The funding conundrum for place branding teams
We can all agree that tourism promotion is an essential component of a city, nation or place’s economy, right alongside a solid economic development strategy. In 2018, travel and tourism generated 10.4% of all global economy and created 319 million jobs – that works out as a global average of 1 in every 10 people whose daily income is reliant on tourism. 1 And yet for some reason, when the going gets tough and budgets need to be cut, everyone seems to turn their eyes to the place promotion budget.
In January 2019, it was announced that the funding for Marketing Edinburgh was going to be slashed in half. In February, the Mexican Tourism Promotion Board was dissolved in its entirety. And Brand USA appears to be fighting to ensure that it won’t face a similar fate. Jos Vranken, Managing Director at NBTC Holland Marketing warned that “particularly government funding is subject to political cycles,” and it seems he is correct.
While there’s a deeper underlying issue here around the ongoing need for advocacy and being able to demonstrate the positive impact that tourism has on a destination’s economy, there’s also a growing need to explore new approaches to funding – for tourism and economic development teams alike. Places around the world are rising to these new challenges, and there’s something for all of us to learn from these innovative solutions – sometimes a tight budget can lend itself to the greatest creativity.
We’ve been gathering thoughts from our speakers at this year’s City Nation Place Global conference.
“With public authorities globally facing funding issues, the challenge is to bring together new funding partnerships involving the public and the private sectors – and the not-for-profit sector – in innovative ways that enables a greater volume of funds to be created for strategy development, implementation and management,” says Malcolm Allan, President of Bloom Consulting. And he’s not alone in this suggestion. The rapid rise in Business Improvement Districts across the world is one realisation of this idea, with local organisations rallying together to improve their region. Or take Los Cabos – following the dissolution of the Mexican Tourism Board, a number of high-profile organisations created a private trust to fund the Los Cabos Tourism Board and to continue international promotion of the region.2
“In our case, the government is simply not putting country branding as a priority, so we don’t have a choice,” explained Joanna Landau, founder & CEO of VIBE Israel. “The corporate industry benefits directly from the country looking good, so it’s in their interest to invest some of their marketing in budget in [country branding].”
This drive towards increased collaboration with the private sector isn’t isolated to DMOs – and it can add to more than just your bottom line. Edith Wong, Chief Marketing Officer at Invest Hong Kong, shared that they’ve been seeing a growing trend towards private-public sector collaboration, rather than a purely government-driven campaign. “This helps to generate a cross-matching of ideas and the involvement of the private sector can often ensure that tangible benefits are made,” she explained.
While many destinations are looking to strike a better balance between government and private sector funding, the province of Manitoba in Canada has taken a different tact. “The government had indicated they would develop a sustainable funding model for the future,” began Colin Ferguson, CEO at Travel Manitoba, "but seeing none forthcoming, we created one for ourselves… and sold it to the government with the help of Manitoba Chambers of Commerce.” With the new plan in place, Travel Manitoba receives 4% of the tax-based revenues generated by tourism industry – with 100% of that money being invested back into marketing initiatives.
Some places, however, are opting not to reach out to stakeholders for an investment. Peter Kentie, Managing Director at Eindhoven 365, explained that they had opted to rely primarily on self-generating income in order to drive their talent, tourism and business attraction campaigns. “Being creative in financing creates freedom and manoeuvrability for the projects,” he suggested, “without making the organisation dependant on business grants or public money.”
It’s clearly a challenge that places will continue to grapple with - but perhaps it’s time to consider that the traditional model of funding for DMOs is defunct? Whilst the ‘overtourism’ phrase has certainly exploded in usage over the last year we do recognise that not every place has this problem – nevertheless, every place should be managing the environmental impact of tourism, and focusing on destination management. It may be easier to advocate for the value of your work if tourism departments become better integrated with the economic development organisations - when EDOs and DMOs share responsibility and collaborate on planning for place promotion, this can provide a clearer message for government and citizens on the benefits, as well as a stronger message to external markets. Eindhoven 365 won our Place Brand of the Year award in 2018 for their work to create a unified brand strategy and it’s an example of how a cohesive, well-defined place brand strategy encompassing both tourism and economic development can go a long way not only to ensuring that you maximise your resources, but also to establishing longer-term security of funding.