Tourism funding should expand to incentivize innovation and collaboration

The Department of Tourism continues to prioritize the sharing of information to engage stakeholders in recovery efforts and opportunities. As such, I present this fifth and final installment of a deep dive into the research and background for the six tourism industry recommendations from the Wisconsin Economic Development Corporation plan, delivered to the Legislature and Governor in response to Act 185 (plan can be found here). While it would have been impossible to fully incorporate insights from the many industry outreach touch points and hours of research, discussions, and survey results, the plan does include recommendations to help tourism regain our prominent economic footing throughout Wisconsin. With financial support and focused engagement, each of the six recommendations (#1, #2, #3, #4) can have significant and positive impacts on Wisconsin's rebound.

Recommendations #5 & #6:

• Expand and innovate tourism grants and provide access to low interest or interest free forgivable loans, encouraging industry innovation to improve on seasonal job fluctuation and build more sustainable year-round offerings.
• Provide funding support to tourism-reliant businesses for personal protective equipment.

The tourism industry continues to struggle as leisure travel begins to return at reduced levels, and business travel and major events are predicted to lag in their rebound until 2024, according to the U.S Travel Association. It bears repeating that the Wisconsin tourism industry achieved a record year in 2019, delivering $22.2 billion in direct business spending and $1.6 billion in state and local taxes to support our communities and government services. As the state's third largest composite industry, we can't afford to overlook the critical role tourism revenue plays in our way of life as residents, and in the scale of our state's economic recovery. The financial losses of the tourism industry are significant and well-documented and as of today's publication date, Wisconsin's DMOs have not received any state-level discretionary COVID-19 relief funding and have been largely excluded from direct federal relief programs like the Paycheck Protection Program (PPP). The most recent (Wave 3) DMO COVID-19 impacts survey illustrates the scope and scale of financial impact to the state's DMOs.

While lost visitor spending during local and national travel restrictions resulted in direct sales losses to tourism-related local businesses (hotels, restaurants, retail, attractions, entertainment, etc.), these losses also have cascading effects on the very organizations that exist to drive visitors into these local businesses, hotels and convention facilities. These sweeping losses translate into lost operating funds to support staff and facilities, lost promotional funds to compete against other regional destinations for travelers who have many choices for where they travel, and ultimately result in a significantly decreased ability to adapt to rapidly changing industry needs.

The infrastructure of the tourism industry is a patchwork quilt of Destination Marketing Organizations (DMOs) that exist to support and promote the collection of businesses that make their community an attractive place to visit and to live. Many DMOs rely largely or in part on room tax revenue to fund operations and promotional activities. In the simplest terms, these DMOs - whether a Convention and Visitor Bureau, a Chamber of Commerce or a hybrid of both - are struggling to perform their critical economic development activities without the necessary resources to support their work as a result of COVID-19 impacts. In this time of COVID-19 impact and recovery, communities are even more reliant on their DMOs to drive the return of spending in their communities, along with many other important support services they deliver. DMOs play a critical role in the economic development and recovery of communities of all sizes across the state, whether by helping to provide PPE and cleaning products for small businesses and nonprofits, mounting a recovery campaign to attract future meetings, conventions, and sports tournaments back to the community, or spearheading the development of a new trail connector, a new convention facility, or a new sports complex. Many of the organizations who pay membership dues to these organizations cannot perform those activities on their own and understand the necessity for greater collaboration with other business owners in the community.

Flexible and creative approaches to tourism relief funding

A nationwide scan reveals that several states have already announced a variety of approaches to Coronavirus Relief Fund (CRF) allocations for tourism industry support and recovery. While not a comprehensive list of states whose tourism industry has received CRF funding, these examples demonstrate different approaches being taken nationwide:

• Mississippi: $15 million
• Missouri: $15 million
• Montana: $15 million
• North Carolina: $15 million
• Utah: $9 million for arts and culture groups; $12 million for tourism
• Vermont: $5 million 

The various CRF allocations by other states address several of the suggested needs referenced in this document’s leading recommendations, including grant programs for DMOs, PPE and cleaning needs for visitor centers, recovery marketing funding for state and local tourism entities, funding for arts and cultural organizations as similarly proposed in Recommendation #3, among other categories of support.

Wisconsin DMOs and tourism entities need funding now not only to drive community recovery in the short term, but also to adapt to the new environment and future opportunities for success. We must continue to think beyond the crisis at hand when we design solutions to our problems. Marketing activities can drive immediate stimulus to local leisure and travel spending, while innovative programs can build momentum toward driving future demand in the slower-to-recover categories of business travel and longer-lead meetings and conventions, sporting events and tournaments. 

Building for the future

Innovation is a commonly used word, but how often do we hear it used in conjunction with tourism in Wisconsin? Certainly, there are a number of innovative attractions, experiences and businesses across the state who have shown success through innovation. And our more traditional or classic tourism offerings are unquestionably important contributors to the variety of experiences people have come to love about Wisconsin. However, new circumstances create opportunities for advancement and competitive advantage. With a strategic approach and focused funding opportunities to incentivize innovation, we stand to gain much as we rebuild our tourism industry for a successful future.

The statewide tourism industry would benefit from funding opportunities that incentivize innovation and collaboration in a variety of categories:

• New technologies to enable a variety of transactions and interactions between travelers and local businesses and products: examples could include hardware or software for fee collection at trailheads, public boat launches, hospitality venues, and other opportunities to enable frictionless commerce for tourism experiences.
• New infrastructure and programs to leverage Wisconsin's outdoor recreation renaissance into a more permanent and sustainable way of life for residents would create hard-to-resist reasons for travelers to spend more time and money in our state across all four seasons.
• Business startups that accelerate utilization of natural resources, improve tourism access for all, and encourage more diversity in tourism industry business ownership and leadership. For example, providers of adventure guide services, outdoor recreation equipment rentals and sales, and technologies that enable greater access, education and inclusion may have unprecedented opportunity to leverage the major resurgence in interest and participation in outdoor recreation activities such as fishing, kayaking, cycling and camping.
• New collaborations between public and private entities to expand the scale of effect and incorporate a wider scope of products and services into the statewide tourism approach for greater economic impact. Wisconsin already offers a rich variety of products, services, lodging, and entertainment. But what does the future hold for a new generation of travelers and adventure seekers? What are the skills needed and who will fill the tourism jobs of the future? Research initiatives, collaboration programs, alternative funding mechanisms and public-private partnerships offer greater insight and flexibility in exploring new trends and ideas through shared risk and reward models and potential scalability of successful ideas.

Whether funding is delivered to local DMOs and other organizations as stewards of opportunity, or the Department of Tourism is enabled to drive these advancements through new grant programs or funding vehicles, the statewide tourism industry needs financial support and it is needed immediately.