The Business of Tourism

By Beacon Staff

Tourism has long been the second largest industry in Montana behind agriculture. But in recent years, cities have ramped up efforts to localize tourism by launching region-specific marketing and promotional campaigns. In short, it’s not enough to simply get tourists to Montana – how do you get them to our town?

Whitefish, with its active convention and visitors bureau, is one of the best at self-promotion, in part because it operates with a considerable marketing budget. Now with the help of a law passed at the 2007 Legislature, cities like Kalispell and Missoula are seeking to build their own marketing budgets.

On July 22 at the Red Lion Hotel, a group of hoteliers met with Kalispell Chamber of Commerce President Joe Unterreiner and representatives from the Flathead Convention and Visitors Bureau to discuss creating a Tourism Business Improvement District (TBID). The 2007 Legislature passed a law enabling cities to establish TBIDs for the purpose of raising money to be used for marketing and promotion.

Billings was the first city to take advantage of the law, forming a TBID in October of 2007. Since then, Bozeman, Great Falls and Helena have followed suit, while Havre, Missoula and now Kalispell are in the process. Proponents contend that such districts not only raise much-needed funds but they also encourage cooperation and structure among local tourist-based businesses.

Gib Bissell, owner of Aero Inn, said that with other towns adopting the districts across the state, Kalispell would be losing important ground if it didn’t do so also.

“We’re giving up a lot of money right now,” Bissell said. “We’re losing out in a lot of ways.”

Cities with TBIDs collect funds through hotels, which charge either a flat per-room fee or a percentage. The four existing TBIDs in Montana charge a $1 flat fee. But the majority of hoteliers at the July 22 meeting favored a percentage of less than 3 percent per room night. Lisa Brown of the Red Lion Hotel and Chris Walters of the Hilton Garden Inn supported a $1.50 flat fee but were willing to accept a percentage.

Representatives from nine of the city’s 16 hotels were at the meeting. All either favored creating a district or were riding the fence but leaning toward approval, with officials from the Blue and White Motel and Outlaw Inn expressing the most skepticism. To establish a TBID, 60 percent of hoteliers would have to approve through a petition. Then the Kalispell City Council would have to approve it.

According to figures from the Chamber of Commerce, it is estimated Kalispell could make $482,566 annually based on a 60 percent occupancy rate of all the available rooms within city limits. At 3 percent, the total jumps to $507,019, based on 2008 collections.

The money could be used for advertising and a variety of marketing tools. There would be staff considerations as well. The funds could also help bid for large events to come to Kalispell, which applies to both out-of-state and in-state groups.

“If you don’t have the funds,” Unterreiner said, “you’re going to get out-bid for those events.”

Hoteliers favored a less-than-3-percent fee because of the old 99-cent advertising rule – 99 cents is more appealing to the consumer’s eye than $1. Since all hotels already pay a 7 percent bed tax to the state, 3 percent would bump up the total tax that guests pay to a full 10 percent. Most agreed that anything between 2.5 and 2.9 would be fine.

Bed tax collections are the primary funding source for most groups whose aim is to promote tourism in Montana. After collection, bed taxes are distributed annually to groups like the Flathead Convention and Visitors Bureau and the Whitefish Convention and Visitors Bureau.

For the FCVB, bed taxes represent roughly $60,000 of the organization’s $110,000 annual budget, said director Dori Muehlhof. The other $50,000 comes from membership fees.

The WCVB, however, gets less than a third of its funding from bed taxes, while the rest is raised through a voluntary “tourism-promotion assessment.” Member businesses place the 1 percent assessment on customers’ bills and are supposed to clearly articulate what the fee is and that it’s voluntary.

Buoyed by collections from the 1 percent assessment, WCVB has worked with a budget as large as $300,000 in the past, though numbers are down a bit this year, said executive director Jan Metzmaker. Using her substantial budget, along with the public relations expertise of Lisa Jones, Metzmaker has managed to significantly increase the city of Whitefish’s presence in advertisements and articles across the nation.

Jones keeps in regular contact with hundreds of journalists throughout the country. She uses her portion of the budget to buy plane tickets for journalists, show them around while they’re in town and cover other day-to-day operational costs. Member hotels provide accommodations and restaurants help out with food.

Through the efforts of Jones and Metzmaker, Whitefish has been featured in The New York Times, National Geographic Adventure, large flight magazines and dozens of other publications. In the fall, PBS will feature the town on its show “The Endless Feast.”

“We’re all trying to find a way to get promotion money because it’s just difficult to come by,” Metzmaker said.

The Flathead Convention and Visitors Bureau tries to reach out to publications in much the same manner as Metzmaker and Jones, but Muehlhof said “I don’t have the means to actively do it like in Whitefish.”

Muehlhof’s organization uses a variety of promotional methods, including brochures; “familiarization” tours that show event organizers around the valley; press releases; working with convention and meeting planners; and Internet advertising, among others.

The FCVB represents the whole valley, but its main focus is Kalispell, Muehlhof said. This is partly because much of its funding comes from Kalispell bed taxes but also because the city is the hub of the valley, she said. Muehlhof is excited by the prospect of Kalispell’s TBID, which would most likely work in conjunction with her agency.

Columbia Falls is also making efforts to both increase and unify its marketing presence. While the town has unmistakable ties to Glacier National Park, Barry Conger of the First Best Place Task Force said a “long-term branding committee” has formed to figure out ways to better advertise the town’s other offerings, such as the Flathead River.

The committee is a joint effort between the Chamber of Commerce and the First Best Place Task Force, a grassroots organization that is active in numerous Columbia Falls events.

“We have the river, but it’s never really been marketed or hyped and the idea is to feature the river and lay out other things that are essential to the town,” Conger said.

Conger said once the specifics of the marketing plan are ironed out, local businesses will have a framework that they can share to give the town a more unified advertising strategy – promote the town as a whole in addition to individual businesses. Also, this summer a group of Bigfork business owners launched efforts to enact a voluntary 1 percent assessment similar to Whitefish’s.

In Kalispell, hoteliers plan to hold another meeting with the Chamber of Commerce on Aug. 5 at 3 p.m. at the Red Lion to decide whether and how to move forward with the TBID. They hope the hoteliers who weren’t present at the first meeting will be able to attend.

Mayor Pam Kennedy was in attendance at the July 22 meeting. She said the TBID could work with local groups like the Kalispell Downtown Association to “truly maximize dollars.”

“We’ve got to find a way to market Kalispell,” Kennedy said. “We have to let people know, this is the place. Kalispell is where you need to be.”