Cover Story Selling Serenity With billions of tourists dollars  at stake, state officials are advancing a complex plan for promoting N.C.'s simple pleasures By Heidi Russell Rafferty The next time you drive by a glistening new elementary school, say a silent thank you to the tourism industry. That’s right. Someone who hiked a mountain, shopped in an outlet, collected seashells on the beach or cheered at a NASCAR race has aided the education of North Carolina’s future leaders, as well as a host of other state programs and services. Our state’s blend of beaches, mountains, golf courses, historical sites, speedways and campgrounds, coupled with the down-home Southern culture, cuisine and hospitality of Tar Heels, creates colossal tourist commerce that sustains and strengthens the state, even in the most strained of economic times. Defining the tourism industry is difficult because of the multitude of contributing players. Besides the obvious attractions that generate revenue and jobs, there are other types of businesses that churn through tourism dollars: restaurants, hotels, transportation companies, retailers and even gas stations, to name a few. When combined, the cascading effect is enormous on people who call the state home. In 2003, tourism provided 200,000 jobs and generated $12.6 billion in expenditures — up from $12.4 billion the year before — and resulting in more than $1.1 billion in state and local tax revenue.

The Cape Lookout lighthouse watches over sailboats near historic Beaufort

Learn more: Warm response to Cold Mountain Growing North Carolina's film industry The Linn Cover Viaduct on the Blue Ridge Parkway affords tourists a breathtaking view of the North Carolina mountains.

“It pays for a lot of schools and other services,” says state Commerce Secretary Jim Fain. “This collection of businesses is economically very important, and it’s also important that it’s a clean business. Our strengths are in historical heritage and natural amenities. Tourism also brings people to our state who may decide to come back and start a business and make an investment here. CEOs come here to play golf, and it’s not uncommon for them to look at North Carolina as a place for a branch or facility.”

With such an asset in its coffers, the state is well positioned to add to the momentum tourism has generated in recent years, say industry insiders. But the question begs: What needs to be done to make tourism stronger?

Besides increased state funding for promotional advertising and services, tourism officials say they would like to see more emphasis placed on attracting North Carolinians to their destinations. They also suggest the state pay attention to the infrastructure to make it easier for people to get to tourist hot spots.

In addition, industry workers agree they need to become more unified. Recent efforts to be more collaborative have paid off. Tourism officials are presenting a proposal to the General Assembly this year for an economic incentive program focused on tourism that would reward developers. Gordon Clapp, retired director of the N.C. Division of Tourism, Film and Sports Development, which operates under the Commerce Department, says even more could be accomplished if there were less parochialism.

“We have a beautiful coast, and the visitors will come anyway,” Clapp says. “We have beautiful mountains, and they’ll come anyway. But that’s only true up to a certain point. We’re in competition with regions and the rest of the world for the visitor’s dollar that helps fuel our economy. Since we’re in competition, we need to work more closely together. Otherwise, we’re just going in circles.”


Hurdles to Overcome

Historically, tourism in North Carolina was slow to gain acceptance as a major industry, according to Clapp and others. It wasn’t until the 1980s that people began to take notice of the contribution it was making to the economies of various states and that it gained acceptance as a major driver by those in economic development circles and the state legislature.

“It’s an industry that’s difficult to get your arms around,” Clapp says. “It’s comprised of so many components. It’s not like attracting a factory that’s tangible that someone can relate to. It’s comprised of hotels and airlines and trains and hospitality services and on and on. It was difficult for them (government officials) to understand the value of it, although it provides states with a quick economic return on taxes.”

Even with that, Clapp says, it was difficult to get additional funds allocated to promote and market tourism. As tourism gained more acceptance as a viable industry, there also was a realization that towns and counties and regions of the state needed to work together for the collective whole.

Today, tourism is one of the state’s largest industries. The state has not ranked it against others, because “there is no apples to apples” comparison, says Chris Mackey, tourism program director at the N.C. Division of Tourism, Film and Sports Development. But current Executive Director Lynn Minges notes that in 2003, North Carolina was again the sixth most visited state in the United States, up from eighth place in 2000. “The return on investment is important, and it’s important for us to be in one accord,” Minges says.

