September 1978 Prepared for the United States Travel Service, An agency of the U.S. Department of Commerce by the United States Conference of Mayors. /•* ^ of c 0a Volume 2 The study was conducted tor the United States Travel Service, an agency of the U.S. Department of Commerce by the U.S. Conference of Mayors, Institute for Urban and Regional Economic Analysis. The primary research was conducted by the Department of Tourism and Travel Administration, Graduate School of Management and Urban Professions, New School for Social Research, New York City. MARTA GOLDSMITH Project Director Institute for Urban and Regional Economic Analysis U.S. Conference of Mayors GERALD T. HORTON Principal Researcher Visiting Professor of Urban Policy — Graduate School of Management and Urban Professions New School for Social Research SUSAN ALT Research Team Director Acting Director, Department of Tourism and Travel Development New School for Social Research Research Team Joan Brown Elizabeth Ketger Lora Meyers Evelyn Weiser New School for Social Research September, 1978 FOREWORD The U.S. Conference of Mayors, under the direction of John J. Gunter as a part of the research program of its Institute of Urban and Regional Economic Analysis, under the direction of Melvin A. Mister, conducted a study of city governmental activities in travel, tourism and convention promotion for the United States Travel Service. The U.S. Conference of Mayors considers that tour- ism is important to the cities' economic growth and development and that it requires special attention. The purpose of the project was to identify and describe the major activities which make tourism development an increasingly significant component of the city's overall economic development program. Case studies are used to identify and describe notable city programs and their origins so that they may be replicated by other cities. In the initial phase of the project, the Conference, in conjunction with the New School for Social Re- search, conducted a mail survey of the tourism and travel programs in all cities with populations over 100,000 in 1978. The findings of this survey are pre- sented in Volume 1 of the report City Government, Tourism and Economic Development. The second phase of the project included the research and preparation of four case study cities selected from the information obtained through the mail surveys and telephone interviews. Case study cities were selected that demonstrated well coordinated programs between the various organizational units, substantial funding to tourism programs, and major involvement of city government. Information for the case studies was obtained through onsite interviews with the individuals in the city most directly involved in tourism and travel pro- motion activities. The results of these in-depth inter- views in Nashville, San Jose, Baltimore and El Paso are contained in Volume 2 of the report City Govern- ment, Tourism and Economic Development. The project was managed by the U.S. Conference of Mayors. The Project Director was Marta Goldsmith. The research was carried out by the Department of Tourism and Travel Administration, the New School for Social Research. The project manager for the New School was Susan Alt, Acting Director of Tourism and Travel Administration at the New School for Social Research. The principal researcher and principal author of the report was Gerald Horton, Visiting Professor for Urban Policy at the New School. We wish to thank all the cities who responded to the survey. It was a difficult task and we were gratified at the response. We hope the report will be useful to Mayors and city administrators across the Country as they consider the role of travel and tourism in their overall economic development programs. September, 1978 in TABLE OF CONTENTS Page Chapter 1 Highlights of the Case Study Cities 1 Chapter 2 Travel Development in Nashville-Davidson County, Tennessee 5 Chapter 3 San Jose's Tourism, Travel and Convention Development Program 16 Chapter 4 Economic Development and Tourism in Baltimore, Maryland 24 Chapter 5 El Paso's Travel and Convention Development Program 35 Digitized by the Internet Archive in 2012 with funding from LYRASIS Members and Sloan Foundation http://www.archive.org/details/citygovernmenttov2unit Chapter 1 HIGHLIGHTS OF THE CASE STUDY CITIES Volume I of this report describes city government involvement in travel development nationwide and in general. The survey revealed that city involvement in the tourism and convention business varies consider- ably. In order to gain more information on the or- ganization, financing, and activities of city tourism programs, case studies were conducted in four cities: Nashville, Baltimore, San Jose and El Paso. The findings from these case studies are included in Volume 2 of this report. The four case study cities were selected not necessari- ly as exemplary programs nor as the most successful in the Nation. Neither are they the best financed nor do they have the largest staffs. Rather, the cities were selected because they had substantial travel develop- ment programs in different parts of the United States that had characteristics common to all of the cities surveyed. They also have different organizational structures, different funding sources, and different attractions as travel destinations. Nashville, Tennessee is a city of 480,000 people in the heart of the Midsouth. There are no major cities or towns nearby, but people from all over the Nation and the world are drawn to Nashville — Music City, U.S.A. Nashville means country music. It has a character and a drawing quality all its own. The city of El Paso is a border town of 420,000 per- sons. People visit El Paso and think of it as the gate- way to Old Mexico. It shows the Spanish flavor with the Old West traditions. San Jose is the 21st largest city in the United States but is often thought of only as a suburb of the San Francisco Bay Area. San Jose has a population of 575,000. It is a new city, built upon an industrial base of high technology and aerospace. Baltimore is one of the grand old ladies of the East Coast. A great colonial port city whose finest mo- ments have often seemed to be in the past, it is ex- periencing a new, rejuvenated second youth. It is the largest of the case study cities with a population of 845,000 in a two million person metropolitan area. The four case study cities have little in common as tourist attractions, convention centers, or as vacation resorts. However, they do share aggressive, well fi- nanced travel development programs that are cre- ating new jobs and causing substantial public and private capital investment in the center city. ORGANIZATION FOR TRAVEL DEVELOPMENT The four cities exemplify the various approaches that cities across the nation use for tourism and conven- tion development and promotion organization. El Paso's Convention and Visitor's Bureau is a depart- ment of the city government. It was created by city Ordinance in 1976 for the "promotion, development, improvement, operation, maintenance and adminis- tration of the city of El Paso's Convention and Visitor's Industry." El Paso also has a City Board of Development, Tourism and Conventions, an advisory group ap- pointed by the Mayor from the private sector. Nashville has a mayor's Administrative Assistant for Tourism and a Metropolitan Representative for Tourist Development, both on the Mayor's staff. These positions were created in 1976 and 1977. Also in 1977, the Metropolitan Government of Nashville- Davidson County entered into a substantial contract with the Nashville Area Chamber of Commerce for tourist and convention promotion services. That con- tract was for $500,000 in 1978. Tennessee state law also provides for a Metropolitan Tourist Commission. This seven-member beard prepares the budgets for both tourism promotions and tourist-related activities. The Mayor of Baltimore located the city's tourism activities in several agencies. The Office of Promo- tion and Tourism, established in 1977, produces in- formation, coordinates downtown events and over- sees all development as it relates to the promotion of the city. Charles Center/ Inner Harbor Management Corporation has the lead responsibility for capital in- vestments in the downtown and harbor areas. The Hyatt Management Corporation was awarded a con- tract in 1978 to manage the Civic Center, the Con- vention Bureau, and the Convention Center. From 1968 to 1978 the city of San Jose relied almost entirely on a contract with the San Jose Chamber of Commerce for travel and tourist promotion. The first contract was in 1968. This year, the city created a Department of Convention and Cultural Facilities. This new department may be expected to become directly involved in travel promotion. FINANCING TRAVEL DEVELOPMENT IN THE CITIES The four case cities all have substantial budgets for tourism and convention promotion from a range of financing sources. Baltimore's major financing for tourism is through its civic promotion program. This includes the Office of Promotion and Tourism's FY 79 budget of $250,000 and the Hyatt Management Corporation's contract and other expenses associated with the Civic Center, Convention Bureau and Convention Center for $820,000. Also included in the program for FY 70 is $194,000 for the operation and maintenance cf tn» city-owned clipper ship, the "Pride of Baltimore," and $300,000 for the Mechanic Theatre. Almost all of these funds come from general city revenues. San Jose had a budget of $435,270 for tourist and convention promotion in 1978 which it contracted with the San Jose Chamber of Commerce for services. These funds are 47.5 percent of the revenues from a 6 percent tourist occupancy tax. The remainder of the tax is spent by the city on cultural activities. The tax was established in 1966. The allocation formula is a local decision. fund. The tax produced $1.5 million in 1978. One million dollars were spent on travel and tourist- related promotion activities. El Paso had a budget of $596,500 for travel develop- ment in FY 78. Of this amount, $458,000 was from the general fund. Another $62,500 came from the airport fund for a matching program with the airlines for promotion and $76,000 is 12.5 percent of the pro- ceeds from a 4 percent hotel occupancy tax. This allocation of a portion of the tax for tourism promo- tion is required by the state enabling act. PUBLIC AND PRIVATE CAPITAL INVESTMENT Travel development in all four cities has necessitated substantial capital investment. The capital plant of the tourism and convention industry includes hotels, convention centers, exhibit halls, and theme parks. In all four cities, the travel business has played a ma- jor role in the redevelopment of older downtown areas. Baltimore has the most significant investments, high- lighted by the Charles Center /Inner Harbor Redevel- opment that costs $644 million and was financed with city, State, Federal, and private funds. A new con- vention center is also under construction, which is being financed by the city and State and will cost $45 million. Nashville has not had a great deal of public invest- ment, but private investment has included approx- imately $140 million of hotel and motel rooms in the last 10 years. The famous Opryland, U.S.A. theme park represents an investment of more than $33 million in private funds. El Paso completed its Civic Center Complex in 1972. This $21 million multi-purpose facility was funded by a $15 million bond issue and 62.5 percent of the an- nual proceeds from the city hotel-motel tax. The Hyatt Regency also has plans for a new $20 million hotel. In contrast, the hotel-motel occupancy tax in Nashville is distributed by State law. One-third of the proceeds must go to tourism promotion, one-third to tourist-related activities, and one-third to the general In San Jose, the San Jose Convention and Cultural Center has been recently completed. With new and renovated facilities, the complex represents an $18 million public investment. The center is adjacent to the San Antonio Plaza. The city has invested $20 million to be matched by $200 million in private funds for this development. This plaza will include a major hotel and a retail /commer- cial center. In San Jose, El Paso, and Baltimore, major conven- tion complexes require these cities to conduct strong promotion programs if they are to be successful. Nashville is currently considering a $23 million con- vention center. The private developments add value to the property tax digests. They also require that the city govern- ment work with the private sector to encourage tour- ism and trade. Tourism can contribute significantly to the econ- omy of the City and surrounding areas and should be planned and promoted as an ongoing activity that will become not only self-sustaining, but capable of identifying revenues above and beyond operational cost .... A commitment must be made to fund a basic ongoing logical program if the investment of time and money are to pay divi- dends. Economic development in San Jose has been directed toward industrial locations and commercial expan- sion. There is no obvious organizational connection between the activities and programs of the City's Economic Development Department and the travel development contract with the Chamber. ECONOMIC DEVELOPMENT AND THE ROLE OF TOURISM There is a new definition of urban or city-centered activity in a number of the Nation's larger cities. For many years, the development of the economic base centered on manufacturing. Recently, however, em- phasis has been placed on the development of service- oriented industries. The redefinition is well demonstrated in Baltimore. No longer is the city of Baltimore the region's center of industry and manufacturing. The new economic base of Baltimore is education, culture, service and tourism. The physical infrastructure of the center city is being rebuilt to better serve these functions. Another indication of Baltimore's increasing com- mitment to tourism has been the progressive institu- tionalization of City activities for tourism. Beginning with the first City Fair in 1970, the City has added new events as the physical capacity to handle those events has grown. Today, the three lead agencies for tourism promo- tion — the Office of Promotion and Tourism, the Hyatt Management Corporation and the Charles Center /Inner Harbor Management Corporation are all involved in economic planning and promotion as well. These institutions are closely aligned with the economic development agencies of the City. This close alliance is highlighted in an excerpt from "A Proposal for a Baltimore Tourism Program" prepared in February, 1978. However, the city's Adopted Goals include: XI. Develop San Jose's full potential as a tourist, sports and convention center. As one city councilman said, "Tourism development is seen as a secondary effect of downtown revitaliza- tion and the construction of the Convention and Cultural Center. We just haven't considered San Jose as a tourist and convention city." Bringing travel development into the overall eco- nomic planning for San Jose is a task yet to be ac- complished. As tourism's i ; ^ortance is relatively new, the inclusion of it in future economic strategies has only recently become recognized as necessary. The Nashville government may have backed into the travel development business through the occupancy tax distribution formula. The Mayor, however, con- siders travel promotion an investment in the overall financing and development of the city. "The travel business creates property tax income through the private capital investment in hotels, entertainment facilities and service centers," the Mayor of Nashville said. "The tourism industry and the occupancy tax are major factors in controlling the property tax in Nashville-Davidson County." The metropolitan Nashville government has an In- dustrial Development Board to encourage the loca- tion of new industry and the creation of new jobs. Tourism development is not a specific mandate of El Paso's newly formed Office of Economic Develop- ment although the Executive Director of the Conven- tion and Visitors Bureau is an ex officio member of its board. There is, however, ample recognition of the role tourism can play in economic development as evidenced by the Goals for El Paso statement as well as in the public support and financial backing given the Convention and Visitors Bureau. Moreover many of the urban economic development projects