The Hospitality Industry's Relationship with DMOs During COVID Times
By Justin Taillon, Professor & Department Head at Highline College and Meagan McGuire, VP Sales & Services at Seattle Southside Regional Tourism Authority
Destination Management Organizations (DMOs) such as Regional Tourism Authorities (RTAs), Chambers of Commerce, and Convention and Visitor Bureaus (CVBs) serve the communities they exist in by enhancing the local economy of hospitality and tourism service providers. The primary manner in which DMOs create this enhancement is by attracting visitors to our destinations and hospitality businesses.
DMOs are primarily funded by hotel occupancy taxes (hot taxes), membership dues, improvement districts, and other government resources. Yet, during COVID-19 much of this funding has dried up. This means that while our businesses need more than ever to be able to rely on DMOs, the DMOs are hurting as much as our operations.
Over the past twelve years I have had an opportunity to work with approximately fifteen DMOs, in a variety of capacities. From conducting 2-3 week trainings to creating and implementing education programs over periods as long as 9 months, I have had an opportunity to view the inner-workings of many DMOs. I have consistently departed these projects with an instilled appreciation for the work these individuals dedicate themselves to in their communities. I know that many individuals reading this have DMOs with dedicated individuals working tirelessly to sell your hotels and communities. You know what the DMOs you work with do for your destination.
As governments tighten their financial purse strings, DMOs are facing an uncertain future. Every single DMO operator I have spoken with has had their budget slashed. They are being forced to make difficult decisions, from layoffs to closing ancillary support systems. Some DMOs are facing permanent closure. This is something that would create a long-term negative impact on our businesses as well as our communities.
How DMOs Are Helping Hospitality Businesses During the Pandemic
The United Nations World Tourism Organization (UNWTO) is urging governments to not only assist DMOs in recovering from the pandemic, but to grow back better (UNWTO, 2020). The UNWTO recognizes that the full impact of COVID-19 on hospitality and tourism operations will be unknown for many years, but they have been clear and consistent in the direction they believe communities should take with their local DMOs. UNWTO Secretary-General Zurab Pololikashvili recently stated, "We must support the sector now while we prepare for it to come back stronger and more sustainable. Recovery plans and programs for tourism will translate into jobs and economic growth" (UNWTO, 2020).
Following UNWTO recommendations, DMO operations during the pandemic have continued. As business operators we may have much lower than normal occupancy in our hotel properties but DMOs are focused on community well-being and building future demand. They are continuing to forward extensive support to our hospitality operations even though their funding and resources are dwindling. Here are some examples of current DMO programs I have been privy to in recent months:
- DMOs are creating immediate revenue generating programs. For example, DMOs are continuing to support our businesses by selling vouchers for future visitation or producing virtual activities to support what can be sold right now, such as take-out dining.
- DMOs are continuing to market our destinations with sensitivity to the audience and pivoting to meet market conditions, creating demand for our businesses when travelers do make a destination decision in the future.
- DMOs are providing data to our businesses about traveler sentiment, travel spending trends, and new target, secondary, and tertiary markets. For example, driving trips have increased while long-distance travel has been hindered greatly. Our businesses may not be tapped into towns and cities within driving distance of our location the way DMOs are.
- DMOs are centralizing and coordinating recovery efforts. While we focus on our business operations, they are marketing and coordinating health and safety campaigns, economic recovery strategies, and other supportive efforts between businesses in communities.
- DMOs are creating new education programs, environmental and tourism sustainability programs, and economic development programs for their communities, with hopes of destinations being better for visitors and host communities after COVID-19 than they were before.
The aforementioned programs were based on creative ideas that individual DMO operators presented. Their ideas stem from advice the UNWTO has forwarded to all DMO operators. The UNWTO (2020) identified three primary areas that DMOs should focus on during the COVID-19 recovery:
- Managing the Crisis and Mitigating the Impact: Key UNWTO recommendations in this area relate to employment retention, entrepreneurship support, ensuring liquidity, education and skill development, and a review of funding and regulation models (e.g. taxes, charges, regulations). The Recommendations are made as a global economic recession looks likely. Given its labor-intensive nature, tourism will be hard hit, with millions of jobs at risk, especially those held by women and youth as well as marginalized groups and are employed in greater numbers in hospitality and tourism than other sectors (e.g. 51% of hospitality workers in the USA are women).
