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Agenda 11/12/2024 Item #11A (FY2025 marketing funding request totaling not to exceed $5,457,500.00 that utilizes both disaster reserve funds up to $390,000 from TDC Disaster Recovery for emergency hurricane recofery marketing and operating reserve funds)11/12/2024 Item # 11.A ID# 2024-1899 Executive Summary ***This item to be heard at 10:00 a.m.***Recommendation to approve an enhanced FY 2025 marketing funding request totaling an amount not to exceed $5,457,500, that utilizes both disaster reserve funds up to $390,000 from TDC Disaster Recovery (Fund 1106) for emergency hurricane recovery marketing and operating reserve funds up to $5,067,500 from TDC Promotion (Fund 1101) for enhanced tourism marketing efforts to remain competitive; authorize any necessary Budget Amendments; and make a finding that this action promotes tourism. OBJECTIVE: To increase the current FY 2025 Tourism Division advertising budget to include enhanced marketing investments associated with Hurricane Milton and utilize operating reserve funds to increase market competitiveness. CONSIDERATIONS: The Tourism Division administers the Tourist Development Council (TDC) budget and promotes the destination as a Convention & Visitors Bureau (CVB). Background Information At the September 17, 2024, meeting the TDC reviewed the budget for FY 2025. During the discussion, the Council raised a question about the $12.2 million advertising and promotion operating reserve, specifically its purpose and any past use. Historically, the reserve has been used to cover over-budget expenses. The TDC requested information from staff on possible options for utilizing some of the reserves for further promotions of the destination. At the October 15, 2024 TDC meeting, staff presented to the Council various options consisting of enhanced advertising opportunities to build its marketing efforts using the operating reserve funds. The Council determined focus areas of the marketing plan should include developing a stronger leisure market presence in current and new markets, expanding marketing opportunities, strengthening sales efforts, and conducting additional research for more data and insights. The three options presented at the meeting were: Option 1 for $5,067,500, Option 2 for $3,707,500, and Option 3 for $2,462,500. The TDC selected Option 1 to be refined at a Special Meeting held on October 23, 2024. At the October 23, 2024, TDC meeting, the Council reviewed two proposals for additional marketing investment. The Council recommended edits to refine the marketing plan Option 1 and recommended combining the original request with an additional request to allocate funds from TDC Disaster Recovery Fund (1106) for a hurricane recovery marketing campaign. Emergency Hurricane Recovery Marketing Campaign Collier County has funded the cleanup and restoration of the community in the aftermath of Hurricane Milton. The next step of recovery is to focus marketing efforts to reinforce that the County is fully operational and ready to welcome visitors. Marketing Collier County as open for business is vital to maintaining current visitor reservations with hotels, restaurants, and shops. This marketing will also help business owners sustain the hospitality employment levels of over 28,000 people in the County. This request seeks Board approval for an FY 2025 Budget Amendment of up to $390,000 from Fund 1106 (TDC Reserve for Disaster Stimulus) to launch a marketing campaign aimed at dispelling any misconceptions about the storm's impact. The campaign will target leisure visitors, group meeting planners, and wedding planners, promoting Collier County as open for business and highlighting the readiness of our hospitality industry to serve visitors. Data Insights for Marketing Plan – Current Market Trends and Competition A significant component of reported area hotel occupancy is comprised of leisure travel and group travel. For FY 2024, leisure travel occupancy in Collier County was 46.2% and group travel was 18.1% leading to a combined occupancy of 64.3%. This occupancy rate places Collier County at the lowest occupancy rate of leisure sales compared to the competitive set of Florida locales. The competitive set includes the Florida Keys, Miami, Ft. Lauderdale, Sarasota, Palm Beach, and Ft. Myers. In Collier County, the leisure occupancy rate has decreased, and the combined hotel occupancy has remained consistent around the 60% rate due to group travel, some of which was booked two to three years ago through the sales efforts and incentives of the Tourism staff. Sales efforts include travel to trade shows to promote the destination for groups, many of which are looking at hotel room bookings in the FY 2025–2028 timeframe. Page 474 of 5419 11/12/2024 Item # 11.A ID# 2024-1899 The hospitality industry and tourism partners have shared concerns