Our View: Group sales program a smart investment
January 18, 2014
We support Steamboat Springs City Council's decision this week to grant Steamboat Springs Chamber Resort Association CEO Tom Kern's request for $21,000 from the city general fund to help attract more convention business to the community.
We consistently have taken the position that there is no getting around the fact that our city government, which is one of only a few municipalities in Colorado that does not have a property tax and depends largely on sales tax receipts, essentially is in the tourism business. For that reason, we think it is not just defensible, but essential, that the city invest in driving sales tax receipts generated by our visitors.
We also would point out that unlike most Colorado resort communities, ours has chosen to spend its lodging taxes on causes other than tourism marketing. We spend it on building amenities and such projects as expanding the biking trails system.
Contrary to council member Scott Ford's remark this week — he was quoted as saying it's not City Council's job to "chase new sales tax dollars, necessarily" — we think it's in the city's best interest to be a full partner in those efforts.
Council member Sonja Macys said this week that she will seek assurances that the community is getting marketing value for the more than $700,000 it spends annually on that cause. We think it's reasonable to seek more accountability for the performance of marketing efforts underwritten by public monies.
But part of the appeal of Kern's proposal to pursue group business is that it's intended to stand on its own within three years.
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He explained Friday that The Steamboat Grand and Sheraton Steamboat Resort have built a group sales team that are effective at pursuing groups whose sizes fit their facilities. However, it's against the law for them to join forces and bid room rates for larger groups, Kern said. That's the niche Kern intends the Chamber to occupy. Under the new test program, the Chamber will go out to the market and solicit larger groups and build a commission into the nightly room rates.
It's the accumulation of commissions that will fund the marketing program beyond the third year.
"If, a year from now, I haven't booked at least four groups averaging about 250 people, we're done," Kern said.
Keep in mind booking a convention in 2014 doesn't mean it's coming to town in summer 2015 — conventions tend to book years in advance. Once there is a contract, it's on the books.
There is precedence for this strategy that is very similar to what the Steamboat Ski and Resort Corp. does with its Central Reservations operation. In fact, more than two decades ago, the Chamber owned Central Reservations. It ultimately sold the business to Ski Corp. when confronted with the high cost of upgrading its reservations software.
The Chamber already has demonstrated it can land the bigger conventions. It brokered the upcoming 2014 World Summit of the International Mountain Biking Association, which is expected to bring as many as 400 participants to town. Kern said if each attendee spends $500 on lodging, food and entertainment it would represent more than $200,000 in business. The IMBA convention alone would drive enough sales tax revenues to offset more than one-third of the annual investment of $21,000 by the city.
In October 2012, we editorialized in favor of the Chamber doing more to justify the effectiveness of the public dollars it uses for tourism marketing. At the time, the Chamber pointed to increases in sales tax receipts as ample evidence that summer marketing is working.
Whether it was his intent, we think Kern's plan to create a self-sustaining program to book larger conventions here in summer, when there is excess lodging capacity, is a creative response to that challenge.
Attracting more convention business on a consistent basis is a long-term strategy. We should invest in it prudently and track our successes and failures.