As Joe Taylor waited anxiously at a Des Moines reception last month to learn the route for the 2018 RAGBRAI, he hoped all the efforts by his Quad-Cities Convention & Visitors Bureau staff had been enough. —
For years, the tourism staff has been reacquainting the bi-state region with the Register's Annual Great Bicycle Ride Across Iowa. The ride skipped over the Quad-Cities for 29 years until ending here in 2011 and again in 2015.
But Taylor, the visitors bureau president and CEO, has learned the importance of communicating regularly with ride organizers, especially, "the years we are serious about putting in our bid for RAGBRAI." In fact, Taylor and his wife, Kathy, hosted RAGBRAI Director T.J. Juskiewicz and his family last summer for an old-fashioned Fourth of July in the Quad-Cities, including the Bettendorf parade and fireworks over the Mississippi River.
"I showed him how we handle crowds," Taylor said, adding he has hosted Juskiewicz for other local events and festivals. By now, he said, "T.J. has a deep understanding of the Quad-Cities."
At the Jan. 27 RAGBRAI announcement, Juskiewicz flipped over cards, in a random order, revealing the names of host cities for the ride's 46th year. Taylor didn't have to wait long: "Davenport was fourth or fifth," he said of the reveal, including the news RAGBRAI will end in Davenport.
It's a big win for the entire Quad-Cities.
Between 15,000 and 20,0000 bicyclists will ride into town to dip their tires in the Mississippi River, bringing along an estimated $1 million in economic impact. The cyclists arrive July 28 — the same day thousands of runners and walkers tackle the Brady Street hill for the Quad-City Times Bix 7 road race.
Whether it's the big bike ride, a regional or national convention or meeting, a youth sports tournament, or a group tour, the bureau relies on the same approach to wooing visitors to the Quad-Cities.
"We have become much more adept at selling through relationships," said Taylor, who has led Quad-Cities Convention & Visitors Bureau since 1998.
But the job of selling the Quad-Cities faces greater challenges these days as cities nationwide, including close Midwest neighbors, compete for tourists. Event organizers are upping their requests for financial incentives — or bid fees — to bring their events to town. Their bargaining chip is the promise of delivering visitors who will spend money on lodging, dining, shopping, attractions and more.
Meanwhile, the convention and visitors bureau has been challenged by deep budget cuts from losses in state grants and a decreased share of hotel/motel taxes from the city of Davenport. The result has been a reduction of 3.5 full-time equivalent bureau positions, less money to spend on advertising the Quad-Cities, and attending fewer industry trade shows.
The challenges are compounded by the need for more "heads in beds" — an industry term for hotel guests — with hundreds of new hotel rooms coming via The Element hotel downtown Moline and a pair of Hyatt Hotels on the East Moline riverfront. The number of Quad-City hotel rooms soon will reach 6,000 in total.
Plus, the opening of the new TBK Bank Sports Complex in Bettendorf (BettPlex) will place additional marketing demands on the already busy bureau.
Rising bid fees
As the convention and visitors bureau works to bring more events and people to the Quad-Cities, the staff has found that money talks.
"Some conventions and sporting events don't just come to your community; they come if you pay a bid fee," Taylor said.
The fee is the amount organizers charge to bring a convention, sports competition or other event to any given locale. Many are paid in cash by the bureau, event sponsors and local hospitality partners, including hotels, restaurants and attractions. Others are a combination of cash and in-kind services, such as free access to related venues.
"Bid fees has become almost a standard in sports marketing," said Lynn Hunt, the bureau's sales vice president. "It used to be only the big national ones wanted a bid fee; now the regional ones want it, too."
To land the Missouri Valley Conference Women's Basketball Tournament, which returns March 8-11 for a third year to the TaxSlayer Center, the bureau paid $80,000. It also paid the $105,000 rental cost for the Moline civic center for a total investment of $185,000, Taylor said. In 2019, which will be the tournament's fourth year here, the fee will drop to $25,000, and the conference will pay for the TaxSlayer rental.
"But if we don't have those hotel rooms filled in March, what could we come up with to match those hotel rooms in March?" he asked, referring to the 1,300 rooms that will be occupied by tournament players, coaches, fans and spectators.
Nearly 20 years ago, the bureau paid a $25,000 bid fee to bring the Fishing League Worldwide Bass and Walleye tournaments to the Quad-Cities. From that investment, Taylor said, "We got the room nights, and there usually is television coverage on one of the sports channels."
In 1998, when the Quad-Cities hosted 45,000 bowlers with the Women’s International Bowling Congress, the bureau paid a $250,000 bid fee.