planned or underway, including those in the area of transpor- tation, are bound to improve the city's tourist facilities. Currently in El Paso, much of the coordination of effort which occurs between tourism promotion and economic development is a consequence of the Mayor's Executive Assistant taking an interest in both areas. It is anticipated, however, that a more formal mechanism will be developed. Chapter 2 TRAVEL DEVELOPMENT IN NASHVILLE DAVIDSON COUNTY, TENNESSEE INTRODUCTION For public administrators and students of govern- ment, Nashville is one of the Nation's five consoli- dated metropolitan governments. For the general public, Nashville means music. The home of the Grand Ole Opry and the sound of country and blue- grass, Nashville draws visitors from throughout the United States to hear the music and see the show. Located in the center of Tennessee and in the heart of the Midsouth, Nashville is not a part of any extended megalopolis as are the case study cities of San Jose and Baltimore. It is in the middle of the expanding Southeast, the industrial Midwest, and the highly ur- banized Northeast. What brings Nashville to mind as a travel destination is certainly the music. But that is not the only reason that people come to Nashville to visit nor why they often extend their stays. As the State Capital of Ten- nessee, Nashville is a governmental center, drawing state conventions and meetings. The Hermitage, the home of Andrew Jackson, the traveler interested in history finds an attraction for a longer stay. With respect to the Nashville-Davidson metropolitan government, the city and county governments were abolished in 1963, and the new government was formed. It is important to this study only in that for Nashville, there is no need for city-county govern- mental coordination to promote the tourism and travel industry. (In this case, the terms city and metropolitan government are synonymous.) Nashville has a population of 480,000. It has 276,000 persons employed. Of that number, an estimated 28,000 people or 10 percent of the metropolitan work force are employed in the travel development field. conventioneers, and business travelers. They spent approximately $246 million on hotels, food, enter- tainment and in other retail sales. Tourism is an expanding business for Nashville. The number of visitors grows at a rate of about 6 percent a year. More significantly, the amount of spending is increasing at about 13 percent annually. In order to accommodate these visitors, Nashville has approximately 10,000 first class hotel rooms, 7,000 of which have been built in the last 10 years. The convention segment of the travel business is an important, though not predominant, part of the tourist industry for Nashville. In 1977, approximate- ly 85,000 persons attended 180 conventions, each bringing more than 100 persons to the city. An important characteristic of the convention busi- ness is that almost half of the 280 conventions were state meetings, demonstrating the importance of the travel industry of Nashville's status as the State capital. Convention spending is a small part of the overall tourist expenditure, accounting for $7.3 million of the $246 million total in 1977. The most significant tourist attraction and traveler magnet in the Nashville area is Opryland, U.S.A., which drew more than two million people in 1977. Opryland, U.S.A. is an outstanding theme entertain- ment center with shows, restaurants, rides, and a ma- jor 615 room hotel and convention center. It is also the home of the Grand Ole Opry. An estimated 11 million persons visited Nashville- Davidson County in 1977. This included tourists, Opryland, U.S.A. represents a capital investment of more than $28 million. The center opened in 1972 and the Grand Ole Opry moved to its new theater at the center in 1974. Other major attractions and visitations in 1977 are shown in Table 1. Table 1 ATTENDANCE AT NASHVILLE TOURIST ATTRACTIONS ATTRACTIONS 1977 Opryland U.S.A. 2,086,372 Grand Ole Opry 844,943 Parthenon (estimated) 500,000 Country Music Hall of Fame 483,894 The Hermitage 357,248 The Upper Room 238,578 Country Music Wax Museum 179,576 Cumberland Science Museum 81,690 Tennessee Botanical Gardens & Fine Arts Center at Cheekwood 38,468 Belle Meade Mansion 42,333 Fort Nashborough 80,000 Life & Casualty Tower 23,797 Travelers' Rest 9,000 Opryland was open weekends in the spring and fall and daily during the summer. All other attractions were open year around. NASHVILLE'S ORGANIZATION FOR TRAVEL DEVELOPMENT Nashville has an organizational structure for travel development that includes a Mayor's Administrative Assistant with policy responsibilities, a Metropolitan Representative for Tourist Development, a Metro- politan Tourist Commission with representatives from the private sector, and a major contract for ser- vices with the Nashville Area Chamber of Com- merce. This structure of contracted services, an ad- visory commission with broad private business in- terests and the assignment of city government per- sonnel for coordination and contract management with the Tourist Commission and the Nashville Area Chamber of Commerce, provides the metropolitan government with policy direction, private sector cooperation, and accountability for the expenditure of public tax revenues for travel development. The Mayor has seven Administrative Assistants, each of whom is assigned broad functional areas of responsibility. The Administrative Assistant (AA), with responsibilities for tourism, convention, and travel development, also has duties related to State legislation. The activities of the Administrative Assistant are numerous but specific in terms of the relation of travel development to other parts of the city govern- mental organization. As the Mayor's representative, the AA attends and participates in the meetings of the Metropolitan Tourist Commission. The AA also ad- vises city governmental departments on availability of funds for tourism-related projects and coordinates the preparation of proposals. Funds for these city- run tourism-related projects are from a hotel-motel room occupancy tax discussed in detail in the financ- ing section of this case study. The Mayor's Administrative Assistant also works with the Chamber of Commerce Convention and Visitors Division in the preparation of its services contract with the Nashville metropolitan govern- ment. The AA also monitors the performance of the contract for both the Mayor's Office and the Tourist Commission. The Metropolitan Representative for Tourist Devel- opment is a new position in the Mayor's Office, cre- ated in 1977. As contrasted with the Mayor's Admin- istrative Assistant for tourism, the Representative for Tourist Development is responsible for day-to-day coordination of the metropolitan government with the Chamber and the private sector of the travel industry. This job includes coordinating promotional tours and events that require government participation. For example, the job could require the closing of a street for a sidewalk art exhibit, scheduling a police escort for visiting dignitaries, obtaining parade per- mits, or seeing that the Mayor is on hand to welcome a convention. The Representative for Tourist Devel- opment serves as the chief of protocol for the Mayor's Office, an official greeter for the City and the City's publicist for visitors, travel agents, and others. The Tourist Commission is a seven-person advisory body established by an ordinance of the metropolitan government. The commission is required by the Ten- nessee state law that gives Nashville the power to levy a transient occupancy or hotel-motel room tax. The pertinent section of the State Act reads: Section 9. Tourist Commission. For the purpose of promoting tourist, conven- tion, and recreational activity, authorization is granted to establish and there shall be estab- lished a tourist commission. This commission shall be comprised of persons selected by the Mayor of the Metropolitan Government in the following manner: (1) Three (3) commissioners from a list of five persons submitted by the Hotel and Motel Association. (2) One (1) commissioner from a list of three persons submitted by the area Chamber of Commerce. (3) Three (3) commissioners selected by the Mayor of the Metropolitan Government from tourist related industries. The commissioners shall be appointed for terms of three (3) years and vacancies shall be filled in the same manner that original appointments are made but shall be for the duration of the unex- pired term only. The law further states that the Commission must prepare a budget for submission to the Metropolitan Government Council for a portion of the funds derived from the occupancy tax. The budget prepara- tions are submitted to the Mayor and Council for ap- proval as a part of the Metropolitan Government budget. The membership of the Metropolitan Nashville Tourist Commission reflects a broad representation from the private sector. The affiliations of the seven members appointed by the Mayor and confirmed by the Council in 1976 are shown below: METROPOLITAN TOURIST COMMISSION MEMBERS Owner-Manager Drake Motel Owner-Manager Howard Johnson's Motor Lodge Chairman of the Board Shoney's Enterprises District Sales Manager American Airlines, Inc. President Motel Systems, Inc. Executive Director Country Music Association General Manager Grand Ole Opry & Opryland, U.S.A. The Tourist Commission recommended to the Mayor and Council a contract with the Convention and Tourist Division of the Nashville Chamber of Com- merce for the Tourist Promotion program. This con- tract is now in effect. The Tourist Commission reviews the performance of the Chamber on an on- going basis and through quarterly reports from the Chamber. The Tourist Commission also reviews and approves independent requests from city agencies and private contractors for funding for tourist-related activities. These may include a hospitality program for people in the travel industry, the erection of signs for an auto tour, and the construction and operation of an airport visitors center. These city government and privately proposed projects are reviewed by the Tour- ist Commission, which then submits a recommended package to the Mayor and Council annually. The third element of the City's tourism organization is the Metropolitan Nashville-Davidson County gov- ernment contract with the Nashville Area Chamber of Commerce for specific services and promotion. These services are described in detail further on in the activities section of this case study. The contract is negotiated by the Tourist Commission using funds from the hotel-motel occupancy tax. The Chamber's Convention and Visitors Division provides assistance and services required under the contract. An organi- zational chart of that division is shown in Chart 1. Chart 1 Organization of the Convention and Visitors Division, Nashville Area Chamber of Commerce Vice President Conv. & Vis. Division Secretary Director of Tourism Tourist Information Receptionist Secretary Director of Conventions Convention Services Manager Secretary The Division had a staff of eight in the 1977-78 fiscal year. Five of these positions were paid out of the contract with the metropolitan government. The Vice-President-in-charge and two clerical positions are paid from other Chamber of Commerce funds. There was no competition for the contract as the Chamber of Commerce was the only existing organi- zation with experience in travel development. The contract and its activities are carefully monitored by the Tourist Commission and the Mayor's Admin- istrative Assistant. The Metropolitan Representative for Tourist Development maintains daily coordina- tion and contact with the Chamber staff. All of this organization — the Administrative Assis- tant for Tourism, the Metropolitan Representative, the Tourist Commission and the contract with the Chamber — have come about since 1976. The organization and the relationships are new and, to date, harmonious. THE FINANCING OF THE TRAVEL DEVELOPMENT PROGRAM IN NASHVILLE The governmental organization for travel develop- ment in Nashville described in the last section fol- lowed the institution of a local hotel-motel room occupancy tax. Prior to the revenue from this tax, tourist and convention development had been solely a private-sector activity. Substantial expenditures were made privately by the airlines, Opryland, U.S.A., and the hotels. Private business financed a program of travel development in the Nashville Chamber of approximately $69,000 annually. In ad- dition to the $69,000, the Chamber receives a grant of $25,000 from the State Department of Tourism which customarily provides grants to selected regional chambers of commerce. Thus, the Chamber received about $94,000 annually for its tourism pro- gram. An interesting note in the contract between the Chamber and the Metropolitan government is the provision that the Chamber must continue to raise $94,000 from present sources described earlier in this section to supplement the governmental funding from the occupancy tax. This "level of effort" clause, along with the contract with the Chamber and the composition of the Tourist Commission demon- strate and encourage a public-private partnership. A state enabling act was passed in 1976 allowing the Nashville metropolitan government to levv a tourist occupancy tax on notel-motel rooms and camp ground sites. The tax is 3 percent of the cost of the room or campground site charge, which generated an estimated $1.5 million in Fiscal Year 1977-1978. Section 10 of the State Act established by law a for- mula for the expenditure of funds obtained from the tax. That section states: try. The tax was originally opposed by the private interests in the tourist business, but the additions gained their support and, as one Tourist Commis- sioner said, "The hotel-motel industry first opposed the tax. It now considers it its private fund for pro- motion." The State law also allows the collecting business to retain 2 percent of the tax collected for administrative costs. This provision was also included to encourage private sector support for the bill. The Tourist Commission, described in the organiza- tion section, is required by the State Law to prepare the annual budget for the tourist promotion and tourist-related earmarked funds — more than $1 mil- lion in Fiscal Year 1977-1978, which ended in June 1978. Section 10. Expending and Distributing Tax. The proceeds from the tax levied herein shall be retained by the Metropolitan Government and distributed as follows: (1) One-third (1/3) of the proceeds shall be used for direct promotion of tourism. (2) One-third (1/3) of the proceeds shall be used for tourist related activities. (3) One-third (1/3) of the proceeds shall be deposited in the general fund. Proceeds of this tax may not be used to provide a subsidy in any form to any hotel or motel. The language of this section was included, as required in the local ordinance in May, 1976 establishing the tax. The Metropolitan Government of Nashville and Davidson County did not intend, when it set out to obtain a state enabling act for an occupancy tax that there be such a distribution formula. Nor did the original intent include a state-required Tourist Com- mission, These additions were found necessary in order to obtain the support of the hotel-motel indus- The first third of the tax proceeds, which are to be used for tourist promotion, funds total approximate- ly $500,000 and are spent by contract with the Nashville Area Chamber. Those funds are divided between tourist promotion, convention promotion, and administrative costs in the budget. A summary of the budget for 1977-1978 is shown in Table 2. Table 2 TOURIST PROMOTION BUDGET OF CHAMBER CONTRACT FOR 1977-1978 A. TOURISM PROMOTION 1. Communications 81,900 2. Consumer Promotion 176,000 3. Travel Operator Promotion 23,500 4. Travel Writer Promotion 3,000 5. Other Activities /Special Projects 10,700 SUBTOTAL $295,100 B. CONVENTION PROMOTION 1. Communication 12,150 2. Convention Solicitation 102,500 3. Convention Servicing 3,500 4. Other Activities /Special Project SUBTOTAL $118,150 C. ADMINISTRATION 1. Personnel 68,519 2. Office Operations 20,053 SUBTOTAL $88,572 TOTAL $501,822 The second third of the proceeds from the occupancy tax are to be spent on tourist-related activities that directly serve the tourist and traveler, encouraging them to come to Nashville. The Tourist Commission receives requests for these funds at