ROI REPORT 2010 – 2014 Presented by:
Sarah T. Page Consulting, LLC May 2015
TABLE OF CONTENTS EXECUTIVE SUMMARY .............................................................................................................................. 1 LONGVIEW CVB 2014 BUDGET ............................................................................................................. 2 METHODOLOGY ....................................................................................................................................... 3 DATA ............................................................................................................................................................ 5 RESULTS ........................................................................................................................................................ 7 Marketing ROI Based on Hotel Occupancy Tax Collections .................................................. 7 Marketing ROI Based on Visitor Spending .................................................................................... 7 CVB Operations ROI Based on Hotel Occupancy Tax Collections ....................................... 8 CVB Operations ROI Based on Visitor Spending ......................................................................... 8 Marketing ROI Based on Hotel Occupancy Tax Collections & Leisure Visitor Percentage ........................................................................................................................................... 9 CONCLUSION .......................................................................................................................................... 10 ABOUT SARAH T. PAGE CONSULTING, LLC ...................................................................................... 11 APPENDIX 1 – LONGVIEW CVB BUDGETS ......................................................................................... 13 CVB Budget - 2010............................................................................................................................. 14 CVB Budget – 2011 ............................................................................................................................ 15 CVB Budget – 2012 ............................................................................................................................ 16 CVB Budget – 2013 ............................................................................................................................ 17 CVB Budget – 2014 ............................................................................................................................ 18 APPENDIX 2 – HOTEL OCCUPANCY TAX COLLECTIONS .............................................................. 19 APPENDIX 3 – TRAVEL SPENDING IN THE CITY OF LONGVIEW .................................................... 20
EXECUTIVE SUMMARY The Longview CVB is the sole entity responsible for marketing the City as a destination for leisure visitors, business travelers, and convention and meeting attendees. The CVB markets the destination in a number of ways including printed publications, advertising, digital marketing, outdoor advertising, trade and consumer shows, social media, and many more. Investments in destination marketing are vital. For one reason, visitors create an economic impact on a destination through the money they spend during their visit. They buy gas, visit attractions, stay in local lodging, eat dinner, and much more. This spending helps local businesses remain profitable. The tax revenue they leave behind supports city services and ads to the quality of life for residents. Secondly, destination marketing investments are necessary because of competition from other destinations. Visitors have a choice on where they spend their leisure time. Destinations must spend money to heighten visitors’ awareness and provide them with compelling reasons to visit. While there are many ways to measure the success of a local tourism marketing organization and its various programs and services, ROI paints a very clear picture of the overall effectiveness and efficiency of the organization. It demonstrates that the public funds allocated to the CVB have been used to successfully promote tourism to the destination – with the ultimate goal of driving visitation and visitor spending. In March of 2015, the Longview Convention and Visitors Bureau (CVB) contracted with Sarah T. Page Consulting, LLC to provide an analysis of the CVB’s Return on Investment (ROI) from 2010 to 2014. It was the goal of the CVB to demonstrate the effectiveness of their tourism marketing programs and services. No data from the Chamber of Commerce or from the CVB’s operational expenses was considered in the development of this report. The results of this study are presented in the following pages.
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LONGVIEW CVB 2014 BUDGET The pie chart below depicts the budget categories for the 2014 budget of the Longview CVB. 2014 Budget numbers can be found on page 17 of this document.
