The state of tourism in N.H.: A roundtable
NHBR’s editors recently met with representatives of the New Hampshire travel and tourism industry at the Greater Manchester Chamber of Commerce to get an overview of the Granite State’s tourism industry and to find out what they believe the future holds for the sector.Participants were:• Tom Boucher, owner and CEO, Great NH Restaurants• Tai Freligh, communications manager, New Hampshire Division of Travel and Tourism Development• Jason Lyon, CEO, The Common Man Family of Restaurants• Jay Gamble, vice president and general manager, Mount Sunapee• Mike Somers, president and CEO, New Hampshire Lodging & Restaurant Association• Jan Barker, immediate past chair, New Hampshire Travel Council• Jayne O’Connor, president, White Mountains Attractions AssociationHow has New Hampshire’s tourism industry fared in the last 12 months?Tai Freligh: Last year was really tough, but this year I think we’re starting to see signs of improvement. It’s not great yet, but it’s definitely an improvement. People are starting to travel again, vacation again.Tom Boucher: In the first quarter we were up as a company 9 percent, which is up 3 percent from the previous year.It’s completely economic-driven, whether people are feeling confident and have discretionary cash to go out and splurge a little bit. The store that I’ve seen the most increase in the last year by far over the previous year is Laconia, which is our only tourism store in the state.Jason Lyon: Our sales are up about 8 percent over last year as well.What I’ve seen in the places where we have a larger tourism clientele – our Common Man in Lincoln for the winter months, the Airport Diner with travelers – we’re up double digits in those locations. I still see some weakness, which causes some concern, those areas where it is more locally dependent.Jay Gamble: We live and die by weather and the weather has been very good for the last four years.Skiing may be a little bit different than dining out. This is my 31st year in the business and we’ve never had a recession in skiing that I’ve experienced.The Great Recession started in 2008 and it was our all-time record year. It was the best year ever for all of New Hampshire’s ski areas, cross country and alpine.When it gets time to tighten your belt, people will still participate in their favorite recreation passion, even if they have to cut back elsewhere.Mike Somers: We’ve seen a little bit of a mixed bag with our members. I think it’s fair to say that the restaurant component, I think most of them are seeing increases.Where I think there’s still a lot of softness, is in the lodging side of things, especially for the smaller inns and B&Bs.I spoke with a gentleman yesterday that said last summer was hot and dry the entire summer, they had a pretty spectacular end of the season, great foliage season, winter was OK. The point where it dropped was in “mud season.” Here in the spring, it’s been very lean times.So I think they’re still going through some pretty heavy cycles, which is problematic for a small business, but across the board, it’s creeping back up.My only concern going forward is what’s the price of gas going to do?Jan Barker: I hear more from people in the Seacoast area. They’ve actually seen a pretty great increase. Some of the lodging properties down there have indicated they’re definitely seeing a huge increase over last year.A lot of them have told me they’re up on bookings more than they anticipated, so that’s a very positive thing.Let’s talk about gas prices. Will higher prices possibly benefit us because of the “staycation” or will it hinder people from out of town from coming up?Barker: I think you’ll see people driving here who can get here within a day’s journey, an easy day’s journey. I think you were talking, Tai, the state travel division has been targeting the Philadelphia area. So I think that will be very telling to see if the numbers from that area are really showing up.Lyon: It’s coming directly out of their pocket, out of their disposable income. So that extra $20 maybe twice a week they’re filling up, there’s $40 that they would have been spending out at a restaurant on a meal for two.Freligh: The Department of Resources and Economic Development, the year before last year, had a “re-discover the state” message relative to staycations. I think it’s very important for our messaging to highlight why people should stay in New Hampshire.Because of higher gas prices and other global issues, commodities, like coffee and sugar, have taken a huge hit. Has that impacted you?Boucher: Whenever you ship it from wherever it is to the next warehouse, they’re all adding that extra fuel charge on it. By the time it gets to us the price of that product is increased substantially.Lyon: We have to combat a drop in sales due to the economy. You look at your marketing, you get real creative and you provide another value. But when commodity prices go up, in order for us to continue to strive and provide the value that we’ve been known for, we can’t go up on our prices and you can’t really go down on your portions. So you’re looking across the board saying, “OK, to some extent I can swap out some products and try to get better costs.” You can tackle some points, but there’s only so much you can do. That is worrisome.Gamble: We aren’t as worried about the price of a tank of gas stopping you from taking your weekly trip as the cumulative effect as commuting to work five days a week and all the other errands with simply less available funds.Boucher: People are getting hit at the grocery store as well, not just in the restaurants. They’ve got even less discretionary money because they have to spend it on energy and food. Those things you need to live.The National Restaurant Association has an index called the Restaurant Performance Index. Last month was the first month where the number one concern was inflation, which is what I’m deathly concerned about at this point. It’s no secret it’s what is really hurting the bottom line right now.Are you seeing more corporate events coming and more business travelers?Somers: Anecdotally, corporate business is coming back slowly, but nowhere near the height it was in ’07 and ’08, not even close. But we are starting to see some more corporate business and it’s encouraging.Again, I think that’s something directly tied to how the economy is doing