The industry profoundly felt the importance of collaboration after 9/11. Yet surprisingly, the number of leisure tourists to North Carolina actually increased from 43 million in 2001 to 44 million in 2002, then exploded to 49.3 million in 2003. The industry had to find a way to reach out to that particular market and sustain itself during the recession that followed.

“Because of North Carolina’s location along the East Coast, we continue to attract an increasing number of visitors that drive on their trips,” Mackey says. “We are close to major metropolitan areas, like Atlanta and Washington, D.C. Visitors were looking to stay close to home and for safe destinations in 2001 and 2002.”

Most experts agree that to continue to gain momentum, the industry needs to overcome two hurdles: to obtain additional state funding to promote tourism in North Carolina, and to find more common ground between geographic factions that are vying for those dollars.

Funding to the division has been maintained at $9.7 million from fiscal years 2001-02 to 2002-03. Surrounding states are significantly ahead of North Carolina in tourism funding, says Steve Miller, executive vice president at The Biltmore Company in Asheville. “When I started working, we were among the top 10 states in terms of funding statewide travel and tourism programs. In 2001-2002, we were down to 21st nationally,” Miller says.

At the same time, advertising dollars spent on tourism have fallen, from $3.2 million in 2001-02 to $2.8 million in 2002-03, fueling more concern among some industry insiders that the state will lose ground.

Some of the state’s critics say tourism has traditionally been a “step child industry.” If the state were to kick in more funding, it would find the return on its investment would be seven-fold, they say.

Pat Corso was president and CEO of Pinehurst Resort for 17 years and was president of the N.C. Travel and Tourism Coalition for 10 years. He charges that tourism “never has had enough support from the legislature or governor” and that “neither has ever picked up on the value of promoting the industry properly and the corresponding impact it would have.”

“People love to travel, but when it comes to the economic contribution to the industry, it doesn’t hit on the Richter scale. Agriculture does. Bio-manufacturing does. But there is a subliminal bias, I think, about tourism,” Corso says. “People see it as a low-wage industry, but that’s not true. In golf, for example, we have better wages on the course in some cases than they do in the mills. We have comparable or better wages than some manufacturers.”

That’s not to say the state’s travel division hasn’t done a yeoman’s job with the funding it has received, says Miller and others. Carol Lohr, executive director of the Crystal Coast Tourism Authority in Morehead City, and Rick Watson, president and CEO of North Carolina’s Northeast Partnership Inc. in Edenton, point out that the division has found a number of ways to stretch the dollars. “The whole travel group has done an excellent job,” Watson says. “I don’t think they can do any better.”

Lohr chairs the North Carolina Travel and Tourism Board, which was set up in statute by the General Assembly more than 10 years ago. The board meets quarterly and the NCCBI president, Phil Kirk, serves on it as required in the law. It advises the division on public policy issues related to tourism.


Bigger Bang for the Buck

The division works in partnership with the primary tourism contacts in each of North Carolina’s 100 counties — either a chamber of commerce or convention and visitors bureau — to market their particular destination or attraction, Minges says. Most of the efforts go toward marketing out of state, because 70 percent of tourists come from other states. There are 10 states east of the Mississippi River that primarily feed into North Carolina’s tourism industry.

The division supplements those efforts with a public relations strategy to work with local media outlets to keep stories fresh about tourist hot spots. The division is running sustaining commercial announcements in partnership with the North Carolina Association of Broadcasters. “We pay them a modest amount, and they give us many times over that in available advertising space,” Minges says. “We don’t control when the commercials run, but we’ve seen a good return on that investment.”

In addition, the North Carolina Outdoor Association has graciously given the division a $1 million campaign on billboards to encourage travel within the state. “They did this after Sept. 11, when we were worried about travel. They came to us with the idea that they would underwrite the cost and development of materials,” Minges says.

