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Item F18 BOARD OF COUNTY COMMISSIONERS AGENDA ITEM SUMMARY Meeting Date: NOVEMBER 19, 2008 Division: TDC Bulk Item: Yes -L No - Department: Staff Contact PersonlPhone #: Maxine Pacini 296-1552 AGENDA ITEM WORDING: Approval is requested to utilize $500,000 Monroe County Tourist Development Council (TDC) Emergency Contingency Funds as follows: Generic (two penny account) funding of $226,980; District 5 funding of$58,845; District 4 funding of$80,782; District 2 funding of$33,393; District 1 funding of$100,000. ITEM BACKGROUND: TDC approved same at their meeting of October 28, 2008. Attached is a copy of the TDC portion of the minutes approving use of Emergency Contingency Funds, and a copy of the backup material provided to the TDC. PREVIOUS RELEVANT BOCC ACTION: CONTRACT/AGREEMENT CHANGES: ST AFF RECOMMENDATIONS: Approval TOT AL COST: $500.000 BUDGETED: Yes ~ No - COST TO COUNTY: $500.000 SOURCE OF FUNDS: TDC REVENUE PRODUCING: Yes-L No AMOUNT PER MONTH Year - APPROVED BY: County Arty N/ A OMB/Purchasing N/ A Risk Management N/A DOCUMENTATION: Included X Not Required_ DISPOSITION: AGENDA ITEM # Revised 11/06 N.4: Consideration and Action re: Emerqency Fundinq Request: Mr. Wheeler explained the Emergency Contingency Fund was established to address an economic/natural disaster situation that would require additional funding deemed necessary to protect and guarantee the sustainability of our tourism industry in the Florida Keys. He stated that in order to do this the TDC must declare that an emergency exists by a two thirds vote of the Board. If approved the recommendation of the TDC will go to the Monroe County Board of County Commissioners for approval of the expenditures. At this time the TDC has a balance of 2.7 million in the Emergency Contingency fund. He requested approval of $500,000 Emergency Funds to be broken down as follows: Generic (two penny account funding of $227,000* (*This amount was adjusted after the meeting to $226,980 due to scrivener calculation error) District 5 funding of $58,845 District 4 funding of $80,782 District 2 funding of $33,393 District I funding of $100,000 Mr. Wheeler further explained that this just opens up the ability to utilize these funds. If the districts decide not to use all of their funds they will roll back into their Emergency Funds for the next fiscal year. In that DAC III has had to address a considerable downturn in their bed tax revenue and tax was down, and had to adjust their FY 2009 budget eliminating their emergency fund and freezing their capital items. He proposed adding the DAC III TV spot into the rotation for the main feeder markets funded by Generic funds. Mr. Marzella moved approval to declare that an economic emergency exists and additional funding is deemed necessary to protect and guarantee the sustainability of our tourism industry in the Florida Keys, Mr. Wright seconded. A roll call vote was taken with the following results: Ms. Ronnie Harris Yes Mr. Jay Marzella Yes Mayor Morgan McPherson Yes Mr. Frank Rego Yes Mr. Freddy Varela Yes Mr. Douglas Wright Yes Ms. Rita Irwin Yes. Motion passed. Ms. Harris appreciated Tinsley efforts especially during tight budget times in expanding the advertising buys with their negotiating additional insertions and added-value bonus features when purchasing media on behalf of the TDC. Mr. Wright explained that approximately 50% of annual profits occurs in the first quarter of the year, and the proposed plan will enable the Keys to have the best opportunity for a good season next year. Mr. Rego moved approval to open up Emergency Funds as follows: Generic (two penny account funding of $227,000* (*This amount was adjusted after the meeting to $226,980 due to scrivener calculation error) District 5 funding of $58,845 District 4 funding of $80,782 District 2 funding of $33,393 District I funding of $100,000 Ms. Harris seconded. In discussion, Mayor McPherson encouraged the agencies to market in areas where the economy is not having such a negative effect at this time. Ms. Panico of the Key West Chamber of Commerce asked if this would be the only opportunity to open up the Emergency Funds. Mr. Wheeler explained that the TDC could ask for more money at a later date if they deemed necessary. Ms. Panico stated that her preliminary research for August, September and October showed bed tax numbers could be down as much as 34% for Key West. Mr. Wheeler stressed he was not sure that the TDC could spend their way out of this situation, but he felt confident that the proposed campaign was the way to move forward at this time. Mr. Wheeler stated that out of the $227,000 (later changed to $226,980 due to scrivener calculation error) Generic funding, $200,000 was allocated to advertising; $20,000 to Sales Department; and $7,000 (now $6,980) to Research Department. A roll call vote was taken with the following results: Ms. Ronnie Harris Yes Mr. Jay Marzella Yes Mayor Morgan McPherson Yes Mr. Frank Rego Yes Mr. Freddy Varela Yes Mr. Douglas Wright Yes Ms. Rita Irwin Yes. Motion passed. The Floridd Keys &KeyWest . . . come dS you dre '.. MO"RjfCOONjYTcuRlSf-Dfve~~fjfcoITNCll To: TDC Members From: Harold Wheeler, TDC Director Date: October 17, 2008 Re: Emergency Contingency Fund Request Our Emergency Contingency Fund was established to address an economic/natural disaster situation that would require additional funding deemed necessary to protect and guarantee the sustainability of our tourism industry in the Florida Keys. The Tourist Development Council (TDC) must declare that