With Visit Florida fighting defunding, other DMOs feel vulnerable

U.S. Travel Association CEO Roger Dow, left, and Destination Marketing Association International CEO Don Welsh at the DMAI conference.
U.S. Travel Association CEO Roger Dow, left, and Destination Marketing Association International CEO Don Welsh at the DMAI conference.

NASHVILLE -- The Destination Marketing Association International's (DMAI) annual CEO meeting last week may have been held here in Music City, but the buzz was all about the Sunshine State.

Among those who had gathered here were many CEOs of smaller and seemingly more vulnerable destination marketing organizations (DMOs) around the country. Their shared concern was that if Visit Florida was having to fight for its existence, who among them was safe? 

Florida is, after all, what U.S. Travel Association CEO Roger Dow in his keynote address here called "the darling of the travel industry." It set record visitation numbers for the past five years, and in 2015 it became the first state to welcome more than 100 million visitors in a single year.

And yet, Florida's House of Representatives in February voted overwhelmingly to cut Visit Florida's budget by 67%. Florida Gov. Rick Scott, a Republican, has been tirelessly campaigning in defense of Visit Florida, crisscrossing the state to persuade residents of the organization's value and educate them about how much tourism contributes to Florida's coffers.

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Visit Florida's troubles began last year when it was revealed that it had paid the rapper Pitbull $1 million to promote the state, leading to the resignation of Visit Florida's CEO in January. Florida's house speaker, Richard Corcoran, a fellow Republican who is said to have his eyes on a gubernatorial run in 2018, has taken on the organization with as much zeal as Scott has invested in defending it.

As of last week, no companion bill had been introduced in the state Senate, and several people in Florida's tourism industry said there is not much appetite in the upper house to introduce one. However, whether or not the bill passes, the Florida legislature will ultimately decide on Visit Florida's budget, for which Scott has requested $76 million.

In a facetious jab at Florida lawmakers, DMAI chair Gary Sherwin, CEO of Visit Newport Beach, said, "I would love to say to the Florida legislature on behalf of the state of California and all its destinations, that agreeing to unilaterally disarm yourself by cutting marketing will be a boon to our state, and we'd like to thank you."

On a more serious note, Sherwin called cutting Visit Florida's budget "a horrible mistake."

"They have to understand that other states will benefit when they decide to take this action," Sherwin said. "Ours will be one of them, and there will be others as well. But the people of Florida and the jobs that people depend on will go away."

But in fact, the current political climate is placing more strain on these DMOs.

"Part of the challenge is that right now -- and we saw it in the presidential election -- there is anti-government sentiment, people saying let's make government small," Sherwin said. "Leave only the essential services and get rid of everything else. There are consequences to those decisions. ... When there's a downturn, a lot of politicians say, 'Well, I can fund tourism or I can put cops on the streets.' Our answer is, 'If you fund tourism, you can do both.' But a lot of politicians don't understand that."

Learning from past cuts

Every person in attendance it seemed could rattle off the names of places that severely or entirely cut their marketing funds -- Washington, Colorado, Pennsylvania and Chicago -- only to quickly learn that whatever they saved in their budget they lost many times over in visitor spending. 

Dow said it was "an irrefutable fact that if you increase spending, more people come, more visitors come. If you decrease spending, less visitors come, there is less spending, less jobs happen. There is case after case after case, but people don't listen."

He cited the example of Pennsylvania, where the tourism budget was chopped from $30 million to $7 million. After five years, the state saw its regional market share drop 17%.

"They saved some money," Dow said. "For every dollar they saved, the state lost $3.66 in tax revenue."

Colorado, which Dow called "the poster boy or girl for our story," closed its tourism marketing office in 1993 for seven years. But it took until 2016 -- almost 23 years -- to win back the market share it had in the '90s.

Yet, other destinations don't seem to learn from those examples.

DMAI CEO Don Welsh, who was CEO of Choose Chicago when its budget was slashed in 2015 by $7 million, said, "It had taken us five years to get it to a respectable level, and overnight it was cut by 42%."

As a result, Welsh said, he had to lay off 29 people and close international offices in Mexico and Canada. The sudden disruption, he said, slowed Chicago's momentum and likely cost the city hundreds of millions of dollars in economic impact in the eight months it took to get the funding back.

"When a city starts getting into a groove, like with Nashville, you have to have continued investment," Welsh said. "If you all of a sudden shut it off, it's not like you can turn the faucet back on the next day."

Nashville, which has almost doubled its marketing budget over the last five years, saw a record 13.9 million visitors in 2016, while also setting records in hotel rooms sold and hotel taxes collected. Its success correlates directly with the support it gets from its top leadership, specifically mayor Megan Barry, who spoke at the DMAI meeting and explained that her support for tourism marketing dollars comes down to the numbers.

"To me it's data-driven," she said. "Was this going to have an economic benefit if we made this investment? What was going to be the dollar-to-dollar return that we could see from the tourist industry?"

With that industry now supporting almost 60,000 Nashville jobs, Barry is convinced.

"Every time you buy a beer, you help pay for a police officer," she said. "Every time you buy a meal, you help me pay for a teacher."

In conclusion, she told those in attendance, "Have a great time -- and spend a lot of money."

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