about the decrease in leisure occupancy as it also affects restaurants, attractions, and retail. In turn, this affects employment as there are over 28,000 individuals employed by the hospitality sector in Collier County. In addition, in Collier County, new hotel properties with an estimated total of 1,000 rooms are coming online over the next 6 months, creating a total of 8,700 rooms (a 13% increase). The hotels will need to fill an additional 147,000 hotel room nights in FY 2025 to maintain the current leisure occupancy rate. If the current demand remains constant, hotel occupancy is estimated to fall 5% to 41%. Advertising Budget History and Competitive Analysis The current FY 2025 advertising budget of $6 million has been approved as part of the TDC budget by the Board at the September 24, 2024, budget hearing. From data obtained by the Collier Chapter of the Florida Restaurant and Lodging Association shown on the Strength of Competition chart attachment, this places the Tourism advertising budget at 13.6% of Total Tourist Development Tax dollar collections, while other Florida destinations (such as the Florida Keys, Fort Myers, Brevard, and The Palm Beaches) spend up to 39.2% of their TDT collections on advertising. Some organizations, including Amelia Island and the Space Coast, had additional funding from reserves for this fiscal year which has led to higher percentages of advertising budgets compared to TDT collections, ranging from 53.5% to 117%. Competitor TDT collections range from $11 million to $61 million and their budgeted advertising spend ranges from $3.7 million to $14.9 million. Collier County advertising was at a high of $6 million in FY 2019. This amount decreased to $5 million during the pandemic in FY 2020 and slowly rose in FY 2022 to $5.5 million. It increased by $500,000 in FY 2023 to $6 million and remained at that amount in FY 2024. Enhanced Marketing Funding The increase of marketing investment of up to $5,067,500 for enhanced marketing efforts is designed to create a marketing foundation for Collier County that remains competitive against other Florida markets. The plan meets the objectives set forth by the TDC by developing four focus areas approved at the October 15, 2024, TDC meeting: 1. Leisure audience marketing will increase the current market presence and adding new markets. 2. Marketing campaigns will expand through enhanced paid advertising, partnerships, social media content, and public relations. 3. Group sales efforts will expand through more group meeting and trade show partnerships. 4. Additional research will include additional focus group and market perception studies. With a focus on these four areas, the advertising plan will broaden the audience of current visitors and potential new visitors. They can learn about the destination and book a stay here, increasing the room nights, which will meet the overall goal of increasing the leisure occupancy rate and the group sales occupancy rates, which provides the income stream for Collier County TDT collections. ADVISORY BOARD RECOMMENDATION: By a unanimous vote 8-0, the Council approved this combined request totaling $5,457,500, including up to $390,000 from TDC Disaster Recovery Fund (1106) for a hurricane recovery marketing campaign (Reserve Balance: $2,077,900), and up to $5,067,500 from TDC Promotion Fund (1101) operating reserve for enhanced marketing and promotion (Operating Reserve Balance: 12,200,000). FISCAL IMPACT: The current approved FY 2025 marketing budget is $6,000,000. Funding for this request, in an amount not to exceed $5,457,500, is available within the Adopted FY 2024-2025 Tourism Budget. This includes up to $390,000 from TDC Disaster Recovery Fund (1106) reserves and funding up to $5,067,500 from TDC Promotion Fund (1101) operating reserves. Budget Amendments may be required to realign funding for this request. Page 475 of 5419 11/12/2024 Item # 11.A ID# 2024-1899 FY 2024-2025 Tourism Marketing Current Marketing Budget $6,000,000 Disaster Marketing Request $ 390,000 Enhanced Marketing Request $5,067,500 Total (Not to Exceed) $11,457,500 GROWTH MANAGEMENT IMPACT: There is no impact to the Growth Management Plan related to this action. LEGAL CONSIDERATIONS: This item is approved as to form and legality and requires majority vote for approval. – CMG RECOMMENDATIONS: To approve an enhanced FY 2025 marketing funding request totaling an amount not to exceed $5,457,500 that utilizes both disaster reserve funds up to $390,000 from TDC Disaster Recovery (Fund 1106) for emergency hurricane recovery marketing, and operating reserve funds up to $5,067,500 from TDC Promotion (Fund 1101) for enhanced tourism marketing efforts to remain competitive; authorize any necessary Budget Amendments, and make a finding that this action promotes tourism. PREPARED BY: John Melleky, Arts and Culture Manager, Tourism ATTACHMENTS: 1. Strength