Changing the Olympic (event) Conversation

Perhaps the most widely engaged-in event around the Olympics is “Games bashing”. Followed closely by piling-on. One could argue that no single event anywhere attracts the depth and breadth of global pontification and criticism that an Olympic Games foments.

Of course, many of the politicians, sport bureaucrats, captains of industry…and even some of the athletes themselves, who work tirelessly to leverage their self-important roles for their own non-Olympic agendae, make it pathetically easy for anyone to make the Olympics a target.

Not surprisingly, the issue most often debated is: “Are the Olympics worth it?” And just like when a destination pursues an event, the primary measuring stick is economic.

Certainly, as with any event, financial prudence is crucial and essential in order to sustain the intended experience. But if financial ROI is the only lens through which an event is evaluated we are not looking at the entire spectrum of event legacies – actual and potential – when human beings gather. In doing so, we are not telling the full story of how events can make a difference.

I confess that I am a huge fan of the concept and published ideals of the Olympic movement. Yes…they exist. From the IOC:

“The goal of Olympism is to place sport at the service of the harmonious development of humankind, with a view to promoting a peaceful society concerned with the preservation of human dignity.”

Athletics - Women's Marathon

Nowhere does it say the Olympics are about creating wealth or economic benefit. This is a creation of the aforementioned politicians, sport bureaucrats and captains of industry that hijacks the conversation away from what the Olympics is supposed to be all about: using sport to remind us to celebrate and preserve what’s good and right about being human.

If you look past all of the warnings and criticisms, the scandals and falls-from-grace that typically precede an Olympic Games, and look at participant behavior at the Games, you just might feel better about humankind.imgres For every story of athletic achievement at an Olympic Games, there are countless, often unpublished, stories of human kindness and ministry that will endure beyond the competition and touch lives well beyond the Games’ balance sheet. These legacies are only possible when people gather together. This is the event conversation that needs a greater voice…and not just around the Olympics…at all events.

At a time when the world is struggling with secular violence, racism and a sickening rise of xenophobia, Rio 2016 has been a badly needed time-out to implore us to celebrate and showcase what’s possible with humanity. Events can do that better than anything else.

And God knows we all could use more than a little of that in 2016.

What Destination Marketers Can Learn from College Marketers

imageFor the last four years I have been on the client-side of the college recruiting ecosystem, not as the decision-maker but as the parent eventually writing the check. And as the process reaches its conclusion this month I could not help but reflect on the similarities between the college recruiting and destination marketing (particular for meetings and events) ecosystems:

  • While the transaction scale is different, both ecosystems are focused ultimately on marketing and selling the promise of a destination experience with some kind of personal return for your investment.
  • They are both BIG MONEY industries. In North Carolina alone, higher education had a 2013 economic impact of $63 billion. Tourism’s 2013 North Carolina comparative was $26 billion. Boom!
  • With over 17 million enrolled students and almost 5,000 colleges and universities in the US (2005 data), the competition is intense for new students.
  • Both understand and have designed their sales and marketing strategy around the importance of developing personal and authentic relationships with prospective clients.

At the same time, while there are considerable similarities, there are a number of elements that I believe destination marketers could learn from their college recruit marketer counterparts:

