To: Vail Local Marketing District From: Vail Local Marketing District Advisory Council Date: September 19, 2017 Subject: Vail Local Marketing District 2018 Operating Plan and Budget

I. BACKGROUND

The mission of the Vail Local Marketing District is to market and promote Vail to attract overnight destination guests primarily during the May – October time frame, creating economic vitality by increasing both the visitor base and sales tax revenues. To date, 2017 summer results show a mix in sales tax performance, with a decrease in May and increases in June and July as compared to the same time period in 2016. The overarching goal is to strengthen Vail’s position as a year-round destination that appeals to a broad audience by elevating the summer brand position. The marketing objectives outlined in the VLMD operating plan are: Continue the momentum and build on the powerful leadership position of the year-round Vail brand in order to:

• Increase May – October occupancy • Increase sales tax revenue • Increase group occupancy • Optimize visitor mix • Monitor net promoter score (due to new methodology) • Increase consideration percentage as measured by Burke

II. BUDGET DETAIL Budgeted revenue from lodging tax collections is proposed at $3,200,000 for 2018. The assumptions for this projection are conservative and consistent with the town’s expected sales tax revenue for 2018. Proposed budgeted expenditures are $3,400,000 for 2018 programs. This is a $350,000 decrease from 2017 budgeted expenditures when $500,000 of fund balance was utilized. However, this is a $240,000 increase from 2016 expenditures. The 2018 ending fund balance is projected to be $943,733, which is 30% of annual revenues, and within Council’s directive of 25% of annual revenues.

The following shifts are recommended from the 2017 budget to the 2018 budget to address recent successes and opportunities and to achieve the outlined marketing objectives:

o Keep Vail in the leadership position and maintain our competitive edge

among other mountain destinations o Increase our ability to be in market longer and during key timeframes o Allow us to reach more of our target personas nationally, within

destination markets and in the Front Range o Increase the momentum for reaching annual and 5-year goals

• Destination budget decreases 2% by realizing a savings in Search Engine Marketing and increased overall digital media efficiencies

• International budget decreases 6% with the elimination of the Panama market • Front Range budget decreases 16% with increased digital media efficiencies

and elimination of some traditional sources • Groups and Meetings budget increases slightly to provide additional sales

efforts as well as targeted partnerships • PR budget decreases 26% with savings in fees due to reduced scope and the

elimination of Panama • Research budget decreases 38% to reflect that there is no Burke Brand

Research study in 2018, it is every other year • Web/email marketing/social media increases 13% in order to provide more

content and social efforts • Photography/video decreases 39% since a significant investment was made in

2017 to build the video assets and photo archives • Branding/production decreases 13% since the new brand marketing was

executed in 2016 and production in 2017 so realizing a savings in fees and production costs due to reduced scope of work

• Professional Fees decrease 2% commensurate with the reduction in scope of work at the new budget level

• Special event funding, no budget for this 2018 line item because no event has been identified. Should an opportunity arise, dollars from the fund balance would be utilized.

The budgetary changes outlined above reflect the goal of shifting dollars to optimize the visitor mix of destination, front range and international travelers; to drive revenue by focusing on the core audience while broadening and increasing relevancy with a younger demographic; to maximize off peak, mid-week and shoulder seasons and to increase awareness of Vail as a group and meeting destination and drive quality leads to the lodging community through additional outreach and programs in 2018.

III. ACTION REQUESTED OF VAIL LOCAL MARKETING DISTRICT

VLMDAC recommends that the Vail Local Marketing District approve the 2018 Operating Plan and budget of $3,400,000.

