RLY STAFF REPORT. Meeting Date: June 19, 2018 To:

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1 RLY STAFF REPORT Meeting Date: June 19, 2018 To: From: Subject: Honorable Mayor & City Council Huma Ahmed, Community Outreach Manager Cindy Owens, Senior Management Analyst Recommendation from the City Council Liaison I Beverly Hills Conference and Visitors Bureau (CVB) I Marketing Committee Regarding the Fiscal Year Work Plan and Funding Request Attachments: 1. Beverly Hills Conference and Visitors Bureau (CVB) Fiscal Year Proposal 2. Fiscal Year City Tourism and Marketing Budget INTRODUCTION This item provides a proposal for the Beverly Hills Conference and Visitors Bureau ( CVB ) work plan for the Fiscal Year ( FY ) Tourism and Marketing Budget and programs which are funded through the City s Transient Occupancy Tax ( TOT ). The request is for $4,707,835 with an additional $150,000 in contingency funding for Metro related marketing for a total not to exceed of $4,857,835. On June 6, 2018, the City Council Liaison / CVB I Marketing Committee (Mayor Julian Gold and Councilmember Lili Bosse) reviewed the CVBs annual work plan and funding request for FYI They supported the proposal and recommended that the work plan be forwarded to the City Council for final review and approval. DISCUSSION The CVB is contracted by the City to conduct a variety of tourism and marketing programs promoting Beverly Hills. All ongoing operations and programming for the CVB are completely funded by the City s Tourism and Marketing (TOT) budget. Special event funding may be provided through other budgets as approved by the City Council. Considered a tourism and marketing extension of the City, the CVB focuses on promoting Beverly Hills as a worldwide stay/shop/dine destination through programs and events that build awareness and drive consumer revenue to the City. On June 6, 2018, the Beverly Hills City Council Liaison CVB I Marketing Committee met with CVB representatives to review the proposed FY work plan and corresponding funding request of $4,857,835 which includes $150,000 in contingency funding for Metro related marketing. The CVB s proposed FY work plan

2 Meeting Date: June 19, 2018 includes a mix of programming that typically recurs annually as well as new initiatives that reflect current and upcoming City Council priorities. At the meeting, the Council Liaisons reviewed and recommended approval of the work program and funding request which includes the following portfolio of services detailed in Attachment 1: Local Holidays - $20,000 Santa at the Paley, and marketing collateral related to the program Events - $177,856 Chinese New Year Domestic Marketing - marketing $1147,919 includes $150,000 for Metro related New York Sales Mission 14% Destination Marketing 42% Domestic Public Relations 13% Meetings, Incentives, Conferences, and Exhibitions (MICE) Marketing 10% Partnership Marketing 5% Secondary Market Sales Missions 16% International Marketing - $687,865 Sales Mission 8% Trade Shows 32% Public Relations 2% In-Country Representation 38% Tour Bus Incentive 1% Global Summit 2% Emerging Market 17% Interactive - $374,455 Database and/or 3% Search Engine Optimization (SEO) / Search Engine Marketing (SEM) 41% Content 23% International 17% Social Acquisition 11% ecommerce 1% Domestic Site 4% Collateral - $56,332 Visitor Guide 53% Fulfillment 9% Page 2 of 6

3 Meeting Date: June 19, 2018 Premiums/Promotional Giveaways 38% Research 76,688 Visa Vue 10% Smith Travel 9% Arrivalist 52% Cision 13% Master Plan 16% Special Program - $50,000 Ad Hoc requests unanticipated requests from City for programming BOLD (Businesses Open Later Days) Winter - $517,000 Installation 40% Programming 13% Marketing 19% Activities 19% Storage 9% Visitor Services - $75,000 Communications 34% Display 33% Collateral 33% Operations - $1,674,720 Salaries Taxes Benefits Each year the CVB reviews programming that was not successful or is no longer relevant in order to undertake new programs. These new programs are aimed at attracting more tourism to Beverly Hills. The costs for these new programs are included in the categories listed above unless otherwise noted below. This year, the new programs by category include: Event Marketing Expanded Businesses Open Later Days ( B.O.L.D. ) summer programming (not included as part of the annual contract) Expanded B.O.L.D. winter programming Grand pop up (still in development, no funding request at this time) Domestic Marketing Metro marketing campaign Stay, Shop, Dine initiative for the entire City Page 3 of 6