"That took a lot of fundraising," he said of the milestone tourist event, which pumped an estimated $40 million into the local economy over three months.
Today, the bureau's entire bid-fee budget is about $250,000.
For each bid, Taylor said, "We have to figure out the financing package that may make it work. It may not be 'our money' to make it work."
For other events, such as the National Association of Intercollegiate Athletics' golf tournament at TPC Deere Run, Taylor said, there is no bid fee, "But we cover the cost of TPC, which is $40,000." It is paid with the golf teams' tournament entry fees.
There are no bid fees for a couple of the area's largest events: Quad-City Times Bix 7 and the John Deere Classic.
Jessica Licko-Avants, a bureau board member, said bid demands became more aggressive between 2011 and 2013, when the industry saw a slight downsizing of bus tours, conferences and company travel and training, and competition was tough.
"But if you don't (compete), down the road, you don't get the business," she said. "It goes to somebody else who has the manpower, money and time."
Both Taylor and Hunt, the bureau's sales VP, said the competitive landscape is empowering event organizers to ask for — and often get — as many expenses covered as possible.
"They know if we don't say yes, someone else will," Hunt said.
The key, she said, is working with the Quad-City hospitality partners: "Can they kick back some rooms or in-kind services, because that is considered hard cash (in a bid). We've just seen the number of comped (complimentary) hotel rooms skyrocket."
In sporting events, for instance, organizers routinely ask for free hotel rooms for their officials, referees and coaching staff as part of the bid package.
"Destinations are willing to pay more, and the rewards are larger," Taylor said. "If you can secure a large piece of business, it means more for your community; more room nights, more expenditures and more of everything a visitor does in your community."
It also means more tax dollars into local communities by non-residents. He said visitors will pay hotel/motel taxes, sales taxes, fuel taxes, and 1-cent option sales taxes where applicable.
Bids are getting more competitive, Taylor said, because they have become more commonplace.
"It's not different than other areas of economic development," he said. "It's likely more consideration is going to be given to the community that can meet or exceed the ask-for incentives."
To stay ahead, Hunt said, the convention and visitors bureau routinely provides in-kind services to attract events. In fact, each major event is assigned a bureau staff member to chair and the entire staff often provides services such as pre-registration and behind-the-scenes functions.
"When we talk to people who own the sporting events, they're looking for destinations to host them," she said.
For big events, Hunt said, every staffer and a corps of local volunteers are standing by to help. At a sports tournament at Green Valley Complex, for instance, volunteers operate concessions, prep the fields between matches, sell admission tickets — even deliver lunch to the officials.
"We think servicing is the new sales, and any of our competitors in the Midwest is also recognizing that," Hunt said. "But if the staff goes down, so does the servicing."
For its 2018 budget, the bureau lost an additional $25,000 in hotel/motel taxes from the city of Davenport.
In about four years, the city's annual contribution has decreased nearly $100,000 — from $478,616 in 2014 to $375,000 in 2018.
The bureau also lost a $10,000 State of Illinois Local Tourism and Convention Bureau grant and is facing its third year without an Illinois Marketing Partnership Grant, which cuts funds by another $50,000 for 2018.
According to Brandon Wright, Davenport's chief financial officer and assistant city administrator, the city had been contributing 25 percent of its hotel/motel taxes to the bureau for some time before capping its contribution. He said it was capped at $450,000 in fiscal 2015, decreased to $400,000 in 2017 and then to $375,000 in 2018.
"Since 2010, hotel/motel tax has grown by more than $1 million, but a good portion of that is rebated back to the Hotel Blackhawk with the development agreement we have with them," Wright said. "A lot of that growth was the Hotel Blackhawk coming in."
Under a development agreement related to the $40 million hotel restoration by Restoration St. Louis, the developer gets 90 percent of the hotel/motel tax generated by the Blackhawk for the first 10 years of the 20-year agreement. The developer then receives 75 percent of the Blackhawk's pillow tax for the next five years, and 50 percent is rebated for the last five years. The first rebate was paid in fiscal 2011 — the year after the hotel renovation. Wright said the average rebate to the Blackhawk currently is $300,000 to $350,000 a year.
The city reduced its bureau funding at a time when it was looking at ways to fund other outside groups, including the Putnam Museum, Quad-Cities First (a branch of the Quad-Cities Chamber) and CASI.
In addition, the city owns and supports the RiverCenter, River's Edge and Adler Theatre and provides an annual payment of $753,000 to the Figge Art Museum. That payment comes from the city's general fund and not hotel/motel taxes.
