Our View: A better measuring stick is needed for marketing

Advertisement

Editorial Board, August through January 2012

  • Scott Stanford, general manager
  • Brent Boyer, editor
  • Tom Ross, reporter
  • Shannon Lukens, community representative
  • Scott Ford, community representative

Contact the editorial board at 970-871-4221 or editor@SteamboatToday.com. Would you like to be a member of the board? Fill out a letter of interest now.

The Steamboat Springs Chamber Resort Association has its sights set on summer 2013 and growing summer tourism to Steamboat, but before the city dedicates more money to that effort there needs to be a well-defined method for measuring the desired outcome.

Specifically, the Chamber points to increased sales tax revenue and its own Lodging Barometer as evidence that its marketing efforts work. We think a better measure would be to use accommodations tax collections as the basis of calculating the value of lodging that was sold and divide that by the average daily room rate. This simple and easy-to-understand calculation results in the number of room nights sold during the summer season. From our perspective, increasing the number of room nights sold has to be one of the primary objectives of the summer marketing program. Best of all, it is simple to calculate routinely and objectively.

During a recent presentation to the City Council, Chamber leaders laid out their vision for future summer marketing, including increased emphasis on the 10- to 12-hour drive market, large group and conference sales, trade show attendance, online advertising and a significant renovation of the visitors center. The Chamber also wants to grow special event programming and is investigating with Steamboat Ski and Resort Corp. the potential of a major three-day music festival during Labor Day weekend. 

There’s a lot to like in what the Chamber has planned for growing summer tourism, which is a significant cog in Steamboat’s economic engine. Marketing works, and when done effectively, it’s money well spent. 

Of course, the Chamber says it needs more money to do a better job marketing Steamboat’s summer offerings and to keep pace with the community’s competitors in the mountain resort marketplace. A report compiled by the Chamber indicates other mountain resort communities spend between $1 million and $1.2 million per year on summer marketing, compared to about $600,000 spent annually by Steamboat. 

Most of the Chamber’s marketing budget is supplied by the city, which has been providing those dollars since the mid-‘80s, when all businesses that collect city sales tax agreed to forego their 3.3 percent vendor fee for collecting that tax and asked that the proceeds be used to develop a summer marketing program. According to the Chamber, the city continues to dedicate between 3.3 and 3.6 percent of total sales tax revenues to the summer marketing program. 

Other resort communities fund their marketing efforts in different ways, but the Chamber says most involve some form of dedicated tax revenue, usually in the form of a bed or accommodations tax. The Chamber is now weighing the merits of three potential tax increases as a means of upping its marketing budget. The first is an increase in the city’s general sales tax; the second is an increase in the Local Marketing District tax; and the third is a combination of increases to the general sales tax and LMD tax as well as a new excise or entertainment tax. Any of the options would necessitate a vote of the people.

We take issue with using what other resort communities spend as any kind of indicator of how much we should spend. Aspen, Vail and Telluride are different markets with different strategies. It’s impossible for us to know, other than anecdotally, exactly how effective their marketing campaigns are.

Nevertheless, more marketing dollars for Steamboat might be justified. So, too, might a tax. But that’s impossible to know until we have objective data to gauge the effectiveness of the Chamber’s existing and future marketing efforts. Simply looking at sales tax revenues and estimated lodging capacity via the Chamber’s own lodging barometer doesn’t cut it.

We really like the ideas Chamber CEO Tom Kern and his staff are bringing to the table. And we very well could be supportive of increased funding for summer marketing efforts. But to convince the community of that need, the Chamber needs to use metrics that prove current dollars are being maximized and achieving the desired outcome of the summer marketing program.  

Comments

Scott Wedel 1 year, 9 months ago

"all businesses that collect city sales tax agreed to forego their 3.3 percent vendor fee for collecting that tax and asked that the proceeds be used to develop a summer marketing program."

Well, that is not correct. As a home rule city there is no 3.3 percent vendor fee because businesses file their sales tax with the home rule city, not directly to the State. The State currently gives a 2.2% vendor fee for businesses filing sales tax with them.

In addition, that statement is wrong because it was not the decision of the businesses to forego their vendor fee. It was a decision of SB City government to divert from the general fund an amount equivalent to the State's vendor fee and spend it on summer marketing. That decision had political support of businesses. SB City had a range of options from creating a vendor fee, keeping the money in the general fund or spending it on summer marketing. And could revisit that decision at any time.