  • Colleges understand that they are first a brand and integrate their brand DNA into everything they do in order to distinguish themselves in a complex, noisy world. Brand strategy is the pursuit of long-term authenticity as opposed to a cyclical campaign logo/tagline approach. Most (not all) also avoid the trap of trying to appeal everybody, which means they have taken the time to understand their essential brand truth as the nucleus of their story.
  • College marketers know and compellingly articulate their unique destination experience value proposition at every engagement point. And they start with answering the most important question of all right upfront: “WHY should you go to school here?”. They talk almost exclusively about personal outcomes and legacies not about how many dorm rooms they have or the quality of the equipment in their labs.
  • College marketers collect and use prospect data extremely effectively, narrowing their acquisition funnel and tailoring their messaging throughout a student’s four-year high school experience. At each engagement point (e.g. high school college fair, college visit, SAT/ACT test) colleges gathered data about us to develop a precise prospect relationship profile. The result: while in freshman year we received emails and direct mail from hundreds of colleges, by senior year only college programs of interest to my daughter (film school) were contacting us. Those that tried to sell us on attending a college for agriculture clearly looked like they hadn’t done their homework.
  • College prospect engagement follow-up was impressive. Personal. Authentic. Compelling. Southern Methodist University did it better than any DMO I have ever seen. Sadly, my undergraduate alma mater – University of British Columbia – failed miserably. No more alumni money for them.
  • Colleges have integrated technology as a client engagement tool rather than as a sales tool aligning nicely with the expectations/needs of prospective students. Upon application submission most universities use social media and other personalized digital marketing approaches not to sell but to keep students engaged in the period between application submission and acceptance decision. Florida State University even creates a shareable personalized acceptance video.
  • For film schools at least, many colleges use student-produced content to show the type of work being done at their schools. UCLA has posted a portfolio of current student work on their website. The University of Texas (and others) showcases some of the work of recent graduates that was featured in film festivals. Again…it’s about client engagement through relevant content and focusing on compelling outcomes, not hard-selling on university features.
  • Not surprisingly colleges use current students and alumni as their ultimate closers. They have figured out that no amount of hard sell on their part is going to convince a student to select a college as part of a slick sales pitch. Instead they make current students and alumni incredibly accessible throughout the entire process. New York University hosts what essentially amounts to a student site inspection weekend (they do not host your transportation or accommodation etc) run primarily by current students with participation by alumni. It was as tightly organized as any destination site inspection I have ever been on. There was no hard sell just opportunities for authentic conversation between prospects and current students/alums about the good, the bad and the ugly of student life.

tumblr_o2572r96UE1to8yb2o1_1280Finally…of course the destination is a critical part of the final decision. And college marketers know this. Every college we considered integrated elements of their host destination as part of their overall brand story, value proposition and engagement marketing. (UCLA’s recruiting brochure featured destination content as good as any DMO’s. SIDEBAR INSIGHT: Every piece of marketing content we saw used real students/faculty, not stock images or over-staged models.) But rather than positioning the features of the destination as a ‘reason to buy”, the destination was primarily positioned as to how it contributed to the college brand and value proposition for its (prospective) students. The University of Texas does a nice job leveraging SXSW for the benefit of the School of Radio Television and Film.

Some great destination marketing practices are happening outside the DMO. And herein lies a powerful opportunity for BOTH. The trend of the deepening of business relationships between DMOs and their local colleges/universities will pay dividends by developing mutually-compelling stories that enrich their respective brands and businesses.

Proof once again that we’re never too old to go back to school.

Formalizing the Tourism Marketing and Economic Development Partnership

A colleague of mine from Vital Economy – one of the US’ foremost social enterprises focused on community economic development strategies – forwarded me a recent Forbes article about how cities are getting serious about marketing campaigns to attract talent to their destinations. They cite LouisvilleMontrealClevelandCalgaryRaleigh and Houston as examples of cities that have established comprehensive community development initiatives under various organizational constructs, such as economic development offices (EDOs) or chambers of commerce, to market their destinations as great places to live and work.

When you go to their respective websites (check-out Montreal in particular) you’ll find that their look, feel and approach is strikingly similar to that of a DMO looking to engage visitors. And why not:

  • EDOs are attracting talent and investment.
  • DMOs are attracting visitors.
  • Both are dealing with intensely competitive global marketplaces (the “war for talent” and investment is every bit as brutal as competition for meetings and events).
  • Both want to build relationships with executive-level decision-makers as well as engage individual consumers.
  • Both are in the destination marketing business – presenting their destination’s emotional and pragmatic benefits to their target audiences with the objective of making their community a better place to live, work and play.

The potential partnership synergies are enormous.

When DestinationNEXT identified the development of new business models as one of three provocative transformational opportunities for the future of DMOs, the top element in business model evolution was “greater involvement in broader economic development initiatives.”

So what does that look like?

There are currently numerous DMOs that have recognized the important opportunity that closer working relationships with EDOs presents for everyone in the community. For starters, many progressive communities have already seen fit to include the film and/or sports commissions as part of the current DMO since they too are in the business of marketing the destination. At the same time, many of those relationships remain issue and/or opportunity based – that is to say that there are currently very few examples of ongoing formal structural or MOU-type DMO-EDO initiatives with measurable objectives and aligned strategies.

