Friday, November 12, 2010

More Sabre-Rattling But “It’s The Destination, Stupid!”

Apparently folks in Raleigh have overheard the ring-leader of the six-member so-called statewide Hospitality Alliance loudly boasting that the group definitely plans to sue Durham’s local government for modestly incentivizing adaptive reuse of a downtown landmark into a boutique hotel.  Still may just be a bit of blunderbuss, who knows?

I’ve known some members of the group for years as we worked on state-wide issues.   In fact, one (not one of the three named in the paper) is the brother of an executive at a downtown Durham-based company and a proponent of projects like this.  I really can’t see any of the members of this group with whom I’m acquainted being the driving force behinds the threats made by the ring-leader but he’s obviously going to cost them some serious money.angry-face-1

There is also little reason for the group to single Durham out, without also suing Charlotte and Raleigh, communities that long ago did far more than Durham just did to incentivize hotels in their respective central business districts.    Members of the group live in and have lodging properties in those communities and giving them a pass seems hypocritical.

To be fair the group did object to the Raleigh and Charlotte incentives.  They just didn’t do much else nor did they continue to threaten law suits once the decisions were finalized.

If I was a member of this group, I’d tell the ring-leader to pipe down and stop wasting my money.  He’s made his point and it just isn’t fair or reasonable to give Raleigh and Charlotte another pass and then take out all of his angst on Durham for doing something far more thoughtful, conservative and just plain “smart.”

This alliance made hardly any fuss, although a group in Charlotte did when that community used tax dollars to grant development cash and guaranteed a lease to make a parking deck possible to ensure a Westin there.  Nor did they raise much fuss when Raleigh provided an up front grant and below market parking ( some say purchasing the land) to incentivize development of a Marriott there.

Charlotte is famous for asserting the hotel was needed to make the convention center successful and then turning around to argue that the convention center needed to be expanded because the new hotel was siphoning away business, a logic that resulted in the hilarious newspaper headline, “Convention Center Half Empty, Officials Propose Expansion.”  Raleigh even uses tax funds for an on-going slush fund to lure people to use the center and the hotel.  Doesn’t seem to bother this group a bit….but Durham, we’ve somehow really under the skin of this ring-leader or he just feels little risk in jerking us around.

Nor did they appear to get hives over the years when communities including Atlantic City, Austin, Baltimore, Cambridge MD, Chicago, Houston, Indianapolis, Miami Beach, Philadelphia, Pittsburg,  Sacramento San Diego, Scranton, Tucson and Tulsa did the same…and this list is no where near complete.

However being inconsistent didn’t stop this group and others associated from clearing the way for a prepared food tax in Charlotte and Raleigh but then devoting resources to sway public opinion against one for Durham that was much more broadly beneficial to tourism here.

Nor did this six-member alliance fuss when Durham subsidized the development of Research Triangle Park here by running water and utilities or when it was exempted by the state from city property taxes.  Nor did they fuss at local government’s far greater role in The Streets at Southpoint or the American Tobacco complex.

Below is the reason why.

To adapt a famous political campaign phrase from the 1990’s, “It’s the Destination, stupid!”

Savvy hoteliers are on record stating that it isn’t hotels that draw visitors, it is the community where they are located and community-based assets that draw visitors.  The decision to travel to visit a certain community comes down to it’s overall appeal and the way its destination marketing organization communicates that appeal so as to get on the list for consideration in the mind of travelers for whom a particular destination would be rewarding.

Lodging properties then compete to harvest their share of that yield.  Don’t get me wrong, having great hotels is an important ingredient in a community’s overall appeal.  These facilities just aren’t the primary motivator when it comes to visitation.

Once a destination is successfully chosen by a traveler, then the decision about “where to stay” comes second for 16% of travelers and third for 32%.  Only 2% of travelers select a hotel first and those folks are going to destination “resorts.”  While the overall destination choice comes first regardless of the type of travel, the decision about accommodations falls third for entertainment travelers, fifth for both family centered and recreation travelers and sixth for business/pleasure travelers.

This is because the choice of lodging property is driven largely by location or because an event occurring there.   All of this information comes from research studies and from my nearly 40 years of assisting thousands of consultants conducting hotel reappraisals or feasibility studies.

At the very least, I hope this ruckus brings a sharper focus on the workings of visitor-centric cultural and economic development.

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