Background

Throughout this document the term "CVB" is used to represent any organization that is designated by a respective municipality's government, to sell and market that city or destination to the meetings and tourism markets. The following background information was extracted from the International Association of Convention and Visitors Bureau (IACVB), www.iacvb.org - April 2005:

Revenue Realized by Cities from Tourism Industry

Travel and tourism enhances the quality of life for a local community by providing jobs, bringing in tax dollars for improvement of services and infrastructure, and attracting facilities like restaurants, shops, festivals, and cultural and sporting venues that cater to both visitors and locals. Travel and tourism is one of the world's largest service exports and largest employers. In the U.S., for example, travel and tourism is the third biggest retail sales sector. The industry contributes more than $545 billion annually to the nation's economy and generates $94 billion in tax revenues (2001 figures).

From the 2004 ExPact Study, spending averages per an event with exhibitors:

• Per Delegate: $945
• Per Exhibiting Company: $6,753
• Event Organizer: $454,673

Indeed, travel and tourism represent significant economies in many cities/destinations and CVBs are a key drivers to the growth of the industry.

CVB's Financial Profile:

Funding: The average bureau is funded primarily from public sources (84%), specifically, room taxes. Private sources of funding (16%) come from such items as membership dues, advertising, promotional participation, print and co-op advertising, donated (non-cash) services, interest, and building revenue.

Expenses: Bureaus spend more than half of their budget on sales and marketing efforts (28% for conventions and 25% for tourism). The remainder is spent on administration expenses (19%), communications (9%), visitor services (6.5%), membership (3.5%), convention services/housing (3.5%), and other expenses (5.5%).

Source: 2003 CVB Organizational and Financial Profile Report, IACVB Foundation, December 2003

Overview of CVB's Services

Core to a CVB's mission is promote the city/destination to meeting professionals, the travel trade and/or leisure visitors to positively influence visitor volume. Most CVBs are not-for-profit organizations representing a specific destination. Most are membership organizations bringing together companies that rely on tourism and meetings for business.

 In addition to sales and marketing programs, CVBs offer numerous services to meeting professionals, travel trade and leisure visitors. Among its many areas of expertise and service for meeting professionals, a CVB:

• Markets the city to encourage organizations to hold their meetings in that city
• Assists groups with meeting preparations and logistics by utilizing contacts and relationships within a city's governmental and hospitality industry communities
• Provides promotional materials and expertise to build attendance at conferences/events
• Organize and assist in management of hotel room blocks CVBs can/often serve as the official point of contact for convention and meeting planners with the city.

CVBs represent the gamut of visitor-related businesses, from restaurants and retail to rental cars and racetracks, as well as city officials and departments. Therefore, they are responsible for introducing planners to a full range of meeting-related products and services the city has to offer. Basically, they match needs to a city's resources. Only five percent of CVBs run the convention center in their location. Nevertheless, CVBs work closely with local convention centers and can assist planners in getting what they need from convention center staff.

The costs for services of a CVB are provided out of the various revenues collected from by transient room tax, government budget allocations, private membership or a combination of any or all three. Michael Gehrisch, president of the International Association of Convention & Visitor Bureaus (IACVB), points out, "Convention bureaus are both a hotel's and a meeting planner's best friend. They don't charge either one, but book business for the hotel without a fee and provide the same service, for free, to planners."

CVBs make planning and implementing a meeting less time-consuming and more streamlined. They provide meeting planners with expert local knowledge andgive meeting planners access to a range of services and packages. Before a meeting begins, CVB sales professionals can help locate meeting space, check hotel availability, and arrange for site inspections. CVBs can also link planners with the suppliers, from motorcoach companies and caterers to off-site entertainment venues, that can help meet the prerequisites of any event.

Scope of the Issue

CVBs, in varying degrees, are adapting to the changing marketplace in order to market their cities and increase the expenditures and tax revenue from visitors/meeting attendees. CVBs play a vital role in the education and promotion of their destinations, but are facing challenges in the manner in which they are able to sell and market their destinations, as it relates to changes in distribution channels, funding and resources. Moreover, there is an opportunity (be it for PCMA, or another Industry Resource such as IACVB) to engage the public (press, city leaders) on the value of the tourism/meetings industry to their respective municipality. Once better educated on the value of the industry, the CVB should be armed with increased support from and partnership with the constituencies in which they serve and to whom they are held accountable.