an emergency exists by a two thirds vote of the Board. If approved, their recommendation must go to the Monroe County Board of County Commissioners for approval of the expenditures. Our Emergency Contingency Fund has a balance of 2.7 million dollars. The request is the following: Generic (two penny account) funding of $227,000* (*This amount was adjusted to District 5 funding of $58,845 $226,980 due to scrivener District 4 funding of $80,782 calculation error) District 2 funding of $33,393 District 1 funding of $100,000 Total Funding Request of $500,000 The Florida Keys &Keywest . . . come ts you dre -.. lofOIolra COUNTY 1aJlJST DfVfiCJll\.lfNT COUNCIL To: TDC Members From: Harold Wheeler, TDC Director Date: October 17, 2008 Re: Plan for Economic Crisis The outlook for the U.S. economy has weakened noticeably and every major sector of the economy has been hit by the financial shock. The travel and tourism industry has been and will be for some time impacted by this crisis. I believe the Florida Keys' tourism industry is aware of the underlying causes that may bring a negative impact to our tourism business in the coming months. What the industry wants to know is that the Tourist Development Council is doing everything possible in marketing to help the businesses during this crisis. The TDC staff and agencies of record have been working on developing a marketing plan for this economic crisis to bring to the Board and the tourism industry to review and approve. We have evaluated the types of research required; markets; media placement; creative message; public relations and sales efforts; funding resources; and evaluation process for our efforts. We have decided not to list all the causes or factors why the potential visitor may not travel or travel as much this year, but instead, to focus on who we need to reach in the marketplace and what is going to motivate them to travel. We will focus on our major domestic markets for the winter season, the top cities within the Northeast and Midwest markets. We believe the International markets will be softer than last year over the next 12 months as the economic crisis spreads through the European countries, unless the cost of travel decreases. We believe that our creative message will be an important component within our marketing efforts. The message should be sensitive to the uneasy consumer and must be a soft and authentic approach to better appeal to the consumer. Our destination must be a little diversion for the visitor from the concerns or worries at this time. We believe the traveler will be making last minutes bookings and will be taking shorter length trips. This means we will need to reach more potential visitors more often with our marketing efforts. This will take additional funding resources to keep the message before the targeted audience. We will present our program at the meeting which will included research data, current scheduled advertising, additional marketing efforts and justification for the marketing approach, and additional funding requests from our Emergency Contingency Fund. 2660 Brickell Avenue + Miami FL 33129 + (305) 856-6060 + FAX (305) 856-9236 MEDIA MEMORANDUM To: John Underwood From: Eric Gitlin Re: MCTDC-2008/2009 Media Plan Highlights & Additional Recommendations Date: October 16,2008 CC: Sandy Tinsley, Jim Flanagan, Scott Sussman, Sharon Joseph, Natalie Moore The following provides an overview of the current media plan for FY 2008/2009. Also, included are additional media recommendations to bolster the Florida Keys presence in key feeder markets during the current economic situation. The Harrison Group performed an update of their "Annual Survey of Affluence and Wealth in America". Research performed from September 19-23,2008 shows a downturn in planned spending by wealthy Americans, but not as dramatic as some would expect. Some of the important findings in this research are: . 57% of respondents said travel/vacations were something they still would splurge on . Only 2% of those surveyed would eliminate luxury items (including travel) . 70% of respondents are now looking carefully at their spending on luxury expenses (including travel) . 83% are waiting for something to go on sale before they buy it (including travel) This research indicates that consumers will still travel, but most likely do less of it and may look more closely at the cost of vacations. To this end, it will be necessary for The Florida Keys to persuade those who will be traveling that it is the perfect escape during these times given the value and environment offered by the destination. Current FY 2008/2009 Media Plan Overview The 2008/2009 media plan continues to reach an affluent audience of A35-64 $1 OOK+ household income with the means to travel to the Florida Keys. Generic, Districts and Umbrellas are currently advertising in their core feeder markets as well as nationally to upscale travelers and to niche markets (ie: bridal, gay/lesbian, cultural, diving, fishing). The following outlines the current media plan for FY 2008/2009: Newspaper (Generic, Districts, Umbrellas) . Allows for co-op (with hotels & attractions) providing immediacy and a call to action to generate hotel bookings. Newspaper ads have a feeling of being "newsworthy". . Ads are placed on Sundays to target readers when they have the time to spend with the newspaper and specifically look at the travel section for travel ideas and deals. . The current plan targets key feeder markets: . FalllWinter 2008-2009: Northeast, Midwest and limited Southeast . Spring/Summer 2009: Southeast, primarily in-state and drive-down markets. Magazine (Generic, Districts, Umbrellas) . Allows for selection of appropriate targets for the Florida Keys demo of A35-64 $100k+. . Allows for graphic exposure of the Florida Keys in rich, full color. . Have a long shelf life (weeks or months); readers tend to be very involved with their favorite magazines. . The current media plan targets the following niche markets: 0 Bridal/Honevmoon Market - Bridal Guide, Destination Weddings & Honeymoons and Destination I Do Magazine. 