Old DMO Design

Maybe the time is right for everyone to think a little bigger. Since DMOs and EDOs are BOTH in the destination marketing business (though to different audiences) does the future destination marketing organization one day look like this?:

New DMO Design

Consider some of the benefits of a broader consolidation with EDOs:

  • More business leads: Combining relationship networks across geographies and industries will help develop more leads for meetings/events, business investment etc.
  • Community support: Bringing stakeholders together in one entity will help community engagement and stakeholder understanding (e.g. business and investment community) of destination marketing activities, building both marketplace and political capital for use where and when needed.
  • Brand alignment: One consistent destination story will improve traction in intensely competitive marketplaces.
  • Destination development: Having a destination development plan (e.g. convention center expansion, tourism improvement district etc) that is broadly endorsed by tourism and economic development leaders/constituencies will help secure the required government policy support as well as private/public sector financing.
  • More business generation capacity: Enhanced operating efficiencies allowing for greater investment in direct business-generating destination marketing and economic development activities.

However, the idea has three fundamental challenges:

  • Funding: With prescriptively defined funding already in-place for many DMOs through hotel tax allocation and other lodging-based voluntary levies, having those proceeds dedicated to anything but visitor transaction generation could present problems.
  • Leadership: While the big picture mission (“making the community a better place to live, work and play”) won’t get much challenge, the need to also meet the expectations of the diverse individual stakeholder groups for each organization will take considerable energy.
  • Culture: This could be the biggest challenge of all. For example, while most tourism stakeholders have a richly-grounded hospitality ethos, the economic development mindset can be very bottom-line driven. Can they co-exist?

Of course its idealistic, simplified and maybe even naïve. But if superior relationship development and operational performance from community destination marketing initiatives in intensely competitive marketplaces is the objective, the concept of one organization formally leading a community’s various destination marketing initiatives is worth exploring.

THE SECOND COMING OF THE CELEBRITY TOURISM AMBASSADOR

At one time or another most DMO executives and their local partners have considered enlisting the services of a celebrity (however defined) native son or daughter to pitch their destination. “They’ll do it and they’ll do it for free because they’re from here” are the typical expectations.

My experience has been:

  • Most don’t want to do it because they don’t want to look like they can be bought to pimp a destination.
  • They’ll do it but want BIG money to do as little as possible…and only if/when they feel like it.
  • Be careful what you wish for. Hitching your carefully cultivated and managed destination brand to a paparazzi target (remember “Snookie”?) that uses twitter as a weapon of mass destruction just might cause more damage than you’re able to clean-up.

This paradigm would now appear to be changing. It seems that some high profile destination brands have decided that the risk and investment in a celebrity tourism ambassador are worth it in order to take their brands to new levels of affinity as the competition for attention and revenue continues to escalate:

B09ELH1IMAAAnd5

New York City (Taylor Swift): The Big Apple hired her even though she’s not a native daughter nor does she live there. She does have over 70 million Twitter followers however. Perhaps it was “brand defense” given The Donald’s continued reference to his NY heritage.

 

ThorAustralia (Chris Hemsworth): Tourism Australia hired him to follow in the steps of perhaps the world’s most famous tourism ambassador, Paul Hogan. To a whole generation of travelers and more, Crocodile Dundee was the embodiment of all things Australia. It will be interesting if consumers come to associate Mr. Hemsworth as much with Australia as they already do with Asgaard.

Josh DuhamelNorth Dakota (Josh Duhamel): North Dakota is one of the US’s least visited states and its most widely-known story-line of late involves a wood-chipper in the academy award-winning movie Fargo. Hiring native son Josh Duhamel to tell tales from the “Peace Garden State” appears to be working with a reported 20% increase in visitor guide distribution during 2015. No word on his impact on wood-chipper sales.

_83389027_640Tokyo (Godzilla): The appointment of Godzilla will have boomers reminiscing about their exploits at drive-in movies but I am not sure how it extends the Tokyo brand story. It was brilliant, however, in terms of generating press releases and photo ops. At least Godzilla’s not at-risk for inappropriate social media behavior.

