marketingguru

As part of the investigative piece I did for the Washington Herald Telegraph, I interviewed 4 different people.   Here is a Q & A write-up of the four separate interviews combined into one.

Washington, DC Tourism, Is it on the rocks?

By Killeen M. Gonzalez, Freelance Writer

I recently had the pleasure of interviewing four pillars of the Washington, DC tourism industry; Richard Spigler, Randy Julian, Elliot Ferguson, and Patrick M. Foley, on the subject of how the recession is affecting their business in the nation’s capital.      

Mr. Richard Spigler is President of the Carlyle Suites Hotel and Savoy Suites Hotel, the Chairman of the Hotel Association of Washington, DC and a board member of Destination D.C.  

Mr. Randy Julian is President of Julian Tours based in Alexandria, VA and 2007 Chairman and CEO of the National Tour Association.  

Mr. Patrick M. Foley is a Certified Hotel Administrator, General Manager of the Comfort Inn Downtown Washington, DC, President of the Hotel & Lodging Association of Virginia and a member of the Board of Directors of the Virginia Hospitality & Travel Association.

Mr. Elliot Ferguson is the President and CEO of Destination DC.  

Here is what they had to say.

What impact has the recession had on DC tourism overall in terms of the number of visitors, number of conventions booked, special event attendance, length of stay, tourism income, visitor make-up (foreign vs. domestic)?

Richard Spigler: Hard DC visitor statistics for 2009 are not yet available but preliminary indications are that overall visitation numbers have increased.   We attribute this to the overall excitement that the new administration has brought to the Capital.

There has been a significant decrease in the number of conventions booked but this is attributed in greater part to the delayed construction of our convention center hotel rather than the current economic conditions.  Most major conventions are booked years in advance and although 2009 conventions are down from 2008, we anticipate our future pace for convention bookings to increase after the convention center hotel commences construction this fall.

We have enjoyed unusually strong hotel occupancy levels in the beginning of the year due to the excitement surrounding the President’s Inauguration but this was followed by some minor declines in the spring.   However, we anticipate a strong summer due to the combination of great hotel values and almost every major attraction in the city being free, making DC the best destination value in our country this summer.

Randy Julian: The worst recession in over 70 years has had a dampening effect on all aspects of tourism. Washington is fortunate to have the benefit of an historic and new administration in office. Coupled with the fact that DC was building powerful visitor numbers right up until last year, well these things have helped the city hang in there. It is probably suffering less severe drops than other major destinations.

Patrick M. Foley: According to Destination DC, there has been a 2% drop in occupied rooms through May 31. The Comfort Inn Downtown DC is the exception, with occupancy running 12% higher than last year.  Tourists at our hotel are booking reservations much closer to their arrival date than they used to.  We often see people waiting to book until 3 or 4 days prior to their arrival.  In the past guests would book well in advance to make sure they have a secured reservation. 

Elliott Ferguson: We collect our visitor statistics on an annual basis and will be releasing the 2008 statistics later this week. We will be happy to share with you the information we have on visitor spending/ demographics, but the data will come from 2008 and thus may not speak directly to your questions about the recession.

Indicators we’re able to track more regularly include hotel occupancy (which was 73.8% year-to-date through May 2009, down 2.3% from 2008), average daily rate (which was $217 year-to-date through May 2009, down 0.5%, but with steeper declines in April and May). The declines we’re reporting now are not as steep as the declines that began last year in many other markets. (if you want comparison data, I would suggest Smith Travel Research as a good source: www.strglobal.com)

The Smithsonian Institution and National Park Service have both reported increases in the number of visitors at their DC locations. Smithsonian visits are up 21%, NPS sites are up 9%.

We anticipated a lower number of conventions in 2009-10 due to construction delays surrounding the Marriott Marquis, our convention center headquarters hotel and slower convention traffic along the East Coast. We had 24 citywide conventions in 2008, compared with 15 in 2009 and 14 in 2010.

What impact has the recession had on certain target market segments (SMERF, Corporate, Government, Leisure etc.)?

Richard Spigler: All segments are booking more short term and are increasingly using the internet or electronic distribution channels to purchase their hotel rooms.

Randy Julian: I can only speak for leisure and while it is down, I do not believe it is down as sharply as corporate for example.

Patrick M. Foley: Corporate travelers are definitely thinking twice before booking hotel rooms.  Many companies that have established preferred rates have tried to renegotiate their rate in search of a bargain.  So far the SMERF market has been pretty steady, though we see more people sharing rooms than before.  Leisure travel for the Comfort Inn Downtown DC is up from last year, with more and more people booking reservations through third-party websites.