0 Upscale Travelers - Conde Nast Traveler, Travel & Leisure, NY Times Travel Magazine, Coastal Living, The New Yorker, Gourmet, Bon Appetit. 0 Active/Eco - National Geo Traveler, Outside Go, Canoe & Kayak, S. Florida Adventures. 0 Gav/Lesbian - Out, Advocate, Out Traveler, Instinct, Passport, Curve 0 Travel Trade: Travel Agents & Meeting planners via Agent at Home Magazine, Successful Meetings and Meetings South. Television . Is the most intrusive and effective communication tool. . Provides a broad reach against the target audience. . Is highly targeted to the Florida Keys target audience via network selection: 0 National Cable Television (Generic & Key West) - CNN, FoxNews, Food, HGTV, Golf, Travel, Weather from January-March 2009. 0 Out-of-State Spot Market Television (Generic, DACs and Cultural Umbrella) in New York and Philadelphia January-March 2009 0 In-State Spot Market Television (Generic & DACs) in Miami-Ft. Lauderdale, West Palm Beach, Ft. Myers-Naples, Tampa-St. Pete, Orlando and Jacksonville from April-July 2009. Search Engine MarketingllnternetlE-Marketing (Generic & DACs) . Works in tandem with all media to create awareness and direct users to f1a-keys.com: 0 Search Engine Marketing (Generic & Districts) - Google and Yahoo search terms are used throughout the year. 0 Internet (Generic, Districts & Umbrellas)- Banners, Buttons and E-mail Newsletters are used to drive targets to the f1a-keys.com website. International Media (Generic & DACs) . The current media plan will target Canada and Europe (U.K., Germany & Italy the main focus plus other Europe). . Efforts consist of Newspaper, Magazine and E-marketing efforts Fishing Efforts (Generic, DACs and Fishing Umbrella) . The TDC has significantly increased its presence to this market in FY 2008/2009 and has also emphasized supporting charter boat captains: 0 Television - Vida Del Mar and The Spanish Fly w/Jose Wejebe on ESPN 2; Saltwater Experience w/Rich Tudor and Tom Rowland (filmed in the FL Keys) and airing on Versus Network and Sun Sports Network; Sun Sports Chevy Fishing Report; Sportfishing TV on Versus Network. 0 Radio - WOAM-FM (Miami-Ft. Lauderdale) The Weekly Fisherman program with interviews with Florida Keys Charter Boat Captains. Fishing Efforts (Generic, DACs and Fishing Umbrella) Continued 0 Maqazine - Saltwater Sportsman, Florida Sport Fishing, Florida Sportsman, Fly Fishing in Saltwaters, Fly Rod & Reel, Sport Fishing, The Edge Big Game Fishing Journal, Florida Fishing Weekly, Destination Fish. 0 Online: Sportfishingmag.com, Sportfishingmag.com E-Newsletters and Saltwaterexperience. com. Dive Efforts (Generic, DACs and Dive Umbrella) . The TDC has also increased its efforts in the Dive Market both domestically and internationally: 0 Newspaper - Learn to Dive co-op will be offered in Atlanta, Washington and Charlotte. 0 Maqazines - Scuba Diving, Sport Diver, Dive Training 0 International - Dive UK, Diver UK, Sport Diver UK, Tauchen (Germany), Unterwasser (Germany) 0 Online - Scubadiving.com, demashow.com, sportdiver.com, divetraining.com Additional Media Recommendations Tinsley Advertising strongly recommends that measures be implemented to secure business for 2008/2009. Detailed below is an outline of the media recommended: . Television Additional television is recommended to increase The Florida Keys presence to assure that the destination is able to increase share-of-market: 0 Bolster current efforts in Philadelphia 0 Add television activity to Chicago . Newspaper Additional newspaper is recommended to enable co-op programs to promote the destination and allow for hotels & attractions to cost effectively promote their property: 0 Bolster current efforts in key feeder markets and additional co-op opportunities (New York, Chicago, Boston, Philadelphia and DC) . Radio Radio is recommended to be added to the plan in select feeder markets less affected by the economy: 0 Add radio activity to Charlotte, Cincinnati and Columbus . Online Additional online advertising is recommended as follows: 0 AmericanExpress.com - Reaches customers of one of the largest sellers of travel product and is highly targeted demographically and behaviorally. . Banners geo targeted to Amex users in key feeder markets and demographically targeted to A35-64 $100K+ HHI (including $200K+ HHI) . Banners behaviorally targeted to AMEX users spending patterns on travel 0 Travel Ad Network . Banner advertising utilizing behavioral and contextual targeting on travel related websites Impacts of the Economic Crisis on Tourism: Exerts from recent research news stories and the Travel Industty on the current state of travel I U.S. CONSUMERS & DOMESTIC TRAVEL MARKET I Consumer Spending &. Consumer Credit . In response to the falling value of their homes and high gasoline prices, Americans have become more frugal all year. But in recent weeks, as the financial crisis reverberated from Wall Street to Washington, consumers appear to have cut back sharply. Recent figures from companies, and interviews across the country, show that automobile sales are plummeting, airline