every monthly meeting. From these many requests, the Commission prepares the budget for submission to the Metropoli- tan Council. Early on the Commission decided to place approx- imately 90 percent of the tourist-related funds in reserve for the financing of a proposed convention center. The Mayor and Council have agreed with this reserve fund. Table 3 shows expenditures for tourist-related pro- jects for Fiscal year 1977-78. As will be noted, most of these monies are being held in reserve for the possible funding of a convention center. Table 3 TOURIST— RELATED ACTIVITIES BUDGET FOR 1977-1978 $500,000 — Reserve for Convention Center $ 30,000 — University of Tennessee, Nashville Hospitality Training Program $ 15,000 — Airport Visitors Information Center $ 15,000 — Performing Arts Foundation $ 12,000 —Wave Pool/Ice Rink /Equestrian Center Study $ 23,000 — Interstate Tourist Information Center $ 90,000 — Metro Police Department for Downtown Patrols and Visitor Assistance The two budgets in Tables 2 and 3 account for the $1 million Nashville spends from the occupancy tax for travel development. The estimates are that the occupancy tax will increase at an annual rate of 15 percent to 25 percent. Taking a middle range figure, this means an income of more than $2.5 million from the tax by 1981. ACTIVITIES OF THE NASHVILLE GOVERNMENT TO PROMOTE TRAVEL AND TOURISM The travel development program in Nashville can be discussed in two parts: • The tourist promotion program financed from the receipts of one-third of the occupancy tax and con- tracted to the Nashville Area Chamber of Com- merce. • Tourist-related activities carried out by the metro- politan government or under contract by public and private agencies. First, the Chamber contract with the metropolitan government: As the Chamber summary budget for the services indicated, the contracted activities are divided into tourist promotion and convention solicitation on about a three-to-one dollar ratio. The tourism promotion budget, shown in Table 4, includes substantial expenditures for printing and the distribution of informational brochures, pamphlets, guides and the like. These include a general brochure, special events, restaurants, etc. The Chamber also answers all mail and phone enquiries for tourist in- formation, which total about 40,000 annually. The senior staff attends and participates in major tourism trade shows. Often this activity is undertaken in con- junction with Nashville travel agents and other Nash- ville members of the industry. Promotion shows where Nashville was represented in 1978 included the National Tour Brokers Association, the Discover America Travel Mart, and the Canadian National Exhibition. The Chamber annually hosts a travel agent familiar- ization tour to Nashville. Approximately 250 travel agents were included in the 1978 tour program. These tours are a major joint effort of the Tennessee State tourist development program, the airlines, and the hotels. The 1978 tour program was the fourth and was appropriately titled Music City Adventure IV. Both the trade shows and the familiarization trips are jointly funded and sponsored by the metropolitan government and the private sector. They include the participation of the Chamber, through its contract, and various private groups. 10 Table 4 NASHVILLE AREA CHAMBER OF COMMERCE CONVENTION SOLICITATION BUDGET JULY 1, 1977 TO JUNE 30, 1978 AMOUNT $ 1. Communications Reprint basic 4-color brochure on Nashville $13,000 Update and print Nashville Hotel /Motel Map 3,500 Update and print the Nashville Area Campground Map 2,700 Update and print the Nashville An- nual Events Guide 200 Update file of black & white photos and color transparencies of area scenes and attractions 2,000 Prepare sample of photos & slides with order coupon for use by travel writers and promotors 1 ,000 Produce a tourism promotion film, distribute to travel promotion outlets, produce TV and radio spots from the film 52,500 Complete construction of 20' exhibit booth 5,000 Design and publish a series of Nashville travel posters 2,000 SUBTOTAL $81,900 2. Consumer Promotion Postage and envelopes to respond to mail and phone requests for infor- mation on Nashville (40,000 per year) $14,000 Distribute tourism literature to outlets in Nashville between here and other cities within a 50-mile radius 2,000 Operate a hotel "room finder" system during busy periods of the tourist season 10,000 Attend and exhibit in the Canadian Nat'l Exposition 5,000 Advertise in various publications and on TV and radio 145,000 SUBTOTAL $176,000 AMOUNT $ 3. Travel Operator Promotion Attend major tourism trade shows to sell Nashville to travel promotors and provide exhibit space for Nashville travel representatives In coordination with Nashville travel representatives conduct possibly two blitzes to sell Nashville to travel pro- motors Invite selected travel promotors to Nashville for an orientation on local attractions and activities Serve as bulk mail distributor of local attractions tourism brochures to travel promotors Advertise in travel trade publica- tions SUBTOTAL 4. Travel Writer Promotion Prepare and stock press kits Entertain travel writers on a group or individual basis SUBTOTAL 5. Other Activities/Special Projects Attend educational forums and meetings within the travel industry to exchange ideas and information Public relations program to increase awareness to the Nashville market as convention site and tourist destination SUBTOTAL TOTAL— TOURISM PROMOTION $7,500 1,000 2,500 2,500 10,000 $23,500 $1,000 2,000 $3,000 $ 500 10,200 $10,700 $295,100 11 The advertising program for tourism of the Chamber prepares insertions for consumer publications, which are coordinated with the state program and private advertisers such as Opryland, U.S.A. to give max- imum impact and exposure. Nashville advertised in 1977-1978 in "Southern Living," "Family Circle," and "Women's Day" and some trade publications as well. In 1977, a television commercial promoting fall visits to Nashville was produced and was aired on 49 sta- tions in 33 cities, with heavy coverage in the Midwest. Also in 1977, a 30-second televised commercial, "Nashville Loves Company," ran in 29 selected markets. The Chamber has also produced an 18-minute tourism promotion film, "Nashville, Music City, U.S.A.," and a 3-minute short version. These films are shown at the travel meetings, trade shows, and to visiting travel agents. The Chamber operates a hotel "room finder" service during the busy spring and summer seasons. A call to a central number, managed by Chamber personnel, will find the traveler a room if one is available. In 1977, the Service located about 6,000 rooms for visitors. The convention solicitation activities closely parallel those for tourism. A detailed budget and description is shown in Table 5. A Convention Facilities Guide as well as other related materials are printed and distrib- uted. Mailings are made to association executives and con- vention planners. These are followed by phone calls and, often, personal visits. The convention effort may be characterized as direct contact and personal attention. When a convention is obtained, the Chamber provides planning, registra- tion and management assistance for the meeting. The second set of activities are those funded by the tourist-related segment of the occupancy tax and are listed in the financial section of the case study in Table 3. These activities are recommended by the Tourist Commission to the City Council and the Mayor. The operation of visitor information centers at the airport and on an interstate highway near downtown are ongoing activities funded from the tourist-related program monies. The downtown police patrols are also expected to continue. A unique program funded as a tourist-related activity is the hospitality training program for people in the tourist service industry. The program was designed and is conducted by the University of Tennessee at Nashville under contract to the metropolitan govern- ment. The training course is about 2 hours long, including a training film which stresses the impor- tance of tourism to Nashville's economy and the role of those who serve the tourist. The training course has been conducted for more than 1,000 employees of hotels, service stations, res- taurants, and the Nashville Cab Driver's Association. The classes are available during the night or day when a business or organization can get a group of 30 to 50 persons together. The goal is to have all 28,000 per- sons in the tourist industry participate in the training program. The city's program is well coordinated with the state program of the Tennessee Department of Tourist Development. The City and State co-host and spon- sor familiarization tours for travel agents, exhibit together at trade shows and conventions and adver- tise together with complementary ads in trade jour- nals and publications. The Tennessee State Commissioner for Tourist Development and members of his staff have attended meetings of the metropolitan Tourist Commission. This results in the various joint activities. PUBLIC AND PRIVATE CAPITAL INVESTMENT IN TRAVEL DEVELOPMENT Public capital investment in support of travel development in Nashville has been minimal. There has been a feasibility study and there is continuing discussion about a major downtown convention cen- ter complex. This facility, if constructed, is estimated to cost between $17 to $23 million. It would be the largest and most significant public investment that Nashville will have made to encourage the conven- tion business. About $1.3 million of the Community Development Block Grant funds have been spent on two major 12 Table 5 NASHVILLE AREA CHAMBER OF COMMERCE CONVENTION SOLICITATION BUDGET JULY 1, 1977 TO JUNE 30, 1978 1. Communications Update and reprint the Nashville Convention Facilities Guide Update and print the condensed version of the Convention Facilities Guide Publish semiannually a list of conventions scheduled in Nashville for the next 2 years Publish a monthly Calendar of Events for distribution to the local travel industry SUBTOTAL 2. Convention Solicitation Develop and maintain a com- puterized master list of national, regional, and corporate convention prospects Advertise periodically in one or more of the various major conven- tion trade publications Conduct regular mailings and long distance phone campaigns to conven- tion planners to solicit interest in Nashville Organize teams from Nashville to visit Washington, D.C. and Chicago to put on programs aimed at soliciting future conventions AMOUNT $ $10,000 1,600 400 150 $12,150 $2,500 50,000 6,000 19,000 Visit other cities to make sales calls on convention planners Attend and exhibit at major trade shows and conventions attended by convention planners Help sponsor a major entertainment function at ASAE's annual national convention On an individual basis, invite selected convention planners to visit Nashville Attend selected major conventions to present bids on behalf of Nashville for future years SUBTOTAL 3. Convention Servicing Contact conventions coming to Nashville to offer assistance in plan- ning and staging the conventions: Housing Bureau assistance Convention registration assistance Convention typewriters Printed literature & checklists SUBTOTAL TOTAL— CONVENTION SOLICITATION AMOUNT $ 4,000 5,000 10,000 300 3,000 $102,500 300 2,700 500 0_ $3,500 118,150 downtown thoroughfares. This work has included pedestrian islands, new lighting, and street furniture. The Mayor's Administrative Assistant for Communi- ty Development said, "The downtown is the shop- ping area for the hotel guest and the environment of the traveler, conventioneer, and tourist. Community- development funds spent downtown encourage the tourist to visit, to stay, and to spend." Other downtown traffic improvements, parks, etc., are being considered. If the plans are implemented, the metropolitan government intends to use incre- mental tax financing which is available under Ten- nessee State law. The famed Printer's Alley which is the center of Nashville's music nightclub activity has been cobble- stoned and given trees and new street furniture through a joint project of public and private funds. Private capital investment in travel development is characterized by the construction of approximately 8,000 hotel and motel rooms since 1967. The esti- 13 mated investment in these new facilities is $140 million. The two major hotel facilities have been Hyatt Regency Nashville and the Opryland Hotel. The Hyatt was opened downtown in 1976 and has approximately 470 rooms, plus restaurants, meeting rooms, a convention hall, etc. The estimated cost was $14.7 million. The Opryland Hotel is located at the Opryland, U.S.A. site, approximately 9 miles from downtown. It is a 615-room convention and tourist hotel that cost approximately $25 million. The largest private investment is Opryland, U.S.A., a $33 million entertainment complex located in a 110-acre park. The complex includes five musical theme areas, rides, restaurants, theaters, and the Grand Ole Opry House. Private investment has been significant and has added substantially to the property tax digest in Nashville-Davidson County. Public capital invest- ment has been modest, but well directed to en- hancing the downtown area as a tourist environment. THE ROLE OF TRAVEL DEVELOPMENT IN NASHVILLE'S PROGRAM FOR ECONOMIC DEVELOPMENT The Nashville government may have backed into the travel development business through the occupancy tax distribution formula. Mayor Fulton, however, considers travel p- ^motion an investment in the overall financing an»_ ievelopment of the City. The Mayor, a former U.S. Representative and member of the U.S. House Ways and Means Committee, seeks city public investments that encourage private invest- ment and expand tax revenues. He feels that a travel development program does that. "It is a clean industry with no significant pollution problems," Mayor Fulton has said. "The metropoli- tan government invests tax dollars from the occupan- cy tax for tourist promotion, not tax dollars from the general fund and the homeowner. The travel business creates property tax income through private capital investment in hotels, entertainment facilities, and service centers. The tourism industry and the occu- pancy tax are major factors in controlling the prop- erty tax in Nashville-Davidson County." Mayor Fulton's addition to his staff of an Adminis- trative Assistant to oversee tourism, and a Metropoli- tan Representative for Tourist Development, indicates the commitment of his administration to a role for 'ocal government in travel development as a part of a overall development strategy. That commitment appears to be lacking, however, in certain quarters of the metropolitan government. As one Tourist Commissioner said, "The Mayor makes the connection between tourism and economic devel- opment, but there is no sense of that connection of tourist and economic development throughout the government." This deficiency can be seen in the metropolitan government's economic development planning financed through federal Economic Devel- opment Administration funds. The documents pro- duced do not discuss tourism as part of an overall economic development program. The metropolitan government has an Industrial Development Board to encourage the location of new industry and the creation of new jobs. There appears to be no coordination between this Board and the Tourist Commission. Simply put, travel development hasn't been made a part of the overall economic development program of the City, except in the Mayor's Office activities. The expenditure of Federal dollars for capital im- provements through the HUD Community Develop- ment Block Grant program certainly enhances Nashville as a tourist destination as seen in the previous section of this case study. However, this is byproduct rather than a stated intent of the Com- munity Development plans and the application for Federal funds. The integration of travel development into an overall economic development strategy is yet to be accom- plished in Nashville-Davidson County. The pieces are all there and the importance of tourism in terms of jobs and capital investment is indisputable. All that is missing is pulling the pieces together and relating the programs and expenditures to one another. TRAVEL DEVELOPMENT FOR NASHVILLE IN THE FUTURE What about the future? There are plans for new hotels, and the metropolitan government continues its 14 