California: Visit California’s “Dream Big” commercials use numerous A-B-C list Hollywood celebrities to tell the California story. For California it not only makes sense, but it’s totally expected given the Hollywood DNA in the overall California brand and lifestyle. It’s an essential and unique brand truth that is hard to ignore. Not surprisingly, no sightings of the Governator.

So the question is: does the investment in the use of celebrity tourism ambassador move the needle (however defined) for a destination? To get a very basic and organic answer I did what has become the go-to first-step for people: I asked Google…or rather, I used Google Consumer Surveys to ask 500 people in the US the following question:How much does the appearance of a celebrity tourism ambassador in marketing campaigns influence your decision to visit a destination? 

Celebrity Survey

Overall, just under 11% of the population are “moved” by the existence of a celebrity tourism ambassador, with an additional 11% in the gray area of uncertainty. Peeling back the data a bit, the impact of a celebrity tourism ambassador declined slightly as household income rises. In a world where the influence of peer-to-peer travel recommendations is skyrocketing while the influence of traditional placement advertising plunges, this result is not at all surprising.

Time will tell if any of the recent investments in celebrity tourism ambassadors will actually amount to anything more than a press release and a photo op. The only strategic reason I see for enlisting a celebrity tourism ambassador – simply put — is to have their well-known story and tribe of followers attached to your destination’s not-so-well-known story to create a bigger and better story with people that don’t know your destination’s story. In North Dakota’s case, it might be exactly what the destination is looking for as recent campaign results bear witness to. But for more widely-known destination brands and stories…you have to wonder about the ROI.

Let’s face it; signing-up a celebrity with a big story and big tribe of followers to extend yours is hardly destination marketing magic. You just need a telephone (to call an agent), a lawyer to write-up a complicated contract with lots of protection in it and a check with lots of zeroes on it. But as the data above shows…you’re unlikely to initiate a stampede of visitors to your destination. Except of course if you’re using Godzilla.

mqdefaultThe magical thing for DMOs to pursue is to find and share the smaller, more authentic stories about real people doing incredibly cool things in the destination that anyone can have access to. The Greater Palm Springs CVB is producing some great high-energy video content about a myriad of activities with that expand/enrich their destination’s story. This one has already had over 400K views.

If you create and share enough of the authentic and compelling stories that make your destination unique, pretty soon you’ll be the ones attracting the celebrities to your destination. But this time you won’t have to pay for them.

 

Marriott’s Starwood Acquisition: A Transformation-Level Event

Marriott-and-Starwood-infographic_R3-1200x1552This week’s announcement of Marriott’s massive purchase of Starwood to create, by far, the world’s largest lodging company, is generating unprecedented conversation from Wall Street to Main Street and from tradeshow floors to Heavenly Beds.

While not a disruptive force on travel or destination marketing per se, it has all the potential to be a transformative event. Its sheer scale and scope will have a significant impact on many aspects of the travel and destination marketing ecosystem.

Lyle Hall from HLT Advisory in Toronto does a fabulous summary of the various considerations for investors, travelers and communities.

From the standpoint of destination marketers and DMOs, there are several things that are likely to rock those worlds:

  • The creation of a dominant hotel enterprise-cartel that manages a significant proportion of a given destination’s lodging strata (e.g. convention room block or beach resort location) could have significant implications on the type and timing of business that DMO leaders are able to attract to the city…and even possibly impact a destination’s brand.
  • With meeting planners already citing escalating costs of WIFI, rooms and F&B as barriers to future event growth and attendance, will the possibility of continued price escalation resulting from the buyout raise the bar for destinations to provide even greater community-supplied incentives/subsidies that mitigate costs in order to attract event organizers?
  • Will this combination further elevate the appeal of the world’s second largest lodging supplier – Airbnb – positioning sharing economy tourism enterprises as increasingly important destination marketing partners? (See my posting on the Rise of Evolutionary Partnerships.)

While it is still early days in how this will all unfold, the speculation and uncertainty amongst all stakeholders is significant. Suffice it to say that destination marketing leadership will be an essential element in transforming the anxiety around the Marriott takeover into opportunity for many destinations.