traffic is dropping, restaurant chains are struggling to fill tables, customers are sparse in stores - and even gamblers are cutting back. Consumer spending, which accounts for nearly two-thirds of the economy, grew modestly earlier in the year but fell in July and August on an annualized rate. When the government releases quarterly numbers later this month, they are expected to show that consumer spending shrank 3 percent or more. That would be the first quarterly decline since 1990, ahead of the 1991 recession, and the steepest since 1981. (New York limes 10/6/08) . Since last October, household net worth has fallen more than $6 trillion, estimates Mark Zandi of Moody's Economy.com. That calculates to roughly $55,000 per household. Economists have long struggled with the fine art of estimating how people's rising or falling net worth affects the economy. But as a rule of thumb, Zandi says, figure that every dollar decline of someone's net worth reduces spending by 5 cents over a two-year period. [That equates to an average reduced spending of $2,750] (Christian Science Monitor 10/9/08) . Federal Reserve data (released 10/7) showed that consumer credit contracted 3.7 percent in August, the first drop in 10 years. Customers with stellar credit, of course, will still receive a bump up in credit lines and favorable interest rates--even in this environment. But which customers are considered desirable has been evolving during the past year and a half. It used to be if you had a FICO credit score of at least 700, among other factors, you had no trouble obtaining a card, said John Ulzheimer, president of consumer education for Credit.com. Now, you need a score of 720 or higher, which more than half of American consumers do, he said. "We have seen some situations where 780 is the target score," Ulzheimer says. Only 17 percent of U.S. consumers score that high or greater, he said. Besides tightening their credit standards, card issuers started pulling back on direct-mail offers for cards late last year. In the second quarter of this year, credit card issuers mailed out 1.06 billion solicitations, a 17 percent decline from a year earlier, according to the latest figures from market researcher Synovate. The number of mailings is expected to keep falling for the rest of this year. (The Morning Call 10/12/08) Affluent Consumers &. Travel . Luxury consumer confidence continued its downward trajectory in the third quarter 2008. The Luxury Consumer Confidence Index dropped 10.7 points to reach an historic low of 40.3 points, the lowest level ever since Unity Marketing started measuring affluent consumer confidence at the end of 2003. "Unity Marketing's most recent survey of luxury consumers, conducted October 3-8 following the bailout and during the recent stock market upheaval shows that affluent consumers' negative feelings about their economic situation are translating into changes in their shopping behaviors. Among the most important findings in this survey among 1,161 affluent consumers (average income $210,700; age 43 years): 0 Some 56 percent are spending less on luxury now as compared with twelve months ago. 0 Fifty-four percent expect to spend less on luxury in the next twelve months. Among the changes in their shopping behavior, luxury consumers are shopping more strategically by looking for sales. They are trading down to less premium brands. In fine dining, they are choosing less premium restaurants and dining out less often. They are still indulging in luxuries, but they are being more selective in what they choose to indulge. For this holiday season, we see affluent shoppers turning more frequently to mass-market retailers with a high-quality, value-driven image, like Target, as well as to outlet shopping where luxury brands can be had for less." . In terms of the impact of luxury consumers' confidence on travel behaviors even affluent consumers are looking for sales or discounts. According to Unity Marketing's luxury consumer survey, 63% received a sale or discount on the last travel product they purchased even though this group spent $25,000 to $35,000 on travel in the past year on average. The most important factor cited in influencing their most recent travel purchases was a good value for the price (58%). The internet is a power medium for reaching luxury consumers as over 90% reported using the internet in support of their travel planning. Travel Spending Forecasts &. Current Travel Volume . According to a recent Travelocity survey, U.S. households earning under $75,000 are significantly less likely to spend on a winter vacation this year (non-holiday travel). In addition, those households were also most likely to report the current economic situation will have a significant effect on their holiday travel plans. . Plans for saving money on travel this holiday season may give some insight into how consumers travel spending may change in the current year. The Travelocity holiday survey revealed consumers are adjusting their travel habits in light of the economy report they will 0 Be more flexible with travel dates 34% 0 Cut accommodation costs by staying with family or friends 32% 0 Use less expensive transportation 26% 0 Take shorter trips 11% . In September, the top seven airlines averaged a 9.47 drop in domestic passenger miles traveled compared with September 2007. Domestic hotel occupancy was down 5 to 7 percent from the previous September, according to Smith Travel Resea rch (STR) projections. In the individual chains, STR projects: 0 The luxury segment occupancy down 4 to 6 percent; RevPAR down 3 to 5 percent 0 Upper upscale occupancy down 3 to 5 percent; RevPAR down 1 to 3 percent 0 Upscale occupancy down 2 to 4 percent; RevPAR flat to down 2 percent 0 Midscale F&B occupancy down 6 to 8 percent; RevPAR down 4 to 6 percent. 