Town of Vail Page 2

Vail Local Marketing District 2018 Proposed Budget

2

2016 2017 2018

Actual Budget Budget

Income

Lodging Tax 3,198,625 3,300,000 3,200,000

Interest Income 1,722 2,000 2,000

Total Income 3,200,347 3,302,000 3,202,000

Expense

Destination 1,032,293 1,285,500 1,182,548

International 180,704 241,000 235,052

Front Range 247,368 264,000 222,000

Groups and Meetings 700,248 752,965 756,375

Public Relations Expenses 101,693 115,000 85,200

Content/Influencer Strategy - - 100,000

Photography / Video 152,180 185,000 112,000

Research 71,966 136,088 84,365

Web Site 45,000 104,000 50,000

Admin Miscellaneous 4,991 7,487 8,000

Email Marketing 6,500 6,500 6,500

Branding 202,289 110,000 98,000

Professional Fees

Vail App - - 35,000

Legal and Accounting 22,000 25,000 25,000

Advertising 50,741 58,000 48,000

Advertising Agent Fees 45,000 45,000 45,000

Marketing Coordination-TOV 90,000 95,000 95,000

Marketing Coordination-VVP 40,000 40,000 40,000

Professional Fees - MYPR 125,589 132,460 124,960

Ft Range Promotion Fees 22,000 22,000 22,000

Total Professional Fees 395,330 417,460 434,960

Special Event FundingSpecial Event Funding 21,250 100,000 -

Pro-Cycling Challenge - - -

Event Liason - 25,000 25,000

Total Special Events 21,250 125,000 25,000

Total Expense 3,161,811 3,750,000 3,400,000

Net Income 38,536 (448,000) (198,000)

Beginning Fund Balance 1,552,198 1,590,733 1,142,733

Ending Fund Balance 1,590,733 1,142,733 944,733

%age Fund Balance (25% required) 50% 35% 30%

VAIL LOCAL MARKETING DISTRICT

2018 OPERATING PLAN & BUDGET

SEPTEMBER 19, 2017

• Creative Review

• Goals & Results

• Insights & Trends

• VLMD 2018 Budget, Strategy & Operating Plan

• Discussion/Questions

AGENDA /

• Sample videos to feature

2017 CREATIVE /

GOALS & RESULTS

VLMDAC OVERARCHING GOAL /

STRENGTHEN VAIL’S POSITION AS A YEAR-ROUND DESTINATION

THAT APPEALS TO A BROAD AUDIENCE, BY ELEVATING THE SUMMER

BRAND POSITION.

VLMDAC MARKETING OBJECTIVES /

CONTINUE THE MOMENTUM AND BUILD ON THE POWERFUL LEADERSHIP

POSITION OF THE YEAR-ROUND VAIL BRAND.

• INCREASE SALES TAX REVENUE

• INCREASE MAY-OCTOBER OCCUPANCY

• INCREASE GROUP OCCUPANCY

• OPTIMIZE VISITOR MIX

• POSITIVELY IMPACT NET PROMOTER SCORE

• INCREASE CONSIDERATION PERCENTAGE AS

MEASURED BY BURKE

2017 OVERVIEW /BUDGET

Drive

Overnight &

Out-of-state

Visitation

Mkt Production

Branding

Research

2017 Budget: $3.750 Million

27%

73%

Destination

FR Overnight

International

Web/CRM/Social

Public Relations

Groups

47%

10% 8%

27%

4% 4%

Digital

Social

Traditional

PR

46%

7%

7%

40%

2017 NEW APPROACH & INCREMENTAL $500K /

• A ONE-TIME INCREMENTAL BUDGET OF $500K WAS ALLOCATED ACROSS KEY INITIATIVES

• SHIFTED STRATEGIC APPROACH FROM A GEOGRAPHIC AND FUNCTIONAL FOCUS TO A

CONSUMER BASED FOCUS (DYNAMIC FAMILIES/ACTIVE PROFESSIONALS/SUPER

BOOMERS).

• NEW STRATEGIC APPROACH BUILDS INTEGRATED TACTICS AROUND PERSONAS IN ORDER

TO BETTER ACCOUNT FOR TRAVEL MOTIVATIONS & BEHAVIORS, AS WELL AS MEDIA

CONSUMPTION BEHAVIORS.

• ALLOWS US TO BECOME HYPER-TARGETED TO PERSONAS IN DIGITAL AND TRADITIONAL

MEDIA, WITH INCREASED EFFICIENCY OF DOLLARS AND MESSAGING.

• PRIORITIZE HIGH QUALITY PLACEMENTS AND EXECUTIONS THAT WERE PROVEN IN 2016 TO

YIELD BEST ENGAGEMENT AND CONSIDERATION OF VAIL.

• CONTINUES TO BUILD THE MOMENTUM FOR REACHING ANNUAL AND 5-YEAR GOALS.

