Colorado tourism in crosshairs as rural communities reject marketing

Crested Butte has pulled its summer ads as businesses struggle to accommodate crowds. A Telluride councilwoman wants to redirect tourism funding toward housing. The Colorado Tourism Office is without a leader. Chaffee County commissioners rejected a 20,000-person annual music festival.

Angst over tourism is growing as mountain communities emerge from crowd-restricting pandemic closures. Overlapping waves of visitors and new residents are amplifying an unprecedented labor shortage and housing crunch. And with that seasonal distress comes a growing call to silence the statewide promotion of Colorado as a vacation wonderland. 

“It’s a carrying capacity issue,” said Geneva Shaunette, a Telluride town council member who wants to redirect $2 million a year to workforce housing from tourism-campaign spending. “With the drastic situation we are experiencing with housing and a lack of employees we simply cannot handle that many people. We need to ease off the gas of marketing. Telluride already is on the map. The whole ‘Come to Telluride because how great it is,’ we physically can’t handle that anymore. And we have many better and more important things to spend our money on.”

Tourism is in the crosshairs in mountain towns in Colorado while state economic development champions are offering a total of $10 million to organizers who bring groups and events to the state.

Vacationers are pouring into Colorado resort communities, and overworked and underhoused locals feel the crowds are pushing their valleys beyond capacity. Resort town tourism leaders, who long ago began transitioning away from pure marketing toward resource-protecting destination stewardship, are adjusting their messages to not just the visitors, but also locals.

And many of the state’s 100-plus Destination Marketing Organizations — or DMOs — are finding themselves defending the role of tourism in economies that were created by vacationing visitors.

“Tourism, like any industry, should be evolving, and I think the evolution now is how do we amplify the positive things about tourism and mitigate the negative impacts that come with it. That becomes the new role of the DMMO,” said Lucy Kay, a Colorado tourism industry veteran who directs the Breckenridge Tourism Office, which a few years ago rebranded itself as a destination marketing management organization, or DMMO. “Where do we draw that balance?”

The questions surrounding tourism promotion are not unique to Colorado. Hawaii lawmakers are battling with the state’s governor over the future of tourism funding amid complaints of overcrowding. Sedona, Arizona, officials have paused marketing efforts. European destinations are struggling with mass tourism as cruise ships and visitors flock. 

And tourism champions, who years ago began taking on a role as destination stewards, are fighting to defend their industry’s economic contributions. Traditional tourism marketing — a scattershot invite to as many visitors as possible — is long gone. Today, marketing efforts target visitors who spend more and arrive during slower periods. And this year, destination marketing groups are spending more time talking with locals and enlisting residents to shape how communities can balance tourism with the lifestyle that makes mountain towns such attractive places to live. 

“I believe all of these mountain towns that are being quote-unquote ‘destroyed’ by visitors, they are at a crossroads right now,” said Telluride Tourism boss Michael Martelon. “If they make the right decision, working on sustainability and collaboration, it can make their future forever, and if they make the wrong decision, it will change their future forever.”

Destination marketing to management

The conversations around the role of tourism in hot-spot destinations is not new. Sustainable tourism has been the buzz for several years. But the pandemic-spurred migration toward outdoor recreation in Colorado’s high country, coupled with growing numbers of people moving to mountain towns, has amplified the focus on how destinations market themselves and manage tourists.

Destination marketing organizations have spent the past several years moving toward managing visitor impacts. Ads, social media campaigns and messages have focused on embracing local culture and protecting natural resources — like the state tourism office’s Leave No Trace ads. The idea is to lay out local expectations for visitors before they arrive. 

“So people can understand what’s important in these communities,” said Breckenridge’s Kay. 

All DMOs across Colorado are talking about how they can better manage both visitors and local resident expectations. They are critical intermediaries between vacationers and residents, Kay said.

“We are in the best position to connect guest expectations, guest reviews and resident sentiments,” said Kay, whose recent Breckenridge work shares information about fire safety and consults locals on better management of the town’s busiest days. “We are finding our new space and seeing how much the pendulum may swing toward management.”

In the private sector, businesses easily link marketing with operations. That is difficult in the public sector, Kay said, where elected leaders, local city staff and lodging-tax supported tourism boards have to work together to support a visitor-based economy.

The Gunnison Crested Butte Tourism Association in 2019 changed its name to the Tourism and Prosperity Partnership as part of an expansion beyond tourism promotion to include broadening the economic base of the region, encouraging sustainable tourism and supporting Gunnison’s Western Colorado University. 