Elliott Ferguson: Planners across segments are less likely to sign contracts far in advance and are less likely to make long-term commitments than they have been in the past. Some planners booking short-term meetings are also asking for smaller room blocks in order to avoid attrition penalties.

What impact has the recession had on the hotel’s market share, Rev Par and length of stay?

Richard Spigler: Washington, DC has gained significant popularity as a vacation destination since the Inauguration of President Obama.  We consistently see an increase in occupancy and length of stay, coupled with a reduction in rates to accommodate more travelling families.

Randy Julian: I know that hotels are down across the board but that is not my area of expertise.

Patrick M. Foley: As I said, the Comfort Inn Downtown is the exception, here.  We have made more rooms available to third-party booking sites in order to increase occupancy.  Our overall Occupancy is 12% higher than 2008, and REVPAR is up about $3.

What are you doing differently during this recession in terms of marketing, advertising, and staffing?

Richard Spigler: Marketing and Sales, in times of trouble, become even more critical.  We’re full steam ahead on sales initiatives and, in fact, are committing additional resources to push out our great value message.

As an example, we’ve built on the excitement of the new administration by offering our “Serve America and Stay in DC” package to families who may not have otherwise been able to afford a vacation this summer.  (See attached press release.)

Randy Julian: We are trying to market smarter and hold onto our small staff.

Patrick M. Foley: Our hotel has been watching payroll costs and cross-training employees to allow us more flexibility.  We work to closely monitor rates being offered by our competitors.  Our hotel does very little of its own advertising, since we rely on Choice Hotels to represent our brand.

Elliott Ferguson: As we have in past years, we’re focusing on a value message, emphasizing the amazing free and low-cost experiences that travelers find here. We’re also promoting the incredible hotel deals we’re offering through our “Staying Power” packages—travelers who book a three-night weekend stay save 30% on their stay, and the base rates start as low as $69 per night. I am attaching a press release outlining our summer campaign.

In order to boost short-term convention bookings, we’ve introduced a 44-inspired incentive package that builds on Obama’s popularity and the excitement the new administration has brought to DC. The 44 Power Savings package includes added value benefits such as 44% discounts on convention center rental, 4 menus priced at $44 each, a 44-min reception with 44-cent beer and wine, etc.

We’re also working with 36 individual hotels to offer qualified planners special meeting values, including waived attrition and discounts on AV, food & beverage and personal expenses.  I am attaching a press release describing this offer.

Do you find yourself using social media and PR more now than before? 

Richard Spigler: Absolutely.  It’s as much due to the economy as it is a function of the use of social media as a rapidly developing emerging market.

Randy Julian: Yes we are using social media to try to counterbalance smaller budgets for marketing and advertising.

Patrick M. Foley:  We have recently started using Facebook [www.facebook.com/comfortinndc]

Elliott Ferguson: With limited advertising resources, we’ve always relied heavily on PR to carry our messages, and that’s certainly true now. We are using social media more in response to the way media has shifted, and how consumers are relying on different resources to make their travel decisions. I’m proud to report that Washington, DC now has more than 120,000 fans on Facebook and we now have more than 1,600 followers on twitter.

How has the recession affected staffing levels and staff morale?

Richard Spigler: Times are obviously tough for everyone, but hardest hit are our line staff. Our small company reacted immediately to the downturn in the economy.  Our management team has made its mission to keep all members of our team employed.  This rally to succeed has actually brought our team closer together as we all work together to come up with new ideas to reduce expenses.

Randy Julian: Again, we are holding onto our small staff. Morale has its ups and downs right now. Things will ultimately improve.

Patrick M. Foley: The Comfort Inn Downtown DC is fortunate in that we have been busier than last year, so we have not had to reduce staff.  We cross-train many of our employees to allow us more flexibility, but we have not had to reduce hours.

Elliott Ferguson: We have a very capable and talented team tasked with selling and marketing DC and supporting those functions. To date, we have not adjusted our staff levels; however we have chosen not to fill some open positions. We are now planning for our 2010 fiscal year.

What tourism advocacy agencies are you part of and how have the government cuts to tourism related programs affected you if at all?

Richard Spigler: We are members of Destination DC, the official marketing organization for DC and the US Travel Association.  We are not aware of any government cuts to tourism programs related to DC.

