The past few years have been tough for state tourism offices as many toil under heavy budget cuts that state governments enacted to cope with a poor economy.
The most recent and extreme example: Washington state shut down its tourism office at the end of June even though tourism is the state's fourth-largest industry. That action gave Washington the dubious distinction of being the only state without a government-supported, statewide destination marketing organization.
Continuing Struggle
A new report from the U.S. Travel Association, released in August, provides a glimmer of hope that the funding crisis has hit bottom. But the report, an annual survey of state tourism office budgets, also suggests that many state tourism offices continue to struggle.
For fiscal year 2010-2011, the aggregated budgets of state tourism offices in the United States climbed 2.3 percent over the previous fiscal year, to just over $677 million, according to the U.S. Travel report. The increase in funding, while encouraging, means that aggregated budgets were more than 16 percent below the high of almost $812 million in fiscal 2007-2008. Budget totals for fiscal 2009-2010 represented a five-year low in expenditures for state tourism offices.
Nan Marchand, who works with state tourism offices as senior director of National Council relations for U.S. Travel, calls the report "very positive compared to last year. Budgets are stabilizing now, so this is very good news directionally."
At the same time, however, the report also points out that "the increase masks widely divergent changes among the states between the two fiscal years, with just as many states experiencing significant declines as those with substantial increases."
For example, the Louisiana Office of Tourism realized the greatest increase in funding, a nearly 69 percent rise, to almost $32 million, thanks to a one-time, $12.6 million grant from BP as part of the compensation the oil giant is paying for the disastrous 2009 oil spill in the Gulf of Mexico. Without the BP grant, funding for the state's tourism office would have remained flat that year.
By contrast, New York cut its state tourism office budget by nearly two-thirds in 2010-2011 compared to the previous year, to $5.5 million, according to the report. And Washington cut its tourism office budget from $7 million in 2009-2010 to just under $2 million in 2010-2011 before eliminating it entirely in June.
Despite whatever gains that some state tourism offices have enjoyed, the total amount of money that state tourism offices have allocated to marketing and promotion—their main reasons to exist—declined nearly 13 percent in the 2010-2011 budgets as compared to the previous year's budgets, according to the report. Overall, the share of total budgets spent on marketing and promotion declined from 62 percent in 2009-2010 to 53 percent in 2010-2011.
The decrease in marketing budgets might not appear as bad as initially seems, according to Marchand, because the totals represent expenditures for traditional print, radio, and television advertising and promotion, not Internet marketing. State tourism offices are diverting dollars from traditional marketing to Internet marketing, she says, and that may account for the lower marketing budgets.
However, it's not clear how much of the decrease in spending for traditional marketing is being allocated to electronic marketing. Financially stressed tourism offices may also have shifted money away from advertising and promotion in an attempt to shore up their staffs and avoid drastic downsizing.
Impact on Meetings
While state tourism offices primarily target leisure travelers, their marketing efforts affect meetings and events, both in terms of groups siting meetings in a destination as well as individuals deciding whether to attend a meeting based at least in part on a specific destination's allure, according to travel and meeting professionals.
"Ultimately, if a state or city has fewer dollars to market their destination, it will probably affect overall attendance at meetings," says Deborah Sexton, chief executive of the Professional Convention Management Association.
Travel marketing professionals say that destinations that fail to market themselves adequately can suffer an out-of-sight, out-of-mind mentality from potential visitors.
"Research proves that when you stop marketing your destination, your economy suffers," says Marchand. "Just look at Colorado."
Those in the industry often point to Colorado as a cautionary tale. The state eliminated the budget for its tourism office in 1993, and within two years Colorado's share of travel within the United States plummeted 30 percent, creating an annual revenue loss of some $2 billion, according to Longwoods International, a market research firm. (Longwoods demonstrated successful tourism marketing efforts in Michigan and Philadelphia for a U.S. Travel report that was issued in July.)
Colorado restored funding for the tourism office in 2000, and while tourism has rebounded, it has not returned to the levels prior to the funding cut of 18 years ago, Al White, Colorado Tourism Office director, told the New York Times in July, when the closure of Washington's tourism office was making news around the country.
"It's really difficult to affect market share positively, but it's really easy to affect it negatively if you're not out there (marketing)," White was quoted as saying.
In Washington, Terry Onustack, meetings and education manager for Seattle-based International Association for the Study of Pain, fears that as a result of the state tourism office closure, Washington could take a hit when it comes to attracting meetings and events.
"It could affect the larger conferences we're able to attract to the state," says Onustack.
In anticipation of Washington closing its tourism office, members of the state's travel and hospitality industry, including the convention bureaus in the major cities, formed the private, non-profit Washington Tourism Alliance (WTA).
The organization had raised $300,000 by mid-August, according to Suzanne Fletcher, who on Aug. 1 was named WTA's first executive director. A former president of the Global Business Travel Association, Fletcher's background also includes, most recently, an executive marketing position with Seattle-based Concur, a provider of travel technology.
In addition to the WTA funding, more than 50 hotels in Seattle have proposed a $2 per-night room fee to raise an additional $5 million to $6 million in 2012 for marketing efforts by the Seattle CVB. When combined with the present 15.6 percent room tax, the extra fee means that visitors to Seattle would pay among the highest hotel room taxes on the West Coast, although Fletcher maintains that Seattle's overall room rates, including all taxes and fees, would remain competitive with other major American cities.
Fletcher says funds from the proposed fee, which is expected to receive city council approval, are intended to promote travel to Seattle in winter, the city's off-season. That intended purpose suggests a potential problem when localities make up for the loss of funds for statewide destination marketing: local destination marketing organizations naturally focus on their own destinations, and as a result, marketing of the state itself as a destination goes by the wayside.
Fletcher, who hopes to raise upwards of $4 million specifically for WTA, concedes that "it's a daunting task to be the only state in the country not to have a tourism office."
But she adds, "Maybe I'm an optimist, but I hope that this incident (the elimination of the state tourism office) will be nothing more than a blip."
Given the lower level of funding for WTA than the state tourism office, however, and the questions about voluntary future funding sources for this new statewide destination marketing organization, Onustack says, "It will be much more challenging for them to have the outreach that the state had."
