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Travel and Tourism Industry Outlook

A Roundtable Discussion Among Local Leaders

Utah Business Editors

January 23, 2012

Travel and Tourism Mark White, Salt Lake Convention & Visitors Bureau Barbara Riddle, Davis Area Convention & Visitors Bureau Bill Malone, Park City Chamber Bruce Fery, Grand America Hotels & Resorts Chad Linebaugh, Sundance Resort Leigh von der Esch, Utah Office of Tourism Connie Harmston, Davis Conference Center Britt Mathwich, Homestead Resort Joel Racker, Utah Valley Convention & Visitors Bureau Scott Beck, Salt Lake Convention & Visitors Bureau Matt Wirthlin, Holland & Hart Neil Wilkinson, Temple Square Hospitality Keith Griffall, Western Leisure Sara Toliver, Ogden/Weber Convention & Visitors Bureau Bruce Hollien, Morris Murdock Travel Kathleen Roberts, Christopherson Travel Coleen Reardon, Deer Valley Resort Connie Marshall, Alta Ski Area Cory Moore, Big-D Construction We’d like to give a special thank you to Mark White, vice president of the Salt Lake Convention & Visitors Bureau, for moderating the discussion, and to Holland & Hart for hosting the event. Though 2009 proved tough for Utah’s travel and tourism industry, leaders remain cautiously optimistic going into 2010. Our panel of experts discussed some of the issues the industry is facing, including marketing changes and declining corporate travel. The group also discussed the trends of last-minute bookings, service-focused travel and “voluntourism.” And though the industry is experiencing some setbacks, cooperation efforts among the industry’s varied leaders are keeping the state’s travel and tourism industry moving toward success. How is Utah’s travel and tourism industry doing considering today’s economy? VON DER ESCH: We are cautiously optimistic that we have hit bottom and we are starting to go back up again. I think this last year has been interesting in that it was the first time you wouldn't make any blanket statement about tourism—whether it’s up or down—because the state is really reflecting different visitation in a more dramatic way than I think we've ever seen. By that I mean our partners to the south, in the gateway communities and around the national parks, had a very good year. I was looking at visitation at Bryce Canyon—it was up 16 percent last year. Moab was up about 13 percent. Zion Park was up probably closer to 4 percent. So our national parks and state parks visitations were up considerably. However, in the northern parts of the state visitation rates were a bit softer. And then there is no doubt that the convention meetings business was hit differently last year. Overall, I think we are seeing a trend upward. RACKER: Last year was definitely was a down year [in Utah Valley]. Our visitor center numbers were down slightly and we know that the hotel occupancies were down roughly about 3 to 4 percent and tourism tax dollars were also down. But, we are optimistic. We receive a lot of inquiries for information from people wanting to travel here. We know our state parks and our national monument down there—Timpanogos Cave and Utah Lake State Park and Camp Floyd and the Stagecoach Inn State Park—they were actually up. Overall we are optimistic and hopeful that we have hit the bottom and that this next year we'll see some trends with it starting to move up. MALONE: I also think we've found the bottom now. I think last year was a very challenging year—not only on the occupancy side but even more so now on the rate side. And obviously we see the pattern changing in terms of spending. Everyone is looking for a deal and that runs from our luxury product to our economy product—it's not just one part of the market that is experiencing that trend. So we feel as though we've found our new level. And I think we are looking to make incremental gains moving forward now. Our numbers this past winter are pretty well flat to last year, so we think this is our new starting point. BECK: I think for [Salt Lake] it's kind of a tale of two cities. I think we clearly can see the bottom, but we don't feel we've hit the bottom. We are projecting 2010 to be down 3 to 4 percent over 2009. I think that we look at the year in two different ways. In 2008, we had our second biggest booking year for future conventions in the 25-year history of the Salt Lake CVB. In 2009, we were about 80 percent of where we were in 2008. So if you look at the future and the strength of our product as we are out there booking in years 2014, 2015 and 2016, we still have very strong traction. I think that is why we are so optimistic—we clearly see the bottom and we see that there is a lot of potential for the future because of the phenomenal recognition that we are now receiving as a state. For us the real big impact comes in the reduced corporate travel that comes into Salt Lake, which is a little different than some of the outlying areas in that we rely so heavily on the corporate transient market to really sustain a lot of what goes on in the downtown area. And the corporate group meetings—that is where we really have