0 Midscale w/o F&B occupancy down 5 to 7 percent; RevPAR down 1 to 3 percent 0 Economy occupancy down 5 to 7 percent; RevPAR down 4 to 6 percent. The higher-price segment of the hotel industry, which had been holding its own, now also seems to be feeling the pain [of the economy]. "For the last two weeks, cancellations of existing reservations are running about 50 percent above normal" at full-service hotels, said Bjorn Hanson, an associate professor at the Tisch Center for Hospitality, Tourism and Sports Management at New York University. Third-quarter profit fell 28 percent at Marriott International, which is considered an industry bellwether because of its big global presence and its wide range of hotel brands, from midlevellodgings like Courtyard by Marriott to five- star luxury hotels like Ritz-Carlton. (International Herald Tribune 10/6/08) New Trend: The Re-booker and Late Booker . Consumers are now sawier to pricing models in the lodging industry. They are watching property rates after booking rooms and will cancel and rebook if they see a rate drop. Travel writers and bloggers are spreading the word on this strategy. MSN Money, in an article about this, quoted PKF consulting that hotel rates fluctuate based on demand and generally get lower the closer to your check in date. . Post 9/11 we saw consumer changing their booking window to what they saw as the best time to achieve the lowest rates. Back then in a Travelocity survey of 40,000 travelers examined how far travelers will go in an economic downturn to get a good deal. 45 percent of respondents would be willing to change their whole trip to different, but comparable destination if they were to find a less expensive option. The largest group of respondents (almost 40 percent) believed they got the cheapest airfare between 30 and 90 days prior to their flight departure date. Twenty five percent of those surveyed believed they got the cheapest hotel rate if they book between one and two months prior to their stay, while 24 percent believe it's between 15 and 30 days . For the 2008 holiday season, despite warnings to book sooner rather than later due to capacity cuts, fuel surcharges and the peak travel period, the majority of travelers (65%) haven't booked their travel yet. Many says its because they are holding out looking for lower fares (40%). 2009 Travel Prices . AAA predicts gas prices will continue to decrease through the end of 2008. They anticipate prices will begin to climb again starting the end of 1st quarter 2009 with the normal gas price cycle. They are forecasting 2009 will follow more normal patterns of gas price fluctuations and not experience the huge increases seen in 2008. . The comprehension caused by flight reductions and reduced seat capacity is expected to continue through 2009. North America is expected to have the sharpest fare increases, with Advito consultants predicting an 8 percent to 10 percent on both intra-regional and intercontinental flights. . In August the reduced prices travelers found in lodging (down average 1.0% from 08/07) were offset by a 20.9% increase in airfares according to TIA's Travel Price Index. I U.K. CONSUMERS & OUTBOUND U.K. TRAVEL MARKET I From TOC International Sales Aaencv Cellet Travel: UK Economic Overview &. Future Trends . Inflation - currently at 5.2% (August 08 1.9%) a 16 year high, forecast to remain high for near future . Interest rates - Bank of England rate is 4.5% following a 0.5% cut week ending 10th October 2008. The forecast is that further cuts are likely, taking it to 3.5% by Nov 09 and possibly further thereafter. This will get the economy moving; however the key factor is whether the banks and mortgage lenders will pass this on to mortgage borrowers. Very few have passed on the recent 0.5% cut thus dampening consumer confidence and restricting any benefit for potential increased disposable income . Unemployment - Rising steadily thus diminishing consumer confidence to "spend" . Exchange Rates - $1.7544:f1 as of 15th October 2008. The forecast is that it will stay in the upper $1.70's to the end of 2011, possibly dipping to $1.63 during summer 2010. We anticipate this will affect the price sensitive family travel sectors General Economic Observations . FTSE - Currently reviving following government intervention . Socio - Lower income families will be hardest hit. (Forecasts not negative for Florida Keys market demographics) . Purchasing- Sales of "luxury" items such as white goods, furniture, new cars (down 28% for Sept 08) are being hit hard. People are "making do" However, travel and holiday markets not adversely affected (see below) . Work Force - Current younger workforce (40% of total) have not experienced a recession before and are entering unchartered territory . Advertising Revenues - Forecast to be down 12% by early 2009 (see CEBR document attached) Newspaper advertising is a massive 32% down in 2008 vs. 2007 and forecast a further -7% from 2010 through 2012 . Immigrants - Over 100,000 Polish workers expected to leave Britain in coming weeksjmonths as the SterlingjEuro exchange rate means it is not worth sending their earnings home. Plus there are now fewer jobs available in Britain, particularly in the building sector Consumer Travel Observations . More than 80% of consumers who travel abroad are planning to do so again within