I’ve learned over the years that working with destinations can be a tricky and sometimes frustrating endeavour.
Like many publicly funded organizations, Destination Marketing Organizations (DMOs) are often tasked with impossible objectives, saddled with lengthy and cumbersome vendor tendering processes, and a mandate to serve everyone equally all the time.
The biggest underlying issue, in my opinion, is the reliance on tax revenue generated from hotel stays and the subsequent focus of DMOs on putting “heads in beds”.
I can hear the proverbial gasps now.
Don’t get me wrong, I know how important this tax revenue is to most DMOs and although a steady source of revenue is a good thing from a funding perspective, it inevitably results in DMOs focusing too much on their (generally speaking) sole source of revenues.
I’ve been involved with enough local tourism initiatives to know that, in many cases, the advisory boards and boards of directors of DMOs are made up of hotel representatives that eagerly focus the long term strategy towards their own marketing goals.
Why shouldn’t they? After all, they are the ones who have to collect the tax, right?
The small businesses, predominately tour and activity operators are often left feeling ignored and subordinate to the tax revenue generating hotels.
What most DMOs fail to see is that unduly focusing on hotel marketing is squandering the immense opportunity to influence travellers earlier in the buying life cycle.
Think about it, when are travellers choosing at which hotel they are going to stay?
Do they do it before they have decided where to go? I couldn’t find any statistics to show when in the buying life cycle travellers book their hotel stay, but I think it is safe to say that it is after they have already decided where they want to go.
In other words, there is no direct correlation between hotel marketing and the choice of destination. Since destinations are trying to influence travellers to come to them rather than a competing destination, marketing one’s hotels seems to have little impact on influencing the decision making process.
In the recent report on in-destination tours and activities, PhoCusWright found that certain tours and activities had a profound affect on the decision making process. Snow sports such as skiing, sporting events such as championship games (or the Olympics), and artistic performances such as band tours, are major drivers.
In these cases, the traveller is choosing a destination based on what they intend to do at the destination first. How the traveller gets to the destination and where they stay are ancillary to the activity.
Realistically though, these locales make up a small number of destinations.
So, what can destinations do to make their tours and activities drivers rather than add-ons to a trip? The first, and most important step is to expose as much of the long tail product as possible.
As I mentioned in my earlier article (Why the activity segment is an iceberg of Titanic dimensions)Â the majority of tour and activity product lives below the surface and off the radar of most travellers until they are in destination.
The study showed that print is still an important channel for in-destination activities. In fact, 36% of active travellers used brochures and 39% used printed guide books as their shopping method for activities.
The most important shopping method, however, remains the web, with 80% of active travellers opting to search for activities on-line. For those activity providers savvy enough to have a website, this is good news but clearly, there is a large number of businesses that currently have no influence on the decision making process.
The first and most important step a DMO can take is to engage with their small business members. Some DMOs are starting to make concerted efforts to educate their stakeholders and to bring more of the long tail tour and activity product to the surface (ie. the web).
The Australia Tourism Data Warehouse (ATDW), is one excellent example of an initiative to bring all members of the tourism industry to a higher level. The ATDW Tourism E-Kit is a multi-part workbook that is freely available to all tourism businesses and provides a step by step guide to getting a tourism business on-line.
The E-Kit was commissioned by the ATDW and developed by Fabienne Wintle and her team at UntangleMyWeb.com, a tourism consulting company in Queensland.
I mention this specifically to point out that there are, in almost every destination, those in the community that have the expertise to help put these tools together. The E-Kit stands out as one of the best examples of educating and engaging small business and should be emulated by all DMOs.
The long term benefit to the tourism industry is the increase in content (text, photos, and videos) generated by these operators and their customers that can then be used for the purposes of marketing destinations at all levels; nationally, regionally, and locally.
ATDW has also developed a program called Tourism Exchange Australia (TXA) which is a distribution platform. Software vendors can connect to the TXA for the purposes of exposing their customers (activity operators) to larger distribution opportunities in the Australian market.
