Measuring up: Driving the travel economy by changing how – and what – we measure
Occupancy tax remains South Lake Tahoe’s important measurement
One metric for success in South Lake Tahoe is the amount of transient occupancy tax collected. Carl Ribaudo, a local destination tourism marketing consultant, said the best way to predict 2021 is to compare the year to 2019. TOT is tracked from Oct.-Sept, so for the 2018/19 fiscal year, the city collected nearly $9 million in TOT. For the 2019/20 fiscal year, the city collected a little over $7.5 million in TOT.
Still, comparing 2019 and 2021 still won’t give the city an accurate picture. Measure T, which bans vacation home rentals outside of the tourist core, went into effect on January 1, 2021. In just Jan. and Feb., more than 100 vacation homes lost their permits because of the measure. South Lake Tahoe Police Department VHR Enforcement officer Maureen Stuhlman said the majority of the permits will expire in May and June.
In the 2018/19 TOT report, VHRs accounted for more than $3 million of the total income. In 2019/20, when VHRs were banned under the state’s stay-at-home for most of the year, TOT income from individual VHR owners was down 20%. Meaning, the city will likely see a hit once Measure T is fully in effect.
On the flipside, the city saw a huge increase in day trips in 2020 and that trend will likely continue. Ribaudo also said he suspects mid-week trips will also continue to rise.
Destination travel providers have long since adopted reliable, actionable metrics to gauge the success or failure of their efforts to create thriving travel economies. And whether it’s the relatively isolated nature of their economies, the seasonality of revenue streams or the significant infrastructure requirements of snow sports, mountain travel partners and suppliers are proactive with a wide range of data.
But suppliers and their overall communities have both a need and opportunity to change how and what they measure to drive the evolution of the industry.
“How” you measure – recovery vs trajectory
Typically, suppliers and governments measure quantitative performance such as taxes, visitation and resource use in terms of year-over-year (YOY) comparisons. Measuring during similar periods helps ensure that conditions such as weather, economic cycles and holidays are similar in both periods, allowing them to identify what is and isn’t working on the operational or promotional side.
The resulting data provide a measure of annual growth or decline, which becomes actionable. But when you encounter disruption in one of the data sets (say, a pandemic, to use an unlikely and extreme example), interested parties need to adjust to ensure they’re seeing performance in the right context.
For example, if we measure lodging bookings at mountain resorts in the third week of March 2021 versus 2020, we find that bookings are up 1,580% due to shuttered destinations at the same time last year. That, in a nutshell, is a recovery metric that helps you understand emergence from the downside, but has little long-term value.
For long-term value we add more data and also compare the same week versus 2019. The results? Bookings are up 58.5% compared to the same week in 2019. We now have both a recovery metric and a long-term trajectory metrics to qualify our recovery findings and make sure we’re on track. For the record, the current 2021 gains are dominated by pent-up demand, with the dramatic gains over 2020 also largely attributable to last year’s shutdown.
While this is a simplified example, the Insights Collective and I recommend that a multi-year discipline be applied across all data points measured, so that decisions through the recovery keep the long-term interests of the supplier or destination on track.
“What” you measure – shifting long-term interests?
Major disruptors have a way of creating challenges and opportunities, but rarely as aggressively as 2020. While many suppliers and towns are looking forward to a return to “normal,” others see this as an opportunity to drive change and address long-standing challenges like workforce housing, community relations, over-visitation or differentiation, to their competitive advantage.
Some of what was important in 2019 – generating foot traffic in a particular part of a town, for example – is still important, but may be lower on the list in 2021. Shifting away from volume in favor of exclusivity, visitor infrastructure in favor of local lifestyle, lodging tax in favor of workforce housing or any one of a dozen other shifts, are all initiatives destinations may identify that will require new ways to measure success.
Carl Ribaudo, president of SMG, and a co-founder of Insights Collective, suggests that resorts may pivot towards “looking at residents’ satisfaction with tourism as it’s currently delivered, making sure it truly benefits all segments of the community.” Ralf Garrison, founder of the Collective, has another approach, but perhaps to the same end, suggesting there’s an opportunity for suppliers and destinations to be more selective in “identifying the type of visitors that are most compatible with the destination.”
Local satisfaction vs. visitor compatibility
In the first instance, we’re adding Resident Satisfaction to the things being measured, while the Garrison approach compels you to identify and measure traits of consumers before they arrive, then refine, repeat and measure again. As an aside, and not to diminish the targeting efforts of destination marketing organizations, while many are engaged in some version of that exercise, visitor traits have most often been driven by price and access rather than premeditation.
In a quantitative example, Bill Wishowski, director of operations at the Breckenridge Tourism Office, says “focusing on room nights (instead of occupancy) has become a higher priority for us as the number of available units has changed year-over-year” an example of getting in front of changes to second-homeowner and rent-by-owner markets by measuring differently.
The travel industry has largely measured success as revenue gained through price since the Great Recession, but is also something of a victim of that success. There are compelling reasons to measure recovery and trajectory in terms of a return to normal. But there are equally compelling reasons to embrace changing consumer, resident and societal dynamics to measure success in new ways, something mountain travel professionals have proven themselves more than capable in the past twelve months.
Insights Collective; a Tourism Economy Think Tank and Resource Center – is a collaboration of destination travel industry experts who are collaborating and working, together with mountain resort communities and their stakeholders, to understand, plan, and navigate through the emerging tourism marketplace. http://www.TheInsightsCollective.com / email@example.com
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Truckee is offering a one-month extension for downtown businesses, allowing restaurants to continue to use outdoor patio spaces as a means to operate through the end of October, according to Assistant Town Manager Hilary Hobbs.