Skift Take
Since April, destination marketing organizations have been forced to seek funding beyond revenue from hotel bed taxes, which aren’t expected back fully for four years. What’s emerging? A blended DMO model in which advocacy, corporations, and communities play key roles.
When tourism came to an abrupt halt in March, destination marketing organizations saw their primary revenue stream — a percentage of lodging taxes or “bed taxes” — tumble overnight.
Seven months since discussions began on how tourism would fund itself going forward after the damage from the pandemic, most organizations have seen their budgets shrink by as much as 60 percent while having to do more with less. And although some so-called DMOs have received emergency government assistance, the continued global health emergency's strain on U.S. state budgets in particular, means that getting funding for tourism isn't likely to take priority going into 2021.
That is forcing DMOs to do some hard thinking about changing up models from the past, according to interviews conducted by Skift over the past several weeks as new surges in coronavirus cases raise new uncertainties for travel.
Strategic marketing firm Miles Partnership, in collaboration with Civitas and Tourism Economics, earlier this year released a “Futures Funding” report laying out 10 recommended short- to medium-term priorities for DMOs until travel fully rebounds. They still are relevant now.
The priorities range from securing emergency funding to reviewing the DMOs' structure, finding alternative revenue streams, taking on an advocacy role to push for change, and building up future reserves.
The report also shares data from a survey of 115 North American cities, all 50 U.S. states and 10 Canadian provinces, assessing their current state and recovery over the next five years. In November, Group Nao, a global innovation company, released a white paper — "Tourism Taxes by Design" — examining the use of tourism taxes in European cities as a funding mechanism, as well as data on the impact of Covid on European tourism marketing offices.
In addition to reviewing these studies, Skift spoke to a handful of DMOs to see how they’ve fared since April.
Our main takeaway: the DMO of yesterday is no longer, as destinations have been pushed into a whole new range of roles and responsibilities that go well beyond marketing in order to survive in a post-Covid world. These include advocating to lawmakers for their share of emergency funding through the CARES Act, forging political partnerships to establish new revenue mechanisms such as tourism improvement districts, demonstrating the value of tourism for economic development to their citizens, and reaching out to new corporate
