Prompted by an Old Playbook To Look Back on a Transformation

The desperation being felt across the country by community destination marketing organizations (DMOs) isn’t new; it is just coming from a new source.

Feeling the effects of immense overbuilding during the last decade, performing arts halls are now borrowing from a decades-old playbook used by hotels when that visitor-related industry overbuilt in the 1980s and early 1990s.

Seeing the chatter online has also piqued my interest to look back into studies conducted for the communities I served during my now concluded career.

But first a word about the side-effects of overbuilding and how data such as this can serve a preventative and also illuminate the emergence of a destination.

Overbuilding leads tourism-related organizations to demand that DMO resources meant for the community as a whole be redirected instead to their exclusive benefit.

Blinded by insecurity, they ignore that the way visitor-centered economic development is supposed to work is that a DMO’s role is to tell the overarching story to get the community as a whole on the list for visitor consideration.

First and foremost, this is to fuel the overall business climate and tax base.

As first-line beneficiaries, it is the responsibility of individual businesses, organizations and facilities such as these to then harvest their share.

Trying to monopolize and divert resources meant for the community as a whole is cannibalistic and ultimately self-destructive but it’s what happens as a result of overbuilding.

Ironically, it is cookie-cutter mainstream facilities/events which, lacking differentiation, then in desperation turn and seek to hollow out the very core of community appeal, destroying the very source of their sustenance.

Their “sameness” from community to community, whether it is formula hotels, convention centers, stadiums, and now performance halls, is at the heart of their internecine desperation.

They come to fear that only by monopolizing community assets can they survive.

This is why defending community marketing from special interests has been the singularly most important challenge for DMO executives and governing boards for more than four decades.

One of the first things we did while jumpstarting a DMO for Durham, North Carolina where I spent the last two decades of my career was to immediately challenge “conventional wisdom” by developing and analyzing data.

As had been the case in two of my previous DMO startups, we were bombarded with anecdotal opinions, e.g. “No one will come to Durham for anything but business;” “Durham will  forced to feed on the barebones after Raleigh is sated;” “Durham is just a stopover;” and my personal favorite: “There is nothing to do in Durham.”

Because I had seen this drill before, it was clear that one of the first things I needed to do was to scrounge through old studies for data while immediately engaging tourism researchers at NC State University to begin regularly mining primary research for relevant data.

One study I found published from 1976 interviews estimated that less than 5% of visitors staying in Durham hotels came here for the purpose of leisure/pleasure, or about 155,400 visitors in all.

The author projected that by 1990, which was coincidentally, the Durham marketing agency’s first full year of operation, this number would have increased less than 2% a year over that 14 year span to about 198,000.

I knew the numbers were soft because the consultant, as nearly all did back then, had only the observations of local hoteliers to rely on.  I knew from experience that few hoteliers at the local level had a handle on why their guests traveled to a location.

Instead, they often used “rules of thumb” that had by then been passed down from generation to generation of managers, especially those going to hotel schools.

Unfortunately, these had never been verified or updated with actual research.

I suspected that this 1976 number was probably over estimated and the 1990 number was underestimated, based on past research I had conducted during two previous start-ups to promote other similarly sized communities.

But the overall visitation growth rate, without destination marketing to fuel it, didn’t seem that far off.

The study was pretty good for that era, if a bit old school.  I’ve seen far worse over the years. Telling was that it didn’t make any attempt to include daytrip visitors or excursionists as they were called back then.

Of course, it had been only two years prior to that 1976 study that a group of us joined forces to get what was then the International Association of Convention Bureaus, the International body for DMOs, to add “& Visitor” to its name, something overlooked since the 1890s and overdue since the 1930s.

Those 1976 observations made more than twenty years before Durham’s DMO start-up also estimated that in 1976, 19.6% of Durham’s overnight visitor traveled here on business, 22.5% for medical purposes and 46% for conventions.

It projected that by our 1990 start up, leisure visitation would have fallen to just over 4%, business travel would have risen to 42.8%, medical travel was projected to increase to 34% and conventions - if a convention center were built - which it had been in 1989, were projected to increase from from 18.8% to 50.5%.