A structure like TXA in other countries could serve as an aggregation tool for increasing distribution of long tail products. Unlike the TXA model, however, which uses a proprietary data structure and a private partner, I believe a public and open model would have wider adoption.
Of course, I am biased given my preference for Open Travel XML messaging.
Nevertheless, as more and more tour and activity products begin to surface, the more revenue opportunities will inevitably become available to the DMO.
Destinations, more than most other organizations, have access to the vast majority of local stakeholders. Companies like Groupon and Living Social would kill for access to most DMO’s Rolodexes.
Yet, these contacts and the potential they represent go largely untapped. Once operators make their products available, DMOs can use their budgets for the purposes of providing creative marketing opportunities that generate a return for their stakeholders and travellers alike. If the services are meaningful, relevant, timely, and measurable, businesses will pay for them.
In the end, DMOs need to recognize that marketing a destination is about influencing the traveller earlier in the travel buying life cycle.
This means giving travellers reasons to travel to their destination and that means working with experience companies. This also means that DMOs need to generate more of their revenues from the tour and activity segment.
Until there is equal representation from all segments of the tourism landscape both from a governance and revenue standpoint, destinations will miss the opportunity on an important local economic driver and they will continue to leave a sizable pile of money on the table.
NB: Author is CEO of Rezgo, sponsor of the PhoCusWright report and chair of the OpenTravel Alliance.
NB2: Photo Credit -Â Redwood Photography
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About Stephen Joyce
Thanks for the insights and info!
Question: When you mention the stats on how people research travel, are those from the same PhocusWright study you cite earlier?
Can you offer any more info about where those figures come from (e.g. population surveyed, numbers, etc.)?
Yes, the data comes from the PhoCusWright study. The consumer data came from 1200+ travellers, the supplier data came from 340 companies. There is some data that is freely accessible through the executive summary but all the good stuff is in the report you purchase.
Thanks for the reply! Figuring out who’s using print vs. web is such a critical factor in figuring out where to channel DMO marketing dollars. I’m sure there will always be overlap (people who use both). Not sure the print number is shrinking, but I know the web number will be growing faster soon.
Cheers!
Fantastic article. I learned so much and will be adopting concepts. I work for a DMO in Ontario called Bruce County Tourism with a powerhouse social media brand called “Explore the Bruce”.
I have just started an educational series around marketing topics for our local businesses. Have a peek at the first in my series:http://bit.ly/gFV6Rc
Your article stating the great example of The Tourism e-kit supports my direction and gives me incntive to continue. I have gotten a lot of praise from people for starting this helpful resource and hope to have it as immense as the e-kit. Thanks for your article.
Thanks a great resource you’re building Gem. There are many other resources you can pull from as well. Consider following @sheilas @beckymccray and @andrewghayes on Twitter, all good resources.
Do they have some european or french cies in the data comes from the PhoCusWright study?
PhoCusWright did include some companies who operate in Europe, but all the consumer data is U.S. based. The numbers are all based on the U.S. market as well. I hope (fingers crossed) that now that PCW has done the study for the U.S. market that we might see a study on the European market too. This would be useful now that U.S. numbers exist to see how they compare to Europe and elsewhere.
Stephen you’ve done a great job summarising the facts around ATDW and the e-kit.
Reasonably often DMOs (or their consultants) in other countries contact me to learn the secrets of the ATDW platform, hoping to get a copy of the data schema or rights to the e-kit for their industry. What I share with them is neither of these things, but an outline of the key factor in keeping the ATDW alive and evolving over 10 years, and that’s the commitment of all DMOs (State and Federal level) and their collaboration. The DMOs in Oz, who own the ATDW, have been remarkable in their ability to put aside their State parochial differences to allow the platform to keep evolving for the benefit of the industry at a national level.
The DMOs have then pursued individual strategies to leverage the national ATDW in their State and regions…at a local level.