The Rise of Evolutionary Partnerships in the Sharing Economy

The impact of the sharing economy continues to dominate business headlines and tourism/meetings industry conference conversations. The one constant element in both channels is that for the most part users are delighted with sharing economy options while legacy economy stakeholders are struggling to evolve their roles.

Let’s be clear: the sharing economy is not going anywhere. While it’s easy to say it’s just another example of how technology is changing our lives, the real driver of the sharing economy is a grass-roots shift in consumer trust from established corporate enterprises to self-forming peer networks. It’s as much of a social evolution as it is a technology one.

The good news is that after the initial shock and awe of disruption by the likes of VRBO, airbnb and Uber, forward-thinking brands are replacing fear and contempt with partnerships that are truly WIN-WIN. Check out these three examples – all of which have happened in the last 90 days alone:

Tim Mag

I recently had the privilege of speaking at the Elite Meeting Alliance in San Antonio where the topic of the sharing economy came-up in multiple conversations with meeting professional attendees. It was apparent that while the vast majority of attendees had used shared economy platforms in their personal lives, fewer than 10% (based on a show of hands in a room of meeting professionals) had ever used them professionally. They did feel however that it was inevitable for meetings (both airbnb and Uber already have specific business travel arms) but that elements such as risk management, service consistency and room-block contracting needed to be dealt with.

I see opportunity knocking for DMOs. Right here. Right now.

The big knock trotted out by some is that “shared economy participants don’t understand our business or our attendees”. I’m sure its true. But what if they did? What if local airbnb hosts were formally trained by the local DMO on meeting planner/attendee service expectations and had access to briefings/advisories on group business opportunities that they could participate in and earn more revenue?

By navigating the shared economy maze to the intersection of the visitor experience and host/supplier DMOs can play a powerful leadership role in bringing the sharing economy into the existing tourism and meetings industry ecosystem. The result could very likely be:

  • Improved visitor experiences that elevate the destination brand and increase local sharing economy revenues.
  • Commitment to pay local taxes and comply with regulations (e.g. insurance and safety).
  • Greater community engagement with the local tourism and meeting/convention industry.

Some might say this is heresy. Some might say it’s the natural order of competition. Others see it as a way to create new value from a social evolution.

And some smart DMOs are probably already creating plans to make it happen.

These are the Meeting Groups I Want in My Destination

Yesterday, SKIFT’s Greg Oates (@gregoates) wrote a very insightful article about what could make meeting destinations attractive to decision-makers in the future. Every destination marketer should grab a cup of coffee and give this article some thought.

Convene - September 2015Citing a North American study collaboration by DMAI and PCMA’s Convene magazine, Mr. Oates presents the perspective that a destination’s “intellectual capital” is a growing competitive advantage and that it will rival the typical meeting infrastructure elements most often showcased by destination marketers as reasons for planners to pay attention.

While the study suggests fewer than 30% of respondents saw a destination’s intellectual capital as important-very important, it’s definitely trending on association planner radar screens and bears consideration by destination marketers when crafting their pitches.

Where does this trend go from here? I think it depends on how the meeting industry’s age old identity tension (hospitality experience vs. economic development platform) evolves and reconciles. On one hand there continue to be signals (see the 2015 DMAI-Tourism Economics Report) that the meetings industry’s value proposition is increasingly around community economic development. Through the work of meeting industry organizations and the Meetings Mean Business coalition, governments and community leaders are starting to pay attention.

On the other hand, DMOs continue to market their respective meetings value propositions around hospitality elements like the size of their convention centers and the number of Michelin chefs they have on site.

While there are no details about the profile of those respondents that saw intellectual capital as important-very important when making a destination selection, these are the groups that I would want in my community. They are probably looking at the destination through a different lens than hospitality – perhaps for investment purposes or even workforce development. Because their perspective on the destination’s value proposition is different, they are more likely to engage with a broad cross-section of the destination community’s socio-economic stakeholders, bringing the impact of the event well-beyond the venue. And if the destination experience is positive they’ll probably share it with other thought-leaders who have a similar mindset about the strategic role of meetings and events. As a result, their destination legacy from the meeting/event will not only be around traditional hospitality metrics but about how a meeting made a difference for the organization as an enterprise and the destination’s broader community of stakeholders.