and the confidence of businesses that can afford to hold their retreats.I think this is going to be a long, slow build from where we are right now.Freligh: I think you’re going to see other nearby states sort of doing a business trip in New Hampshire because they’re going to get better value for their money.You all have social media tools. Has that dramatically changed your business?Boucher: Oh yeah, we’re heavy into it now. It hasn’t added a new advertising expense, it’s just shifted it. We’ve moved some print, TV, radio advertising into social media.Personally, I can’t remember the last time I didn’t book something through the Internet. And for the most part I’m booking packages. I have to believe it changes the industry.Somers: But I think the effect of the economy has been that value consciousness. We’re all looking for a deal and we’re all willing to wait for it. Now you can.Gamble: Often times you don’t necessarily get a better yield by waiting. Consumers think the longer they wait, they’ll get that last-minute fire sale deal.Do you use a lot of what you see in social media to help you run your business?Lyon: Yes, we do at the Common Man. We are actually using what a lot of people are – Facebook, Twitter, Foursquare.We started a text club last fall as well. We rolled out one promotion last fall, through all those avenues as well as traditional print media and wondered where are we going to get the best response back? Hands down, it was Facebook, and actually texts leading the way in a call-to-action and taking us up on those offers.Barker: I get a lot of national articles, and one of the things they were saying is that people now will trust Facebook way over Google because Google is just a search, anything can pop up; people don’t trust necessarily the information they may see. They trust their friends on Facebook who make a recommendation.Freligh: Oftentimes on Facebook or Twitter, you have direct access to the property, the restaurant. You’re getting pictures, information, specials. You can ask questions and hear right back from people. You’re getting them right where they are, since it seems like everybody has a smartphone or iPad. If we give information right there then they might book right there, plan a trip right there.O’Connor: I think it is a really good loyalty program. It’s a way to do a little back and forth with your customers and keep them engaged in the conversation about your business and what you have to offer.How do you think the value of the Canadian dollar and even the euro, which have strong buying power in the U.S. right now, will impact travel in the coming months?Freligh: The Canadian rates are at their strongest level in years. I think it bodes well. When their dollar is strong, they’re looking for opportunities. We’re right across the border, we’re tax free, which is huge for them. We think our gas prices are high but they’re not as high as theirs.They are our number one international visitor, so I think it’s going to be a strong summer for Canadians.Somers: I would say that the North Country is very dependent on the Canadian dollar being strong against the U.S. dollar. You see an awful lot of French Canadians up there. That’s a great thing, but it goes back to the importance of the travel and tourism division, and what they’re doing in their international marketing and marketing outside of New Hampshire.O’Connor: As you said, they’re our number one international market, but for a couple of decades, we haven’t paid enough attention to them because the U.S. dollar has been so much stronger than theirs. As the loonie dropped in value, we saw them less and less, but we always saw them by virtue of being next door.The euro is not as strong as it has been, but as we keep reminding our partners over there, it’s still stronger than the dollar.Even though we think the gas prices are high, they think they’re nothing.Where do you folks stand on bringing casinos to the state?Boucher: I’m adamantly and immediately against the expansion of gaming. There are so many studies you can read that all it does is suck discretionary spending out of the local economy. It would kill every single person in this room.Gamble: Speaking as an individual, I don’t think it’s going to solve the problems in New Hampshire.Boucher: Connecticut, before they had gambling, they had a budget deficit of half a billion dollars or something. Do you know what their budget deficit is now? $4 billion. And they have the two largest casinos in the world. It was brought in as a panacea to solve their budgeting problems. It is not a solution.Lyon: I would agree with Tom on those statistics and what it does to local economies. But in addition to that, it’s not the New Hampshire way and not the quality lifestyle I think the individuals of New Hampshire look for as well as the individuals that visit New Hampshire. I think it changes the whole perception and branding of what our state is and what we represent.O’Connor: We do have businesspeople, individuals in the North Country who fall on both sides of that fence. They prefer to be educational about it.If I’m speaking for myself, I hate to see that, because it does take your discretionary income, which right now people especially need. I would hate to put that kind of a social situation on them.Somers: The board has discussed it ad nauseam and I think it is fair to say we are neutral. I think I would echo Jayne’s comments, that I think we have a lot of members that are passionately for it and a lot of members passionately against it. The board has really reached an impasse and decided to remain neutral.Barker: I think it will be interesting to see if it happens in Oxford, Maine. They’re bringing it in for the same reasons they’re touting it for the North Country of New Hampshire, because Oxford’s been an extremely depressed area. I am very interested to see five years from now.”Greening” the hospitality industry has been a big movement. What are some of the things you have been doing to be more sustainable at your business?Somers: We have just about 100 members in our association’s sustainable restaurant and lodging program.It has a three-tiered system; the easy stuff like changing to more efficient light bulbs all the way up to the Green Champion level, which has capital expenditures and large-scale programs like composting.I think most businesses now are making the