Travel -Tourism – Marketing A Bright Spot in Rural America? John Keller.

Travel -Tourism – MarketingA Bright Spot in Rural

America?

John Keller

Tourism Defined

A segment of the travel market that consists of individuals and groups that are known as "free and independent travelers" or FITThis definition distinguishes FIT travelers from business travelers or convention visitors who typically travel when and where necessary, rather than choose a destination based on its individual appeal. However, in assessing economic impact, business and convention travel are normally included

Tourism and Leisure Characteristics

Tourism is one of the most sensitive of all economic opportunities relative to public resources. Without public sector investment, most tourism sites remain at the same scale with limited seasonal duration. A major exception is gamblingTourism and leisure returns major investments to the public sector and is heavily taxed by the government. Generally, the more money the public pumps in tourism investment – the greater the return in taxes and receipts.

Who Benefits?

Governmental Cash FlowsTourist or Leisure tax Increased sales tax receiptsEnhanced property tax returnsCMB & Liquor taxEntertainment tax

Tourism Segmentation

VacationsHoliday TripsBusiness Trips Including SalesRecreation and Leisure TripsGambling and GamingSportsResearch and Information - GenealogyConventions/Conferences

Top Tourism Demand

1. Eating and Drinking Places2. Places of Accommodation3. Recreation and Entertainment Sports Golf Theme Parks and Cruises

4. Airlines5. Local transportation – taxis and rentals

Top $ Economic Returns

Transportation and [Arrangement?]

Lodging

Food/entertainment

Retail Sales – specialties

Beverage and liquor

Primary and secondary attractions

The Context: The Nation

Almost every state (46 out of 50) counts tourism among its top three revenue-producing industries. This does not include Kansas and Nebraska!

Nebraska!

“I even thought that I was dead till I found out I was just in Nebraska.”

-Clint Eastwood

in “Unforgiven”

Redneck Institute

Stonehenge

Nebraska Car-Henge

Top 10 Tourist Destinations

1835

50

Top Five World Tourist Destinations

France Spain USA Italy China

In Parlance of Tourism

Its not where you go, its how much you spend

Its not how many people, its how many groups

Its not how much you spend in a day, its how many days you spend

Top 5 World Revenue Earners 2005 in Billions

84.5

36.733.5

2919.9

United States

FranceSpain Italy China

Let’s Get This Out of the Way

Tourism (generally a rural phenomena) in the U.S. can reach the very height of quality and plumb the depths of the disastrous

In other words – it can really suck

It can mine whole economies

It is generally not sustainable

It exploits cultures, people, workers, communities, and whole regions

At the Same Time We Really Enjoy It!

It can be Marginal

Flat Dumb

Or Faux Cultural

Genuine Amish County Store

The Old Standbys

The Who Gives A Damn Category of Tourism

Always Looking For the Can or Parking Space

Creating Amenities

“Asset theory of tourism” - successful tourism depends on the availability of some immobile attraction that people want to visit.

Popular tourist attractions are made rather than discovered.

Rural tourism is just not linked to outdoor activities. There is great diversity in tourism activities- ethnic, historic, special attractions, shopping, eco-tourism, religious events, etc.

And Yes – Kansas Land of Ahs

The fun started immediately when I crossed the Missouri River into Atchison, in the northeast corner of Kansas, and found that the town was named for a senator - from Missouri. In fact, David Rice Atchison was president of the United States for 24 hours, beginning at noon March 4, 1849. He snoozed for most of his term.

Home of the Black Squirrel

In 1987, the "Black Squirrel Song" became Marysville's, Kansas official anthem:

"Lives in the city park, runs all over town

The coal black squirrel will be our pride and joy

Many more years to come!"

Twine in Kansas

Near Insanity

Goodland

Rocket Fest at Argonia

Weirder & Weirder

Samuel P Dinsmoor at 89 & his 20 year old wife and year old son

Picture of embalmed Samuel Dinsmore in his Mausoleum at Lucas, Kansas here

Smaller and Smaller

Kansas Prairie Dog

Missouri Home Grown Tourism

International Tourism

Eco-Tourism

Designer TourismWorld’s Most Expensive Tourism - Antarctica

From New Zealand

By Russian Ice Breaker

Assessing Tourism Impact

Method 1 – Visitation Assessed monthly, quarterly, annually Repeat visitations are analyzed separately to

detect trends and patterns

Method 2 – Geographic Patterns Within 50 miles 51 – 100 miles Over 100 miles Out of State International

Tourism Impact - cont

Method 3 – Market Segmentation IndividualsCouplesFamiliesSchool GroupsTour GroupsOther

Tourism Impact - cont

Method 4 – Spending PatternsAverage Total per visitPer CapitaSegmented

Food and DrinkEntertainmentAccommodationsRetailTransportation

Economic Impact

Segmented Overnight ExpendituresAccommodations – 1.00 - $16,197,001Food/Drink .59 - $9,510,601Food Stores .07 - $1,062,098Ground Trans. .42 - $6,831,224Recreation .34 - $5,321,185Retail Sales .47 - $7,627,798

Analysis of Multiplier Impact

The Multiplier Effect A two percent increase in occupancy would

increase gross annual room revenues by $1,000,000

A five dollar increase in the average daily rent (ADR) would increase gross revenues by $1.5 million

Calculate how much the multiplier effect would increase revenues to other sectors, such as retail sales, for a increase in motel rooms?

