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CEO Roundtable: Tourism

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Springfield Business Journal Editor Eric Olson discusses the tourism industry with Edd Akers, mayor of Branson; Rick Huffman, CEO of HCW Development Co. LLC and developer of Branson Landing; Tracy Kimberlin, president/CEO of the Springfield Convention & Visitors Bureau; and April McDonough, executive director of the Wilson’s Creek National Battlefield Foundation.

Eric Olson: Springfield is an area that has been growing by over 500 new hotel rooms in the last two years. Is the hotel market at a point of saturation or is there still room to grow?
Tracy Kimberlin: We’re on the verge of being overbuilt. Could we support another hotel? It depends on where. Even in overbuilt markets you can find locations where you can put up a hotel and be very successful. One of the things that I’m concerned about in Springfield is the type of hotels that are being built. For the most part, they’re limited-service facilities and that does not generate demand. It only divides up the pie into smaller pieces. What we haven’t had built in Springfield in some time is a full-service hotel. Part of that is because of the market mix that we have. We don’t have a convention center. They tend to pay higher rates and support upper-end properties.
Olson: What’s the outlook in Branson?
Rick Huffman: We had our best year ever last year in Branson. We have 535 rooms in two Hiltons. We had the best from an average daily rate, not occupancy. Occupancy was flat. There’s enough hotel rooms in Branson. Plenty of hotels. Quality is obviously always looked at. The convention center draws a business client to that market [and] has totally changed down there. In the last 10 years, right around 37% of the people that came to a convention in Branson went to a show. Today, that’s down to 21%. We own 37 hotels in which nine of them are either full-service or high-end selects. The business travelers are traveling more and more, economy is strong, unemployment is the lowest rates in over 30, 40 years, so we’re seeing more of a business traveler. Tourism is a big part of it. In Springfield, from 2007 to 2008, really when the economic crash hit, there hadn’t been anything new built. In the hotel business, franchise companies like Hilton and Marriott, they always push new products and they’ve probably introduced 10 new products in the last 10 years – from Trus to Moxys, all these lifestyle brands. That’s what is being built in Springfield and won’t be built in Branson because we have enough.
Kimberlin: In Springfield, as opposed to overbuilt, we’re probably under demolished.
Huffman: Same thing we’ve got in Branson.
Kimberlin: Thirty to 40 years ago, the primary entrance to Springfield was Glenstone and (Interstate) 44. That’s where all the hotels were built. There’s about 3,000 rooms roughly in that vicinity. We have a little over 6,000 rooms, so there’s a lot of old inventory. Tim O’Reilly tore down a couple of properties on north Glenstone, and it wouldn’t hurt to see a couple of others go down, too.
Olson: Is the Branson market overbuilt at this point?
Huffman: Occupancies aren’t growing, so they would tend to say you don’t need any new products. We’re under demolished. But a lot of the hotels have turned into workforce housing. That’s really needed in Branson.
Edd Akers: There’s a lot of internal pressure, too, with Airbnb [and] with timeshares. It’s a different kind of stay for people. We’re seeing a lot of growth in people buying properties and renting their properties out.

Drawing a crowd
Olson: In tourism, what comes first: Is it the attractions and events, or is it the hotels?
Kimberlin: Absolutely attractions and events. People don’t go to a city to stay in a hotel. They go to a city for other reasons, and they find a hotel to stay in. There are a couple of exceptions to that. Convention hotels would be one that can create demand on their own. A lot of the people in the hotel industry, and I came from that industry, don’t look at it that way. A lot of them think that they build a hotel and people come to the city to stay in their hotel. Doesn’t happen.
Huffman: It’s probably more attractions. We have a lot of events. In Branson, we did about 320 event days last year; an event of 15 people or more is how we count in our Hiltons. It’s the beauty of the Ozarks. Branson’s customer used to be 63, 64 years old. Today that customer is more like 53 years old. We’re seeing our customer come in and they’ll go to less shows, but they might be doing biking, hiking, golf, shopping. Shopping is the No. 1 thing they do. Eating out is No. 2.
Kimberlin: Food is actually becoming an attraction now.

Regional hub
Akers: The dynamic for Branson and the Branson area is to recognize we’re a regional destination. We’ve got to tie into Springfield, we’ve got to tie into Johnny [Morris’] properties. Look what he’s doing in Ozark. This is becoming a corridor for tourism.
Olson: Are you statistically tracking that synergy, or is it just anecdotal that there’s more activity between the two markets?
Kimberlin: There always has been. For a long time, for whatever reason, we didn’t want to admit it. There was a lot of parochialism between the two communities that shouldn’t be. We do compete for business, conventions and sporting events. But there’s no reason we can’t be friendly competitors when it comes to tourists. We don’t compete. We complement. Hats off to Johnny Morris. I think he has created a lot of that synergy between the two communities. And he’s not finished.
Huffman: He’s probably one of the few that did cross markets. Back 20 years ago, there was no cross marketing between Branson. A lot of it was the John Q. Hammons’ days. It was a different dynamic when he was around. With him gone, it seems like the two cities can come together better now.
Kimberlin: The division that I saw in the two areas occurred when the theaters became very big in Branson. There was a lot of very big egos that came along with some of those theaters. Branson at that point started focusing more on Branson. Now we’re seeing the bigger picture.
Akers: I think there’ll be more communication. What’s beneficial to Springfield and 40 miles south what Johnny Morris is doing, bringing an international crowd to the golf tournament(April 24-28). You got folks saying, “Wow, I didn’t realize this kind of thing existed in the central United States.
Kimberlin: And then you go down to Crystal Bridges, a world-class facility. If you look at the Bass Pro complex and Crystal Bridges, they’re not that far apart to a tourist.
Huffman: At Johnny’s tournament, I invited several of our different banking relationships in for the tournament to entertain them and they’re like, “Wow, I want to bring my family back. I want to come back to stay here.” They don’t realize the beauty.

