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HomeMy WebLinkAboutCAO-11-028 - Waterloo Region Tourism Marketing Corp - EvaluationDATE OF REPORT: November 21, 2011 REPORT NO.: CAO-11-028 SUBJECT: Waterloo Region Tourism Marketing Corporation -Evaluation RECOMMENDATION: That the City of Kitchener continue to provide funding and support for the continuation of the Waterloo Region Marketing Corporation (WRTMC) and that another evaluation be completed in 2014. REPORT: In 2007, the Waterloo Region Tourism Marketing Corporation was created through support from all Municipalities and the Region together with the Tourism industry. At the outset, each municipality was asked fora 3 year commitment to the new organization in order to ensure sufficient time was given to commence operations, develop support from the tourism industry and implement programs. After 3 years of operations, an evaluation of WRTMC was to be undertaken to determine effectiveness of the organization and subsequently ongoing support. The report which led to the creation of WRTMC is attached for information. In 2010, a one year extension to the evaluation process was granted due to a change over in senior leadership in the WRTMC. Subsequently, an evaluation of the organization was undertaken during the summer of this year, the results of which are attached in the Evaluation Report, completed by the Chief Administrative Officers from all the municipalities in the Region. The results of the evaluation demonstrated that WRTMC added value to the tourism industry in Waterloo Region and as such, the collective recommendation being put forward is to continue to support and fund WRTMC. ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN: The Waterloo Region Tourism Marketing Corporation advances economic development in the City which is identified as a priority in both the community's `Development' priority in the City's Strategic Plan as well as the Economic Development Strategy. 4-1 1 I~ITCHEI~TE~,. Staff Report CA~sO~~e www.kitchenerca FINANCIAL IMPLICATIONS: The City of Kitchener contributes $90,000 on an annual basis to support the operations of the WRTMC. There has been no increase in funding since 2007 and therefore it is being recommended that the City's support remain at the current level together with a 2 percent increase for a total 2012 allocation of 91,800. COMMUNITY ENGAGEMENT: The evaluation of the WRTMC was undertaken through a survey of the tourism industry. CONCLUSION: It is the collective belief of the Municipal CAO's that the Waterloo Region Tourism Marketing Corporation adds value to the economy of the Region and is a strong partner in the building the profile and brand of the Region and therefore the City. It has also served to streamline the delivery of tourism based services by providing it through one organization in a collaborative model. ACKNOWLEDGED BY: Carla Ladd, CAO 4- 2 APPENDIX A ~valuat%ow of the waterloo t~..er~~owa~ -rour~sw~, t~arl~etiwg corporat~ow (septevu.ber zoos to .septewtiber 2ozi) Report f rove. tl~C Muw%cipal Chef .4dvu.%w%stratLve Of fivers iw waterloo Rer~low tw support o f cowt%wued ~uvwliw~ o f the waterloo Rec~lowal Tou~%~svw Mar42etLw~ corporat%ow NoVevttiber 2011 4-3 EVALUATION OF THE WATERLOO REGIONAL TOURISM MARKETING CORPORATION 1.0 BACKGROUND Why was the WRTMC created? Back in 2007, the tourism industry was seen as a significant industry in Waterloo Region. Statistics Canada data available at the time indicated that in 2004 the Region attracted almost 2.4 million person trips, which generated $390 million in revenue, supported 3,200 jobs and contributed $5 million in total municipal taxes. While this economic activity was seen as being significant, it was acknowledged that activity had been declining in recent years, particularly with the precipitous drop in cross-border travel from the US. There was also concern that we were lagging behind comparable municipalities such as Hamilton and London, which have municipally-supported tourism destination marketing organizations (DMOs). It was noted that the three cities and two of the townships provide individual tourism-related services. As a result, tourism promotion in the Region was facing several challenges including: - Fragmented approach with no overall brand or marketing strategy - Limited destination marketing activities, resulting in low external profile - Duplication of some efforts, such as visitor guides - No central body to develop partnerships and participate in provincial initiatives How was the WRTMC created? Recognizing these challenges, a consensus developed within the tourism industry and the municipal administration in Waterloo Region that there was a need and an opportunity to improve the delivery of tourism services, particularly destination marketing, in this community. Over the course of 15 months, these groups worked to define, develop and consult on a tourism initiative, as outlined below: - Municipal and Regional Chief Administrative Officers (CAOs) assessed current tourism initiatives, organizations in other municipalities, and possible funding sources to develop a proposal which was documented in `A Discussion Paper Regarding Delivery of Tourism Services in Waterloo Region', May 2006. - Municipal Councils endorsed the proposal in principle. - CAOs held two consultation sessions with the tourism industry in June 2006. Approximately 90 people attended. Responses were documented in the report `Continuing the Development of a Tourism Organization for Waterloo Region', June 2006. - Municipal Councils endorsed the creation of a Steering Committee to continue the development of a new Tourism Organization in July 2006. - The Steering Committee, comprised of six tourism industry representatives and the CAOs of Cambridge, Kitchener, Waterloo, Wilmot, Woolwich and the Region, met initially in August 2006, and met in total 9 times. - A consultant was engaged to assist the Committee in developing a Business Plan, and a timeline for organization start-up. - A second set of industry consultation sessions was held in February 2007 to gauge industry response to the business plan and budget. - The tourism industry was very supportive of the proposed initiative. 