• ALIGNS WITH VAIL MARKETING WINTER STRATEGIC APPROACH

2017 NEW APPROACH & INCREMENTAL $500K / HOW DID IT WORK

30%

budget increase in

digital

224% increase in digital video impressions

2X digital video views

+71% Content

Impressions

38% budget increase in traditional

media

70% increase in traditional media

top funnel impressions

Expansion into addressable TV with data driven

one to one targeting (and

included Chicago)

9% budget increase in PR

More than 1M static

impressions and story

views through the influencer

program

7% budget increase in

Groups

Increased CVENT engagement

resulted in 18.6% increase in leads and 21% increase

in room nights generated

39% budget increase in photo/video

Accomplished professional

brand photo/video

shoots speaking directly to personas

GOALS AND RESULTS TO DATE /

2016 Results 2017 Goals 2017 Results 2018 Goals 5 year Goals

Sales Tax May - Oct. +7% May - Oct +3% May - 1%; June +3.3% May - Oct. +3% Overall +15%

DestiMetrics/ Occupancy

May - Oct. +5%

(49% overall) May - Oct +2% May - Oct. +.43% May - Oct. +2% Overall +10%

Group Occupancy 30% 4% 6% 4% 20%

Out of State Overnight

Visits 49% of mix 60% of mix 49% of mix 60% of mix 65% of mix

International Visits 5% of mix 11% of mix 6% of mix 11% of mix 15% of mix

In State Visits 25% of mix 20% of mix 24% of mix 20% of mix 20 - 25% of mix

Consideration measure in 2017 55% in 2015 results in October 2% increase 5 - 8% increase

Net Promoter Score 80 84 in 2015

84 mid summer

(intercept only) 83-84 84-85

5 YEAR RESULTS TO DATE /

2014 Baseline

2015

Results 2016 Results 2017 Goals

2017 Results

YTD 2018 Goals 5 year Goals

2014-2016

Results

Sales Tax $7M

May - Oct +

8%

May - Oct.

+7%

May - Oct

+3%

May - 1%;

June +3.3%

May - Oct.

+3% Overall +15% +15%

DestiMetrics/Occupancy

43% occupancy

May - Oct

May - Oct -

1%

May - Oct.

+5%

May - Oct

+2%

May - Oct.

+.43%

May - Oct.

+2% Overall +10% +6%

Group Occupancy

8,570 room

nights down 15% up 30% up 4% up 6% grow 4% grow 20% +15%

Out of State Overnight

Visits 55% of mix 58% of mix 49% of mix 60% of mix 49% of mix 60% of mix 65% of mix 54%

International Visits 9% of mix 9% of mix 5% of mix 11% of mix 6% of mix 11% of mix 15% of mix 7%

In State Visits 19% of mix 19% of mix 25% of mix 20% of mix 24% of mix 20% of mix 20 - 25% of mix 22%

Consideration NA 55% 55% in 2015 55% in 2015

results in

October 2% increase 5 - 8% increase 55%

Net Promoter Score 75 84 80 83-85

84 mid

summer

(intercept only) 83-84 84-85 82

INSIGHTS & TRENDS

2018 INSIGHTS /

• Net promoter scores (NPS) are strong in general

• Geographic origins remain similar to those observed in past

years

– International is our top out-of-state market (6%)

– Mexico is a top out of state market for first time

• 30% of respondents are on their first visit to Vail

• More direct bookings at the expense of OTA bookings

• 30% of overnight stays are 1 or 2 nights

• Recommendations are cited from friends/family, Google

searches, and review sites and destination sites

2018 INSIGHTS /

Each audience has a unique source of travel inspiration

and influence

Mobile’s influence on travel

continues to grow

Visual information is on the rise and a

key part of all parts of the travelers

decision making process

2018 INSIGHTS /

• 80% of Gen Zs and 74% of Millennials report that social media

influences their shopping habits

• 76% of consumers believe the content

people share is more honest than

advertising

• Millennials are particularly receptive to user-generated content

over traditional marketing

• 54% of female consumers purchased a product/service after

seeing it recommended by an influencer

2018 OPERATING PLAN, STRATEGIES &

BUDGET

• Strengthen Vail’s position as a year-round destination

by unifying the brand message in winter and summer

• Leverage Summer research to increase

consideration

• Focus on core audience while broadening and

increasing relevancy with younger demographic

• Maximize off peak, mid-week and shoulder seasons

• Increase Customer Relationship capacity to maintain

repeat guests and re-engage lapsed guests

2018 STRATEGIES /

• Optimize mix to drive revenue: Percent of Destination, Front Range Overnight and