study and investigation of whether the City needs and can afford a new, major, and expensive Convention Center. Estimates indicate there will be more visitors. More visitors means that there will be more revenue from the occupancy tax for tourism development and tourism-related activities. From the present $1 million, the amount available for tourism-related ac- tivities and tourism promotion is expected to reach $1.7 million by 1981 when the total tax will reach $2.5 million. The dollar amount of the contract with the Chamber has been expanded for Fiscal Year 1978-79. The new contract is for $700,000, as compared with ap- proximately $500,000 the previous year. The Chamber's Convention and Visitors Division will add six new positions for a staff of fourteen. The new positions will include increased emphasis on the convention business with the addition of a con- vention sales manager and a services manager. Nashville has a new and well-funded travel develop- ment program. It may be expected to continue. The private-public partnership should deepen. Whether or not travel development will become a significant component of the area's overall development policy remains to be seen. 15 Chapter 3 SAN JOSE'S TOURISM, TRAVEL, AND CONVENTION DEVELOPMENT PROGRAM INTRODUCTION A lot of people know the way to San Jose, for approx- imately 1.5 million visits are made there annually. Located at the south end of San Francisco Bay, San Jose is the major city in Santa Clara County. With a population of 575,000, it is the 21st largest city in the United States and part of a San Francisco Bay Area population of almost 5 million people. Incredibly the city of San Jose had a population of only 95,000 in 1950. Not only do folks find their way to San Jose, but obviously a lot of them stay. San Jose has no single tourist drawing characteristic as does Nashville with its music or El Paso as a border town. Rather, it attracts tourists, business travelers, and conventioneers for a host of reasons. Nearly everyone mentions the Bay Area climate. With two major theme attractions close by, Mar- riott's "Great America" and the Winchester Mystery House and Museum, there are those who come to play. And Santa Clara County is wine country with 32 vineyards, including Almaden and Paul Masson, to visit and their products to taste. The electronics industry dominates the area. FOR- TUNE Magazine says that Santa Clara County has the densest concentration of high-technology in- dustry in the world. This electronics-aerospace in- dustry generates business travel for San Jose. The business traveler is the largest contributor to San Jose's travel industry. More than 500,000 cor- porate and business trips are made to San Jose an- nually. Conventions are also a mainstay, drawing 172,000 delegates in 1977 to 371 meetings. The conven- tioneers spent an estimated $30 million. Approxi- mately two-thirds of these were California groups rather than regional or national organizations. Estimates are that 1.5 million people visited San Jose in 1977 and spent $90 million. The reason that the ex- penditure figure seems low is that two out of every three visitors stayed in private homes. Also, a number of major attractions, such as the theme parks and the vineyards, are not in the city but in the county or suburban towns. San Jose has seven hotels that may be considered to be top quality with a total of 2,273 rooms. Of these, 1,000 have been built since 1970. New hotel construc- tion is planned as a part of downtown redevelopment efforts. The city of San Jose has made a major effort to pro- vide public facilities for conventions and meetings. The recently completed San Jose Convention and Cultural Center is the centerpiece. It has a 3,300-seat auditorium, a 2,700-seat Center for the Performing Arts, a new 30,000 square foot Exhibit Hall, and a number of other theaters and facilities. This $18 million complex can house a 10,000-delegate convention with 4,000 for a banquet meeting. Considerable private investment for travel develop- ment and the consequent tax benefits occur outside of the city of San Jose in the county. The most dra- matic example is the Marriott Corporation's $60 mil- lion "Great America" theme park. This complex of rides, restaurants, and theaters includes a ten-story 302-room hotel. The Park was opened in 1976. The vineyards and a number of other attractions are also outside the city limits. The city's efforts in 16 travel development must, therefore, include the pro- motion of the general area, but focus the visitor's ex- penditures on the city. ORGANIZATION IN SAN JOSE FOR TRAVEL DEVELOPMENT A major element of San Jose's development as a travel destination has been air travel and the San Jose Municipal Airport. It opened in 1949 and has grown to the 35th busiest in the Nation with 3.5 million passengers in 1978. Estimates are for 8 million passengers by 1985. Plans are being made to spend more than $50 million on airport capital improvements in the next 10 years. "San Jose has not thought of itself as a tourist destination until recently," a San Jose Councilman said. "It has only been a big city for a few years and this was because of the electronics and high tech- nology industries." Now with all its residents and their visitors, the air- port and business travelers, and the major conven- tion and meeting facilities, San Jose is in the travel business in a big way. The city of San Jose has a newly created City Department of Convention and Cultural Facilities and a long-standing contract with the San Jose Chamber of Commerce Convention /Visitors Bureau for tourism and convention promotion. The Department of Convention and Cultural Facil- ities was created in January 1978. Its mission, as stated in the city budget document, is ". . . to pro- mote and operate a major performing arts center and a multipurpose facility for a wide range of usage in- cluding general entertainment, convention and meet- ing activities, cultural and sporting events, and public assembly usages." The major responsibility of the Department is to manage the San Jose Convention and Cultural Center. With a proposed budget for its first full fiscal year of 1978-1979 of $2 million, the Department will have a staff of 30 persons. The organization of the Department is shown in Chart 2. Chart 2 Convention & Cultural Facilities Department 1978-1979 Budget Request Director Admin. Analyst II Account Clerk Events Manager Typist Clerk II Secretary II Assistant Director Typist Clerk II Events Coordinators (3) Facility Supervisor Convention/ Auditorium Crew Supervisor Crew 17 The Department is responsible for local promotional and advertising activities for the complex. These local events are the major activities of the Center, with conventions a minor part of the scheduled use of the facilities. The Chamber has a Tourism and Convention Com- mittee. This Committee is composed entirely of peo- ple in the travel industry and from the private sector. There are no city government representatives on the committee. The city of San Jose contracts with the San Jose Chamber of Commerce for its visitor and convention promotion activities. This contractual arrangement began in 1967, when the city instituted a transient occupancy tax. That tax will be discussed in the financing section of this case study. The Chamber has 10 departments . . . two of which are the Convention Bureau and the Visitors Bureau. These are financed by the city contract. The Convention Bureau's job is to promote San Jose as a desirable convention city, book conventions, and service the attending delegates. Its staff is shown below: SAN JOSE CHAMBER OF COMMERCE CONVENTION BUREAU STAFF Executive Director Salespersons (3) Coordinators (2) Clerical Assistant (1) The contract states that this Bureau will "... carry on the work of advising, promoting and publicizing for the city of San Jose by attracting people to said city for the use of conventions, conclaves, area, regional and national meetings and other similar gatherings in the city of San Jose . . ." The Chamber Visitors Bureau is to promote San Jose as a destination city for both the commercial traveler and the tourist market. The staffing plan for the Visitors Bureau is below: SAN JOSE CHAMBER OF COMMERCE VISITORS BUREAU Executive Director Associate Director Publicity Coordinator Administrative Asst. Clerical Asst. The organizational structure does not include any city advisory commissions or boards to oversee the Chamber contract. The Chamber makes quarterly reports to the San Jose City Council. With the opening of the new exhibit hall at the San Jose Convention and Cultural Center and the crea- tion of the Department of Convention and Cultural Facilities, a formal organizational connection be- tween the city and the Chamber's staff may be called for. Also Proposition 13 in California has made the City Council more conscious of the hotel /motel occupan- cy tax and the Chamber expenditure. A closer moni- toring of the Chamber's performance can be antici- pated. This may take the form of someone in city government with the responsibility to coordinate city and Chamber travel development activities. There are numerous other organizations in Santa Clara County, including 13 Chambers of Commerce and the Santa Clara Valley Wine Growers Associa- tion. The County also has a transient occupancy tax and a promotion program. No organizational struc- ture exists for a coordinated or unified travel development effort countywide. FINANCING OF TOURISM AND CONVENTION DEVELOPMENT IN SAN JOSE The city of San Jose finances its travel development program through a 6 percent hotel /motel room occu- pancy tax. This tax was instituted in 1966 at 5 percent after State enabling legislation. The receipts of the transient occupancy tax are allocated by a formula in the City enacting Ordinance. It has been changed twice and in recent years the tax income has been allocated on a formula of 52.5 percent of the pro- ceeds going to the city and 47.5 percent into tourist and convention promotion. The Ordinance further allocates the City's 52.5 per- cent share with 40 percent into the general fund, 35 percent for convention sales and services, 12.5 per- cent for promotion of visitor and tourist activities and 12.5 percent for Council promotion. 18 This breakout is done at the discretion of the City Council as the State law does not specify that the monies must be spent on travel and tourism promo- tion. The city could choose to spend all the monies it- self rather than by contract with the Chamber. The transient occupancy tax generated $640,000 in 1976-77. The city and the Chamber estimate it will increase by 25 percent for 1977-78 for an income of approximately $800,000. It is expected to continue to grow at a rate of 15 percent annually for a number of years. The Department of Convention and Cultural Facil- ities has a proposed 1978-79 budget of $2 million. These monies are from the general fund, the occu- pancy tax and facilities revenues. The budget is shown in Table 6. Table 6 DEPARTMENT OF CONVENTION AND CULTURAL FACILITIES Personal Services Nonpersonal Expenses Equipment Rental Payment Capital Improvements Total Use of Funds $ 556,000 599,000 36,000 725,000 87,000 $2,003,000 San Jose's contract with the Chamber for the 1977-78 period was $435,270 including a special $23,000 for promotion of the City's new Exhibit Hall. That budget is shown in Table 7. The budget in- cludes $103,500 for the Visitors Bureau $292,200 for the Convention Bureau; and $23,000 for the special promotion. The Convention Bureau's budget is almost three times that of the Visitors Bureau. This is in contrast to the Nashville situation where the tour- ist budget is twice the convention budget. It reflects San Jose's interest in the convention business and the promotion of its Center. The city spends 52.5 percent of the occupancy tax. These monies are difficult to trace in the City budget but appear to be generally spent by the Parks and Recreation Department for cultural grants and the new Department of Convention and Cultural Facil- ities. The occupancy tax is expected to continue to yield in- creased revenues. A new hotel and expansions of existing hotels should make more rooms available and create more income. The Chamber and the private tourism businesses feel that travel development expenditures should be in- creased. There is also talk of increasing the tax from 6 percent to 7 percent. Proposition 13 gives the City Council another per- spective. Since its passage, there has been discussion of reducing the Chamber contract amount to meet general fund needs. Financing for travel development in San Jose is avail- able through the transient occupancy tax which produces annually increasing revenues. It remains to be seen if it will be spent for that purpose. Also, whether or not a full 47.5 percent will be spent through contract with the Chamber of Commerce may be a question in the future. ACTIVITIES OF SAN JOSE TO DEVELOP TOURISM AND CONVENTIONS The city of San Jose's tourism and convention pro- gram may be best presented by discussing first the ac- tivities of the city Department of Convention and Cultural Affairs. Following that, the program that the Chamber's Convention and Visitors Bureau oper- ates under contract to the city will be described. The new Department of Convention and Cultural Affairs has as its primary responsibility the manage- ment of the Convention and Cultural Center. Its ac- tivities include rental contract preparation, revenue verification and collection, and monitoring of con- cessionaire operations. Close liaison is maintained with the Chamber of Commerce Convention Bureau to maximize use of the convention and exhibit facilities. Direct contact is also made with promoters and local organizations to ensure high-quality events in the facility and con- tinued audience development. The Convention and Visitors Bureau of the Chamber of Commerce promotes San Jose as a destination city in commercial and leisure travel markets and attracts 19 Table 7 SAN JOSE CHAMBER OF COMMERCE CONVENTION AND VISITOR BUREAUS BUDGET PERSONAL SERVICE Executive Director, Convention Executive Director, Visitor 3 Sales Persons, Convention 3 Coordinators, Convention 2 Coordinators, Visitor Maintenance /Delivery Clerk Convention Typists Mag /card Operator (50%) Receptionist (50%) Printer (50%) Fringe Benefits Total Personal Services NONPERSONAL SERVICES ($164,015) (33,796) $197,811 Sales: Service: (Exclusive of salary & fringe benefits) Printing (12,000), bid travel (3,000), bid hosting expenses (6,000), sales incentive program (3,000), promo- tion sales items (15,000), special sales programs (12,000), advertising (43,800) ($94,800) (Exclusive of salary & fringe benefits) Equipment rental, (shuttle and bus service) (7,000), printing (15,900), local transportation and parking (1,500), local convention hosting (2,500), service materials (15,095) (41,995) Promotion: Administration: (Exclusive of salary & fringe benefits) Printing (art work, brochures, promotional brochures) (14,000), staff business expense (1,500), transportation, (parking and mileage) (1,800), publicity and pro- motion (23,600), awards (750) (41,650) Telephone (6,500), office supplies (4,100), sta- tionery (4,000), postage (6,500), data processing (1,980), committee expense (782), management development (3,200), memberships (2,900), equip- ment rental, purchase and maintenance (4,000), subscriptions (250), prorated share of space (24,802) Total Nonpersonal Services TOTAL CONVENTION AND VISITOR BUREAUS BUDGET (59,014) $237,459 $435,270 20 conventions to town. Its activities toward this objec- tive include: • Publicity and promotion locally, nationally and internationally in printed and electronic media to make San Jose identifiable as a con- vention and destination city. • Travel agent "Familiarization Trips" which attract travel industry leaders from all parts of the country. • Assistance to the wine industry promotional program. • Representation for San Jose area hotels and at- tractions in regional, national, and international travel shows and conventions. • Creation of Information Centers which will en- courage travelers to leave the highway and learn why they should spend time in San Jose. Supervision of the Information Kiosk at San Jose Airport is part of this program. • The development of San Jose as a destination for travelers from the United States, the Orient, Europe, and other parts of the World. In 1977, the Chamber conducted the first annual