Lowcountry Tourism Part 2: Just how much marketing money is the 'right' amount?

How can a community whose economy depends upon tourism determine whether it's spending the right amount on marketing to attract visitors?

That's a pressing question for Beaufort County and its municipalities, as the economic downturn exposes fractures in the larger economy and as those who make tourism marketing their business ask for more public money to do their job.

In the second day of a two-part series, The Island Packet and The Beaufort Gazette pose some questions and answers that could illuminate the debate:


For fiscal year 2010-11, the marketing arms of the Hilton Head Island-Bluffton and Beaufort Regional chambers of commerce had budgets of about $2.8 million and $946,595 million, respectively.

Beyond those figures, it's difficult to say just how much is spent promoting the Lowcountry, in part because many businesses do their own marketing. The private sector, however, doesn't do this nearly as much as it did decades ago, when developers of new gated communities snagged buyers with national advertising campaigns.

Groups that, by law, get public money from accommodations and hospitality taxes include the Hilton Head-Bluffton, Beaufort Regional and Beaufort County Black chambers of commerce; the Lowcountry & Resort Islands Tourism Commission; the Hilton Head Hospitality Association; and Main St. Beaufort, USA.

Many other groups apply for grants each year from accommodations-tax revenue. They include the Hilton Head Island Concours d'Elegance & Motoring Festival, the Bluffton Historical Preservation Society and Penn Center, which hosts the Heritage Days celebration on St. Helena Island.

The two largest local recipients of public money for tourism marketing are the Hilton Head-Bluffton and Beaufort Regional chambers. The Beaufort chamber uses the money for multimedia advertising and public relations campaigns that target primarily likely travelers in markets such as Columbia, Greenville, Atlanta and Charlotte. The Hilton Head-Bluffton chamber does much the same but focuses on Eastern U.S. markets, such as Washington, Philadelphia and New York, in addition to Atlanta and Charlotte.

Both chambers' leaders say their organizations work hard to solicit private money for marketing; both usually derive a greater percentage of their revenues from private sources than many competitors with budgets of a similar size, according to a 2009 study by Destination Marketing Association International, a Washington-based group of marketing organizations.


Leaders of the Hilton Head-Bluffton chamber don't have an exact figure in mind but want to be on par with those who market other destinations. About $5 million more a year -- a 179-percent increase -- would put them at the national average of about 55 percent of accommodations-tax collections.

The Beaufort chamber's VCB wants its budget to reach $2 million within three years -- a 111-percent increase -- which its officials say would bring it in line with competing destinations.

The black chamber -- which spends $75,000 to $90,000 a year on marketing, most of it in publications with predominately black audiences -- wants $100,000 to $150,000 more, president and CEO Larry Holman said.

Jim Wescott, executive director of the Lowcountry & Resort Islands Tourism Commission, said his group spends about $650,000 a year to promote tourism in Beaufort, Jasper, Colleton and Hampton counties.

"If we had 10 times that much, we could easily use it," Wescott said.


Lowcountry residents need not look far for a case study.

Last year, tourism leaders in Horry County lobbied state lawmakers to let local governments there charge an extra 1-percent sales tax to pay for more marketing.

The legislature considered a similar bill for Beaufort County earlier this year but did not pass it.

The Horry County bill was controversial but benefited that community, said Brad Dean, president and CEO of the Myrtle Beach Area Chamber of Commerce.

The push for the bill came after Dean's chamber commissioned a Coastal Carolina University study of tourism trends in 2008. That was just as the recession closed in on the middle-class tourists who are the lifeblood of that coastal South Carolina destination and just as tourism marketers there realized they'd over-built during the preceding real estate boom.

The forecast was dire: Businesses dependent upon tourism could soon see as much as a 25-percent drop in revenue.

"We were absolutely shocked to see what was about to happen," Dean said.

As a result of the tax, the Myrtle Beach chamber, which previously spent $5 million to $10 million a year on marketing, now spends about $20 million a year, Dean said. Since the tax took effect in August 2009, occupancy rates have in increased to pre-Sept. 11 levels, he said. That improvement came even though the area doubled its supply of available rooms to about 100,000 from the mid-1990s to mid-2000s, he said.

Hotel and condo-hotel occupancy far surpassed expectations this summer, up about 8 percentage points from last year, according to another Coastal Carolina University study. Hoteliers, academics and officials have attributed the increases to some combination of a modest economic recovery, vacationers fleeing the Gulf oil spill, increased airline traffic and more advertising by the chamber.

Even though Hilton Head and the Lowcounty are world-class destinations, Dean said, he urged them not to take visitors for granted.

"You simply must increase investment in promoting Hilton Head Island if you expect to maintain or grow your market share," he said.

Eventually, though, marketing expenditures reach a point of diminishing returns, several experts said.

"The more you throw at it, the less you'll get back at some point," said Scott Sperling, senior economist at Tourism Economics, a Pennsylvania consulting firm that provides economic analysis and forecasting for local and national destinations.

Susan Thomas, vice president of the Hilton Head-Bluffton chamber's VCB, said the Lowcountry is nowhere near that point.

"We are so far away from that right now," she said.


Tourism marketers say they will continue to seek more public and private money.

The Beaufort Regional Chamber's Visitor & Convention Bureau is assembling a committee to examine ways to do that, said Carlotta Ungaro, the chamber's president and CEO.

One possible source: Beaufort County hospitality tax funds.

The county usually puts that money into reserves for parks or into the county's general fund, but County Council voted in September to give $200,000 in hospitality taxes to tourism groups, including all three local chambers, for the first time.

Finding more funding also is a priority for the Hilton Head-Bluffton chamber, leaders say. Its board should begin discussing strategies after Tuesday's runoff for Hilton Head mayor, chairman David Tigges said.

Two recent proposals to boost public money devoted to marketing met political resistance.

In the first case, both chambers supported the failed Beaufort County sales-tax bill, which would have allowed municipalities to impose a sales tax of as much as 1 percent and use proceeds for tourism marketing.

Hilton Head-Bluffton chamber officials, who helped draft the bill, have not decided if they will ask a state legislator to try again, Tigges said. "Everything is on the table," he said.

In the second case, the Taxation Realignment Commission, a group state lawmakers charged with recommending changes to the state's tax structure, earlier this year suggested guaranteeing more money for marketing and devoting less to local governments and arts and cultural organizations.

Many local government officials decried the proposal. The Beaufort Regional Chamber's VCB considered it but took no stand. The Hilton Head-Bluffton Chamber opposed it, saying it would bring only a minimal increase in funding and would shift money from other organizations that serve visitors and enhance the community.

The commission dropped the proposal from its list of final recommendations last month.

If tourism marketers seek further changes at the state level, state Sen. Tom Davis, R-Beaufort, will listen to their case but said he is wary of any tax or fee increases in a down economy.

"At the end of the day, my inclination is whatever is decided on is going to be subject to a referendum of the people," he said.

The (Myrtle Beach) Sun News contributed to this report.