International (Mexico/Latin American) guests

• NEW - Develop Content Marketing plan to provide new ways to reach consumers

with key Vail messages

• Increase awareness of Vail as a group & meeting destination and to drive quality

leads to the lodging community

• Support EGE flights with targeted and integrated efforts in flight markets

• Leverage summer events and identify new events to build overnight guests and

mid week traffic

2018 STRATEGIES /

• I-70 Vail Underpass will be completed 2017 ski season and will relieve congestion along frontage roads and roundabouts.

• Expanded summer bus service to continue, servicing East Vail, Vail Golf Course and Sandstone neighborhoods

• New accommodations: Hotel Talisa, The Lion, Doubletree Hotel

• New restaurants/retailers

• New/expanded events: Taste of Vail Fall Food & Wine Discovery, Craft Beer Festival

• Continued expansion of Vail Epic Discovery

2018 WHAT’S NEW / SUMMER

BUDGET

Drive

Overnight &

Out-of-state

Visitation

2018 Budget: $3.4 Million ($350,000 REDUCTION YOY)

79%

Destination

FR Overnight

International

Web/CRM/Social

Public Relations

Groups

47%

8% 8%

28%

3% 5%

Digital

Content

Traditional

PR

44%

6%

2%

43%

2018 OVERVIEW / BUDGET

Mkt Production

Branding

Research

21%

Other 5%

2018 VS. 2017 BUDGET COMPARISON

Budget by Category

2018

BUDGET

% of

Budget

2017

Budget

% of

Budget

2018 vs. 2017

%Change

2016

BUDGET

% of

Budget

2018 vs. 2016

%Change

Destination Efforts $ 1,257,348 37% $1,285,500 34% -2% $1,119,000 34% 12%

Front Range $ 222,000 7% $264,000 7% -16% $225,000 7% -1%

International $ 226,552 7% $241,000 6% -6% $220,000 7% 3%

Branding/Production $ 146,000 4% $168,000 4% -13% $110,000 3% 33%

Groups $ 756,375 22% $752,965 20% 0% $702,500 22% 8%

PR $ 85,200 3% $115,000 3% -26% $103,000 3% -17%

Research $ 84,365 2% $136,088 4% -38% $74,000 2% 14%

Photo/Video $ 112,000 3% $185,000 5% -39% $124,000 4% -10%

Web/Email/Social $ 125,200 4% $110,500 3% 13% $101,500 3% 23%

Professional Fees/Admin $ 359,960 11% $366,947 10% -2% $351,460 11% 2%

Event Support $ 25,000 1% $125,000 3% -80% $120,000 4% -79%

TOTALS $ 3,400,000 $3,750,000 -9% $3,250,460 5%

2018 BUDGET SHIFTS

• ADDING:

• New content/influencer strategy

• Vail app maintenance and expansion

• Group PlanIt initiative

• ADJUSTING:

• Savings in professional fees with efficiencies and reduced scopes of work

• Right sizing all addressable TV markets, resulting in the reduction in spend

• Reduction in TV/video productions and asset gathering; focus on capitalizing on

2017 video and photo efforts

• Reduction in research with off-year of Burke Brand research

• Shift Cactus agency fees by maintaining current “For Those Who” creative

platform with refreshed executions showcasing new photography, video and

headlines. Savings will be used to support new initiatives

2018 BUDGET SHIFTS

• ELIMINATING:

• Front Range print - Destination print Official State Vacation Guide participation

(will still maintain presence with Lodging co-op)

• Front Range TV brand messaging (will keep Event TV that includes some

branding)

• Special Event line item – No budget for this 2018 line item because no event has

been identified. Should an opportunity arise, dollars from the fund balance would

be utilized.

QUESTIONS?

THANK YOU!!

APPENDIX

PERSONAS /

Dynamic Families Active Professionals Super Boomers

MEDIA TARGET AUDIENCES / ?DO WE NEED THIS HERE?

