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HomeMy WebLinkAbout2019-02-05 MC Special Meeting MinutesAL ESERT SPECIAL MEETING OF THE PALM DESERT MARKETING COMMITTEE MINUTES Tuesday, February 5, 2019 — 3:00 p.m. Administrative Conference Room 73-510 Fred Waring Drive, Palm Desert, CA 92260 I. CALL TO ORDER Rolf Hoehn called the meeting to order at 3:02 p.m. II. ROLL CALL Members Present: Rolf Hoehn, Chair Bruce Nation Jeffrey Norman Ray Rodriguez Erin Scott Members Absent: Franchesca Forrer Staff /Others Present: Thomas Soule, Tourism & Marketing Manager Martin Alvarez, Economic Development Director Barbara Blythe, Tourism & Marketing Specialist Vanessa Mager, Management Analyst Heather Chernicki, Office Specialist 1 Ed Cohen, IdeaPeddler Andrea Foertsch, IdeaPeddler Maggie Montez, Lee & Associates Jan Hulahan, JW Marriott Desert Springs Jane Stanley, Recording Secretary III. ORAL COMMUNICATIONS None. IV. CONSENT CALENDAR A. MINUTES OF THE MEETING OF MAY 22, 2018 Jeffrey Norman moved, by Minute Motion, to approve the minutes of the May 22, 2018, meeting as presented. The motion was seconded by Ray Rodriguez and carried by a 5-0 vote. (AYES: Nation, Norman, Rodriguez, Scott and Hoehn; NOES: None; ABSENT: Forrer) MINUTES SPECIAL MEETING OF THE PALM DESERT MARKETING COMMITTEE February 5, 2019 B. MINUTES OF THE MEETING OF DECEMBER 5, 2017 Jeffrey Norman moved, by Minute Motion, to approve the minutes of the December 5, 2017, meeting as presented. The motion was seconded by Bruce Nation and carried by a 5-0 vote. (AYES: Nation, Norman, Rodriguez, Scott and Hoehn; NOES: None; ABSENT: Forrer) V. NEW BUSINESS A. SELECTION OF CHAIR AND VICE -CHAIR FOR 2019 Jeffrey Norman moved, by Minute Motion, to select Rolf Hoehn as Chair for 2019. The motion was seconded by Bruce Nation and carried by a 4-0-1 vote. (AYES: Nation, Norman, Rodriguez and Scott; NOES: None; ABSENT: Forrer, ABSTAIN: Hoehn) Rolf Hoehn moved, by Minute Motion, to select Franchesca Forrer as Vice -Chair for 2019. The motion was seconded by Ray Rodriguez and carried by a 5-0 vote. (AYES: Nation, Norman, Rodriguez, Scott and Hoehn; NOES: None; ABSENT: Forrer) B. CONSIDERATION OF THE MARKETING COMMITTEE MEETING SCHEDULE Thomas Soule noted that this item was discussed previously but there was not a quorum to have a vote. He would like the Committee to meet more regularly because there is more business to conduct with the new agency and new ad campaign. If approved, the rest of the meetings this year would be in April, June, August, October and December. Ray Rodriguez asked if there would be a meeting in August, to which Mr. Soule replied that the meeting would be cancelled that month if there isn't a quorum. Meetings would still be at 3:00 p.m. the first Tuesday of the meeting month. Erin Scott moved, by Minute Motion, to amend the Marketing Committee Bylaws to reflect that henceforth the Committee will meet on the first Tuesday of every second month of the fiscal year. The motion was seconded by Jeffrey Norman and carried by a 5-0 vote. (AYES: Nation, Norman, Rodriguez, Scott and Hoehn; NOES: None; ABSENT: Forrer) C. PRESENTATION OF PRELIMINARY MARKETING BUDGET (This item was discussed after Item V. D. of the agenda.) Mr. Soule introduced Ed Cohen from IdeaPeddler to discuss the plan for the upcoming year. Mr. Cohen reminded the Committee that IdeaPeddler's strategy was to listen to what is going on, revise the "So Worth It" campaign, which has been done with a gentler tone, and now it's time for research. He and Andrea met with the CVB today and were able to get the research they have done. Combining that with the data Cimin just presented, they will hand that off to their researcher to go do 2 MINUTES SPECIAL MEETING OF THE PALM DESERT MARKETING COMMITTEE February 5, 2019 focus groups. In early spring they will package it together and present it to the Committee. The researcher will also create the creative brief before starting on next year's creative. Around the beginning of summer, they will have two different options that fit where we're headed. The reveal will be towards the end of summer, with photo shooting in November, and deliverables out in January and February. They want to make sure the creative aligns properly and layers with the CVB's dollars where appropriate. Mr. Soule noted that the projected cost is included in the preliminary budget, which is the only addition. Some of the research cost will be covered by extra dollars from this year's budget. The net increase for next year is about $51,000. Everything else will remain