Posted: April 01, 2011
The tourism comes out of the recession on a bit of a rollBy Lisa Ryckman
In 2008, the Colorado Tourism Office decided to find out what folks in other parts of the country thought of the state as a destination vacation spot.
Marketing research firm Corona Insights conducted interviews in and around New York, Atlanta and San Diego with people who expressed interest in a visit to Colorado but hadn't been there within the last five years ... if ever.
No doubt some Coloradans might argue the results simply reveal that the interviewees were, for the most part, a bunch of lost balls in tall weeds. But no matter what the spin, it's still a bit of a shock to hear that many of them thought of the state as little more than a collection of perpetually snowbound ski resorts.
"It is not an exaggeration to say that for many people, their only knowledge of Colorado reflected visions of grade school history textbooks - log cabins, white people, snow - and the movie ‘Dumb and Dumber,'" the report says.
Denver was the only city many could name, and their image of it was more than a tad askew.
"A majority believe that Denver is snowpacked and below 0 degrees all winter," the report says. "Many guess that Denver is ‘in the mountains' or in a bowl with mountains all around. Some believe it is cold even in the summer."
Good news for residents who wish people would stop moving here; not so much for tourism.
But former state Sen. Al White, a Republican tapped by Gov. John Hickenlooper to run the Colorado Tourism Office, isn't all that surprised.
"We need to take a hard look at branding Colorado," he says. "What is our branding image? What sort of icon serves as a mental connector? It's an important piece."
Colorado's latest brand marketing campaign sounds like a profile for an online dating service: The state is down-to-earth, rugged, yet inviting; playful, yet sophisticated; straightforward and uncomplicated, yet stylish; friendly, caring and warm.
All that, and mountains, too. Who could resist? (See our ColoradoBiz Travel Survey 2011 results.)
In fact, Colorado's second-largest industry lost less ground than many places when the economy tanked, thanks in part to the Democratic National Convention, an event that put the Mile High City on the national radar screen.
"The situation in 2008 was the luckiest of all for us," says Jayne Buck, vice president of tourism for Visit Denver, the Convention and Visitors Bureau. "We had the Democratic National Convention when a lot of other cities and states were already seeing a recession in tourism. It was priceless, really. There's no way to make advertising do what that kind of exposure did."
Colorado has been, at times in the last 20 years, atop the tourism summit and at rock bottom. But in 2009, Colorado was one of only a few states to come out of the year without a decline in visitation, attracting 27.5 million overnight visitors, virtually the same as in 2008, according to a report by the research firm Longwoods International. Business travel was off 13 percent, but leisure travel grew by 3 percent to a record 24.1 million.
Unfortunately, 40 percent were from Colorado itself, and residents on the road spend less than half of what an out-of-state vacationer would. Overall, visitors spent nearly 12 percent less than they did in 2008, $8.6 billion compared with $9.6 billion.
But those figures might be deceiving, according to a Dean Runyan Associates report, The Economic Impact of Travel on Colorado 1996-2009. When adjusted for deflation of already overpriced lodging and gas, the decline in travel spending was closer to 7 percent. Overall, total travel spending tops $13.4 billion, and the industry generates more than $689 million in state and local tax revenue, the Runyan report says.
"Tourism is an economic engine whose gasoline is money," White says. "You pour in promotion dollars, and you get a return in six to 12 months. It's not something you have to wait to warm up for five or 10 years."
The CTO recently accepted bids for its $10 million advertising, public relations and Web contract, which has been held by Kansas City, Mo.-based MMG Worldwide since 2006. Its current campaign - "In a Land Called Colorado" - is designed to convey the "grand and sweeping nature of the state (and) how attainable a visit here can be."
Indeed, Colorado's laid-back image might be one of its greatest assets.
"People are always looking for places that are authentic and easy access and where you don't have to be somebody to go to a club or theater or dinner," Buck says. "We're very approachable."