seen the big change. And it's not that we don't see some of it returning in 2010, but it's still going to be a brave new world out there for the corporate market. RIDDLE: In Davis County, we have had ups and we've had downs. Overall the message is that even though our occupancy was down by 6.2 percent for 2009, that doesn't compare with the state occupancies, which was down by 7.1. So, yes, we were down but we could have been a lot worse. Antelope Island State Park had a fabulous year in 2009. The park actually saw growth of 5 percent in visitors and it realized an 8 percent growth in revenue—we were absolutely thrilled about that growth. We had our Antelope Island Balloon and Kite Stampede, which brought out 20,000-plus people all by itself, which for our county is a pretty big event. From our meetings and convention component, our sales team actually met its goal and actually exceeded the goal that we had in place for 2009. What we found is people were actually willing to talk about booking of multi years. So we had many of our clients that booked three-year contracts with us which, compared to a year before, they didn't even want to talk to us—so that’s good for us. Our occupancy, as has been mentioned, is certainly something that has great room for improvement, but it could have been a lot worse. And where we are situated with Hill Air Force Base, we find that we still see a lot of business from that neck of the woods, which we are really appreciative of. Our conference center did very well in 2009, so we see some exciting growth for 2010. In fact, looking at the books for 2010, we have booked more than what we had in 2009, so it's going to be a real positive year. TOLIVER: For [the Ogden area] it's a very similar story. We are not the central heart of Salt Lake or a resort destination area, but our exposure is growing, the awareness of our destination is growing and because of that we actually had a pretty good year in 2009. Our transient room tax collections overall ended up being down about 3 percent, but looking at some other areas and regionally, we feel pretty good about where we wound up. We’re especially happy about the relationships we've been able to foster with meeting and convention planners, and we actually saw increases in our room nights booked of 38 percent over our goal for the year. So we are seeing our trends rising. Our hotels finished pretty strong. Our occupancies were up by a fraction of a percentage—but that’s pretty good considering the economy. We had great success with the Winter Dew Tour, which brought 30,000 people up to Snowbasin Resort and gave us great national exposure that we haven't seen in the past. We are seeing a lot of growth in the awareness and exposure of our area, which is translating into the visitors and the meetings and conventions that are coming. How are the state’s private hotels and resorts managing the downturn? FERY: The Grand and Little America hotels and Snowbasin, which is another one of our properties, has struggled because of the corporate market. Last year was tough, but when October rolled around we started to get more short-term corporate business. We had some associations, mainly back out of Washington, D.C., that started to look at 2012, 2013 and 2014. So for hotels in general, 2009 was a tough year and I think 2010 will be another tough year as well, but then occupancy and meetings will really start improving. How are the state’s ski resorts doing? LINEBAUGH: At Sundance, our lodging in general was down in 2009, however, on the leisure side we actually did see growth. We know it's a combination of more travelers from the local market but also from our national leisure markets, primarily California and New York. So it's been nice to see that growth on the leisure side. Of course on the group side we have seen a decline, but we do anticipate the group market coming back the second half of the year. But we are investing and building for the future, as we believe that group market will come back. On the ski side and other activities side, we have had great success. We had record-breaking numbers in our preseason pass sales for ski passes, and day ticket sales have also increased. We also invested in our ski product by adding night skiing this year. That was a result of the great success of the past couple of years. I think in this economy more and more locals are looking for that form of recreation and to get away and we have seen an increase. We have far surpassed our expectations with night skiing already with the number of skiers we have per night, so that's been wonderful. REARDON: This year, so far, has been the polar opposite of last year. In 2008, we had Christmas on the books before the wheels came off the economy, so we had a really good Christmas. But from there, it just declined steadily throughout 2009 and February and March were really, really tough. Christmas was flat, which was really important although it came at us the hard way. We were booking the rooms up until the day before arrival—that just has never happened before. We had a little bit