pretty much the same. The major shift will be this project for the first half of the year. IdeaPeddler proposed and additional $35,000 for four seasonal photography shoots. There is no funding for market research next year, but there is funding for Arrivalist tracking. Mr. Hoehn asked about ad or concept testing. Mr. Cohen responded that there is no plan for that, but an addendum to the proposal would be for the same researcher to do that. So the new creative would be based on the upfront research and their expertise. Mr. Hoehn said the City should consider doing additional research to confirm the assumptions since so much money is being spent up front. Mr. Cohen said that they want to drill down the CVB's research and see how it affects Palm Desert to prioritize the right assets. Ray Rodriguez was surprised that the golf web page came in lower than restaurants, so he is supportive of doing the research. Erin Scott agreed that the City should spend money where people are best served. Mr. Hoehn added that we can see how Palm Desert fits in or is distinguished from the rest of the Valley. Mr. Cohen stated the goal for next year as far a creative is appropriately layering the media budget to the CVB's budget. The CVB will do the heavy lifting in certain areas, and we will drill down to make conversions to make every dollar move more efficiently, tied to some piece of data. Right now we are setting up the infrastructure with the creative on top. Mr. Hoehn asked the difference between the local co-op and the hotel co-op funds. Mr. Soule answered by saying the hotel co-op funds have a very specific purpose. They are used to help hotels acquire group business during the off- season. There is more leeway in the local co-ops, such as helping someone get an ad in a target market to extend their marketing budget, and it includes the CVB co-ops. 3 MINUTES SPECIAL MEETING OF THE PALM DESERT MARKETING COMMITTEE February 5, 2019 Jeffrey Norman moved, by Minute Motion, to recommend approval of the Preliminary 2019/2020 Marketing Budget to the City Council as presented. The motion was seconded by Erin Scott and carried by a 5-0 vote. (AYES: Nation, Norman, Rodriguez, Scott and Hoehn; NOES: None; ABSENT: Forrer) D. QUARTERLY UPDATE ON AD CAMPAIGN PERFORMANCE BY IDEAPEDDLER (This item was discussed after Item V. B. of the agenda.) Cimin Cohen joined the meeting by phone. Mr. Soule reminded the Committee that the Arrivalist program is now being used to track the effectiveness of the campaign. Cimin will report on the initial batch of data. Cimin stated that the methodology is to pixel an impression from the paid and owned media channels, such as the website, emails and social network. This is the starting point to track. The next point is movement of the person into the City of Palm Desert. If they stay for a period of two hours or more it is counted as an arrival. Starting at the end of October there is an average of 12.2 daily arrivals in October and November, and 18.3 in December. Outbrain was the content seeding partner and they were flooding the market with a lot of impressions to get more clicks. IdeaPeddler has moved to another content seeding partner, which has been much better. Overall, Arrivalist has tracked 15M impressions, 1,260 arrivals, and a .08 arrivals per thousand. Arrivals per thousand means the number of people who arrive based on a thousand points of exposure or impressions. Removing Outbrain's spikes we are at a .21 arrivals per thousand. The benchmark is .09 for a blended look at all categories, so we are greatly exceeding the benchmark. Fifty-one percent of the arrivals were first attributed to an Adara pixel, so it is the most efficient partner. Adara was originally targeting nationwide markets because they wanted to give a wide a range of possibilities for the most likely converter. All other media targeted California. Based on results, Adara has been scaled back to California. Some interesting data is that Seattle, San Francisco and Portland were 9 percent of the impressions but 24 percent of the arrivals, so those are markets to be explored in the future. Our target markets have not yet reached saturation. We are still exceeding the arrivals per thousand benchmark for the drive markets with Los Angeles being the largest percentage. Next was data for the point in the planning process in which consumers engage with different media outlets. For Adara, the days out from arrival time people are engaging with media is much greater than Trip Advisor. Adara is sourcing 98% of the leads 60 to 1 