National Audience

Dynamic Families Active Professionals Super Boomers

Definition Adults overnight

past summer trip

to CO, UT, NM

National: HHI

$200K+

Adults 35-54 with

children, overnight past

summer trip to CO, UT,

NM

Destination (Houston,

Dallas, Chicago): HHI

$100K+

Denver: HHI $75K+

Adults 25-35 without

children, overnight

past summer trip to

CO, UT, NM

Destination (Houston,

Dallas, Chicago): HHI

$100K+

Denver: HHI $75K+

Adults 55-65,

overnight past trip to

CO, NM, UT

Destination (Houston,

Dallas, Chicago): HHI

$100K+

Denver: HHI $75K+

Dynamic Families Active Professionals Super Boomers

Travel Motivations

- I want to spend lots of time with my family

- I’m looking for a kid-friendly adventure, something the whole family can enjoy

- I hope I can get some time in to just rest and relax

- Adventure and sightseeing are at the top of my list

- I’m not in the office, so it’s time to play

- Vacation is also my break; when I’m not playing, I’m ready to kick back and relax

- Rest and relaxation are my number 1 vacation goals

- I’m ready to get out of the city and spend time in nature

- I plan to do lots of sightseeing

Buying Behavior

- When I find a travel destination/brand I like and trust, I stick to it

- I buy based on quality, not price - I support destinations/brands that

reflect my style - I research a lot and read reviews

before I invest in a trip

- If it’s a travel destination/brand I trust, I’ll buy it even if it’s slightly more expensive

- I support destinations/brands that reflect my style

- I buy based on quality, not price

- I buy based on quality, not price. - If I trust the brand, I’ll buy a

product even if it’s slightly more expensive.

- It’s important to me that salespeople be knowledgeable about the products/brands

TRAVEL MOTIVATIONS AND BUYING BEHAVIOR / ?NEED THIS HERE?

2018 SPEND AND TACTICS BY AUDIENCE OVERVIEW /

Video Display Banner

Social Native Display

Addressable Cable TV

Advanced Linear Cable

OOH

Destination - Dynamic Families

x x x x

Front Range – Dynamic Families

x x x x x

Destination – Super Boomers

x x x x x

Front Range – Super Boomers

x x x x x x

Destination – Act Professionals

x x x

Front Range – Act Professionals

x x x x x

Destination – All audiences Families only

Families only

Families only

Front Range – All audiences

x

2018 DIGITAL MEDIA STRATEGY /

• DIGITAL MEDIA WILL DRIVE DESTINATION INTEREST ACROSS AUDIENCE

SEGMENTS BY BRINGING VAIL TO LIFE ACROSS ENGAGING AND IMMERSIVE

MEDIA EXPERIENCES.

Continued investment in video,

consider new formats such as 360

Expanded use of social media to promote and

support influencer content as well as campaign assets

Introduce native display and content marketing as new

tactics for 2018

2018 VAIL SUMMER SOCIAL, WEB & EMAIL / STRATEGIES

WEB

• Responsive Website Integration

• Leverage new interface & content functionality to present a fully integrated summer web experience, year-round

EMAIL

• Expand and reimagine summer email campaigns with VR learnings and targetability enhancements (messaging beyond the summer preference list)

• Utilize the full breadth of dynamic sending and increased personalization capabilities – Note: Phased innovations & investments from VR

SOCIAL

• Increase focus on Video related postings, supported by investments in “Boosting” content to maximize reach

• Capitalize on the evolving content strategy to maximize reach against a new audience, while improving engagement and loyalty of existing followers

2018 Budget – Proposing a -1.5% reduction in budget gained from operational efficiencies in web/email. Proposing incremental $1.2K investment to support “boosting” campaign to increase reach against new guests.

2018 TRADITIONAL MEDIA / DESTINATION STRATEGY

• Eliminate the OSVG Print buy with the CTO (covered by lodging co-op/PR)

• Right-sizing all markets (Chicago, Houston, Dallas) and personas in addressable TV

and advanced zoned cable

• Extend flight time with no hiatus

2018 Budget Implications: Reduces Traditional media destination budget by 20.8%

2018 TRADITIONAL MEDIA / DESTINATION STRATEGY

• Recommendation: Data Driven TV is the cornerstone of our

recommendation, as we have the ability to target spots as never before

(much like online).

