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HomeMy WebLinkAbout1987-01-27; City Council; 8869; Convention and Visitor Bureau Mid-Year Report63 .I 4 CIIT" OF CARLSBAD - AGEND -BILL \B#m TITLE: dTG. 01 I27 I87 CONVENTION AND VISITORS BUREAU DEPT. HD.% CITY AlN V@? MID-YEAR REPORT RECOMMENDED ACTION: Hear presentation and accept report. ITEM EXPLANATION The attached report has been prepared by Mr. Craig Severson, Manager, Carlsbad Convention and Visitors Bureau. Mr. Severson would also like to make a presentation of approximately twenty minutes in order to review activities to date and highlight activities for the balance of the year. EXH I B I TS 1. Letter to City Manager from Mr. Severson, dated January 15, 1987. I Janaury 15, 1987 Mr. Frank Al%hire, City Manager CITY OF CARLSBAD 1200 Elm Carlsbad, California 92008 RE: CONVIS MID-YEAR REPORT TO CITY COUNCIL Dear Mr. Al%hire, In accordance with our by-laws, the Convention ti Visitors Bureau is prepared to present our Mid-Year Budget Report to the Carlsbad City Council. At this time I would like to request that the Convention & Vistors Bureau be placed on the agenda for the Council meeting date of Tuesday, January 27. Due to the in depth nature of this report, I would also like to request that the presentation time be extended to 20 minutes. If you have any questions or comments, please contact me at any time. Sincerely, BUREAU Craig Manag cc: Mr. Paul Schwartz Mr. Stephen L'Heureux Mr. Dave Kulchin Mr. Jerry Long Carlsbad Convention &Visitors Bureau P.O. Box 4297, Carlsbad, CA 92008 (619) 729-1786 Division of the Carlsbad Chamber of Commerce TO: CARLSBAD CITY COUNCIL MEMBERS SUBJECT: CONVENTION iS VISITORS BUREAU MID-YEAR REPORT The information contained in this report reflects tremendous results accomplished by the Carlsbad Convention & Visitors Bureau in the first six months of this fiscal year. Due to our forecast of a decrease in the amount of tourists due to the effects of the World's Fair in Canada, we concentrated our advertising and promotional efforts in the markets of Los Angeles, Phoenix and Denver. As a result, Carlsbad TOT revenues increased an average of 16.7% for the first two months of the fiscal year, whereas San Diego realized a 6% decrease for the same time period. During the next two months Carlsbad report- ed increases of 22.8% for September and 39% for October. The increases above are due, in part, to an increased number of hotel and motel rooms that were built in early 1985. Their oc- cupancies and revenues have been increasing steadily over the past year. These recently built property T.O.T. revenues are only representative of approximately 60% of the total gain. It is our opinion that the increased gain is due to a unified effort between the Convention and Visitors Bureau and the Carls- bad lodging and hospitality industry to effectively promote and advertise the area to intended visitors. Our methods and programs for acheiving these goals are detailed as follows: 1-800 CENTRAL RESERVATION SYSTEM In July 1986 The CCVB went 7'on-line1' with Southern California's first city-wide central reservation and information system. This system was targeted to the consumer travel market whereby allowing the intended traveler a method of receiving direct in- formation about the Carlsbad area and a "no-cost'? method of placing a booking or reservation with one of the Carlsbad pro- perties. In addition this gave the CCVB a method of tracking our advertising response in any given market at any time. The information provided maximizes the effectiveness of our advertising dollars rather than spending funds on generic adver- tising that is untrackable. The information gathered through Central Reservations such as regional market response and ad effectiveness is then reported to the local Carlsbad properties to aid them with directing their advertising to producing markets. 3 Page 2 COOPERATIVE ADVERTISING PROGRAM In an effort to enhance and maintain effective market penetra- tion and exposure without having the funds to adequately accomp- lish this, the CCVB in cooperation with local Carlsbad pro- erties, initiated a voluntary hotel/motel contribution based on a per room assessment for each property. At present, 70% of all Carlsbad properties are contributing to this fund on a monthly basis. This program was first set-up in September with an end-of-December goal of raising $4000., at present we have collected $4765.12, which is $765.12 over our goal. Additional cooperative advertising programs have included cost sharing newspaper advertisments appearing in Denver,Phoenix, Las Vegas/Reno, and