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Colorado Springs Destination Marketing
Funding Analysis and Recommendations
February 17, 2015
1
Hypotheses
• The promotional budget for the Pikes Peak region is
substantially lower than most destinations in our
competitive set.
• There is room to grow LART collections without
eliminating our competitive edge.
• Increasing tourism promotion will have a dramatically
positive impact on revenue, tax collections and jobs.
• Destination development (completed & planned) needs
marketing support for strong ROI.
• Increased marketing of the region will increase airport
usage and service, and fill more seats.
Funding Analysis• Why did we commission the analysis?
• Anecdotal evidence of low tax rate
• New tourism development throughout the region
• Spreading marketing dollars even thinner
• What will we do with the information?• Share with the industry & community
• Start a discussion
• Listen to feedback and develop a plan
• How will it guide our decisions?• Provides a benchmark against competition
• Objective data
• Equitable solution for the good of the region
Tourism Contributes to our Vitality
Sources:
• Colorado Blueprint Region 4 Profile 2014
• Dean Runyan Associates “The Economic Impact of Travel on Colorado” 1996-2011
• The U.S. Travel Association
Destination Marketing = Economic Development
Travel Industry is Resilient
Travel Industry is a Primary Employer
-5%
0%
5%
10%
15%
1998 2000 2002 2004 2006 2008 2010 2012
Primary employer employment gains over timeIndex, cumulative percentage points of employment growth since 1998
Hospitality and tourism primary employers
All other primary employers in aggregate
+ 9.8%
-0.8%
Source: US Cluster Mapping Project; Census Bureau; Tourism Economics
Tourism contributes $1.35 billion to the regional economy each year; that
translates to $43 per second. This counter on the CVB website tracks this
annual spending.
They Visit & Spend
Their Money…
…then they go home
Road Maintenance
Park Maintenance
Road Construction
Strong Property Values = Strong Schools
How Do We Benefit form Tourism Dollars?
How Do We Benefit form Tourism Dollars?
Airport Usage & Service
Storm Water Projects
Public Safety - Fire
Public Safety - Police
How the Funding Works
2%
1%
1/3
2/3
$4,461,172
Lodging &
Automobile Rental Tax
(City of Colorado Springs only)
Contract between
City & CVB
Application Process
What is a DMO?Destination Marketing Organization
• Promotes a town, city, region or country (the “perfect place”)
• Promotes the development of a destination
• Focuses on convention sales, leisure travel, sports & group tours
• Conducts marketing, PR & sales activities
• Goal is to increase the number of visitors and amount of spending
• Private 501(c)(6) nonprofit organization
• Established in 1980
• Currently have a 3-year contract: 2015-2017 with City of Colorado
Springs to market the Pikes Peak region
We bring more visitors to Colorado Springs at Pikes Peak.
Pikes Peak Region (El Paso, Teller & Fremont)
Colorado
Springs
Woodland Park
Divide
Florissant
Cripple Creek
Victor
MonumentPalmer Lake
Fountain
Cañon City
Manitou Springs
Old Colorado
City
Divide/
Florissant
GM Falls/
Cascade
Monument/
Tri-Lakes
Cities marketed
by the CVB
$2,773,332
$608,292
2015 CVB Revenue Sources $3,381,624
LART
Dues/Ad Sales/Grants
82%
18%
CVB 2015 Budget$3,356,000
Admin – 21%
$712K
Group Sales – 39%
$1.3MM
Marketing/PR – 28%
$927K
VIC/Film – 7%
$247K
Partnership – 5%
$170K
Group Sales
• Building Relationships
• Attending Trade Events
• Booking Group Business
Marketing & PR
• VisitCOS.com website & mobile app
• Print & online advertising
• Public relations & social media
Visitor Services & Film Commission
• Official Visitor Guide / Dining & Shopping Guide
• Visitor Information Centers & Kiosks
• Promoting region as a filming location
The CVB is an accredited
organization, meeting 57
mandatory rigorous
industry standards.
Visits
Branding
New Assets
DemandInfo
Media
The Colorado
CVB marketing
plan provides
a consolidated,
strategic
approach to
promoting the
Pikes Peak
region.