4 Additional Marketing Creative Meeting Date: June 19, 2018 messaging to include activities and Citywide parking programs. channels include digital advertising, social media content and video which will be repurposed from existing footage. will be developed to communicate the message in the brand voice. Target audience will include those with $150K household income who reside in drive feeder markets. Meeting planner lead generation tool International Marketing New agency for China ILTM Cannes with Visit California Luxury UK sales mission Interactive Social media strategy implementation Visitor Services New merchandise Expanded ecommerce development Research Destination Development Plan completion Arrivalist in-market GPS tracking Meeting and events tracking The CVB also continues programming that has proven to be successful in years such as the New York Sales Mission and Winter BOLD. previous FISCAL IMPACT For FY , the City s Finance Department projects $49,098,000 in TOT revenue. This has resulted in a base FY TOT budget of $7,014,000. The actual TOT revenue generated for FY exceeded the budgeted revenue; therefore, an additional $628,338 was added to the TOT budget for FY The proposed Policy and Management - Tourism and Marketing budget for FY is $7,642,338 (Attachment 2). The current CVB funding request represents an $854,102 increase from last year s base programming budget, $4,003,733, including the $150,000 for Metro marketing. This is a twenty-one percent (21%) increase over last year. Four percent (4%) of this increase is to offset cost of living adjustments as Well as salary and benefit increases. The remaining 17% reflects additional funding that was provided for special events/programming in last year s overall budget. A summary cost breakdown is provided on the next page. A detailed budget is included as Attachment 1 to this report. Page 4 of 6

5 Meeting Date: June 19, 2018 Description 17/18 Budget 18/19 Budget Carryover % Change Description Local/Holidays $20,000 $20,000 0% Events $201,016 $177,856-12% ForYourArt Complete Includes $150,000 in contingency funding for Metro Marketing, pending City Domestic Marketing $1,084,374 $1,147,919 6% Council Liaison approval International Marketing $605,600 $687,865 $50,000 14% Rotating Trade Shows Interactive $405,773 $374,455-8% Chinese Site Complete Collateral $60,800 $56,332-7% Visitor Guide Complete New Arrivalist I Meeting Research $68,420 $76,688 12% Planner Research Special Programs $50,000 $50,000 0% BOLD Winter 2018 *see note below $517,000 Operations, including Salaries, Taxes & New Equipment and Group Benefits $1,348,000 $1,674,720 24% Sales Salary Visitor Center $159,750 $75,000-53% Salaries moved to Ops Includes 4% cost of doing business. Includes $150,000 in Metro marketing contingency TOTAL $4,003,733 $4,857,835 21% funding. Programming added after base budget adopted by City Council not funded by TOT Funded by Business Development Budget and not Master Plan $50,000 N/A Tourism and Marketing Budget Funded by General Fund BOLD Winter2Ol7 $1,250,000* N/A Transfer Total $5,303,733 $4,857,835-8% *BOLD Winter in 2017 was funded through a general fund transfer as the TOT money was not sufficient in the Tourism & Marketing budget to cover this expense. The cost of $1,250,000 for BOLD Winter 2017 is not reflected above due to this. The CVB/Marketing Liaisons reviewed the CVB annual work plan, which also included enhanced marketing related to the Metro Purple Line Extension (PLE) project. Since the subway construction is a non-city project, the Liaisons recommended City to find a mutually agreeable way to fund the request. The $150,000 could be reimbursable for mitigate for business impact related to Metro. The CVB s FY annual work plan budget in the amount of $4,857,835 is budgeted in the Fiscal Year Policy and Management Department, Tourism and Marketing budget ( ) and includes $150,000 in contingency funding dependent upon Metro. As the CVB is fully funded by the City, there is a formal session report on the June 19, 2018 City Council meeting requesting interim funding in the amount of $1,221,746 for Page5of6