2018 TRADITIONAL MEDIA / FRONT RANGE STRATEGY

• Maintain Out Of Home Summer/Brand messages

• Focus on summer events/lodging/mid-week TV messaging through Addressable

Cable, Advanced Linear Cable

• Add Video on Demand across all personas to increase exposure to coincide with

summer viewing habits

• Include Active Professionals within the Addressable Cable approach

• With high Front Range brand awareness and recognition, remove Brand TV & Print

(Denver Post and 5280)

2018 Budget Implications: By eliminating Brand TV and print messages, we reduce

the budget by 17%

2018 DOMESTIC PUBLIC RELATIONS / STRATEGY

• In-Market Media Visits

• Continue to focus on NYC and Chicago while rotating in a third market

• Continue smaller group activities and one-on-one meetings in the Front Range

• Media Visits

• Mix of individual and group

• Timing focused on early and late summer

• Community Relations

• Continue to grow restaurant, lodging and activity partners

• Media Center

• Enhancements to support new website design

• Drive more visits to and expand content on the summer media center

2018 Budget – cut expenses 12% by eliminating winter cross sell budget and tightening

spending in admin and in-market trips. NOT loosing key tactics. Shifting $16K in

expenses and $7500 in fees to collective content/influencer program.

2018 INTERNATIONAL PUBLIC RELATIONS / STRATEGY

• Mexico

• Continue to refine the Mexico City media mission

• Media Visits

• Explore opportunities to possibly split the group in two to cover early

summer and the Vail Dance Festival – tie with Dance MX

• Panama

• MYPR will not be involved in the Panama mission

2018 Budget – Cut fees by 30% removing Panama.

2018 INTERNATIONAL MARKETING / STRATEGY

DANCE FEST

• Reimagine event format and pulling up a dance master class during the

summer to capture a larger audience of high end families

OPTIMIZING EXISTING EFFORTS :

• Golf - continue Vail Summer presence at top Mexican golf clubs and events all

through the year.

• Camps - Kids camps both day and overnight (through two top companies

dedicated to high end families kids ‘summer programs)

NEW OPPORTUNITIES:

• Running – Host a 10K , triathlon or well-designed race for Mexicans to align

with their personal health goals and training regiment.

2018 Budget – Eliminating efforts against Panama due to limited opportunity, resulting

in a 13% budget decrease (4% net decrease accounting for reallocation to International

PR and still 10% above 2016 levels)

2018 GROUP SALES / STRATEGY

– Convention PlanIt

• ConventionPlanit.com is an advertising distribution channel to increase group

business. Meeting planners have free access to marketplace listings, RFP

sourcing tools, and industry information when they’re buying.

– Event Hosting Fees

• Governor’s Conference on Tourism, Future Business Leaders of America,

Colorado Bar Association, baseball event (tentative), etc

– Industry Group Engagement (expanded presence)

• Destination Colorado, Meeting Planners International (MPI), Colorado Society

of Association Executives (CSAE), American Society of Association

Executives (ASAE), Financial & Insurance Conference Planners (FICP), etc.

2018 Budget – Minor shifts in tactical budget items and addition of

ConventionPlanIt.com (Request for Proposal) tool to increase new lead generation

resulting in a flat budget.

2018 VAIL APP SUPPORT

• Town of Vail database, research interactive map, new lodging platform and guest

service enhancement

Budget Implications: New allocation of $35,000 investment from VLMDAC

RESEARCH / DESTIMETRICS

Same scope of work as 2017

• Reservation Activity Reports

• Daily Occupancy Reports (including mid-month updates)

• Guest Profiler

• Hotel v Condo breakout

• Group v Leisure breakout

• Event overlays (including industry wide)

• Comp set reports

Budget Implications: Flat YOY with same reports

RESEARCH / SUMMER INTERCEPT STUDY

RRC Associates summer guest intercept study

• Short Intercept Study (approximately 1,500)

• Web Follow Up Study (approximately 400)

• Mid-season & end of season reports

Budget Implications: Flat YOY with same reports/scope