The division does research to know the demographics of visitors, she adds. “We know what they read and how they make decisions, how media outlets affect their decisions, what they like and don’t like. We try to determine how far in advance they plan their travel,” Minges says. “We also know why they visit the other states. We know what’s different and unique about those who come to North Carolina.”

The division beefs up its television ads every year with all new spots and runs them in targeted markets east of the Mississippi. It also bought into a program called “Paid for Inquiry TV,” Minges adds. North Carolina’s ads run on major national cable channels nationwide, and the state pays only for inquires that the commercials generate. Those commercials have an 800 number, and the consumer goes into a different call center that gathers information. So far, that campaign has paid off. The state test marketed it last spring and discovered that there were 61,000 inquires in six weeks. “The folks who called followed through and visited here,” Minges says.

Fain says Minges is “the best travel division executive in the country. She is admired by her peers and is both a great leader and manager. She does a great job to lead our team. In an industry that is so diverse, building consensus among the parties is the strength that she has. That’s the reason why our industry is together. That’s the fact,” he says.

He acknowledges that because of budget challenges, the state has “had to work hard to hold the line for expenditures for travel and film,” but that “both the governor and the General Assembly are very supportive, finding creative ways to maintain financial support over time for the division. As circumstances improve, I’m confident they will invest more money,” he says.

He adds that the division’s budget of $10 million exceeds substantially what the administration has committed to the Business and Industry Division. “It’s always been that way. We spend measurably more on supporting the travel industry in implementing programs than we traditionally spend recruiting and supporting traditional industries.”

Fain says that over time, the administration wants to increase tourism’s advertising budget to overcome the effects of inflation. “Also, because if we advertise wisely, we will generate more business and increase that,” he says.

Meanwhile, industry insiders note the importance of working closely together to present a unified voice to the General Assembly and the administration on their monetary needs.

The North Carolina Travel and Tourism Coalition represents many industry organizations to the General Assembly. It formed in 1991-92 and is a primary link between the industry and state government today. Miller says the council was the result of a retreat meeting organized by Corso at Pinehurst, where lawmakers and industry officials gathered to talk about how they could get more accomplished. NCCBI is a charter member of the group and Kirk is a member of the coalition board.

Gerry Hancock of Raleigh is the coalition’s general counsel. He says that unlike in the past, when factions vied for funding and competed mercilessly, groups today do a better job of working together. “It is like a family in some ways,” he says. “There is an element of competitiveness and disagreement, but the core values are cooperative and mutually supportive. People on the coast realize the more people who come here is good for the coast, even if their first stop is the mountains or Pinehurst.”

Industry players also must collaborate to attract visitors to the state as a whole. David Huskins owns Linville Falls Lodge & Cottages in Linville Falls and is a consultant in economic development, governmental affairs and association management. He suggests more partnerships, especially at the regional level. “The state needs to be in front of this kind of strategy,” he says. “Leisure travelers look at a regional destination more than a specific location. They want to know what’s around where they are staying and the variety of experiences and activities they can engage in. By engaging more with the various tourism interests across the state through partnerships — both public and private, we can get a bigger bang for the buck in our promotional and development efforts.”

Chris Cavanaugh, vice president of marketing at the Biltmore Estate in Asheville, says that the various factions around the state will help themselves — and each other — by focusing on the needs and wants of their customers, and less on how much they’re spending on advertising dollars. “Our efforts shouldn’t depend on political divisions that, for the most part, our visitors don’t see,” he says. “It shouldn’t depend upon different parts of the state getting equal mathematical shares. It starts with the customer and delivering a customer-focused benefit.”

Dale Carroll, president and CEO of AdvantageWest North Carolina in Fletcher, notes that the differences can also be seen as strengths, however. “A (marketing) strategy that is effective for coastal North Carolina is a different strategy than what works in western North Carolina,” he says. “I think we need to have a very versatile approach — something that takes into account these different parts of our geography. The one-size-fits-all approach we can’t have when it comes to tourism marketing.”


