As 2020 continues in its uphill vein, you wouldn’t be blamed for yearning wistfully for the ‘years of plenty’ of 2018 and 2019. Lulled into a sense of security and endless possibility, we entered 2020 “with great hope, vision and enthusiasm” (Don Welsh, CEO of Destinations International).
Across the tourism industry, we have all suffered, but to my mind, less has been heard about the struggles of DMOs and CVBs. A recent article written by Lisa Grimaldi and published in Northstar Meetings Group, outlines the issues DMOs and CVBs have been facing, as well as some short-term solutions to help them to stay afloat.
The below paragraphs summarise some of the key take aways from this insightful article, and if you would like to read it in full, please click through using the red button at the end of this summary!
NB: Further to the original posting of this article, Skift and Sojern have brought out a joint report investigating the potential of Co-Op Marketing for Destinations. Generated from in-depth interviews with destination leaders across Europe, Asia Pacific and North America, this report is a roadmap for any destination executive looking for solutions to try and jumpstart their tourism economy in the era of Covid-19. As an accompaniment to the below article, this report is well worth a read. See here for more information.
Financial Issues facing CVBs and DMOs
A Destinations International/Northstar Meetings Group study conducted in April revealed that 42 percent of CVBs faced budget cuts of 50 to 100 percent. Many bureaus had to furlough or lay off employees.
CVBs were particularly vulnerable for several reasons.
- The vast majority are set up as nonprofits, leaving them ineligible for federal relief initiatives.
- Nearly all of their revenues come from hotel bed taxes, according to DI. So with hotel occupancy falling to unprecedented levels, bureaus have been left with a fraction of their pre-pandemic revenue.
Potential Solutions to help stay afloat
The following are some potential suggestions that might help CVBs stay afloat and restructure during this time.
- Seek Government Aid
- Look for Local Lifelines
- Rethink Funding Models
- Tap Area Businesses
- Align with Local Leaders
- Team up with Neighbouring Bureaus
- Be of Service Right Now
1. Seek Government Aid
While many travel entities have been able to obtain funds through the CARES Act, DMOs were left out in the cold, despite the best efforts of the U.S. Travel Association, the lobbying body for the country’s tourism industry.
- Destination International (DI) sent letters to all members of the House and the Senate. At press time, these efforts had not yielded results.
- U.S. Travel sent an appeal to Congress asking for specific legislative action to be included in the next coronavirus-relief package that would extend the Paycheck Protection Program eligibility to DMOs. (At press time, the government’s plan had not been finalized.)
2. Look for Local Lifelines
A handful of bureaus have secured emergency financial support from their local governments. Visit Anaheim, for one, received an unexpected lifeline of $6.5 million dollars from a $15 million tourism grant issued by Mayor Harry Sidhu and the city council.
Burress applauds the city leaders’ “belief in us and their belief in the industry” and for recognizing the impact tourism and meetings have on the community.
But this is a temporary fix, he acknowledges: “It’s not a well we can go back to again.”
3. Rethink Funding Models
To build long-term sustainability through the pandemic and beyond, insiders have long urged bureaus to revamp their business models and funding strategies. It makes sense to diversify revenue sources, rather than relying almost exclusively on hotel taxes for support.
“When we ask ourselves to reimagine a funding model for destination marketing, we should think about who benefits [from the CVB and the business it brings to a city]”Gabriel Seder, DI’s senior director of advocacy policy and program development.
4. Tap Area Businesses
DMOs should consider all the industries, organizations, businesses and stakeholders in their communities that benefit from their work. Large companies seeking to lure the best talent could be a source of funding. Likewise, hospitals and universities are among other entities that rely on a destination’s reputation to draw doctors and students.
“Employers in your community rely on the strength of your brand to attract and retain the best employees. When they go out recruiting, they talk about what a great place your community is. They depend on your effectiveness and they have a vested interest in your success.”
5. Align With Local Leaders
Another funding solution is being explored by Julie Hart, president of CFO by Design, which outsources financial officers to CVBs, DI and associations. Rather than rely on hotel tax revenues, she suggests a shared-services model between the CVB, chamber of commerce and economic development council.
Under this model:
- The CVB develops the branding and creative services for the city
- The chamber educates local businesses on the value that tourism and meetings bring to the destination
- The economic development council works in conjunction with the CVB to attract industry, businesses and talent to the city.
For example, when a nursing convention is booked, the EDC — which might be looking to attract more nurses to work in area hospitals — would reach out to the group and meet with them when they are in town.
6. Team Up With Neighbouring Bureaus
Another suggestion from Hart: Regions with multiple CVBs, like the Minneapolis and Dallas-Fort Worth metro areas, could share back-office operations like human resources and accounting.
“I am realistic enough to know there are going to be some turf wars, but if we can reduce those costs by sharing some services across multiple CVBs, that seems to be a huge opportunity for the industry.”Julie Hart, President of CFO by Design
7. Be of Service Right Now
Many DMOs have found a new purpose as a trusted source for their customers and communities — repositories for the most up-to-date news on government regulations, health and safety protocols, and the status of area meeting venues and suppliers.
“It’s important that the DMO gets in front of the messaging to ensure we’re receiving the right information. You have this opportunity to control the messaging and to get the facts correct, and to send them to your clients”Deidre Clemmons, CMP, CAE, senior vice president of events and strategic partnerships for the Airports Council International–North America
Kate Kurkjian, CMP, events manager for the Zillow Group, also looks to CVB partners to:
“have their finger on the pulse, be the boots on the ground and really deliver all that information that’s actually happening in their cities.”
There is no doubt in my mind that destinations would not perform the same without our DMOs and CVBs. This article has provided a platform from which to recognise and future-proof their contributions both now and into the future. Like the rest of the tourism industry, we hope that our CVBs and DMOs will be able to ride this wave of uncertainty and disruption. Perhaps, even emerging stronger and more resilient than ever in the new dawn of post-Covid tourism and travel.