Something just didn’t seem right about those numbers.  Our initial inventories documented that Durham already had in place a wealth of cultural and historic visitor features above and beyond the many found on the campuses of Duke and North Carolina Central universities here.

I could hardly wait to see what the actual data revealed.

In the meantime we had our hands full teaching festivals, historic sites, performance halls and nature areas both to be visitor-ready and how to harvest their share of visitors.

Durham’s first ever visitor census, which was completed in 1990 (one of the first anywhere) could only delve into overnight visitation that first year but it gave me data to compare.

By 1992, updates included daytrip visitors of 50 miles away or more and a couple of years later, Durham became one of the first in the nation to measure daytrip visitors from closer than 50 miles.

The data collected that first year revealed that the percent coming for business (excluding conventions) was actually 29% vs. the 42.8% projected 14 years earlier.  Medical travel was 16% vs. 34%.  Those attending conventions stood at 2.9% vs. the 18.8% projected.

Instead of the 4% projected, the proportion coming here for leisure/pleasure (excluding visiting friends and relatives [VFR] and families visiting students) was actually 14%.

In just a little more than two years, as Durham ramped up community destination marketing for the first time, the proportion coming for business held even at 30.9% while conventions grew to nearly 6% and the proportion coming for medical treatment fell as a percentage to 11.2%.

Visitors to Durham for leisure/pleasure (excluding VFR and student’s families) had also grown from 14% to 16.8%.  I exclude those two groups of leisure visitors for comparison, but actually they were still important groups among whom we promoted greater circulation and spending.

We could also tell from the data, which of the visitor features were catching on to what we had been teaching them about how to harvest visitors here for other purposes.

The hardest part was to get them to accept the difference between those prompted by an activity vs. those who would take it in during the course of trips for other purposes.

Repeatedly, studies show that the destination is the first decision made when planning a trip, even if an activity is a prompt.  Even day trippers are filtering a decision through image, value/cost, how to get around and safety before getting to uniqueness, entertainment or even culinary reputation.

This all adds up to why destination marketing must never be sacrificed to fill seats.  But evaluating the percentage that are prompted by an activity vs. taking it in on trips for other purposes is also a good way to measure efforts to generate circulations.

While the pool of overall visitors had also already grown substantially, following those initial years of promotion, a closer looks showed that sports events had surged from nominal to 3.6%, festivals held even, sightseeing fell to 3.6%, shopping to 2.7%, entertainment to 2.2% and nature/outdoor recreation to 1%.

All were harvesting more visitors, but some organizations and facilities had obviously caught on faster than others, and because of turnover and development, a DMO’s work in this regard would never be done.

The data had another impact, though.  It helped slow the speculative overbuilding of hotels, because although there would continue to be a healthy annual increase, feasibility consultants were now using data to better inform development decisions.

Unfortunately, convention centers and performance halls often pushed forward with ulterior motives in mind such as propping up property value.  Many have yet to learn this crucial lesson enabled by communities that still don’t collect data.

By 1995, nearly all of Durham’s named restaurants, festivals, performance halls and stadiums were harvesting 70% or more of their patronage from visitors.

The evolution of a comprehensive community calendar, now a must-have best practice, was helping events better calibrate expectations for underwriting, attendance and volunteers, as well as optimize date selection and tempering overdevelopment of events.

By 1998, just eight years after beginning to ramp up Durham’s first promotion, the community was already exceeding its fair share for conventions and meetings, but the majority of even overnight visitors to Durham were now here for leisure/pleasure purposes.

Overall, average stay and party size were improving.

With the proportion of overall business travel - especially conventions - in obvious long term decline by then, the writing was on the wall.

It was clear that Durham had to try to maintain higher than fair market share in those declining segments while racing to keep visitation growing from year to year by tapping more and more into the proportion of travelers taking leisure/pleasure trips.

It was also clear by that time that mainstream events, formula stores and franchise architecture were beginning to hollow out or put at risk the indigenous districts, events, natural infrastructure and cultural ecosystem that gave Durham its authenticity and appeal.