of Competition Chart 2. Nov 12 BCC Enhanced Marketing Funding Request Page 476 of 5419 Page 477 of 5419 2024-2025 Enhanced Marketing Funding Request Page 478 of 5419 2 Urgent Funding to Counter Negative Perceptions ●CVB Distribution Channels ○Website & First Party Data, Social Platforms, eNewsletters, Online Communications ●Partner Relationships ○Real-Time Content Development & Distribution ●Media Advertising ○To Drive Bookings & Promote that the Destination is Fully Open for Business Optimized Creative Messaging Tailored to Three Key Audiences: ●Leisure (Domestic and International) ●Groups & Meetings ●Weddings Emergency Hurricane Recovery Marketing Request Page 479 of 5419 Current State of Tourism 3 ●Declining Leisure Hotel Occupancy ○Collier County last among Florida competitors ●2025 New Hotel Room Supply ○1,000 new hotel rooms ○Adding 147,000 leisure room nights to fill ●Occupancy Drives Visitation/TDT ○If demand remains unchanged, Occupancy is forecasted to decrease to 41% FY25 ●Hurricane Impacts and Negative Perceptions ○Ian, Debby, Helene, Milton ●Softening Tourism Market ○Florida Fatigue (Domestic) ○Increased International Options ○Future Group/Meetings Business (pipeline) 69.5% 69.5% 72.8% 66.2% 65.8% 64.3% 59.6% Page 480 of 5419 Strength of Competition 4 *These DMOs are funded from TDT along with funding from a Tourist Improvement District (TID) and membership fees. Advertising expenses are based on only the TDT. 1Amelia Island, Space Coast and Visit Tampa Bay were awarded additional funding from reserves for FY2025. 2These DMOs are nonprofit corporations 3SRQ/Bradenton CVB joint campaign contributing $200,000 with Visit FLorida contributing with $500,000. Source: Collier County Chapter, FRLA, State of Florida Department of Revenue (2024), Space Coast Office of Tourism, Sarasota Office of Tourism, Tampa Bay Business Journal, Amelia Island Office of Tourism Destination & Visitor Tax %County Total TDT Collected FY2023 Advertising Budget % TDT Spent on Advertising Travel Budget Number of FTE Amelia Island (5%)1, 2 Nassau $10,686,000 $12,565,000 117%$2,160,000 13 Space Coast (5%)*1 Brevard $25,000,000 $13,380,000 53.5%$32,000 16 Fort Myers/Sanibel (5%)Lee $36,500,000 $14,300,000 39.2%$297,450 33 Tampa Bay*1,2 (6%)Hillsborough $42,100,000 $14,900,000 35.4%$1,000,000 41 The Palm Beaches*2 (6%)Palm Beach $31,000,000 $10,230,000 33%$150,000 50 Sarasota2,3 (6%)Sarasota $49,996,721 $14,999,000 30%N/A 14 Florida Keys (5%)Monroe $61,478,869 $11,935,279 19.4%$1,010,000 8 Naples, Marco Island, Everglades (5%)Collier $44,000,000 $6,000,000 13.6%$133,000 9 Bradenton Area CVB3 (5%)Manatee $30,354,740 $3,731,946 12.3%$286,206 N/A Page 481 of 5419 Marketing Investment - Use of Funds Request 5 Emergency Hurricane Recovery Marketing (FUND 1106) ●Urgent Funding to Counter Negative Perceptions $390,000 TDT Reserve Investment (FUND 1101) ●Feeder Market Growth and Expansion ●Enhanced Efforts to Impact Off Season ●Strengthen Sales Efforts ●Expanded Paid Advertising ●Additional Research, Data and Insights $5,067,500 INVESTMENT $5,457,500 Fund 1106 reserve account balance is $2,069,300 Fund 1101 expenses include a $12,200,000 reserve balance Page 482 of 5419 Value of Supporting Collier County Tourism $48M Tourist Development Tax (TDT) Collections $1,525 Resident Tax Savings 28,000+ Local Tourism Jobs $3.6B Economic Impact $1.2B Total Wages TDT Drives Growth and Supports Beaches, County Museums, Culture, Recreation, Community, Environmental Projects Strengthens Reputation as the Best Community in America to Live, Work, and Play $12.2M TDT Promotions Reserve Page 483 of 5419 OPTION 1 Stronger Presence in Currently Identified Feeder Markets Expand Summer Target Markets by 4 Expand Winter Target Markets by 3 Enhanced Paid Advertising Opportunities Partner Co-op Programs Luxury Media Partnerships + Collaborations Additional Research, Data and Insights Enhanced Influencer Marketing International Public Relations Digital Marketing Enhancements Groups, Meetings, Weddings Enhancements Travel Trade Enhancements TOTAL INVESTMENT = $5,067,500 OPTION 2 Stronger Presence in Currently Identified Feeder Markets Expand Summer Target Markets by 2 Expand Winter Target Markets by 1 Enhanced Paid Advertising Opportunities Partner Co-op Programs Luxury Media Partnerships + Collaborations Additional Research, Data and Insights Enhanced Influencer Marketing International Public Relations Digital Marketing Enhancements Groups, Meetings, Weddings Enhancements Travel Trade Enhancements TOTAL INVESTMENT = $3,707,500 OPTION 3 Stronger Presence in Currently Identified Feeder Markets Expand Summer Target Markets by 3 Additional Research, Data and Insights Enhanced Influencer Marketing Digital Marketing Enhancements Groups, Meetings, Weddings Enhancements Travel Trade Enhancements TOTAL INVESTMENT = $2,462,500 Budget Options (presented to TDC 10/15/24) 7 Page 484 of 5419