CITY OF CARMEL-BY-THE-SEA DESTINATION MARKETING PLAN: Focus on Sunset Center

ABSTRACT: “The City of Carmel-by-the-Sea engaged our team from UCLA Anderson School of Management to help them create a visitor profile and provide strategic recommendations to increase the Transient Occupancy Tax (TOT) revenue, driven by increasing the number of hotel room nights sold to leisure visitors, particularly younger visitors.” Research Recommendations and material strictly related to Sunset Center are reproduced and presented. Importantly, UCLA Anderson School of Management “hypothesized that it could increase visitors during slow periods by attracting corporate groups and younger visitors. However, our research did not support these hypotheses…we recommend: (a) The City of Carmel-by-the-Sea not invest additional monies in the Sunset Center for the goal of attracting group meetings because of the high costs and limited return possible, the feedback gathered from meeting planners, and the myriad other venues available for group meetings in Monterey County."  The CITY OF CARMEL-BY-THE-SEA DESTINATION MARKETING PLAN document is embedded.
NOTE: Jack Globenfelt, Sunset Cultural Center, Inc.’s first executive director informed the City, then-Mayor Sue McCloud and the public that the Sunset Center was not a competitive venue for conferences and group meetings seven years ago.

EXCERPTS FROM CITY OF CARMEL-BY-THE-SEA DESTINATION MARKETING PLAN RELATED TO SUNSET CENTER

Research Recommendations

1. Do not invest additional monies in the Sunset Center with the goal of attracting group meetings

Research Recommendation Clarification

1. The City is not pursuing any additional renovation expenses at Sunset Center but supports the Hospitality Improvement District (HID) that is actively selling and marketing to meeting planners in the group meeting industry.

The City has projected a balanced budget through 2018, and our research shows that the City has a loyal core of visitors, as well as positive 'brand equity' among leisure visitors. Given that the City is looking to ensure the sustainability of its TOT revenue, we hypothesized that it could increase visitors during slow periods by attracting corporate groups and younger visitors. However, our research did not support these hypotheses.

In sum, we recommend:

(a) The City of Carmel-by-the-Sea not invest additional monies in the Sunset Center for the goal of attracting group meetings because of the high costs and limited return possible, the feedback gathered from meeting planners, and the myriad other venues available for group meetings in Monterey County;

(b) The City target visitors 55 years and older for off-peak travel (e.g. during the winter months and weekdays);

(c) The City reallocate existing marketing budgets to the Internet to attract new visitors, to strengthen the City's loyal visitor base, which will help sustain TOT revenues.

Through several discussions with our client and refinement of the project scope, our team developed the following hypothesis to test whether small groups are a viable target consumer segment. 

Carmel-by-the-Sea is well-positioned to attract small groups during lean periods and weeknights.

The City has recently created a Hospitality Improvement District (HID), as a partnership between the City of Carmel-by-the-Sea, the Carmel-by-the-Sea Chamber of Commerce, the Carmel Innkeepers Association, the Monterey County Convention and Visitors' Bureau (MCCVB) and the Sunset Center, the city-owned performing arts and conference site. Together, they are working to increase the occupancy rates in the town's many inns and hotels, as well as to market the town as a world-class destination. Moreover, renovations have recently been completed to make the Sunset Center a more desirable meeting and conference space. The town contributed $l00K to the renovations, and the HID funds supported the hiring of a meeting planner to assist groups by coordinating catering, accommodations, travel and specific meeting needs.

Based on the above analysis, we concluded the following:

• Most SMERF groups have amenity and space needs similar to corporate group needs which make hosting such groups at the Sunset Center a challenge.

Note: SMERFs (Social, Military, Educational, Religious, and Fraternal)

• Small (10-15) leisure groups (i.e. needle point groups) that enjoy a pedestrian lifestyle and are open to dining and lodging at different places would be a better fit for Carmel and specifically the Sunset Center.

3.0 FINDINGS and RECOMMENDATIONS

Hypothesis: Carmel-by-the-Sea is well-positioned to attract small groups during lean periods and weeknights

3.1.a Recommendation #1:

Do not invest additional funds in the Sunset Center to attract corporate groups.

• Finding lA: The investments in the kitchen renovation (estimated at $250k) and personnel necessary to staff group meetings ($106,370, for two FTE including benefits) significantly outweigh the projected increases in TOT receipts for the City of Carmel-by-the-Sea.

• Evidence lA: If Carmel-by-the-Sea can achieve the average returns of its competitive set (approximately 5.2% growth from current occupancy rates in Q1 months of January, February and March), it will only realize an additional $38k in TOT. Because the TOT revenue the City receives is a 10% surcharge on each room night sold, an increase 5.2% increase in occupancy would not significantly impact the City's revenues (see chart below). Additionally, because it is off-peak season, room rates are generally lower than the rest of the year thus limiting the amount of additional TOT revenue for the City.

Destination Marketing Plan 08-06-13 

CITY OF CARMEL-BY-THE-SEA DESTINATION MARKETING PLAN, 2013