But how to get that message out? About 62 percent of the CTO budget goes to spring/summer promotion, a season during which the biggest single chunk of marketing money - about 38 percent - puts Colorado inserts in magazines ranging from Better Homes & Gardens to Bon Appetit to Oprah (Midwest edition). Online outlets are mainly travel sites such as Orbitz, Travelocity and Expedia. The primary targets: families and affluent people in cities including Dallas, Houston, Kansas City, Phoenix, Albuquerque, Austin, Chicago, Minneapolis and Omaha.
"Marketers say you can control about 25 to 35 percent of the market with promotion," White says. "And then there are some people who will keep coming back whether we tell our story or not."
Speaking of stories, here's a good one: It's about the death and resurrection of Colorado tourism, a cautionary tale considered legend in the industry.
The story really begins in 1993, when the state's burgeoning industry fell victim to Douglas Bruce and TABOR and had its $12 million tax-funded promotion budget cut to nothing. That - along with controversy over Amendment 2, which repealed antidiscrimination laws designed to protect gays, lesbians and bisexuals - caused a 30 percent drop in Colorado's domestic tourism market share in the next two years - a loss of more than $1.4 billion in annual revenue, which eventually grew to more than $2 billion a year.
Once the No. 1 summer resort destination in the nation, Colorado dropped to 17th in the space of a year.
"It was a bit like owning a Ferrari but not having the money for gasoline," Bill Siegel, founder and CEO of Longwoods International, told a Nevada tourism group in 2009. "The Colorado case study answers the question that we as marketers would all like the answer to, but would never have the desire or nerve to test: What happens if you take a successful marketing program and cut it to zero? It took just two years for Colorado's business to bottom out."
He related how after seven dismal years, the Legislature gave $5 million to a newly created Colorado Tourism Office, and the industry began a tough climb out of a deep hole.
And then Siegel shared the happy ending: how Longwoods' research over the next few years showed a return on investment of more than 12:1, and the tourism promotion budget grew to $19 million. By 2007, Colorado attracted a record 28 million visitors who spent $9.8 billion frolicking around the state.
"In these challenging economic times, when marketing budgets are an easy target in the private sector and public sector alike, the lesson from this case is quite simple," Siegel said. "Think twice before slashing your marketing budget. Don't be the next Colorado!"
As a ski shop and mountain lodge owner, White knew the value of marketing firsthand. So when he was elected to the Legislature, first to the House and then the Senate, he never stopped banging the tourism drum, arguing for full funding for CTO during even the bleakest economic years.
"When I was in the Legislature, I had to battle my friends on the left-hand side of the aisle who were upset we were spending money on tourism instead of social programs," White says. "On the right-hand side, they'd say, ‘Why are we subsidizing the private sector?' And I said, ‘Hey, you've been saying for years that we should run government more like a business. And what's more businesslike than getting a great return on an investment?'"
Gov. Bill Ritter cut CTO's $21 million budget by about 25 percent, although some legislators thought it should be eliminated altogether. But so far, Hickenlooper seems more inclined to cut education funds than tourism, so White is hopeful his office will hang onto its $15 million budget.
"After beating them over the head, they finally do understand the importance of investment in tourism," he says.
For many tourism sectors and areas of the state, last year was flat or worse. But there's cautious optimism now, with all signs pointing to a statewide tourism recovery, according to economist Richard Wobbekind of the University of Colorado at Boulder's Leeds School of Business. He predicts moderate improvements in lodge occupancy rates, room rates, casino revenues and skier visits.
Things have already started looking up for the more than 550 members of the Colorado Hotel & Lodging Association, which represents 40,000 rooms in everything from bed and breakfast inns to mountain cabins to luxury hotels and spas. The statewide occupancy rate rebounded to nearly 59 percent in 2010 from about 55 percent a year earlier, although the average rate fell again.
When vacationing seemed to screech to a crawl in 2009, the "thing that suffered most was the rate," says Christine O'Donnell, president of the Colorado Hotel & Lodging Association. "The last time rates took this much of a dip was right after 9/11."
It took five years for rates to recover, and she predicts it will take about half that time now, citing a recent report naming Denver as the fifth-fastest recovering city in the nation in terms of hotel occupancy and rates. Denver area hotels rose to more than 64 percent occupancy in 2010 from 59 percent in 2009, and Colorado Springs-area hotels enjoyed their highest occupancy rate in eight years in 2010 - nearly 61 percent - after suffering through their worst year in the last 20 in 2009.
