Beware of Lost Business to Justify New or Larger Facilities

I am amazed at the number of community/destination marketing (DMO) executives across the nation who still push for newer or larger facilities based on data from flawed “lost-business” reports, even though this rationale has long been discredited.

This obsession almost always indicates that a DMO is operating in a long-outmoded sales mentality at the expense of more holistic marketing. Ironically, it also means the DMO may be ignorant of and/or simply failing to grasp the pivotal difference between traditional economic development (often known as smoke stack chasing or big game hunting) and visitor-centric economic and cultural development.

The traditional approach is supply driven. The visitor centric approach of DMOs is demand driven.

The former pursues facilities and organizations that may hopefully generate demand but, unfortunately, these have been shown recently to displace almost as much.

The latter focuses on generating visitation demand that will make existing facilities sustainable and improve the market-driven feasibility for future facilities.

Most often lost-business reports are cited in relationship to convention facilities and increasingly of late to sports facilities.

To understand why they can be misleading, let me use conventions and meetings as an example, but a similar analysis applies to sports events as well.

There are roughly 1 million conventions and meetings held each year in the USA give or take. The market has fallen back to the mid-2000s level because of the great recession and isn’t projected to surpass those levels again until 2012 or later.

However, only 1% of these are the major conventions so many DMOs obsess over. Each region of the nation is eligible for roughly a quarter of these or a couple of thousand meetings each year. They average about 1,000 room nights per day and a quarter of these events use convention centers. Far too many DMOs are fighting over this small 1% slice.

Far too few DMOs go after the 17 or 18 times larger segment of other association meetings which are much more manageable and can be fit into periods where visitation is needed without displacing other types of visitation. Still fewer DMOs focus as well on the 80 times larger corporate meetings market.

Community and business leaders must be aware of the market when evaluating a DMOs use of “lost-business” as a rationale for expanding or building facilities. Much too often the reasons why business is being lost can be determined by examining the following circumstances:

• A DMO may be poorly prospecting and pre-qualifying the groups it pursues. A dead give-away to poor targeting is if the DMO is still offering or providing underwriting subsidies or giving kick-backs in order to land groups. It means they are focused on a much to thin slice of the market.

• A DMO may be neglecting to make sure the needs-periods are based on surveys of local public and private facilities not just speculation or conventional wisdom or ego. Business lost because the DMO is pursuing groups that are too large for existing facilities or during periods when availability is low due to other visitor markets is not really “lost-business.”

• Also check to make sure the DMO is monitoring its fair share of each potential visitor market including but not exclusively the 10-15% related to conventions, meetings and sports events and comparing it against stringently defined competitor sets which include comparable nearby communities.

• Make certain the DMO isn’t still using the gross economic impact of groups instead of the more relevant net-value-added impact on the entire business climate, not just hotels, and also in terms of the return in local tax revenues on investment in public facilities and infrastructure.

• Make certain the DMO is not only staying current with but voluntarily circulating third-party analysis of mega-conventions and sports events to local stakeholders, officials and news media, especially those that reveal fallacies about mega-groups. Good economic development is rarely about ego.

• Make certain the DMO isn’t attributing lost business to a particular facility without first factoring in competition within the overall community, public and private. Lost-business needs to be lost to the community as a whole not just a particular facility or district.

• Beware of DMOs promoting the need for new or larger facilities on the premise that they will in turn generate construction of surrounding facilities. Facilities rarely if ever spawn other facilities and regardless, even when they might, there are much less expensive ways to do so, such as generating demand for existing facilities.

Contemporary, best practice DMO’s stay focused on and calibrated to generating demand to fill existing capacity rather the antiquated sales-driven lobbying to increase the supply of facilities. The market will signal when expansion is needed.

More often than not, a DMO crying for newer or larger facilities is failing to focus on fair market share, filling needs-periods and good prospecting.

When Beliefs Become More Like Possessions

Coincidentally, two things happened during my just concluded cross-country trip that helped me better understand Tea Party followers.