SB businesses cannot decide to start taking a 3.3% or 2.2% vendor fee. Nor does the city have any legal obligation on how they chose to spend the money collected due to SB not having a vendor fee.

0

Steve Lewis 1 year, 9 months ago

This editorial is the most focused of the last few which have posed the question; Where are we going economically? And how will we get there?

The right answer, in my view, requires we break our rear view mirror:

1) Our economy of skiers will decline. Skiers represent an already flat industry, with an increasingly costly challenge - getting some large percent of them flown to Steamboat.

2) Real estate has found the same flat trajectory. It is doing a little better, but it will feel the same pinch of fewer flights and Steamboat's remote logistics as travel costs rise. We should not plan on a real estate rebound, at least not enough to carry us in any significant measure.

3) Yampa Street revitalization will be done, and it will help anchor our tourism base, but it will come slowly if it is relying on public and taxpayer dollars. If the private sector money is not there up front to speed it, we are foolish to expect private sector money will be there following it.

4) The financial crash changed every trajectory and every trend. If your argument is based from October 2008 or later, you have your bearings in the new reality. Data for business use from 2007 and before can be meaningless. I was a bit dumbfounded to watch a recent LMD argument give data from 2005 and 2006 the same weight as much worse data from 2010 and 2011.

5) Given the above, increased summer marketing is smart. As suggested, we should spend it on a population close enough to get here without flying. The reliable foundation of our tourism (and probably our location neutral businesses) will increasingly be the Colorado front range.

6) Overall and most important, we benefit the most from efforts that make ours an even better town and county. Build the sidewalks. Light the streets. Bury the utilities. Protect the environment. And then go have some fun.

0

Scott Ford 1 year, 9 months ago

Hi Scott W – Thanks as always for your clarifications regarding the “vendor” fee. I started working for Steamboat Springs Chamber Resort Association (SSCRA) in the fall of 1992. I know that at that time an amount equal to what would have been considered the “vendor fee” was being matched dollar for dollar by the City in order to create a pool of money dedicated to summer marketing. This was the practice in place for some period prior to 1992.

Over time, I think beginning in 1994; the City’s match went from a dollar for dollar “match” to no match by the late 90’s. I do not recall the dates associated with the phase out of the match. I am sure you know the specific dates. All I can recall was the anxiety associated with the declining and eventual loss of the “match” by the SSCRA board members and staff.

I think there is general agreement that the desired outcome of the summer marketing effort is to maintain visitor “market share” and hopefully expand the number of folks coming to Steamboat Springs during the summer.

I do not think the City should play a role in deciding what strategies and tactics SSCRA wants to use to achieve the desired outcome. To put it bluntly – leave the strategies/tactics used to the marketing professionals. The City, however, needs to play a significant role in determining how the success of these efforts is going to be measured.

What would be a good measurement of SSCRA summer marketing? The simpler we keep it the better – but it needs to be consistent over time.

0

Steve Lewis 1 year, 9 months ago

From a recent Pilot article and editorial:

"Steamboat Springs Chamber Resort Association CEO Tom Kern... thinks Steamboat needs a clear economic development strategy. His expectation is that the (economic) summit will result in a set of tasks to be taken into consideration in the months ahead by the Chamber’s Economic Development Council as it blends them into an overall strategic plan."

"The Chamber’s recent Economic Summit sought to lay the groundwork for a new strategic vision for the Yampa Valley’s economic future. We agree with Chamber CEO Tom Kern that Steamboat needs a clear economic development strategy."

It would be good to know what Tom Kern learned and where the Economic Development Council thinks we should head. This should be a community conversation too. As I post above, my thinking is that skiers and real estate (construction) are no longer our best targets. Summer tourism should be a new priority, among others.

Scott Ford, your writing on several occasions has been careful to describe "economic development" as increasing 1) diversity of income and employment sources and 2) increasing the income per capita. It is good to see you are engaged both with the editorial board and with the EDC goals. I look forward to Pilot articles and editorial that expound on these new directions.

0

Scott Ford 1 year, 9 months ago

Steve - In economic development circles an acronym that is often used is CARE.

The acronym stands for: Creation; Attraction; Retention; Expansion. Most communities focus on the showy part of Attraction. Economic Development professionals and city/county officials lust after what can only be described as “golden shovel” moments. (This is the ground breaking ceremony where folks that rarely hold a shovel in their hands stand in a semi-circle and turn dirt over while the press takes pictures.) Most communities focus most of their economic development energy and resources on seeking “golden shovel” moments. In the Yampa Valley this is a failed strategy – but one that is well understood, wished for and talked about with zeal.