Developing Emotional Connections

The industry also should recognize that most travel decisions are emotionally-based, Cavanaugh says. People bond with locations and then re-visit them to recreate the memories they created the first time. Cavanaugh speaks publicly on “strategic branding destinations,” which he defines as using an attraction or destination to develop an emotional connection with the customer.

“Travel is one of those great, great categories for developing emotional connections, yet a lot of the time, we fail to recognize that emotional connection or leverage it when we market, not just in North Carolina but everywhere,” Cavanaugh says. “We in the tourism industry are good at promoting the features of places. We can tell you the number of hotel rooms, shopping, restaurants, scenic natural features and historical sites, but we’re lousy at telling potential guests about the benefits of visiting.”

Corso says the emotion felt by tourists starts with North Carolinians and the enthusiasm they have for their home. “If we create that sense of pride in the state among the people, it spills over into other things. It becomes a dynamic that could be very unique,” he says.

Huskins notes that funding for competent market research should be a priority. “Some fresh approaches to branding would be great,” he says. “We used to be branded as the ‘Variety Vacationland,’ a rather powerful description. Today, we are ‘A Better Place to Be.’ ”

It’s especially important for the industry to rethink its entire approach, because competition from other states is becoming more intense. “The competitive situation is only going to get more fierce,” Cavanaugh predicts. “In particular, as states in the Southeast look to replace jobs lost overseas to the closing of textile mills and furniture plants, a lot of communities are going to look more closely at tourism as available and strong economic tool.”

Carroll says there are some instances, however, when it benefits the state to cooperate with others. “We’ve done things to jointly promote the Blue Ridge Parkway, realizing that the parkway starts in Virginia, comes through western North Carolina and is a gateway to eastern Tennessee,” he says, adding that efforts have been co-funded by parties in all three states.

Some also argue that North Carolina’s natural strengths easily set it apart from other destinations. R.V. Owens is owner of R.V.’s Restaurant in Nags Head and former president and chair of the Outer Banks Tourist Authority. He points out that Virginia Beach attracts a different type of traveler than the Outer Banks, as does Myrtle Beach, S.C., from the southern North Carolina beaches.

The Outer Banks have experienced an “explosion,” and although some of that comes from advertising, Owens says advertising is overrated. “Virginia Beach is wall to wall condos. The sun is blocked by the condos.” Owens says. “The beauty is why they come. You just have to figure out not to be the goose that kills the golden egg. You’ve got to make sure that why people come here is why they stay.”

Owens says he would like the state to pay more attention to the road infrastructure rather than tourist advertising dollars. “People travel south to vacation, and infrastructure is the biggest dictator of where they go,” he says. “We’re so isolated, we couldn’t get someone from the closest base — the Triangle — because you have to pack a lunch to get here. Think of what I-40 did to Wrightsville. It exploded it.”

Watson in Edenton agrees, noting that increased advertising will eventually require improved infrastructure. “The four-laning of (Highway) 168 out of Virginia and (Highway) 158 into North Carolina automatically caused people to visit. Since 1987, we’ve gone from 8 million to 12 million visitors to our region,” he says.

Watson adds that today’s traveler is more sophisticated and knowledgeable than in the past. “Years ago, you’d get the map to go to a nice place in Florida and stop off somewhere in Georgia. Now, I don’t know anyone that doesn’t go on the computer and search web sites and know when they get here what they want to do. Infrastructure is more important than advertising,” he says.


Vacationing at Home

Industry officials say there’s another pool of tourists who shouldn’t be overlooked: North Carolinians. About 30 percent of tourists are state residents.

“We don’t want to encourage them to vacation at the beach rather than the mountains, but we can encourage them to come to the North Carolina coast rather than the South Carolina coast or the mountains rather than those in Virginia or Tennessee,” Hancock says.

Huskins says he has advocated funding for an orchestrated campaign for one year to encourage North Carolinians to vacation at home. “Think of what an economic benefit it would be if we could encourage our residents going out of state for a vacation to vacation in our own state,” he says.