the next 12 months, according to the Ipsos Mori poll for ABTA (Association of British Travel Agents ) . Almost half of the respondents (47%) said they would not change their travel plans because of the economic situation . And a similar proportion (46%) said their travel plans for destination and type of holiday would not be affected by the downturn . But the strength of the Euro is deterring Britons from visiting Western Europe. Just 46% said they were planning to visit the region in the next year, compared with 65% of travelers who have visited the region this year - Potential positive trend for USA travel . Half of those asked said they would not be cutting back on the length of their holidays . The survey also suggested that a significant minority (38%) of consumers would cut back on the number of short breaks they take, although slightly more (39%) said they did not plan to reduce the number of holidays Source: ABTA Survey Summary of presentation by Malcolm Preston, Head of Travel at PriceWaterhouseCoopers to ABTA Convention, October 7th 2008: . Leisure travel spend will grow over the next two years but the number of trips taken will decline, according to business analysts at PriceWaterhouseCoopers. "Potential higher spend for longer holidays" . Travel Industry continues to be robust. UK travel sector continued to grow throughout the last recession in the early 1990s . However, rapidly declining consumer confidence, particularly among older generations is expected to hit the travel industry - (worried about pension performance) . Preston said market figures produced by Ascent MI showed travel prices were up between 5% and 10% and volumes were also holding up while capacity was down in summer 2008 worldwide. . For Winter, prices are also up 10% and volumes down between 2% and 3% worldwide . Summer 2009 is healthy as 12% of capacity is already sold, prices are again up 10% and volumes are holding up! . Preston said there was "quite a significant" shift towards "Package Holidays" as consumers look to insure themselves with a bonded Travel company against price rises and currency fluctuations. . There has also been a resurgence of bookings through Travel Agencies as consumers seek clarity and insurance against airline and tour operator failures - booking levels have been described as disproportionate to the market! . Retail Travel Agencies are increasing their share of distribution of travel sales General Observations . Continuing consolidation in the market resulting in Job Losses (First ChoicejTUI ) . Major Travel company failures - XL Leisure (Travel City Direct) · British Airways and Virgin announced this week they are lowering fuel charges on long haul flights from fl09 to f96 (except premium cabins) Conclusion: Current climate provides an excellent opportunity to carry out a targeted advertising campaign. . Excellent deals available · Uncrowded Marketplace - visibility of message · Opportunity to position Keys as "Destination of a Lifetime" - not to be denied · Capitalize on consumer insecurity by cooperating with our brand leading Tour Operator partners to provide bonding and clarity of message · Target market sectors least effected by current economic climate - (Double Income - no kids, Pink Pound, Empty Nesters etc) · Exploit "Aspirational" aspect of destination (emulate destinations such as Thailand, Dubai) From TDC International PR Aaencv KBC PR & Marketina, L TD: . We have something of a dichotomy right now - the actual booking figures are looking decent for this year and next year. I know that before it went bust, Travel City Direct was already one-third sold for summer 2009. Against this we have all the economic doom and gloom, with huge worries about job security, manufacturing outputs well down, most European economies going into recession and this huge commotion over the banks. . But the over-riding feel in the UK, German and Irish markets is that it is the short break holidays that will suffer from this downturn - the weekend trips will stop. However the main, two-week summer vacation has become sacrosanct - to not be able to afford that is like admitting to being on the poverty line. We strongly believe that Brits, Irish and Germans will still want their long haul holidays. . The U.S. is very much in public eye right now for more than just the sub-prime mortgage crisis. The coming election and the replacement of President Bush, who has a poor profile in Europe, will definitely be a fillip; as well as a number of high profile TV feature series just starting on UK TV all about the US, both historically and looking at popular culture and the friendliness of American people. One series is by Stephen Fry (and the Keys is in it!) and it starts on Sunday. . We strongly believe that the biggest influence on choice of holiday destination will be perceived value for money. The Germans and the Brits have always been extremely price sensitive and that will not change - in fact it will become even more critical. . The more expensive properties in the Keys might find it very hard to attract Europeans in this climate. At least one upscale Keys property has been pulled from Virgin Holidays, Britain's largest tour operator, because it is now too expensive for their customer profile. Keys properties are going to have to be very flexible on their rates if they want Europeans in their rooms, perhaps offering tour operators special deals for multiple night bookings. . There is a huge movement back to booking holidays and flights with travel agents and tour operators who are bonded which gives consumer