Whilst it’s not always easy to maintain full synergy across this federated system, ultimately wisdom has prevailed when it comes to the strategic decisions around content, technology and education to allow us to keep adapting stay relevant with the market.
I like to give credit where credit is due and you’ve certainly done an amazing job with ATDW. I fully appreciate that it can’t be easy to bring everyone to the table but you have proven that it can be done.
Hi Stephen…here is an overview of Porter’s tourism cluster model:
The development of a regional cluster promotes local competition while simultaneously “encouraging…innovation, growth and productivity” of organizations within the cluster; therefore enhancing the overall quality of products within the cluster. Porter asserts that by participating in a cluster, organizations and stakeholders can take advantage of economies of scale and maintain autonomy without expending significant individual resources (Porter, 1998, pp. 78, 80). However, overcoming traditional competitive tendencies and building trust across disparate stakeholders within a cluster is a significant challenge, not to understate the point. Stakeholder education and awareness should be the first strategy initiated towards overcoming stakeholder conflict. As a part of this process, highlighting the benefits of collaboration to stakeholders may enlighten those with disparate perspectives. Chinyio & Akintoye (2008, p. 599) advise that among the many benefits of stakeholder integration, gaining commitment, facilitating empowerment, improving communication, resolving conflicts, and developing trust are identified as prominent potential outcomes of a successful stakeholder integration process towards building community social capital.
Jackson & Murphy (2002) provide a comparison of the traditional industrial districts framework with Porter’s 1998 competitive cluster theory, exemplified through the introduction of seven new characteristics making up Porter’s theory. While the industrial districts framework provides a foundation for building destination competitiveness, Porter’s new characteristics identify the need to recognize and emphasize the competitive advantage that may be realized by creating interconnections between heterogeneous actors within a defined geography. This may be exemplified in the tourism sector through the promotion of “local heritage and sense of place distinctiveness as market attractions” (p. 38). Keeping in mind that Porter suggests that it is dissimilar but complimentary product and services vendors which differentiate a cluster from a homogenous group of similar competitors located in an industrial district. Furthermore, in order to avoid the ubiquity of global commoditization, Jackson & Murphy highlight Porter’s assertion that “Cluster development efforts must embrace the pursuit of competitive advantage and specialization, rather than attempt to imitate exactly what is present in other locations. (p. 39)”
Chinyio, E., & Akintoye, A. (2008). Practical approaches for engaging stakeholders: findings from the UK. Construction Management & Economics, 26(6), 591-599. doi:10.1080/01446190802078310
Jackson, J., & Murphy, P. (2006). Clusters in regional tourism an Australian case. Annals of Tourism Research, 33(4), 1018-1035. doi:10.1016/j.annals.2006.04.005
Porter, M. (1998). CLUSTERS AND THE NEW ECONOMICS OF COMPETITION. Harvard Business Review, 76(6), 77-90. Retrieved from Business Source Premier database.
Interesting that the one tourism source mentioned is Australian. Those clever Aussies.
Hi Stephen,
. Excellent article, full of thought provoking yet refreshing content. The ATDW and state tourism organisations did a tremendous job with the Ekit. It has reached many operators and is a real stepping stone with allowing them to fully embrace the web. However we have realised during our training workshops over the country that many of them need more than a workbook resource. This lead us to develop MyWebSchool (www.mywebschool.com). MyWebSchool is an online learning environment for tourism operators allowing them to access downloadable resources (such as how to market their tourism businesses on facebook), listen to interviews but more importantly it is a hub where they can get support from tourism marketing experts who will answer any questions they may have.
I am blushing, thanks for the mention
During my tenure as Market Intelligence Manager in a Queensland DMO I fully experiences the bums in bed focus you described, especially since many of our executive staff came from various hotel backgrounds. Lodging Occupancy is also much easier to report on than tour occupancy, unfortunately.
It is rare to see the tours and attraction sector of our industry being given the same weight as lodging (theme parks being an exception) but maybe an analysis of the ROI of the “long tail” (being tour and activities operators) would open some eyes and give more consideration to the sector. After all, that is where our travellers spend their “days” and make their memories.