familiarization trip for 140 travel agents from throughout the U.S. "A Taste of San Jose" was repeated in 1978 for 200 agents. The Bureau also sends background articles on various aspects of San Jose to travel-related publica- tions such as "Motorland," inflight magazines and other print media nationally and internationally. The Bureau responds to more than 30,000 enquiries for information, brochures, and other promotional material on points of interest in and around San Jose. Any requests received by the City are sent to the Chamber. For the promotion of area vineyards, a day-Ion^ wine familiarization tour was held for local and Bay Area media in 1977. The Visitors Bureau has produced a slide show with sound of San Jose area points of interest to be used for presentations to visiting travel agents, public vice employees, and visiting dignitaries. ser- It also distributes brochures to 150 tourist-related locations, and San Jose City maps and other brochures to the San Jose Municipal Airport infor- mation Kiosk and other information centers. The Bureau is exploring sites for a San Jose Information Center on the highway network as a complement to the Center at the Airport. The information centers would be self supporting by selling advertising space at a monthly rate, selling brochure rack space, having a gift shop with souvenirs, a snack bar, and a hotel reservation ser- vice in cooperation with local hotels and motels. The Convention Bureau's responsibility is to pro- mote San Jose as a desirable convention city, book conventions, and service the attending delegates. The Convention Bureau maintains approximately 3,000 sales files which are in continual review by one of its three sales people. The hotels and Bureau ex- change copies of correspondence to keep one another up to date. Approximately 1,000 convention leads are sent to San Jose hotels each year. The Bureau receives these leads from the California Association of Convention Bureaus, the International Association of Conven- tion Bureaus, other cities' calendars, and trade publications. Bureau staff occasionally travels with a hotel to assist in bidding against another city. This is done only if city representation is necessary to swing the vote for San Jose. The Convention Bureau handles sales and housing arrangements for large citywide conventions. The hotels provide guest rooms and meal functions. Promotional items, such as San Jose sales signs, stickers, glasses, giveaways, brochures, films, hospitality supplies, sales kits, and dignitary gifts, for site selection committees are designed and distributed by the Bureau. When a convention is booked, it is turned over to the Convention Bureau service department. That depart- ment plans city tours, makes parking arrangements, is a liaison with the San Jose Convention and 21 Cultural Center, sets up registration, and provides San Jose name badges, program covers, delegate kits, and brochures. Citywide conventions require complex housing coor- dination. The Convention Bureau may block rooms in 20 hotels and motels for one convention. The Bureau handles each individual reservation, confirm- ing with the client and the hotel. The Convention Bureau is responsible for the plan- ning and implementation of the above sales and ser- vice projects. It plans advertising and promotional programs each year such as an Open House and statewide sales blitzes. It is a liaison between the city, the San Jose Conven- tion and Cultural Center, hotels, and the tourist- related industries. PUBLIC AND PRIVATE CAPITAL INVESTMENT FOR TRAVEL DEVELOPMENT IN SAN JOSE San Jose has made significant public investments in downtown redevelopment and convention facilities. Though much of this has been related to banking, financial, commercial, and retail activities, a signifi- cant portion is important to tourism development. The prime example is the newly completed San Jose Convention and Cultural Center. The complex in- cludes the following facilities: • The 2,700-seat Center for the Performing Arts • A 3,242-seat Auditorium • The 577-seat Montgomery Theater • The 950-seat Jay McCabe Hall • A 30,000 square foot Exhibit Hall • A 20,000 square foot open air plaza located be- tween the Exhibit Hall and Auditorium com- plex • A 28,000 square foot amphitheater The San Jose Center represents an $18 million invest- ment in new construction and renovation. The Center for the Performing Arts costs approximately $8.5 million and was financed through revenue bonds. The older sections of the Convention Center were renovated with a $2.7 million Federal grant. The new Exhibit Hall was financed with $5 million of redevelopment bonds. The San Antonio Plaza is the city's most ambitious undertaking and involves substantial public and private involvement. The development of San An- tonio Plaza will provide a major hotel, a retail /com- mercial center and residential units along with office, specialty retail, restaurant, and parking facilities. The first phase of the project will include a 558-room luxury hotel, oriented and in close proximity to the new Convention Center. Studies have been made for public incremental tax financing of the hotel as well as joint public-private financing. At the center of this project the City has invested $3.2 million to develop the Paseo de San Antonio. San Jose has also committed an additional $20 million to support the $200 million in private capital that will be needed to complete the project. In recognition of the San Jose Airport's role as a gateway to the traveler, the city plans to invest $50 million over the next 10 years in an airport capital im- provements program. Discussed and proposed new private construction would include the addition of 1,000 new hotel rooms, plus the San Antonio Plaza Hotel. The public and private capital investments promise a strong center for the tourism and travel business in downtown San Jose. They also commit the City and the private sector to an aggressive travel development program in order to ensure the success of the invest- ment. SAN JOSE'S ECONOMIC DEVELOPMENT PROGRAM AND TRAVEL DEVELOPMENT As San Jose's population has shown its phenomenal growth, more and more jobs and capital investment in industry have located outside the city, in the county and in suburban cities. The city has a Department of Economic Development, and it has prepared an action plan for the creation of jobs and capital in- vestment. The program objectives of that plan do not reflect a primary interest in tourism development. Its focus is industrial and commercial development. In fact, the 22 tourism and convention business is not specifically addressed or named in the Action Plan. There is no obvious organizational connection be- tween the activities and programs of the city's Economic Development Department and the travel development contract of the Chamber. The city's adopted goals, however, include: XI. Develop San Jose's full potential as a tourist, sports and convention center. As one city councilman said, "Tourism development is seen as a secondary effect of downtown revitaliza- tion and the construction of the Convention and Cultural Center. We just haven't considered San Jose as a tourist and convention city." The city is committed to increased convention and tourist business to maintain and operate its public facilities. City participation in the construction of the proposed hotel will place it squarely in tourism development as an economic activity. Also, the expenditure of the oc- cupancy tax funds through the Chamber makes the city government directly responsible to the public for the effective use of these funds in travel develop- ment. Bringing travel development into the overall economic planning for San Jose is a task yet to be ac- complished. As tourism's importance is relatively new, the inclusion of it in future economic strategies has recently become necessary. THE FUTURE AND TRAVEL DEVELOPMENT IN SAN JOSE San Jose's future in travel development should be a bright one. The Convention and Cultural Center now opened and in operation will draw more and larger meetings as bookings for the future already show. If the new hotel is constructed in San Antonio Plaza, San Jose will have a major new facility to attract the tourist and conventioneer. Estimates for the transient occupancy tax indicate a continuing 15-percent to 25-percent annual in- crease. This will provide substantial and necessary financing to expand convention and tourism, adver- tising and promotional activities. The previous reli- ance on the State market will not be sufficient to uti- lize the new center. Organizationally, San Jose may be expected to in- crease its monitoring and management of the Chamber contract. Such management and coordina- tion should be a positive factor in the overall tourism development program. The travel promotion pro- gram and the successful operation of the Convention and Cultural Center are part of the same piece. Tying those functions together organizationally will prob- ably find some form in the near future. As San Jose continues its economic development planning, it can be expected to view tourism and con- ventions as an industry. Their presence as an economic factor has been acknowledged and ex- perienced in recent years. Tourism should be seen as an industry and made part of the industrial develop- ment program. The large number of small programs in the various chambers of commerce and the county will call for some organizational coordination. What that might be, and the role that the city of San Jose might play, was not made clear during this case study. San Jose has arrived as a tourist destination. The future policies, organization, and financing of tour- ism development by the city will determine the im- portance it has in terms of jobs, capital investment, increased tax revenues, and a healthy and prosperous economy for San Jose. 23 Chapter 4 ECONOMIC DEVELOPMENT AND TOURISM IN BALTIMORE, MARYLAND INTRODUCTION The city of Baltimore, located at the northwestern apex of the "Inner Harbor" of the Chesapeake Bay and on the east central shore of the State of Maryland, has served as a major point of entry for people and goods since colonial days. When the city incorporated in 1797, shipbuilding was already a major industry and remained so through the late 1800's when Baltimore Clippers gained international fame as the swiftest ships afloat. They established Baltimore's reputation, which continues down to the present, as a prosperous world port. A city of 845,000 in a metropolitan area of more than 2 million people, Baltimore has borne a reputation as a rundown decaying and declining city to be avoided by potential visitors and residents in favor of the open green-spaces and the political and cultural glit- ter of the National Capital less than 60 miles away. But this image is changing. As the center of the seventh largest metropolitan area and the fourth largest port in the country, the city is thriving on a broad-based economy with shipping as the keystone. The port also serves as a magnet for industrial plants looking to minimize shipping expenses, and several major corporations have recently selected Baltimore for their home offices. Most importantly, the city has mounted a major downtown redevelopment program which, begun in 1958, has generated an economic boom and a new self-image for the central city. It is this redevelopment and the activity it has caused that has been the major tourist attraction in Balti- more in recent years. Coupled with the restoration of its picturesque close-in neighborhoods, the Charles Center/ Inner Harbor Management, Incorporated (CC/1HM) complex, World Trade Center, Planetar- ium, Mechanic Theatre, and other elements of the Redevelopment Program along with the festivals, musical productions, fairs, and art shows have begun to attract tourists and conventions. Baltimore is no longer "the best kept secret on the East Coast." Until recent years, neither tourists nor convention planners nor residents of the city thought of tourism as a significant sector of the Baltimore economy. But within the last 2 or 3 years the city, which has been undergoing major downtown revitalization, has realized that a vital urban center with restored homes, a harbor with public access and green space, a diversity of ethnic cultures and satisfactory air, rail and highway access, augmented by a few of the more conventional tourist attractions such as Fort McHenry, the Frigate Constellation and a Science Museum, can build a substantial tourism industry. BALTIMORE'S ORGANIZATION FOR TRAVEL DEVELOPMENT Tourism-related activities within the city are carried out primariy by one governmental and one quasi- governmental agency. Each of these agencies is autonomous and has fairly specific and well- differentiated responsibilities. Both report directly to the Mayor of Baltimore. In response to a new heightened awareness of the im- portance of the tourism industry, the city established, in December 1977, the Baltimore Office of Promo- tion and Tourism. The office is assigned overall re- sponsibility for regional promotion and tourism development and produces tourist information, maps, and brochures; staffs tourist information centers; and maintains contact with the private sec- tor, including tour brokers, travel agents, and tour bus operators. 24 The Office of Promotion and Tourism is also respon- sible for developing, producing, and promoting most of the downtown festivals and other events described in more detail later in the case study. Its duties also include oversight over all major community develop- ment projects designed to draw people downtown including the Mechanic Theatre, a rehabilitated Broadway production house operated by the city, the World Trade Center Observation Level Project and numerous projects dealing with the restaurant and hotel industry. The Office has a staff of twelve full-time paid people and a total budget of just under $300,000. A list of personnel is as follows: STAFF FOR OFFICE OF PROMOTION AND TOURISM Director of Promotion and Tourism Director of Tourism Director of Downtown Events Festival Coordinator Office Manager Tourist Service Manager (part time) Tourist Information Guides (4) Receptionist Secretaries (2) The quasi-public agency is a public nonprofit corpor- ation, Constellation Management, Inc., with the sole function of managing a contract with the Hyatt Management Corporation. In 1978, the City con- tracted with the Hyatt Management Corporation to manage the Convention Bureau, the Convention Center, and the Civic Center. The five year contract provides for three vice presidents of Hyatt Manage- ment who serve as the executive directors for these three institutions and a senior vice president who is responsible for the overall contract. The staffing pat- tern for Hyatt Management Corp. is shown in Chart 3. The contract with Hyatt Management includes a $180,000 management fee plus 15 percent of all revenues over $850,000 earned by the three facilities. Chart 3 Hyatt Management Vice President Exec. Director of Civic Center Senior Vice-Preside Vice President Exec. Director of Convention Center Vice President Exec. Director of Convention Bureau 25 The five-person Board of Directors, appointed by the Mayor, includes three members from the private sec- tor, one from the city and one from Charles Center/ Inner Harbor Management, the private nonprofit corporation which manages the city's downtown redevelopment projects. Other city agencies and private firms participate in the city's tourism to a lesser degree. The city's Department of Planning is preparing a brochure and accompanying map detailing the locations of many tourist attractions. The Department's sign division is also devising a sign system, highway markers to direct tourists to and through town, and kiosks which will display information about attractions and events in the city. The city contracts with Rent-A-Tour, Inc., a private firm which offers a variety of tours around the city, to run a tour bus on a regular schedule. The Mechanic Theatre, whose operations are monitored by the Office of Promotion and Tourism, is managed by the separately incorporated Baltimore Center for the Performing Arts. The theater is the Center's only going concern and the Director of the Office of Promotion and Tourism is the president of the corporation. From October 1976 through July 1977, the 1600-seat theater with four paid staff had 343,880 attendees. The Mechanic has the second largest subscription