In Iowa, Wright said, cities are required to spend half of their hotel/motel taxes on recreational facilities, tourism and other things that draw people to the city.
"We spend more than 50 percent," Wright said.
Of the $2.5 million in hotel/motel taxes brought in last year, only $100,000 went into the city's general fund.
"The rest is going to tourism (projects), supported outside agencies, the RiverCenter's operating subsidy — convention centers don't operate nationally without a subsidy — and capital projects at the Adler and RiverCenter."
Different tax shares
Davenport's contribution to the bureau puts it below a previously agreed-upon level of commitment.
"We ask the cities to each give 25 percent of their hotel/motel taxes to fund the CVB, but that has started to erode a little," said Tim Huey, Scott County's planning and development director, who serves on the bureau's board.
Davenport's 2018 contribution is projected to be 12 percent of its hotel/motel tax income, which compares with more than 20 percent it provided four years ago. In actual dollars, it still is the highest among the Quad-Cities, because it collects the most in hotel/motel taxes.
Moline's projected contribution is $276,000, or 15.5 percent of its tax collections this year. The city increased its hotel/motel tax in 2003, but eliminated the bureau from the additional tax. Bettendorf and Rock Island will contribute just over 25 percent with an estimated $207,864 and $100,964, respectively.
"Davenport is a major contributor, but it also has the most to gain," said Huey, the convention and visitors bureau's incoming board chair. "Scott County contributes $70,000, and we have zero hotel/motel taxes, but we recognize the value of the QCCVB."
Other cities, including LeClaire and East Moline, contribute set amounts. But East Moline, which has not received hotel/motel taxes, is awaiting the completion of its first hotels, the Hyatt Place and Hyatt House, as part of The Bend on the Mighty Mississippi mixed-use development.
Increasing CVB tax share
Bettendorf Mayor Bob Gallagher is advocating for the cities to increase their bureau contributions.
"My discussions have been: How do we ramp that up to 50 percent over a 10-year period?" he said, adding he is not finding much support.
"There is nobody in our city staff that does tourism ... those services are done at the CVB, and, without financial assistance there are no tourism services," said Gallagher, whose city will welcome the TBK Sports Complex (BettPlex) in May. The project is likely to bring additional, related developments — all attractive to visitors.
The mayor said the first step is to get all the cities back to the 25 percent level, but he supports as much as a 50-percent hotel/motel tax contribution.
"We're not going to do it if we're the only city," Gallagher said.
Wright said Davenport also has supported the bureau in other ways, including helping it reduce the rent costs incurred with its Union Station visitor center by relocating the center to the Davenport RiverCenter last year.
"We look at the QCCVB very much as our partner," he said. "We're asking everybody to tighten their belts, but we want them all to be successful with their mission."
Between the Iowa and Illinois Quad-Cities, the tourism bureau receives about 19 percent of the area's hotel/motel taxes collected. But that puts the bureau near the bottom in tax allocations in both states among its peers, said Charlotte Morrison, vice president of marketing and communications.
According to Morrison, Des Moines contributes 90 percent of its hotel/motel taxes to its CVB; Dubuque, 50 percent; and Cedar Rapids, 30 percent.
"They have more money to market their areas, attend trade shows and market sports facilities," she said.
"We had $400,000 to spend on advertising four years ago; now we have $60,000 to spend," said Morrison, a 19-year veteran of the bureau. "In the meantime, we're being beat by the competition: Dubuque, Rockford, Des Moines and Peoria. They're spending big advertising dollars. Our area is being lost by a lack of visibility."
The funding situation also has forced the bureau to cut back its attendance at industry trade shows, where it meets event organizers; from 10-12 such shows a year to just two or three a year in the past three years.
"If we're not at that trade show, and we don't have the funds, Cedar Rapids, Rockford and Peoria all do," said Deanna Jensen-Valliere, who now chairs the bureau's board.
Jessica Licko-Avants, a bureau board member and the Quad-City Lodging Association's secretary, said to help the bureau expand its trade show presence, the association financed three additional shows last year.
Licko-Avants is the area sales director for Ambridge Hospitality, which owns four Quad-City hotels, including Fairfield Inns in Moline and Davenport and Country Inn & Suites and Residence Inn, both in Davenport. She said the impact of not being at those shows will not be seen for about two years.
"We're all fine now," she said. "We're getting as much business as we've always gotten. However, for a lot of these shows and conventions, the tour operators and sports planners are planning for 2019, 2020 and beyond. We haven't seen the real impact, yet."