2014 CVB Budget Accounting and Legal
Advertising Auto Expense Computer Operations Capital Outlay Dues and Subscriptions
5%
Insurance
0% 1%
0% 3%
3%
Janitorial
6%
Wayfinding
6%
0%
Office Supplies
5%
Postage
6%
44%
Rental Equipment Professional Development
3%
Telephone
2% 4% 2%
Travel and Meetings
2% 4%
Outdoor Advertising Service Promotion Convention Sales
0% 2% 0%
0% 0% 1%
Tourism Sales
Convention Marketing Materials
Website Maintenance CVB Merchandise Expense Visitors Center Hospitality Training
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METHODOLOGY The methodology for calculating Return on Investment is very straightforward. The program’s expenses (or investment) are subtracted from the gain (or return). That result is then divided by the investment. The product of these calculations is the Return on Investment, or ROI. ROI is a profitability ratio that describes the overall financial health of a business or program. The resulting ratio can be expressed in terms like the statement below:
“For every $X dollar spent by the Longview CVB in its operations, $X was returned to the City in the form of hotel occupancy taxes collected.” The basic ROI formula is below:
ROI = (Return – Investment) Investment The ROI for the Longview CVB was calculated in two different ways because there are two main sources of tourism revenue (or the return portion of the formula) that can be measured. Communities typically experience the economic impact of tourism in the form of hotel occupancy taxes collected and through overall visitor spending in a destination. Since the primary goal of any CVB is to encourage overnight stays, using hotel occupancy tax collections is the more relevant method of the two. It is important to note that great care was taken to ensure that the data used was as specific and precise as possible. No numbers have been inflated or represent an area larger than the City of Longview. Absolutely no expenses or revenue from the Chamber of Commerce factored into any calculation. As described below, only certain budget categories were included in the CVB’s expenses. This was done so that the ROI calculation measured only the direct advertising investment rather than expenses unrelated to marketing (e.g., salaries, benefits, office supplies, etc.) For the “investment” portion of both ROI equations, the CVB’s budget was the source of information. The budget data was provided by Karen A. Jacks & Associates, PC. Great care was taken to only include those programs and activities strictly related to marketing Longview as a destination. Only advertising, outdoor advertising, website, and 30 percent of tourism sales as purely advertising- and promotion-related expenses were used in the CVB expenses calculations. Thus, only the marketing and advertising functions – and not operations functions 3
– were used in the ROI calculations. These annual budgets can be viewed in Appendix 1, starting on page 11 of this report. Hotel occupancy tax collections were requested and received from the City of Longview, and thus formed the basis for the “return” side of the equation. This information can be viewed in Appendix 2 on page 17 of this report. For the second ROI calculation, total visitor spending for the City of Longview was used for the “return” side of the equation. This data was obtained from the Governor’s Office of Economic Development and Tourism, and can be viewed in Appendix 3 on page 18 of this report. ROI was calculated for each year in the 5 year period using both sources of “returns”. A total 5year ROI was also calculated.
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DATA The data in the following tables was used to determine the ROI calculations for the Longview CVB.
Longview Convention and Visitors Bureau Total Operating Expenses Year Actual Expenses 2014 $507,470.40 2013 $515,122.31 2012 $478,980.30 2011 $490,123.12 2010 $467,653.86 TOTAL $2,459,349.99 Data provided by Karen A. Jacks & Associates, PC
Longview Convention and Visitors Bureau Total Advertising Expenses Year Actual Expenses 2014 $142,338.39 2013 $113,811.81 2012 $142,007.26 2011 $118,414.81 2010 $151,892.11 TOTAL $668,464.38 Data provided by Karen A. Jacks & Associates, PC * Includes “Advertising”, “Outdoor Advertising”, “Tourism Sales” at 30%, and “Website” budget categories only
Longview Hotel Occupancy Tax Collections Year Collections Local Hotel Occupancy Tax Rate 2014 $1,813,836.53 *7% 2013 $1,768,751.13 *7% 2012 $1,483,374.34 *7% 2011 $1,672,785.24 7% 2010 $1,619,378.47 7% TOTAL $9,805,543.42 Data provided by City of Longview * Does not include the 2% venue tax for the Maude Cobb Convention Center
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Longview Visitor Spending Year Visitor Spending 2014 n/a 2013 $195,600,000.00 2012 $190,000,000.00 2011 $189,000,000.00 2010 $176,300,000.00 TOTAL $750,900,000.00 Data provided by Dean Runyan Associates, Inc. and the Governor’s Office of Economic Development and Tourism
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RESULTS In conclusion no matter which data is used for the “return” side of the equation, the Longview Convention and Visitors Bureau has an extremely positive Return on Investment. The results show that the Longview CVB is using their marketing dollars effectively and efficiently to drive visitation to Longview from leisure and business travelers. Continuous changes and additions to the marketing mix are encouraged so that staff is always using the most effective ways to reach visitors.
Marketing ROI Based on Hotel Occupancy Tax Collections Year 2014 2013 2012 2011 2010 TOTAL
Longview Convention & Visitors Bureau Total ROI (HOT Collections) Collections CVB Advertising Return on Investment Expenses $1,813,836.53 $142,338.39 $1,174.31 $1,768,751.13 $113,811.81 $1,454.10 $1,483,374.34 $142,007.26 $944.58 $1,672,785.24 $118,414.81 $1,312.65 $1,619,378.47 $151,892.11 $966.14 $8,358,125.71 $668,464.38 $1,150.35
The Longview CVB’s total advertising budget over the 5 year period was $668,464.38. By subtracting the investment (budget) from the gain (hotel occupancy tax collections), then dividing by the investment, the Return on Investment (or ROI) is calculated at $1,150.35. Put another way, for every $1 dollar spent by the Longview CVB in its advertising and marketing operations, $1,150.35 was returned to the City in the form of hotel occupancy taxes collected.