roster for a theater of its type in the country, and single ticket sales are expanding an- nually. Another public /private corporation was created by the city in 1976 to manage the local events conducted in conjunction with the visit by the Tall Ships. Balti- more Op Sail, Limited now has sole responsibility for the care, management, and promotion of the city- owned Baltimore clipper ship, the "Pride of Balti- more." Originally constructed with urban renewal bond funds, the "Pride" will receive $50,000 in general revenue funds, and $100,000 raised from private sources in FY 79. The corporation anticipates that use of the ship by private corporations will in- creasly shift the bulk of the maintenance and operating expenses onto that sector. Chart 4 Organizational Chart for Baltimore Promotion Program Office of Promotion and Tourism Baltimore Center for the Performing Arts Hyatt Management Corporation Operation Sail Ltd. 1 Conve ntion Center and Civic Convention Center Bureau Department of Housing and Community Development Baltimore Economic Development Corporation Charles Center Inner Harbor Management, Inc. 26 FINANCING TOURISM ACTIVITIES IN BALTIMORE The major portion of city expenditures for tourism is made through the Mayor's Office in its civic promo- tion program. The program includes the Office of Promotion and Tourism with a FY 79 budget of $250,000; the operation of the Baltimore Aquarium, Inc. with a FY 79 budget of $194,000; the Baltimore Center for the Performing Arts, a FY 79 budget of $300,000; and the Constellation Management Cor- poration contract with a FY 79 budget of $820,000. A complete budget for the program is found in Table Overall, the expenditures for tourism and promotion in Baftimore have increased markedly in the last two years. The Downtown Coordinating Council received $122,628 in FY 77, and the Office of Tourism and Promotion doubled its $125,000 FY 79 budget in FY 79. This, added to the budgets of Constellation Management and HCD's tourism-related expendi- tures for physical development, accounts for a marked increase. ACTIVITIES OF THE CITY GOVERNMENT TO PROMOTE TRAVEL AND TOURISM Until Fiscal Year 1979, several of these activities — the Office of Tourism and Promotion (formerly the Downtown Coordinating Office), the clipper ship, the Morris Mechanic Theatre, and the Convention Center — were funded through the Department of Housing and Community Development (HCD). As of this year, the only HCD-funded activity relating to tourism is the $960,966 contract that the city has with Charles Center/ Inner Harbor Management Corpora- tion, and that relates only to the physical develop- ment of areas used by tourists. The revenues for all of the Mayor's civic promotion activities, as well as for the contract with Charles Center /Inner Harbor, come from general city funds, with the exception of $100,000 for the Convention Center, which is a grant from the State of Maryland. The Civic Center is still administered by an indepen- dent Civic Center Commission, appointed by the Mayor. While the Center will be brought under the management umbrella of the new contract with Hyatt Management Corporation, its operation is still listed as a separate function in the FY 79 budget. Operation funds for the Center in FY 79 total $2,383,488. Revenues predicted for FY 79 equal $905,000; the remaining $1,478,488 will come from general revenues. The city has no hotel/motel tax, mixed drink tax, or any other kind of special revenue for tourism-related activities. When asked about the feasibility of a hotel /motel tax, city officials indicated that due to the currently high tax rate, voters would be resistant to additional taxation. This resistance might diminish when residents become aware of the increased influx of out-of-state visitors resulting from the opening of the convention center. The Baltimore approach to tourism and convention development is described by Mayor Schaefer and his staff as a three-phased effort. The first phase is to improve the physical and social appearance of the City and to make it more attractive. This phase includes the production of events that draw people back to the downtown area. The second phase is to inform the metropolitan residents of the improved quality and attractiveness of the renewed downtown, to publicize the events, and to generally better the image that Baltimorians, as well as inhabitants of surrounding areas, have of the central city. The third phase is to use this improved self-image, as well as more directed tactics, to promote the new Baltimore image nationally. This includes a national promotion effort by the recently revitalized Conven- tion Bureau and the Greater Baltimore Council, which represents the private sector. Each of the agencies identified earlier has a respon- sibility for all or part of these three phases. Together, and through the coordination efforts of the Office of the Mayor, they comprise a tourism program for the City. The Department of Housing and Community Devel- opment is the oldest and most established of the agencies involved. It has served as an incubator for many programs, such as the Convention Center and the Office of Tourism and Promotion, and continues to support them with facts and backup projects. The Department is responsible for administering the con- tract with Charles Center/ Inner Harbor Manage- ment. 27 Table 8 CITY OF BALTIMORE, TOURISM-RELATED ACTIVITIES FY 79 BUDGET ESTIMATES 1) Agency: Office of the Mayor Program: Civic Promotion This program provides for the support of activities designed to promote the interests of Baltimore City as well as the celebration of historic events. RECOMMENDED BY BOARD SUMMARY OF ACTIVITY ESTIMATES FOR FY 79 Defender's Day Committee $ 2,200 I Am An American and Constitution Day Committee. . 2,000 Columbus Day 1 ,000 Flag Day 600 St. Patrick's Day Parade Commission 1,000 Maryland Day 800 Baltimore Neighborhoods, Inc 10,000 Regional Planning Council 125,994 Afro Clean Block Campaign 1 ,000 Our Country Day — Baltimore Council for International Visitors 5,000 Baltimore Urban Coalition 10,000 Tourism and Promotion (Downtown Coordinating Office) 250,000 City Tourism 40,000 Junior Association of Commerce 3,000 Maryland Marathon 1 ,500 Clipper Ship (Pride of Baltimore) 50,000 Baltimore Aquarium, Inc 194,400 Baltimore Center for the Performing Arts, Inc. (Morris Mechanic) 300,000 Constellation Management Corporation (Convention Center) 820,000 Neighborhood Housing Services 10,000 Charcoal Hearth Restaurant 60,000 Hampden Thanksgiving Day Parade 2,500 Bicentennial Committee — Bicentennial Committee Offset — Total Activities $1,890,994 2) Agency: Housing and Community Development Program: Charles Center/ Inner Harbor Management The objective of this program is to provide the executive management of urban renewal projects in the central business district of Baltimore City. In meeting this objective, the Charles /Inner Harbor Management Incorporated, a private nonprofit corporation under contract with the city, carries out: (1) project planning, scheduling and conducting and /or coordinating the acquisition, relocation, disposition, and other actions necessary to complete inner harbor projects; and (2) conducting the Metrocenter, Harbor Campus, Municipal Center, Financial District, the Retail District renewal pro- 28 grams in the central business district. Also included is the Downtown Coordinating Office, which is responsible for such activities as "Sunny Sundays" and ethnic festivals. SUMMARY BY ACTIVITY Charles Center /Inner Harbor Management $ 754,507 Inner Harbor Shoreline Operations 206,459 Downtown Coordinating Office — Clipper Ship (Pride of Baltimore) — Convention Center — Total Activities $ 960,966 3) Agency: Civic Center Commission Program: Civic Center Operation The Civic Center Commission of Baltimore is an agency of the city created by city ordinance in accor- dance with provisions of the Public Local Laws of Maryland for the purpose of operating the Civic Center as a multipurpose auditorium, arena, and exposition hall. The Commission, appointed by the Mayor, is charged with the responsibility of doing all things necessary in connection with the use, operation, management, maintenance, and repair of the Civic Center. The Commission is authorized to adopt and enforce rules and regulations for the use and oc- cupancy of the Civic Center and to procure various types of shows, sporting events, conventions, and other public presentations. SUMMARY BY ACTIVITY General Administration $ 251,931 Events 709,577 Maintenance Repair and Utilities 652,780 Debt Service 769,200 Total Activities $ 2,383,488 Charles Center /Inner Harbor Management Corpora- tion participates primarily in the first phase of tourism program. CC/IHM conducts all negotiations and competitive offerings for the disposition of land and supervises the design and construction of public facilities. CC/IHM is guided by a Land Disposition Policy established by the Department of Housing and Community Development, which is drawn directly from city goals, including the development of the city as a place to attract both local residents and tourists. Many of Baltimore's most popular attrac- tions as well as proposed attractions are located within the management area including: • U.S. Frigate Constellation; • Maryland Science Center; • World Trade Center; • Aquarium; • Public Wharfs; • Nobaka (a restaurant aboard a ship); • Shuttle boat to Fort McHenry; and • Harborplace, Rouse Retail Development. The Baltimore Office of Promotion and Tourism is the city's lead agency for improving the city's image locally and within the metropolitan area. It produces more than 700 events annually. The largest concen- tration of activity occurs in the summer months and includes weekend ethnic festivals, outdoor concerts during the week both noontime and evenings, profes- sional outdoor children's programs, and a center city farmer's market. The Office also operates a Baltimore Bus Tour daily and responds to numerous tourist inquiries. A minimum of 175 calls per day are answered. Between 29 January and May 1978, the Office distributed ap- proximately 20,000 tourist information guides and 10,000 dining-out brochures, among other materials. Two organizations in the City are primarily con- cerned with the third phase of tourism promotion — improving and publicizing Baltimore's national im- age. They are the Constellation Management Cor- poration (Hyatt Management Corporation) and the Greater Baltimore Committee, Incorporated. Promotion for the new Convention Center was the responsibility of the Baltimore Promotion Coun- cil. When the Council was disbanded in the fall of 1977 in favor of the Office of Tourism and Pro- motion, it was decided that a separate office for promotion and management of the Convention Center was needed. In response to this need, the Constellation Manage- ment Corporation was formed to provide for the management and promotion of the Baltimore Civic Center, the Baltimore Convention Bureau and the soon-to-be completed Convention Center. Constella- tion Management in actuality serves as a contracting agent between the city and the Hyatt Management Corporation, which will promote the Civic Center and assume all responsibility for the Convention Bureau and the pre-opening activities of the Convention Center. The primary concern of the bureau is to identify and solicit potential clients for the Convention Center, coordinate the ancillary events and services that are to be made available to convention attendees, and en- sure that all of the arrangements for the conventions are completed. A proposed budget for the Conven- tion Bureau and the Center is shown in Table 9. Table 9 CONVENTION BUREAU (1978-79 Fiscal Year) Convention Bureau Manager $ 35,000 Convention Bureau Sales Reps. (3) 60,000 Convention Bureau Services 60,000 Travel & Entertainment 90,000 Brochures 100,000 Office Expenses 45,000 (Telephone, Mailing, Etc.) Secretarial Services 40,000 Advertising 60,000 CONVENTION CENTER (1978-79 Fiscal Year) Convention Center Manager Convention Center Superintendent Convention Center Engineer Clerical Event Coordinator Miscellaneous Personnel Miscellaneous $ 35,000 (12 Months) 9,000 (6 Months) 9,000 (6 Months) 24,000 4,000 (3 Months) 50,000 (Last 3 Months) 19,000 $490,000 $150,000 30 The Greater Baltimore Committee, Incorporated (GBC), the lead private-sector organization in the city involved in both tourism and economic develop- ment, has undertaken a 5-year National Image Build- ing Program. After merger with the Baltimore Chamber of Commerce in 1978, the Executive Com- mittee of the GBC authorized an Economic Devel- opment Council with 27 members to evaluate the economic conditions, potentials, activities, and pro- posals and to prepare a complete proposal of goals, objectives, work program, and budget for the city. The GBC has the responsibility to promote the city's image nationally, particularly as a place for doing business. However, the Council does have an opera- tive subcommittee on both the tourism aspects and the promotion aspects of the National Image Build- ing Program. Currently Op Sail's only function is the ownership and management of a 90-foot wooden schooner, similar to the Baltimore Clipper ships of the early to mid-1800's. The "Pride of Baltimore" was con- structed in 1976-77 in the Inner Harbor within view of passers by. The ship, as the city's "Ambassador of Goodwill," travels from city to city promoting her home port. In the past, operating expenses of the "Pride" were primarily covered from city general revenues. How- ever, for FY 79 two-thirds of the operating expenses will come from private sources and city officials anticipate that in future years, private corporations will use the ship for parties and outings and will be charged fees which will increasingly cover the costs of operation. PUBLIC AND PRIVATE CAPITAL INVESTMENTS IN BALTIMORE RELATING TO TOURISM The city of Baltimore has made major capital in- vestments in recent years for the promotion of tourism, and it has plans for more. The Charles Center/ Inner Harbor development described in more detailed below includes a Broadway show theater owned by the city, underground parking and over- the-street walkways and plazas. The development also encompasses Frigate Constellation Dock, the Marina, the Science Center, the Shoreline Park and Promenade, and an outdoor theater. The city has several projects relating to tourism under construction including an aquarium, a harbor front rental dock and a Convention Center hotel complex. Independent private investments related to tourism in the downtown area have increased sharply in recent years. A $20 million Hyatt Hotel is planned for the new Convention Center complex, the Rouse Cor- poration has committed $15 million to the construc- tion of a "Harborplace." Retail development and two new restaurants will be opening in the area. In addition, the city is now accepting proposals for the rehabilitation of the Baltimore Gas and Electric Power Plant, which sits on the waterfront, and for the redevelopment of the Market Place area on the other side of the Inner Harbor. Several privately owned parking lots in the area have plans for expansion and a new shuttle boat across the harbor and a shuttle bus 31 Table 10 CAPITAL INVESTMENTS IN THE INNER HARBOR Project Convention Center* Constellation Dock Aquarium* Marina Shoreline Landscaping World Trade Center (Observation level) Harbor Front Retail* Science Center Charles Center /Inner Harbor Development *Under construction Cost $ 45 million 1.6 million 1 million 1.4 million 7 million .8 million 7 million 8 million 644 million Method of Financing City and State City /Federal City Bond Issue City /Federal City /Federal City and State Private Federal / State / Private City /State/ Federal /Private along the main street paralleling the harbor are also proposed. Joint public /private development, however, is much more prevalent. Within the last five years, the city has completed the major portion of a 373-acre Charles Center/ Inner Harbor Redevelopment proj- ect which includes a major portion of downtown Baltimore. All of these projects, their costs and funding sources are in Table 10. Charles Center is a 33-acre, $182 million complex which combines prime office space, specialty stores, restaurants, apartment towers, two hotels, and a Broadway theater with the public developments mentioned above. Connected to the Inner Harbor with walkways and bridges, the entire project has drawn thousands of people both from within the metropolitan region and from elsewhere to the Balti- more central city. These investments by the city are the foundation of the first phase of Baltimore's promotion strategy. The city protects and enhances these investments by promoting the downtown generally, and these project areas in particular, through its Office of Promotion and Tourism and its national image-building efforts. ECONOMIC DEVELOPMENT AND TOURISM IN BALTIMORE In recent years, the name "Baltimore" has become synonymous with successful urban economic development in general and downtown revitalization in particular. The city was one of the first to attempt downtown commercial revitalization in its Old Town area. It began rebuilding its downtown center using federal urban renewal programs in 1959 when the Commis- sion of the Baltimore Urban Renewal and Housing Agency began its first downtown renewal effort — the $145 million Charles Center Project. In 1965, as the Charles Center Project was underway, the city asked the general manager and deputy general manager of the project to undertake the next phase of downtown redevelopment — a 20-year pro- gram of renewal projects in the Inner Harbor and adjacent to the Central Business District. The two men formed Charles Center/ Inner Harbor Manage- ment, Incorporated in order to undertake the Inner Harbor program. In 1970, the Corporation contracted with the city to administer a program of guiding, stimulating, and coordinating the course of private and public devel- opment downtown. In order to pay for the services of the corporation, Baltimore has established a revolving fund from which the corporation pays its expenses and which is reimbursed on a monthly basis. 