The Kotler Marketing Group
White Paper
Destination Marketing in the United States
Benchmarks & Best Practices
COLONIAL WILLIAMSBURG, VIRGINIA
BRANSON, MISSOURI
LAS VEGAS, NEVADA
ORLANDO, FLORIDA
BILOXI, MISSISSIPPI
Prepared by Milton Kotler, Aaron Thomas and Dr. Jonathan Monroe of the Kotler Marketing
Group on October 11, 1999
Destination Marketing in the United States: Benchmarks & Best Practices
Table of Contents
I.
Aim of the Destination Marketing Site Meetings _______________________ 3
II. The Benchmark Destinations _______________________________________ 4
III. Learnings _______________________________________________________ 6
Marketing Strategy _______________________________________________________ 7
Vision and Destination Brand Essence______________________________________ 12
Consumer Knowledge, Targets, and Statistics ________________________________ 14
Public - Private Sector Coordination: A Virtuous Circle for Economic Growth _____ 19
Experience: Variety, Fun, and Quality ______________________________________ 22
The Tourism / Gaming Phenomenon ______________________________________ 25
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Destination Marketing in the United States: Benchmarks & Best Practices
I.
Aim of the Destination Marketing Site Meetings
-
Addressing Questions and Challenges for Destinations
Addressing Questions and Challenges
The benchmarking project and this report are focused on four primary questions:
Question 1
How do destinations develop a rapid growth strategy in a sensible and
successful manner?
Question 2 What are the leading-edge examples of brand image for destinations,
and what is the most effective approach to development and
management of the brand image?
Question 3 What are the best models of tourism marketing that focus on total
customer needs, wants and experiences, and which recognize the
essential nature of fun, high quality and diversity of choices at the
destination?
Question 4 What are the best cases of public/private partnering in the financing,
marketing, and growth planning of tourism destinations?
The answers to these questions were expected to shed light on some key
challenges:
Challenge
Develop destination offerings, and especially off-season attractions, that
are differentiated by their unique qualities
Challenge
Facilitate greater private/public coordination for long-term development,
especially with regard to attracting hotel/resort investment
Challenge
Develop a destination’s share-of-mind and share-of-heart among past,
present and future visitors
Challenge
Develop an understanding of the destination’s tourism customers that is
based on their total needs and total experience
Challenge
Plan for growth with a view toward its sustainability and its contribution to
the overall quality of life
Challenge
Increase economic growth to support the goals of the community: e.g.,
increased employment, better schools and other public institutions, etc.
Challenge
Increase tax revenues accruing from the tourism industry
Challenge
Increase public confidence in destination marketing by ensuring that the
tourism offerings have a high standard of quality are perceived as
valuable resources by the city's own population; also, by communicating
the positive benefits of tourism in the clearest possible manner.
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Destination Marketing in the United States: Benchmarks & Best Practices
II.
The Benchmark Destinations
-
Unique Qualities and Offerings
-
Common Styles of Origin and Development
-
Acceptance of Tourism in the US
-
Demonstrating Value
-
Funding Tourism Development -- Organization and Taxation
-
The Use of Tourist Taxes in the US
-
Attitudes of US Tourists Concerning Tourist Taxes
-
Economic Impact of Tourism in the US
Unique Qualities and Offerings
All of the benchmark destinations are American cities with a primary focus on
tourism. However, each site has a set of unique qualities that appeal to visitors in
distinctive ways.
Colonial Williamsburg/
Busch Gardens
A living Revolutionary era town, where visitors learn through
an interactive experience of major historical events and of
the lifestyles of the period. A short drive away from Colonial
Williamsburg, Busch Gardens is the most extensive family
fun theme park in the Northeastern US.
Branson
A gathering point for many of the most famous American
musical talents of past decades, who perform nightly at
theaters they have "retired" to, at the sunset of their careers.
Orlando
An endless bonanza of delights for the family, with parks,
rides, museums, concerts, sporting, cuisine, and the
growing list continues on, to include almost all imaginable
leisure activities.
Las Vegas
The sine qua non of lavish spectacle, opulence, and
gambling-oriented entertainment.
Biloxi
A place that harks back to the grand old days of the pre-war
South and includes gambling as an integral part of this
experience.
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Destination Marketing in the United States: Benchmarks & Best Practices
Common Styles of Origin and Development
But there is far greater learning value in understanding the shared characteristics and
marketing methods among these destinations. To begin with, each of the sites
started from humble origins, with few natural advantages, and grew into first-tier
destinations in the US.
Origin
Today
Colonial Williamsburg
A decaying historical town
salvaged by the interest of a
wealthy patron.
The fourth-largest tourist
attraction in the United States
Branson
A small, poor town in the
Ozark Mountains region of
Missouri. Lake fishing and a
mountain cave were its first
tourist attractions.
A town of 3000 people that
hosts 6 million visitors per
year.
Orlando
A region of swampland,
chosen by Disney because
the land was inexpensive.