of a soft January. Sundance wasn't what we had hoped for or expected, but it was decent. We were almost sold out on Presidents Day weekend, which was good. March is also really, really strong. So we are cautiously optimistic that we are going to end up a little ahead of last year on the lodging side. On the skier visitation side, last year we ended up at about 11 percent down. But we did a lot better than a lot of resorts. We are ahead of last year's numbers already in skier visitation. MARSHALL: Alta has a little bit different story. About half of our business is local. We were thrilled in the late summer of 2008 when our seasons' past sales had hit an all-time record, which then really solidified a lot of our skier visitation for the winter—so the season of 2008/2009 was great. This year we are pleasantly surprised that somehow those locals were still able to buy passes, so we started out the season with a really good, solid feeling. I think a lot of it was based on two seasons of more than 700 inches of snow at Alta, which for the Alta local is the nirvana that trumps anything. But this year snow has been tough, especially for the early part of our skiing year. Alta rode on a 50-inch base for all of December. But now we hit the 100-inch mark, so we’re hoping to start seeing a healthy winter. Our percentage last year was down, but we were happy to be down only a single digit from the year before. I think that we are still coming around the bottom, but I am optimistic because of the freshness of Utah and still the relatively undiscovered part of what our tourism landscape has to offer. BECK: We have a ski pass that is sold for the four Salt Lake County resorts—Alta, Brighton, Snowbird and Solitude. The real big thing for us is that we are very different than Park City and Deer Valley, where the skiers can come for five to seven days. Our skier is very different—our skier is in Thursday and out Sunday, and uses Salt Lake because of the value and the ability to have a very, very inexpensive ski vacation. That's really who we focus on. So we’ve been focusing on the trends that no one books in advance, everyone shows up last minute and everybody wants a value. So this year we went out with a unique program called Ski Salt Lake. We asked ourselves and our partners, “How can we get people to book early and get them to add a fourth day?” We decided to go out with a fourth day, fourth night ski free promotion. Year to date we are up 38 percent over total revenue from last year with our Ski Salt Lake program. We have hotels that are up 300 percent year over year in this past program sale. Not just ski days, but also room nights. And what we are finding is that value message is really, really strong and has a strong ability to move people to make a purchase. We have also found that people who aren't motivated by value will make the last-minute, day-before reservation, but the people who are motivated by value are attracted to these programs. REARDON: I think it's also related to consumer confidence. We are not a discount value resort. We are a value resort in the servicing, but not in the sort of pricing. And what we are seeing from our guests is that they are not looking for the cheapest deal, but they are making sure they are getting the best deal that's out there. Last year there was still this distrust in booking your vacation early, because those who booked early ended up paying the most. So there has been a huge rate integrity issue that we have been holding to, to make sure that if we are going to offer a promotion, it goes to everybody that's already on the books, which is tough to do. We are working to make sure that we are instilling that trust back into the consumer because it's huge. If we want to get those early bookings, we have to get them to a place where they are trusting the tourism industry again. We’ve talked about Utah’s travel and tourism industry in the context of incoming travelers, but how have today’s dynamics affected Utah’s outbound travelers? ROBERTS: Christopherson is about 85 percent business travel and most of that is outbound. Our corporate travelers were down about 25 percent as an average of business travel. Obviously one way you combat the slowdown in our industry is to get more corporate accounts, and that's how we withstood 2009. Luckily our January numbers are up significantly. We compare ourselves to 2008 to see if we are up because to compare it to 2009 just really isn’t accurate. We do annual reviews with all of the major corporations that we service and we have more than 60 percent of the Salt Lake market share of corporate accounts. Our focus is more of a transient, day-to-day business travel and we’re seeing their budgets are up—the majority have increased travel budgets for the coming year. We saw it definitely come through in numbers in January. In the instances when budgets are cut, we’ve found that companies are trying to squeeze more meetings into that budget—they are going to still spend that same travel budget, it's just how many trips can they get out of it. On average, Utah