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Tourists visit the Cloud Gate sculpture at Chicago’s Millennium Park in 2019. Experts suggest that after COVID-19 restrictions are lifted, people likely will be tourists in their own cities or cities close for at least awhile.
When we spoke with Don Welsh, president and CEO of Destinations International, in late April, he acknowledged the plight the coronavirus crisis has put destination organizations in: “We’re all trying to figure out in our own respective cities, regions, countries, how do we respond? How do we work much closer with government officials than probably we ever have?” Welsh said that this period of uncertainty is particularly difficult for professionals in the destinations and events industry, who tend to be decisive and strategic. But, he added, “I think this is not a time where we’re in a position to say, ‘Okay, let’s go, let’s get back to holding meetings and turning on the tourism faucet,’ because of the uncertainty from a health standpoint.”
Here’s more of what he had to say.
How are your member organizations navigating this crisis?
I’ve really never seen such rallying by the industry as I’ve seen to date. We’ve truly been inspired by the innovation that’s taken place — members are down 70, 80, 90 percent of their former staff, but they still find a way to bring value to their community during some of the most difficult times in recent history.
Don Welsh
I think the industry organizations have galvanized extremely well — we’re all working together to address realistic timeframes as to when the meetings industry can get back on his feet and when that safely can be done. A lot of that is out of our hands until the scientific and medical community says we’re good to go.
The thing that is probably the biggest frustration so far for all of us, primarily for the U.S. destinations, is that we have 427 members of which 97 percent of those organizations are 501 C (6)s, and we’re still not being able to access any of the funds from the CARES Act.
By not having that and at least the assurance of a credit line or a loan to tap into, a lot of us, including Destinations International, didn’t have the luxury of not moving on furloughing and eliminating staff — whereas a lot of industries have had the luxury of knowing they had a credit line backup now and therefore they can maybe be a little bit slower on some of those big decisions.
We know that about 20 percent of our members have a runway of about 90 to 120 days of current reserves before things have to go to the next level — and what is that next level? Do organizations get shut down? Do they get rolled into either a city organization or another nonprofit? Do we go back to being extensions of chambers of commerce? In certain places that works really well, but that’s not been the norm. That has been the biggest challenge and frustration that we continue to have.
I’ve heard some say that the DMO funding model has been shattered by this epidemic. What are your thoughts about that?
That’s a really good question. Yes — unfortunately or fortunately. [Before this crisis, the model worked] fine because hotels and restaurants and attractions were doing well, but I think this [crisis] did show the vulnerability of destinations that are tied 100 percent to hotel taxes. For many, there’s zero revenue coming in and you don’t know when they’re going to get back up and they didn’t have the reserves to begin with.
So, for the DMOs of the future, what is the governance? What is their revenue structure? What is the fallback? As a nonprofit, you have to have adequate reserves. I think [as head of CVBs in Seattle, Indianapolis, and Chicago] we all fought to have anywhere from six months to a year [of operating reserves]. That was under less-drastic circumstances. That has sort of accelerated this whole use of reserves right now.
And even if a CVB has reserves, aren’t other local government entities tapping into them?
That’s happening now too. So even in the event there are reserves sitting within a CVB, a governor or a mayor may feel as though those revenues are more beneficial to the general fund to support the continuation their recovery efforts. And I can’t blame them for looking for monies that they need for survival.
The unfortunate thing is we’ve had such success around the world for the past almost decade now that in some cases, tourism and meetings were almost an assumed. You assumed your city was going to be full with meetings. You assumed that you’d run 90-percent hotel occupancy. You assumed you would have overtourism challenges.
Clearly, this [means a] total reset in terms of how we think about things. But governors and mayors will do whatever they need to do right now to access funds to support what they believe are essential services.
One of the things we’ve seen is that DMOS are reinventing themselves, and their role right now is focused on helping their local communities, especially local businesses. Moreover, rebuilding the destination experience will now be part of a DMO’s portfolio. What are your thoughts on that?
That’s a great question. I think that goes back to what we’ve been working on for about two years. Jack [Johnson, Destination International’s chief advocacy officer] started rolling out the community shared value proposition. How can a CVB be viewed with the same level of respect in their community as other nonprofits or organizations? How do you begin clearly articulating that there’s a direct correlation of not only jobs and economic impact, but the ideology of that community? How does a community get positioned?
As an example, some of the most brilliant minds in the world come to Chicago a few times of the year. Some of the greatest papers on cancer research are shared during ASCO [American Society of Clinical Oncology] or RSNA [Radiological Society of North America] conventions and Chicago has the bragging rights to say, this is where these meetings take place and therefore the city’s academic and medical institutions get the chance to piggyback on that.