protection should the company go bust. More than ever it is now vital for Keys properties to be featured by tour operators in order to attract British visitors - internet booking direct with hotels is now seen as risky as money will not be refunded if the holiday cannot go ahead because the airline has failed. A return to more focused trade marketing is therefore necessary. I GERMAN CONSUMERS & OUTBOUND GERMAN TRAVEL MARKET I From TDC International Sales Aaenev Get It Across Marketina: German market situation I economic factors: . Economic growth: Projection 2009: = +/- 0 . Unemployment rate: = 7.4 % (3 million) vs. 8.4 % 2007 . USD Exchange rate: = 1 EUR = 1.35 USD . German DAX Index (= Dow Jones in the US): July 2007 = 8151.57 points Oct 06-10, 2008: = DAX lost about 20% Oct 11, 2008 = 4544.31 points Monday, Oct 13, 2008 = 5064 points = +11.4% European Union Summit on October 12, 2008 . The government leaders of the 15 European Union countries using the EUR met on Sunday, Oct 12, 2008 in Paris to discuss the actual financial crises and to define ways to solve and hopefully limit the crises. . Outcome: The EU and each individual member are going to invest billions of EUR to stabilize the individual financial systems. Germany is going to invest 400 billion EUR to support one major goal which is the "Creation and Placement of Confidence in the financial system ". a) Placement of confidence among the banks so that they are in able to continue their regular business of allowing or granting credits to other banks and companies. b) Placement of confidence in the relationship between consumers/clients and banks . The German government confirmed the following: a) Provision of guarantees/ security of credits. b) Provision of capital resources to support the banking system. c) Almost nationalization of the banking sector but for sure the buying of shares to secure a better control of the financial system. It is not in the interest of the government, however, to completely control the private banking sector. It is more buying shares on a temporary basis only. . Due to these guaranteed stateside activities confirmed on October 12th the DAX Index went up to over 5,000 points on Oct 13th. This positive development indicates that the economy and the financial system seem to recover from the crisis and new confidence is born. Current situation on company lfirm side: . Due to the financial crisis, the tendency of company investments slowed down a bit. Some strong industries in Germany, i.e. the automobile industry, already reported that their business is not doing well due to a lack of demand on the international markets. The automobile industry especially is very export driven in Germany. . Some other industries (pharmacy, chemical, energy), however, reported a positive development and that their situation is much better compared to the previous years. For some of them the defined future markets are Russia, India and China with enormous expected increases of their economic growth in the near future. Current situation on consumer side: . Effect on Live Insurances/ Pension Plans: Those Germans who have based their insurances on the development of the Stock Exchange have concerns that the current financial crises will have a bad effect on their live insurances / pension plans (only about 5.1 million individual contracts in Germany are based on that development). Market specialists declare that the situation in German is different than in Japan or the US. The overall control mechanisms and different insurance regulations secure the consumers position. There is no reason at all to fear any bankruptcy. However, consumers have to expect slight decreases in the yields of their individual life insurance. Recommendation from analysts: Stay with your contract and wait until the crisis is over. . Effect on Savinqs Accounts: There have been some consumers concerns about their own savings on their bank account. The question was more if they should they leave their Euros on the savings account or should they select a new/ different bank. Last week the German government on purpose guaranteed all savings accounts in Germany just to create among the small investors an atmosphere of trusts and confidence again. Please be assured that there has never been a major concern among German consumers. They are concerned in general but no withdrawals from their savings accounts or discontinuation of live insurance contracts are taking place. And will not be due the EU Summit from last Sunday. Trust and confidence is back. There might have been more and still are more concerns in the US and in the UK among the consumers. In Germany the situation is different. The German consumer is not that much depending on the development at the Stock Exchange as in the US. The majority of Germans save their money in savings deposits and are not that active on the Stock Exchange. Travel Industry Situation: . So far the travel industry does not seem to be that much affected by the financial crises yet. 2008 has been very successful for all tour operators, indeed. In one of the trade publications of today DERTOUR and Meiers Weltreisen announced an increase of 22% versus 2007. Winter bookings are looking good and the USD/ EUR exchange rate is still very favorable although the USD has become stronger over the previous weeks. DERTOUR and Meiers are looking very positive into the future. They even announced a further decline of catalogue rates for the 2009 catalogue and therefore expect further increases in bookings to the US. (Source: touristik aktuell, Oct 13, 2008) . Nevertheless, the travel trade will be facing some upcoming challenges in 2009: 0 Increase of airline ticket costs due to the consolidation within the airline industry which will lead to a decreasing flight capacity on North Atlantic routes. 