Jim Webster: A business perspective
May 28, 2013
I think it is admirable for the lodging tax committee to blaze a trail for mountain biking in Steamboat, but $6 million throughout 10 years strikes me as possibly high risk and lower return. And with the Steamboat Springs City Council sending the committee proposal back for reconsideration, I am afraid we could end up with "duck soup."
I cannot say I am fully informed of all the facts in this debate, but I can declare that I am a mountain and road biker and I would like to see both activities prosper. In principle, Bike Town USA has a nice ring to it. But let's not get warm and fuzzy about a marketing slogan that appeals to our sense of local pride in the outdoors.
My point of view here is strictly from a business perspective and not as a participant. I have invested money professionally and creatively found ways to both win and lose. In general, I lost when I reached for too much perceived return and misjudged the risk. Most important, I lost when I did not follow my own pre-set investing guidelines.
Without clear guidelines to judge proposals, the committee can be subjected to persuasion by interest groups and personalities. The fact that City Council has rejected the committee's recommendation after months of deliberation tells me that the city did not outline the guidelines appropriately in advance.
I cannot say for sure what all of the guidelines should be for spending this money, and there are some restrictions based on the wording of the tax ordinance. However, I will venture that some of the following principles should be considered in judging the proposals:
■ Funds should maximize tourism dollars and not just increased number of tourists.
Recommended Stories For You
■ The committee should be able to predict with some certainty a proposal's return on investment.
■ A proposal's outcome should be measurable throughout time so the city can judge if it should continue.
■ The funds should support the natural competitive advantages of the Steamboat community versus other competing Colorado towns.
■ A diversified, lower-risk approach is preferable to a high-risk, single venture.
■ The money should not unduly advantage a single interest group.
In the case of the proposed expanded mountain biking trails, selected competitors such as Winter Park and Crested Butte have excellent mountain biking trails. Winter Park is closer to Denver and it would have a natural advantage over Steamboat as a result. However, Steamboat is a "real working town" with more activities to offer than Winter Park, so a preference should be to include this natural competitive advantage in improving downtown activities and/or Yampa Street. We already have many nice mountain biking trails, so does the $6 million improve on them to give us a measurable incremental advantage over, say, Winter Park? Road biking will not be improved in the committee proposal, but the expanded Core Trail does widen the appeal.
How do mountain bikers spend money as compared to other groups who golf or play tennis? Given an aging national population, is the mountain biking demographic in decline? Steamboat's traditional marketing appeal has been to the family, which does not appear to be the mountain biking market. What are the projected incremental sales tax revenues from an increased number of mountain bikers during the few summer months in which one can participate in the sport?
In the American West, we have a history of blazing new trails, and such trailblazing can be high risk. An expanded mountain biking trail system appeals to our wonderful sense of the outdoors, but from a business perspective, it could be a high-risk, lower-return bet.