6 Meeting Date: June 19, 2018 the first quarter of FY (July 1, 2018 through September 30, 2018) while their FY annual work plan Agreement is being finalized. This will allow for the incorporation of any work plan changes the City Council may recommend at the June 19 Study Session into the final Agreement. This will also allow the CVB to continue its ongoing daily operations and programming prior to the approval of the final Agreement. The interim allocation, if approved by the City Council, would be deducted from the CVB s FY budget. The final Agreement between the City and the CVB for FY will be on the Formal Session agenda on July 17, 2018 for City Council approval. The final Agreement will have a total not to exceed for $3,636,089 should the interim funding Agreement be approved. RECOMMENDATION Staff recommends that the City Council review and provide direction for the FY work plan and funding request from the Beverly Hills Conference and Visitors Bureau. If approved, the funding Agreement will be agendized for the July 17, 2018 Formal Session meeting for City Council consideration. Pamela Mottice Muller Approved By Page6of6

7 Attachment 1

8 BEVERLY HILLS Conference & Visitors Bureau Strategic Plan TOT Liaisons Budget Presentation April 2018

9 Tourism Builds Community

10 TOT History Fiscal Year City TOT City Sales Tax 2% of TOT Forecast and % increase Forecast and CVB Contract (1/7 of 14% TOT Actuals Actuals TOT+) CVB Share 2009/10 $23,447,458 N/A $43,118,458 $2,158,160 $3,383,065 57% 2010/11 $24,283,657 4% $46,336,518 $2,050,000 $3,469,094 69% 2011/12 $29,789,182 23% $23,093,800 $2,120,000 $3,799,258 56% 2012/13 $31,085,808 4% $26,820,826 $2,665,000 $4,371,429 61% 2013/14 $35,397,159 14% $29,874,256 $3,283,204 $4,864,393 67% 2014/15 $36,658,589 4% $31,338,894 $3,300,000 $5,571,429 59% 2015/16 $38,989,282 6% $34,927,352 $3,914,202 $5,794,286 68% 2016/17 $43,538,369 12% $32,663,323 $3,829,202 $6,071,429 63% 2017/18*++ $44,100,000 1% $33,442,000 $4,003,733 $6,300,000 63% 2018/19*++ $49,098,000 11% $32,495,000 $4,340,835 $7,014,000 62% *Forecasted +1/7 of 14% of TOT not 1/7 of total TOT. ++Does not reflect additional dollars for BOLD, BOLD Holidays and Destination Development Plan

11 2017/18 Overview

12 2017/18 Highlights One of the CVB s most important core values is to keep a fresh perspective on all programming. This allows for new flourishes on existing programs as well as the execution of completely new ideas. Domestic Marketing BOLD summer Business Open Later Days BOLD holidays Group Sales Executive Events Revamped Chinese New Year concept to include second night Curated art event exploration Exploration of international economic development opportunities International Marketing Two GCC (Middle East) sales events in November 2017 and May 2018 Russia travel show

13 2017/18 Highlights Interactive Completion of Chinese responsive mobile website 360 video ecommerce build-out Partner portal Development of social media strategy Research Strategic Plan Refresh Destination Development Plan phase 1 Adhoc Programs Execution of Advocacy Plan and Celebrate Tourism Event

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15 Beverly Hills Conference and Visitors Bureau Strategic Direction Vision Mission Values Reputation Position We envision a destination where every generation and culture can create their best experiences. We enhance the economic and social vitality of Beverly Hills by creating demand for our destination. Fresh Perspectives Forest and the Trees Community Professional Growth Leader Forward-Thinking Connector Accountable As the official destination marketing organization for the city, we are the only entity responsible for promoting the entire Beverly Hills experience globally. Imperatives Grow Demand for the Destination Key Performance Indicators Annual TOT/sales tax growth on par with City projections 35 annual room-night sales leads (Includes booked business in 2020/21) 10% annual market key domestic feeder markets, 5% growth in targeted international markets Initiatives Develop leisure/group sales plan (Mary)* Develop event/activity plan (Julie/Bob)* Leverage Strategic Partnerships In-Kind $ to BHCVB Hard $ to BHCVB BHCVB Sponsorships of other programs ROI Reach & Influence Create sponsor target list for all events/activities (Bob/Malarie)* Increase collaborations with other city organizations (Julie/Bob) Explore/secure opportunities for BHCVB event investments (Bob/Mary) Maintain and Continue to Grow a Strong Brand Digital Engagement: 750,000 website visits per year Social follower count to exceed 250,000 Consumer to 100,000 Increased media quantity and breadth (2017/18 as baseline) Develop a comprehensive marketing plan (Bob/Malarie )* Complete a Destination Development Plan (Julie)* Develop plan to enhance in-market visitor experience (Malarie/Kristen)* Ensure a Vital CVB Increase or maintain Y/Y CVB funding level using 2017/18 as the baseline at a minimum, keep pace with TOT growth Achieve and maintain a minimum of 80% staff engagement on key measures City resident engagement of 75% within the plan period Develop activities that further advocacy messages (Megan)* Ensure facilities/internal resources are aligned with & support strategic plan (Julie)* Secure existing/explore new/sustainable CVB funding (Julie) Identify and invest in pro-dev opportunities for staff (All) Further engage Board in its active support of CVB mission (Julie) *To be completed FY 2018/19