0 Insecure development of fuel and gas prices. 0 Instability of overall economic situation Conclusion: The EU Summit from last week-end and the G-7 Summit helped to re-gain the trust and the confidence in the financial market. The DAX, Nikkei and the Dow Jones Index, all went up again. Of course, the financial! banking system has been affected by the development at the Stock Exchange but not the consumer. And that just because the consumer in Germany is not that much focused on the stock market as the consumers in the US (the focus is more on savings deposits than on funds traded on the stock market). And therefore, consumers have not made any decision on their travel arrangements yet based on the financial crisis. The economic situation in Germany has been very stable over the past few months and not declining because of the crisis as expected by some analysts over the past few weeks. On the contrary, the unemployment rate is much better than a year ago (Sep 2008 7.4% vs. 8.4 in 2007). All in all, we can not report any severe consequences for the Florida Keys & Key West due to the recent developments. We will keep on executing tour operator coops to promote the destination. Of course, the more we can do and invest in coops the better it is. There will be many coops running in the German market as international is in the focus of many destinations right now. Therefore, it would be great to have more marketina cooo dollars available in the future to secure our market share. However, there is no reason to change our general strategy to secure future business for the Florida Keys & Key West. I IRISH CONSUMERS & OUTBOUND IRISH TRAVEL MARKET I . Ireland last month became the first eurozone member officially to fall into a recession since the US subprime home loan crisis sparked a global economic crisis. According to the Irish government, GDP will decline by 1.3 percent this year, and 0.8 percent next year before growing by 2.7 percent in 2010. In July, the government had forecast growth of 0.5 percent this year and 2.25 percent in 2009. . Irish Finance Minister Brian Lenihan said Tuesday that while Ireland's comparatively low rate of corporation tax would not be raised, so as to preserve the country's "economic brand", other taxes would have to be increased to help meet fiscal targets. Ireland will introduce a tax on air travel. (AFP 10/14/08) According to The Guardian, the proposed tax would be 10 euro ($14). On shorter journeys, the rate would be 2 euro. . Still, Irish outbound travel is showing little signs of slow down for 2009. Travel agents in the country are optimistic that holidaymakers will continue to choose foreign travel. They believe stressed Irish workers will decide that going on their foreign holiday is not negotiable and they will change their shopping habits and otherwise make adjustments to their budgets, leaving the funds available for the all-important holiday break. The director of Cassidy Travel, John Spollen, noted that his agency was seeing an increase in bookings for all-inclusive holidays for the coming winter, to destinations such as the Dominican Republic and Mexico. Spollen said that these packages offer good value and more control for the client regarding overall spending on the holiday. (The Post 9/28/08) . A record numbers of Irish people are flying stateside to get more bang for their buck. There were 1.4 million transatlantic trips (arrivals and departures) between Ireland and US cities from January to September this year, according to new figures from the Dublin Airport Authority (DM). This represents a 22 per cent jump on the same period last year. Aer Lingus, which operates flights to a number of major US cities, said that, while seat sales for the US were "slightly behind the same period last year", there had been a "surge in bookings" after a special sales promotion launched September 30th. Continental Airlines said it believed its strong passenger traffic out of Ireland would continue through Christmas and into the new year. "The load factors on the Ireland routes for the year to date are in excess of those for our transatlantic routes as a whole, which are 77.7 per cent," said Bob Schumacher, the airline's senior director for Ireland and Britain. (The Post 10/5/08) . The TOC sales & research departments conducted a joint survey of Irish Outbound Travelers at the Travel America Consumer Show in Dublin on October 4th - 5th. Irish consumers were still very actively booking and planning a long-haul trip to the U.s. within the next 12 months. Survey results show: 0 57% of Irish consumers will take the same amount of holidays next year and additional 38% will take more holidays. Only 5% reporting reducing their travel habits. 0 This pattern is despite the fact that 43% of consumers think their economy will be worse in the next year. 0 Perhaps the continued travel is due to the majority sentiment that their own economic situation will remain the same next year (73%). Agenda Item # N.4. MONROE COUNTY TOURIST DEVELOPMENT COUNCIL AGENDA ITEM SUMMARY MEETING DATE: October 28, 2008 DISTRICT: AGENDA ITEM WORDING: Consideration and Action re: Emergency Funding Request ITEM BACKGROUND: See Attached PREVIOUS DAC/TDC ACTION: RECOMMENDATION: FYI TOTAL COST J BUDGET: ALLOCATED FROM: REQUESTED BY: Harold Wheeler/Marketing Director DATE: October 17,2008