32 The area which falls under CC/IHM's control is Baltimore's biggest attraction. Unlike other cities where people visit because of the climate, such as Miami, or because of a main attraction, such a the music industry in Nashville, or because of proximity to geographical or historical attractions, such as Denver or Independence, Missouri, people visit Baltimore to see the city itself. In Baltimore, they concentrate around the harbor, so the attractiveness of this area is crucial to the tourist industry. Conversely, the realization by the city of the poten- tial of this area for tourism has prompted additional development. This has required that the agencies in Baltimore which have lead responsibility for the development of these areas, and subsequently for the city, generally to begin to include tourism in their economic planning. should be planned and promoted as an ongoing activity that will become not only self-sustain- ing, but capable of identifying revenues above and beyond operational costs ... A commit- ment MUST be made to fund a basic ongoing logical program if the investment of time and money are to pay dividends. There is one aspect of the city's economic develop- ment program which fails to include tourism in its strategy. The Baltimore Economic Development Corporation (BEDCO) is responsible for the promo- tion and development of the industrial base of the city. Reaching beyond the central city, BEDCO solicits firms, packages investment opportunities, and works to create jobs throughout the city. Although the organization does include cultural and tourism attractions in its promotion materials, it does not ac- tively seek firms related to the industry. This commitment is evident in an explanation given by the Director of Housing and Community Devel- opment. In the last fifteen years or so, he explains, there has been a redefinition of the nature of the city. In addition to the traditional sectors of industry and manufacturing, the economic base of the city is becoming education, culture, service, and tourism. The physical infrastructure of the central city must be rebuilt to serve these new functions better. As in- dicated earlier in this report, the Department has put this philosophy into action, serving as an incubator for the Office of Promotion and Tourism, for the development of the Convention Center and for the Charles Center /Inner Harbor Management Corpora- tion. Another indication of Baltimore's increasing com- mitment to tourism has been the progressive institu- tionalization of city activities for tourism. The three lead agencies for tourism promotion — the Office of Promotion and Tourism, the Constellation Manage- ment Corporation, and the Charles Center/ Inner Harbor Management all work with the city on eco- nomic development planning and promotion proj- ects. This close alliance is highlighted in an excerpt from "A Proposal for a Baltimore Tourism Program" prepared in February 1978. Tourism can contribute significantly to the economy of the city and surrounding areas and TRAVEL DEVELOPMENT IN BALTIMORE'S FUTURE Baltimore's future for travel development is in- separable from its future as a viable urban center. Because, more than any of the other case studies, the attraction of Baltimore is the city itself, the health of the tourism industry will rest on the continued revi- talization of the city. This sentiment is clearly defined in a paper prepared by the Director of the Office of Promotion and Tourism: Baltimore's extensive redevelopment effort has touched every section of the city. Most particu- larly it has changed the character of the down- town, creating a new physical environment designed to lure new residents, new visitors, and new business. While the new Baltimore is most immediately characterized by extensive physical rehabilita- tion, the spirit of the city has changed in an equally dramatic manner. This balance of si- multaneous physical and psychological renewal has been at the heart of the Mayor Schaefer urban strategy. The future of Baltimore's redevelopment looks bright. Charles Center has given the city 15 new buildings, 1,350,000 square feet of office space, a successful Broadway show house, a twin tower hotel, apartments, and an underground parking facility for 33 4,000 cars. The Inner Harbor, when completed, will The city has created the new Office of Promotion represent $285 million dollars in city, Federal and and Tourism, has brought the private sector into private investment, much of which was to make the tourism-related planning and programing through area more attractive to tourists. Finally the Conven- the Greater Baltimore Council and is using the Of- tion Center complex when completed will provide the fices of the Mayor to raise the awareness of city city with a facility, unavailable up to now, for attract- agencies regarding the importance of this industry ing major conventions and exhibits from all over the for economic and physical development, county. 34 Chapter 5 EL PASO'S TRAVEL AND CONVENTION DEVELOPMENT PROGRAM INTRODUCTION Located in the far southwestern corner of Texas, at the junction of Texas, New Mexico, and Mexico, El Paso has been, since the 17th century, the crossroads of three cultures — Indian, Western, and Mexican. The juxtaposition of these cultures with El Paso's natural attributes has created an attractive stopping- off place for international travelers. El Paso claims more days of sunshine than any other U.S. city and offers golf and tennis to Canadians at the same time it offers skiing to Mexicans. The citizens of El Paso reflect its historical back- ground and include in their population of 420,000, Caucasians, Indians, Asians, and Blacks and a pre- dominance (58 percent) of population with Spanish surnames. Proximity to Mexico has had a unique and positive effect on the development of El Paso's economy. The 1968 "Twin Plants" program permitted separation of the manufacturing process from the assembly pro- cess in El Paso and Juarez so that while the three largest producers of leisure slacks are located in El Paso, some of the cloth is actually cut in Juarez. Handmade boots begun in Juarez are completed in El Paso. Jewelry settings are made in Juarez; the stones are set in El Paso. Replacement parts for diesel engines are built in El Paso and the engines are assembled in Juarez. A major contributor to El Paso's economy is Fort Bliss. Military payrolls and resulting local purchases contribute more than $255 million to the city's economy. When this sum is added to government and military spending, they total in excess of $400 million — most of it circulating through El Paso. An esti- mated 2,000 servicemen from other nations train here annually. Many of them arrive with their families for the period of the training program. Some 10,300 residents in the city are retired military personnel. El Paso is making a concerted effort to develop its tourism industry. Public and private sector activity is intense and highly cooperative. The Civic Center Complex, completed in 1972 at a cost of $21 million, a variety of public and private acquisitions and restorations of historical buildings and sites, and ma- jor expenditures by the public and private sector for amusement and recreation facilities, attest to the in- creasing interest in tourism. Present plans for the construction of a Convention Headquarters Hotel is another example of the city's commitment to tourism and convention development as a significant income- producing enterprise. Visitors to El Paso can spend time at historic mis- sions, an Indian Reservation, a Western dude ranch, Juarez, Mexico, and a variety of museums and attrac- tions either in the city or within a few miles radius. It is estimated that visitors come to El Paso at a rate of more than 4,000 a day. The growth of their eco- nomic impact is illustrated in Table 11. 35 Table 11 THE ECONOMIC IMPACT OF TRAVEL IN EL PASO 1975 1976 1977 Total Visitor Expenditures 160,765,000 186,922,300 224,306,800 Visitor- Generated Jobs 6,967 7,898 9,478 Visitor- Generated Payroll 34,356,000 41,505,400 49,806,500 State Tax Receipts 6,257,000 7,432,600 8,919,100 Estimated 1978 total visitor expenditures, $261,306,800 Source: U.S. Travel Data Center, Washington, D.C. $268,306,800. Local Tax Receipts 1,645,000 1,958,400 2,350,000 ORGANIZATION OF EL PASO'S GOVERNMENT FOR TOURISM DEVELOPMENT The El Paso Convention and Visitors Bureau is a department of the city government, created in 1976 for the "promotion, development, improvement, operation, maintenance and administration" of the city's convention and visitors industry. A copy of the resolution establishing the Bureau is shown below. RESOLUTION I BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF EL PASO: development, improvement, operation, maintenance and administration of the City of El Paso Convention and Visitors Industry. In carrying out its responsibilities, the Convention and Visitors Bureau will consider all recom- mendations made by the City Board of Development, Tourism and Conventions on matters pertaining to the Bureau or related Convention and Visitors activities . . . Ill The Director of the Convention and Visitors Bureau shall report to the Mayor and City Council and shall serve as secretary to the City Board of Development, Tourism and Conven- tions. I The Department to be known as the Conven- tion and Visitors Bureau is hereby created in accordance with Article 1015J-1, Vernon's An- notated Civil Statutes. The Director of the Con- vention and Visitors Bureau will be head of the Department and shall be appointed by Mayor and City Council. II The purpose of the Convention and Visitors Bureau will be to provide for the promotion, IV The Convention and Visitors Bureau will con- tain such appropriate positions as are reason- ably necessary to carry out its responsibilities. ADOPTED this 2nd day of September, 1976. The Convention and Visitors Bureau is headed by an Executive Director who reports to the Mayor and the City Council. There are two main subdivisions: Tourism Marketing and Convention Marketing. The Bureau operates under the direct oversight of an alderman, one of six who comprise the City Council (Each alderman is given responsibility for oversight 36 of a specific functional area of city government.). There are sixteen full-time staff, most of whom are under Civil Service jurisdiction. Three principal staff members are employed under city contracts specifically designed to allow for transferability of time-in-grade and specialized ex- perience developed elsewhere. One new position has recently been approved (Assis- tant Convention Marketing Director), and general expansion of the unit is expected to keep pace with the growth of the industry in the city. An organiza- tional chart appears on Chart 5. Under the terms of the resolution creating the Bureau and the companion State enabling legislation, the Bureau must consider recommendations made by the City Board of Development, Tourism, and Conven- tions. This advisory board to the Convention and Visitors Bureau consists of five members chosen by the Mayor from private-sector, tourism-related busi- nesses. role in boosting El Paso and the promotion of tour- ism attractions. The Executive Assistant to the Mayor pays particular attention to relating certain Federal grants, public works in general, and resulting benefits to the travel industry. At the highest level, Mayor Salazar is a sup- porter of tourism efforts and uses his good offices to effect improved liaison with Juarez, Mexico for joint tourism activities. FINANCING TRAVEL DEVELOPMENT IN EL PASO The public financing of travel development in El Paso is substantial and from a number of sources in- cluding the general fund, the airport fund, and a por- tion of a hotel occupancy tax. For the Fiscal Year 1977-78, the City Convention and Visitors Bureau was funded as follows: Current members represent airlines, hotels, banking, media and international interests. Members serve 2-year terms and meet with the Executive Director and staff of the Bureau each month to advise on travel development matters. They function also as a tourism outreach task force, providing effective liaison with the private sector for the institution of joint activities and developing overall support for tourism activities. The Board appears to be particularly effective because of its efforts and enthusiastic commitment to the cause of travel development. It played a major role in the development of a 5-year tourism market- ing plan and in meeting and surpassing many of the long range goals of that plan within 2 years. The Chamber of Commerce, relieved of specific tourism responsibilities for the city government since 1976, still functions in the field, though somewhat peripherally. It produces public relations materials, staffs a tourism desk in its office, and encourages its membership representing specific industries to have those industries bring their conventions to El Paso. Some tourism-oriented organizations still belong to the Chamber (less than 5 percent of their member- ship), but concentrate their tourism promotion activ- ities under the aegis of the "Discover El Paso" Asso- ciation, a private organization taking a very active 1. General Revenues — No more than 1 percent of the general fund budget $458,000 2. The Airport Board contributes the city's portion of a two-to-one match with airlines for promotional pur- poses. Airport Board revenues come from landing fees, an industrial park and land sales and leases. $ 62,500 3. Hotel Occupancy Tax — Of the 4 per- cent collected by the city amounting to $608,000; 2.5 percent goes tothe retirement of Civic Center bonds, (62.5 percent) 0.5 percent goes toward Civic Center maintenance (12.5 percent) 0.5 percent goes to the Arts and Humanities (12.5 percent) 0.5 percent goes to tourism promo- $ 76,000 tion (12.5 percent) TOTAL $596,000 The legislative history of the Occupancy Tax begins in 1959, when Texas instituted a Hotel Occupancy Tax "equal to three percent of the consideration paid by the occupant of such room to such hotel." 