The single largest tourist
destination in the world. Over
30 million visitors arrive at
Orlando International Airport
every year, with another 14
million arriving by alternate
means.
Las Vegas
Situated in the desert with no
natural water supply of its
own.
The global leader of gambling
and lavish entertainment. The
city hosts over 30 million
visitors per year, including 3.3
million convention visitors.
A depressed town passed
over by history, situated in an
under-developed stretch of the
Gulf Coast.
A rejuvenated city where 60%
of new jobs are created by
gaming revenues and per
capita income is 5% above the
Mississippi state average.
Biloxi
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Destination Marketing in the United States: Benchmarks & Best Practices
III.
Learnings
-
-
-
-
-
-
Marketing Strategy
•
Planning to Achieve Multiple Goals
•
Five Critical Terms Defined
•
Summary of Best Practices in Destination Marketing
Vision and Destination Brand Essence
•
The Central Value Proposition
•
Benchmarks of Brand Essence
•
Destination Multibranding
Consumer Knowledge, Targets and Statistics
•
The Power of Market Knowledge
•
Targets: the Basis for Coordination
•
Segmenting the Tourism Marketing and Selecting Targets
Public - Private Sector Coordination: A Virtuous Circle for Economic
Growth
•
Benchmark Models of Cooperation
•
Benefits for the Citizens of the Destination
Experience, Variety and Fun
•
The Necessity of Pure Enjoyability
•
Best practices in innovating fun and variety
•
Assured Quality of the Experience
The Tourism / Gaming Phenomenon
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Destination Marketing in the United States: Benchmarks & Best Practices
Marketing Strategy
Planning to Achieve Multiple Goals
Is it necessary for a city to have a marketing strategy for attracting tourism? If the city
aims to host tourists in a way that leads to economic growth while balancing the
needs of the citizens of the city, then a structured and coordinated approach -- a
marketing strategy -- is the optimal approach to achieving these goals.
The benchmark tourist destinations are indeed accomplishing a diverse family of
public and private goals. These goals come from citizens, businesses, and public
institutions, and are funneled through marketing planning processes. Planning that is
based on inputs from all interested parties, and that is informed with the best
available knowledge of the tourism market (including both consumers and tourist
industries such as airlines, etc.), is the only way to achieve multiple goals
simultaneously.
Five Critical Terms Defined
Best-practice destination marketing planning is structured around five primary
reference points: the Tourist, the Destination, Tourism Services Suppliers, the
Citizen, and the Public-Private Interest Coordinator.
1. THE TOURIST: Defined in terms of the total needs and the total experience desired by
a potential visitor. The traveler is understood as someone who is seeking values such
as leisure, relaxation, fun, personal enrichment. The tourist is most often traveling
with a family or partners, which gives rise to additional needs and wants.
Furthermore, the tourist will consume a broad range of products and services during
the visit, all of which should offer an acceptable standard of quality. The tourist also
wants choices, and sufficient information to make the best choices for him or herself.
2. THE DESTINATION: An interconnected and complementary set of attractions, events,
services and products which together create a total experience and value proposition
to visitors. Within the picture of the total experience, there is usually a balance of the
unique and the complementary - that is to say, interesting choices that together
create a fun, convenient and personally valuable visit. As neighboring Colonial
Williamsburg and Busch Gardens illustrate, attractions in close proximity can be
mutually supportive -- by offering nice choices for a vacationing family -- even though
they differ thematically. In a successful destination, each attraction contributes
something to the total: complementary demographics (Williamsburg1), incoming
tourist traffic (Las Vegas2), complementary styles and experiential values (Branson3).
1
Busch Gardens and the Colonial Williamsburg Foundation have together realized that incoming
families generally want to visit both types of attractions, not just one or the other. They have created
joint-marketing programs, like the Revolutionary Fun package, that appeal to these families.
2
Las Vegas's spectacular gambling casinos attract tourists who actually spend most of their money on
shopping and entertainment.
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Destination Marketing in the United States: Benchmarks & Best Practices
A coordinated and consistent offering is not realized by accident, but instead through
careful management.4
3. TOURISM SERVICES SUPPLIERS: Destination marketing is primarily accomplished by a
large group of independent firms and agencies that work together to serve their
independent interests. Suppliers include both private sector firms (e.g. a hotel), and
public sector agencies (e.g. a public transportation department). Each private sector
firm will behave in a way that maximizes its own return on investment, while public
sector agencies will act to maximize the effectiveness of their resources and to
accomplish their legislative mandate. But because of the essential interdependence
of the players in the tourism market5, destination tourism service suppliers should and do - attempt to coordinate their marketing activities. Even so, private firms are
constrained from taking a long-term view of destination marketing by short-term profit
pressures and imperfect information.6 Coordination is difficult to sustain because of
the inherent difficulty involved in perceiving the connection between individual
contributions and individual returns. This inspires the need for a specialized publicprivate interest coordinator, who will not only coordinate strategy but also undertake
the expense of demonstrating the benefits of coordination. It is this essential and
necessary expense that is most often forgotten when it is assumed that private firms
and agencies will coordinate tourist policies.