Los Angeles, with major airlines such as Continental Airlines and PSA. These programs have allowed us to advertise Carlsbad at a reduced cost and provide "price in- centive" transportation at the same. COOPERATIVE TRADE & TRAVEL SHOW PROGRAMS As a part of our increased efforts to attract and produce ad- ditional travel agent business, group, and tour sales, the CCVB has planned a very aggressive trade show attendance for the 86- 87 year. The costs for attending these trade shows is being shared by the CCVB and various hotel/motel properties on a ro- tational basis. The CCVB has presently scheduled to exhibit in 16 shows during the 86-87 year. DIRECT MAIL CAMPAIGNS An estimated 47% of all Carlsbad visitor lodging business is derived from visitor 'Ipoint-of-origin" travel agents. The CCVB has and is continuing to focus an aggressive and cost effective direct mail campaign to all travel agents and agencies in all of the popular target markets as well as "high dollar yield" markets such as Vancouver and Chicago. Although these "high dollar yield" markets produce fewer traffic numbers, they do provide visitors who have a longer length of stay and a higher revenue yield. This visitor balance is essential to maintain a consistant tourism base. REGIONAL AND NATIONAL RADIO/TELEVISION PROMOTIONS As a part of the over-all marketing plan to increase intended visitor interest and to enhance the impact of the regional adver- tising being done in popular Iftarget markets", the CCVB arranges regional market and national radio and television promotions to coincide with Carlsbad print advertising being done in the markets. These promotions are orchestrated by the CCVB in cooperation with major airlines, regional radio stations, national television networks, and local hotel and resort properties. Ji Page 3 The actual dollar value of the these various promotions has just exceeded $648,000 for the period of July 86 through December 86. These promotions were completed at no dollar cost to the CCVB but with an actual room cost to local properties of $12,825. An example of this type of promotion is that the CCVB will trade Carlsbad lodging accommodations together with airfares supplied by a major airline, for radio and television air time. GROUP AND TOUR SALES The CCVB has been gearing up it's staff involvement in the actual direct pursuit of group sales of Carlsbad and it's properties to potential companies, organizations, and tour groups. This entails contacting and coresponding with various groups and actually selling them on coming to Carlsbad, assisting with accommodations, transportation, amemities, and special requests. This measure is by far the most effective revenue producing approach available. Our only limitation in this area would be the additional manpower and budget requirements needed to launch a strong and continious effort. 5 '' "continental Airlines -- Call now. for special pre-season rates! -~ - ur friend& coastal vilLage is the 0 sun-drenched wonder of Southern California. Literally surrounded bji water, Her many charms include miles of heautifiil coastline, shimmering 1986 RADIO & TELEVISION PROMOTIONS Listed below are the total number of Carlsbad radio 8r television sputs that have aired or are airing ta date, since June of 1986. These pr-omc:ltions were accomplished using hotel /mcltel /airline trade and reflect what the actual cash value wlx(ld be. RADIO PROMOTIONS NATIONAL TELEVISION TOTAL RADIO 8r TELEVISION PROMOTIONAL VALUE: % €19,199. **THIS DOLLAR VALUE DOES NOT INCLUDE LOIXL RADIO STATIONS USED FOF: SPECIAL EVENTS SUCH AS THE C:ARLSEAD GRAND PRIX IN WHICH THE VALUE WAS STATED A'r m,50(:). 7 CD W W W I k 7 0 2 , u w - 0 > n w - u) CARLSBAD CONVIS REPORT ~~ ~ Carlsbad Convention &Visitors Bureau (619) 729-1786 DECEMBER 1986 P.O. Box 4297 Carlsbad, CA 92008 TOURISM REVENUES; Where do the dollars go? In a recent survey, the Carlsbad Convention SC Visitors Bureau has released the figures for tourism revenues generated in the Carlsbad area during the fiscal year of 1985/86. The revenue amounts shown by catagory are based on "actual" visitors staying hotels or motels in the Carlsbad area during that period. They are nfit reflective of visitors arriving and staying with friends or family, which is estimated to be 22% of all arriving visitors. The graph below shc~ws haw the estimated revenues are spread throughout the Carlsbad area. VISITOR SPENDING 'Perday by visitor group. ALCOHOLIC BEVERAGES $1 6,546,221. Total Revenue *$71 per day LODGING 31.2% $21,244,531. Total Revenue 1 NON-FOOD ITEMS $12,120,277. Total Revenue $42 per day % BASED ON