Fain cautions, however, that most of the dollar generation comes from “new money,” not from in-state residents. “If you focus on business in North Carolina by North Carolinians, then it’s hard to know if you’re making the pie bigger. What we’re about is making the pie as big as possible,” he says. “We are mindful of making sure that North Carolinians have travel choices and are aware of North Carolina’s treasures, however.”

Meanwhile, Hancock is among those leading the charge on a proposal to the General Assembly that would offer incentives to developers to create tourist attractions in rural or blighted urban areas. Developers would be able to recapture some portion of state sales tax they would otherwise pay if they took on large projects that would affect multiple counties.

“It’s not a lot of money, but it would encourage developers to build in areas where they otherwise would not build. It’s a complicated proposal, but other states have used it with great success,” Hancock says.

As an example, he points to Branson, Mo., a country music locale that has developed in recent years. “If an entrepreneur were to decide to do something of that kind in western North Carolina and was in the process of putting together the capital of a project, we would encourage that with the kind of incentives I’m talking about,” he says. “They would be part of the financial package to put the project together. If the project is successful, it might draw tens or hundreds of millions of economic activity to an area where otherwise that would not happen.”

Fain says the group crafting the proposal came out with a well-thought out approach that will probably be considered this year.

Hancock cautions that the proposal does not mean the state would “throw money at a pie-in-the-sky idea.”

“As we go forward in developing the plan, some types of incentives would not be of interest and others would be. We’re currently working on that. No numbers have been carved out yet,” Hancock says.

Craig Madison, general manager of the Grove Park Inn Resort & Spa in Asheville, says the tax incentive idea is a solution to bringing more “destination drivers” into the state. “It’s giving people new product,” he says. “The industry has never had incentives to do that in the past. That activity is one of the most pressing things a lot of other industry segments and states are doing, like Illinois and Kentucky. We need new products, and we need help.”

Madison and others in the industry are also promoting the self-financing bonds constitutional amendment which will be on the ballot in November. In fact, the Grove Park made the first contribution to the campaign, which is being led by NCCBI. The N.C. Travel and Tourism Coalition and other tourism supporters have also contributed to the campaign to pass the bonds, which are already allowed in 48 states.




Warm Response to Cold Mountain

North Carolina has benefited greatly from the film industry, but folks at AdvantageWest North Carolina have discovered a unique marketing opportunity for a blockbuster Hollywood movie that was not even filmed here.

The state is among the nation’s leaders in filmmaking, according to the U.S. Department of Commerce. In 2002, the last year for which data is available, the state hosted 78 major productions, up from 44 in 2001. That included eight feature films, 23 television episodes of “Dawson’s Creek” and record numbers of commercials and industrial production activity. Some past notable films shot in North Carolina include “The Last of the Mohicans,” “The Fugitive,” “28 Days,” “Forrest Gump,” and “Batman and Robin.”

“Cold Mountain,” a best selling novel by Charles Frazier, is based on the western mountain region during the Civil War. But the movie version was filmed in Romania. The film stars Nicole Kidman, Jude Law and Renee Zellweger.

AdvantageWest North Carolina has been working with MountainSouth USA to book visits with European group tour operators, says CEO Dale Carroll. The marketing campaign teases Europeans to “visit the real Cold Mountain,” Carroll says. “We developed promotional materials, trade show exhibit displays. The artwork looks like a sunset in the movie. It’s been central to what we’re doing,” he says. Recent trade shows were held in Manchester, England; Glasgow, Scotland; and Cork, Ireland.

MountainSouth USA generated additional interest by having a sweepstakes drawing through Delta Vacations at high-end health clubs throughout Europe. “More importantly was all the publicity that surrounded it,” Carroll says. “The BBC ran a TV story on MountainSouth USA and Cold Mountain country. In the press, we had coverage from numerous magazines and newspapers, and it ended up being successful.”