4. THE CITIZEN: The ultimate authority and beneficiary with regard to the development of
his or her home city. The first mandate of destination marketing is to satisfy the longterm needs and wants of its natural constituents: the people who sustain the city and
give it life. Citizens are asked to host visitors and to harmonize their city's qualities
3
Branson's individual offerings work together to create a strong, coordinated value proposition: live
country music shows, famous performers of past years, a fun and culturally enriching theme park, and
sporting and nature activities that are extremely well suited to the American Midwest target market.
4
For example, the rejection of proposed gambling licensing in Branson demonstrates a serious decision
to preserve the character of the destination and to forgo the revenue and traffic growth which licensed
gambling would generate.
5
One of the special characteristics of the tourism market is that it is in the interest of a large number
suppliers to share the same customer. E.g., John Smith, a tourist coming to NYC, might get services
from an airline, one or more hotels, several museums, several restaurants, several retail stores, taxi
companies and public transportation companies, etc. These various firms can optimize their profits or
other interests by together coordinating their complete 'marketing mixes': products and services, pricing,
promotion, placement (distribution channels), etc.
6
In general, negative externalities result from a single firm acting to serve its own best interests in a way
that indirectly causes adverse effects on the market. There are many potential negative externalities that
can arise from the tourism industry: pollution, intra-industry negative advertising, price gauging and
other monopolistic behaviors.
A positive externality is a benefit derived from a firm's actions that the firm itself does not directly benefit
from providing. To illustrate: a 3-star restaurant opens in NYC, which especially attracts new visitors
seeking culinary experiences; airlines, hotels, and other suppliers will benefit from the increased traffic,
but the restaurant itself is not directly rewarded for these positive effects. It receives direct benefit only
from its own paying customers.
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Destination Marketing in the United States: Benchmarks & Best Practices
with the needs and expectations of prospective visitors.7 What is tourism's reward to
the citizens? Does it go beyond pure economics? These issues are vital to successful
destination marketing, and the responsibility for handling these issues also falls to the
public-private interest coordinator. (See also, Public - Private Sector Coordination: A
Virtuous Circle for Economic Growth.)
5. THE PUBLIC-PRIVATE INTEREST COORDINATOR: An organization that has the
responsibility to coordinate and facilitate the interests and actions of all the
concerned parties in destination marketing. In other words, its job is to increase the
potential benefits available to all the parties. Its duties are to:
1) Recognize and respond to all concerned parties.
2) Take a leading role in researching and analyzing the incoming-tourism market.
3) Identify positive and negative externalities in the market.
4) Inform all concerned parties of these externalities and facilitate the process of
innovating or legislating solutions for them.
5) Create positive externalities by undertaking the marketing activities for which
no other single party would have a sufficient return to provide on its own (e.g.,
consumer research, development of the destination brand image,
communication, etc.).
Fundamentally, the main roles of the public-private interest coordinator are
continuous and rapid learning about the tourism demand-supply market and effective
communication of the opportunities, threats and potential areas for coordination. This
role cannot be fulfilled effectively either by the public sector or the private sector
acting independently. Nonetheless, public and private sector interests are optimally
served when a third-party coordinator provides these services; therefore, both the
public and private sectors justifiably finance this service in conjunction with each
other. (See also, Public - Private Sector Coordination: A Virtuous Circle for Economic
Growth.)
Summary of Best Practices in Destination Marketing
Today's most innovative practices in destination marketing are built on the five
above-mentioned conceptual reference points. The continuation of this report
discusses these practices in detail, and we list some of them here:
Best Practice
Developing a powerful and unique value proposition to urge
tourists to select the city over numerous alternatives. Colonial
Williamsburg asks Americans to go on the "most important vacation
you'll ever take."
7
A citizen walking around his home city can easily observe many of the usual results of tourism (both
good and not-so-good): more restaurants, better maintained museums, higher prices at -- for example -hotels, increased numbers of people on the streets and at particular attractions, more-crowded buses,
etc. The indirect benefits are also significant but not so easy for a citizen to observe on his own:
increased employment in the city, greater revenue for businesses and the public-sector.
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Destination Marketing in the United States: Benchmarks & Best Practices
Best Practice
Branding the value proposition in a communications program that
is substantial and consistent. Orlando is the far-and-away leader in
creating share of mind as well as share of heart throughout the entire
world.
Best Practice
Visitor profiling to understand the tourist consumer's preferences,
and purchasing behavior. Disney is the leader in this practice, using
a resort credit card to track the consumption patterns of individual
visitors.
Best Practice
Generating cost and time savings through visitor activity packages
that include admission to several attractions over a period of several
days. Busch Gardens' marketing program shows how such
packages can be extremely successful, in this case by offering a
crucial convenience for families whose working parents do not have
time to research a trip.
Best Practice
Providing for the education of tourism partners (citizens,
institutions, airlines, hotels, etc.) and the facilitation of
coordination. Best practice destinations strive to create a win-win
situation for the beneficiaries of tourism. The Las Vegas Convention
and Visitor's Bureau was established -- and is cooperatively funded - as a focal point for much of the city's tourism marketing activities.