corporations that we service were down 25 percent, but we are seeing increased budgets for 2010. But although they are having more money to spend, they are not ready to spend it more liberally, so we are not seeing the relaxing of policies so much. But they have more in the budget, so we want to get back on track start to grow business again. HOLLIEN: We handle the meeting and incentive side of the business and then also the retail travel side. The meeting and incentive side for 2009 was the best year in the 25-year history of the company. The reality is that we had advance bookings from 2006 and 2007 that carried us through and made an unbelievably successful 2009. Right now we are in the valley. We are going to be right with everyone because 2010, from the meeting and incentive side, is going to be a challenge. But the encouraging sign is those large corporations that were fulfilling the rewards for their key employees achieving those sales goals—they are now back booking with us in 2011 and 2012. On the retail and leisure travel side, 2009 was nothing short of brutal. It had dramatic declines from the previous year both in terms of package prices per diem and simply in passengers booked. We realize that while the vendors have to discount enough for value, it got so bad that our advance bookings on cruises and tours, which were traditionally six to nine months out, were only two to three weeks out and at a very discounted rate. Now we are trying to train people back into purchasing further out so you can control your inventory, you can keep your staff employed and you can manage better. We are seeing a little bit of an improvement in the books. GRIFFALL: It's interesting because Utah is in a perfect storm situation—we’ve had a confluence of events that has really helped us a lot. One of those things has been the marketing and advertising that the Utah Office of Tourism has done over the last few years—it has made a large difference in the people who are calling us to book customized group programs. Instead of asking, "What is there to do in Utah?" It’s now more like, "How do we fit it all in?" It seems as though the state has made real strides in increasing national and international awareness of Utah over the past couple of years. Discuss the Office of Tourism’s marketing plan going forward. VON DER ESCH: Our budget had a big hit last year at 37 percent. The good news is that Governor Herbert has not taken the number down farther. And we feel it's particularly important. It was very gratifying when U.S. Travel released a report just before Christmas of the percentage of increase in tourism spending for various states, from 206 to 2007, and that Utah was in the top 10. In fact, only California and New York were ahead of us, and also Louisiana, but that was the year after Katrina. This shows that the marketing was working. That was our first full year with the advertising span that we were able to do. We are able to say that we aren’t just doing better in the intermountain and surrounding areas, but we are attracting visitors nationwide. The fact that this industry is revenue generating in a year when the legislature is looking for money to cover needs of programs that use revenue, it's very important that we get the message out that advertising is working. WILKINSON: The other day we hosted a Russian tour company at Temple Square, thanks to the Utah Office of Tourism. I could name you 10 new tour companies that we got at Temple Square Hospitality last year that are new and we kept all of our old ones—much of this is due to the increased advertising. Even though some of the old companies have cut back in some areas, they are still coming. We are positioning ourselves so well that when the economy does rebound we will see a huge increase. Now is the best time to market because then you get these new people knowing about you, they come and have a wonderful time, and then as they grow, we grow. RIDDLE: It is so important that our legislature and our governor continue to support tourism from a statewide perspective because it does have this incredible trickle-down effect within all of our counties and it certainly boosts our counties and the funding that we have available. We are actually not just promoting our counties, but we are promoting the state. So it's really a brilliant marketing ploy and something that we've really been able to benefit from. It helps us put our name all over the Western United States. GRIFFALL: It's interesting to note that the money that comes from the state doesn't go to the private enterprises in any sense, but I think what it does do is it truly encourages more marketing from all of us. And while I'd love to have it matched, that's not really the point. It has really encouraged us to do more and more marketing. Our marketing budget has been going up every year. And particularly this year, it's the time to really market. But I'm encouraged by the fact that where we are really makes a difference. BECK: When someone comes here, the perceptions change. When you get people here, they are changed for