The case for increased tourism spending in Colorado
Overall visitation to Colorado reached record highs in 2013, with increases to visitation of 7.3% and to visitor spending of 5% from 2012. Tourism directly supports 150,700 jobs in Colorado. Tourism is big business, and not only in the mountain region.
The statistics speak for themselves: our efforts to promote Colorado are working – and are being noticed. In fact, the Colorado Tourism Office (CTO) was recently recognized as the best state tourism bureau at the 2015 Travvy Awards, as voted by travel agents from around the country. Congratulations to Al White, John Ricks and the entire CTO team, as this is a well-deserved recognition.
Governor John Hickenlooper, whose budget request to the state legislature includes a $3 million increase to the Colorado Tourism Office, also deserves recognition for his support of tourism. The proposed budget increase positively impacts the entire state of Colorado, as tourism is an economic driver not only for the mountains, but the entire state including our rural areas, the western slope and the eastern plains.
A brief look at the numbers – and the accompanying return on investment – shows that our legislature would benefit by increasing funding to the Colorado Tourism Office by an even larger investment than recommended by the Governor.
Tourism investment is a non-partisan issue that our elected officials on either side of the aisle should be able to support. The return on investment of the CTO’s efforts have created the highest ROI ever for the tourism office, including:
- • Over 2 million incremental trips generated which resulted in $2.6 billion in visitor spending
• Every dollar invested returned $344 in visitor spending, a $344/$1 ROI
• This equates to approximately a $25/$1 return in state and local taxes for each marketing dollar invested
• These ROI figures represent the highest totals for any of Strategic Marketing Research Insights (SMARI) clients in 2013 – and the highest totals they’ve seen in the past number of years
(Source: Strategic Marketing & Research Insights, 2013 & 2014)
We’re fortunate in Colorado to have national parks, national monuments, ski resorts, urban centers and thriving small towns that result in a culture and brand that is attractive to visitors. It’s hard to argue that Colorado is in an enviable position. Two basic tenets of destination marketing come into play when we discuss the concept of increasing our state tourism funding:
Destination Marketing Tenet #1 – It’s really tough to get people to go places they don’t want to go.
• In 2014, Colorado ranks 5TH in domestic destinations people want to visit – called “Aspirational Destinations”
• Colorado is ranked only behind CA, FL, HI, and NY when people asked, “Where do you want to visit?”
• 22% of people say they want to visit CO compared to 39% CA; 38% FL; 31% HI and 28% NY
This research clearly defines Colorado’s competitive set as other “aspirational destinations” – not other western states in close geographic proximity. For comparison purposes these percentages for other western states are as follows: WA 18%, AZ 18%, OR 12%; NM 10%; WY 8%; UT 8%; ID 6%.
Data Source: 2013 & 2014 Portrait of American Travelers
Destination Marketing Tenet #2 – You can be guaranteed one thing, if you don’t invite people, they’re not coming
• Simply put, “inviting people” is the main purpose of a state-level destination marketing program.
• It is the role of the Colorado Tourism Office to position and maintain Colorado as a preferred vacation destination on consumer “shopping lists”
• Overall goal is to create awareness and invite as many households as possible to visit Colorado, within the given budget
Despite Colorado Tourism’s great success over the past three years, due to budget constraints, Colorado’s marketing campaign reaches only about 37% of domestic households (44 million of 119 million households).
We are clearly missing an opportunity – in 2014, Colorado has the second largest “Opportunity Gap” of any “Aspirational Destination” in the continental US. This means that of the 25% of people in 2013 who said they wanted to visit Colorado, only 9% actually visited. This 16-percentage point gap is second only to CA. Notably; CA is currently working to increase its budget from $50 million to $100 million.
Colorado needs to close this opportunity gap to bring more money into our economy. Fortunately, a market potential model and ROI’s have been provided by Strategic Marketing & Research, Inc. to help guide our efforts and determine the best and most effective ways to close this gap. The research included a number of contributing factors in each DMA (geographic area) including traveling households, current visitation, potential visitation, distance to Colorado, cost of media, etc.
Strategic Marketing & Research, Inc. (SMARI) research shows that with an additional $10.7M for statewide tourism funding, Colorado could see an increase of more than $1.2B in spending generated by incremental tourism visits (817,000 visits). These projections are very conservative, but will deliver exposure to a minimum of a 14 million households, boosting Colorado’s awareness penetration to 58 million households (nearly 50% of the U.S. total). Of note, the projections do not reflect the cumulative, building effects of a marketing campaign in the marketplace.
Tourism is doing well in Colorado by most every measurement and metric. Sales tax and visitation continues to grow as the CTO, our local municipalities and private industry refine their marketing efforts.
But we can do better. We owe it to ourselves to do better, as tourism spending is one area where government can invest to drive more revenue to the bottom line. Increasing tourism spending to support the Colorado Tourism Office isn’t only a smart business decision, it’s good government.
Chris Romer is president & CEO of Vail Valley Partnership