With its main source of revenue down by more than 4 percent, the Newport County Convention & Visitors Bureau had to make some tough choices last year to balance its $2.3 million budget.
Evan Smith, the bureau’s president and CEO, reduced advertising and did not send representatives to as many trade shows as the prior year. He pared back some employee benefits. And, most painfully, he let go two staff members.
“I had to lay off two talented people, and I didn’t want to do it,” he said.
Smith is not alone. Across Rhode Island, the recession is forcing the state’s tourism bureaus to tighten their belts and revise the ways they market the Ocean State to would-be visitors.
The six tourism bureaus are all funded to varying degrees by revenue from the state’s 6 percent tax on hotel rooms, splitting the revenue with municipalities and the state. Hotel tax receipts fell by more than 3 percent last year, according to the R.I. Division of Taxation.
In Newport, 86 percent of the tourism bureau’s budget comes from the tax on local hotel rooms, which brought in about $100,000 less in 2008 than the prior year, Smith said. He is expecting an even larger decrease of 7 percent this year amid a nationwide fall in travel spending.
Smith is currently preparing his budget for 2009-2010, and although he is not expecting more layoffs, the bureau’s board may impose a salary freeze. At the same time, though, “we still have a job to do,” he said. “We have to get people here.”
At the Providence-Warwick Convention & Visitors Bureau, hotel tax revenue fell 3.5 percent in 2008, and looks set to decline further this year, said Martha Sheridan, the bureau’s president and CEO. She has trimmed her $2.8 million budget by renegotiating advertising contracts, reducing employee benefits and modifying travel schedules. Although she has not laid off any employees, one vacant position has not been filled.
Sheridan emphasized that the drop was not caused by a decline in hotel occupancy but rather the lower rates hotels are charging to woo customers, particularly in Providence, where the total number of hotel rooms has grown in recent years.
Smaller bureaus are also feeling the pinch. The Block Island Tourism Council, which gets 95 percent of its $250,000 budget from hotel tax revenue, can no longer afford to contribute to the town budget for tourism-related expenses such as new trash cans. “Those are the things that, unfortunately, have gotten cut this year,” said Jessica Willi, the council’s executive director.
Instead, Willi – who is the council’s only paid employee – is focusing all her resources on the central task of promoting Block Island. “You always continue to market [the location] so that you’re in the best position when things turn around,” she said.
The revenue drop also highlights the need for tourism bureaus to partner with local businesses and municipal governments to leverage their resources, said Myrna George, president of the South County Tourism Council in Wakefield, where hotel tax dollars make up most of the $600,000 budget.
Value is in. While the City of Newport’s hotel tax receipts dropped by nearly 6 percent last year, revenue rose by slightly more than 1 percent at hotels (mostly in Middletown) in Newport County’s other communities. Smith attributed that to a new price consciousness on the part of travelers.
“Over the last 20 years, Middletown has built a number of mid-range and economy-class hotels,” he said.
He sees the same factors at work in the cruise industry, known for its aggressive pricing and all-inclusive packages. In 2008, 68,000 cruise ship passengers came through Newport, far surpassing the previous record of 57,000, Smith said.
Weddings are another bulwark against the downturn. “With all the challenges we’ve had in the last 12 months, the shining star has been weddings,” Smith said. “I thank my lucky stars that we have them, because without that right now this conversation would have been much different.”
Demand generally has not fallen off a cliff. The number of people staying in hotel rooms in downtown Providence was up 6 percent in 2008, according to Sheridan. But the growth was not reflected in the occupancy rate because of the increase in the total number of hotel rooms available.
A strong year for conventions also provided a boost to Providence. Major gatherings are planned years in advance, and many associations depend on having successful annual meetings, Sheridan said. Her staff is currently working to book conventions for two to five years from now, and she said their efforts have been successful so far.
The Providence bureau also has created new promotions, such as a “One-Tank Meetings” campaign that reminds companies in the Northeast that their employees can get to a corporate gathering in Rhode Island using only a single tank of gasoline.
All the bureaus are making a concerted push to attract more leisure travelers from nearby states and even other parts of Rhode Island. Willi said her pitch is: “You can get a world away, but it’s still so close.”
However, there may be fewer visitors from outside the country. International travel has been a growth area in recent years, but it is expected to decline this year due to the dollar’s renewed strength against other currencies, Smith said.
The downturn is also speeding up the transition of marketing dollars from traditional media to online advertising. Search-keyword ads are now the Newport bureau’s most effective advertising strategy, according to Smith.
Though their main source of revenue is down, tourism bureaus say the role they play is all the more vital in a downturn because they can provide expertise and support to businesses.
If there is a silver lining, it may be the bargain-basement deals available to those consumers who still want to travel. Willi said she has seen $300 hotel rooms advertised at $99.
“For anybody that has any expendable income this year, there are going to be travel bargains we’ve never seen before,” said Smith. “We will never see a year like this [again].” •
