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HomeMy WebLinkAboutPSDRCCVA - Increase Airline SvcCITY OF PALM DESERT COMMUNITY SERVICES STAFF REPORT REQUEST: Consideration of a request for funding of the CVA co-op marketing campaign to increase airline service. DATE: January 25, 2007 CONTENT: January Marketing Committee Minutes Recommendation: By Minute Motion: 1) Concur with the recommendation of the Marketing Committee and support the CVA spot marketing campaign in the amount of $50,000; 2) appropriate funds from the Unobligated General Fund to account number 110-4417-414-3221. Executive Summary: The Palm Springs Desert Resorts Convention and Visitors Authority (CVA) recently unveiled its marketing plan which includes details of regional, national, and spot advertising, trade publication advertising, collateral development, and trade show, sales mission, and familiarization trip schedules. Included in the plan is a spot marketing campaign with the long-term objective of growing airline service to the desert resorts. The major strategy to accomplish this task is the development of a cooperative partnership between the CVA, the cities, and the airport. This campaign, to be featured in select markets, is a trial promotion. If it proves to be successful in increasing visitors to the Valley and thereby resulting in additional flights or increased service, the campaign can be expanded to additional markets. The CVA has budgeted $200,000 towards this partnership and is seeking at least five cities' participation and the airport at $50,000 each for a minimum of a $500,000 program. Background: As part of its recently unveiled marketing plan, the CVA proposed a cooperative promotional campaign designed to target four feeder markets with the goal of increasing Toads and eventually airline service to the Valley. Attached please find a detailed description of the spot marketing campaign. The four markets being targeted include Portland, San Francisco, Seattle, and Chicago. The 8-week campaign features radio, magazine, and newspaper advertising and promotions in those areas to increase demand of the desert as a destination. Special packages will be developed to reach particular audiences, such as girlfriend getaways would highlight spas, and golfers would be offered a free second round. American and Alaska airlines are already onboard with support for this campaign. They are offering discounted fares not just for travelers originating in the targeted cities, but from all locations flying into Palm Springs. They have offered their email databases for an e-newsletter and a web splash page announcing and describing the promotion, in addition to offering bonus miles and other incentives to travelers. A detailed description of the airline support also is attached. Recognizing this promotion does not offer city -specific advertising, the benefits of participating include having the opportunity to offer Palm Desert hotels and attractions as part of the promotional package. For example, the Desert Springs JW Marriott, Desert Willow Golf Resort, and the Living Desert can participate in offering special packages as part of the promotion, thereby ensuring the visitors actually stay and play in Palm Desert. Results of this campaign will be measured over the next year by calculating if load capacities on existing flights increase and if over time airline service is expanded. In the past, the City of Palm Desert has contributed funds to the CVA to assist in increasing airline service; however, those funds were paid directly to the airlines without additional benefits. In this proposal, the CVA will place advertising and coordinate promotions in conjunction with the discounts offered by Alaska and American airlines. The Desert Resorts will receive the advertising and promotional benefits from the contributed funds. While the CVA could attempt to develop a spot marketing campaign with its budgeted $200,000, it would be limited to two markets and reach would be narrowed, decreasing the effectiveness of the plan. Staff recommends concurring with the Marketing Committee to support the CVA spot marketing campaign in the amount of $50,000. Funds are not available in the current marketing budget and would need to be appropriated. Submitted By: Kristy Kne ding Marketing Manager Approval: Carlos L. Ort City Manag 7 Sheila R. Gilli• . n Assistant City Manag Paul Gibson Director of Finance :ITY COUNCIL .A APPROVED RECEIVED MEETIW s TE AYES L E'1 ` NOES: xner ABSENT: ABSTAIN: VERIFIED BY: Driginal on CTION: DENIED OTHER LI W1. WI ec6S1 Pity 1 File wCity Clerk's Offir'e PRELIMINARY MINUTES