Publicly funded destination marketing organizations are increasingly finding their mission questioned — and budgets threatened. Is it time for a reinvention?
As Visit Florida sounds the alarm over threats to its very existence, tourism experts around the country hear a warning.
While they believe Florida could find alternate ways to promote itself without government support, destinations without famous beaches and theme parks could have a much tougher time.
“If Florida falls, what does that mean for destination marketing across the country?” said Bill Geist, CEO of DMOproz, a consultancy that works with destination marketing organizations across the Americas.
The drama in Florida is the latest example of how hotly politicized publicly funded tourism has become in the U.S., mostly at the state and local levels. More and more, officials are debating the economic benefits of earmarking dollars to attract visitors, versus where that money in these cash-strapped times could best be spent elsewhere, like schools.
Florida’s official tourism marketing organization is only authorized to exist through the end of September. After months of lobbying from the industry, as well as pleas from the new governor, a powerful state lawmaker signaled his reluctant willingness to reauthorize — but only for another year.
“The governor’s office has expressed a desire to have it go forward so that he would have an opportunity to make an assessment of his own of how unnecessary it is,” House Speaker Jose Oliva, a Republican from Miami Lakes, told reporters on Friday.
And Oliva said he wasn’t sure about funding; the organization got $76 million from the state last year, and Gov. Ron DeSantis asked for the same in the budget for the upcoming year. Florida’s Senate wanted to cut that to $50 million, and the House has only agreed to $19 million to keep it running through the sunset date. Last week, the Senate agreed to the House amount since reauthorization had not yet been passed.
“I would expect it would be some level of compromise in there that the chambers can work out amongst themselves,” said Visit Florida CEO Dana Young, a former state legislator who took over the job in January.
Lawmakers only have until Tuesday to come to agreement on reauthorizing Visit Florida.
“I am optimistic because I know the incredible value that Visit Florida brings to the taxpayers of our state,” Young said. “I know that we have the facts and our good work on our side, and I think that is in the end what will carry the day.”
But even if it does survive to fight another year, the celebration will likely be short-lived as the battle for future funding revs up.
Tough Trend for Tourism
Florida’s fight is the latest and most high-profile example of a longstanding trend in the U.S. that appears to be escalating as elected officials at state and local levels question whether public dollars should go toward tourism marketing efforts. The United States is not isolated; Mexico’s new government has reimagined its own destination marketing in a way that eliminates the country’s tourism board.
But observers say the U.S. has been especially vulnerable.
Colorado, which cut spending for its tourism board altogether in 1993, is the most famous case study. But in more recent years, Connecticut, Washington, Pennsylvania, and Texas have all seen cuts that ranged from dramatic to moderate. Visit Florida has survived several attempts to slash the budget, but its fate is still up in the air.
“It’s one of the issues we’ve been grappling with ourselves in terms of every year there seems to be a much larger number of destination marketing organizations who are involved in some sort of funding fight, which somewhat is expected because every year there is a legislative body somewhere that’s going through their appropriations process,” said Jack Johnson, chief advocacy officer for Destinations International, which represents tourism boards. “The number of them that are having their existence questioned is growing.”
Local convention and visitors bureaus have not been immune. Elected officials in destinations including Dallas, Texas; New Orleans, Louisiana; Jackson, Mississippi; and Boulder, Colorado have recently found their spending under scrutiny, budgets threatened, or funding at risk of being diverted.
Chris Barrett, CEO of the Pocono Mountains Visitors Bureau in Pennsylvania, has watched as the state’s tourism money dwindled over the year.
“At a time when Pennsylvania was at $35 million a year, the state tourism agency was a real leader in the nation as far as developing all types of electronic tools to market Pennsylvania,” he said. “And now they basically don’t have enough money to maintain the state’s website, or barely enough.”
While his own bureau is funded through a local hotel tax, he said the state cuts hurt those smaller bureaus that don’t have much money to work with.
“They really depended on the state funding to be able to market the state more globally,” Barrett said.
Travel industry insiders in Pennsylvania are hopeful that a new law closing a loophole in taxes charged through third-party booking sites will add more to state coffers. Barrett said projections have suggested as much as $24 million in revenue could be on the way.
“I’m in a wait-and-see attitude,” he said. “I hope it does; that would be great.”
Even the nationwide effort to marketing the United States to international travelers, Brand USA, is in a fight for its future. The public-private partnership, which gets $100 million in public money from fees paid by visitors from visa waiver countries, is due for renewal in 2020.
Roger Dow, CEO of the U.S. Travel Association, said Congress shifted that visa fee money to the general fund after 2020 — a mistake he said he is certain they will rectify — but lawmakers are moving slowly. He said Brand USA needs to be reauthorized and the funding source restored so private partners can allocate their own matching funding as required.
