The Exposition Center Advisory Committee met 09/08/2021. In addition to the presentation specifically about the Paper Valley Hotel and the Exposition Center, they also received a report about the state of the local tourism industry in general. This was presented by Pam Seidl, the Executive Director of the fox Cities Convention and Visitors Bureau.
Mayor Woodford introduced her and explained that they wanted to understand where the Expo Center fits in the broader context of the tourism sector and they also wanted to talk about where that sector was in terms of recovery, moving forward, booking new events, and getting things going again.
Pam said the presentation she put together was about the entire Fox Cities market. The presentation started with a graph that was essentially a reverse checkmark. It showed year over year growth in visitor spending going back to 2016. There had been some seasonal spending in the Fox Cities. In 2019 they started to have some growth which was record setting and then there was a complete drop off in 2020 that essentially erased 11 years of growth.
In 2019, visitor spending in the Fox Cities was $511 million. That was the first time they cracked the $500 million mark. In 2020, that was down to $333 million. She said that didn’t sound like a bad number in the whole scope of things. That spending in 2020 was driven by people staying at hotels. Medical staff came in for long-term stays as well as critical infrastructure workers who also stayed at hotels. [I’m not actually sure what a “critical infrastructure worker” is and she didn’t explain that in the presentation.] When the state started to open up in the summer of 2020, they did have some regular visitors/stays as well. There was also spending from daytrips. She said they also had some sports activities and facility rentals. So, there was a still a fair amount of spending in the Fox Cities although not what they would have hoped for in 2019.
They lost about $178 million of visitor spending which was a 1/3rd decline. One out of every 4 direct tourism jobs were lost, and those workers have not come back to those jobs. The last time visitor spending was at the level of 2020 was in 2011 when we were coming out of the Great Recession.
She went back through the FCCVB’s records of their portion of the room tax and discovered that the last time their revenue was as low as it was in 2020 was in 1996. That was a big impact on them and was about a 60% decrease from normal.
She presented a graph that displayed the hotel occupancy rates from 2016-2021. There was consistent hotel occupancy from 2016-2019, then a very low occupancy rate in 2020. There was a definite drop off in March and April of 2020 then a little bubble of increased rates through the summer. The line for 2021 rates provided a nice visual on how the recovery had started in the market. It only went through July because she did not have the August occupancy numbers yet. She noted that all but one day of EAA happened in July so that would have helped those numbers. They were only a few percentage points off of the July 2019 occupancy rate. However, as had been referenced during the Expo Center presentation, they did think that the Delta variant and the news around it was affecting some people’s decisions. They had originally thought the 3rd and 4th quarters were going to be the heart of the tourism recovery, but now she didn’t think it would be. They may have peaked in the 2nd quarter. They will have to wait and see.
She then reviewed the hotel room revenue. The hotel room tax was 10% of revenue from hotel rooms. 3% of that 10% tax funds the bonds for the Exposition Center, 3% funds the bonds on the Community First Champion Center, and then the Fox Cities Convention and Visitors Bureau gets about 2.85% of that tax revenue. Their revenue had been quite consistent. 2019 had been a record-setting year. Then 2020 was very low. The revenue in 2021 had been off to a nice start with a peak in July. They had been generating a nice amount of room revenue since May of 2021 that was almost in line with history. They had been hoping the recovery continues. There is always a post summer fall off that in normal in that market, but those revenues do usually hold through the 3rd quarter because of Packer home games. Those Packer home games are going to still happen this year. “So, we’re cautiously optimistic but a little bit concerned at this point because of some of the other things we’re seeing with business travel.”
She thought that what they were seeing was what she called a “Paused Recovery”. 59% of American travelers now indicate they are changing travel plans due to the pandemic, and increase of 16 points in 2 months and back to levels not seen since the beginning of march 2021. 88% still report they are going to travel in the next 6 months. However, now there are some ongoing income or costs of travel inflation concerns around the travel industry. Additionally, people have spent their stimulus checks and are now back to what Pam called “normal spending.”
She thought it was particularly interesting that, overall visitors are less inclined to take guidance from state and local resources than they are from federal leadership and agency sources.
Mayor Woodford dryly noted that was something those in local government have known for a long time.
Pam had thought most people would be hyper focused on where they wanted to go and look at what was going on right there, but instead they tend to take a global view and apply that to everywhere.
Meeting and convention planners have some specific issues they are facing. The goal posts keep moving. There’s a reluctant to commit because of ebbs and flows with what’s going on in the pandemic.
Hybrid meetings are the most expensive and time consuming to hold. There has been an idea that hybrid meeting are where things are going, and there’s an expectation for that technology to be available, but from a meeting planner’s perspective, those meetings are really tough to run. Essentially, they are running two meetings and they are very expensive, so it’s the least favorite option of meeting planners.
Additionally, last minute changes equal financial risk so they are seeing some early cancellations such as a January event at the Expo Center that had just recently been cancelled. This seems to be consistent throughout the state of Wisconsin. People are cancelling further out because the closer an organizer is to an event the more money has been invested which they can’t get back. They would have contracts signed with providers and that can’t be gotten back once the contract is signed. Therefore, organizations are choosing to cancel and not risk it. When they’ve already cancelled a money generating event the year before, they don’t have the money to risk again this year and lose it twice. They are seeing that especially with government and education groups. Those are the groups most likely to cancel for fall and into winter. There’s just a little more hesitancy in those groups.
They hoped that 2022 will be a more normal year, but the thought they would still continue to see that hesitancy toward not booking so far out until people start feeling comfortable taking that financial risk and making that commitment.
They have seen some large community events come back as well as conventions. Business travel is still very soft. She noted that business travel drives their mid-week days and is a very important part of the travel here that they don’t spend a lot of time thinking about.
They hoped that they would be able to create a Tourism Master Plan through a collaborative approach with some of the local municipal governments. This would look at the whole tourism economy and create basically an economic development plan for the tourism infrastructure. They need to rebalance the tourism infrastructure in the face of the pandemic. Right now, most of the Fox Cities’ tourism is large group activities. They want to look l at an economic overall plan for the area that also takes into account different types of tourism that would have helped the local industry potentially weather this pandemic. They also wanted to look at the facilities that are involved such as the Exposition Center and how they could leverage those facilities in different ways so that, in the face of a pandemic, they won’t see the losses they’re currently seeing.
She finished by giving a shout out to everyone in the hospitality industry struggling with workforce. This issue isn’t going away fast, and they’re asking everyone to be patient, to be kind, and to volunteer. One of the things that they have been seeing a lot of is that there are fewer people willing to volunteer. These people have not only left the workforce, they’ve left the volunteer force, and they’ve chosen not to come back. They have seen a couple smaller community events even get cancelled because they couldn’t field the volunteers needed to put the event on.
She opened things up for questions.
Mayor Woodford thanked her for the presentation and the context it provided. He appreciated the reminder to be calm and patient and thought that applied to everyone in every sector, not just the hospitality industry.
There were no other questions or comments.
View full meeting details and video here: https://cityofappleton.legistar.com/MeetingDetail.aspx?ID=884738&GUID=58DB58C0-5DF8-4C50-A7A0-B6FB9613036C
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