Monday, September 25, 2017

DMO to Tap Into Hidden Treasures



By on July 27, 2017

From Orlando, Fla., to Barcelona, Spain, many cities, districts and countries have put their tourism marketing strategy into the hands of a more specialized organization, a destination marketing organization (DMO). With the passage of Act 17 of 2017, Puerto Rico became the latest jurisdiction to bet on a DMO to further increase tourism on the island.

Puerto Rico’s DMO, as with many DMOs across the globe, comprises mostly tourism and marketing experts who work in the private sector, and their task is to develop a marketing strategy to attract more travelers to Puerto Rico. This task was previously the responsibility of the Puerto Rico Tourism Co. (PRTC). The DMO board now has 10 of its 13 members in place and can officially begin working.

Tourism is an important component of the local economy. According to the PRTC, tourism contributes nearly $4 billion a year to the Puerto Rico economy. Despite the zika scare, an estimated 10 million passengers were expected to go through the island’s airports by the end of 2016. Besides air travelers, the cruiseship sector is also important to the island, as San Juan is considered the No. 1 homeport for cruiseships in the Caribbean.

However, this transition of responsibility does not mean the government will be excluded from developing Puerto Rico as a destination and the traveler’s economy on the island. The private sector is expected to bring both expertise and continuity in order to create a marketing strategy that is not tied to partisanship and other political changes.

“This [the DMO] is nothing new. We are not reinventing the wheel. On the contrary, this has been a world tendency. This is decentralizing the government from the task of marketing and promotion, and leaving it in the hands of those who can give continuity to those efforts. It is also recognition that the image of Puerto Rico, of the destination, has become lacerated and limited by the political comings and goings,” argued PRTC Executive Director José Izquierdo.

The Tourism Co., for its part, after aiding with the transition to the DMO, will see its role become that of a destination management organization, which means the PRTC is the entity that will ensure there is integral planning and development of the industries and infrastructures related to tourism on the island.

Preparing the terrain for the DMO

In a sit-down interview, Izquierdo explained to Caribbean Business that the PRTC has been preparing various aspects, from a short-term marketing strategy to a budget, to have a good transition for the DMO to take over the reins of the marketing strategy.

He pointed out that Puerto Rico is still in the process of recuperating its market share, which was lost in 2016 due to the infamous zika virus, among other aspects. According to the PRTC chief, while there was a “marked decrease” in the room-tax revenue in February 2016, the projections were not amended, leading to $10 million less in collected revenue.

This is why Izquierdo argued for the need to implement a short-term marketing strategy for Puerto Rico.

“We are looking for immediate results to recuperate our market share, which is what I think we lost, given the challenges of 2016,” he said. “It is very easy to focus now on the DMO and forget about the need to promote ourselves. To that effect, I estimate that with our efforts, we are going to recuperate about 5% of the market share we lost attributable to the mosquito whose name I shall not say anymore. This would represent around 180,000 additional tourists.”

Izquierdo pointed out that the input of the private sector is essential in this process. “We are elaborating a destination marketing plan that I want to be visualized precisely as that—as a destination marketing plan—and not like a plan of the Tourism Co. This is a change that seems subtle, but it is very important,” he added. Izquierdo explained that in the past few months, the PRTC has hired experts and has been in constant communication with members of the traveler’s economy.

Another element Izquierdo wants to leave to the DMO is a broader and more accessible way to access the information related to tourism on the island.

“We are trying to broaden our platform of data intelligence, all the statistics that will allow us to evaluate our performance, as it’s been done in many other places. All [the previous] marketing strategies were business-driven, as in business to consumer, a bit imposed. Ours is more consumers to business,” he said.

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The DMO is now entering a six-month period in which the Tourism Co. will send a monthly budget allocation of $400,000, or a maximum of $2.4 million a year. This subsidy is to help the DMO complete some organizational tasks such as hiring full-time staff. Once Izquierdo certifies that the DMO is fully operational, the marketing organization will receive a budget allocation from the room-tax revenue of up to $25 million a year.

For Izquierdo, who stresses the “collaboration” between the private and public sectors, the DMO is now in the startup stage, and he is confident, that as in other jurisdictions, Puerto Rico’s DMO will yield positive results for tourism on the island.