Marketing ROI Based on Visitor Spending Year 2014 2013 2012 2011 2010 TOTAL
Longview Convention & Visitors Bureau Total ROI (Visitor Spending) Visitor Spending CVB Advertising Return on Investment Expenses n/a $142,338.39 n/a $195,600,000.00 $113,811.81 $171,762.66 $190,000,000.00 $142,007.26 $133,695.98 $189,000,000.00 $118,414.81 $159,508.41 $176,300,000.00 $151,892.11 $115,969.23 $750,900,000.00 $668,464.38 $112,232.09
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The Longview CVB had a total budget over the 5 year period of $668,464.38. By subtracting the investment (budget) from the gain (visitor spending), then dividing by the investment, the Return on Investment (or ROI) is calculated at $112,232.09. In other words, for every $1 dollar the Longview CVB spent in its advertising and marketing operations, $112,232.09 was returned to the city in visitor spending.
CVB Operations ROI Based on Hotel Occupancy Tax Collections Year 2014 2013 2012 2011 2010 TOTAL
Longview Convention & Visitors Bureau Operations ROI (HOT Collections) Collections CVB Expenses Return on Investment $1,813,836.53 $507,470.40 $257.4 $1,768,751.13 $515,122.31 $243.4 $1,483,374.34 $478,980.30 $209.7 $1,672,785.24 $490,123.12 $241.3 $1,619,378.47 $467,653.86 $246.3 $8,358,125.71 $2,459,349.99 $239.9
The Longview CVB’s total budget over the 5 year period was $2,459,349.99. By subtracting the investment (budget) from the gain (hotel occupancy tax collections), then dividing by the investment, the Return on Investment (or ROI) is calculated at $239.90. Put another way, for every $1 dollar spent by the Longview CVB in its operations, $239.90 was returned to the City in the form of hotel occupancy taxes collected.
CVB Operations ROI Based on Visitor Spending Year 2014 2013 2012 2011 2010 TOTAL
Longview Convention & Visitors Bureau Operations ROI (Visitor Spending) Visitor Spending CVB Expenses Return on Investment n/a $507,470.40 n/a $195,600,000.00 $515,122.31 $37,871.56 $190,000,000.00 $478,980.30 $39,567.60 $189,000,000.00 $490,123.12 $38,461.74 $176,300,000.00 $467,653.86 $37,598.82 $750,900,000.00 $2,459,349.99 $30,432.46
The Longview CVB’s total budget over the 5 year period was $2,459,349.99. By subtracting the investment (budget) from the gain (visitor spending), then dividing by the investment, the Return on Investment (or ROI) is calculated at $30,432.46. Put another way, for every $1 dollar spent by the Longview CVB in its operations, $30,432.46 was returned to the City in the form of visitor spending.
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Marketing ROI Based on Hotel Occupancy Tax Collections & Leisure Visitor Percentage A third way to look at the marketing ROI of the Longview CVB is to factor in the percentage of leisure visitors versus business visitors. It can be argued that leisure visitors to Longview are the ones most impacted by the CVB’s marketing efforts. Business travelers, on the other hand, may not be impacted by the CVB’s marketing and advertising efforts. Thus in this final table, we apply the percentage of leisure visitors to the Longview MSA to even further refine the ROI results. According to D.K. Shifflet & Associates and the Governor’s Office of Economic Development and Tourism, 63 percent of the visitors to the Longview MSA came for leisure purposes. The ROI results are below. Longview Convention & Visitors Bureau Total ROI (HOT Collections) & Leisure Visitor Percentage Year Collections CVB Return on % Leisure Final Advertising Investment Visitors Return on Expenses Investment 2014 $1,813,836.53 $142,338.39 $1,174.31 .63% $739.82 2013 $1,768,751.13 $113,811.81 $1,454.10 .63% $916.08 2012 $1,483,374.34 $142,007.26 $944.58 .63% $595.09 2011 $1,672,785.24 $118,414.81 $1,312.65 .63% $826.97 2010 $1,619,378.47 $151,892.11 $966.14 .63% $608.67 TOTAL $8,358,125.71 $668,464.38 $1,150.35 .63% $724.72 The Longview CVB’s total advertising budget over the 5 year period was $668,464.38. By subtracting the investment (budget) from the gain (hotel occupancy tax collections), then dividing by the investment, the Return on Investment (or ROI) is calculated at $1,150.35. Multiplying the ROI by 63 percent (leisure visitation) then provides the final marketing and advertising ROI. Put another way, for every $1 dollar spent by the Longview CVB in its advertising and marketing operations, $724.72 was returned to the City in the form of hotel occupancy taxes collected by leisure visitors.