So it gets down to how are we going to continue to serve that message. There are countless destinations that really are viewed in that capacity in their cities — that when the mayor or governor holds the discussion on economic development for their city, there’s a seat at the table for that person running that CVB. But the science of what we do also is misunderstood in a lot of places.
You can really see that when things have transpired of significance in a community in the past, it has been that DMO that was at the control center to communicate on behalf of the city what was taking place when the crisis was happening, and then, more importantly, what was going to happen in the days to come.
What do you see in terms of the road to recovery?
I think what we’re going to see here on a worldwide basis will be what we’ve seen in isolated cases before. First of all, people will begin to explore their own cities. They’re going to sort of test the waters and say, “Well, let’s go to a restaurant, let’s see how a movie theater is going to handle an audience.” Once there’s a comfort level that things are being done properly locally, I think the concentric circles will expand and people will then go regionally, then nationally, and then they go internationally.
My concern on the international piece is probably for the last 10, 15, 20 years — and particularly in places like China or parts of the world that somehow were not necessarily frequently traveled — we have become a borderless world. I think that’s been incredible. What concerns me, and I know many of my colleagues, is will we go back to being overly cautious about who can come to our country and where we’ll go? It will only be a matter of time before I think some normalcy returns in that area. That could take years for that type of trust and confidence to be realized again, and that clearly will then dictate how airlines ramp back up.
That will be, I think a very slow, pragmatic, thoughtful process that the airlines will take before they jump back into markets. Again, when [pre-pandemic] you run on 80- to 90-percent load factors and you’ve got record profits every month from all the major airlines, not only in the U.S. but around the world — we know how capital-intensive the airline industry is, and I think they’re going to be somewhat slow on how they’re going to get back into markets. And that will have a clear impact on the ability of destinations to realize tourism and meetings.
There seems to be general consensus that drive-to destinations will be first to recover.
I agree. Hopefully things are going to be a little bit green-lighted between now and early summer. I think people will clearly make the decision based on their own interpretation of what’s available from scientific and medical evidence, what they see in their local community, and how they process for themselves and their families how safe it is for them to travel.
I don’t think that can be hurried. I think there could be the greatest offers in the world and incentives to travel. But I think that that most people will have their own time process about what they think is right for them and their families.
And then business travelers have budgetary constraints — their employers may lack the funds to send them to meetings, conventions, and conferences.
Absolutely. My frustrations have been around [which industries have been appointed to the White House Economic Recovery Task Force]. Only Roger Dow, president and CEO at the U.S. Travel Association, is representing our industry, and there are three people from the cruise industry. I like to cruise, but I don’t know whether I would categorize the cruise industry is an essential industry since most of their boats are not registered in the United States and most of the employees that work on those boats are not U.S. citizens.
There’s not one person from the meetings and exhibition industry and I have clearly voiced my support for somebody in that area. That sector technically represents billions to the U.S. economy in terms of revenue and taxes and U.S. jobs.
If you were to look for any silver linings during this crisis, what might they be?
One is that the collaboration we’ve seen, as I said earlier, between the industry organizations has never been on greater display. There are countless webinars, discussion groups that are taking place on how collectively we can address this when the time is right.
Secondly, as I said to you, the innovation that I’m seeing at the city, state, regional, and federal level is absolutely inspiring — to see what people are doing under times of duress with much less staff and fewer resources. It’s also sort of showing that, if there’s an idea, everyone is willing to share it and benefit the industry.
The next thing probably will be that I believe that cities, states, and countries will never view a tourist, meeting planner, or a meeting attendee in our communities to the same degree that we did before the crisis. I think that when that convention attendee comes in with a group of people with their name tags on in a restaurant, that restaurant will say, “Wow, welcome back.”
I know the recovery will be long and hard, and I think as long as we continue to keep the collaboration that we’re seeing right now, we’ll get through it. We’ll learn from one another.
Some of these process changes are definitely going to benefit us long-term. I don’t think hotel rooms and airplanes will have ever been cleaner. What will be the universal housekeeping seal of approval that is scientific and medically supported?
I think there’s a lot of cool things that will benefit us down the road. But first and foremost, we’ve got to get people safely back to work. When people are safely back to work, they’ll feel comfortable about maybe taking that trip locally. I think the restaurant industry is going to be the first critical step. I can’t wait for some of the major theme parks to begin reopening — I think they also set a standard for safety and security.
Around the world people are understanding that clearly this is a pandemic, but hopefully with the help of the scientific and medical community, our government leaders can make the decision to get their cities, states, or countries opened within a realistic timeframe, because people do have to work.
Once that green light is given, I think everybody will have to interpret on their own when they want to travel and no one can make that decision for them. You can’t tell somebody to get on an airplane and fly to a meeting, and I think that companies and organizations will be respectful of those personal decisions along the way.
Michelle Russell is editor in chief of Convene.