Study Sponsors & Supporters
Major Study Sponsor• Private Source
Presentation Sponsors• Best Western Executive Inn & Suites –
Hitesh Patel
• Best Western Plus Peak Vista Inn &
Suites – Hitesh Patel
• Cultural Office of the Pikes Peak
Region (COPPeR)
• El Paso County
• Manitou Springs Chamber
• Old Colorado City Associates
• Pikes Peak Country Attractions
Association (PPCAA)
• Pikes Peak Lodging Association
(PPLA)
• Garden of the Gods Club
Study Supporters
• Arkansas River Outfitters Association
• The Broadmoor
• City of Colorado Springs
• City of Green Mountain Falls
• City of Manitou Springs
• City of Monument
• Colorado Restaurant Association –
Pikes Peak Chapter
• Colorado Springs Downtown
Partnership
• Colorado Springs Fine Arts Center
• Colorado Springs LART Advisory
Committee
• Colorado Springs Regional Business
Alliance
• Fremont County
• Fremont County Tourism Council
• Glen Eyrie / The Navigators
• Regional Leadership Forum
• Tri-Lakes Chamber of Commerce
Stakeholder Interviews
Steve Bartolin
Jack Damioli
Jeff Johnson
Andre Gutierrez
Sallie Clark
Jeff Greene
Jan Martin
Bob Cope
Lyda Hill
Nancy Lewis
Chris Jenkins
Fred Veitch
Andy Neinas Tom OsborneAndy Vick
Katherine Loo
Tourism Promotion
Why is it vital to a destination’s economy?
What are the regional benchmarks?
What is the optimal level of funding?
What are the funding scenarios & mechanisms?
What are the expected outcomes of higher funding?
What are the next steps?
Aran Ryan
Director
Key Points
1. Pikes Peak marketed as a region
2. Low LART = discount for visitors
3. 1,400+ new jobs
Regional
Benchmarking
$0.9
$1.2
$1.5
$1.6
$2.1
$2.5
$2.8
$2.9
$3.4
$3.9
$4.5
$5.6
$6.4
$6.4
$10.7
$10.7
$14.6
$16.9
$18.8
$19.9
$0 $5 $10 $15 $20 $25
Fort Collins
Billings
Boulder
Cheyenne
Estes Park
Yakima Valley
Wichita
Springfield, MO
Colorado Springs
Spokane
Des Moines
Oklahoma City
Albuquerque
Tucson
Austin
Scottsdale
Salt Lake
Seattle
Denver
San Antonio
DMO fundingAverage annual funding, in millions
Source: DMAI; Tourism Economics
Key term:
DMO =
Destination
marketing
organization
This is the role currently
fulfilled by the Colorado
Springs CVB.
Regional
Benchmarking
2,109
2,521
2,538
2,564
2,804
4,405
5,590
6,896
8,942
11,208
11,717
12,612
15,555
15,744
15,934
18,419
20,240
22,476
23,605
40,344
0 20,000 40,000 60,000
Boulder
Cheyenne
Fort Collins
Estes Park
Yakima Valley
Billings
Springfield, MO
Spokane
Wichita
Des Moines
Colorado Springs
Scottsdale
Oklahoma City
Albuquerque
Tucson
Salt Lake
Seattle
Denver
Austin
San Antonio
Hotel roomsHotels in primary area for DMO
Source: Smith Travel Research; Tourism Economics
Regional
Benchmarking
31
$261
$282
$309
$363
$367
$404
$404
$405
$453
$494
$519
$560
$617
$718
$793
$811
$836
$836
$847
$890
0 500 1,000
Billings
Colorado Springs
Wichita
Oklahoma City
Fort Collins
Albuquerque
Tucson
Des Moines
Austin
San Antonio
Springfield, MO
Spokane
Cheyenne
Boulder
Salt Lake
Estes Park
Denver
Seattle
Scottsdale
Yakima Valley
DMO funding per hotel roomAnnual average funding
Source: Smith Travel Research; DMAI; Tourism Economics
Regional
Benchmarking
32
$42
$61
$78
$83
$86
$87
$91
$94
$114
$129
$129
$129
$133
$151
$161
$238
$297
$307
0 200 400
Fort Collins
Boulder
Oklahoma City
Seattle
Colorado Springs
Wichita
Austin
Billings
Denver
Tucson