Even though Tea Partiers are rare, just 9% of the general public and 11% of registered voters, I was able to meet and/or listen to several either during refueling stops or during dinner conversations because, traveling alone, I choose to eat at the bar in the places where I stop.  This often leads to some interesting encounters.

At the same time I was interacting with some of these folks on the trip out west and back, along the northern route this time, I read What Intelligence Tests Miss: The Psychology of Rational Thought by Dr. Keith E. Stanovich, a professor and researcher on human reasoning at the University of Toronto.  I was able to apply some of the information I gleaned from this research during my encounters.

Each of the Tea Party adherents I met appeared to have well above average intelligence but only a shallow grasp of facts and information.  It appeared to me that they based their opinions almost entirely on testimonials heard on talk shows or at rallies.

In his book Stanovich notes that while intelligence is innate, rationality is learned and that research reveals that “open-minded thinking is associated with reliance on statistical evidence” while what he terms “myside bias” has an over-reliance on testimonials.

This explains why, to a person, the activists I met seemed unperturbed to learn that the vast majority of the current debt problem occurred under a conservative president who had inherited a budget surplus.  When probed for the basis of their beliefs they almost always cited talk show hosts or speakers at rallies.

Similarly, they didn’t appear to be racists but tended to generalize about immigration and racial issues based on group stereotypes gleaned from testimonials that may have been racist rather than on facts or any personal experience with or knowledge of individuals.

The nation is currently held hostage not by the 11% of registered voters who are Tea Party adherents but by the less than 6% who insisted, in the very recent USA Today/Gallup poll, that the Congressional Committee now charged with trimming the debt should “stand pat on principle no matter what.”

Based on what I learned from the research reviewed in this well-written book, the inflexibility of this very small group is grid locking the nation and the economy because they “treat their beliefs” in Stanovich’s research, “as possessions” making it almost impossible to inform them with additional information or to find compromise.

To me, this is what makes them so dangerous and why even conservative columnist David Brooks raises questions about their moral decency.  Maybe even more dangerous are those officials elected to represent far more than this tiny 6% but to whom they pledge allegiance, “no matter what.”

One Republican’s Object Of Deep Spiritual Significance

A powerful, popular, independent Republican President was on my mind as I started my third cross-country road trip in less than a year, driving up the Shenandoah Valley of Virginia and crossing bits of Maryland and West Virginia before cutting across Pennsylvania to carve my way around the Great Lakes.

My route took me near a route of then-desolation in Pennsylvania that Theodore Roosevelt viewed from the train as he made his way from Buffalo to Washington D.C. after the assassination of President McKinley.

A hundred years ago, Roosevelt probably wasn’t aware that settlement and development had by that time eliminated one of every three trees (210 million) from the billion acres of forest that had covered America in the mid-1600s.

Roosevelt also didn’t have access to the economics involved. Today we know that “over the course of 50 years, a single tree can generate $31,250 worth of oxygen, provide $62,000 worth of air pollution control, recycle $37,500 worth of water, and control $31,500 worth of soil erosion” according to the Arbor Day Foundation.

What Roosevelt did have according to his biographer, Edmund Morris was a firm belief, even as a city boy that “trees were objects of deep spiritual significance.” He also viewed conservation as good for business, good for development and in the best interests of the American people.

He bucked his own powerful political party and, as noted at this link, by the end of his term he had “established the United States Forest Service, signed into law the creation of five National Parks, and signed the 1906 Antiquities Act, under which he proclaimed 18 new U.S. National Monuments.

He also established the first 51 Bird Reserves, four Game Preserves, and 150 National Forests, including Shoshone National Forest, the nation's first.

The area of the United States that he placed under public protection totaled approximately 230,000,000 acres.” And yes, he was a Republican.

Today, more than half of the earth’s forests are in Russia, Brazil, Canada, the United States and China. Forests cover less than 1/10th of the earth’s surface and about 30% of its land area. Degrading forests are driving 17% of greenhouse emissions.

