June 6, 2016

Tourism industry shares in CT budget pain

PHOTO | Contributed
PHOTO | Contributed
Hartford's Mark Twain House and Museum is among the arts and tourism groups facing state funding cuts.
images | Contributed
Digital ads on the states tourism website (www.ctvisit.com) showcase destination spots around Connecticut.

As we head into the summer tourism season, Connecticut officials will have less money to spend marketing the state's attractions, while individual museums, nonprofits and arts groups will also see less state funding as a result of budget cuts negotiated by lawmakers.

Most organizations, ranging from the Connecticut Science Center, Mystic Aquarium, and Greater Hartford Arts Council, are seeing 10 percent reductions in state funding, but the statewide marketing budget lost nearly a third — or $3 million — of its original $9.5 million funding allocation for fiscal year 2017.

As a result, the state Department of Economic and Community Development (DECD) has for the first time since 2012 cut television advertising from its marketing campaign typically launched in late April, said Timothy Sullivan, the agency's deputy commissioner who oversees the state's tourism programs.

DECD has instead increased its focus on less expensive and more trackable digital advertising, he said. That trend will continue in the year ahead, when advertising will comprise a larger percentage of the marketing budget.

The budget cuts finalized by state lawmakers in special session are for fiscal year 2017, which begins July 1, but some of the state's marketing and tourism cutbacks have already begun due to mid-year rescissions and deficit-mitigation efforts.

Many cuts

Sullivan said DECD will also be forced to cut its contribution to the Connecticut Convention and Sports Bureau (CTCSB), a public-private partnership that markets the state's sports and convention venues to tournament organizers, industry associations and other groups.

CTCSB's funding from DECD fell to $655,000 this year, down from $800,000 in 2013 — the year after it was created.

Sullivan said the size of CTCSB's cut for fiscal 2017, which will come from DECD's marketing budget, is still being discussed.

CTCSB reported signing contracts for 109 area events and 73,000 room nights in fiscal year 2015. Among its recent wins was luring USA Cycling's cyclo-cross national championships, which will take place at Hartford's Riverside Park in January.

Also on the chopping block for the coming fiscal year is DECD's Marketing Challenge Grant program, which will be put on indefinite hiatus, unless state funding is increased, Sullivan said.

The program, which has helped spread Connecticut's "Still Revolutionary" campaign, provided grants as large as $50,000 to nonprofit tourism entities that proposed projects that demonstrate economic and innovation impacts.

Spared a worse fate?

Spending several million dollars less on advertising will hurt the tourism sector and impede its economic impact, observers say.

"Planting your image in somebody's mind subliminally is part of it," said John Lombardo, general manager of the Saybrook Point Inn and Spa and a board member of the fledgling Connecticut Tourism Coalition. "How do you do that? Well, you don't do it by not advertising."

But in a session in which the legislature was struggling to close a nearly $1 billion deficit next year, the outcome could have been more severe.

Lombardo said he credits the efforts of the new coalition, which includes hotel and restaurant industry associations, for saving tourism spending from "a far worse fate."

The coalition pushed legislators, ultimately unsuccessfully, to allocate a portion of the hotel tax to a dedicated tourism fund.

Though the bill didn't pass, Lombardo said the effort was worthwhile, and may have helped stave off a bigger tourism cut.

"I think the challenge now is the state has to spend [the $6.5 million it does have] as wisely as it can," he said.

While declining state spending on advertising won't help, Cindy Lovell, executive director of the Mark Twain House & Museum, shares the sentiment that things could have been worse.

"Absolutely there was relief," Lovell said of the moment she learned the museum's earmark would be cut 10 percent. "It could have been zeroed out."

Digital marketing strategy

The Mark Twain House has benefitted from the Marketing Challenge Grant program, which is being cut entirely. Lovell said the museum used some of the funds to pay for advertising in Metro North train stations.

That's a location where Saybrook Point has also advertised, but both the hotel and the museum, like DECD, have forged ahead with a largely digital marketing strategy heavy on social media.

Among its initiatives, for example, Saybrook Point has cultivated a list of more than 40,000 desirable customers that receive emails about upcoming events and promotions. Lombardo said the emails have high open rates and have allowed the hotel to get more granular data on what its customers and potential customers want.

Lovell said spending on advertising isn't the only marketing option. The Mark Twain House has been fortunate to get positive coverage from major media outlets, including a May article in The New York Times detailing a new exhibit about Twain's daughters. In 2013, National Geographic ranked the museum a top 10 historic house. That same year, a spread in Time Magazine described it as "Downton Abbey's American Cousin."

"You can't buy publicity like that," Lovell said.

Venues, arts groups, to see individual cuts

The state's tourism and nonprofit ecosystem has known since January or earlier that cuts were on the way.

That month, during a speech before a nonprofit audience in New Haven, Gov. Dannel Malloy's budget director Benjamin Barnes warned of impending budget pressures and said he supported a higher level of accountability for nonprofits that receive state funds to ensure that grant money is spent on programs that produced economic benefits for the state.

Malloy's first budget proposal, released the following month, proposed reducing a $21.3 million pool of arts, tourism and community grants by 26 percent, and consolidating those funds under the Comptroller's office for an in-depth evaluation of their economic benefits.

The nearly $19.8 billion state budget approved last month by lawmakers, and by Malloy late last week, is arguably a better result, since the majority of grantees, ranging from performance venues and museums to tourism districts and festivals, face cuts only in the 10-percent range.

In addition, the budget bill doesn't consolidate the grants under the Comptroller's office for accountability purposes.

The Mark Twain House's Lovell said her board of directors is grateful for state funding, but is always cautious not to rely on receiving the full amount budgeted, since actual spending can change, as it did this year.

The museum expects to receive just under $45,000 by the time the current fiscal year ends, which is nearly identical to the budgeted amount for the coming year. For a nonprofit with a modest $1.5 million endowment and a $2.7 million budget, it's real money.

The museum hasn't laid off any employees, but Lovell said the funding dip might mean delaying the purchase of new billing software for another year or two.

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