The first sign was when the capacity of heretofore vibrant facilities and events began to erode while seemingly oblivious developers and creators continued to pile on more and more.

Last year, the proportion of overnight visitors here for leisure/pleasure had increased through effective community marketing many times over, to nearly 73%.

Overall by person stays, overnight visitors to Durham are now 29% for business (excluding conventions,) still above fair market share, 8% for medical treatment and 15% for conventions (also above market share and nearly twice the national average.)

Among day trip visitors, not only has participation levels quintupled for festivals and sports events has nearly tripled but nature/outdoor and performing arts have each increased six times what it was early on, by five times even before the fabulous DPAC.

Shopping participation has grown nearly 15 times over.  More telling though, is that destination marketing is also getting visitors to circulate beyond the thing that may have been their main focus.

Nearly a third of those who take in performing arts came for other purposes, as did 40% of shoppers, 20% of those taking in sports events and 60% of those attending festivals.

Even a third attending a convention or meeting did so on trips for other purposes.

Key is that the pool of overall visitation each year to Durham is quadruple what it was, and more and more facilities have learned to not only harvest their share but tap into visitors here for another purpose.

Lodging guest rooms have grown by a stable one and a half times what they were when community marketing commenced, just 40% of the speculative rate they had been before good data began to inform decisions.

However, the desperation from over development has now shifted to cultural entities such as theaters and festivals.  Some have yet to learn that lesson or when they were suppressed by the first entities to use the playbook, some are eager to use now to suppress others. 

Hopefully, here and across the country, they soon will.  People are now overwhelmingly drawn to communities with a sense of authenticity including indigenous facilities and events.

This is true even for those who ultimately take in mainstream events that can be seen almost anywhere, unaware that overdevelopment of these is putting what drew them in the first place at risk.

Ironically, once that authenticity and unpretentiousness is lost, they will go elsewhere as will the mainstream facilities and events, leaving communities not worth visiting.

Before it’s too late in more and more cities, hopefully they come to understand their desperation is of their own making and will fall back into their place in the fabric of place.

Until then, communities that rely on data and sense of place must weather another storm of special interests.

Looking Back To A Revealing Era of Common Sense

As if on cue each year, news reports in Durham, North Carolina will headline that the convention center here ran a deficit as if there shouldn’t be one or that this wasn’t expected when it was built.

A new book I recently finished inspired me to read back through each of three feasibility studies that were conducted between 1972 to 1982 for facilities of this type on behalf of each of the three different mid-sized cities in different parts of the country.

This was the first of my now concluded four decades in visitor-centered economic and cultural development during which I would represent these three cities.

It is a span when studies such as these seemed far better grounded and realistic than many before or since.

Last reported, the annual deficit for the civic/convention center in Durham, where I still live in retirement, was $104,000.  That is without netting out tax revenues generated from related visitor activity or even parking revenues.

If they had, it would cover that amount by more than double.

Leading up to construction of the facility, consultants warned the City based on a 1977 survey of convention centers in other cities in North Carolina, to expect a deficit of around $450,000 annually or about $1.8 million in today’s dollars.

The fact is, cultural infrastructure doesn’t “pay” for itself any more than roads or other types of infrastructure.  The only difference is that communities very rarely build roads that aren’t needed.

But in-depth research going back nearly a century reveals that local officials across the country have long been pushed by business interests to build stadiums, convention centers, and increasing over the last decade, performing arts centers.

Ostensibly this is for tourism-related purposes but the real motives have been to shore up the values of surrounding private property in downtowns.

From their own public records including private papers, it is clear this has most often been done, to paraphrase their words, as a means of “shoring up” downtown property values or “insulating” them from “erosion” in nearby neighborhoods.

Other ulterior motives were to act as “anchors” to facilitate private loans or as “people generators.”

If a cultural facility is ever reported to be breaking even, it is usually a sign that ancillary revenues are being included while costs related to capital and site preparation are conveniently not.

Feasibility consultants up through the 1970s, called convention centers by the name “civic” centers because they knew that “75% of the days in a year that the civic center is in use is for local meetings, dances, banquets, [expositions] etc.”

Even today scientific surveys of residents show that more experience a civic/convention center in a given year than any other cultural facility.

