Visit Florida, one of the behemoths of destination marketing, cut its staff by more than 20% in the past year, and it was not entirely related to the public fiasco surrounding rapper Pitbull.
My home state of Florida lives and dies by the tourism industry, and disheartening as it is to see the cuts, there is a deeper reason that our state and others are finding it challenging to maintain robust budgets to attract visitors: Whether big or small, destinations find it difficult, if not impossible, to draw a direct line between marketing expenditure and the revenue they generate.
It's a problem that badly needs to be addressed.
Pitbull performs in the “Sexy Beaches” video promoting travel to Florida in conjunction with Visit Florida. The video landed both the rapper and the destination marketing organization in hot water with state officials because of its lyrics and subject matter. But the reasons for Visit Florida’s recent staff cuts go deeper than this controversy, argues travel innovator Leland Pillsbury.
A huge industry, a big problem
Destination marketing is a massive international industry, with stakeholders including countries, state and local governments, public-private entities, hotels, airlines, restaurants, attractions and other important swaths of local and regional economies. Spending in 2016, for example, exceeded more than $400 billion worldwide.
Given that, it's no surprise that spending by destination marketing organizations (DMOs) is a huge engine of economic growth. Tourism creates jobs, generates tax revenue, boosts local real estate values, retail volumes and more.
This level of massive spending has gone on for years, interrupted periodically by decision-makers questioning the effectiveness and efficiency of various expenditures on programs, staffing levels and other costs -- as, for example, in Florida.
The reason, however, is not a disconnect by policymakers who fail to understand the importance of tourism. It is a failure by DMOs to prove a return on investment (ROI), which enables policymakers to challenge expenditure levels and, frequently, to cut the level of expenditures when budgets are tight and leaders are under pressure to save money wherever possible.
Advertisers feel the pinch
Television advertising continues to be a main lever marketing organizations use to drive visitation. Well-produced campaigns not only reach millions of potential visitors, they generate a sense of place and pride for local citizens and politicians, who respond favorably to seeing their hometown presented in a most favorable light.
Social media has also become a key lever, with spending on Facebook, Instagram and other social networks growing rapidly.
Some destinations, such as New York and Cape Town, have even gone so far as to combine marketing funds to go after high-yield customers.
However, advertising executives are also forced to use indirect measurements, such as readership, or in the case of social media, "eyeballs," as a proxy for measuring the results of ad spending.
The problem is obvious. Lots of eyeballs for a little expenditure may or may not translate into revenue at hotels, restaurants and attractions in a given market. Would fewer eyeballs at a higher cost generate more local revenue?
What is needed is a standard for accurate and measurable metrics: actual hotel bookings, revenue generated and, ultimately, ROI. With such metrics in hand, DMOs would be able to establish the credibility of their marketing efforts, protect their budgets and, ultimately, drive more sustainable growth at their destination. And advertisers could better demonstrate the value of their campaigns.
Finding a key in data
Some solutions are coming into view, even providing real-time measurement tools to directly connect marketing activity to revenue spent in a given market.
The destination marketing professional association Destinations International has created an Event Impact Calculator to help assess ROI.
Meetings, events and convention professionals are also innovating to develop technologies that not only personalize guest experiences but also measure concrete results, with companies including Social Tables and Bizzabo at the forefront.
Impact, a program offered by Adara, on whose board of directors I sit, maps marketing investments to destination bookings and revenue based on first-party data from 175-plus large travel brands. It provides a detailed look into travel behaviors and campaign audience metrics, including total room nights, average daily rates, search-to-departure-time windows, etc., with the goal of providing insight to inform data-driven decisions.
In the hands of destination marketing and research specialists, data from the offerings listed above can spur better decision making and the right allocation of spending. It can also enable DMOs to know exactly who their customers are, how they plan and travel and how they spend. Ultimately, they provide tools to justify marketing allocations by tying spending to real results.
Helping DMOs see around the corner
You do not have to look far to see the power of tourism, destinations and local experiences on the public psyche -- or on the economic share of wallet.
Wide acceptance of travel TV programs, luxury magazines and travel websites have made destination-based travel part of the national zeitgeist.
Where even 20 years ago, faraway places seemed exotic and hard to imagine visiting, the growth in consumer travel and the growth of the online marketplace have made international travel a reality for hundreds of millions of new consumers. The rise in consumer travel from China and India, alone, will add hundreds of millions more traveling consumers in coming decades.
Destination marketing is a robust engine of economic growth in many ways we see (and many that are not so obvious), and the imperative on DMOs is to compete and win their share of the new traveling consumer.
The right technology and tools can provide DMOs and tourism boards with the information they need to quantify their value and economic impact.
It can also empower destination marketers with new and compelling insights to help them shape future marketing strategy, optimize media spending and streamline budget allocation.
More investment in these technologies is needed -- and the faster existing tools are adopted by the industry, the better.
Leland Pillsbury is managing director at VC Thayer Ventures and a lifelong entrepreneur and innovator in travel and hospitality. He was a senior executive at Marriott, where he headed strategic planning, then executive vice president. With his wife, Mary, he founded the Pillsbury Institute for Hospitality Entrepreneurship at Cornell University.