TOTALVISITOR REVENUES OF: $68,091,448. S0UF:CE: Car 1 sbad Convent i 1x-i % Vi st or s Eureai!, San Uiego Cunvention r% Visitors Bureau, CIC Reasearch, Ecimumic Development Dept. , San Diego Chamber of Commerce -I-------------- CONVIS TARGETS MARKETING EFFORTS TOWARDS GROUP SALES As the "peak" tourist season draws to a close the CARLSBAD CONVIS is now directing its marketing and advertising efforts toward the travel agent, tour operator, group, and corporate business as an "off-season" source of revenue for the Carlsbad area. Craig Severson, Manager of CONVIS stated, "As hotel/motel rates decline and room availability rises during this time of year, the corporate and group business becomes an increasingly viable source of business as Carlsbad's average room rate is very competitive with outlying areas." During the month of October the CCVB attended two travel trade shows in its efforts to attract more travel agents to sell Carlsbad. The attendance at both of the shows were record setting, with over 3800 travel agents from the L.A. area alone. "In order to gain as much as exposure as we can for our money, we coop or share the cost of the travel and trade shows with local hotel/motel properties,'' said Severson, "this allows us to attend more shows and gain that much more exposure where otherwise our budget limitations would prohibit the expense." CO-OP ADVERTISING PROGRAM: A TREMENDOUS SUCCESS In efforts to gain more exposure for less money and holding its own against the increasing costs of advertising, the CCVB together with the Carlsbad Hotel/Motel Council, implemented a co- op advertising program whereby local hotel/motel properties would voluntarily contribute dollars and room trades to a general advertising fund for the purposes of advertising and promotion. Craig Severson, CCVB Manager, stated, "To date we have approximately 70% of all Carlsbad properties participating with an anticipated *15,000. more for general advertising and pr omot i ons. I* "But the impressive part is the amount of rooms they have given me to use in trade for advertising in newspapers, radio, and television in our targeted markets", said Severson, "the amount of solid advertising we have received in the four months we have had this program has just exceeded S600,OOO." In summary, Severson said, "As advertising costs have increased an average of 17% over last year, our budget would not allow us to even maintain the level of advertsing we did last year." "Realizing this, the Carlsbad hotel/motel properties offered to help far beyond what they were asked. " WHO ARE THE VISITORS? WHY DO THEY CHOOSE CARLSBAD? Of visitor groups surveyed, an estimated 77% of all Carlsbad visitws are from Southern Califlx-nia, Arizcina, and Western Mountain States. The Western States region accounts for 19% of this catagory. Vistors list their primary reason for visit as: -Just en joy the area: 23% -Sea World, Zoo, Wild Animal Park: 34% -Climate: 14% -Many at tract ions: 12% -Ocean: 6% -Other 11% Thirty-Five (35) percent of all visitor groups survey during the summer of 1986 were traveling with children and had a median hciusehold income of $33,907. TOURISM PROMOTIONAL EFFORTS ARE PAYING OFF AS THE CONVENTION AND VISITORS BUREAU REPORTS A SIGNIFICANT RISE IN CARLSBAD HOTEL/MOTEL ROOM TAX COLLECTED The Convention and Visitors Bureau has reported increases in the ammtnt of T.O.T. (Transient Occupancy Tax 1 or Hotel/Motel Room Tax collected ranging from 14.5% to 22.8% during the first four months of the fiscal year beginning June 86. JUNE JULY AUGUST SEPTEMBER 1985 $ 86,150.00 $1 28,255.00 $1 43,817.00 $ 82,133.00 1986 $1 00,815.00 $1 50,470.00 $1 76,841 .OO $1 06,459.00 INCREASE $ 14,665.00 $ 22,215.00 $ 33,024.00 $ 24,326.00 Yo CHANGE + 14.5% + 14.8% + 18.6% + 22.8% Carlsbad presently ranks third in T.O.T. producing cities in San Diego County, behind San Diego and Coronado. TOURISM TRENDS As more and more cities are looking at tourism as a viable source of revenue the level of competition for the tourist dollar is getting extremely competitive, far beyond that of even two years ago. For example, in the Los Angles market alone you can pickup most any magazine or newspaper and see ads from a Convention and Visitors Bureau wanting to attract business to that particular city. Three years ago the intensity of this situation did not exist. But this is minor compared to the trend we see taking place in the San Diego market which drasticly effects our own efforts to hold our position for the tourist dollar. San Diego is under-going a tremendous surge in the present and future growth of the number of hotellmotel