2 4-4 Mandate of the original organization It was agreed that the new organization would focus primarily on marketing tourism opportunities in Waterloo Region -encouraging more people to visit this area, and encouraging visitors to stay longer. In addition, it was agreed that the organization would replace the existing municipal destination marketing activities being provided by K-W Tourism and Cambridge Tourism. The organization was to be amembership-based, not-for-profit corporation, governed by a board of directors comprised of tourism industry and municipal representatives. Its funding would be derived from a combination of municipal grants, industry membership fees and co- operative marketing opportunities As a start the following interim mission statement was adopted: A municipal, industry and community partnership that operates as a Destination Marketing Organization for the Waterloo Region. Dedicated to maximizing tourism visitation to the community, and industry economic impacts, on a year round basis, through: - Development and delivery of both broadcast and targeted marketing and advertising programs - Provision of visitor information and support services - Development and participation in tourism partnerships and joint initiatives - Support for industry capacity development. Summary of Marketing Focus Four marketing priorities were identified: - Conduct market research, create a marketing plan and develop an advertising campaign. - Build image and awareness through attendance at trade and consumer shows, development of lure brochures, etc. - Undertake Co-operative Marketing Programs, funded by the tourism industry and the DMO (with possible support from senior levels of government) which promote both Waterloo Region and the individual industries, using various media such as radio and TV spots, print, website banner ads, visitor guide, etc. - Undertake a branding initiative to develop the organization name, identifier, tag lines etc. Visitor Service Focus It was agreed that the organization would provide the single point of contact for visitors requesting information about tourism opportunities in Waterloo Region. Visitor Information Services would include: single telephone number, website, telephone and email response, and literature fulfillment. These services would be coordinated by the DMO to ensure consistency across the region. The DMO will also produce a single visitors guide for Waterloo Region. In addition, it was agreed that Visitor Centres would continue to be operated and funded by the Local Municipalities. They would offer a core level of services and programs including tourism literature distribution and over-the-counter travel counseling. Local municipalities could enhance the services offered. 3 4-5 Governance The DMO was to be a membership based, not-for-profit organization. The Board of Directors would be comprised of eight tourism industry members (one representative from each of the five identified sectors and three at-large) and six municipal representatives (the CAO or designate of the Region, Cambridge, Kitchener, Waterloo, Wilmot and Woolwich). The Steering Committee in place at the time agreed to act as the interim Board of Directors until a full Board was elected at the first Annual General Meeting. Funding Model Membership Fees The proposed membership fees were differentiated by industry type, and ranged from $150 to $750 per year. Membership provides opportunity to participate in the DMO, and included a basic website listing, visitor guide listing and brochure distribution. The DMO membership fee replaced the separate fees being charged by Cambridge and K-W Tourism Summary of original consultation process and support for the organization Consultation sessions were held with the Tourism Industry on Wednesday, February 21, 2007 in Kitchener and Friday, February 23, 2007 in Cambridge. About 70 people attended, in addition to the Steering Committee. An Information Handout and Comment Sheet were distributed, and subsequently emailed to all members of Cambridge and K-W Tourism. In addition to the comments made at the meeting, 15 comment sheets were returned. A separate initiative led by the industry representatives on the Steering Committee resulted in 22 signed letters of support from key industry members. The letters indicated full support for the WRTMC goals, structure and market focus. They also pledged financial support of paid membership, participating in co-operative programs, and "new and aggressively created programs that will clearly show benefit to our organization". The overall tone of the meetings and comments was clearly positive. Several industry members stated strongly that the initiative is needed and on the right track. They applauded the involvement of the municipalities, noting that it makes the initiative significantly different from previous attempts to establish a single DMO. 2.0 IMPORTANCE OF TOURISM TO THE ECONOMY Ontario Economic Contribution • $22.1 billion in tourism receipts • 200,900 jobs • Provincial tax revenues - $2.6 billion • Municipal tax revenues - $571 million • Only industry that is found in every town, city and province within Canada • Contributes more to the GDP of Ontario than manufacturing, forestry and aerospace industries 4 4-6 Waterloo Region Economic Impacts - 2009 Regional Results (Ministry of Tourism) 2007 2009 Person visits: 3,554,000 4,037,000 Visitor Spending $346, 558, 000 $371, 978, 000 Overnight Stays 3,240,000 3,639,000 3.0 ACCOMPLISHMENTS OF WRTMC IN THE FIRST FOUR YEARS Waterloo Regional Tourism Marketing Corporation (WRTMC) The current Mission Statement of WRTMC is as follows: • To increase tourism in the Waterloo Region by focusing resources on promoting the Region's personality and attributes to high-potential markets. The makeup of the WRTMC is as follows: • Not for Profit -Incorporated • Board of Directors - 14 seats • 8 Tourism Industry / 6 Chief Administrative Officers • Industry segment seats • 3 Accommodations (High Occupancy and B&B) • Arts & Culture • Retail • 3 Events & Attractions • Committee Structure -Marketing, Nominations & Governance • Private sector committee involvement • WRTMC model -member based The WRTMC Board of Directors for 2011 are: Mark Bingeman, Bingemans -President David Brenneman, CAO -Township of Woolwich -Vice President Tim Anderson, CAO -City of Waterloo -Treasurer Larry Blundell - (Retired) Representing Oktoberfest Don Bourgeois -Counsel, Charitable &Not-For-Profit Law Sally Burns -Waterloo Inn Conference Hotel Mark Garner -Downtown Kitchener BIA Jim King - CAO -City of Cambridge Carla Ladd - CAO -City of Kitchener Lucille Bish -Director of Community Services -Region of Waterloo Karen O'Grady -African Lion Safari Vanessa Stevenson -Homewood Suites by Hilton Wendy Schuster -Waterloo B&B Association Grant Whittington - CAO -Township of Wilmot 5 4-7 WRTMC -Success to date - 2007-2011 • Over 6,000 consumers added to the database through contesting and tradeshow participation (up from 2500 in 2010) • Over 2,000 leads captured in the conferences/meetings, travel trade and media markets since 2008 • Website overall page views for 2010- 304,000/366,000 in 2011- up 25% and an increase in 35% of unique visitors per site, since inception • Over $200,000 leveraged unpaid media in 2010, $1.5 Million in 2011 • Marketing 58% of our 2010 operating budget • Visits for YTD are up 18% on visits from comparable period last year • WRTMC efforts have for the first time galvanized collaborative efforts in external marketing • The Provincial Government has come to appreciate the importance of Waterloo Region in the overall Tourism industry • WRTMC has proved to