16 Domestic Market Growth Although we have seen a decrease in international visitation, domestic marketing efforts have contributed to substantial growth in US visitors. This data is based on quarterly Visa Card spend first two quarters of FY 2017/18 over first two quarters of FY 2016/17. Approximately 1/3 of visitors pay with a Visa card. Markets below are listed in order of highest to lowest total $ s spent. Top US Feeder Markets % increase in total spend year over year Local/Los Angeles = 3% New York = 13% San Francisco = 14% San Diego = 15% Las Vegas = (6%) Chicago = 6% Washington DC = 15%

17 International Market Growth International tourism represents 49% of visitors into Beverly Hills (down 13% from FY 13/14). Top international market by spend is from Visa credit card data. Represented below is spend growth for the first two quarters of FY 2017/18 over the first two quarters 2016/17. An average of 20% of international visitors pay with Visa. Markets below are listed in order of highest to lowest total dollars spent. Top International Feeder Market Percentage Growth/(Loss) China+ = (9%) Canada = 13% Saudi Arabia* = (45%) UK = 10% Russia = 7% UAE = (30%) Australia = 5% Japan = (13%) Qatar = (38%) EU (FR, DE, IT) = 4% + Most Chinese use Union Pay and Visa no longer issues cards for China Union Pay. AliPay and WeChat Pay are growing in popularity. It is estimated that the decrease in activity is partially attrition. * Only about 15% of Saudi visitors use Visa.

18 2018/19 Program of Work

19 New for 2018/19 New Programs by category: Event Marketing Grand pop up (funding tbd) Expanded BOLD programming summer Expanded BOLD programming winter Domestic Marketing Metro marketing campaign Meeting planner lead generation tool International Marketing New agency for China ILTM Cannes with Visit California Luxury UK sales mission Interactive Social media strategy implementation Visitor Services New merchandise Expanded ecommerce development Research Destination Development Plan completion Arrivalist in-market gps tracking Meeting and events tracking

20 New for 2018/19 New Programs by category: Domestic Marketing Metro Mitigation Campaign to include the following: Stay, Shop, Dine focus for the entire city. Additional messaging to include activities and free and convenient parking Marketing channels include digital advertising, social media content and video which will be repurposed from existing footage. Creative will be developed to communicate the message in the brand voice. Target audience will include those with $150K+ household income who reside in the city s drive feeder markets.

21 CVB 2018/19 Budget Summary 17/18 18/19 Carryover Description Budget Budget Funds % Change Description Local/Holidays $20,000 $20,000 0% Events $201,016 $177,856-12% For Your Art Complete Domestic Marketing $1,084,374 $1,147,919 6% Metro Marketing International Marketing $605,600 $687,865 $50,000 14% Rotating Trade Shows Interactive $405,773 $374,455-8% Chinese Site Complete Collateral $60,800 $56,332-7% Visitor Guide Complete Research $68,420 $76,688 12% Special Programs $50,000 $50,000 0% New Arrivalist/Meeting Planner Research Operations, including Salaries, Taxes & New Equipment and Benefits $1,348,000 $1,674,720 24% Group Sales Salary Visitor Center $159,750 $75,000-53% Salaries moved to Ops TOTAL $4,003,733 $4,340,835 8% Includes 4% cost of doing business