Eventually renaming them convention centers, this was said to appease a handful of meeting planners seeking ego gratification, but the real reason, along with pressure to increasingly overstate performance, was to rationalize using visitor taxes as a means to avoid public referendums.

Durham dodged a bullet when it waited ten years after that 1977 feasibility study to secure voter approval to build a civic/convention center, but still at the modest size that had been originally recommended.

Consultants could see back then that far more cost/benefit accrued to centers just 9% of the size of today’s behemoths and less than half the size of centers back then.

Even then, before it ever opened, the Durham Civic Center was situated so as to fulfill its role related to surrounding private property values.

Many other cities over the next two decades, would go on a “big game hunting” binge, doubling the amount of similar space across the nation, while convention and meeting tourism began a long, gradual decline.  The proportion using these facilities plummeted to just 8%, at tops 15%.

The same thing is happening now with performing arts centers with hundreds of new facilities opening in just the last decade while Americans attending concerts as a percentage of the U.S. population has remained flat at around 22% and even down in areas such as touring Broadway.

But based on the findings of urban policy-making researchers, nearly all of these cultural facilities fulfilled their primary “real estate” purpose before they ever opened, pimping tourism merely as a means to access funding without voter scrutiny.

Though undetected yet due to systemic changes in the convention/meeting/facilities landscape, we know know that convention/civic centers were destined to become unviable by the 1980s.

But based on performance surveys of convention centers in the mid-1970s, it was estimated that, on average, these facilities should expect to harvest up to 45% of the overall convention and meeting attendance in their communities.

The overall nationwide decline in convention and meeting demand was imperceptible and unfathomable in the 1970s,  But it would soon begin to show graphs as each dip in demand began to fall slightly lower than the last and each subsequent rise peaked short of the one prior.

It has continued with few exceptions over the past four decades, still undetected by those zooming in on too tight a focus.

Unaware, consultants in the mid-1970s, as they did for Durham, would often predict that a community’s “delegate count would not increase significantly without facilities provided by a civic center.”

This mantra would prove wrong as would a pervasive amnesia about the primary use of these facilities being local.

But what also wasn’t anticipated was the sudden explosion across the country in the number of major convention hotels across the nation (with at least 150 guest rooms and at least 5,000 square feet of meeting space.)

An even bigger surprise was how much more popular they would become nationally than civic/convention centers.

It was inconceivable to consultants in the late 1970s and early 1980s that the proportion of conventions interested in convention/civic centers as a venue would soon plummet rather than skyrocket as predicted.

It is the miscalculation that haunts many cities today where sense of place has been exchanged for things bright and shiny only to find their overall appeal diminished.

Using Durham as an example, forecasts in 1977 for Durham estimated only a slight increase in the number of guest rooms over the next few years and a leveling off during the remainder of the 1980s.

Instead, by the time Durham’s convention center and an adjacent private hotel opened, there were already 10 or more convention hotels across the community vying to harvest conventions and meetings drawn here.

By the time its center opened, Durham was already drawing a third more convention attendees overall than had been projected by the consultant.

With a community destination marketing organization then in place, within three years Durham, community-wide, was drawing more than three times that amount and would soon eclipse its fair market share of that segment of visitors.

But in part because under contract it was held hostage to the priorities of the adjacent hotel, which naturally limited its availability when more lucrative visitors were available, the convention center was harvesting only 8% of Durham’s convention attendees instead of the 46% projected.

Still, as the consultant had forecast in 1977, even the existence of a very modest civic/convention center can often serve a role in a community’s marketing appeal to meeting planners even though the events are ultimately held elsewhere in Durham.

Of course, this is a very expensive way to amplify marketing, but should be credited when considering operating deficits.

One elected official obsessing a decade ago about the center’s operating deficit quipped in a moment of frustration to a group looking at data showing the local tax revenue generated by visitors who attend conventions and meetings:

“Why do we care about meetings held in other parts of town, we need to close that facility’s deficit!”

A more strategic member of the group quickly reminded the group:

That this would be “fiscally cutting off one’s nose to spite one’s face.”