Randy Julian: We belong to the National Tour Association and to the Student and Youth Travel Association. Budgets at the state and city Convention and Visitors Bureaus have been cut everywhere. This hampers the tour operator’s ability to develop new product offerings into new destinations.

Patrick M. Foley: We are members of Destination DC, the Choice Hotels Marketing Co-Op, and the DC Chamber of Commerce.

Elliott Ferguson: We are members of the US Travel Association and Destination Marketing Association International, plus various meetings, tourism and public relations-related association. We don’t have any evidence to suggest that the government cuts to tourism-related programs have affected Washington, DC.

How has the recession affected your back of the house operations (F & B, gift shop etc.)?

Richard Spigler: As independent hotels, we are more nimble than larger, franchised operations and were able to quickly adjust food and beverage pricing to match our room rate values to positively impact sales.  Although larger hotels can lower their room rates, they have much more difficulty aligning their restaurant values with their reduction in room rates. 

Patrick M. Foley:  As a limited service property, we do not have a gift shop or F&B outlet.

How has the recession affected the number of overseas visitors and their spending and length of stay?   How has it affected domestic travelers in those same areas?

Richard Spigler: Again, we do not have hard statistics for 2009 but we believe that the new administration has helped make us even more attractive to international visitors and our hotels continue to experience an increase in international leisure guests.

Randy Julian: The dollar is now stronger against many other currencies which means that the US is more expensive to visit today as compared to 1-2 years ago. This has hurt international inbound as has swine flu scares. The domestic business has been faring better and Washington in particular has benefitted from folks taking vacations closer to home.    

Patrick M. Foley:  According to Destination DC, Combined Domestic Travel through Reagan National and Dulles is down 6% since last year (through May); Foreign Travel is off by 4%.  Conversely, our hotel has seen an increase in overseas visitors, primarily from Europe and South America.  We attribute this to our success in creating a greater presence on booking sites that are targeting foreign travelers.

Elliott Ferguson: We will be releasing our 2008 statistics on Thurs. and will follow up with pertinent figures; again, our statistics will reflect travel in 2008 and our outlook for 2009.

Are you using any partnership marketing techniques or cutting any costs?

Richard Spigler: We have partnered with VolunteerMatch.org for our Serve America and Stay in DC package and our team members are consistently developing and testing new methods of cost savings.

Randy Julian:  We are partnering with another tour operator to attract the Chinese incoming market which has the potential to be a very important one.  Right now, however, that market is challenging due to their economic woes.

Patrick M. Foley: We participate in the Choice Hotels Marketing Co-Op.

Elliott Ferguson: We have not introduced any new partnership marketing programs; we are currently working to identify potential sponsors/ strategic partners and have developed relationships with airlines, AMTRAK as well as major events taking place in DC such as the Legg Mason Tennis Classic and the AT&T National golf tournament.

We are currently building our budget for 2010 and will be focusing on programs that show strong return on investment and motivate travelers to book. On the leisure side, we are focusing on the lineup of cultural experiences we’re offering this year. For example, our National Geographic Museum is the last US stop for a blockbuster Terra Cotta Warriors exhibition. We expect it to draw large crowds and will be promoting hotel packages and related cultural experiences. We’re also excited about the Sept. 15 release of Dan Brown’s newest book, which takes place here in DC. His earlier works have boosted tourism in locations like Paris and Rome.

Do you see any emerging travel trends or markets?

Richard Spigler: We are focusing on the regional five hour driving distance leisure traveler who can experience all that DC has to offer at a fraction of the cost of any other world class destination.

Randy Julian: I believe the domestic market and regional destinations will strengthen next year.

Patrick M. Foley: The Comfort Inn Downtown DC is making an effort to attract the Gay, Lesbian, Bisexual and Transgender Market.  We recently exhibited at a GLBT trade show in one of our major feeder cities.

Elliott Ferguson: We continue to see opportunities in the international market and are working to position ourselves as an international meetings and events destination. We continue to focus on traveler psychographic types that find themselves at home in DC, such as family travelers, urban explorers and history/ knowledge seekers. Knowing that consumers are increasingly cost-conscious, we are focusing on regional drive markets.

The travel industry has had its share of troubles – overbuilding in the 1980’s, rapid consolidation in the 1990’s and Post 9/11 security and safety concerns – How do they compare to the current recession?

