City Considers Independent Convention & Visitors Bureau

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SeaWorld San Antonio President Dan Decker presents the task force's findings to City Council. Photo by Scott Ball.

SeaWorld San Antonio President Dan Decker presents the task force's findings to City Council. Photo by Scott Ball.

A local industry force has recommended that the San Antonio Convention and Visitors Bureau (CVB) become an independent organization so that San Antonio can be more competitive when vying with other cities for conventions and tourism dollars.

The recommendation was made before City Council in a Wednesday briefing.

If the suggestion from the Convention and Visitors Bureau Structure Task Force is adopted, the City’s current CVB would obtain 501(c)6 status, and take 12-18 months to make the transition from City governance to becoming an independent organization with its own board to set policy. The new structure, if approved, would mean that the City would contract with the CVB, which would have a total target budget rise from $20 million in 2015 to $30 million in three to five years, according to task force estimates.

SeaWorld San Antonio President Dan Decker, who chaired the task force, said he and his fellow task force members spent eight months studying how independent convention and visitors organizations function in other select cities.

The 13-member task force, appointed by Mayor Ivy Taylor, included representatives from across the local hospitality industry, as well as CVB Executive Director Cassandra Matej and Michael Sawaya, director of the City’s Convention, Sports and Entertainment Facilities.

The task force took note of a 2013 economic impact study of the hospitality industry, which states that San Antonio receives more than 31 million visitors annually, resulting in a $13.4 billion impact on the local economy.

While San Antonio remains a top tourist attraction in Texas, and a continuing project will result in the expansion of the Henry B. Gonzalez Convention Center, Decker told the Council that other comparable cities are getting more competitive in their bids to attract visitors.

Constriction showing the expansion of the Henry B. Gonzalez Convention Center. Photo by Scott Ball.

Construction continues on the Henry B. Gonzalez Convention Center expansion. Photo by Scott Ball.

Of the top 50 U.S. cities, San Antonio is the only one with a city-governed convention and visitors bureau, the task force found. Decker said five commissioned studies all suggest that a change in the local CVB structure would improve the city’s marketability and increase economic growth.

“We’re behind now, and we’re worried about being behind in the future,” Decker said.

Competitor cities such as Austin, Dallas, Houston, New Orleans, Phoenix and Nashville are rapidly increasing their marketing budgets while San Antonio’s has remained relatively flat at 4% growth over the last four years. Its critics also say it markets the city’s well-known attractions while overlooking the evolving city and its attraction to more sophisticated visitors and groups

The takeaway here is that travel is a critical business segment in San Antonio and its regional dominance is being threatened, Decker said. Competitor cities are increasing their CVB-related resources and inventory. rising payroll costs and other expenses in San Antonio are leaving fewer budget dollars  for competing with other cities. A changing marketplace demands the city streamline its efforts, Decker said.

The task force outlined the relative merits of staying with a City-governed CVB versus going out on its own. Going independent would mean a bigger budget, a more competitive marketing plan, and more committed stakeholder support.

The CVB get all but 3% of its funds from the public sector via the hotel occupancy tax (HOT), and local and county tax funds. The new independent model could reduce public funding to 70%. Private sector revenue sources could include advertising and partnership services, corporate sponsorships, and membership dues. There would be more opportunities for individuals, businesses, and organizations to help fund operations.

The downside is mostly logistical: migrating employee benefit plans, adding back office costs, and impacting some  local businesses that now do business with the CVB.

If it were to approve such a plan, the Council would set up a transition team with staffers from the City’s human resources, legal and finance/budget departments, as well as some task force members, including Matej, and outside contract counsel. The scope of work would include determining the terms and length of a contract between the City and the new organization as well as bylaws to structure of the board of directors.

Lori Steward, the City’s Human Resources director, said CVB employees could transfer to other City departments or stay with the CVB. Special consideration would be given to employees nearing retirement so they would not lose any accrued benefits.

“We’re going to try to make it fair and equitable for everyone,” Steward added.

San Antonio Human Resources Director Lori Steward explains how government employees would transition if the CVB were to become an independent organization. Photo by Scott Ball.

San Antonio Human Resources Director Lori Steward explains how government employees would transition if the CVB were to become an independent organization. Photo by Scott Ball.

Assistant City Manager Maria Villagomez said the City will continue analyzing the impact to City finances from a CVB transition. The bureau currently pays $1.5 million yearly to the City’s general and restricted funds.

As an independent organization, for example, the new CVB would need its own payroll personnel and process, and a new way to procure technical equipment and support staff. The recommendation for transition has received support from local organizations such as the San Antonio Hotel Lodging Association and San Antonio Area Tourism Council.

The basic idea of giving up City governance of the CVB received support from the mayor and Council. The potential transition comes as the City is trying to increase the number of nonstop flights to lure more business travelers and economic development to San Antonio.

Redevelopment projects at the convention center and the Alamodome are also expected to contribute to the city’s ability to attract a wider variety of major events. Meanwhile, the designation of the Spanish colonial missions as a World Heritage site gives San Antonio a new opportunity to lure even more visitors for years to come.

These objectives, including enhancing air service, have been noted as key to the CVB’s marketing success in 2016, as bureau officials noted in the organization’s recent annual meeting.

Councilmember Joe Krier (D9) called the proposal “game-changing.”

“This is potentially the most historic thing we’ve done with our visitor industry since (HemisFair ’68),” he added.

“I don’t have any problem with the recommendation itself,” Mayor Taylor said, adding that she wants to ensure concerns about the impact to employees and City finances are addressed. “We’re trying to do everything we can to stay competitive.”

Taylor and several Council members also emphasized the importance of a thorough analysis of how a transition would affect the City’s finances, and hope that the new CVB would remain transparent in governance and involved with the City’s branding efforts.

 

*Top image: SeaWorld San Antonio President Dan Decker presents the task force’s findings to City Council. Photo by Scott Ball. 

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