Des Moines
Springfield, MO
Albuquerque
San Antonio
Spokane
Salt Lake
Cheyenne
Yakima Valley
DMO funding per jobAnnual average DMO funding as a ratio toleisure and hospitality employment in MSA
Source: Bureau of Economic Analysis; DMAI; Tourism Economics
Funding Scenarios
Current Colorado
Springs CVB budget
Optimal DMO
Funding for Pikes
Peak Region
Annual
funding for
destination
marketing
(i.e. total
CVB budget)
$3.4 million
Scenario A:
$5.8 million
Scenario B:
$7.0 million
Scenario C:
$8.2 million
Funding Benchmarks
$0.9
$1.2
$1.5
$1.6
$2.1
$2.5
$2.8
$2.9
$3.4
$3.9
$4.5
$5.6
$5.8
$6.4
$6.4
$7.0
$8.2
$10.7
$10.7
$14.6
$16.9
$18.8
$19.9
$0 $5 $10 $15 $20 $25
Fort Collins
Billings
Boulder
Cheyenne
Estes Park
Yakima Valley
Wichita
Springfield, MO
Colorado Springs
Spokane
Des Moines
Oklahoma City
Scenario A
Albuquerque
Tucson
Scenario B
Scenario C
Austin
Scottsdale
Salt Lake
Seattle
Denver
San Antonio
DMO fundingAnnual average funding, in millions
Source: DMAI; Tourism Economics
Scenario CScenario B
Scenario A
Current funding
$261
$286
$309
$363
$367
$404
$404
$405
$453
$494
$495
$519
$560
$597
$617
$700
$718
$793
$811
$836
$836
$847
$890
0 500 1,000
Billings
Colorado Springs
Wichita
Oklahoma City
Fort Collins
Albuquerque
Tucson
Des Moines
Austin
San Antonio
Scenario A
Springfield, MO
Spokane
Scenario B
Cheyenne
Scenario C
Boulder
Salt Lake
Estes Park
Denver
Seattle
Scottsdale
Yakima Valley
DMO funding per hotel roomAnnual average funding
Source: STR; DMAI; Tourism Economics
$42
$61
$78
$83
$87
$87
$91
$94
$114
$129
$129
$129
$133
$151
$151
$161
$183
$214
$238
$297
$307
0 200 400
Fort Collins
Boulder
Oklahoma City
Seattle
Wichita
Colorado Springs
Austin
Billings
Denver
Tucson
Des Moines
Springfield, MO
Albuquerque
Scenario A
San Antonio
Spokane
Scenario B
Scenario C
Salt Lake
Cheyenne
Yakima Valley
DMO funding per jobAnnual average DMO funding as a ratio toleisure and hospitality employment in MSA
Source: Bureau of Economic Analysis; DMAI; Tourism Economics
Funding Benchmarks
C
B
A
Current
CB
A
Current
Funding Mechanisms
Alternative 1: Expand LART Alternative 2: Create LMD
Increase existing Colorado
Springs LART, and expand to
include attractions
Establish a local marketing
district (“LMD”) and implement
local taxes on rental cars and
attractions
• Increase LART tax rate (e.g. 4.0%)
• Expand tax to attractions
• Specifically dedicate 2/3 share to
DMO
• Multi-year DMO contract
In addition to Alternative 1:
• Create LMD including selected areas
of the Pikes Peak Region
Hypothetical Structure
Regional destination marketing
organization
Pikes Peak
Local Marketing
District (“LMD”)
Attraction taxes
in specific areas
Lodging and car
rental taxes in
specific areas
Lodging tax share for DMO
2.75%
2.31%
1.33%
2.67%
Denver Selectedcomparables (13
markets)
ColoradoSprings: current
(2/3 of 2.0%)
ColoradoSprings: potential
(2/3 of 4.0%)
Percentage points of lodging tax contributed to DMO
Source: Tourism Economics
Lodging tax “discount”
7.67%
9.63%
10.00%
10.35%
10.50%
12.00%
12.30%
12.53%
12.60%
12.60%
13.00%
13.30%
13.33%
13.88%
13.92%
14.75%
15.00%
15.43%
16.75%
16.93%
0% 10% 20%
Billings
Colorado Springs
Cheyenne
Fort Collins
Estes Park
Des Moines
Boulder
Yakima Valley
Salt Lake
Springfield, MO
Albuquerque
Wichita
Spokane
Oklahoma City