day out from arrival, with 26% being 31 to 60 days out. That means we are more likely converting someone who would not have otherwise traveled to the destination. For Trip Advisor 40% of those reached arrived between 1 to 7 days later, indicating they decided to travel to Palm Desert specifically and are looking for more service -oriented content, such as places to 4 MINUTES SPECIAL MEETING OF THE PALM DESERT MARKETING COMMITTEE February 5, 2019 eat and things to do. Thomas and Cimin have discussed changing some of the creative to have a wide variety of activities for Trip Advisor because they have already made the decision to come here. Mr. Soule added that this is valuable information because he didn't know where people were being hit in the planning funnel. To be much more strategic visitors can be pinpointed, depending on which channel they use. With relatively small numbers, people are not relying on our site for hotel information. Golf, Top 10 Things to Do, Activities and Shopping are website entry points that are converting to arrivals. Mr. Hoehn commented that this is great data. Mr. Soule added that the research assisted in getting out of Outbrain quickly so that funds will not be wasted on useless impressions. With Committee concurrence, the Ad Campaign Update was received and filed. VI. CONTINUED BUSINESS None. VII. OLD BUSINESS None. VIII. REPORTS FROM CITY COUNCIL LIAISONS No report. IX. REPORTS AND REMARKS A. Chair Mr. Hoehn reported that the CVB has had some great accomplishments over the last three years, including a new website that is producing good results. Regarding the Airport Commission, he stated that a record was set last year with 2.3M passengers going in and out of the airport. There are new airlines, services and destinations. The ticketing area will be enlarged and renovated, and will completed next season. Following that, the rental car facility will be expanded and will include a new building and garage so they can move out of the baggage claim area. New chairs will be installed in the Bono concourse. At the Tennis Gardens, the National Pickleball Championship was very successful last October. It was the first of a five-year run at the facility. There were 2,200 participants over 9 days and several thousand matches. The purpose of moving the Championship from Arizona was to build the sport for the participants as well as for spectators. The big event, the BNP Paribas, is in a few weeks. 5 MINUTES SPECIAL MEETING OF THE PALM DESERT MARKETING COMMITTEE February 5, 2019 This Saturday the Dr. George Car Show will be on the east side of the Tennis Gardens campus. Over 1,000 cars are registered. B. Committee Members Erin Scott reported that the new entrance for The Living Desert is open. Attendance is flat year -over -year. WildLights was successful, but there were traffic issues on Portola. Brew At The Zoo is this Saturday and will include food trucks and thirty beer and wine vendors. The annual gala is on March 2. Groundbreaking for the Australia habitat will be after spring break and should be done by the end of the year. Jeffrey Norman reported that the Gerald R. Ford Founders Room has reopened and is absolutely stunning. The Women's Leadership Council recently raised over $285,000 for the education division. The Jersey Boys continue to set records, but the Wizard of Oz did not. There is lots of variety at the McCallum. Ray Rodriguez reported that there are a lot of restaurants in town. The Cafe's expansion is working out well and the Cork Tree is doing well for upscale dining. Bruce Nation reported that Desert Willow has a record several months. They have sold over 1,000 Platinum Cards and have stopped selling them. Average Daily Rate (ADR) for golf is up almost $8.00 over last year. Music and Dining events are selling out and the outing business is ahead of last year. The course is in amazing shape. The new Superintendent has cleaned up a lot of the desert waste areas. C. Staff Martin Alvarez is looking at 2019 as a transformative year. There won't be large construction projects, but several resort/mixed use projects will be coming through the planning process. Four properties on El Paseo will undergo large-scale redevelopment. The 350-room resort hotel, 50 timeshare villas and a large resort surf amenity is under review for the Desert Willow pads. It will take the remainder of this year to get through the planning process. The US Post Office on El Paseo and Portola will be relocating. The City would like to keep them in that corridor. The former Rosewood Hotel project