• CVBs have recently faced challenges in the greater public and civic leaders' understanding of their roles, relevance and return on the City's investment.
• From city to city, CVB services to meeting planners often differ contributing to industry confusion on the value of a CVB.
• In the last four-five years, more CVBs have been under greater scrutiny from their respective press, public and civic leaders
• Some CVBs have been criticized for certain financial expenditures and business practices in the name of client relations and marketing of the city - examples include but are not limited to:
• FAM activities (client events in the respective city),
• Expenditures at industry events (dinners, golf/spa packages, theatre/shows),
• Gift-giving (including the financial support of other non-profit organizations, i.e., foundations

Budgetary constraints on city governments are reducing the financial investment allocated to CVBs and consequently driving different CVB models. In some cases, cities have decided to reallocate the funding and responsibilities of CVB to other marketing/sales teams within the city (ie convention center personnel), and in other cases cities have redirected funding to other city departments such as parks and recreation.

Scenarios

Risks

There are some members of PCMA who do not use of the various services offered by CVBs. Some of these meeting organizers/professionals, as well as others who DO take advantage of CVBs' services, may believe it is not within the core mission of PCMA to allocate time and finances towards advocating support of the CVB community.

There are also companies in the meetings industry and members of PCMA that offer tools and services similar to, and sometimes competing with, those offered by CVBs. Some of these companies may also not agree with PCMA moving forward with resources allocated to support the CVB community.

Benefits

The above risks, and possibly others unforeseen, are outweighed by the opportunity to broaden the awareness of the economic impact CVBs drive. The better funded the CVB, the greater resources there are to service the meetings and conventions, meeting planner and meeting attendees.

Municipalities depend on CVBs. Their economies would be negatively impacted due to decreases in conferences and conference attendees. "Delegate spending" (direct and non-direct) and sales/hotel tax revenue from the meetings industry employs large percentages of citizens and supports various city services.

Organizations that place meetings in various communities have come to depend upon the various services and expertise offered by CVBs. Successful implementation of a meeting's logistics and promotion of a meeting to potential attendees could be in jeopardy if CVBs are no longer able to offer services due to restrictions or elimination of funding.

Meetings industry organizations (such as PCMA and MPI) have come to rely on the financial resources of CVBs to conduct business they deem as core to their missions. For example, regarding PCMA revenue:

• CVBs have contributed 58% of Convene's advertising revenues to date ( 4/1/05) in 2005 -- 52% in 2004;
• CVBs contributed 65% of all sponsorship revenues for the 2005 Annual Meeting;
• CVBs comprise half of the sponsors for the 2005 Partnership Summit;
• CVBs are PCMA's single largest group of advertisers and sponsors, far exceeding all other supplier categories.

If CVBs funding is impacted negatively, it is likely they would decrease their involvement (exhibiting, attendance, sponsorship, advertising) in various elements of the industry's trade organizations.

Next Steps

PCMA should, in partnership with other meetings industry organizations - namely IACVB - research the financial impacts further and provide a "tool kit" (specific/relevant data, templates for letters, etc.) to CVBs to assist in their own, respective campaigns to educate their elected officials, board members, and other community members on the economic gains realized by their community due to the CVB.

PCMA should engage IACVB and, in partnership, proactively communicate the value of the meetings' industry and CVBs to communities at federal, state and municipal levels. Via "press releases" and "talking point" information in template forms for use by CVBs, hotels, convention centers, and association/corporate meeting planners for use in respective local, state, and regional communities. Most direct impact on CVBs, however, is being felt and should be focused at the local/municipal levels.

PCMA should encourage CVBs to provide consistent services from city to city creating an opportunity to better serve the meeting planner.

PCMA should educate its members on the important financial contributions CVBs make towards PCMA events and the Education Foundation, as well as other important initiatives that PCMA supports (i.e., APEX).

CVB Subgroup members:

Chair: Paul Miller, Director of Sales, Nashville Convention and Visitors Bureau
Sidney Chang, Associate Director, Trade Show Association Sales, Mandalay Bay Resort and Casino
Leslie Hastings, CHSP, Account Executive, Washington, DC, Detroit Metro Convention and Visitors Bureau
Andrea Hendricks, Director, Chicago Area Office Atlanta Convention and Visitors Bureau
Patty Richbourg, CHSE, CHME, Regional Director, HelmsBriscoe
Janet Williams, Convention and Meeting Sales Manager, Grapevine Convention & Visitors Bureau