Scottsdale
Denver
Austin
Tucson
San Antonio
Seattle
Lodging taxes and assessments
Note: Total amount of tax on lodging. Includes dollar per room assessments by assuming average room rate of $150.Source: DMAI; Tourism Economics
| Tourism
Economics
40
Regional Benchmarking
0%
5%
10%
15%
20%
25%
7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22%
Lodging tax rates in top 150 US urban markets
Share of markets in each rate category
Total lodging tax rate categories in 2013 (e.g. 14% indicates between 13% and 14%)
Colorado Springs 9.63% rate
Denver is part of the 18% of thetop urban markets with a tax between 14% and 15%
Source: HVS
Outcomes
$132
$192
$246
A B C
Increase in Pikes Peak region
visitor spending (in millions)
Scenario
1,470
2,131
2,731
A B C
Increase in Pikes Peak region
tourism-sector jobs
Scenario
Source: Tourism Economics
+ General fund revenues
+ Purchases at other local businesses
- Tax burden for local households
The Pikes Peak Region
Investing in Tourism
Broadmoor West Cloud Camp Ranch at Emerald Valley
Fly Fishing School Fly Fishing Camp
Seven Falls
Experience
Broadmoor World Arena Broadmoor Stables Penrose Heritage Museum
The BROADMOOR
Pikes Peak South Slope Recreation Area
Manitou Incline
Recently Opened & Renovated
Terror-Dactyl
Cave of the Winds
Ivywild
Phantom Canyon
Royal Gorge Bridge & Park
WWII Aviation Museum
Garden of the Gods Visitor & Nature Center
Pikes Peak Summit House
Under Renovation & Planned
Mountain Post Museum
North End Hotel and Water Park
Children’s Museum
Over the River Art Project
Colorado Springs Science Center
Colorado Springs Public Market
I-25 Cimarron Interchange
Total Investments
$640,700,000
“If you build it, they will come” does not apply to the travel industry.
Marketing is essential for sustained success.
Uses of Additional Funds
TV Advertising
Print Ads in National Publications
Shoulder & Off-Season Marketing
Expand U.S. Geographic Reach
Expand International Reach
Trade Show Presence
Pikes Peak Region
The CVB markets the entire region, but 95% of funding comes from within
the boundaries of the City of Colorado Springs.
River Communities
Mountain Communities
COS Airport
City-Funded Events
Tourism Growth Model
In just one hour, the tourism industry has taken in $154,800.
What’s In it for Us?
• More vibrant economy
• More jobs
• Lower tax burden on citizens
• Improved air service
• Improved infrastructure
• Better quality of life
Key Stakeholders• Hotels / Pikes Peak Lodging Association
• Attractions / Pikes Peak Country Attractions Association
• Restaurants / Colorado Restaurant Association – PP Chapter
• Arts Industry / Cultural Office of the Pikes Peak Region (COPPeR)
• State, regional & city parks
• El Paso County
• Colorado Springs & Old Colorado City
• Manitou Springs & Green Mountain Falls
• Monument & Tri-Lakes area
• Teller County
• Woodland Park
• Divide & Florissant
• Cripple Creek & Victor
• Fremont County
• Cañon City
• Royal Gorge Region
• Elected Officials – Cities & Counties
• LART Committee
• Regional workforce & Pikes Peak Workforce Center
• Voters
Next Steps
Industry & Community
Conversations
Funding Solutions
Sustained Vitality
Public Votes
Plan
Development
Colorado Springs Destination Marketing
Funding Analysis and Recommendations
February 17, 2015
68
