News for the Hospitality Executive
|By Andy Vuong, The Denver Post
Knight Ridder/Tribune Business News
Apr. 15, 2004 - The Denver Metro Convention and Visitors Bureau's relatively small 2003 budget of $7.2 million hurt its search for a new president and hinders its ability to promote the city, according to three potential candidates for the job.
"Denver is a bigger market and a very attractive market," said Bob Lander, president of the Austin (Texas) Convention and Visitors Bureau and a 20-year veteran of the tourism industry. "A market that size with a bureau that small, and a budget that small, would always be under question." The Denver bureau contacted Lander twice about the opening, he said, but he declined to be considered.
Denver convention officials say the bureau's budget didn't hinder its search for a top executive. Richard Scharf, 44, who has worked at the bureau for most of the past 20 years, was named president and chief executive March 16.
Pat Grant, chairman of the Denver bureau's 12-member president selection committee, said the bureau received applications from "top-notch" talent nationwide.
"It was an impressive list," Grant said. "Richard Scharf is clearly the very best choice." He added that the board unanimously approved Scharf's appointment.
A convention bureau's ability to operate, market and attract convention business is largely based on its budget.
The Denver bureau's 2003 budget ranked No. 39 in a recent survey of 83 cities in the United States and Canada conducted by PricewaterhouseCoopers and the Chicago Convention and Tourism Bureau.
Denver's 2003 budget trailed the likes of San Diego, Houston, Dallas, Phoenix and Pittsburgh -- cities Denver is often compared to in terms of market attraction.
"Many organizations don't have a lot of money, but it really comes down to 'What are you doing with the money and how effective are you in the marketplace?' " Scharf said. "And I think we're extremely effective." Last year, conferences in metro Denver drew 300,000 attendees and had an economic impact of $450 million, according to bureau estimates.
"We've done an incredible job with the money that we have had," Scharf said.
But two other potential candidates for Scharf's job, who head convention bureaus in Pittsburgh and Portland, Ore., said the Denver budget is too low to effectively market the city's attractions.
Denver's budget "is not at the level that it's going to need to be to adequately market the city, especially with the expansion of the convention center and the new hotel project," said Joe D'Alessandro, president of the Portland Oregon Visitors Association.
Denver bureau officials contacted D'Alessandro about the opening, he said, but he declined because he wanted to stay in Portland.
Denver needs marketing muscle as it prepares for the planned December opening of the $309 million Colorado Convention Center expansion and the December 2005 opening of the 1,100-room Hyatt convention center hotel.
In its search for a leader, the Denver convention bureau twice contacted Joe McGrath, McGrath said. He has 32 years of experience in the industry and has been the top official at five convention and visitors bureaus.
But McGrath, president of the Greater Pittsburgh Convention & Visitors Bureau for the past 14 years, declined to be a candidate, he said. Like Lander from the Austin bureau, McGrath cited Denver's convention budget as a reason.
"It truly is important because it hampers your ability to perform," McGrath said.
Robert Canton, director of convention and tourism consulting for PricewaterhouseCoopers, said Denver's low budget puts the city at a competitive disadvantage.
"You look at who Denver's competitors are -- cities like Dallas, Houston, Phoenix, San Diego, San Francisco -- you start getting to budgets that are 50 percent to 60 percent greater or even double Denver's," Canton said.
To be competitive, each hotel room in a city should correlate to $250 for the convention and visitors bureau's budget, Canton said. Denver has about 36,500 hotel rooms, which means the bureau's budget should be $9.1 million.
The Denver bureau, a nonprofit trade association with 850 members, has a budget of about $8 million this year, according to Rich Grant, the bureau spokesman.
The budget covers advertising and publications, and pays the salaries of 42 people. About three- quarters of the money comes from lodging taxes -- most visitors bureaus across the country rely on similar tourism-related taxes. The rest comes from membership fees and publication revenues.
The search committee began its work in December, seeking a replacement for Eugene Dilbeck, who was fired in November after 10 years as president and CEO.
The committee identified 150 prospects, including Lander, McGrath, D'Alessandro and Scharf.
Four candidates, including Scharf, were interviewed. The other three were not publicly identified.
The Denver bureau used private funds for the search and is not required to disclose the amount, said Scott Bemis, chairman of the bureau's board and publisher of the Denver Business Journal.
Scharf said he would like to see Denver's tourism marketing budget be in the top 10 nationwide.
New York was No. 10 in the 2003 budget survey, with a $15.5 million bankroll, more than double Denver's 2003 budget.
OTHER CITIES' SPENDING
The Denver Metro Convention and Visitors Bureau's 2003 budget of $7.2 million ranked No. 39 among U.S. and Canadian cities.
That budget is relatively small compared with what is spent marketing cities that compete with Denver.
Here is a list of the five largest convention bureau budgets and those of some of Denver's competitors:
1. Las Vegas; $138.7 million
2. Orlando, Fla.; $38.1 million
3. Hawaii; $37.7 million
4. Reno, Nev.; $33.9 million
5. Kissimmee, Fla.; $21.9 million
11. San Diego; $14.9 million
17. Houston; $12 million
23. Dallas; $10.8 million
53. Austin, Texas; $5.6 million
Sources: PricewaterhouseCoopers and Chicago Convention and Tourism Bureau
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(c) 2004, The Denver Post. Distributed by Knight Ridder/Tribune Business News.