Tourism insiders scramble as budget cuts threaten state office

At a summit Thursday (March 31), industry professionals will discuss how to replace the functions of the state tourism office, which is expected to close June 30. A key question: how to finance marketing and partnership efforts the staff has provided until now.

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At a summit Thursday (March 31), industry professionals will discuss how to replace the functions of the state tourism office, which is expected to close June 30. A key question: how to finance marketing and partnership efforts the staff has provided until now.

With the Washington State Office of Tourism expected to close on June 30 due to budget cuts, a group of tourism industry leaders have formed a new organization to take over at least some of the activities of the state office. The new Washington Tourism Alliance (WTA) plans to develop a strategic marketing plan and has scheduled a Tourism Summit of stakeholders Thursday (March 31) to get input and examine possible funding mechanisms. 

Tourism is big business in Washington and elsewhere. It is the largest and fastest-growing economic sector in the world, even in the current economic downturn, and 2011 is expected to be a banner year, with a projected 1 billion people traveling and worldwide spending of about $9.3 trillion. Tourism is a major jobs generator; more than one in 12 jobs around the world are involved directly in tourism, according to some studies.

The numbers are equally staggering in Washington state, where travelers in 2010 — the lion’s share of them from other states — spent an estimated $15.2 billion. That was a 7.4 percent increase over 2009, making 2010 the state's second-best year on record for visitor spending. Revenue from those visitors provided essential dollars to state and local government and sparked the creation of almost 144,000 jobs statewide, many of them in less-populated areas.  

With numbers like these at stake, a group of tourism-industry leaders met last year when it first became obvious that state spending on tourism would be declining. The idea of an alliance took on greater urgency when it was clear that all state dollars could disappear this legislative session.

“A statewide alliance was long overdue since tourism is made up of so many different kinds of businesses with multiple lobbyists,” explains Tom Norwalk, CEO of the Greater Seattle Convention and Visitors Bureau. “But now there’s an even greater response to the idea while we figure out the best model to raise $10-12 million a year.” 

WTA has some of the heaviest hitters in the tourism industry behind it, including the convention and visitors bureaus of Greater Seattle, Spokane, and Tacoma, plus the state’s ports and associations representing lodging, restaurants, attractions, and economic development. The group's first order of business is to figure out how to raise enough funds to take over some of the state’s tourism assets — including the tourism website and its customer database, call center and print travel planner — so that the momentum the state already has won’t be lost.  

“We have jaw-dropping beauty and many places that offer variety and authenticity,” says Norwalk. "Though we’re not a top-tier tourism destination like California, Florida, or New York, many people want a hands-on experience of the U.S. with Seattle as a gateway. There’s also enormous interest in our Native American history and culture and we have the capacity for more wine tourism.”

A small working group within the alliance has been looking at California as one model for how to do state tourism marketing without state dollars. About 10 years ago, California created the private, nonprofit California Travel and Tourism Commission, overseen by 36 commissioners, along the lines of other commodity boards like the milk commission. The Travel and Tourism Commission’s $50 million budget is entirely under its control, rather than the state’s, and is used as the Commission sees fit.

The California group does get state money from taxes on hotel rooms and car rentals that were already being collected (as they are in Washington state). But some of its funding comes from assessments on major tourist destinations and businesses that benefit from tourism. California law requires that all businesses that earn more than $1 million a year from tourism pay the assessment, which amounts to $650 for every $1 million generated from tourism. The Commission is headed by a CEO who serves as deputy director to the state's Secretary of Business Transportation and Housing, though her salary is paid entirely from private Commission funds.

According to Mike Gallagher, who helped found the California commission and continues to serve as a commissioner, the California model has provided something that didn’t exist previously, namely predictable funding. “With a state tourism office, you never know if you’re going to get funded since it’s difficult to get politicians to understand tourism and tourism marketing,” he says. “So if you can’t get government to do it, you’d better do it yourself.”

Gallagher says there’s an added benefit: “There’s no question we’re doing tourism better now because in the travel industry, partnerships are key and we are bringing marketing experts together to bring more tourists in.” 

Gallagher, who will be a featured speaker at the summit in Seattle this week, is quick to point out that what works in California is not necessarily best for Washington. But he says whatever the WTA does, the bottom line is that tourism marketing funds must be protected. “What is needed is courage and perseverance to come together as an industry to figure out what makes sense and then write legislation to accomplish that.” 

What is not up for debate is whether the tourism industry will do something to keep state tourism on track in an increasingly competitive marketplace, especially given the steps other states are taking.

Despite tight budgets this year, many states are proposing to hike their tourism marketing and advertising budgets, according to John Cooper, president of the Washington State Destination Marketing Organization: “Michigan’s governor has called for a $25 million tourism ad campaign increase, Connecticut’s governor has called for a $15 million increase and Minnesota is considering a $2.6 million increase for tourism marketing and promotion.” 

Cooper and others in the WTA are determined to avoid the fate of tourism in Colorado in the early 1990s. At the time, the state effectively closed its tourist office as a result of a $12 million loss of public funding, and the industry ultimately lost a third of its U.S. market share within two years.

“We cannot assume that tourists will just show up on our doorsteps,” says George Schweitzer of Red Lion Hotels Corporation. “Tourism is a highly competitive landscape.”


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