be a focus for the Regional Tourism Organization (RTO) process, and will be a focal point for marketing initiatives • WRTMC has set the local tourism industry up for success by working with other like- mined organizations such as CTT and the Creative Enterprise Enabling Organization WRTMC Strategic Plan Approved for 2010-2015 -Highlights The Corporation recognizes that its effort must be directed toward specific, innovative, key marketing strategies to realize the best results for both its tourism partners and the visitors within the Region. As a result, the WRTMC uses amulti-year perspective in its planning framework, realized through explicit Action Priorities on a year-by-year basis. WRTMC's marketing communication and promotion efforts are designed to balance a regional overview with individual attractions. Our marketing efforts strive to utilize the most innovative and ground breaking technologies and strategies to position the Waterloo Region as a leader in state of the art destination profiling. Four Objectives set the foundation for the renewed Strategic Plan: 1.0 Create a business model for the Corporation that can be sustained over time; 2.0 Establish the WRTMC as the authoritative source in the Region for tourism attraction marketing; 3.0 Focus on enhancing the overall image and awareness of the Region as a visitor and tourism destination; and 4.0 Ensure marketing and communications activity consistently highlights key Waterloo Region attractions and events. Specific Action Priorities are derived from each of these objectives and provide a `menu' of actionable work from which an annual operational plan is built. 6 4-8 Marketing Plan Approved -Highlights The marketing plan target markets were strategically aligned with extensive and defendable market research and in direct correlation to Provincial and Federal marketing directives. A highly detailed project was performed by Environics Research commissioned through the Ontario Tourism Marketing Partnership of the Ministry of Tourism. This research project produced a segmented consumer template of travel buyers throughout Canada and the United States linking geo-demographics to social values, consumer attitudes and behaviour. The Region of Waterloo product offering inventory was established as a baseline and analyzed against these target markets to arrive at the highest and best focus for our efforts. The marketing deployment plan is divided into sections to best define those internal efforts focused on core product development in our Corporation's start up years and external efforts focused on attraction and profiling. The plan also segments tactics designed to profile the region as a whole through Destination Marketing Organization (DMO) tactics and Co-operative Marketing tactics designed to allow members individual profiling opportunities. Key sector targets are in Leisure, Meetings &Conventions, Travel Trade, Media in Ontario, Canada (Alberta, Quebec) and some United States in conjunction with the defined Ontario Tourism target markets. • Spring: (Target Couples and Families) • Summer: (Target Families) • Fall: (Target Couples) • Winter: (Target Couples and Families) New for 2011 -Member Training and Consumer Events • May 18th, 2011 -SPARK - 2011- A local familiarization tour and training day was held for the local visitor centres and frontline accommodation and attraction staff, Ontario Tourism Travel Centre Staff, and media. • Results: 70 attendees and $225,000 in earned media from stories resulting from that event. • June 3rd -Ontario Tourism Launch Day -Toronto - Dundas Square Event. Over 100,000 traffic to launch 2011 summer options. WRTMC was there to promote their website, summer offerings and cost-shared with 3 partners. • Results -Over 400 consumers added to the consumer database for future email-outs and radio exposure to the Toronto market • July 6t" -first 2011 lunch and learn workshops for members/partners on social media and search engine optimization. • Results: 22 members attended and from their input WRTMC will be having two more in the fall on this topic. They plan 6 lunch and learn training sessions per year on relevant topics for their members. Market Caaacity Statistics • 2008 membership • 2009 membership • 2010 membership • 2011 membership to-date 7 240 -total product inventory 104 186 188 235 4-9 Marketing (2010) - i.e.: Toronto Star, Association Magazine, Up Westjet, Ignite, Bearskins, Local Audience Development, Radio campaign/The Record, Grand Living, West of the City, 4 leisure shows and 6 corporate/trade shows, editorial copy worth $200,000. 3rd Regional Travel Guide - 150,000 distributed at 900 locations and geo-targeted houses in GTA/Ottawa and markets identified through marketing plan Visitor Information Statistics 2010 Visitor Information Services Traffic 21,378 (reported) Website Growth Web Analytics -Results to Date -Visits 2008 27,260 2009 62,947 2010 87,955 2011 96,493 (NOV 2011) Web Analytics -Results for the period 2009-2011 -Geographic • 96,493 visits • 144 countries • 3,300 cities Top five web high hits: • Home • Attractions • Events Calendar-33% increase over 2010 • Outdoor • ART -100% increase over 2010 • 2011- 2012 Initiatives and Partnerships WRTMC plans to continue to leverage and build partnerships in 2011/2012 • Greater synergy and cost-sharing with Canada's Technology Triangle/Creative Enterprise Enabling Organization for marketing and other initiatives OPPORTUNITY: More creative businesses picking Waterloo Region as home base • More collaboration with the Universities and Conestoga College for research, outreach to alumni, potential students and common messaging- OPPORTUNITY: More students, parents coming to and visiting the region • More emphasis on earned media, improve website functionality/cutting edge applications and interactivity, OPPORTUNITY: More stories generated and cross promotion to drive traffic to everyone's websites • Research, partnership meetings and product development work started on tech tourism opportunities, Waterloo Regional Tourism Culinary Strategy, motorcycle and cycling product development and partnerships, OPPORTUNITY: Leveraged marketing and business opportunities from increased tourism traffic 8 4-10 4.0 FINANCIAL ANALYSIS Revenues -Industry participation: • 2008 - $156,167 • 2009 - $270,789 • 2010 - $254,000 • 2011 - $244,700 (Projected) The targeted goal is for 60% of the budget to be spent on annual marketing initiatives, with the last 3 years reflecting 50-57% being spent on marketing and web site functional improvements. 