37 Chart 5 El Paso Convention and Visitors Bureau Organizational Chart Taxpayers Mayor City Council Afderman City Board of Development & Tourism Tourism Marketing Director Tourism Sec. Tourism Recpt. Asst. Dtr. Voc. Ed. Clerks (2} Airport info. Center (5) Public info. Officer Executive Director Executive Secretary Convention Marketing Director Conv, Sec. Convention Coord. Housing Bureau Conv. Tel Oper./Recpt Conv. Regis. Clerk (5) Asst. Dir. Sales Rep. Clerk III 38 In 1962 the El Paso City Charter was amended to provide that the City Council had the power to col- lect an occupancy tax of 3 percent and that in the event such tax was levied, the proceeds were to be used 0.5 percent for the maintenance of the "audito- rium and convention center" and 2.5 percent to pay the principal of and interest on bonds issued for the construction of "such auditorium and convention center." The charter amendment provided for the financing of bonds for the construction of the con- vention center. In December 1962, the amendment passed, but the bond issue did not despite an active campaign of support by the city administration and labor and business officials. The local newspaper headline of December 12, 1962, read "Voters Shatter Center Dream." In 1967, a State statute piloted through the Senate by the State Senator from El Paso was passed providing that cities could issue revenue bonds to build and operate a civic center and that such bonds might be payable from parking revenues and an occupancy tax if the city is authorized by ordinance to levy such a tax. In 1977, the State statute was amended providing that the revenue from the occupancy tax might be used for ". . . tourist advertising of the city and its vicinity and conducting ... a program to attract conventions and visitors; the encouragement, promo- tion, improvement and application of the arts . . . ; historic preservation and restoration." At that point, the city amended its ordinance to provide that 0.5 percent of the tax was to be used for convention center constructon or improvement, furnishing of facilities for registration of convention delegates, advertising for general promotion and tourist adver- tising, conducting a program to attract conventions and visitors. One half of one percent of tax could be used for "the encouragement, promotion, improvement and ap- plication of the arts, historic preservation and restoration." This 0.5 percent currently goes to pro- motion of the arts and the creation of new cultural attractions through historic restoration. Despite some initial concern regarding the effect of the occupancy tax on the revenue of smaller hotel properties, the innkeepers are currently among its strongest supporters. The city budget request for tourism development for Fiscal Year 1978-79 is $775,602, more than double the FY 1976-77 budget. El Paso, obviously, is financially committed to its travel development pro- gram. The budget request is shown on the following pages on Table 12. ACTIVITIES TO PROMOTE TRAVEL AND TOURISM IN EL PASO The executive director and senior staff of the City Convention and Visitors Bureau are engaged in a variety of promotional activities reflecting the multi- faceted nature of their tourism program. The majori- ty of these activities are included in the El Paso Con- vention and Visitors Bureau Five-Year Marketing Plan 1976-80. The purpose of the plan is "to assist in the promotion of the city as a convention site and tourist destination." It was designed to be used as a format and guidelines to "realize the largest return possible for the dollars invested." Promotion activ- ities are divided into three categories: • Convention Sales and Promotions Direct Mail Trade Advertising for Conventions National Advertising for Conventions Sales Trips /Conventions Trade Shows /Conventions Educational Programs • Tourist Sales and Promotions Package Tour Brochure of El Paso Creation of a Special Package for Winter Trade from the Canadian Market, Specializing in Golf and Tennis during the Winter Months Special Package to be Designed for Mexican Trade, Highlighting Ruidoso Skiing Com- bined with a Shopping Tour in El Paso Matching Grant Program National Advertising Direct Sales Sales Blitz in Selected Cities Familiarization Tours Direct Mail Tourism Trade Advertising Rise and Shine Program Tourism Educational Program • Media and Film Promotion Film Library Press Kit and Media Information El Paso Film Commission CB Promotion Media Tourist Information 39 ACCOUNT Salaries 900 Auto Allowance 801 Advertising 805 Co-op Advertising 805-1 Promotion 805-2 Printing Maint. Furn. Equipment 818-4 Postage 821 Rental Equipment 822 Membership Dues 825 Services 826-03 Books 830-01 Photo Supplies 830-05 Office Supplies 830-10 Other Supplies 830-19 Uniforms 835 Travel per Diem 840 Telephone / Telegraph 842.05 Capital Expense TOTAL Table 12 CONVENTION & VISITORS BUREAU BUDGET REQUEST SEPT. 1, 1978 - AUG. 31, 1979 BUDGET JUSTIFICATION: $160,072 13 employees $10,200 5 employees and Executive Directors Auto $122,000 Directories and Local /National Advertising $100,000 $95,000 $40,000 $1,650 Special fund, i.e., Continental-Southwest-Frontier, American Airlines Special DATO Program, Trade Shows, Fam Tours, Seminars, Sales Blitzes, Promotional Materials, e.g., appliques, buttons, bumper stickers, etc. Brochure printing; handbooks, convention packets, etc. $16,500 New direct mail program plus normal response and mailing $17,380 System 6, Postage Meter, Xerox $5,000 Organization, etc. $66,000 Consultants /Certified folders $800 $5,000 Special Project /Movie Liaison $20,000 $5,500 $1,500 Additional Personnel $50,000 6 employees traveling $15,000 Additional Personnel (Selling long distance) $24,000 Office remodeling, additional equipment, i.e. desks, typewriters, Airport Tourist Center @ $20,000 $755,602 Includes 0.5 percent Room Tax of approximately $100,000 40 One of the greatest strengths of the Bureau has been the joint promotional activities with both the public and private sectors. For example, the Bureau ini- tiated a $70,000 public awareness media campaign to educate El Pasoans on the economic significance of tourism in order to encourage them to make visitors feel more welcome. A blitz of ads appeared in news- papers and magazines, radio, and TV. Advertising materials are prepared by an advertising agency under contract to the city to "Furnish com- plete and comprehensive services in the handling of the city of El Paso's advertising promotion and other such marketing activities ..." In addition to the paid ads, the Bureau convinced the print media to run articles with photographs describing local places of interest. Radio and TV stations ran public service announce- ments in addition to paid commercials. They also publicized a 13 week contest series called Ask Me How, in which citizens were asked to identify El Paso attractions for instant cash prizes and a grand prize of a weekend in El Paso contributed by the Inn- keepers Association. The Restaurant Association matched the Bureau's $7,500 expenditure for a half million place mats as part of the same educational campaign, and utility companies, banks, and other firms throughout El Paso agreed to include tourism promotional inserts with their monthly mailings. A cooperative advertising program with the airlines serving El Paso has been one of the Bureau's most successful joint efforts. Because Continental Airlines began in the city, one of the Advisory Board members was able to develop a joint advertising program through which Continental contributes $2 for every $1 expended by the city for an advertising campaign. The Airport Board provides the city's share. Promotion with Continental Airlines also involved the development of an award-winning in-flight film and an 80-minute tape presentation of an interview with a popular country /western singer. It is esti- mated that 6,000 passengers a day heard the presen- tation. Southwest Airlines, a regional carrier, also partici- pates in two-to-one dollar match advertising promo- tion with El Paso. A March 30, 1978, Southwest Air- lines proposal for co-op magazine promotion specified: "In addition to this co-op magazine pro- gram, Southwest Airlines has committed itself to the promotion of El Paso through use of radio, outdoor posters, a full color brochure and other special sales efforts Both American Airlines and Frontier Airlines are negotiating to establish similar matching arrange- ments. Last year, the city spent $62,500 for a promotional campaign whose total cost was $187,500. As more route cases involving El Paso landing rights are approved, it is anticipated that more airlines will get involved in the two-to-one match. La Placita is an extensive shopping mall located in the airport terminal and established by the Mer- chant's Association. Open from 9:00 A.M. to 7:00 P.M., it consists of 17 shops where Indian, Mexican, and Western arts and crafts are sold. Sales blitzes and familiarization tours are the lifeblood of tourism promotion. When they are done by El Pasoans, they are done with style and mutual cooper- ation and support. Hotel, airline, and restaurant per- sonnel turn out, as do city officials. Often these are cooperative efforts with the U.S. Travel Service of the Department of Commerce and the Texas Tourist Development Agency in their familiarization trips for travel writers. Texas Tourist Development Agency has provided matching funds for an El Paso night at the DATO Pow Wow and cooperates with joint advertising pro- grams which resulted in three-quarters of a million dollars worth of new business booked into El Paso for the coming year. In order to attract foreign tourists, the Bureau does yearly updates of special packages for winter trade from Canada, highlighting golf and tennis, and pack- ages for the Mexican market, emphasizing skiing combined with shopping in El Paso. Other activities include a film library with films available to groups for promotional purposes. One such film, "El Paso: City on the Rio Grande," won an award as best of its type. The Bureau also takes its message to hotel employees and other public contact personnel by conducting training seminars. 41 PUBLIC AND PRIVATE CAPITAL INVESTMENT IN EL PASO FOR TOURISM DEVELOPMENT hotels are currently operating at approximately 80 percent capacity, but no present facility can suffi- ciently expand in capacity to become a satisfactory headquarters hotel. The El Paso Civic Center complex, completed in 1972 at a cost of $21 million, includes the Convention and Visitors Bureau, the Chamber of Commerce Building, a 2,548-seat theater, 60,000 square foot ex- hibition hall, and 10,000 square feet of meeting space with a full array of services, including kitchen facilities and closed circuit TV. Its architectural design cap- tures the intrinsic characteristics of the twin cultures of the U.S. and Mexico. The complex was funded principally by a $2.5 million bond issue passed in 1968. A portion of the hotel/motel tax goes to the operation and maintenance of the Center. Another major capital investment is described in an Urban Development Action Grant application sub- mitted to the Department of HUD for almost $8 million. This will be used to leverage private com- mitments to revitalize a deteriorated central business district and a residential neighborhood. An explana- tion of the commercial component (Civic Center Plaza) follows: This property, north of El Paso Civic Center, is known as the Civic Center Plaza. Three major structures are envisioned in the Plaza area; a ten-store municipal building, already under- way; a new hotel; and a parking garage facility. The city has awarded an option to a private development corporation to locate a major hotel facility on the Plaza land. The private development corporation has negotiated a contract with the Hyatt Regency-El Paso, to con- struct a 400-room, $20 million hotel, contingent on the city's ability to build a major parking facility. Feasibility studies will be undertaken to include a Tigua Indian Tribe Arts and Crafts Center; an Inter- national Trade Center, featuring primarily Mexican import products; a children's exploratorium; a Tourist Bureau Center; and retail shops, restaurants, and other related uses in Civic Center Plaza. Assist- ance from the Economic Development Administra- tion of the U.S. Department of Commerce will be sought for this showcase project. Once the hotel is constructed, existing hotels are ex- pected to improve and expand their facilities. These THE ROLE OF TOURISM DEVELOPMENT IN EL PASO'S PROGRAM FOR ECONOMIC DEVELOPMENT The city of El Paso did not have an Office of Eco- nomic Development until early 1978, when it received a grant from the U.S. Department of Commerce, Economic Development Administration, Office of Technical Assistance. Under the general direction of the Mayor and City Council, this office provides information, data, and expertise in evaluating and shaping specific economically oriented development programs and projects. Although tourism is not specifically mentioned in the guidelines for establishing this office, evidence of a commitment to tourism as a part of economic devel- opment is present in the financial and public support given to tourism development by the Mayor and City Council and in the recognition by the community of tourism's status as an industry producing "export" dollars. There are strong statements advocating tourism development in the "Goals for El Paso" document, a proposal resulting from widespread community involvement in developing long-range goals for the City. A number of programs, planned or underway, will have a positive effect on the economic revitalization of El Paso's Central Business District, and bear on the city's tourism potential as well. Some examples of these are: 1 . A consulting firm has been retained to study the economic feasibility of developing a regional fair for 1981. The objective of this program is to revitalize the area south of the Civic Center through the creation of a regional fair that will have a continuing program in future years. 2. El Paso has engaged a private consulting firm to formulate a comprehensive industrial devel- opment marketing program now that communi- 42 ty leaders recognize that such a campaign is a viable solution to arresting the city's unemploy- ment and underemployment problems. The success of this program is, in turn, expected to increase convention business. 3. The El Corredor Downtown Revitalization Project is a Local Public Works Project using local and Community Development funds with a $3 million budget. The project is designed to improve the visual appearance of downtown El Paso and to encourage the investment of private capital by property owners and tenants in the downtown area for long-term benefits for the downtown area. New street furniture, light- ing and landscaping are the basic elements of this beautification program scheduled to en- compass the major portion of the local down- town street system. TRAVEL DEVELOPMENT FOR EL PASO IN THE FUTURE Tourism in El Paso has come a long way since 1959, when the State of Texas passed a law advocating tourism promotion only to discover that the "carpet- bagger law" prohibiting advertisements to attract visitors and business was still in effect. Whether in terms of its being a clean, nonpolluting industry or as a contributor of taxes which increase services and keep the local tax rate down, there seems to be a pro- tourism momentum generated. Private groups, such as the Discover El Paso Association, the Junior League, the Rotary and Kiwanis Clubs, the Histori- cal Society, and others have all become tourism boosters. Although El Paso's tourism effort, as structured within the Convention and Visitors Bureau, is relatively new, the enthusiasm and excitement of the effort indicate a high level of commitment. It is an- ticipated that lower airfares and service by more airlines, including more Mexican routes, will increase the number of visitors. Improvement in and speeding up of the inspection process at the border is expected to bring in more citizens from Mexico who will shop, sightsee, and stop overnight before leaving, before leaving. The development of the new 400-room "head- quarters" hotel adjoining the Civic Center will bring El Paso's total hotel room capacity more in line with that of the Civic Center's convention capacity, thus enabling the City to physically host all but the very largest conventions (6 percent of those which annually meet in this country). The increased revenue from the occupancy tax could then be used for further pro- motion, although there is some indication that it would be more likely to go instead toward reducing the amount of funding which comes from general revenues. The tourism message has raised the consciousness of business people, public servants, and the general population alike, so that when the little "Amigo Man" mascot says "Bienvenidos Amigos" he is con- veying the sentiment of El Pasoans of all back- grounds, races, and occupations. 43 *> U. S. GOVERNMENT PRINTING OFFICE : 1979 O - 275-722 (Vol. II) / ^MENT 0(5 Ct Sr ■*T6S TRAV6*- PENN STATE UNIVERSITY LIBRARIES ADDDD7DTM37MD