That focus on valley health and prosperity made it “a no brainer” to kill summer ads and direct funds toward more critical uses, said John Norton, the partnership’s executive director and longtime Colorado tourism industry veteran.

“We have the option to spend more in other directions and stay within our mission,” Norton said. “All we are doing is recognizing that we are not put on earth to keep building business and building business and stressing people out. This is less of an anti-guest issue than it is a capacity issue. At this time, we are at capacity. We do not need to throw more gasoline on the fire.” 

A recent survey of mountain town residents detailing the impact of new residents in high country communities suggested local governments could reallocate marketing and tourism money toward housing. 

“Visitors may always anchor the resort economy, but as these communities add year-round residents, tourism may become a less dominant economic driver,” reads the survey commissioned by the Northwest Colorado Council of Governments and the Colorado Association of Ski Towns. 

Tweaking the tourism tax in Telluride

Telluride town councilwoman Shaunette wants to cancel her town’s lodging tax — which state law says must be directed toward tourism promotion — and install an excise tax on rented homes and hotel rooms that can be used for building affordable housing. 

There is a growing concern in Telluride, Shaunette said, about how the Telluride Tourism Board spends $2 million a year reaching visitors.

“They collect far more money for marketing than we spend on affordable housing,” she said of the lodging tax on roughly 740 short-term rentals and many more hotel rooms in the Telluride and Mountain Village region. “Right now we don’t get to touch that tax money and we don’t get to have influence over how it’s spent. People are upset about that.”

Shaunette, who last month offered a proposal to her fellow town council members that would shift tourism taxes toward housing, said Telluride needs to slow down its marketing “because town is overrun by people.”

State law requires county lodging taxes to be used “only to advertise and market tourism.” In 2018, Colorado legislation that would have allowed county voters to allow lodging taxes for other uses did not pass. 

Tourism boosters warn against going dark in the tourism landscape. Other states will pounce and fight for visitors who are considering a trip to Colorado. California Gov. Gavin Newsom, for example, is proposing a $95 million boost to the state’s tourism industry after revenues from Golden State visitors fell to $65 billion in 2020, from a record $145 billion in 2019.

“We are going to compete with that,” said Martelon, the president and CEO of the Telluride Tourism Board for the last decade. “Tourism is not an on-and-off light switch.”

Martelon suspended Telluride advertising on March 13, 2020, and ran his first ad in late April. This summer, the community’s tourism dollars are focused on messaging to visitors who are already in town, and about flights into the nearby Montrose airport.

A sort of mad professor of tourism numbers, Martelon tracks dozens of metrics collected from area businesses along with geo-locating mobile phone data to measure who, where, when of Telluride’s visitors plus how much every vacationer is spending. He draws a distinction between tourism advertising and marketing. 

Marketing needs to be redefined, he said. Too often people think it means spending money to get more visitors. It’s not about more, Marleton said.

“Marketing is putting the desired message in front of the desired audience. That’s consumers who are coming here. Consumers are here. And the locals who live here,” he said. “That messaging for locals is important. A lot of time the locals need reassurance and training as well.”

Telluride, like many of Colorado resort destinations, does not use ads or marketing to lure daytrippers, who spend a fraction of the amounts spread by overnight visitors from afar. But day tripping tourists arrived in record numbers last year as mostly Colorado residents escaped urban areas. The flood of new visitors — alongside part-time residents moving full-time into their vacation homes — buoyed sales tax revenues for Telluride and Mountain Village, which were down only 5% in 2020 compared with 2019.

So Telluride tourist leaders changed their message to help these newcomers lessen their impacts and “visit right,” Martelon said. The most recent campaigns — focusing on mobile phones within the Telluride area — include messages like “Live Like a Local,” which asks visitors to pick up trash, save water, put out campfires and pick up after their dogs.

The recent messaging represents the Telluride Tourism Board’s yearslong transition from marketing into a role where it helps develop and manage the vacation experience alongside local residents, Martelon said. And that “visit right” message, he said, is “needed now more than ever.”

“People think we are in a new reality right now and we are not. We are in this freaking limbo where we don’t know where reality is actually going to settle in,” Martelon said. “This is not a new reality. This is a mirage. We don’t know how it’s going to end up. No one does.”

Tourism communities need to work with tourism businesses to measure things like the health of the residents, the quality of trails, the traffic on public transportation and the vibrancy of local art and culture, Martelon said. That’s on top of typical measurements, like occupancy rates, lodging revenues and room rates.

Tourism and real estate are more than a $1 billion industry in Telluride and supporting it requires only $2 million in tourism management, Martelon said. Most of that is spent reaching overnight visitors, which are down to 217,000 through June 2021, according to Martelon’s early estimates. That compares to 597,000 in all of 2019. 

