What is the Next Evolution of the Destination?

As 2017 comes to a close, the future of the destination is at a crossroads with visitation numbers fluctuating and the roles and responsibilities of destination marketers shifting. We spoke with SLO CAL CEO, Chuck Davison, about these changes and how he sees this a affecting travel marketing in 2018 and beyond

US Visitation Fluctuation

Over the past few years, the United States has seen a continued large rise in travel. However, recently that rise has begun to slow.

“Tourism has been on the rise for eight years now with year-over-year increases, but we’re starting to see the markets level out,” Davison said. “If we go back a couple of years ago, we were seeing double digit increases, which became single digit increases last year and are now into the low single digits. In some parts of our destination we’re seeing a flattening. That seems to be a trend that’s happening US-wide. It’ll be interesting to see if that flat trend is going to continue or if we’ll see a bounce back. From a destination standpoint, that’s something we’re keeping our eye on and trying to manage.”

International tourism in particular has become problematic. The Commerce Department’s National Travel and Tourism Office reported that international visitation to the United States in May of this year was down 8.5 percent compared to May 2016.

“We’re seeing the international visitation of the United States fall, and it doesn’t appear like it’s going to have a resurgence in the near future,” he said. However, we look at international as a long-term investment. What we’re doing in the international markets today is not going to deliver business tomorrow, it’s not even going to deliver business 3 months from now. We’re planting seeds to drive awareness so that when people do choose to travel, we’re in that decision process.

What are some of the factors leading to this decrease? Some of it may be a natural fluctuation of the market, but according to Davison, some may also be attributed to new tactics being implemented in the travel space.

“A growth track can only continue for so long before it goes in the other direction,” Davison said. “This is the longest on-record sustained increase that we’ve seen in tourism according to US Travel. I think the other factor is, and we’ve seen this across the United States, that hotels have become way more savvy in how they’re managing their inventory. They’re taking less people but charging more, and that rate increase definitely leads to a depression in bookings. The experience hasn’t changed, but the price has, and that leads to a change in visitation as well. For the hotel, that makes a lot of sense, but in the hotel and municipal space that becomes a challenge. For every less person staying in a hotel, that means one less person in a restaurant, visiting a winery, or buying in a retailer. It also doesn’t lead to the generation of additional tax dollars in the market, which helps build bridges and provide infrastructure. It’s a tough scenario depending on which side you’re on. As the destination, we try to create a balance.”

Crisis Management

“We’ve had rain, wildfires, and hurricanes in the southern part of the United States,” Davison said. “Those are really big factors. For us, when we talk about California and the west, 2017 and the late part of 2016 has been a year filled with a lot of crises. The northern part of California is on fire right now; mass destruction is in place in two of our markets.”

Those familiar with California travel may remember that last November a major highway in the state was shut down due to mudslides and a bridge collapse. Despite a parts of that road opening, large portions that allow access between parts of the northern part of the state into the central part remain closed leading to decreases in tourism for areas that have been cut off.

“The challenging part is that all of those items are ones we have zero control over,” he continued. “We can be ready for crisis communication, and we are. But outside of a few days, there’s no way to forecast when a hurricane is going to hit or a fire is going to start. Those are tough trends that we have to manage. They seem to be amplified for us in California over the last couple of years, and they’re things that lead to fractures in business and people’s abilities  to get here.”

The Impact of Technology

Another major trend in 2017 that will lead to further change in 2018’s tourism market is technology - from marketing platforms to the continued rise of mobile technology. Davison and his team at SLO CAL have moved to an almost 100% digital-focused marketing strategy to meet travelers needs who have come to expect destinations and travel brands to be just as tech savvy as they are. While this may be a challenge for marketers who haven’t yet evolved their tactics, this also provides an immense amount of opportunity to the ones that have.