Not reinventing the wheel

Izquierdo’s expectations are not out of line with what has been the global trend. Visit Orlando, which is the DMO for the city of Orlando, directs a marketing strategy for an industry that brings in $64 billion in annual revenue. To have a successful marketing strategy, Visit Orlando brings together the public and private sectors, which include the more than 1,200 businesses and community organizations that are members of this DMO.

Another example is the Bermuda DMO, called the Bermuda Tourism Authority (BTA). The BTA had a similar goal to Puerto Rico as it wanted to “keep politics out of tourism-related decisions,” as was stated on its website. While Bermuda has been successful as a cruiseship stop, its DMO is also working on increasing other types of travelers, as studies have shown tourists who arrive by plane spend more than those from cruiseships.

While New York City certainly has many attractions, this city is also one of the many jurisdictions around the world that can thank a DMO for its destination marketing strategy. The NYC & Company is the organization in charge of the marketing strategy for New York City’s five boroughs. Their edge comes from a global view of the things that New York has to offer to travelers and being able to give centralized services to those interested in adventuring in the Big Apple.

Getting to work

With the recent appointments by Gov. Ricardo Rosselló of Jon Borschow, president of Foundation for Puerto Rico, Joanne Ferguson-Twiste, president of Destination Puerto Rico, and Federico Stubbe Jr., president of Prisa Group, the DMO’s board has officially reached quorum and will now be able to officially start to work.

As to the importance of working for the DMO, Borschow, founder & president of Foundation for Puerto Rico, stated that the “traveler’s economy is part of a crucial strategy for economic development on the island.” He went on to explain that tourism, or more broadly the traveler’s economy, has substantial multiplying effects. For example, the foundation has found that for each day a tourist is in Puerto Rico, he or she has a direct impact of $200 and an indirect impact of $500 on the local economy.

Another reason Borschow is an advocate for investing in the Puerto Rican traveler’s economy is the possibility that a conglomerate of industries could experience economic growth while other industries, such as manufacturing, bounce back from the economic crisis.

As for developing a successful destination marketing strategy, he explained that it will be a process that is going to require three important aspects: rethink Puerto Rico as a destination; make sure there is cohesiveness among the different industries and the marketing strategy; and have a reliable input and data collection system.

“The key is that Puerto Rico rethinks itself in terms of how we want the world to know us, that we are able to understand what is essential within Puerto Rico, which is going to be attractive to the rest of the world,” Borschow said.

He explained that today’s travelers have moved from vacations aimed at resting to vacations aimed at acquiring more experiences, which means Puerto Rico, as a destination, needs to present itself to the world as more than just beach and sun. The importance of shifting the focus from sandy beaches is also directed toward increasing the number of days tourists plan to spend on the island.

Another change the DMO is expected to make when it comes to the destination marketing strategy is the medium through which Puerto Rico promotes itself and giving more attention to technology-driven strategies.

“In 2017, according to Google, almost 70% of the people who traveled planned and managed their trip using the tool that is the internet,” Borschow said, arguing that utilizing cybernetic resources will allow for a more personalized approach toward the marketing strategy. This is expected to result in a marketing strategy that can appeal to both economy travelers as well as luxury travelers. He also pointed out that having an experienced-focus strategy means the majority of what will be promoted can appeal to most types of travelers.

Borschow said that even sectors that are not traditionally considered part of the tourism sector need to be involved in the strategy. This means other industries need to be in tune with the strategies to attract more travelers to the island, which may include commerce embracing new technologies and spaces like social media.

Information central

 

This means tried and tested statistical methods such as the nine endorsed by the World Tourism Organization and other innovative ways to capture the input of tourists who come to Puerto Rico. For the latter, Borschow alluded to the possibility of implementing an application that could collect the experiences of travelers in real time. This could help not just with the collection of data, but also for improving the tourist experience.

Arnaldo Cruz, the foundation’s director for Research & Analysis, explained that Puerto Rico needs to improve the collection of data to achieve more precise conclusions. One example given by Cruz is that the main metric for the island is hotel occupancy, yet 50% of visitors do not stay in hotels. Furthermore, lodging only accounts for 29% of the expenses incurred by tourists.

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