location entitlements have expired and the owner has full control of the site after a legal dispute with the developer. A new developer is interested in the site. X. INFORMATIONAL ITEMS A. Visitor Services Reports Mr. Hoehn noted that the Social Media engagement rates are up. One of the CVB's goals is to focus more on the engagement rate as opposed to the number of impressions. B. Maggie Montez, Lee & Associates 6 MINUTES SPECIAL MEETING OF THE PALM DESERT MARKETING COMMITTEE February 5, 2019 Mr. Soule invited Maggie to update the Committee on her area of expertise. Maggie started by saying she will give an overview of the commercial real estate in Palm Desert. It has been an interesting slog for ten to eleven years. The past three to four years it has been getting continually stronger. There is great news in some sectors and still moving along in others. The different components are industrial, office and retail. The strongest sector is the industrial sector, which has less than a four percent vacancy factor. There isn't much available when there is a five percent vacancy factor. In Palm Desert proper there are about 2.6M square feet of industrial, 103,000 square feet is vacant. It is interesting because no one has built for ten years and there are not a lot of plans to build. The cost to build is high. Until we can get industrial rents to about $1.15 it doesn't make sense to build. Right now we're at about $0.85 - $0.90. Over the next year or two we'll probably see some developers realizing that if they start to entitle projects now by the time they came out of the ground in two years there will probably be a lot of demand. A lot of this is at the Monterey and Dinah Shore area. Most of the vacancy is at Desert Business Park, which is across from the entrance to Del Webb Sun City on Washington Street. This is one of the few areas that has space left. They are big spaces, 5,000 square feet, which doesn't work for the small business. That's the kind of space (small) that we're struggling with. Then there is the office world. Before the recession we had about 500,000 square feet of office built in the Palm Desert/Rancho Mirage area. During the good years that same area absorbed about 50,000 square feet a year. We had financing available, buildings started going up not following the old rule of having to be 50 percent pre - leased. We were leasing at $2.25 per square foot, triple net, and giving maybe $10 per square foot in tenant improvements. That world has changed. We are at a thirteen percent vacancy factor so we have about a 2.6M square feet of office. In Palm Desert that means about 340,000 square feet is vacant. We have also been hit with technology, allowing people to work from home. Real estate companies and banks that used to take 4,000 to 6,000 square feet are now fine with 3,000 square feet. So that complicates things a little more. Our average rent is $1.60 modified gross, which means combining the base rent and triple net. Our base rent before the recession was about $2.25, and we're at about $1.10 - $1.15 now. Spaces stay on the market an average of 12.8 months. Our smart landlords realize that, and when they have a good size tenant who is expiring there are concessions still being thrown in order to keep them. There are a couple of things that have been really good for office in Palm Desert. Eisenhower Hospital has moved all of their administrative services off of their Rancho Mirage campus, and about 90 percent has landed at Point Monterey Business Park, on Monterey near Dinah Shore. With healthcare rules now, the hospital can charge a facilities fee. Every time you go to the doctor's office on campus your bill will contain an $85 facilities fee. That's the reason the hospitals are taking all the administrative off of the campus and filling it all with doctor's offices. Point Monterey Business Park and Village at University Park is the retail center at Cook and Gerald Ford that was a condo project that was built as we collapsed. A number of the buildings sat vacant for a long period of time. A company by the name of AFMA, an insurance company that insures our veterans and their family based out of Reston, 7 MINUTES SPECIAL MEETING OF THE PALM DESERT MARKETING COMMITTEE February 5, 2019 Virginia, came in and bought both the retail project and the office project. They also bought Point Monterey Business Park. They will only buy concrete tilt up buildings because they are long-term holders. The other thing they are able to do that other office landlords aren't able to do is that they