“The metrics in this space have become so robust in the last few years,” Davison said. “You’re able to really drill down to find the segment of people who are interested in your product and serve them the right messaging at the right moment to create the right response. Year over year technology continues to amaze us and allow us to function as a destination better by being more accountable for the dollars we’re spending and how we’re putting them to work for our market.”

Davison specifically pointed to a new platform his team has been using, Arrivalist, which enables marketers to track the digital content they publish to see how it performs and if or when the people targeted arrive at the destination.

“That kind of technology is really helping DMMOs carve their space out and prove a direct correlation between our touchpoints with the consumer and our efforts,” he said. “That helpful not only from an optimization standpoint but also to explain the benefit of our organization and our efforts.”

Changes in marketing technology is not the only thing changing travel though - the shared economy has been a heated topic in the travel space over the past couple of years. However, it seems the wild west style may be coming to a close as key players strike deals with destinations and local governments. According to the San Luis Obispo Tribune, Airbnb will now collect a 9 percent transient occupancy tax from renters and send them to the county. These fees are also applied to hotels and other lodging providers.

“We’ve got more than 3000 vacation rentals in our market, and it’s a great way for people to travel,” Davison said. “I think the amplified focus on the shared economy space is one to keep our eyes on. Obviously, Airbnb is a big player in that market, and our county just struck a deal with Airbnb to collect taxes on all lodgings in our county.”

The Evolution of the Destination

The last, and possibly largest, shift destinations should be paying attention to in the upcoming year is the potential evolution in their own role when it comes to their location. Davison shared his views for how destinations can and should move from the destination marketing organization model to being a destination marketing and management organization to own more of the management and facilitation of the destination.

“We take a proactive approach in the development of the destination to put ourselves and our community in the best position to win in the decades ahead,” Davison said. “I think getting more involved and take ownership in that space is going to be a big push for destinations. Our role really is and should be bigger than placing ads for the destination.”

How is this already happening in SLO CAL?

“We’re looking at what our destination needs to look like countywide 20 or 30 years from now,” he said. “What infrastructure is needed to get where we want to be? What’s the asset development in our county look like? How do we avoid the over-tourism scenario that’s happening in so many markets across the world?”

This also means pushing back on certain expectations placed on destinations - such as driving bookings for hotels. While Davison acknowledges that destinations that specifically focus on meeting and conference spaces may not have an option, many of the leisure destinations can and should avoid being responsible for bookings.

“A lot of times, destinations are pigeon-holdes into being a booking agent or being responsible for the old phrase of delivering heads in beds, and I think that’s a problematic space for destination marketing management organizations to play. The reason I say that is DMMOs don’t own brick and mortar facilities for the most part. The ability to attract a visitor to a destination and cause that visitor to book a room or activity is somewhat limited. If I get a lot of people to our destination who are willing to pay $200 a night for a room, but the lodging establishment charges $210 a night for a room, I can’t do anything about the fact that the consumer is not going to book that property. And so I think when DMMOs push themselves to be the booking agent or make themselves accountable for heads in beds, if the strategy of the lodging property doesn’t align with the overall customer being delivered into the market, DMMOs are going to find themselves in a very compromising position.”

But how does one make this argument if their partners are pushing for more destination ownership of driving bookings? Davison encourages education - ensuring that all parties involved understand both goals and roles, using the travel marketing funnel as a key artifact to help align all parties.

“We talk a lot to our members, board and elected officials about the roles and responsibilities of Visit SLO CAL as a destination management and marketing organization and the different role that plays versus say a hotel,” he said. “It helps them understand that when we go out internationally or even to larger domestic markets in the US, we’re not talking to a consumer about how they should come to Slo Cal and book the Marriott. That’s not the conversation that’s happening. We’re talking to the customer about coming and experiencing the destination. Hotels have come a long way in understanding that for the most part, outside of key resort destinations, people don’t travel to experience properties. They travel to experience the destination. If people are struggling to get to that funnel, they really need to help educate those entities starting with helping them understand the tourism ecosystem.”