5.0 EVALUATION INPUT FROM TOURISM INDUSTRY A key component of this evaluation process was inviting existing WRTMC members to provide their feedback on the relevance and effectiveness of ongoing initiatives, as well as comments on future directions. An on-line survey was sent to members during August 2011, and a focus group was held for invited members in early September. The on-line survey was completed by 37 respondents, representing a 17% response rate. The response rate reflects the relatively short period of the survey and the business of summer months for the tourism sector. However, the respondent profile has a similar distribution to the overall membership, both in terms of tourism industry sector and geographic distribution. The focus group, which was led by a professional facilitator, had 8 participants representing the key industry sectors. Benefits of Membership Survey respondents were evenly split on the value they have received from WRTMC membership, with one-third rating it high, one-third moderate and one-third low. The highest rated benefits of membership are: the WRTMC website, enhanced media exposure for participants, and the co-operative marketing opportunities. Focus group participants noted the following additional benefits: • 'Hands-on assistance' with promotion and outreach (such as assisting with attracting inbound visitors, or public relations/media relations services in markets that would otherwise not be possible for a single tourism operator to reach); • Trade show participation and leads; • Advice and sharing of expertise -including assistance with writing proposals to secure grants; • Data gathering and information sharing (e.g. tourism reports, research, trends analysis, etc.); and • Bringing member organizations together and contributing to relationship building . Some participants noted that "Our only opportunity for external marketing is through WRTMC...we couldn't do it without them". This is likely true across the membership, as almost 60% of survey respondents stated that their total annual marketing/promotion budget is less than $20,000. Very little is spent on external marketing, with 74% of respondents spending less than 20% of their marketing budget outside the Region. The focus group participants were asked more specifically about membership fees. Their view is that the current fees model is preferable to other possible approaches. Also, while there is no 9 4-11 great appetite for raising fees, some would consider modest increases if they could be justified by expanded or enhanced services and/or greater proof of success. Overall, members would like more communication from the WRTMC about membership benefits, marketing opportunities, and other initiatives. New members and smaller organizations in particular have greater need for informative, timely communication. Marketing WRTMC has offered its members a variety of co-operative marketing opportunities, including: the annual Travel Guide; listing on WRTMC website; banner ads on the website; print, digital media, and radio ads; and participation in trade shows. These were generally rated as moderate to high value by both survey respondents and focus group participants. The WRTMC website, www.explorewaterlooregion.ca, was described as "universally important" by the focus group. Ninety percent of survey respondents agreed that the website should be the primary source of tourism information for the region. A similarly high percentage agreed with the WRTMC mandate to market the region externally. Overall, the consensus is for a balanced marketing approach among all forms of communication. However, members do want better measures of the effectiveness of marketing opportunities for both themselves and WRTMC to assist with their own reporting and to understand overall value. Member Services Survey respondents reported a lower use of member services than of marketing opportunities. Focus group participants described the WRTMC's ability to generate media interest/coverage of the region as a core strength and one of the Corporation's most valuable contributions. Tours of local cultural and recreational attractions that familiarize front-line staff and the media with member sites are also perceived as being of significant value. Overall Performance of WRTMC A significant percentage of survey respondents gave a high rating to WRTMC in the following areas: • Improved awareness of Waterloo Region as a unique tourism destination market (36%); • Providing cone-stop website that promotes tourism information for the Region (45%); • Improved awareness of their organization (45%). They also agreed that WRTMC has: started slowly but continuously improved; provided improved collaboration and product development; and benefitted Waterloo Region. Focus group participants identified WRTMC staff as a particular organizational strength and key benefit of membership. However, it was also acknowledged that WRTMC would need additional resources to take on any new opportunities that the group suggested. Opportunities Many opportunities for improving and growing WRTMC were suggested by both survey and focus group participants. They include: • Increase support for specific tourism segments (meetings and conventions, culinary, sports, and arts and culture were mentioned); • Enhance communication with members, and in particular provide more lead time for participating in co-operative marketing opportunities; 10 4-12 • Develop and communicate concise implementation plans with focussed activities and anticipated benefits; • Make enhanced use of social media and continuously improve the website; • Develop tracking methods and evaluation tools that enable members to understand the value of various marketing opportunities; • Better portray a more progressive, current and strategic brand for the region. Overall, there is a sense that the WRTMC is continuing to make a valuable contribution to tourism in the region. It has been gaining momentum and enhanced its effectiveness, but as well there are ongoing opportunities for further growth and improvement. 6.0 GOING FORWARD Future Issues, Challenges & Opportunities to Tourism • Ontario Tourism Marketing Partnership Review -WRTMC will be advising the Ministry of Tourism on marketing that works for the members to ensure maximum benefits • Marketing the province of Ontario as a destination equal in value and not a low cost alternative -WRTMC will work with TIAO and other destination marketing organizations in Ontario to make marketing budgets for Ontario a priority spend. Regional Tourism Organization 4 (RTO 4) -Potential Advantages The RT04 Member Inventory is as follows: 8 Destination Marketing Organization (DMOs) -Regional Tourism Operations (representing multiple municipalities) • Waterloo Regional Tourism Marketing Corp • Guelph Tourism Services • Wellington Tourism • Huron Tourism Association • Visit Perth County Ontario • Fergus/Flora Tourism • Stratford Tourism Alliance (DMF Funded) • St. Jacobs Country (Private) It is interesting to note that visits to RTO 4 are mainly to Waterloo Region (58%), and that 54% of U.S. visitors went to Perth RT04 Roles and Responsibilities • Regional Strategy Development • Marketing • Product Development and Innovation • Attract Investment • Workforce Development & Training Coordination • Manage