And isn’t that what destination marketing success ultimately needs to look like?

Got get ‘em.

If I (Only) Had a Million Dollars – Core Strategies for Small DMOs

DSC_0014-1Ask many DMO leaders where they spend most of their time and budget security is typically at or near the top of the list. Whether it’s a fear of losing what they have or a quest for more, this is what keeps many a DMO leader awake at night.

Starting this week I am beginning a series of postings on key DMO strategies for different budget challenges. Of course, every DMO and destination have different community and visitor economy profiles that makes the development of a standard set of a core strategies difficult. However just because a DMO has inherent budget limitations should be no excuse to be less remarkable. Today, I believe budget is less of a determinant of performance than ever before. In today’s hyper-connected flattened marketplace, ALL DMOs can be remarkable. The key is focusing on doing a few things REALLY well and having the courage to discard/ignore approaches that have hit their expiry date.

The Magic of Today’s Small DMO Opportunity

For small DMOs (defined herein as those having operating budgets of $USD 1 million or less), I believe these are the “best of times”. While iconic destinations will always have significant appeal, one of today’s most important visitor trends is the quest for a unique, authentic experience – and often this means a smaller, lower profile destination where people are seeking the ultimate travel driver – ESCAPE. This is the sweet spot for the small DMO.

And even though visitor economy competition has never been as intense as it is now, destination marketing professionals in small DMOs have never had access to so many powerful tools, rich visitor data and vast relationship networks than today – and most of them are free.

So with that as a set-up here are six core approaches and strategies for small DMO leaders (and even larger DMOs since the principles and data points remain the same for the most part):

Spend Your Time and Money Here:

  • Engage Your Community as an absolute imperative. This is not about lobbying your local government/partners for money. This is about sharing a compelling story of why tourism matters to the average citizen and how theyselfie-vacation have the starring role in making it happen. With only a small budget, you need to inspire your community to be its biggest story-tellers and magic-makers. Visit local schools and business leaders. Ask them what they think makes your destination remarkable. Hold selfie contests. Crowdsource local photos and videos. Create a local tourism movement.
  • Digital Domination: You don’t have the time or money for a multi-platform marketing assault so make your destination website your channel of first resort. In 2014, Google reported that 74%/77% of leisure/business travelers used the web as their primary source of travel planning and that 50%/54% respectively used their smartphones during their trip. Creating a responsive (mobile-friendly) SEO optimized, visitor-centric website that shares your destination’s story along with how and where to find it should be your DMOs primary marketing investment.
  • It Takes a Village – Cultivate TripAdvisor engagement: Just because you say your destination is awesome does not mean potential visitors are going to believe you. But they do believe people who’ve been there, done that. And with a monthly audience of 375 million TripAdvisor is where people go to share and to explore. A December 2013 study by PhoCusWright indicated that 67% of travelers check TripAdvisor several times per month. You need to inspire your visitors to share their experiences and to coach your community to engage there. Contests and incentive awards work wonders…and the pay-off is HUGE.

Approaches and Strategies To Avoid:

  • Printus Interruptus: Don’t pay to print anything. One of the sacred cows for many destinations is the visitor guide…but once it’s printed it’s out of date. Let someone who is in the publishing business do what they do best and manage this sacred cow. As a DMO fully-engaged with your community, you’ll be the one with the latest and the greatest experiences, sharing them with visitors on a timely basis via your digital channel of first resort along with your inspired community story-tellers.

5118138279_439b53965f

  • Avoid Temptation from “Mad Men”: Stay away from paid advertising. Your budget also will not allow you to hit frequency/reach critical mass to get any kind of audience recall traction. Besides, research continues to indicate that travelers increasingly rely the most on personal contacts for travel inspiration and that their trust in paid advertising continues to decline.
  • Not Just Members Only: Many DMOs started as membership-models. And it worked in a pre-hyperconnected world. But as a small DMO you need to be seen as inclusive in your community, not exclusive. Potential visitors (particularly millennials) have decreasing trust in membership organizations as they have inherent biases and are perceived as not transparently supporting visitor needs. DMAI’s DestinationNEXT study actually found that almost one-third of existing member-based DMOs were looking to move away from the membership model over the next five years.