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CONCLUSION An infographic depicting the results is below.
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ABOUT SARAH T. PAGE CONSULTING, LLC Sarah Page is the principal of Sarah T. Page Consulting, LLC and has worked in tourism and economic development for more than 23 years. Her professional experience includes the Texas Department of Transportation, the Texas Department of Economic Development, and the Lower Colorado River Authority (LCRA). Ms. Page has conducted dozens of economic impact studies on festivals, events, tournaments, and communities. Examples of economic impact studies include Nacogdoches tourism, the Georgetown Red Poppy Festival, the Brady World Championship BBQ Goat Cookoff, the New Braunfels Wein & Saengerfest, the Great Texas Balloon Race in Longview, and the TAAF Youth Basketball Tournment (also in Longview). Page is a graduate of Texas A & M University with a degree in tourism and has served on a wide range of boards and commissions including the Board of Directors for the Texas Brazos Trail Region, the Texas Downtown Association and the City of Round Rock’s Tourism and Historic Preservation Commissions. She speaks frequently to groups and has been featured at the Governor’s Small Business Forum, the Texas Association of Convention and Visitor Bureaus (TACVB), the Michigan Association of Convention and Visitor Bureaus (MACVB) and the Social Media Tourism Symposium (SoMeT) among many others. Sarah holds certifications as a Professional Community and Economic Developer (PCED) from the Community Development Council; Tourism Marketing Professional (TMP) from the Southeast Tourism Society’s Marketing College; and is a Certified Tourism Executive (CTE) through the Texas Travel Industry Association’s Travel and Tourism College. As a native Texan, Sarah is very involved in statewide tourism and economic development organizations. She is currently a member of the Texas Downtown Association (TDA), the Texas Travel Industry Association (TTIA), Texas Association of Convention and Visitor Bureaus (TACVB), the International Festivals and Events Association (IFEA), the Texas Festivals and Events Association (TFEA), and the Texas Recreation and Park Society (TRAPS). Sarah is also active in the Solo PR Pro association which is a resource to professionals in the public relations and marketing industries. Sarah T. Page Consulting, LLC is backed by 23+ years of experience of Principal, Sarah Page. Our strengths lie in several diverse areas including:
Economic impact analysis Consumer and market research 11
Social media marketing Custom training and presentations on tourism and social media Social media campaign development and execution Tourism marketing Tourism product development
Our clientele includes public sector entities, non-profits, and associations.
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APPENDIX 1 – LONGVIEW CVB BUDGETS The budgets for the Longview CVB from each year during the evaluation period (2010 – 2014) are on the following pages.
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CVB Budget - 2010
Source: Karen A. Jacks & Associates, PC 14
CVB Budget – 2011
Source: Karen A. Jacks & Associates, PC 15
CVB Budget – 2012
Source: Karen A. Jacks & Associates, PC 16
CVB Budget – 2013
Source: Karen A. Jacks & Associates, PC 17
CVB Budget – 2014
Source: Karen A. Jacks & Associates, PC 18
APPENDIX 2 – HOTEL OCCUPANCY TAX COLLECTIONS
Source: City of Longview
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APPENDIX 3 – TRAVEL SPENDING IN THE CITY OF LONGVIEW
Sources: Dean Runyan and Associates, Inc.; Governor’s Office of Economic Development and Tourism Total Direct Travel Spending Longview Calendar Year
Million $
Annual Change
2002
$119.50
N/A
2003
$127.80
6.90%
2004
$136.20
6.60%
2005
$148.40
9.00%
2006
$167.80
13.10%
2007
$185.80
10.70%
2008
$202.40
8.90%
2009
$166.40
-17.80%
2010
$176.30
6.00%
2011
$189.00
7.20%
2012
$190.00
0.50%
2013
$195.60
2.90%
Sources: Dean Runyan and Associates; Governor’s Office of Economic Development and Tourism 20