The trick for second-tier cities has always been to identify their strengths and to use those strengths advantageously. That proposition can be a challenge in any sort of economic climate, but in the kind of economic maelstrom the world is currently enduring, it can be downright daunting.
Yet many believe that second-tier cities, forever consigned to exist in the shadow of their first-tier counterparts, are well positioned in this economic climate to leverage their strengths. Another view holds that the shadow may instead be lengthening.
The reality? Both are partially true. It really depends, of course, on the city.
Many second-tier cities never compete directly with their first-tier counterparts. It’s a matter of both market reality and geography. In destinations like Milwaukee, Wis., or Albuquerque, N.M., the city may be regionally very strong but nationally rank below first-tier cities in terms of such criteria as location and population. These are a sort of big fish in a small pond.
In cities like Santa Clara, Calif., or Tacoma, Wash., located in the periphery of San Francisco and Seattle, respectively, the opposite perspective prevails. These destinations may now be competing more directly with their first-tier neighbors for the same business.
In today’s turbulent economic climate, cities of all sizes face new challenges when it comes to remaining competitive. But how has the economy affected the second-tier city?
Has it caused a shift in their favor, suddenly casting their reputation for affordability in a desirable light? Or has the fact that first-tier cities are now on sale been doubly disadvantageous in second-tiers? Both scenarios are real, but as they have historically, second-tier cities persevere by continuing to play to their strengths.
Carving a Niche
“First and foremost for us is to reach out to our existing customers,” says Steve Van Dorn, president and CEO of the Santa Clara CVB, whose city has managed to carve its niche in the margins of its larger neighbors San Francisco and San Jose. “Because certainly occupancies [in January] have dropped from this time last year. Conventions were down significantly in December and in fact many of the tech companies who we typically rely upon did not even have holiday parties last year. So we have been calling on our solid customer base to remind them that we are here for them and of the value we provide.”
Nurturing existing relationships is a sound strategy for many second-tier cities as repeat customers are their bread and butter.
“About 70 percent of our business is repeat business,” Van Dorn says. “So during times like this we are making sure we are being as flexible as we can to accommodate any requests they may have in light of whatever struggles they might be enduring on their end.”
Unique Challenges
Accommodating requests—in the form of concessions made by CVBs or suppliers—is another common and useful tactic from second-tier cities vying to remain viable. But second-tiers face unique challenges that can be magnified by a tough economy.
Among the more acute symptoms suffered on the second-tier level is the prospect of diminished ability to reach the destination.
Nowhere is that more profound than in service cutback by airlines. When a major air carrier decides to cut routes, tier-twos feel the pinch. Planners increasingly cite cost of travel and accessibility as major influences in destination selection. So where regions had traditionally relied upon the drive market, that focus is now being re-energized.
In Providence, R.I., the Providence/Warwick CVB now plays up the fact that its destination is within the average tank of gas to about a quarter of the U.S. population. Its “One Tank Meetings” program helps planners make the connection by offering discounts on room blocks and at the convention center, and even with rebates on gas and recommendations on great driving tunes.
“Our One Tank program was designed to take advantage of the kinds of groups we know we can work with,” says Kristen Adamo, V.P. of marketing and communications for the Providence CVB. “We know that there are groups who might be considering the larger cities in our region, but we choose to market to our strengths, and to highlight our accessibility. We’re telling these groups, rather than going to the mountain, we can bring the mountain to you.”
Whether roadway or skyway, there’s little doubt the landscape has shifted. Among second-tiers, the universally accepted maxim is “adapt.” While first-tier cities continue to cut rates, the practice is largely done in the hope of retaining its customer base rather than to lure groups for whom cost was previously a barrier.
“We have seen a few instances where a group will say, ‘We’ve always wanted to try San Francisco, here’s our chance,’” Santa Clara’s Van Dorn says. “But the San Francisco Hilton has a ballroom that’s the size of our convention center. There are just some levels we’re not going to compete on. But what some planners need to understand is that you’re also going to pay fifty bucks for parking and spend more on F&B. I think that’s where the difference lies.”
Big Welcome
A salient point, but the differences don’t stop there. Many second-tiers are, on closer look, much like fist-tier cities without the baggage. Accordingly, the full array of big-town amenities, services and infrastructure often belie the hospitable spirit associated with small towns. Again, this is strength being emphasized during uncertain times.
In North Carolina, the Greater Raleigh CVB has tapped into the notion. Rolled out last year, the Red Carpet Welcome Program is an initiative that involves hotels, restaurants, retailers, transportation companies and other members of the hospitality community in an effort to super-serve groups.
“We want to position the Greater Raleigh area as one of the most hospitable destinations in the country,” says Denny Edwards, CVB president and CEO. “By giving businesses the tools they need to effectively communicate with meeting planners and convention delegates, we can ensure that visitors to our destination arrive to a warm welcome and leave with the desire to return.”
Raleigh, too, is an example of a city marketing to its strengths—not just Southern hospitality but also infrastructure, accessibility and, above all, value. Current conditions have not only reprioritized the destination’s value propositions, but also the target business.
“We never really set out to go toe-to-toe with the first tier,” says Greater Raleigh CVB executive VP Loren Gold. “We kind of knew our place all along and we know that most of the collective sum of our accounts is not necessarily meeting in first-tier cities to begin with, so we continue to go after the business that makes sense for us. We have positioned ourselves as a value option for the more expensive cities. With the pendulum now swinging toward a buyer’s market we will still have to fight for our fair share but our mission will still be to find the groups that are right for our market.”
That strategy is echoed in similar-market destinations through the nation, including Baton Rouge, La., where Renee Areng, V.P. of sales and marketing for the Baton Rouge Area CVB, confirms a core-value strategy.
“Fortunately, our marketing efforts are already geared to a regional audience,” she says. “So our messaging is consistent in these challenging times with the messaging of the past. All of our research confirms that our leisure, business and meeting visitors come from a five-hour drive of Baton Rouge, thus, most of our market drives. Although the cutback in flight availability has affected first-tier cities, our available flights have not been adjusted recently.”
It’s apparent the key method for navigating the current economic seas is to do everything possible to maintain an even keel. Second-tier cities, while certainly happy to have previously first-tier business, are not banking on those groups to save the day.
Highlighting regionalism, value and hospitality, second-tier cities are angling to maintain market share and indeed shore up long-term business for when things ultimately turn around. In some cases it’s an organic approach, but in most cases specific initiatives are being put into place.
Several tier-two destinations, including Albuquerque, N.M., and Tacoma, Wash., have introduced campaigns designed to appeal to planners who are sensitive to cost and accountability.
“Our markets are more SMERF and association rather than corporate,” says Linda Brown, V.P. of convention and sales for the Albuquerque CVB. “Now we are rolling out a major program to go after these [association] groups more aggressively.”