Locally the folks involved in Economic Development can talk about large company attraction all they want to – but it won’t change the reality that a company with a meaningful number of jobs and high aggregate payroll is not coming. I do not think as a community we could put enough bags of gold on the table disguised as incentives/abatements/credits /cuts / wavers, etc. to make them come.

What remains when attraction is removed? Creation, Retention and Expansion. These three are not as showy as Attraction, often messy and much slower but they are what we have to work with.

So what do we need to do to Create-Expand and Retain businesses here? From my perspective it is to do all of the following very well in rank order:

1). Be a great place to live (schools – to health care – to a cornucopia of recreational/cultural opportunities) 2). Understand that a business can be here even if they have no customers here if the ownership of the company wants to be here and as long as being “here” does not inconvenience their customers to the point that they lose them as customers. To avoid too much of the “inconvenience factor” often involves having strong telecommunications (in the form of Broadband) and transportation options so they can get to relatively quickly where their customers need them.

0

Steve Lewis 1 year, 9 months ago

Scott F., That's good information. I agree wholeheartedly about the top ranking being a great place to live. If we focus on that, the attraction will take care of itself. Like many others here, we could have made more $ in bigger cities, but this was the place to be even with lower earnings.

Retaining businesses like Smartwool and Big Agnes seems offer direct effort-to-benefit increases. Attracting business will be a less certain proposition if done via the refrain, "if we build it they will come".

Keep up the good work. Perhaps the Chamber will bring more information on this topic.

0

Scott Ford 1 year, 9 months ago

The economy of the Yampa Valley and specifically that of Steamboat Springs is benefiting from the effects of accumulated advantage. In the context of our local economy this simply means that there are a lot more things working together to our benefit than working to our disadvantage. This effect, (accumulated advantage), is the driving force behind the growth of Location Neutral Businesses (LNBs) in our area.

Although there are dozens of examples of this occurring locally, the Steamboat Springs School District RE-2 is a great example of “accumulated advantage”. We know that there are thousands of individuals that have visited Steamboat Springs that imagine (dream) about living here. The reality is that relativly few start to explore that possibility and even a smaller subset of this group become serious about it enough to make a decision to move.

Within this subset there are some LNBs. They make the assessment that the technology and transportation infrastructure is adequate to meet their “business” needs. In this example, because they have kids – they also assess the education system and health care. Since SSSD-RE2 is currently rated the 7th best school district in the state of Colorado out of 183 school districts – it "helps" seal the deal. Since we have a great regional hospital and physicians, these become yet more icing on the cake. What's not to like!? Simply put, the list of things that we have going for us far outweigh the things that do not work well for us.

So how do we protect and enhance our community, i.e., our accumulated advantage? Focus first and foremost on being a great place to live. As a benefit – great places to live are typically, also great places to visit. As a result a small segment of those who visit will begin to explore moving here. Because of the household demographics of who moves here and who have the financial means to move here - median household income increases. From an economic development perspective this means sources of income and employment diversify, etc. Essentially all those things that make a local economy “tic” get better.

0

Steve Lewis 1 year, 9 months ago

Scott F., If we are going to have a goal of more people moving here, our population should be a key barometer.

The demographics I find online show our population shrinking slightly. (I will guess much of that is the departure of our construction industry, which accounted for 30% of our employment at one point.) Hidden from that population trend but contributing to our economy (service demand) are second home residents. Tax Policy Boards 1 and 2 varied in their guess at second homes vs full time residents, I believe the 60-40 of one was reversed to 40-60 by the other.

Taken together our population and second home owner count should be a barometer to watch.

0

Steve Lewis 1 year, 9 months ago

A banker once suggested to me the population tipping point, at which a town creates it's own self sustaining economy, is about 20,000 people. I like the theory. Not so much that I felt it accurate, but because it always helped me understand our need for economic gardening. We need to be creative. Particularly today as some of our "import" sectors struggle.

I hope, as we intentionally shape future economies, we are able to choose sustainability over bubbles. After 30 plus years here, I've had one bust too many. Perhaps the gang now studying sustainability at CMC can teach us something.

0

Requires free registration

Posting comments requires a free account and verification.