Performance • Support Financial Sustainability 11 4-13 RTO4 Collaboration with WRTMC to-date • Launched new projects inventory assessment for trails/waterways and heritage products and are holding a trails summit with heritage planning staff from the Region of Waterloo on September 29, 2011 • Initiated a meetings and incentive travel strategy that will have tactics to increase revenue for partners in RTO4, and to increase visitors stay by moving them around the region. • Contracted photographers to build an image inventory for RTO4 and DMO partners year round (both video and stills) • Initiated consumer marketing research and market-ready marketing campaigns for summer 2011 with input from all DMO partners to leverage existing brands and to cluster similar products and markets based on season (summer/fall/winter) Implementation of the Regional Tourism Levy in 2012, if done right it could mean $5 million plus to assist with marketing our area to tourists. Moving forward with the Regional Tourism Organizations, there is a need for more strategic alignment with other DMOs and RTOs so everyone can leverage maximum exposure through marketing efforts. New for 2012 -Building partnerships and being innovative • WRTMC will be creating more benchmarks and tracking features for media campaigns in 2012 through packaging attractions, events and accommodations and utilizing unique landing pages • The organization will work closely with CTT, Creative Enterprise Enabling Organization, Communitech, University of Waterloo, Wilfrid Laurier, CIGI and others on innovative events/conference bids, tech tourism and arts initiatives. • Upgrades to the website will occur for more interactivity, video, Trip Advisor and 3rd party reviewers- both professional bloggers and options for tourists and locals to upload their favorite Waterloo Region stories and tourist videos • WRTMC will integrate more QRI coding and mobile advertising into media mix and create portals for media writers in 2012 • Building on the research and photography from RTO4 will happen to refine the marketing campaigns and maximize results for our members • Developing new packages and tourism products (meetings and conventions, cycling, culinary, sports, and tech tourism) based on tourism trends and through working with our academic partners (Conestoga, Wilfrid Laurier, University of Waterloo and others) Tourism Outlook 2010-2014 Business investment will grow at a solid pace in 2011/2012 with Western Canada projected with the most growth. There is an opportunity for Waterloo Region is to reach out to Calgary and other Canadian Provinces with RTO4 and OMTPC. Emerging travel markets such as China, India and Brazil will dictate tourism product development. There is an opportunity for Waterloo Region to package and cluster appropriate products: outdoor adventure, rural/agri-tourism, culture/arts, brand/high- end shopping/spa and multi-generational travel options 12 4-14 Benefits of Partnering with Waterloo Regional Tourism Initiatives in the Future • Market and leverage your product or service for maximum exposure • Extend your reach by partnering for cost-effectiveness • Seasonal and year-round opportunities • Prices unchanged on existing programs • Choose from a wide variety of participation options, from marketing and advertising programs to media relations/FAM initiatives • Increase your awareness with online advertising, e-blasts to consumers/meeting planners 4x a year, co-op ads in trade magazines and online bundles options Going Forward -Waterloo Region Tourism also needs to be... High tech, cutting edge, an economic powerhouse, and a thought leader. Our website should be transactional (not only create demand but fulfill it as well) so we need to invest in a booking engine to keep up with trends (we are in discussions with Regional Tourism Organization 4 to pick up the initial costs). Our cooperative programs will first and foremost create demand for the destination and encourage a single call-to-action. Our programs will be focused and measurable based on trending metric such as media impressions, unique visits, conversion to sales and supply those metric and research to our partners whenever they want to receive it. Our programs have to further the marketing goals and objectives of the destination as a whole and must be aligned with current brand strategy of Waterloo Region. We need to look at not just amembership-only model which can hamper revenue from non-traditional sources (those who do necessarily want a membership as tourism may not be their core business, but they see the value in sponsoring one part of a program or website) but at a model of membership and partnerships. Non- traditional partners could pay a premium or one-time fee and members who advertise frequently could see rewards/ discounted programs and free educational opportunities because tourism is their core business. Revenues can still be garnered through bundled program offerings that still offer value to those who want to leverage WRTMC's marketing efforts and priced according to what the market will bear. By looking at non-traditional advertisers who benefit from tourism but are not necessarily considered tourism products/services helps to deliver on Action Priority 3.2 of the 2010-2015 Strategic plan: Enhancing the overall image and awareness of the Region as a visitor and tourism destination and to develop externally focused marketing and public relations program to build awareness of and attract visitors to the Waterloo Region. It also delivers on priority 1-in creating a sustainable tourism organization. 7.0 CONCLUSION Based on the above analysis, staff recommends that the municipalities within Waterloo Region continue to provide funding and support for the continuation of the Waterloo Regional Tourism Marketing Corporation (WRTMC), and further that a re-evaluation be completed in 2015. 13 4-15 1 KrT` c~~ ~R ' • Chr`ef Administrator's ©ffice Report To: Councillor Berry Vrbanovic, Chair and Members of Finance and Corporate Services Committee Date of Meeting: April 23, 2007 Submitted By: Carla Ladd, CAO Prepared By: Carla Ladd, CAO Ward(s) Involved: ALL Date of Report: April 18, 2007 Report No.: CAO-07-019 Subject: PROPOSAL FOR A TOURISM DESTINATION MARKETING ORGANIZATION FOR WATERLOO REGION RECOMMENDATION: That the Council of the City of Kitchener endorse the establislunent of The Waterloo Region Tourism Marketing Corporation as set out in the report attached hereto entitled "A Destination Marketing Organization for Waterloo Region". BACKGROUND: For several years, discussion has been ongoing about the future of tourism in the region because there was clear recognition that the success of our local tourism industry could be enhanced by a more comprehensive approach to the delivery of tourism services. In 2005, the regional CAO's began discussions about a collaborative approach to tourism and after obtaining support from all of