Unique history
April McDonough: I have a much narrower focus than the rest of you. We try to market and support the [Wilson’s Creek] Battlefield in a lot of different ways, but I think it fits into this kind of synergy very well. It’s the only Civil War battlefield in Missouri and really there are only a couple of national battlefields in this whole area. People come to battlefields and then they also go other places, like Branson, if there are other things to do in that area. The people who come to Civil War battlefields are about 50-ish. In the marketing aspect, we don’t do a lot of advertising of the battlefield because the battlefield can’t. It’s a national park. We have a partnership with the Convention & Visitors Bureau and that’s been very helpful because they help us market to a lot of different areas. But marketing the battlefield would actually be beneficial to everyone in this area because it brings people in that might not come otherwise and then they spend money. The typical battlefield visitor spends more money than the typical recreational visitor. That’s what we’ve seen in our research. I’ve got some numbers from 2015. The battlefield had about 160,000 visitors that year. It’s up right now to above 200,000. The local sales that were generated that year was $8 million. Now it’s going to be up another 20%-25%. It’s a real benefit to this area.
Olson: But you’re kind of limited in getting that message out there.
McDonough: Yes. We can’t spend a lot of money. But for example, if the hotels in Branson had a brochure from the battlefield, that can be kind of a partnership, too, because we have a website, we have Facebook, we could have links to hotels.
Olson: I recently toured the History Museum on the Square and saw several artifacts on loan from the battlefield. The organizers of that are really betting on it being a draw for tourism. Do you see history itself pulling people to markets?
McDonough: Yes, definitely. Something else about the battlefield that people are not aware of, in 2005, the park service purchased a huge trans-Mississippi Civil War collection. It is the only trans-Mississippi collection of artifacts in the country. And there are right now probably almost 10,000 artifacts that are owned by Wilson’s Creek Battlefield. We’re in the process of a fundraising campaign to renovate the visitor center so that more artifacts can be on display out there. It could become a destination just for that collection because it’s so unique.
Huffman: I can tell you as a business guy, I’m going to go for the big events every time. What draws the masses to our area? That’s conventions and events.
McDonough: In 2011, we had a 150th anniversary reenactment of the Battle of Wilson’s Creek. We had probably somewhere between 20,000 and 30,000 people attend that. A lot of people came from other places and we get questions all the time about when are you going to have a reenactment?
Huffman: Those types of things are fantastic. I’d like to see Springfield and our region trying to create those events that every year you put it on your calendar.

Convention competition
Olson: In Springfield, the idea of a convention center is not new. In fact, Rick, you looked long and hard at a downtown convention center in the mid-2000s.
Huffman: Local politics killed that deal. I won the (request for proposal), and they opened it back up again and Mr. Hammons got it. They called him and they leaked every bit of the information to Mr. Hammons. In fact, I did the city a favor. They told me to up my bid on the garage by $1 million because it would get back to Hammons and he’d pay to keep me out of there. And he did.
Olson: Did you get a thank you note for that?
Huffman: I actually did from Dan Wichmer. [Laughs] There was too much control from one company in the area which did hurt the city. We were going to do a 30,000-square-foot ballroom and an 18-story building.
Kimberlin: They may want to talk to you again about that. [Laughs]
Olson: The Hunden report says the city could use a convention center of that type, 160,000 square feet connected or adjacent to a hotel and a couple supporting hotels to that. If the demand hasn’t been there from private developers, is it really needed?
Kimberlin: Private developers will never build a convention center big enough for the community because they want to fill their hotel rooms. They are not concerned about filling everybody else’s hotel rooms. Meeting space, for the most part, is your loss leader in a hotel. You have the meeting space to fill your hotel rooms and not to sell food and beverage. Private enterprise will never build anything big enough. We have examples in Springfield; you know the DoubleTree just added a convention center there, and that’s part of the problem, everybody calls a meeting room a convention center. What we need in Springfield, like Branson has, is a facility that’s large enough to benefit, not just the hotel that’s right next to it, but other hotels in the city. If we have a convention of more than 1,000 people, we’re stretched. University Plaza pretty much has a monopoly on the big groups. John Q. liked it that way. As you know, we’ve been looking at a Bass Pro location, and there is interest there, but we don’t know how much. If a public-private partnership were put together with Johnny Morris, it could be very difficult to do. Johnny wants 100% control.
Huffman: Johnny is a good friend and I understand why he wants it out there, but that’s the wrong spot to put it in Springfield. It has to be centrally located. It’s got to be downtown. It’s got to be next to an expo hall they already have. Convention centers are not made to make money. They are there to draw people into town who will spend $1,000 while they’re in town and go out and eat. That’s increased sales tax for your community. Therefore, it makes money.
Kimberlin: There’s other benefits to convention centers that most people don’t even think of. Convention delegates pay a very high average daily rate. It’s not unusual to pay $200 a night for a hotel room. Well, the average daily rate in Springfield citywide is $85. That would help bring that average up. It will also help create the demand for full-service hotels, a higher-quality hotel. The quality of your hotel inventory and whether you have a convention center in the community is very important when it comes to industry attraction for the city. If you’re thinking of relocating a business to Springfield and the best room you can get is the Best Western, you may rethink that.
Olson: If the city opens up a request for proposals for this convention center, are you interested?
Huffman: The first person I’d call is Tim O’Reilly. Tim and I have actually talked about partnering on a project. He likes partners.

Excerpts from Features Editor Christine Temple, ctemple@sbj.net.

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