagging sales.

The findings of the audit, released in summer 2011, were harsh. Declines in bookings at the convention center were attributed to the CVB's sales methods, deemed "not customer-centric," and its lack of flexibility. In addition, tensions between the CVB and the hotel community were cited, as was the bureau's fragmented, dysfunctional environment, which the report charged "can do little but undermine existing and potential partnerships within the industry and can be expected to have greater impacts and ramifications as competitors continue to expand efforts to reach the same targeted customer segments."

The CVB began changing course even prior to the release of the scathing audit. In March 2011, Keith Toler, who helmed the organization since 2008, resigned, following reports of tensions with city manager Robert Romero and criticism from city officials.

Toler's successor, Jim Bradbury, joined the bureau last April with a mandate to improve convention sales -- and fast. He immediately hired a new sales team and added a marketing manager. He also created a business plan that called for more sales blitzes to targeted markets, more collaborative marketing efforts with partners and more familiarization trips for meeting planners.

To jump-start bookings at the convention center, the bureau launched the "Experience Santa Fe...On Us" promotion late last year. The initiative provides perks to groups to who book 500 or more rooms per night for a minimum of three nights (among them a complimentary welcome reception with Native American dancers, beer, wine and local foods; free transportation between hotels and the convention center; free use of the convention center's meeting space, and a refund of the cost of a site visit after a qualified meeting is booked).

At press time, the initiative had netted the city some 3,700 room nights. Overall, the total number of room nights booked from April through December 2011 was up 68 percent over the same period in 2010.

Team San Jose In February 2011, when M&C last reported on Team San Jose, the bureau was still reeling from the San Jose City Council's censure of its finances and practices thanks to a controversial move: To close a 2010 budget shortfall, the DMO had dipped into its reserves, using up 40 percent of the $8.8 million fund, while the staff was given hefty bonuses.

Lawmakers also questioned the bureau's direction: Team San Jose, which manages the San Jose Convention Center as well as six arts and entertainment venues, targeted conventions that brought out-of-town business to the city, although the city, according to former bureau CEO Dan Fenton, would have been quite happy to book events that drew mainly local attendees.

As a result of these issues, the city unanimously voted in December 2010 to solicit requests for proposal for a new team to take over the management of the center and entertainment venues. And in January 2011, Fenton stepped down from his post.

One year later, there have been big changes in the bureau and its relationship with the city. Following the appointment of Bill Sherry as new CEO, the organization has grown revenue to $18.7 million, $4.8 million more than the adopted budget, and achieved a 98 percent overall customer service rating. Among other positives: Team San Jose's reserve fund grew by $3.3 million over the projected amount.

As a result, last December, lawmakers unanimously approved the city manager's recommendation to keep Team San Jose in charge of operations at the convention center, which currently is undergoing a $120 million expansion slated to open in 2013, and the other venues. At the time of the vote, Mayor Chuck Reed said, "I support the vision and goals of Team San Jose's new leadership. This extension [of the contract] will allow Team San Jose to build on its recent progress in bringing business to our convention center that will generate new revenues, hotel room nights and jobs in our community."

In addition to strong sales results, Bill Sherry attributes the vote of confidence from the city to changes made to bureau procedures during his tenure, e.g., restructured internal oversight and increased transparency. "It's created the necessary refocus and efficiencies for the city to reverse their decision on putting out an RFP.

"With the convention center expansion and renovation project proceeding on time and within budget," Sherry adds,  "the timing couldn't be better."

Fort Worth Convention & Visitors Bureau Like 89 percent of DMOs, the Fort Worth (Texas) Convention & Visitors Bureau depends on local hotel taxes for funding. Here, those taxes make up 99 percent of the bureau's budget; the other 1 percent comes from sponsorships. Thanks to ongoing economic distress, Fort Worth hotel revenue per available room, a major indicator of a property's financial health, has gone from bad to lackluster in recent years -- down 18 percent in 2009 over the year before, and up by just 4 percentage points in 2010 over 2009.

To top it off, bureau president and CEO David DuBois saw his fiscal 2010-2011 budget get slashed by 10 percent. "I've been here five years," he notes, "and last year was one of most difficult."

But thanks to a somewhat improved economy and an 8 percent boost in business booked by the convention and visitors bureau last year, Fort Worth's hotel occupancy and RevPAR rebounded nicely in 2011, resulting in a healthy 19 percent increase in room tax collections, compared to 2009 figures.

As a result, the bureau has seen its budget increase by $650,000, for a total of $8.9 million, for the current fiscal year (which began last October). And DuBois has been able to give his staff of 40 raises and increase the bureau's spending on marketing, public relations, social media initiatives and sales efforts by 40 percent in each category.

The healthier budget allows the Fort Worth CVB to compete more effectively in what is "still a buyer's market," according to DuBois.

"Last month, we were able to send six people to PCMA [the Professional Conference Management Association's annual meeting that took place Jan. 8-11 in San Diego] to meet with customers," DuBois notes. "In 2010, we were only able to send four."