I know. Easier said than done. But for small DMOs, making just a few of these choices can result in significant performance results enhancements even though your resources are comparatively smaller. And as compared to larger DMOs and larger destinations, you can probably activate them much more quickly and consider their impact. That makes your sweet spot even more tasty.

Next week: What Would You Do With an Extra Million $’s?

Tourism Subsidies: Short-term Transactions vs Long-term Innovation

In the global tourism industry tourism subsidies go by lots of different names: incentive, rebate, subvention, supplement. But regardless of the label, at the end of the day the DMO or some other destination entity ends up writing a check to an event organizer or tour operator in order to bring their associated visitor economy business transactions to town.

Ask DMO/destination leaders about subsidies and, after exclaiming how they’re out of control, they resign themselves to the fact that they are now just part of doing business.

Meeting professionals will tell you that, given eternal budget pressure, if there are incentives available, they’ll take them. For larger congresses and citywide events the provision of an incentive is now basically table stakes even in a booming meeting industry economy. (I heard one international association leader publicly say that unless the venue is FREE, they won’t even consider the destination.)

poker-cash_3104004kBring DMO leaders and meeting professionals together to discuss event incentives and the room feels more like the finals of the World Series of Poker with $millions on the table surrounded by stoic players quietly watching and waiting to play their cards.

Regardless of how and why we got here…tourism subsidies are a reality and we have to deal with them. But consider this: economists will tell you that transactional subsidies rarely work over the long-term for most industries. These subsidies typically create industry inefficiencies and can stifle long-term innovation because free cash has a way of smoothing over all sorts of systemic shortcomings in favor of short-term transactions.

The question for DMOs is this: Is there a better approach than transactional subsidies to event organizers and tour operators to help the local tourism industry and community thrive?

I believe there is. Simply put, DMOs need to consider “industry innovation incentives”.

maxresdefault-1

The Singapore Tourism Board has made this a cornerstone strategy and has recently established two new tourism industry innovation funds to enhance their tourism industry performance:

Singapore Kickstart Fund: The fund supports the creation and test-bedding of innovative lifestyle concepts and events with strong tourism potential and scalability. This is with the aim of enhancing the vibrancy of Singapore as a tourist destination in areas such as the arts, entertainment, dining, sports and retail.”

Singapore Experience Step-Up Fund: “The S$10M fund aims to encourage businesses to develop new tourism experiences that will enhance overall visitor experience and satisfaction in Singapore… The Board is also calling for proposals for tour development and technology initiatives.”

The STB has chosen to provide innovation incentives/subsidies as a way to create long-term competitive success through destination innovation/product development as opposed to a reliance on subsidies to generate short-term marketplace transactions.

Sadly, the STB, an acknowledged trailblazer in the DMO world, remains an outlier in this approach. In Europe and North America, transactional subsidies still rule as a foundational strategy for many DMOs to achieve their stakeholder mandated short-term room-night performance metrics.

I believe investing in “innovation incentives” are the type of DMO product development “NEXTPractices” contemplated in DMAI’s DestinationNEXT study. But its even bigger than that. It’s also about industry leadership organizations investing in the innovation capital of their industry’s future.

Still, I marvel at today’s explosion of tourism industry innovation. But the interesting thing is that most of it is coming via entrepreneurs from “outside” the established tourism industry ecosystem. (E.g. airbnb founder Joe Chesky is a design school graduate who was running a minor league hockey team when he started airbnb.)  Igniting industry innovation it seems is someone else’s responsibility.

But it doesn’t have to be. Imagine what $25K or $50K could do in the hands of two or three local tourism entrepreneurs with big ideas as compared to a far away tour operator looking to supplement their advertising budget.

With tourism revenues (and their associated tax revenues) growing across the globe, now is a good time to break with convention and consider how redirecting subsidies from short-term transactions to long-term innovation is the ultimate form of destination marketing legacy and long-term competitive advantage.