America’s tree cover has remained at 747 million acres for the last 100 years. According to the national atlas, this includes 384 million acres in the East and 363 million in the West. In the East, 74% are broadleaf trees, in the West 78% are conifer.

In the East 83% of forest is privately owned but in the West 57% is publicly owned. This may explain why I saw far fewer outdoor billboards in the Midwest and West.

This may also explain why public officials in North Carolina are so slow to protect trees from outdoor billboards, oversimplifying it as a private property issue rather than as a degradation of view-shed and sense—of-place as the general public here overwhelmingly does.

Once heavily forested, North Carolina is now less than 60% tree covered or less than the tree canopy in the City of Durham, the state’s fifth most populous city. North Carolina has also become less forested than either of its two neighboring states, Virginia and South Carolina.

We need more Republicans like Teddy Roosevelt. Especially in North Carolina.

Innovation Is Right Under Your Nose

I had my hands much too full in 1965 to notice, but while I was caught up in the back to back to back to back to back releases of Mr. Tambourine Man (Dylan and The Byrds,) Can’t Get No Satisfaction, Help, The Sounds of Silence and California Dreamin’, Toyota launched the development of the hybrid technology (Prius etc.)

Things we commonly refer to as “breakthroughs” have usually been evolving right under our noses for decades.  Clive Thompson notes in a column for Wired Magazine that the revolutionary iPhone “pinch-and-zoom” was actually pioneered back in 1983.

Click here to read more about what Bill Buxton at Microsoft terms the “long nose” theory of innovation.

The lesson for organizations that seek to be innovative is that it is more about adapting existing or evolving concepts at the margins than waiting for a “bolt out of the blue.”

My Third Cross-Country In Less Than A Year

For anyone curious about my hiatus, I recently completed my third, 6,000-plus-mile cross-country trip in less than a year. As always, riding shotgun was my English Bulldog, Mugsy and we took the Jeep instead of the Cross Bones.

This time we went up the Shenandoah Valley of Virginia, then across those narrow bands of Maryland and West Virginia and cut across the southwest corner of Pennsylvania.

We curled around the great lakes, up through the Wisconsin Dells, across northern Minnesota and North Dakota and the Theodore Roosevelt National Park.

We took a new route across Montana to Great Falls, then skirted the Bob Marshall Wilderness and up through Glacier National Park.

We continued on US 2 up through the incredible forests and lakes around Libby to Bonners Ferry, Idaho, then across to Newport, Washington before dropping down the very western edge of the Idaho panhandle to rendezvous on a lake with family including my grandsons and daughter, my Mom, younger sister and brother-in-law and my niece and nephew and his family.

There is something therapeutic about dogs and children, especially the sounds of little voices while they are swimming, fishing, rowing and canoeing or getting the first glimpse of Ospreys and Blue Herons at work feeding their families.

On the way back we continued down the panhandle then up the incredible Clearwater and over Lolo Pass back into Montana, down through Yellowstone and Grand Teton National parks and several valleys along the Wyoming-Idaho border.

We then crossed over and along the Wasatch Range through Utah before cutting back east across the Colorado River and up and over a band of Rockies that dissect that state before dumping back out onto the plains at Denver.

Part way through Missouri we took a new route down through Paducah, Kentucky and the northwestern part of Tennessee before heading up over the Smoky Mountains and home to Durham.

We didn’t miss all of the heat wave.  It was in the 90s and humid as I went through Bismarck, North Dakota.  But in the Northern Rockies, I woke up each morning to find it in the 50s and there were several days when the temperature barely reached 80.  On the way back it was a stifling 113 in central Missouri.

Mugs is a great travel companion.  We’ve now taken six different routes across this country and, other than those times during my now-concluded four-decade-long career in community marketing when parachuting into various cities on business trips, these cross-countries  allowed my first real exploration of 22 states and new routes through many other states through which I had previously traveled.

More later on which areas exceeded expectations or didn’t live up to the hype.