I totally agree with the concept of Destination First however spending the $ together to promote a destination first isn’t as appealing to the majority of business owners as measuring the individual returns is much harder that way.
Looking forward to your next articles.
Fabie
I’m late to the convo, Stephen. I agree with much of what you’ve pointed out – especially the part about helping more activity providers with market readiness. I also agree that a large part of DMO advertising features hotel partners rather than activity providers. There are many reasons why this is so.
In my experience, hotel tax revenue / collection plays a small, if any, part in hotel-focused DMO advertising. I think most DMO types and hoteliers will agree that visitors choose a given destination based on the experience they want rather than the hotel where they will stay.
A challenge is that most of the reasons people choose a given destination are tough to monetize. Our research has found the main reasons people choose to visit are largely intangible like relaxing, visiting friends/relatives, sightseeing, the beach, etc. Attractions, tours, and activities tend to be chosen when our visitors arrive.
Another challenge is that DMOs coop advertising makes for a situation where partners must “pay to play”. Most activity providers do not have adequate marketing budgets to participate when hotels do. As a result, many activity providers openly admit that they rely on hotels for referrals and package promotion.
Having said all that, we’ve just moved from a membership model to a stakeholder model. This will allow us to work better with activity providers and other clusters to develop marketing programs that make sense for them from the ground up. We’ll have a team member dedicated to working with these clusters and we’ll invest hotel tax funds to help offset costs.
Exciting days ahead!
Most DMOs are not familiar with new internet-based technologies, and have not had sufficient opportunities to learn about and evaluate these dynamically changing technologies. Therefore, the aims should be to demonstrate how educational content has developed to provide tourism with basic training in new technologies, and to improve the delivery of additional training by discovering their opinions, constraints and needs regarding the adoption of tourism technology. The lack of time to learn, and funds to implement technologies, must be indicate as the greatest constraints that DMOs have. Implications for effective learning and content development should be discussed.
Although no studies have explored ways to design special curriculum for teaching DMOs, how to increase the level of use, and employees’ familiarity with tourism technologies, the role of higher education cannot be neglected. Focusing on the context of higher education, two implications can be drawn in terms of improving DMOs’ ability to adopt new technologies for their organisations. First, there is no doubt that DMOs’ employees need to have training to improve their level of familiarity with new technology. Although a diverse array of Web 2.0 applications has been introduced recently there has not been enough attention on how to teach their use to tourism professionals. Second, while most studies have focused on current students, content development for educating DMOs has been largely neglected. What students need to learn for their future career may not be equal to what DMOs need and want to learn. Therefore, effort should be made to develop content for DMOs based on their needs. More importantly, the content needs to be modified and updated regularly; taking into consideration the changing nature of Web 2.0 and the industry’s evolving reaction to it.
Tourism Technology
Tourism Technology is a term that encompasses all social, cultural, managerial, and value-adding activities of the tourism industry. Tourism Technology also incorporates and encourages technological advancements and economic development in the tourism industry. “Tourism Technology”, initially based on the concept of cultural technology, is a more comprehensive term covering knowledge used to add to the value of tourism products on a micro level and the management of the travel and tourism industry on a macro level. New tourism products are also the end result of tourism technology combining with other industries. These include medical tourism, educational tourism, agricultural tourism, marine tourism and the application of information technology to the travel and tourism industry. The term “technology” can easily call to mind scientific achievements, computer graphic skills, special effects and other engineering-related images. However, “Tourism Technology” encompasses the integrated fields mentioned in the previous paragraph, statistics, managerial and socio-cultural know-how, and skills that the tourism industry can adopt to design, produce, and market various tourism products. In addition to coordinating various aspects of human resources in the travel and tourism industry, “Tourism Technology” describes a comprehensive field containing but not limited to such widely referred to subjects as entertainment technology, contents technology and creative technology.