"I think it's a good sign that we're not seeing as many people booking on Thursday for a Friday night," O'Donnell says. "They're getting a little more comfortable making that commitment further out. That kind of tells you that people are calming down. We're Americans. We can only struggle so long - and then we have to go on vacation."
Colorado Ski Country USA (CSCUSA), a nonprofit trade association representing 22 Colorado ski and snowboard resorts, reported visits up 10 percent during the first period of the 2010-11 season compared with a year ago. Gaming revenues from the state's 40 casinos have improved, and on the Western Slope, January's figures for tourism marketing indicators - lodging tax, visitor center visits, brochures mailed, Internet hits - have moved into the plus column, some of them substantially, over a year ago.
The trick is keeping things moving in the right direction, even when the economy works against you.
"Going forward, it's really incumbent upon us to diversify our product," White says. "As baby boomers age, sleeping in a tent under the stars and shivering in a sleeping bag all night long may not be as attractive as when we were 26. This generation is looking for other activities."
Perhaps a tour of Colorado's wine country - aka Grand Junction. The city's decision to market itself as the hub of the state's version of Napa Valley began in the early 2000s, a strategy designed to set the area apart.
"Many places in Colorado have amazing hiking, many have amazing mountain biking, many have amazing skiiing," says Jennifer Grossheim-Harris of the Grand Junction Visitor and Convention Bureau. "The thing that makes us different are the wineries."
The bureau's online surveys in the last few years show that the pitch has paid off, pulling in affluent 40-somethings who tour the 18 wineries with tasting rooms by car, bike and limo. This month, they're launching a campaign designed to lure more traffic from the Front Range, with billboards touting Grand Junction as "Tuscany: Now available in Colorado" and "Sonoma - minus the airfare."
"You've got to sell people to go that one step past Glenwood," Grossheim-Harris says.
When the bottom drops out, there is one tourism sector that actually can benefit. That's why folks who show up without a reservation at the Junction West RV Park in Grand Junction this summer might find themselves out of luck.
"We had a 30 percent increase last summer," says owner Tom Garland, co-president with wife Mari of the Colorado Campground and Lodge Owners Association. "People are going camping instead of going to Disney World. They're rediscovering what an awesome experience it is to hang out by campfire and toast marshmallows and do a little fishing."
Then there are the skiers: half a million of them who live in Colorado, and millions more drawn to the state's incomparable product. When it comes to ski trips, Colorado is the undisputed king of the mountain. The state's 26 ski resorts claimed nearly 20 percent of the nation's overnight ski trip market with 1.6 million trips, the Longwoods report found.
The industry enjoyed two record years before the economy began circling the drain. Business dropped by about 7 percent for CSCUSA members in 2008-2009. Visits moved up just a whisker last year, which was notable for its stingy snowfall.
"We like to talk about our business being 70 percent snow, 30 percent economy," says CSCUSA President and CEO Melanie Mills. "This year, we've got good snow, but we're still seeing - while spending is increasing a little and visits are going upwards - that everybody is still looking for a lot of value for their money and making choices very carefully."
Spending limited dollars wisely has become an industry mantra as well; it's all about maximizing return in a highly competitive market.
"In 2009, we had 4 percent growth when most places were seeing an average of 5 percent loss in leisure travelers," Visit Denver's Buck says. "We had marketing and public relations combining to keep us afloat. We were smart about how we spent our dollars."
It's all about coming up with a strategy that makes vacationers choose Colorado over California, Florida, Arizona, Utah, Europe.
"The whole world is our competition," Buck says.
When Mills talks about her member resorts' approach to attracting and retaining customers - how they're expanding activities, focusing on service and tailoring their message to tempt the affluent, the mature and the family - she could be speaking for the state's entire industry.
"We're in the middle of the country, so people have to travel longer distances to get here," Mills says. "The geographic challenge has always been there, and we never lose sight of the competition. We can't be complacent.
"We never rest."
Lisa Ryckman is the online editor at cobizmag.com.