the better and they come back. And you look at what our industry is able to do, not just the trickle-down to the restaurants and the hotels, but when you look at the impact of people coming for the Outdoor Retailers trade show—now those companies are relocating to Utah. We have Salomon that has been exposed to Utah from 10 to 12 years at the Outdoor Retailers Show. We have the Sundance Film Festival that is bringing people here and the impact it generates is amazing. And the same thing with the ski industry—how many executives came out here to ski, loved it and then opened up an office in this area so they could ski Utah and have a business here at the same time? I think it's really important that we also remind the legislature that this is an industry that is really a strength for our state. This industry is not just an industry of parties and hotels—this is a legitimate industry and the economic impact on this industry is immense. GRIFFALL: One of the things that the tourism industry really can offer Utah is development in the rural areas of the state. The fact is that much of what we do business-wise is in the rural areas of the state. One thing that is important to discuss is the liquor license problem that we are having right now—it is really going to affect the ability of those rural areas to create more infrastructure. Nobody is going to build a restaurant in Southern Utah or a new hotel with a restaurant if they cannot serve liquor of some kind. It is not about people dropping by to a friendly bar, it is about European tourists, American tourists, people who come to see the beauty that we have and they typically would like to have wine or beer with dinner. MALONE: I just wanted to echo what Keith [Griffall] is saying. I totally agree. It really is an economic development issue, it's not an alcohol issue. How has the travel and tourism industry been influential in attracting outside companies to relocate to Utah? BECK: Our industry is transformative and it really can get people to Utah in a very different way and convince them of the benefits. Then they come back and want to stay, whether that is as a business, as an individual, as a student, whatever that may be. But I also think even bigger than that is the real nature of our industry. When we talk about bringing companies in for meetings, that's a great economic development tool. It's a great economic impact just immediately when they are here to spend the night, but it's also a great economic development tool long-term. FERY: We over the past several years have flown in several hundred customers at our own expense. These are either meeting planners or people who have influence to bring business to our city and to our state. Once you get them here they are so amazed of what a great state and a great city we have. The unfortunate part is that we spend more time on the offense explaining our liquor laws and spending more time during the sales process or the marketing process trying to justify the liquor laws. Instead of spending all this time talking about the liquor laws, even though they need to change and normalize, we ought to continue to talk about all the wonderful things that are going on. We have to figure out a way where we have that conversation about some of the other great things our state has to offer. Because when people think about Salt Lake they think, "Oh, you can't get a drink," but are there so many great things to do here. WILKINSON: The liquor should be a side issue—it shouldn't be the main issue. I certainly agree with the fact that it needs to be looked at, but we don't want to shoot the goose that lays the golden egg. I believe that part of why companies come here, why they want to move here, why they want to be part of Utah is because of the all inclusive nature and friendliness of the people of Utah. That should be the story we tell. What trends are you seeing? GRIFFALL: One of the values that Utah has is volunteerism, which has created “voluntourism.” People want to travel closer to home and volunteer. Another trend that I see taking off is green travel—people are really starting to be a great deal of attention to the environment and want to do something built around it. And both of those trends really favor Utah. So I see that as something we can really grasp as an industry as well as the state of Utah and surrounding areas. VON DER ESCH: One trend I am delighted to see is the use of Utah’s Own products. Sundance used Utah's Own products this year for the catering and meals and the variety of different things, which was great. And MPI did a great job showcasing Utah's Own food and culinary. I think that's a trend we can see more of. REARDON: I think quality service is the trend. Service is the best marketing you can provide—you’ve got to deliver on your promise. People are expecting so much more for less. BECK: I think it's a real redefinition of the trend where luxury might have a real struggle right now. Quality is really the key and that's going to be a trend that goes a long way.
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