Tourism leaders say educating the community on the value of tourism and the importance of promoting the Quad-Cities is an uphill battle.
"The Quad-Cities needs to understand that tourism is economic development," Hunt said.
According to U.S. Travel Association, the Quad-Cities attracted 1.57 million overnight (hotel) visitors in 2016. The travel industry's economic impact locally was $857 million, based on total travel expenditures as well as travel-generated employment, payroll, and tax revenues.
Travel-generated payroll is the money paid to employees who directly serve travelers using their goods and services.
The convention and visitors bureau estimates an average visitor spends $180 per day on lodging, dining, shopping, attractions and more.
The association's data also shows the travel industry supports more than 8,000 Quad-City workers with a payroll of $162.71 million. An average tourism-services worker makes $20,000 a year. Travelers to the Quad-Cities also produced $52.84 million in sales tax receipts and $14.5 million in other local taxes.
"I think residents of the Quad-Cities are not aware of the amazing place they live," said Licko-Avants. "They just don't see it as a tourism destination because, when they want to take a vacation, they go to Mount Rushmore, Disney."
Tami Petsche, the Quad-Cities Chamber's economic development vice president, said the chamber realizes the importance of the bureau's work not only in drawing tourists but in raising the quality of life for residents.
"We recognize that the quality of place is becoming really important in attracting both talent and new business to our community," she said. "Tourism plays a big role in that."
Through the chamber's Q2030 Regional Plan, one of the goals is to attract new and young workers.
"The reasons a person comes to visit our community, a lot of those are the same reasons why a person wants to have a business here," Petsche said.
She said the chamber has seen a shift in priorities among prospective businesses and developers: "In the past, a business' No. 1 priority was inventory — do we have the site for them? Now, the first question is, What does your workforce look like? They not only want quantity, but quality. So, we have to build our place to attract talent."
Jensen-Valliere, who has spent much of her career in hospitality, said the industry is challenged nationwide, "to spread the message that tourism is an economy driver.
"The perception is (tourism) is all fun and games; a fluffy industry, because when you think about vacation, you think about fun," she said. "It's a matter of educating people."
She and Licko-Avants agree that, even those in their business do not understand the impact of the convention and meeting business in the Quad-Cities.
"A corporate group is going to spend more dollars than a tourist coming in," Jensen-Valliere said. "A corporate event will fill 250 rooms, use meeting space. Say they're in town three days; they're out visiting restaurants, shops and dropping those dollars."
According to Hunt, restaurants and many small businesses do not realize the number of visitors they have walking in their doors.
"But if I own a small business, and I do, I see the revenues coming off of Interstate 80 everyday," said Hunt, who also owns The Edge Eatery and Drinkatorium, a bar and grill in Rapids City. "When people are traveling, they're not looking for chain restaurants. They're looking for local flavors."
Other funding models
According to Hunt, the states and cities "need to recognize tourism as a revenue generator." Those that do are finding innovative ways to reinvest in tourism, she added.
Last fall, the bureau invited a discussion among its hospitality partners about creating a new destination marketing fee — a fee that would be paid by hotel guests and used to market the Quad-Cities. Taylor said the idea has not yet gained traction, but is still in the talking stage.
If area hotels charged a $1 destination fee, and 100 percent of the hotels participated, it would create $1 million in additional funding for destination marketing, Taylor said. While $1 million is not likely, just one-tenth of that would put another $100,000 into marketing the Quad-Cities. The destination fee already is being used across Iowa by the communities of Iowa City-Coralville, Cedar Rapids, Dubuque and Burlington.
In Rockford, where youth sporting events have become big business, the Rockford Area CVB has launched a new investment model, enlisting support from its member communities and the private sector.
"Here at our bureau, we work hard at telling the story of tourism as our economic development strategy as a region," said John Groh, president and CEO of the Rockford CVB.
Groh, who also chairs the Illinois Council of CVBs, said his bureau represents Rockford, about 10 surrounding communities and Winnebago County.
The bureau has been successful in growing new events and tourism facilities through public and private investments. A new Holiday Stroll on State event, which draws 80,000 people to Rockford, was underwritten by corporate sponsors and donors. The CVB also worked with the city of Rockford to develop a new sports complex, UW Health Sports Factory, which is attracting a significant youth sports tournament business.
Faced with its own state budget cuts, Groh said "We have not put in jeopardy our group sales business, or going to conventions and trade shows. But we've pulled out of some of the leisure travel opportunities.
"It's so hard to get back the group business. Conversely, Iowa City, Des Moines and Rockford are going to say 'Thank you, we'd be happy to pick up your business.'"