22 CVB 2018/19 Additional Programming Additional Programming 17/18 Budget Cost of Materials 18/19 Budget Carryover Funds Description BOLD Summer* BOLD Winter** Grand POP Programming and Marketing $800,000 $248,002 $77,198 Light installation, maintenance, storage, reprogramming, activities and marketing $1,250,000 $458,000 $59,000 To be executed summer 2019 N/A TBD $133,000 Marketing, $192,200 Activities $207,000 installation, $100,000 marketing, $100,000 activities, $65,000 maintance and reprogramming, $45,000 Storage TOTAL $2,050,000 $646,002 *Carryover from 17/18 budget variance and remaining unspent dollars from holiday contract **Carryover from contingency $100,000 from holiday budget at the city

23 CVB 2018/19 Budget Overview Total Budget $4,340,835 16% 9% 2% 1% 2% 1% 39% Fixed 39% $1,674,720 Events 4% $177,856 Local.4% $20,000 Domestic 26% $1,147,919 International 16% $687,865 Interactive 9% $374,455 26% 0% 4% Collateral 1% $56,332 Research 2% $76,688 Visitor Center 2% $75,000 Special Programs 1% $50,000

24 CVB 2018/19 Budget Detail DOMESTIC $1,147,919 16% Destination 42% $484,048 13% 5% 42% New York 14% $156,000 MICE 10% $121,500 PR 13% $144,531 10% Partnerships 5% $56,840 14% Secondary Market 16% $185,000

25 CVB 2018/19 Budget Detail 2% 1% 38% 17% INTERNATIONAL $687,865 8% 2% 32% Sales Missions 8% $56,500 Trade Shows 32% $217,400 Media FAMs 2% $16,765 In-Country Representation 38% $263,080 Tour Bus 1% $3,120 Global Summit 2% $15,000 Emerging Market 17% $116,000

26 CVB 2018/19 Budget Detail INTERACTIVE $374,455 41% 3% 4% 1% 23% Domestic Website 4% $16,202 ecommerce 1% $4,000 Content 23% $85,354 Social Acquisition 11% $40,991 International 17% $64,560 11% SEO/SEM 41% $152,116 17% Database/ 3% $11,232

27 CVB 2018/19 Budget Detail RESEARCH $76,688 16% 10% 13% 52% 9% VisaVue 10% $7588 Smith Travel 9% $6,600 Arrivalist 52% $40,000 Cision 13% $10,000 Master Plan 16% $12,500 STR Forecasting Report is new for this year at $2,800.

28 CVB 2018/19 Budget Detail VISITOR SERVICES $75,000 33% 34% Communications 34% $25,000 Display 33% $25,000 Collateral 33% $25,000 33%

29 CVB 2018/19 Budget Detail COLLATERAL $56,332 Visitor Guide 53% $50,000 38% Fulfillment 9% $5,000 53% Promotional Giveaways 38% $20,000 9%

30 CVB 2018/19 Budget Detail Operations $1,674,720 Special Programs $50,000 Events $177,856 Local $20,000

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32 Attachment 2

33 - - UPDATED MAY 31, 2018 Tourism and Marketing Budget and Programs Projected Budget & Funding Requests Description Amount of Money Notes Bose Budget (To still be adopted by Council) $7,642,338 FY 17-l8cqrryoverfunding $0 Available to spend in FYi 8-19$7,642,338 Funding Requests Description Amount of Money Notes Annual Butter/Reserve to Cover 101 Revenue Reductions $ 200,000 Contingency Programs $ Intellectual Property Legal Services $ ,000 ;ercity AttorneY, please keep at Holiday Decor Conterence (excluding Rodeo Drive) & Visitors Bureau (amount Rodeo Drive Committee (amount available) available) $ $ 4,857,835 $ 2,1 1 7,500 IruGreen Landscape 20,000 Funds remaining to be Subtotal allocated $ - 4.5% of budget of Fy 18/19 budget - Estimated costs forthis year (based on last year, with no increase) is $480, % of budget FY 17/18; 63.6% FY 18/19 (includes $517K Winter BOLD) 23.6% of budget Fy 17/18; 27.7% FY 18/19 (includes Winter BOLD)