don't look at a deal just based on the five- year lease term. For instance, another building they own is Desert Business Park and Las Montanas by the entrance to Del Webb, where an advertising agency is going into the Canyon Bank branch that's been vacant since 2008. It has to be gutted and the vault removed. He has a five-year deal. Asking rents are $1.35 modified gross, and they will do tenant improvement packages at that kind of rent where they're really not making a return in their first five years because they have this long-term hold. For the other office landlords in Palm Desert, that space needs to be absorbed and they need to be off the market. We are close to it; we have two suites left at Village at University Park. We have a total of 6,000 square feet and we're close to getting that filled and off the market. AFMA has been hugely aggressive, purchasing a lot of square footage in Palm Desert. Then there is the retail world — that's the good, bad, and ugly. We have a 7.25 percent vacancy factor, but we have 6.3M square feet of retail, which means we have 460,000 square feet vacant. We've had basically no net absorption in 2018. While we have filled 60,000 square feet over at Desert Crossing with Bob's Furniture and Five Below, Golfsmith vacated the old Home Depot, so we've just had a tradeoff. Our grocery re - anchored neighborhood centers are good and stable. We're at about that five percent healthy vacancy factor and our rents are at or ten percent below what they were in 2008. El Paseo has a number of things going on. Some big retailers are migrating from the west end of the street to The Gardens. We are strengthening the middle of the street, which is good for the east end. We used to do no leasing during the season at all, but for the last two years some retailers are willing to take the risk. We gave them some abated rent for summer, because it they haven't see the whole season, we want to make sure they survive the summer. A container brewpub would like to put a truck container on El Paseo, maybe on the Union Bank site on a pop-up basis during Coachella. This is a trend in San Diego and Berkeley and other cities. This has been a fast overview. Mr. Hoehn asked Mr. Rodriguez about the restaurant world and a sign for "86 Kitchen and Pub" at the Wolfgang Puck site on El Paseo, to which he responded that he heard it's a relatively inexperienced operator that is well financed. He added that he and his colleagues have a concern with the amount of restaurant space. The waits we used to enjoy during the peak periods are gone, which is not good for the operators. Country clubs are doing a much better job of keeping their members on campus. Hotels also do this. Additionally, supermarkets have created deli atmospheres and take-outs. All this has impacted freestanding restaurateurs. It's not an extremely healthy industry. He gets worried that at some point we're going to lose a lot of good people because they will sell and leave. 8 MINUTES SPECIAL MEETING OF THE PALM DESERT MARKETING COMMITTEE February 5, 2019 Ms. Montez added that the Wolfgang Puck location was vacant for a long time because it's expensive and a big space. The Colonnade has small suites, where New Balance and Savory Spice Shop are located. The suites are 1,200 — 1,300 square feet. She was getting $3.25 per square foot plus triple nets, and asking rent is now $2.45. They do the deals for about $2.25. The west end has not incorporated that philosophy. Mr. Rodriguez said his thinking on El Paseo is that you either need something small that you can charge a lot for, or something very small that you can do volume on. Mr. Norman said he gets asks all the time where someone might go for dinner after a show. Responding to a question, Ms. Montez said the most exciting thing is downtown Palm Springs, where they have done a phenomenal job in retail regeneration. The lease for the first Chick-Fil-A was signed this week at another project at Monterey and 1-10 called Monterey Crossing. The River in Rancho Mirage is a big challenge. It was purchased by investors who just wanted to get their visas. They made the mistake of playing tough when things fell apart and not working with the tenants. The grocery business now is Whole Foods/Amazon, and Walmart. No one else is expanding. There are some big entertainment and fun players looking at the Portola interchange, something like bowling or golf. XI. NEXT MEETING DATE — April 2, 2019 XII. ADJOURNMENT With Committee concurrence, the meeting adjourned at 4:26 p.m. Jane Stanley, Recording Secretary 9