Kathryn Boyd-Batstone / Rivard Report
The San Antonio Convention and Visitors Bureau (SACVB) has enormous responsibility in performing sales, marketing, and service activities for one of the most vital contributors to San Antonio’s economy – tourism and hospitality.
For many years, the SACVB has been competitively funded and regarded as one of the most well-functioning and productive Destination Marketing Organizations (DMOs) in the United States.
However, the competitive environment is changing dramatically. This has created the need for organizational evaluation in order to ensure optimum performance and achieve desired results.
Convention center expansions, headquarter hotel development, enhanced DMO budgets, and new hotel inventory in Texas and around the U.S. are gaining attention from some of San Antonio’s potential and longstanding customers.
There are certain factors that can inhibit the SACVB performance. It’s critical to analyze organizational structure and funding restrictions as potential limiting factors that could affect the ultimate competitiveness of the destination. Key considerations in this analysis also include speed to market, human resources, and common business practices that enable a DMO to produce desired results on behalf of the city.
The SACVB is almost solely funded by collection of Hotel Occupancy Taxes (HOT) that occur when hotels in the city’s defined market area are rented by visitors. The SACVB receives no contributions from the City’s general fund that is used to pay for basic public services such as streets, sidewalks, drainage, public safety, and more.
It is important to note that HOT funds are considered “restricted” by state law and mandated to be spent on advertising and conducting solicitations and promotional programs to attract tourists and convention delegates to a municipality or its vicinity. The statute does allow a maximum of 15% of the tax collected to be used to support public infrastructure and up to 15% for promotion of the arts that support tourist activities.
While still considered “public funding,” the restricted use of these funds for use by the SACVB would deem it necessary for any private DMO to be primarily governed by a board of directors familiar with common business practices in the hospitality industry that address the key concerns of ultimate competitiveness.
Oftentimes, the phrase “public dollars” is used as a generic term to refer to any taxes collected. However, the restricted nature of HOT funds would clearly show its difference from ad-valorem taxes and their uses. While there are opportunities to raise private funds to supplement the sales and marketing efforts, any increase in the taxes or surcharges applied to the renting of hotel rooms would require City Council approval.
There are many issues to consider when advocating for change of a structure that has been in existence for decades. Any potential organizational structure change will have expected political concerns that must be taken into consideration. A newly formed organization must be committed to a partnership with the City and to bringing measurable benefits to the citizens and stakeholders in the community.
With a new convention center built for the future, a debt-service commitment funded by future market growth expectations, and a hyper-competitive regional and national tourism and convention marketplace, performance criteria based on market dynamics will need to be negotiated and contracted.
As is the case with any transition, consideration must be given to issues of control and oversight. Historically, all control rests with the City both on the management and policy-making sides. A transition to a more independent structure will require relinquishing a certain amount of control by the City in return for an increased private sector investment – both in time and financial support.
In most DMOs around the U.S., the board is comprised of volunteers from the hospitality and broader business communities who are willing to dedicate their time and attention to achieve great results for their city’s economy. Typically included in the board composition are City staff members who represent the City’s interests and are responsible for the results to be delivered by the DMO. As there are many examples around the country that would help model the ideal board, this is not a difficult task.
As destination sales and marketing differs vastly from delivering basic public services, so should our approach to reaching the audiences we target to visit San Antonio. Motivational speaker Tony Robbins once said, “By changing nothing, nothing changes.”
At the end of the day, the ultimate goal for the City and its stakeholders is to put the very best team on the field – unencumbered by any non-competitive business practices and positioned to be forward-thinking, opportunistic, speedily responsive to potential clients, and nimble in a fast-paced marketplace.
Call it visionary, timely, or wise. I call it just plain good business sense.
Top image: The Henry B. Gonzalez Convention Center lights up Market Street. Photo by Kathryn Boyd-Batstone.