rooms being built. Even now we are seeing the supply fast approaching and soon exceeding the demand. When this situation occurs hotel occupancies usually drop along with the rates whereby the amount of percentage tax a city collects is signififantly less. At pre- sent Carlsbad's hotel occupancy increases significantly each time San Diego hotels fill which would present Carlsbad as an overflow or alternative area to San Diego. If this trend continues, and all indications are that it will, San Diego's supply will soon exceed the demand and Carlsbad will not enjoy the amount of over- flow business from San Diego that it presently has. To circumvent this situation, the Carlsbad Convention and Visitors Bureau is re-directing its marketing efforts to the areas of direct group and tour sales in an attempt to "pre-sell" Carlebad to Southern California visitors. TRAVEL &TRADE SHOW AlTENDANCE PLANNED BY CCVB As part of its on-going efforts to educate travel agents and visitors about the Carlsbad area, the Conventiun and Visitcws Bureau has planned an extremely active schedule of consumer and travel trade shows for the 86/87 year. These shows provide in- formation and interest in the Carlsbad area at the point-of-ori- gin for the visitor. 1986/87 SCHEDULE OCTOBER 30 OCTOBER 30 FEBRUARY 6-7 MARCH 6-7 MARCH 13-15 MARCH 1'3 MARCH 23 MARCH 25 MARCH 31 APRIL 2 MARCH 30 TRAVEL MARKETPLACE TRADE SHOW TRAVEL MARKETPLACE TRADE SHOW SOUTHERN ARIZONA TRAVEL SHOW SOUTHERN ARIZONA TRAVEL SHOW LOS ANGELES TRAVEL SHOW TRAVEL MARKETPLACE TRADE SHOW TRAVEL MARKETPLACE TRADE SHOW TRAVEL MARKETPLACE TRADE SHOW TRAVEL MARKETPLACE TRADE SHOW TRAVEL MARKETPLACE TRADE SHOW TRAVEL MARKETPLACE TRADE SHOW ANAHEIM, CA UNIV. CITY, CA PHOENIX, AZ TUCSON, AZ LOS ANGELES, CA DENVER, CO PHOENIX. AZ ANAHEIM, CA OAKLAND, CA SAN FRANC I SCO SEATTLE, WA ... D. .b Hotels: Operators torecast rf Goodwin declared, and he warned against engaging in a price war. “My feeling is don’t lower the rates. Look into any city where they’ve done that, and all they’ve ac- Hoteliers expect room increase in ’87 to cause rate war By Diane Lindquist wr writer Eyeing a further increase of hotel mms in San Diego County this year, local hotel operators are predicting a rate war. Last year, 1,704 rooms were added to the area’s inventory, a 5.6 in- crease, for a total of 31,611. ks a re- sult, occupancy rates dropped four points from 75.5 percent to 71.5 per- cent, much to the surprise and dismay of San Diego hoteliers. San Diego’s occupancy rates have long been among the top five in the cwtry, said Jim Durbin, president of the San Diego Hotel and Motel As- sociation and president of Great Pa- eific Hotels. Local hoteliers have become ac- customed to a strong business that has repeatedly weathered local eco- mnic depressions, Durbin said. “You can get real used to high occupancies and bwg able to raise rates.“ Therefore, the hotel executives were taken aback by last year’s oc- cupancy rate dip, even though the rate remains impressive compared with a national average of 64 percent and the rates being experienced in some other parts of Cahfornia. Durbin expects occupancy to fall even further this year. An additional 2,500 new rooms are scheduled to open during 1987. More than 20 percent will be added down- town, with the completion of the 450. room Ormrl Hotel ne.xt to Horton Plaza and the 74-room Gaslamp Plpzp renovation and the Wroom second tower of the Hotel InterCon- tiwnlal. The remainder of the new rooms will be split among Mission Valley, La Jotla and the North County area. In Missioo Valley, Budget Motels Cutrt Point will add 300 room to the tow inventory and Image Suites will add 160. Old Town will get an additional 150 rooms with the com- pletion of the Ramada Old Town h and another 150 with the completion of the Old Town Galeria. Tbe La Job area growth appears due iD pprt b the rapiderpppdoll of the Golden Triangle region. The La Job Marriott, which opened there last year, enjoyed one of San Diego area’s most impressive performanc- es. Holiday Inn, through a subsidiary, is buildmg an Embassy Suites Hotel in the area at La Jolla Village Drive and Towne Center Drive that has 335 units. “If we’re not careful, we’re going to start getting into some rate dis- counting, which would be detrimen- tal to our industry,” Durbin said. Other hotel operators are predict- ing price wars during the coming year. Last year room raw rose by ap proximately 3.7 percent to an aver- age of $70. Projections by Laventhol &I Horvath, a management advisory firm that concentrates on the hotel industry, anticipate an overall slow- ing