the municipal Council's in the Region, a Steering Committee was formed in May 2006, consisting of municipal and industry representatives for the purpose of advancing this initiative. The primary purpose of the proposed new organization is to market the Region in an effort to attract more tourists, and once here, to keep them in the area longer. The organization would be established as anot-for-profit corporation governed by a Board of Directors consisting of municipal and industry representatives, fashioned after the structure of CTT. Finally, it would be membership based and would be jointly funded by the members and partner municipalities. While visitor services would be coordinated by the new tourism organization, Visitor Information Centres would continue to be the responsibility of each of the muncipalities. In this regard, a detailed review of the function and operation of KW Tourism will be undertaken should the new organization proceed. Further details about the proposed new tourism organization are included in the attached report. 4-16 Prior to finalizing the proposal for the new organzation, meetings were held with the tourism industry to provide information, obtain feedback and gauge support. Through these meetings and subsequent written submissions to the Steering Committee, the industry expressed clear support for this initiative. As a result, this final recommendation to proceed with the creation of a Tourism Destination Marketing Organization is being made to all Municipal Councils in the Region. Financial Implications The City of Kitchener's share of the funding for the new organization is $90,000 on an annual basis for the first 3 years, 2008-2010. ki order to ensure a successful start to the new organization, a 3 year commitment is being requested for this intiative, aclalowledging that amlual finding must be formally approved through the annual budget process. Funding in the amount of $45,000 has been provided for in the City's 2007 budget. Currently the City of Kitchener spends approximately $200,000 on tourism for both destination marketing and visitor services. While some of our current funding is directed to destination marketing, much of this finding is offset by revenues received from memberships and advertising which will now be directed to the proposed new organization. Consideration will be given to our ability to redirect existing tourism funding to the propose3d organization, however some additional funding may be required to support the new organization and a local Visitor Information Centre. Further information will be brought to Council once a review of KW Tourism has been undertaken. Conclusion Interest in creating a more cohesive approach to tourism is shared by all municipalities and the tourism industry collectively and the proposed new organization is being recommended as the best model to achieve success and enhance our local tourism industry. Carla Ladd ,CAO 4-17 ATTACHMENT 1 ;; Regicri of W~~terloa THE ~~~~4FsF'Cr~',ATi~~N ~F 'li E G ITSr' ~~ __ ~~~~ Trr C:~ f N (]~ aterfc A Destination Marketing Organization For Waterloo Region Report from the Municipal Chief Administrative Officers in Waterloo Region ~ ~ '~ In Support of the New Tourism Organization Steering Committee Apri12007 4-18 This rcpor-t hErs been prepared and endorsed by the ~rluiiicil~al C:l~ief Arlrnini5trati~•e [7f~cers in Waterloo Region.. ~' ['Mike Murray C'hicf Administrative t~f~cer- Region of `~'4'aterloo Don Smith C'hiof Adnzinistratii°~ O~fticcr City of Cambridge ~~ ---~~-- Rodger 1'~lordue Acting Adr~~inistrator-Clerk-Treasurer To4~~nship of North I)uml'rie5 Susan Duke Chief Acirninistrative officer Tom°nsl~ip of Wellesley ~~~. ~ ~, ~:, ~, r~ 'y-- '%~, f. ,.rte .; tom--- t ,~' _JA• City of Kitchener h ,, } _"~--~.x.__.- Simon Far}~raiher,t`4 C'hic.f Adrninistrati~~e Officer City o~E V4'atcrlno Grant Whittington Chief Adrrrinistrati~e []fficei- To~~rnship ©f Wilmot ,- r f -~~ David Brenneizian Chief Administrati~•e O~gicer Towns}~ip of Wool~,~~ich 4-19 Carla Ladd Chief Adt~:iinistrEitive G ffcer RECOMMENDING A DESTINATION MARKETING ORGANIZATION FOR WATERLOO REGION 1.0 Background Tourism is a significant industry in Waterloo Region. Statistics Canada data indicate that in 2004 this Region attracted almost 2.4 million person trips, which generated $390 million in revenue, supported 3,200 jobs and contributed $5 million in total municipal taxes. While this economic activity is significant, it has been declining in recent years, particularly with the precipitous drop in cross-border travel from the United States. It also lags behind comparable municipalities such as Hamilton and London, which have municipally-supported tourism destination marketing organizations (DMO). Currently the three cities and two of the Townships provide individual tourism-related services, primarily through Visitor Centres. As a result, tourism promotion in the Region faces several challenges including: • Fragmented approach with no overall brand or marketing strategy; • Limited destination marketing activities, resulting in low external profile; • Duplication of some efforts, such as visitor guides; • No central body to develop partnerships and participate in provincial initiatives. 2.0 Steps to Date Recognizing these challenges, a consensus has developed within the tourism industry and the municipal administration in Waterloo Region that there is a need and opportunity to improve the delivery of tourism services, particularly destination marketing, in this community. Over the past 15 months, these groups have worked to define, develop and consult on a tourism initiative, as outlined below. • Municipal and Regional Chief Administrative Officers (CAO) assessed current tourism initiatives, organizations in other municipalities, and possible funding sources to develop a proposal which was documented in `A Discussion Paper Regarding Delivery of Tourism Services in Waterloo Region', May 2006. • Municipal Councils endorsed the proposal in principal. • CAOs held two consultation sessions with the tourism industry in June 2006. Approximately 90 people attended. Responses were documented in the report `Continuing the Development of a Tourism Organization for Waterloo Region', June 2006. • Municipal Councils endorsed the creation of a Steering Committee to continue the development of a new Tourism Organization in July 2006. 