Analysis of Philadelphia’s Destination Marketing Infrastructure and its Role in the Hospitality Sector September 2014


Audit Date: September 9, 2014

Audit Categories

  • Other
Controller: Alan Butkovitz

Audit Tags

  • Commerce,
  • Economic Development,
  • Hospitality,
  • Tourism

Executive Summary


For Immediate Release
Sept. 9, 2014

Contact: Brian Dries
215-686-8869

Controller Butkovitz Concludes Combining Tourism & Marketing Agencies
Could Save $1 Million Annually
Study says peer cities have consolidated destination marketing into a single organization in recent years with improved results

Analysis of Philadelphia’s Destination Marketing Infrastructure
& Its Role in the Hospitality Sector

PHILADELPHIA – City Controller Alan Butkovitz today released a study of Philadelphia’s multiple tourism and marketing agencies that found the City could save at least $1 million annually by consolidating services under one agency.

These savings would accrue from attaining a wide variety of efficiencies in contracted services, rent, office and administrative expenses and information technology.

The Controller’s study reviewed the operations and costs of the Philadelphia Convention and Visitors Bureau and Visit Philadelphia, which both promote the City as a destination for business and leisure travel. The majority of funding for both organizations is derived from the City’s Hotel Tax, which in 2013 provided $12 million to the Convention and Visitors Bureau and $8 million to Visit Philadelphia.

“Both of these agencies are selling essentially the same product – Philadelphia,” said Butkovitz. “The savings through combining resources and reducing overhead could be re-deployed strategically to enhance promotion of historically weak segments such as international and business travel.”

According to Butkovitz, there is cause for concern as business travel to the City remained almost entirely flat, over the last 14 years. Additionally in 2013, the Convention and Visitors Bureau booked 100,000 fewer rooms than in 1997. The analysis shows that leisure tourism increased dramatically since the mid-1990s, with other segments such as conventions, business, and international underperforming.

“Furthermore, Philadelphia ranks only 13th among U.S. cities in international tourism, and is the only major East Coast city that fails to attract at least one million international visitors a year,” said Butkovitz.

By analyzing the tax dollars invested, the number of rooms booked, the economic impact created by each agency’s efforts in 2013, the Controller’s Office determined the following:

Agency

Attributable Economic
Impact

Return on Investment
Per Tax Dollar

Convention & Visitors Bureau

$909 million

$74

Visit Philadelphia

$564 million

$69

The Controller’s study indicates that the economic impact of the Convention and Visitors Bureau lagged peer cities: the national average room impact per night for a convention attendee is $2,500, while in Philadelphia it is only $1,600.

“The Convention and Visitors Bureau is supposed to provide the bulk of economic impact dollars,” said Butkovitz. “Instead, it’s 36 percent below the national average.”

Philadelphia is the only City among those studied for this report with two Destination Marketing Organizations of comparable size and budget. Several peer cities, such as New York City, Houston and Chicago, have consolidated their destination marketing into a single organization in recent years with improved results.

“These cities have seen greater coordination, alignment of branding, marking, and resources,” said Butkovitz. “Philadelphia’s current structure makes strategic allocation of resources very difficult.”

In recent years, the Mayor’s Hospitality Advisory Board has met infrequently and has failed to provide adequate leadership and coordination necessary to achieve maximum efficiency.

“Given the structure of Philadelphia’s destination marketing industry, leadership is critical to setting and achieving strategic priorities for the sector as a whole,” said Butkovitz.

###

Two Destination Marketing Agencies: (1)The Philadelphia Visitors and Convention Bureau was created in 1941 and is the primary tourism agency for the City of Philadelphia globally and the primary sales and marketing agency for the Pennsylvania Convention Center. It is a membership organization with over 800 dues-paying businesses. (2)Visit Philadelphia was created as the Greater Philadelphia Tourism and Marketing Corporation in 1996 with the goal of attracting more leisure visitors to the City, and once they arrived, to get them to stay longer.

Philadelphia’s hospitality sector is the second largest employment sector in the city, supporting 64,508 jobs, and is one of only four sectors to have increased employment since 2001.