“When things change, it’s hard to call money back because everyone has tight budgets,” he said.
Forces at Play
Observers say tourism boards are under fire for a few reasons, the simplest one being competition for scarce resources as governments look for ways to fill budget gaps.
Destination marketing money can be attractive because often, especially at the local level, it comes from hotel taxes paid by people who typically don’t live in the area.
“At the end of the day, they have to balance their budget, and they need to keep their constituents’ taxes low,” said Geist. “They’re looking for ways to find non-resident taxes to pay for residents’ needs.”
Residents may not think of tourism dollars as being a critical need compared to education or infrastructure, especially if they don’t work in the industry. But Amir Eylon, president and CEO of tourism market research consultancy Longwoods International, said there’s a danger to tapping into destination marketing budgets for other uses.
“If that money’s not reinvested in marketing and promotion, you lose market share,” he said.
Some tourism boards have raised eyebrows due to their spending on items such as salaries, travel expenses, events, or marketing programs. Visit Florida famously drew ire from the state legislature over a $1 million contract with the rapper Pitbull, which led to the departure of its CEO, chief financial officer, and chief marketing officer in late 2016.
“It only takes a couple of those to seed some doubt there,” said Johnson, of Destinations International. He urges organizations to make sure their expense reports are accurate and to be aware of the expectations for spending public money.
“I think there have been many in our industry that have kind of shot themselves in the foot,” he said. “They’re finding themselves now being held to a question of, ‘Are you a good fiduciary of the public’s money?’ And I think that’s something they’ve been unprepared for — and they should have been prepared for whenever you spend public money, it comes with expectations attached to it.”
Also at play is an ideological clash: a sentiment that government should not be in the business of funding economic development efforts and that tax-funded tourism promotion amounts to corporate welfare.
“The Florida Senate is also wrong to fund Visit Florida with another $76 million dollars,” Chris Hudson, state director of Americans for Prosperity-Florida, said in a statement in 2017. “Visit Florida’s lack of transparency and lack of accountability have engulfed the Sunshine State in national embarrassment that should not be rewarded. This failed program needs more than just reform; it should be completely eliminated.”
That corporate welfare argument is the wrong mindset, Dow said.
“This isn’t government giving away money, this is government priming the pump to get more money into the state,” he said.
Critics of Visit Florida argue that the state’s beaches, theme parks, and other attractions will be able to spread the promotional message without added money from the state.
“This is a case of hubris,” said Geist. “They think their destination is so cool that people will still come — and some will, but not in the numbers that they’ve enjoyed for decades.”
But Eylon said the idea that a handful of big spenders can make up for a lack of state or local funding misses the point that mom-and-pop businesses make up a big part of the tourism industry.
“Those businesses have very limited marketing budgets,” he said.
A New Approach
Johnson has been giving presentations lately — soon to become a policy brief — to help members better communicate their mission. That requires taking a more emotional approach.
“Stop telling people that you support x number of jobs and start talking about the number of people you put to work in your community every year,” he said.
And, he said, destination marketing organizations need to consider local residents their customers, as opposed to meeting planners, tour guides, concert promoters, hoteliers, and other industry insiders.
“You need to keep them involved, you need a community outreach plan, you need to have them support you in what you’re doing and the elected officials will follow,” Johnson said.
Later, he added: “It’s no longer putting heads in beds. Your goal is much better than that: It’s to help that community.”
Geist said destination marketing organizations have been so focused on outward-facing messages that they have forgotten the audience in their own backyards. Especially important, he said, is communicating how tourism helps local businesses beyond just hotels and attractions.
“Most people don’t realize the tentacles that go out into the community, and when they do, they go ‘Oh,’ and the conversation changes,” Geist said.
Eylon said a new report that Longwoods is releasing this week with Destinations International shows that 70 percent of those polled in a study agree that tourism is important to their state, while 24 percent were neutral. And 65 percent believe it’s important to their local area, with 19 percent neutral on the question.
Asked if they agreed that government should fund tourism promotion, 54 percent agreed and 33 percent were neutral at the state level; 53 percent agreed and 31 percent were neutral about local funding.
Despite that support, Eylon said destination marketing organizations have been under pressure to come up with alternative funding models, such as public-private partnerships or voluntary fees paid by businesses. Visit California operates under a self-assessment system.
“I think as long as destination marketing organizations are going to have their primary funding source be attached to a public source of revenue, there will always be a risk,” he said. “Because there’s always competing interest for scarce resources, and they’re always going to have to demonstrate that they’re getting the best bang for the taxpayer dollar.”
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Photo credit: Fort Myers Beach is pictured. Visit Florida, which promotes the state as a tourist destination, finds out soon whether it will be reauthorized to operate past September of this year. Alex Iby / Unsplash