Best Practice
Perennially laboring to improve the diversity of the destination’s
offerings. The Colonial Williamsburg Foundation and neighboring
Busch Gardens have spearheaded a cooperative effort in the region
to create fun choices for visitors, some of whom might really love
history, while others have a deeper appreciation for waterslides!
Best Practice
Creating compelling reasons to visit in the off-season. Branson
has a harsh climate in its wintertime, but its destination marketers
have created offerings that attract full capacity tourism during
Christmas.
Best Practice
Providing support for the diverse needs of individuals and
families. Disney has been a pioneer in this effort. They understood
early on that adults are along for the ride with their kids: they too
need some fun, rest and relaxation in Orlando. This type of offering
has expanded to include many attractions which are targeted
specifically at adults, most notably the Disney Institute, where guests
can learn a new hobby (cooking, climbing, guitar-playing) with the
help of distinguished experts in the field.
Best Practice
Ensuring consistency between the actual tourist demographics
and the needs and wants that the destination serves. Las Vegas
has scarcely missed a step in its highly successful endeavor to
expand their market beyond gamblers and to develop attractions for
broader markets.
Best Practice
Finding and developing undiscovered value inherent in the
destination. During its 120-year history, Branson has ingeniously
cultivated its brand through major transformations. At first, people
visited for the great fishing and the mysterious cave. Later, they
came for a unique theme-park experience based on the region's
history and culture. Then came live country music shows, a broad
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Destination Marketing in the United States: Benchmarks & Best Practices
offering of theme entertainment, and finally, the best entertainment
available in a single place in America's Midwest.
Best Practice
Establish a public-private interest coordinator that is financed
by both the private and public sectors. The benchmark
destinations most frequently utilized a special tourism tax, such as a
bed-tax on hotels. Other possible tax measures are an airport tax, a
restaurant tax, and taxation on events and attractions.
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Destination Marketing in the United States: Benchmarks & Best Practices
Vision and Destination Brand Essence
The Central Value Proposition
Vision and brands are a fundamental part of commercial activity, but does a city need
a vision and a brand for tourism development? The answer is yes, because
destinations, like companies, must communicate to a broad market of consumers
what they are, why they offer what they do, and the consistency and quality of their
offerings.
This is accomplished through the brand and through the vision. Ultimately, a
company's vision is the most visible part of that company's marketing strategy, and
the same is true for cities. When any city is without a strong vision, its marketing
strength is severely undermined. Destination brand essence is a term used
frequently in destination marketing to indicate the synergy of vision and branding in
strategic marketing.
Benchmarks of Brand Essence
Not surprisingly, the benchmark destinations had each cultivated a powerful brand
essence:
•
The most important vacation you’ll ever take - Colonial Williamsburg
•
Live Music and Wholesome Fun - Branson
•
The World's Favorite Place for Family Fun - Orlando
•
The Unique Riverboat Experience - Biloxi
•
The Ultimate Entertainment and Gaming Extravaganza - Las Vegas
Destination Multibranding
Having an effective brand essence does not require, however, that the destination
must be one-dimensional in its appeal. In all of the benchmark destinations, beneath
the brand essence are a family of diverse offerings, each of which has a brand of its
own.
This form of marketing -- multibranding -- is motivated by the findings of market
research in 4 of the 5 destinations (Las Vegas, Orlando, Williamsburg, Branson).
This research indicates that most visitors are seeking a varied experience that
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Destination Marketing in the United States: Benchmarks & Best Practices
includes several distinctive attractions8. In most cases, a premier attraction functions
as a hook to bring in tourists, who will ultimately spend money on many other items.
•
Las Vegas: Gambling casinos
•
Orlando: Disneyworld
•
Colonial Williamsburg: Historical re-enactments
•
Branson: Household-name performers
A visitor to any of these destinations will inevitably experience far more than the hook
attraction. Multiple values are each branded and communicated to the potential
consumer as a total, diverse experience.
8
This is true even when a visitor intends to spend only a few days at the destination.
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Destination Marketing in the United States: Benchmarks & Best Practices
Consumer Knowledge, Targets, and Statistics
The Power of Market Knowledge
It is nothing new to take tourists for granted, to assume they will respond to the
opportunity to visit a nice city. Operating in this way -- in the dark, so to speak -- is
not necessarily wrong (it is an essentially organic growth strategy), but it certainly can
impede the city's ability to achieve its most far-reaching and important goals. A city
cannot plan, cannot fully benefit from its potentials, or reliably avoid the inherent
negative possibilities, without knowledge of the tourism market, visitors (demand
side) and tourism industries (supply side).
The benchmark destinations illustrate, in fact, that with increased market knowledge,
the improvements in strategic marketing are powerful. All of the destination marketing
organizations we benchmarked invest a significant portion (2% to 10%) of their
annual budget on research, and they are continually innovating ways to gather
market information and apply it. Surveys and focus groups with potential consumers,
post-purchase satisfaction surveys, as well as demographic and market trend data
are fundamental inputs to their marketing strategy development. (See Disneyworld
Case, below.)