Employment Impact

Employment Impact due to overnight stays Accommodation 1.00 – 278 Eating & Drinking 1.45 – 417 Food Stores 0.10 - 28 Ground Trans 0.60 –

167 Recreation 0.70 – 195 Retail Sales 0.60 – 167 Air Transportation 0.60 - 167

Tourism and Leisure Demand Factors

Population Increase If all other factors are held constant the demand

for a tourism commodity increases as the available population of potential consumers increases

Family Structure Changes Family oriented tourism and leisure is a major

demand factor in tourism. As the family structure changes demand shifts to meet the new reality of the family – its size, composition, age, culture

Demand Factors - cont

Distance to Source Tourism and leisure visits are distance sensitive. A

great many leisure and tourism visits will be within a day’s drive of the clients. Major example of decreasing distance is to build more golf courses

Transportation Rates Nearly all tourism and leisure is sensitive to

transportation costs. Transportation cost and time minimization is the key to increasing visitation. Conversely, increasing transportation costs will have a major impact on demand – just ask Australia

Demand Factors - cont

DemographicsAGE

The consumption of tourism and leisure goods is highly structured around age. Changes in age patterns impacts both demand and the type of leisure consumed

Economic Status - AffluenceThe ability to pay remains a major factor in the

type of activities, the amount of time spent in visitation, and the cost of accommodations

Factors the Influence Gross Spending

AgeFamily compositionLength of stayLocation of visit (NYC is a lot more expensive that Disney World or Vegas)Income level of clientType of transportation selected (if you fly you rent cars)Nature of opportunity at source (skiing is expensive – so is eco-tourism)

Tourism Diversity

Why Do You Choose A Destination? Have not been there Been there and liked it Cost Interest in particular place/activity Kids/family/partner want(s) to go Diversity of activities at source 2 fers – get your tourism around your business

events

Marketing and Advertising

Tourism marketing involves identifying local attractions, developing facilities and services to meet visitor needs, identifying the tourism market segment which applies to the attraction, and pursuing linkages within those market segments. Tourism marketing must consider complex factors – distance from population centers, availability of good transportation, cost involved, competition, etc.

Marketing Tourism

Identify the Target MarketDemographic (age, income, gender

education and occupation)Geographic Psychographic (enthusiasts such as

boating, skiing, gardening, history, military)

Position Statement

The Position Statement – “Positioning” Positioning is the place you occupy in your target

customer's mind The goal is that, when your customer decides

they're ready to consume tourism, they think of you first – or at least they think of you?

The positioning statement usually includes two elements: Your unique selling proposition (what makes your business special) and your target market (your most important customer segment).

Marketing Strategy

Marketing Strategy entails emphasizing key elements (Peeing) of your Marketing MixProductPlacePricePromotion

Marketing MixFor example, if you have a great array of desirable products (+), at very competitive prices (+), but a poor location (-) and a moderate amount of promotion (0), your assessment might look like this:

Your Enterprise

Product + advantage

Price + advantage

Place/Location - no advantage

Promotion 0 disadvantage

Plotting Price/Quality

Price

Quality

low

low

high

high A

B

CD

E

F

G

Sweet Spot

Marketing Objectives

The final part of the marketing plan is the creation of clear objectives for the amount of advertising required Must be specific (increase in visitation or an

increase in first time visitors) Must be measurable (increase profitability by 5.0% Must be realistic (objectives must be based on

reasonable criteria such as an increase of 5.0% in first time visitation compared to the previous 6 months)

Immutable Laws of Marketing

1. It is better to be first than it is to be better. 2. If you can't be first in a category, set up a new

category you can be first in. 3. It is better to be first in the mind than to be

first in the marketplace. 4. Marketing is not a battle of products, it's a

battle of perceptions. 5. The most powerful concept in marketing is

owning a word in the prospect's mind. 6. Two companies cannot own the same word in

the prospect's mind

Marketing Laws - cont

6. The strategy to use depends on which rung you occupy on the ladder.

7. In the long run, every market becomes a two horse race.

8. If you are shooting for second place, your strategy is determined by the leader.

9. Over time, a category will divide and become two or more categories.

10. Marketing effects take place over an extended period of time.

11. There is an irresistible pressure to extend the equity of the brand.

Marketing - cont

12. When you admit a negative, the client will give you a positive.

13. In each situation, only one move will produce substantial results.

14. Unless you write your competitor's plans, you can't predict the future.

15. Success often leads to arrogance, and arrogance to failure.

16. Failure is to be expected and accepted. 17. The situation is often the opposite of the way

it appears in the press.

Marketing - Conclusion

18. Successful programs are not built on fads, they're built on trends.

19. Without adequate funding, an idea won't get

off the ground. 20 When things go really Wrong it can get ugly

Marketing As Branding

“Marketing is building a brand in the mind of the prospect." "If you can build a powerful brand you will have a powerful marketing program. If you can't, then all the advertising, fancy packaging, sales promotion and public relations in the world won't help you achieve your objective."

Branding means creating an emotional association (such as the feeling of success, happiness, or relief) that customers forms with the product, service, or company

Last Step - Feasibility

The failure rate of rural tourism and promotion ventures without competent feasibility studies is 3.5 times as high as those with proper assessment

The core of the feasibility study is the assessment of the penetration rate

Penetration Rate

P x F = PR where

P = Penetration Rate

F = Frequency of Penetration

PR = Penetration Rate

Example

Market Area Participation Rate Frequency PR

A 20% 2.5 50%

B 20% 1.0 20%