Richard Spigler: You are correct, our industry has had its share of troubles but each event has made our industry stronger and benefited our guests.  Each recovery has produced better hotel products and services than ever before.  Who would have imagined in the post 9/11 era that DC would be the vibrant city that it is today with most hotel rooms being luxurious renovated facilities with flat screen televisions, wireless access, custom bedding, all the comforts of home and all at the fraction of a cost of other world class destinations?

Randy Julian: Everything cancelled in the aftermath of 9/11. What we are in now has been a long slow downward trend that began two years ago.

Patrick M. Foley: I believe the current situation is going to be relatively short-lived compared to the problems in the 80’s, 90’s and post-9/11.  Right now, hotels that can keep an eye on their cash flow should be able to weather this.  The danger lies in hotels that start slashing prices so deeply that profit margins evaporate; or properties that cut back on services to the point that their loyal guests leave them for another hotel.

Elliott Ferguson: If you’re talking about the national picture, I would suggest speaking with the communications team at US Travel. On a local level, we hear fewer concerns from our clients and leisure travelers about their personal safety as they make their travel decisions and more concerns about their personal finances. Corporate travel has also been scrutinized in ways that it wasn’t in 2001, although corporate travel to DC has not faced the same degree of criticism as it has in resort-type destinations. 

Where do you expect the tourism industry to be in 5 years?

Richard Spigler: I think the US tourism industry will be fully recovered and booming in five years due to a recovered domestic economy and an international market that will be responding to our new and improved policies of welcoming international visitors.

Randy Julian: Barring an unexpected calamity, I expect the DC tourism industry to be very vibrant 5 years from now. 

Patrick M. Foley: I believe the industry will have rebounded by then, particularly in markets like DC.

Elliott Ferguson: Again, I would defer to US Travel for the national picture. We will provide you with our outlook for 2009 and beyond when it is released on Thurs.

In your estimation have the changes in DC’s tourism industry trickled down into other industries and if so how?

Richard Spigler: Absolutely.  Tourism is our biggest industry after the Federal Government and it affects every business and resident of the District of Columbia.  Fortunately, DC tourism has had minimal negative effects as a result of the recession and we continue to hope that they will be offset by the popularity and excitement of the new administration.

Randy Julian: I’m certain the tourism slowdown has had an adverse effect on everything from taxis to restaurants.

Patrick M. Foley: All companies are looking for ways to run a more streamlined operation.  Companies that used to send more than one representative to cover a convention or trade show now send only one, if they attend at all. 

If you wanted to tell the traveling public one thing about DC tourism or DC in general what would it be?

Richard Spigler: Washington, DC is such a vibrant city and this new administration has brought a palpable buzz to the air.  Every American should visit our Capital at least once, and this summer is perhaps the most exciting summer that I can remember. Almost every attraction in the city is FREE, making DC the best destination value in our country!”

Randy Julian: Washington DC is one of the leading travel destinations in the US. That notable position will expand and grow over time to where DC will rank very high on the list of most desirable international destinations as well.

Patrick M. Foley: As a destination, DC is popular because of the buzz generated with a new President, and the fact that nearly all of the tourism attractions in DC are free, once you get here.

Elliott Ferguson: I’d encourage them to take a look at how the city has evolved in the past few decades, with new restaurants and hotels opening up in all parts of the city, as well as major new developments like Nationals Park, the Newseum and the Capitol Visitor Center. Neighborhoods are completely reinventing themselves, attracting new restaurants, shopping and retail development as well as new residents. There’s a strong creative spirit in the city and a rich arts and culture scene.

Travelers are often surprised to learn how easy it is to access some of the places and experiences that make DC unique. You can sit in on a Supreme Court ruling, see a concert at an embassy… there’s nowhere else in the world that you can have those experiences, and so many of them are free of charge.

Is there anything else that you would like to add on the subject?

Richard Spigler: Visit www.carlylesuites.com and www.savoysuites.com

Randy Julian: Things will get better!

Patrick M. Foley: My concern is that the larger hotels in DC are cutting prices so drastically right now to try and fill that they’re spoiling the market.  Some hotel companies were the first to tell hoteliers not to drop prices when the downturn began, but now they’re the ones responsible for rates dropping as much as 22% lower than last year.  This is great for the tourists, since they are able to get real bargains on hotel rooms, but hotels that slash prices too drastically in order to keep up with the larger chains are going to have a hard time getting back to the price-point they need once the economy improves. 

I’d like to extend a Thank you to all four gentlemen for agreeing to be interviewed and their thoughtful responses.