4 - 20 • The Steering Committee, comprised of six tourism industry representatives and the CAOs of Cambridge, Kitchener, Waterloo, Wilmot, Woolwich and the Region, met initially in August 2006, and has met 9 times since then. • A consultant was engaged to assist the Committee in developing a Business Plan, and a timeline for organization start-up. • A second set of industry consultation sessions was held in February 2007 to gauge industry response to the business plan and budget. • The Business Plan highlights and Industry response are summarized in this report. The industry is very supportive of the proposed initiative 3.0 Proposed Tourism Organization Overview Based on a review of initiatives in other communities, and considerable discussion among local tourism industry and municipal leaders, the creation of a new Tourism Destination Marketing Organization for Waterloo Region is proposed. The interim working title for the organization is "The Waterloo Regional Tourism Marketing Corporation". The new organization would focus primarily on marketing tourism opportunities in Waterloo Region -encouraging more people to visit this area, and encouraging visitors to stay longer. The organization would replace the existing municipal destination marketing activities currently being provided by K-W Tourism and Cambridge Tourism. The organization would be amembership-based, not-for-profit corporation, governed by aboard of directors comprised of tourism industry and municipal representatives. Its funding would be derived from a combination of municipal grants, industry membership fees and co-operative marketing opportunities. Further details regarding the proposed organization are provided below. Interim Mission Statement The following Mission Statement is proposed, but would be refined following development of the organization's Strategic Plan. A municipal, industry and community partnership that operates as a Destination Marketing Organization for the Waterloo Region. Dedicated to maximizing tourism visitation to the community, and industry economic impacts, on a year round basis, through: • Development and delivery of both broadcast and targeted marketing and advertising programs • Provision of visitor information and support services • Development and participation in tourism partnerships and joint initiatives • Support for industry capacity development. 4-21 Marketing Focus Four marketing priorities have been identified: • Conduct market research, create a marketing plan and develop an advertising campaign. • Build image and awareness through attendance at trade and consumer shows, development of lure brochures, etc. • Undertake Cooperative Marketing Programs, funded by the tourism industry and the DMO (with possible support from senior levels of government) which promote both Waterloo Region and the individual industries, using various media such as radio and TV spots, print, website banner ads, visitor guide, etc. • Undertake a branding initiative to develop the organization name, identifier, tag lines, etc. Visitor Service Focus The organization will provide the single point of contact for visitors requesting information about tourism opportunities in Waterloo Region. Visitor Information Services include: single telephone number, website, telephone and e-mail response, and literature fulfillment. These services would be coordinated by the DMO to ensure consistency across the region. The DMO will also produce a single visitors guide for Waterloo Region. Visitor Centres will continue to be operated and funded by the Local Municipalities. They will offer a core level of services and programs including tourism literature distribution and over-the-counter travel counseling. Local Municipalities may enhance the services offered. Governance The DMO would be amembership-based, not-for-profit corporation. The Board of Directors would be comprised of eight tourism industry members (one representative from each of five identified sectors, and three at-large) and six municipal representatives (the CAO or designate of the Region, Cambridge, Kitchener, Waterloo and two of the Townships). The existing Steering Committee has agreed to act as the interim Board of Directors until a full Board can be elected at the first Annual General Meeting, anticipated by year end 2007. Membership Fees The proposed membership fees are differentiated by industry type, and range from $150 to $750 per year. Membership provides the opportunity to participate in the DMO, and includes a basic website listing, visitor guide listing and brochure distribution. The DMO membership fee replaces the separate fees currently charged by Cambridge and K-W Tourism. 4 - 22 Budget The proposed budget for the first three full years of operation is shown in Figure 1. The budget components are: Revenues Municipal Grant • Financed 50% by Region of Waterloo and 50% by Local Municipalities. Does not increase over the three year period. Basic Service Package Revenues • Revenue from tourism industry individuals and organizations that choose to become members. Membership sales efforts will be minimal. Budgeted to be less than combined K-W and Cambridge Tourism current revenue from membership, since duplication eliminated. Partner Cooperative Marketing Revenues • Industry participation in marketing initiatives such as trade publications, electronic and print media, trade shows. Expected revenue is based on experience of other DMOs and assumption of quality advertising campaign. Expect it will be achievable if industry members shift 5% to 10% of individual advertising dollars to the DMO. Municipal In-kind Services • Services such as Finance, Legal, Human Resources or facilities such as space, telephones, web hosting may be provided by the partner municipalities at no charge to the DMO. visitor guide Licensing Fee (net) • The production of the visitor guide could be licensed to a third party, which could be expected to pay a small fee to the DMO. Merchandise and Local Opportunities (net) • Merchandise sales through website, local event sponsorship and miscellaneous revenue. Partner In-Kind Services • Tourism industry members could provide in-kind support, such as operators underwriting the cost of FAM trips (accommodation, meals), hotels hosting Board and Committee meetings, local media supporting marketing campaigns. Expenses Payroll and Benefits • Reflects a modest team of three professionals (General Manager, Marketing and Media Relations Coordinator, Group Services Coordinator) plus clerical support. These staff are dedicated to the marketing effort, and considered part of the overall expenditure on marketing. • Note that DMO's with similar mandates have seven to 10 staff, not including Visitor Information Centre staff. • As partner revenue increases, so would the staff complement. • Other services requiring staff are assumed to be contracted out. Overhead and administration • Includes rent, professional fees, office supplies, telephone, travel, Board expenses. Image and Awareness • Trade shows, lure brochures, print and electronic campaigns. Visitor Information Services • Literature fulfillment, call centre, e-mail response, website maintenance, trunk lines Cooperative Marketing Programs • Includes radio and television spots, print media, trade publications, etc. • The expenditures depend on the buy-in by industry, as reflected in revenue. 