Promote community not tourism
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| May 27, 2017

For a variety of reasons the city of Calistoga’s recent budgets are not bleak. Therein lies opportunity if we are bold enough to seize it.

The city’s budget anticipates revenues of over $10 million this year. More than half of that revenue is paid by visitors to local lodging, the so-called TOT tax. The budget’s expenditures, meanwhile, include provision for police, fire, public works, pensions, debt service, etc. The complete budget is available online or at city hall.

With the improving national economy, our city revenues have increased each of the last five years. The Budget Summary cautions however that “it is important to remember that the City’s budgets will, once again, be very tight.”

But there’s a bright side. The need for a tight budget in an expanding economy presents the opportunity for both spending more and spending less.

Spending more is easy. Indeed, our next budget proposes increased spending in most departments, including fire, recreation, and planning.

Spending less, however, as most of us know from personal experience, is harder.

The city's budget reports our payments to the Chamber of Commerce Visitors Bureau, for promotion and marketing. Since 2011 we’ve spent $300,000 or more per year (over $330,000 this year) to promote our city this way. The rationale is that the money spent is more than paid back by resultant TOT revenue.

For most of our expenditures we know what we get for our money: a newly-paved street, another officer on the beat. Not so with money spent to entice visitors. We may think and hope marketing matters, but we don’t know. There are assertions by large professional tourist organizations of remarkable (e.g. 15:1) returns on promotional efforts, but there’s no empirical evidence directly linking Calistoga’s promotional efforts with its TOT revenue. We guess the return justifies the expense. But we’re not sure.

Usually we in business are pragmatic; but spending money on marketing is instead an act of hope.

It’s not clear that any marketing is even necessary. It’s possible we’d collect the same TOT whether we advertised or not. In the last decade Calistoga’s TOT revenue has basically tracked the broader economy, increasing every year except for the 2009-10 recession.

This is the perfect time to save money on marketing. Today’s economy is still growing. People feel they have money to spend, and famous Calistoga is definitely on their radar. Our local budget is expanding so that a diminution of visitors, should that occur, could be absorbed. Meanwhile we’d have over $300,000 for more important expenditures. There’s no point in spending money to lure people who are going to visit us anyway.

There’s nothing sacred about the $300,000+ budget number traditionally spent on marketing. It’s just a habit -- and a good time to kick it. Besides, if promotional efforts were so certainly remunerative, why not spend even more on marketing? In that case it would be irresponsible not to.

Alternatively -- if we spend less, will TOT revenue decrease?

Unlikely, because even without any additional advertising, local tourism has momentum. It comes from Calistoga’s location in the Napa Valley, as well as from a strong national and regional economy. The city might fear that without marketing, tourists and their money will disappear: surely other north bay towns will continue to advertise?

So what! Are we not confident Calistoga is special? Let’s seize this opportunity to save. Our reputation is established: we are hospitable. If we advertise less, people are not going to suddenly forget we exist. They aren’t going to forget what we offer here. Besides, we’re not in a rooms race with other towns. Tourists will continue to come, and the TOT revenue too.

Responsibly ceasing self-promotion might seem radical. But recall the official admonition to keep a tight budget. Think of what we could get with $340,000 of public funds: longer pool hours, or lower water bills, or an improved shuttle system, or decreased debt, or whatever else we need. If after kicking our advertising habit the TOT revenue remains stable, we’re $340,000 ahead. If by chance TOT decreases, in this strong economy Calistoga is well positioned to manage that, and resume promotional efforts another year.

People of means know that accumulating wealth sometimes means taking risks. In the world of city governments, where little things are big things, less self-promotion may seem daring, but it’s really a sensible step to take when it (1) isn’t necessary to attract visitors in a strong economy, (2) saves $340,000, (3) won’t hurt the city hugely if TOT falls shorter than expected, and (4) can be reinstated easily next year anyway.

So let’s try it. Let’s take a leap. Let’s stop marketing Calistoga for a year and save some public money.

NVR LTE version 5/27/17: Maybe it's time to cut the marketing purse strings

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