Our View: A better measuring stick is needed for marketing
October 2, 2012
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.