PALM DESERT MARKETING COMMITTEE JANUARY 16,2007 V. NEW BUSINESS A. SELECTION OF COMMITTEE CHAIR AND VICE-CHAIR Norine Bowen moved to, by Minute Motion, appoint Sara O'Flynn as Chairwoman for 2007. Motion was seconded by Mr. Mandelbaum and carried 4-0. Ms. O'Flynn moved to, by Minute Motion, appoint Ms. Bowen as Vice-Chairwoman for 2007. Motion was seconded by Mr. Mandelbaum and carried 4-0. B. PSDRCVA SPOT MARKETING CO-OP REQUEST WOODY PEEK, Vice President Travel Industry Sales 8� Membership with the CVA addressed the Committee. Mr. Peek stated that the objective of the program was to increase the overall long and short-term air service to Palm Springs International Airport. Both the convention and leisure sides of the CVA find it a hindrance in selling the destination when airline service declines during the summer and shoulder periods. The CVA has met with Alaska and American Airlines to develop partnerships to work specifically on developing air service. In the past, there was a program wherein the airlines were paid directly; however, the CVA was not recommending that approach. The CVA would buy print ads, radio time, and some magazines and newspapers to set up promotions in those markets around the time when the airline service begins to decline. The program will begin its first eight-week run for April and May in key markets that the airlines determined were important to them. The CVA contributed $200,000 from its 2007 budget to cover two markets. Those two markets would include flights from Portland and San Francisco serviced by Alaska Airlines. Alaska Airlines would run on-line promotions, discounted fares, and whatever else was needed to drive the appeal of the program. Alaska Airlines would also be giving incentives to its sales representatives for selling the Palm Springs destination and service into that airport. In order to form partnerships with the Valley cities, the CVA was asking that each city contribute $50,000 to help expand the markets. With the additional funds contributed by Valley cities the CVA could promote in the Seattle and Chicago markets. The CVA met with representatives from the Palm Springs Airport and the aforementioned destinations were at the top of the Origin & Destination list. Therefore, those established markets could, through promotion and strengthening, be year round markets for the Valley. Alaska Airlines were receiving new aircraft at the end of 2007, and where they decide to put those flights will be based on what the market is producing. The goal of the CVA would be to increase the yield and load factors so that Alaska Airlines would consider Palm Springs as an expansion market for the new aircraft. Mr. Peek was very happy to report that the vice-president of Alaska Airlines agreed to sit on the CVA's Advisory Council. That decision secured Alaska Airlines commitment to the program. 2 PRELIMINARY MINUTES PALM DESERT MARKETING COMMITTEE JANUARY 16, 2007 Upon question by Ms. Bowen, Mr. Peek responded that there was non-stop service from Portland; however, that service stops during the summer. Upon question by Mr. Mandelbaum, Mr. Peek responded that the CVA was working with established destination airlines, i.e., Alaska and American Airlines. He added that the CVA's program would educate the consumer on destination demand. Ms. Kneiding added that the CVA would run print and radio campaigns in those markets. The difference was that the airlines would not be written a check; the CVA would be controlling the message. Upon question by Ms. Bowen, Mr. Peek responded that Palm Desert was his first presentation. He said he has received a good response from the other cities and there was a certain level of interest. Although he has not received formal commitments, he felt strongly that the CVA would secure four cities. Upon question by Ms. Bowen, Mr. Peek stated that there would be a core group of representatives from each city. That group would make the recommendation to either drop a market or shorten flights if all cities do not participate. He added that the Palm Springs Airport was committed to the program and has contributed its $50,000. Upon question by Mayor Kelly, Mr. Peek responded that cities that contribute to the promotion would be included in the packages developed for the program. Upon question by Ms. O'Flynn, Mr. Peek responded that the measure of success would be the growth of air service and Ioad factor. It would really be based on 18 to 24 months out. Mr. Mandelbaum complemented the program and he believed it would generate long and short-term results. 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