Marketing is, by one definition, the science of creating added customer value, and it
follows that good marketing requires knowledge of what customer value is. The most
basic marketing question is: "What do our customers, or potential customers, value?"
A well researched and considered answer to this question provides the foundation for
the rest of the marketing program: segmentation and targeting, new product
development, product management, brand management, channel management,
marketing communications, and even the structures of the planning organizations.
Thus research, whether conducted on a qualitative or quantitative basis, is ignored at
the marketer's peril!
Tourism is a relatively new field for marketing: that was the primary motivation for
benchmarking destinations that are on the leading edge of marketing, and not those
destinations that are most similar in character. Academic work in the field of
destination marketing is still in its infancy, although Marketing Places, by Kotler,
Haider, and Rein, is a worthwhile introduction to the larger field of place marketing,
including tourism as one dimension. Certainly, marketing experts are beginning to
undertake academic research and analysis in this area, but in the meantime it is
primarily up to cities themselves to innovate destination marketing and advance the
field. But just like academics, destination marketing organizations must first conduct
sufficient research to realize value from the work.
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Destination Marketing in the United States: Benchmarks & Best Practices
Case: Disneyworld's Customer Intimacy
Soon after having booked a trip to a Disneyworld resort, a visitor receives a
personalized letter with extensive information on the total Disney offering in Orlando.
Upon arrival and check-in, the visitor is provided with a Disneyworld credit card, which
can be used to pay for literally anything that is available in Disneyworld: meals, shows,
gift-shopping, park attractions, and other vacation services. This credit card also, of
course, enables Disney to know the visitor's complete purchasing behavior, down to
the penny and the moment it was paid for. It is powerful information for marketing
purposes. On a one-to-one marketing basis, Disney is able to -- and in fact does, in
subsequent direct mailings -- tailor its offering to returning visitors; and in its total
offering, Disney has the ability to micromanage each component to create optimal
value for each visitor within the spectrum of targeted visitor groups.
Targets: the Basis for Coordination
The first application of destination marketing data is most often the setting of targets
for visitation in future years. Quantitative targets, like the qualitative goals set forward
in the vision and brand essence, are integral parts of marketing strategy and
planning. In destination marketing, more so than almost any other industry, there is
an enormous number of directly involved parties who together develop the
destination: hotels, museums, event planners, theaters, restaurants, municipal
departments, international and intracity transportation providers, and many more.
One of the most astounding observations in the benchmark destinations was the high
level to which all of these parties were aware of the total tourism growth target and
had coordinated their own targets and planning to the overall target. Quantitative
targets are simple to communicate, and relevant parties can, with some
straightforward assistance, understand how it would be mutually profitable to
contribute through participation in the overall program. Targets are the keys to
success in destination marketing.
Case: Busch Gardens' Quantitative Marketing Research
Ed Dreistadt, Vice President Marketing, Busch Gardens and Water Country USA
participated in an email-based interview on the topic of consumer knowledge, targets
and statistics for our report:
On Busch Gardens' destination marketing statistics and target numbers and
measurement of the contribution of tourism to the Williamsburg area:
I'm not permitted to release the statistics we use to develop plans for Busch Gardens,
however, much of the research we use in planning for the city and the region are
posted by the Virginia Travel Corporation at
http://www.vatc.org/research/research.htm
On creating marketing targets for the growth of tourism:
In general, you will need to determine the source of your business by geographic area.
At the park, we ask every 10th person for their postal code and use the information to
determine which cities and countries our visitors are from. This allows us to identify
trends, determine our penetration (number of visitors versus the (continued over)
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Case: Busch Gardens' Quantitative Marketing Research
total population of an area) and monitor the response of specific markets to marketing
programs.
On targeting specific consumer groups (e.g. Motor-Coach, FITs, etc.) and
monitoring marketing performance with respect to each:
In addition to geographic source, we also track by business type so we know if
motorcoach, corporate group outing, season passholder, etc., are doing well. This is
done by tracking business by ticket sale and developing tracking numbers, allowing us
to assign the tickets to categories.
On research on how consumers respond to specific components of the offering:
To do this, we generally conduct focus groups to get reaction to current and potential
future attractions within the park. We also distribute questionnaires to people leaving
the park at the end of the day and ask them to rate various attractions and aspects of
the park.
On measuring tourist visitors’ purchases in the city, and the resulting
contribution to local business development and public tax revenues:
Within the park, it's easy to monitor spending by type. To get an idea of overall
economic impact, the Revolutionary Fun cooperative group surveys people who called
in from out vacation package offerings and determine from purchasers and nonpurchasers who went to Virginia what their spending was while in-state. This allows us
to go to the state legislature and request tax funding of tourism efforts because we can
demonstrate a definite return on investment.