4 - 23 Since the organization will be initiated mid-way through 2007, the estimated budget for 2007 is approximately $300,000. This will consist primarily of municipal grants, and will be used to fund salaries, and the development of initial marketing activities. Other sources of funding will be explored, both to support the start-up phase, and to supplement marketing revenues in the longer term. 4 - 24 FI ure 1: Waterloo Re tonal Tou rism Marketln Cor oration Bud et 12 months ending 12 months ending 12 months ending Dec 31 2008 Dec 31 2009 Dec 31 2010 Revenues Municipal Grant $600,000 61.1 % $600,000 54.6% $600,000 49.3% Basic Service Package Revenues $46,770 4.8% $63,438 5.8% $76,245 6.3% Partner Cooperative Marketing Revenues $250,000 25.5% $325,000 29.6% $400,000 32.9% Municipal in-kind services $25,000 2.5% $25,000 2.3% $25,000 2.1 visitor guide Licensing Fee (net) $25,000 2.5% $25,000 2.3% $25,000 2.1 Merchandise and local opportunities (net) $10,000 1.0% $20,000 1.8% $40,000 3.3% Partner in-kind services $25,000 2.5% $40,000 3.6% $50,000 4.1 Total $981,770 100.0% $1,098,438 100.0% $1,216,245 100.0% Expenses Payroll and benefits $260,000 26.5% $338,000 30.8% $351,520 28.9% Overhead & Administration $173,600 17.7% $172,100 15.7% $178,984 14.7% Marketing Initiatives Image & Awareness $120,000 12.2% $110,000 10.0% $100,000 8.2% Visitor Services $62,520 6.4% $88,040 8.0% $118,560 9.7% Cooperative marketing programs $350,000 35.6% $375,000 34.1 % $450,000 37.0% Total Ex enses $966,120 98.4% $1,083,140 98.6% $1,199,064 98.6% Total Surplus/Deficit $15,650 1.6% $15,298 1.4% $17,181 1.4% 4.0 Comments from Tourism Industry Consultation Consultation sessions were held with the Tourism Industry on Wednesday, February 21, 2007 in Kitchener and Friday, February 23, 2007 in Cambridge. About 70 people attended, in addition to the Steering Committee. An Information Handout and Comment Sheet were distributed, and subsequently emailed to all members of Cambridge and K-W Tourism. In addition to the comments made at the meeting, 15 comment sheets have been returned. A separate initiative led by the industry representatives on the Steering Committee resulted in 22 signed letters of support from key industry members. The letters indicate full support for the Waterloo Regional Tourism Marketing Corporation goals, structure and marketing focus. They also pledge financial support in the form of paid membership, participating in cooperative programs, and "new and aggressively created programs that will clearly show benefit to our organization." The overall tone of the meetings and comments was clearly positive. Several industry members stated strongly that the initiative is needed and on the right track. They applauded the planned involvement of the municipalities, noting that it makes this initiative significantly different from previous attempts to establish a single DMO. The responses from the meetings and comment sheets are summarized below. 4 - 25 Do you agree with this business concept? All respondents agreed with the concept, and some industry members expressed enthusiastic support. Caution was expressed about follow-through and the need to involve all partners. Previous attempts have failed, but having municipal funding/involvement this time is seen as a key difference. Some still questioned the reason for not including the operation of Visitor Centres in the business model. However, this issue has been extensively discussed by the Steering Committee, with the conclusion that Visitor Centres should be funded and operated by the Local Municipalities. Do you agree with the proposed Marketing Plan Goals, and the Marketing Priorities? Almost all respondents indicated agreement with the marketing approach. There is concern about when the branding initiative is planned, with some suggesting it should be started immediately. The Steering Committee's intention that the proposed marketing campaign will be tested with the industry in the third quarter of 2007 is seen as positive. Would you become a member, based on the proposed initiative and fee structure? All respondents indicated they would become a member of the organization. There is strong support for a single organization and one member fee. There were several comments about the fees proposed for some categories, and questions about how volunteer-run events would be included. The Board will have to re-visit and finalize the membership fees taking these comments into account. Would you allocate 5-10% of your marketing budget to the DMO cooperative marketing plans? Most agreed that they could direct 5% to 10% of their current marketing budget toward cooperative marketing with the DMO. About two-thirds of the respondents indicated an amount which ranged from $1,000 to $15,000 and averaged $5,000. Concerns have been expressed both that the anticipated revenue amount of $250,000 in the first year is too high an expectation, and that the amount to be spent on cooperative marketing ($350,000) is too low. Although these projections are in keeping with the experience of other DMOs, it will be a challenge to engage the industry sufficiently to ensure success of the organization. Is the proposed budget appropriate? Almost all respondents agreed that the budget is appropriate. Some suggested that the percentage to be spent on staffing and office overhead seems to be high. However, it was noted that there are only three staff included in the initial budget, and most of their 4 - 26 time will be spent on marketing. Other DMOs in comparable municipalities have 7 to 10 staff accounting for 70% of the budget. One respondent suggested that more than three staff would be required for an organization with this much responsibility. 5.0 Next Steps If municipal council approval and funding commitments are received, the next steps are outlined in the chart below. 2007 Transition Year Activities A M J J A S O N D Establish Organization X Develop Marketing Framework, Advertising Campaign X X X X Recruit and Hire staff (3 positions) X X X X X X Image and Awareness initiatives X X X X X Solicit memberships, Board members X X X Hold first Annual General Meeting X 6.0 Conclusions and Recommendations The Business Plan developed by the Steering Committee provides sufficient detail on which to base the start-up of the Destination Marketing Organization. The proposal has been positively received by the Tourism Industry. There appears to be sufficient interest and support to expect that the cooperative marketing revenues anticipated in the budget can be achieved, provided that the right type of marketing campaign is offered. Based on these results, the Steering Committee recommends that Municipal Councils approve the establishment of the `Waterloo Regional Tourism Marketing Corporation'. Although the municipal funding required for the organization may need to be approved on an annual basis, it should be recognized that the Business Plan assumes a three year commitment (through 2010) to solidify the organization and assess its achievements. rocs ~: 3~ss~~-~s 4 - 27