- Providing Stimulus and Accelerating Recovery: DMOS are in a unique position to accelerate recovery. To accelerate recovery it is important to provide financial stimuli, including favorable tax policies, life travel restrictions as soon as the health emergency allows for it, promote visa facilitation, and boost marketing and consumer confidence. Tourism, as a facilitator of a greater economic multiplier than other sectors, should be a focal point of recovery from COVID-19.
- Preparing for Tomorrow: Tourism has unique ability to lead local and national growth. We should use the COVID-19 shutdowns and economic difficulties to build resilience, as we learn lessons from the crisis. DMOs by definition are well-suited to lead our preparedness for tomorrow.
How Hospitality Businesses Can Help DMOs During the Pandemic
DMOs are working hard on our behalf during the pandemic. They have been working for our businesses for decades. While our businesses are hurting, DMOs are our teammate assisting us recover. DMOs may not make it through this pandemic without assistance though. Existing funding models could deter their operations. There has never been a more necessary time for us to assist our local DMOs. But what can we, as hospitality operators, do?
- Advocate for your DMO: Many DMOs are funded with hotel occupancy taxes or assessments, often at the discretion of City, County, or State officials. This DMO revenue source is, during normal circumstances, continually threatened by competing interests. Now, with the tax source dwindling, the threat is volatile. DMOs need their partner businesses to advocate for them and defend their funding so that they can continue to drive visitation. Hotel occupancy taxes and assessments are collected to support tourism marketing that then replenishes the tax. Elected City, County, or State politicians need to hear from you, as their hospitality business constituents, on the importance of tourism marketing.
- Communicate with your DMO: Destination marketers are passionate about promoting your destination. Instead of holding back right now due to a reduction in travel, they are strategically pivoting their messaging. Marketing content and press releases are now focused more on virtual experiences, unique personal stories, and innovative ideas. You can help by communicating with your DMO details about the new and interesting ways your business has adapted.
- Understand that a rising tide lifts all boats: Without a coherent story and coordinated stakeholders, your destination loses its brand. The DMO is the region's brand manager, Individual businesses sometimes find it difficult to recognize 'what's in it for me' when it comes to destination marketing. Now more than ever, it is important to understand that DMOs work collaboratively with hospitality businesses, government agencies, and other stakeholders for the greater good of the destination as a whole, and the marketing messaging must be understood as such. Specifically, messaging is designed to 1) speak to an outside-the-region audience, 2) attract visitors to the destination, not necessarily to a particular business, 3) focus on the things that make your destination unique and make people want to visit, and 4) is not equally weighed and may not represent all businesses similarly. Your business may compete on the ground level with other businesses, but more visitors as a whole will make business better for everyone, from the homemade pie shop to the mega-museum.
The hospitality and tourism industry is facing more uncertainty than we have felt in decades. We need to work together as a community to bring patrons to our communities. Our community organizers are DMOs. We can rely on them to leverage resources and collaboration wisely for the betterment of our communities and businesses. These organizations complement our business operations and extend our resources to local global markets alike.
Yet DMOs are facing closure due to financial realities. We can either allow our DMOs to fall by the wayside, or we can answer the UNWTO's call and work with our DMOs to ensure their sustainability. This paper outlines how we can operationalize the purpose and reasoning of DMOs and assist them in maintaining operational effectiveness. It is a win-win dichotomy for hospitality business operators, so long as DMOs continue to thrive.
UNWTO (April 1, 2020). UNWTO Launches a Call for Action for Tourism's COVID-19 Mitigation and Recovery. United Nations World Tourism Organization. Retrieved October 3, 2020.