Such ideas promote heritage tourism, which is a growing market segment of the tourist industry, says Gordon Clapp, retired director of the N.C. Division of Tourism, Film and Sports Development. “For example, a county may have one historic church, but when you combine it with all the others in the region, you have a tour,” Clapp says. “The same thing can be done with the gardens of North Carolina, and some of the Civil War trails that are tied to Virginia or the Revolutionary War trails. You can have arts and crafts trails in the mountains. We’re looking at the whole ball of wax and preserving our past.”

Carroll says the Cold Mountain campaign is already seeing positive results. “We’re on the front end of the benefits to be derived,” he says. “We are literally getting specific requests for travel information for western North Carolina to our executive director of MountainSouth. It’s created a higher level of activity with our receptive tourism operator.

“It’s still early, but later this year, we will know the true impact of all the promotion,” he adds. “I’m encouraged by it so far.” -- Heidi Russell Rafferty



Growing North Carolina's Film Industry

By Robert W. Seligson

Film production activities, revenue and jobs have declined in North Carolina during six of the nine past years. In 1993, the state posted an all time high of $504 million in direct spending for all film production. By 2002, this had dropped to $230 million. A study by the Center for Entertainment Industry Data showed that in 1998, 1999, and 2000 Canada’s share of feature film production increased by 124 percent and that the financial subsidies and incentives offered were taking as much as $10 billion worth of production a year from the United States.

A number of states including Louisiana, New Mexico, Oklahoma, Hawaii, Illinois, and recently Georgia and South Carolina, have mounted highly promoted financial incentive programs in an effort to counter those offered by Canada and foreign countries, with varying degrees of success to lure film production to their states.

Since 1980, film production has contributed more than $6.3 billion in direct spending to local economies in North Carolina. The state has hosted more than 600 features, ten network or cable television series and thousands of national TV commercials during the past 23 years. Seventy-five of North Carolina’s 100 counties have hosted feature productions.

In the past, North Carolina has provided the opportunity for many production jobs. The loss of feature production proposes a potential threat to the “permanent” status of North Carolina’s film base crew. North Carolina not only has some of the most qualified film production people in the country, but also has some of the finest filmmaking schools in the country as well. UNC-Wilmington, UNC-Chapel Hill and Duke University have film and documentary study programs, and Winston-Salem has the N.C. School of the Arts School of Filmmaking that is run by the famous Hollywood producer and director Dale Pollock.

The School of Filmmaking recently was recognized for its efforts in contributing to the production of the short film entitled “Two Soldiers” which won an academy award.

North Carolina is educating and training very talented and creative students for the film industry. The right environment must be created to allow North Carolina not just to lure people from other parts of the country to produce films in this state, but also to create an environment that allows people indigenous to the state to produce major motion picture films and television programs in North Carolina as well (especially those who have graduated from North Carolina film schools).

In 1999, Governor Hunt appointed a blue ribbon task force to initiate financial incentives for filmmakers to maintain the state’s competitiveness in the industry. The 2000 General Assembly enacted legislation establishing a film development fund for financial incentives but did not allocate money for such use. The legislation set up an apparatus to provide filmmakers a rebate of up to 15 percent of in-state purchases of goods and services for qualified productions up to a $200,000 per project and a provision prohibiting location fees for filming on state properties. State film incentive programs appear to be in constant change, either by legislative amendment or application. However, in North Carolina, because of our diverse geography as well as highly skilled production personnel, we offer other hidden incentives as well.

In order for North Carolina to become the top film production state in the country, it will require an ongoing commitment by the General Assembly and local communities to develop enhancements that will encourage more film production to come to North Carolina. Film production continues to grow as an industry in this country. North Carolina should capitalize on this opportunity to help create more jobs, inject more capital into the local communities and to showcase North Carolina as the premier state to produce films of all categories.

The N.C. Film Council in concert with the Department of Commerce is currently undertaking an exhaustive study of an incentives proposal to encourage more production in the state. The amount of revenue generated, taxes collected, and money spent in local communities will more than equal any incentive program that is instituted. Members of the Film Council will be working closely with the General Assembly to educate them about these tax incentives.

Robert W. Seligson is chair of the North Carolina Film Council. He also is executive vice president and CEO of the North Carolina Medical Society.


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