No free market capitalist would turn down the chance to make $141 on every dollar invested, but when the seed money consists of public funds, return on investment often falls victim to politics.
Grand Junction can pay now or pay later to stay on top of destination marketing, but it must pay or risk falling further behind in the global competition for billions of tourist dollars.
That was the message the Grand Junction Visitor and Convention Bureau board of directors delivered to the Grand Junction City Council during a joint meeting last week.
“I’m sorry to say that you’re not rebounding like other destinations are,” bureau consultant Karin Mast of Miles Media told the group. “You’re really behind in terms of the dollars you can turn back into the (local economy).”
Mast backed up her claims with a new study of tourism’s impact on the Colorado economy.
Commissioned by the Colorado Office of Tourism and published in June, the independent study showed Mesa County collected about 12 percent more tourist dollars in 2012 than it did in 2010, but the state’s total visitor dollars rose nearly 15 percent during the same period.
Visitor tax revenue also increased in Mesa County by slightly more than 8 percent, but across the state, it increased more than 13 percent, the study said.
The disappointing numbers represent lost opportunity costs for Mesa County equal to untold millions of dollars, Mast said.
“We’d completely miss the lede here today if we didn’t see the potential, the unlimited potential, of tourism,” board member Glen Gallegos said.
Tourists inject $1.6 million a minute, $2.3 billion a day into the U.S. economy, according to the U.S. Travel Association.
In Colorado, direct travel spending during 2012 exceeded $16.6 billion. Of that, Mesa County took in nearly $270 million, enough to support 2,950 tourism-related jobs, Mast said.
The totals do not reflect the multiplier effect, where dollars — like those from the paychecks of hospitality workers — turn over again and again within a community, resulting in increased income and consumption greater than the initial amount spent, she said.
“I think what makes the Visitor and Convention Bureau different than the other departments within the city is that they are bringing dollars into the economy. They’re not just spending dollars and sending them out and using them for public services. They’re bringing in new dollars into your economy. Every dollar invested in the budget, results in $141 in direct travel spending,” Mast said.
Internationally, the middle class is growing, which means more people have more income to spend on travel. In addition, there is more inbound travel than ever before to the United States. Unfortunately for Mesa County, however, the choice of destinations has also never been greater, she said.
“From Denver, we used to say, hey, $500, come on over to Grand Junction, spend the money and have a great weekend. Now I can fly for $88, round-trip, to Houston. How much am I going to spend on two tanks of gas to go back and forth (from Denver) when I can fly to Houston for $88? What if I could take a seven-night cruise in Alaska for $439?” Mast asked.
The problem of proliferating, affordable destinations is compounded by the fact travelers have a multitude of new ways to find out about those destinations.
Consumer habits are rapidly changing due to social media, which provides instant communication with the masses on multi-channel devices like smart phones, tablets, e-readers and notebooks, Mast said.
How can Grand Junction compete in such a noisy and confusing marketplace? By expanding and targeting its use of Internet technology to better communicate with potential visitors, she said.
The VCB’s Internet strategy needs to be specifically tailored to user needs in order to overcome interference from online travel agencies, travel review websites, and time share and vacation rental websites, Mast said.
The VCB responded to these challenges in 2012 by launching a mobile website, publishing a website designed specifically for tablets and introducing mobile-friendly guides.
“Thank goodness we invested when we did ... because here it is, July of 2013, and traffic to our mobile website has increased 630 percent (since July 2012). We’re looking at 15,000 visits a month just to the mobile website. If you hadn’t seen that coming down the road like a freight train, we’d be developing that now and just think of all the opportunities we would have missed,” Mast said.
The message was not lost on Grand Junction Mayor Sam Susuras.
“The whole message here is, it takes money to make money. I get it. The problem is, we have to find a source for that,” Susuras said.
“If what you’re suggesting is that we increase the bed tax and taxes on rental cars, then I guess that’s the presentation that your board needs to make to our City Council. Where do you want us to increase taxes? That’s going to be a difficult vote,” he said.
VCB Executive Director Debbie Kovalik said any tax increase should be reserved for big-ticket items, not destination marketing. Instead, the council should look at other opportunities, like better managing its annual subsidy for Two Rivers Convention Center.
During the last four years, the City Council transferred roughly $1.2 million out of the VCB’s budget to subsidize the convention center, bureau division manager Barb Bowman said.
Also, the timing of the budget process makes it difficult for the VCB to get the biggest bang for its advertising buck.
“VCB didn’t know what the subsidy level was going to be until February, after the year’s already over. VCB sat on a bunch of money and didn’t spend it in order to have it just in case Two Rivers went up or down, so that’s been the really difficult part,” Kovalik said.
The VCB’s budget remained roughly the same in each of the past three years, around $1.8 million. In 2013, the bureau will spend an estimated $375,000 of that amount on media.
In contrast, Mesa County’s competitors are increasing their destination marketing budgets. According to Mast:
■ Boulder increased its marketing budget in 2012 by $417,000 by boosting its lodging and food sales tax.
■ Alamosa County established a new marketing district in 2012 and increased its marketing budget by $300,000.
■ Durango is reviewing its annual subsidy for public transportation — about $115,000 — and may redirect those funds to increase its marketing budget.
“The budget times will come and go,” Gallegos told Susuras. “I’d hate to be in your shoes with those budgets ... but let’s really look at the big picture two, three, four, five years down the line and it’s an unlimited potential. How do we take advantage of it? That’s the point.”
“If you aren’t keeping up with the marketing that needs to get done, if you’re not keeping up with other destinations in terms of budgets ... you’re going to fall behind,” Mast said.
“These are new dollars coming in to really keep the lifeblood of the community alive. It’s something that you have to watch carefully,” she said.