On creating targets for the number of tourist visitors coming to specific events
(e.g., concerts, festivals, sporting events, etc.):
At one time we hosted concerts in our park, but eliminated them to realize cost
savings. We are now adding special events, such as a night Halloween operation in
October. The targets are pretty simple. We know what a person will spend to get into
our park and how much they will spend on food and merchandise once inside, so we
need to attract enough visitors to pay for the Halloween expenses and make a profit.
Conclusions on the use of statistics and targets for a sound marketing strategy:
If you don't have revenue-driven tracking and targets, you will never know
what is working and what isn't. This would result in the waste of much of
your marketing resources.
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Destination Marketing in the United States: Benchmarks & Best Practices
Segmenting the Tourism Marketing and Selecting Targets
The second key application of consumer knowledge should be segmentation and
selection of target segments. The broad market of former, current and potential
customers can be segmented along an almost infinite number of dimensions -- all the
way down to segments of one consumer, treated as a unique individual.9 The
benchmark destinations use many different segmentation variables, the most
frequent being: geography, age, family status, household income, needs and wants,
length of stay, trip budget.
Benchmark Destinations
Target Segments
Branson
1. Residents of the Midwestern US
2. Motor Coach Tours / Retirees
3. US domestic Frequent Independent Travelers
(FITs)
Orlando
1. US and International Families, especially those
with young children
2. Young Married Couples
3. Children on School Tours
Biloxi
1. Local and regional adults
2. Gaming Enthusiasts in the US
Las Vegas
1. Convention Participants
2. International Married and Single Adults (highest
spend rate)
3. Domestic Married and Single Adults
4. Families on tour through the US
Colonial Williamsburg and
Busch Gardens
1. US Domestic Families with Children
2. Motor Coach Tours / Retirees
3. Route-95 Corridor population
9
The segmentation approach should not only be customized to the demand-side of the market under
study (e.g., European tourists), but also to the offering that is being marketed (e.g., London). London
would always be better off if it uses a market segmentation that is customized, and not simply the
carbon copy of Paris's market segmentation, for instance. This already appears to have been
accomplished, for the most part.
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Destination Marketing in the United States: Benchmarks & Best Practices
The practice of selecting target groups as the basis for their marketing strategies
enables these destinations to get greater and more consistent returns from their
investments in product development, marketing communications, development of
placement channels, etc. And in today's marketing environment, which is increasingly
oriented to electronic communication media and information technology, targeting is
especially useful, because only then can one utilize the new tools: email, Internet, ecommerce, database marketing, and total customization.
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Public - Private Sector Coordination: A Virtuous
Circle for Economic Growth
Harmonizing Leadership Roles Between Public and Private Sectors
In most major destinations, tourism services suppliers from the private sector provide
the lion's share of the investments and new offerings, marketing communications,
and channel management. But the long-term success of destination marketing relies
on coordination of the private-sector with the public sector and the citizens of the
destination. In benchmark destination marketing, the public-private interest
coordinator brings together the distinct interests of all groups into a powerful
symbiotic system.
The benchmark destinations illustrate a special form of virtuous circle for
development:
⇒ A leadership role by the public sector nurtures private sector growth
⇒ Private sector growth increases the tax revenue base
⇒ An increased tax revenue base enables the public sector to invest more in
large-scale research, branding, promotions, and other activities, which only
the public sector has a direct interest in performing
⇒ Greater public leadership facilitates increases in private sector growth on a
sustainable basis
The vital connection for this type of virtuous circle to work is taxation, preferably
targeted directly at tourism industry revenues. Among the benchmark destinations,
taxation based on bed-nights is the most frequently used.
Benchmark Models of Cooperation
Private investment is the engine of growth for most American destination tourism. But
in each case some form of public-sector coordination accompanied this investment.
The benchmarks included three models of investment and development:
1. Private entrepreneurial development with public sector leadership: Branson
2. Corporate development with public sector partnership: Biloxi, Las Vegas and
Williamsburg
3. Mega-corporate development10 with public sector facilitation: Orlando
(Disney, Universal Studios)
10
It is interesting to note that in Orlando, the most important area of cooperation is between the megacorporations, who have found it necessary to agree on at least one thing: “let's get the tourists to
Orlando, and then we can compete with each other.”
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Destination Marketing in the United States: Benchmarks & Best Practices
Key facts on Benchmark Destination Models of Public-Private Cooperation
•
Private capital investment in Las Vegas -- construction of casinos and resorts -totaled $1.775 billion in 1998 and is projected at $3.794 billion for 1999.
•
Colonial Williamsburg raised $25.7 million in 1998 from a membership base of sixtyfive thousand private donors in the United States.
•
Branson charges a 4% tax on hotel nights and entertainment. One-quarter of this tax
revenue is dedicated to inbound tourism marketing. The contribution was $6 million in
1998.
•
Las Vegas charges a 9% room-tax. Three-quarters of these funds are directed to Las
Vegas Convention and Visitors Authority. The total contribution was $105 million in
1998, of which $72 million was spent on destination marketing, $20 million on special
events (30 events in the off-season), and $6 million on convention promotion (Las
Vegas hosts 60 conventions a year).