initial steps from a cost-savings standpoint with the price of energy and everything else.Lyon: We’re doing some solar-powered hot water generation. We’re using biofuel in a wide variety of our maintenance vehicles, we use it also as an additional heating source for the inn as well as our company store.In the past six months, we’ve switched over to recycling with Waste Management. We’ve even gone as far as partnering with some local farmers in hauling off our food waste, using it for feed or for composting. We, of course, use bio-degradable packaging, and we’re looking at different initiatives in lodging.Gamble: There have been a lot of technological advances in snow-making technology in the last 10 years. That is capital intensive, butwe have spent a lot of capital dollars on more energy-efficient snow guns.We also did a lot of the low-hanging fruit fixes, switching to fluorescent lights, auto timers, the motion sensors in restrooms and so forth.For the most part, skiers are an upscale clientele and they expect us to be making headway to having a smaller carbon footprint. Being green doesn’t necessarily mean it’s all savings. In many cases, the greener you get, the more it costs. But some of those costs may save us money in the long term, but you’ve got to get started.Freligh: I think you nailed it when you said they expect you to do it now. I think the traveler these days not only expects it, they demand it. They’re pretty savvy about it, too, so they know if someone’s green by their light bulbs.Boucher: A major initiative for us in 2012 is to get involved in a sustainability program. The motivation behind it is that the Copper Door, which is being built – there’s massive regulation on new buildings. It’s shocking, between the regulation on lighting and ADA, it’s overwhelming. PSNH has programs based on whatever your budget will allow.We got early on the bandwagon of bio-diesel shortly after Cranmore Mountain Ski Area led the way, but a lot of us now are starting to question that with the rise in commodity prices.I think more and more people are now having the courage to speak frankly and call something “green washing” when you’re not really having the net effect that you could be trying to achieve.The state travel division is facing some real pressure from budget cuts. It obviously impacts the division, but how will this impact the rest of you?Freligh: Well, nothing is set in stone until the budget comes back.I think everybody is pretty much working with what they have. That is where partnerships come in; partnerships are huge when you’re working with limited dollars.When we have a final number from the Legislature, at that point we’ll be looking at what we need to cut.But I think we need to keep marketing. It seems like marketing is one of the first things that people want to cut, but it’s the last thing that should be cut.Boucher: Figuring in all the revenue we generate and all the taxes we pay, we contribute roughly 15 percent of all the taxes the state of New Hampshire collects. That’s significant. We’ve crushed every other industry because of the 9 percent rooms and meals tax, so it’s foolish to cut in that area because that’s where most of your revenue is coming from.Gamble: With some of the speakers I have seen, approximately 60 percent of the entire state’s rooms and meals tax is driven bytourism streams. Those dollars are typically leveraged several times. You’re talking about $8 in state and local taxes that are generated for every $1.There is quite an ROI on these dollars, and I hope that the budget cuts will be less significant than currently discussed.Somers: We need to make sure we do invest the state dollars in the travel and tourism budget.I’ve heard stories told of what Colorado did, Tai may know the story better than I, but Colorado cut their promotion budget catastrophically, almost eliminated it, and it took them 15 or 20 years to get back from that.I know they’ve got tough decisions to make, and I certainly don’t relish in that decision, but I really hope that the Legislature understands how important this is.Barker: I think they will see a ripple effect. As it affects tourism, it’s going to affect all the suppliers of tourism, all the services to tourism. It will bring the economy down overall. It’s a short-term answer to a long-term situation.Gamble: The ones that are hurt most by it are the ones that don’t have marketing budgets, the smallest mom-and-pop restaurants and businesses. They are relying on the bigger budgets for them, but they’re still the bedrock parts of the communities. They and the taxpayers will be hurt the worst.Where do you think the tourism industry in New Hampshire will be in five years or so?Somers: I think the key going forward is that we need to figure out how to adjust to what’s happening in the commodity side of things, what’s happening with costs of health care, those kinds of scenarios.I think the industry is going to need to make adjustments going forward, but I think it’s going to grow and flourish, I really do. I just think that New Hampshire is just too good to waste. People are going to come, they’re going to come.O’Connor: I would like to see the respect that it requires and it deserves as the second largest industry in New Hampshire.We have a tremendous impact on the lives of people in this state and yet there are cuts being made that counter the economic development that tourism has been about.Gamble: Some of the regions that are most dependent on tourism dollars are the ones most hurt by these cuts because they don’t have the balance of the other industries. I think that fact is being overlooked as we consider cuts.To the future, I think business is going to be more proactive. Business managers who are thinking very progressively of who exactly is their customer will take the lead. The folks that just open the door the same way every year, like five years ago, like 10 years ago, are going to all of the sudden realize you don’t have business here anymore.Freligh: I think there needs to be better awareness by everybody in the state to the fact that every person who faces a visitor needs to be an ambassador for the state, whether it’s the gas station attendant, the pool person or whatever.I think we’re also going to see an explosion in terms of technology. Addressing technology is getting people where they’re at. It’s getting to them quickly.