Another added to the chorus of nods around the room, “more like Hara-kiri.”

This would have robbed the city coffers of millions of dollars in revenue from conventions and meetings and undermined scores of businesses just for the sake of avoiding uninformed criticism.

It varies, but the convention/civic center in Durham generally harvests about 25% of Durham’s overall convention attendance.  While not the 45% projected in 1977, this is two to three times the proportion held in convention centers nationwide.

By the time I retired five years ago, the percentage of meetings using convention centers nationwide had dropped to between 8% and 15%, depending on the report, with nearly 90% of conventions and meetings now using convention hotels or other types of lodging with meeting facilities.

During the course of my career, the proportion using convention/civic centers fell by more than 80%, by nearly a quarter in the last few years alone while the communities I represented continued to grow and exceed market share for that visitor segment.

So it isn’t likely Durham’s facility can somehow buck that trend.

Another systemic change that has occurred since the late 1970s is the proportion of day-trip to overnight attendees going to conventions and meetings.

Even today, consultants will often project that as many as 75% of attendance at conventions and meetings held in convention/civic centers will be overnight.

But even when daytrip attendees who travel less than 50 miles are excluded (and they shouldn’t be), 41% of attendees are now “local.”   Fully a third of the attendance now at major national conventions comes from within each state where the meeting is held.

Overnight delegates aren’t quite half of attendees.

But as I retired in 2009, even in major convention destinations such as New York City, only 39% of the attendees at conventions and trade shows (not exhibitions) held in its 1.8 million square foot convention center were overnight visitors and more than a fifth were local residents.

Overnight delegates attending events in the 700,000 square foot convention center in Washington D.C. represented just 4% of the community’s total.

Even as long ago as 1993, as the newly opened civic center in Durham was finding its legs, consultants for the Georgia World Congress Center in Atlanta, using historical data there, found only 45% of attendees to conventions were overnight visitors.

Still, other cities, including nearby Raleigh and Charlotte, tore down those facilities the Durham consultant found to be too large to be optimal in 1977 and erected new ones five times larger, the former out of envy for the latter according to an editorial there.

As I retired five years ago, the performance of Charlotte’s much larger center was barely measuring up to that much smaller predecessor, harvesting about what the other one did in 1991.

Cities that open huge convention centers such as these also find, if they are looking that is, that as a percentage of overall visitation they are drawing the same as cities with much more modest facilities such as Durham.

Even though it has a 3.2 million square foot (soon to be 3.7) convention center, Las Vegas draws the same proportion of its visitation to attend conventions that Durham does.

Its proportion of visitors attending conventions has been relatively unchanged through three expansions, even though 50-60% of delegates say they were more likely to attend because the convention was held there.

On top of the glacial decline in convention business nationwide, the migration of more and more to hotels and trends to lower proportions of overnight attendees, the massive oversupply of convention center space has caused these cities to shell out subsidies to secure business, adding to its deficits.

But conventions and meetings nationwide now have fallen below 9% of overall visitor person stays while the annual number of visitors being drawn to destinations such as Durham has been increased four-fold since the convention/civic center opened.

Shackled to mega-facilities, other cities are siphoning away marketing dollars that would bring a far greater return if redeployed to other visitor segments.

Durham will soon have 578 lodging guest rooms within walking`` distance of its micro-sized convention/civic center and another 145 nearby, nearly what it had back when the facility was first studied in 1977, but still fewer than what consultants had suggested would be spurred when the facility was built.

But Durham officials should question very seriously any future calls for a new or expanded center.  As it did in the 1980s, Durham should buck any effort to do so for ulterior motives such as propping up, insulating or anchoring real estate values.

The facility is doing just fine and outperforming the national average for proportion of convention attendance harvested by a convention center by nearly double.

Judging by market data and the lack of performance by larger facilities in other cities, it is highly unlikely that with more space it would be able to do any better than it is now and there are much less expensive ways to improve visitation.

Instead, officials are better advised to put the effort into better educating news outlets and the general public.

The ultimate return from cultural facilities, like that of other public infrastructure, is found strategically in a vibrant community not some narrow and arbitrary bottom line.