•
Orlando Convention and Visitors Bureau had a $22 million budget in 1998, 10-15%
contributed by tax on resorts. The remainder of its budget comes from 1500
businesses that are members; each of whom pays a fee based on its tourism
revenues.
Benefits for the Citizens of the Destination
Taxation and investment is not only a 2-way street between the public and private
sectors. The ultimate concerned party in tourism development is the citizens of the
destination city. Tax revenues from tourism provide a direct benefit to their welfare,
whereby special tourist-tax revenues go to schools and infrastructure for the
community.
Job creation in tourist industries also constitutes a significant contribution. As a
service industry, tourism is heavily labor dependent, and creates a relatively large
number of jobs compared to other types of industry. The citizens of the destination
are thereby included in the virtuous circle:
⇒ Cooperative leadership by the public and private sectors leads to sustained
growth in the quality of life for the destination citizens
There are, of course, other benefits that tourism provides to citizens, but which
cannot be measured in such precise terms. For example, tourism to the city inspires
civic pride, new understandings and appreciations of the city, globalism and
international friendship. While difficult to measure, these benefits can and should be
cultivated and communicated in a destination marketing program.
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Destination Marketing in the United States: Benchmarks & Best Practices
Key facts on Benchmark Destination Benefits for Citizens
•
Nevada's casinos employ 170,000 people with total compensation of $4.28 billion.
•
The Las Vegas 9% hotel room tax contributed $16.4 million to local schools and $18
million to public infrastructure in 1998
•
In Branson, three-quarters of the revenue from the 4% tourism tax are spent on local
infrastructure. The county also directly provides $34 million in tax revenues to the
state.
•
Orlando tourism revenues generate a $356.9 million yearly revenue for the
government. The government’s expenses on behalf of tourism are $256.1 million /
year. This results in a $100.8 million annual surplus generated by tourism for the
Orange County and City of Orlando governments. In addition, a substantial amount of
ad valorem tax revenues ($318.2 million / year) are generated for area schools.
Subtracting the government expenditures for tourism employees’ children ($298.1
million / year) leaves an annual surplus of $20.1 million / year.
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Destination Marketing in the United States: Benchmarks & Best Practices
Experience: Variety, Fun, and Quality
The Necessity of Pure Enjoyability
How to define tourism? We recognize that tourism begins when people travel away
from home for reasons other than business or personal. The tourist is looking for a
particular kind of experience, which may include personal enrichment through new
knowledge and experiences, or simply relaxation in an environment devoted to
his/her enjoyment and convenience. We can also say that, in its nature of being not
necessary, tourism is voluntary, leisureful, fanciful.
In a sense, many of the most popular destinations on earth are being weakened by
their status as "Must see" locations. That is never really true, of course, because of
the very nature of tourism. And in thinking of themselves as necessary trips, the
marketers of these destinations sometimes start to forget why the tourists "must
come" in the first place: that the destination is, purely and simply, great fun.
The benchmark destinations are focused, with the intensity of lasers, on providing fun
for their visitors. It is not generic fun, of course -- each of the benchmark destinations
offers a unique experience and varied forms of fun. Each destination’s offering fills
the whole day with opportunities for different kinds of fun to choose from. The offering
mix is broad, providing activities for many moods and tastes: sports, museums,
entertainment attractions, nightclubs, shops, etc.
Best practices in innovating fun and variety
•
Anticipate unspoken needs and wants by:
(1) Making shopping an entertainment activity11: e.g., Caesar’s Forum and
Mills Corp. Malls in Las Vegas
(2) Recognizing how and where visitors need to relax: e.g., Disney’s Resort
Spas
(3) Lightening the traveler’s burden of responsibilities: e.g., children’s and
adults’ only programs at Colonial Williamsburg.
•
Enable tourists to pre-plan their agendas by providing sufficient information well
before their trip starts. Orlando supplies visitors a mailing that can be brought along
on the trip very easily.
11
Shopping: In the benchmark destinations, especially Las Vegas and Orlando, shopping has been
developed as an activity that is well suited to filling the free time that families and spouses have during a
vacation. The potential for combining shopping with entertainment was first recognized by Mirage CEO
Steve Winn: a single gift shop in the Mirage Resort earned $22 million in its first year. The secret was
drawing visitors there and keeping them there with a variety of entertainments. Today, the Forum Shops
at Caesar’s Palace earn more money per square foot of retail space than any other mall in the world
2
($1000/ft ). The Forum Shops were developed by Steve De Bartolo of Mall of America fame.
Retailing has become a very important part of the experience for tourists in many places around the
world. Colonial Williamsburg earns $2.5 million dollars in sales revenue from retail. Orlando’s CityWalk
and Downtown Disney are dynamic complexes that integrate entertainment and shopping.
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Destination Marketing in the United States: Benchmarks & Best Practices
•
To entice repeat visits, the destination’s total product offering must exceed
expectations.