Now is not the time to “kill the golden goose,” said Martelon, who sees a dark tourism effort eventually reducing overnight visitors to a level where the Telluride economy relies solely on second-home owners and wealthy residents.

“These are not normal times. We are walking on quicksand and should not be making decisions that threaten our economy,” Martelon said.

“The Rise and Fall of Colorado Tourism”   

In May 2020, Colorado lawmakers briefly considered slashing the Colorado Tourism Office’s budget by 87% as the gambling taxes that support tourism marketing in the state collapsed during the early months of the pandemic. Tourism champions across the state rallied to upset a timeworn argument that Colorado sells itself and advertising is unnecessary, ultimately carving out $15.8 million for tourism promotion in the fiscal year 2021, down from $18.6 million in fiscal year 2020. The board that governs the Colorado Tourism Office has not finalized the fiscal 2022 budget.

The office spends about $11 million a year on advertising and marketing, roughly 66% of its budget. Almost all of that goes to MMGY Global, the Colorado Tourism Office’s media partner. 

In 2018, the Colorado Tourism Office spent $8.02 million on ad campaigns. The office’s research shows the state’s national “Come to Life” campaign inspired 2.33 million additional leisure trips to Colorado and an additional $3.84 billion in spending. The office has supported its ad spending by showing every dollar it invests in tourism marketing returns $479 in visitor spending, making its ad campaign among the top five most effective state tourism campaigns in the country. 

In the last half of 2019, the Colorado Tourism Office spent $2.1 million on a new winter campaign, dubbed “Wow.” Even though the winter season in Colorado was cut short in March 2020 with pandemic closures, the tourism office said its “Wow” campaign inspired 887,000 winter visits that generated $1.73 billion in spending. If COVID-19 had not forced the closure of ski resorts in March, another 107,500 visitors who had seen the campaign were ready to come to Colorado and spend $206 million, according to tourism office research.

The tourism office is still compiling its 2020 visitation research detailing the impacts of the pandemic on the state’s tourist industry. Early reports show that Colorado lost $10.8 billion in travel spending between January 2020 and May 2021. In 2019, visitors to Colorado spent $24.2 billion, generating a highest-ever $1.5 billion in local and state taxes.

Tourism advocates have reams of research showing big returns on investment in tourism campaigns, including a detailed analysis of the last time the state’s tourism promotion went dark. 

Colorado voters in 1992 rejected a tourism tax and state lawmakers the next year pulled the plug on vacation marketing. When Colorado tourism promotion funding went from $12 million to zero in a year, the state became a case study showing the value in tourism investment. 

Colorado’s share of U.S. vacationers fell to 1.6% in 1995, down from 2.7% in 1992. The Colorado tourism industry lost $1.4 billion in those early years and, as the state’s share of American vacationers slipped, the loss grew to more than $2 billion annually before lawmakers reinstated $5 million in tourism funding in 2000. It took nearly 20 years for the state to reach that 2.7% mark again. 

“The Colorado saga provides a cautionary tale for financial decision-makers who, in these difficult economic times and an unprecedented pandemic, are naturally looking at major cutbacks in all areas, including promotion,” reads an April 2020 note by tourism-tracking Longwoods International founder Bill Siegel introducing his 2006 report “The Rise and Fall of Colorado Tourism.” “It clearly illustrates that marketing is an essential net generator of revenue and profits to the organization, not a cost.”

Brady Johnson, the president-elect of Destination Colorado’s board who works as head of sales and marketing for the C Lazy U luxury guest ranch, said the success of the state’s tourism communities last year was built over decades of promotional work. 

 “This is not an overnight success story, like out of nowhere an amazing player gets into the NFL. Well they were not an overnight success story. They have been building up to that point for their whole life,” Johnson said. “The way we have been spending on tourism and our brand for the last 20 years is the same. We have an amazing brand and we have built it up over many years and now is not the time to let off the gas.”

The state’s DMOs have spent recent years growing meeting business and driving traffic to so-called shoulder seasons in resort communities. That’s helped create a more year-round tourism business, with groups coming in fall and spring months. Taking out the seasonality in mountain-town tourism traffic helps local businesses keep staff on payrolls for the entire year.

That kind of off-season traffic is a result of statewide tourism promotion spending, Johnson said. 

“We have spent lots of money to get people to focus on our state in a positive way … and give them a year-round ability to enjoy the state,” he said. “It’s a chicken-egg thing. Do these communities exist for the tourists or vice-versa? We need both to be in harmony and it’s a careful balance.”