during next year to 2 percent to 3 percent. The dip in occupancy rates in 1986 was felt fairly uniformly around the county, although rates held up best and even increased in the Mission Bay area, where no new rooms were added and demand continues at a steady pace because of the location near the Ocean and tne bay. Downtown, which during the past year witnessed the reopening of the renovated U.S. Grant Hotel, the Budget Hotels and the renovated Horton Grand Hotel, suffered per- haps the greatest decline from 77.2 to 69.4 points, as of October. As a result of the showing at the US. Grant, Atlas Hotels withdrew from its operating agreement and has agreed to continue on a month- to-month basis until another mana- ger has been found. Meanwhile, the Grant’s occupancy rate has risen and the hotel has insti- tuted a number of changes, including access to sports facilities and trans- portation services, to encourage cus- tomers. But with even mare lodging planned to open downtown next year, some operators expect further de- 6seBoTELsm&geU Anoth, :k to boost San Diego’s cause of the added tax. A 1 perce higher Occupancy rates, said Durbin, increase could cost a group of 5,O is to increase the current marketing people, for example, an adhtion effort conducted by the Convention W,W in the total amount thc and Visitors Bureau to appeal to a would pay, enough to prompt greater range of visitors. change of debation. Most of San Diego’s tourists come Few people realize the contrib from driving distances - Los Ange- tion the hotel business makes to U les, Orange County and Arizona - local economy, be said. Private-se and range between 25 and 50 years of tor investment in the industry in tl age. next few years will amount to $8 ”We need to expand that market so million, compared with $150 mihi we’re getting more people in from for the convenlon center, he said. flight destinations,” he said. ”In the industry, there is one er “It won’t take a lot of new business ployee for each guest room. Here to start changing the occupancy San Diego it may be more because rates. And the new convention center the banquets and additional husine is one of those things that will give we do,” Stangl said. “That is in e that incentive.” cess of 40,OOO employees in S; Michell Davis, senior vice presi- Diego.” dent of Sybedon Cow., which owns In his hotel’s two and a half yea the U.S. Grant, said the bureau is of operation, he said, it has paid $31 missing a bet by not including the million to its workers, $3.1 million Civic Center convention fac in TOT tax and purchased $37 million its promotions. “It’s San Diego’s best- goods from local suppliers. kept secret,” he said. Hotels also are aiming at specif Besides the occupamy issue, some and narrower markets to increa in the hotel business have felt as if their occupancy. Thus, San Diego hi they were being dealt a double witnessed an increase of quality hl whammy recently with proposals to tels along with an increase in buds! increase the transient occupancy tax properties. by 1 percent to a total of 4 percent to The newly reopened Horton Grar help fund promotion for the Super Hotel downtown aimed at a segmer Bowl being held in San Diego next of guest desiring quality accommi year. dations with special services aa “It is important to remain price achieved a respectable 46 percent a competitive. This concern me very cupancy by the end of its first si: much,” said Sandor Stangl, vice pres- months of operation. It also becan: ident and general manager of the a local gathering spot and earned 2’ Hotel Inter-Continental. “Ultimately times its projections in food an they won’t get any more money.” beverage sales. He predicted a 5 percent to 6 per- Marriott was the first to delve ini cent drop in hotel occupancy if the a mid-priced, small-scale, reside1 City Council approves the additional tial-style hotel built around tax. Tour organizers, he said, will be landscaped area and dubbed Cwr less likely to come to San Diego be- - yard. Howard Johom Franchil Sysiims plans to follow tb year b, building one of their Park quari Inns in San Diego. Howard Johnson President Curti Bean called its endeavors “one a hotel industry’s news swes storie . . . The hotels have proved extremd, popular among travelers.” Similar mid-priced facilities wit a total of 820 rooms are expected t be built this year along the Interstat 15 corridor and inland North Count! They include a 1Wroom Sixpx Ipn in Escondido, a l%room L Qr~lota at Rancho Pefiasquitos, a t3( room Holiday [on at Montgomer Field, a 21&room Compri at Raoch Bernard0 and a 130-room Rpffh i Mira Mesa Boulevard. .