Assured Quality of the Experience
It would seem that anyone who has been on a vacation is pleasantly familiar with that
wonderful experience of arriving to find all the promised qualities at her destination,
and sometimes the experience of something greater-than-expected. Unfortunately,
most of us are also personally knowledgeable of the searing disappointment of
traveling at great cost and inconvenience to a place that is far less enjoyable than
expected. The prospective tourist naturally operates under a certain veil of ignorance
about the place where he will travel to: does a nice new experience await me, or one
of a very different kind?
The origins of destination marketing are, of course, those basic communication
activities which try to interest and assure the prospective tourist about the quality and
enjoyability of the destination. But it is well understood today that destination
marketing must first ensure that the quality and enjoyability in fact exist at the
destination! Without quality and enjoyability, a tourism destination will never thrive,
and can indeed become a great sore for all concerned parties.
Here again, the combined leadership of the public and private sectors plays the most
vital role: hotels, restaurants, shops, museums, special event programs, airlines,
public transportation systems, information bureaus, police departments, et cetera, all
make integral contributions to the quality of the destination. And if any one player
contributes at a particularly low level of quality, conceivably the entire whole can be
ruined in the tourist's eyes. Assurances of quality must be the responsibility of all
parties.
The ramifications of serious quality lapses in fact go much deeper. If a destination, in
an ill-considered effort to attract large numbers of tourists, begins to undermine its
quality12, the citizens themselves can be severely affected. Citizens do not always
welcome tourism industry expansion because they are aware of the potential traffic
bottlenecks, pollution, corruptions of the cultural and historical character of their
home city, and other negative impacts on the quality of their lives. If citizens are not
given assurance against these negative side effects, or the compensation of a certain
increase in some quality of city life, a backlash can ensue and the destination
marketing efforts go back to square one.
Because quality is so vital, the single best practice in destination marketing today is
to confer the overall responsibility for quality assurance to the public-private interest
12
Often when a destination's quality is in decline, it is due to the reverse of the virtuous circle:
the vicious cycle. Tourism service suppliers will often attempt to reduce the quality of their
offerings in order to increase revenue and net profit, and this inevitably affects the overall
quality of the destination. Consequently, the destination will be visited by fewer tourists who
seek high-quality destinations. Thus, there will be less demand for high-quality tourism
services, and the overall quality of the destination is further reduced. This vicious cycle will
continue to operate until a coordinated effort is made to reverse the quality decline.
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Destination Marketing in the United States: Benchmarks & Best Practices
coordinator. This body has the duty to inspire and, if necessary, enforce through
regulations, an acceptable level of quality in all aspects of destination marketing.
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Destination Marketing in the United States: Benchmarks & Best Practices
The Tourism / Gaming Phenomenon
The powerful marketing potential of legalized gaming in destination marketing can be
explained in part by noting that large-scale gambling is one type of fun that is in
scarce supply in the world. Most countries have not legalized gambling, and so
enthusiasts and curious people travel from around the world to Las Vegas, Atlantic
City, Sun City, and Monaco, to gamble, and to enjoy the lavish spectacle that has
become an integral aspect of gambling. On a smaller scale, Native American
Reservations in the United States and Canada have exploited the power of gambling
to bring in visitors from surrounding areas.
For these destinations, gaming has had many positive effects: increased
employment, a massive increase in tax revenues, and an external effect whereby
visitors spend money on other types of businesses at the destination (e.g., hotels,
restaurants, etc.) These positive outcomes can be the basis for the future growth and
diversification of the destination. There are also severely negative impacts that can
arise in the community because of gambling, of course -- less so with legalized
gambling than with an illegal gambling industry13 -- but that is outside the scope of
this report.
In benchmark meetings in Las Vegas and Biloxi, several points of interest for a
destination marketing program were discussed:
•
Gambling requires multiple licenses to attract outside tourism.
•
Gambling creates a social problem for less than 2% of the local population14.
However, the "sin" stigma may actually limit convention business, if the destination is
primarily associated with gambling activities.
•
Gaming industry investors are earning as much through hotels, dining, and shopping
as they do on gaming.
•
Gambling is a tourist attraction that is not sensitive to weather conditions.
•
Gaming provides for cost savings on hotel and food prices: visitors to Las Vegas are
able to experience luxury for much less than anywhere else in the US. Gambling
contributes one-half of a hotel’s total revenue
13
One of the most positive impacts of gambling legalization is that it takes away a common
platform for organized crime activity. This has been the case, most dramatically, in Las Vegas
and Atlantic City, where organized crime has been unable to thrive in the new open market for
gambling.
14
Citation: Dr. John T. Bowen, Professor of Hospitality Marketing, University of Las Vegas,
Nevada.
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Destination Marketing in the United States: Benchmarks & Best Practices
For information on strategic consultation in Destination Marketing, contact:
Dr. Jonathan Monroe
E-mail: [email protected]
Phone: 202-331-0555
Snail Mail:
925 15th St., NW 4th Floor
Washington DC, 20005
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