2016 Market Analysis

Table of ContentsExecutive Summary4Introduction to Visit Philadelphia5Macro Level Analysis7Political7Economic8Social10Technology12Environmental13Micro Level Analysis14Publics14Marketing Intermediaries15Suppliers15Target Market Analysis16Identification16Demographic16Psychographic18Internal Analysis20Competitor Comparison22SWOT Analysis23Conclusion24Works Cited26

Table of Figures

Figure 17

Figure 29

Figure 39

Figure 417

Figure 518

Figure 622

Figure 723

Executive Summary

The following market analysis report will analyze the current state of Philadelphia’s leisure tourism destination marketing organization, Visit Philadelphia. The analysis will focus on the destination’s major strengths, weaknesses, opportunities, and threats. To determine these factors, this report will provide an external analysis of the organization and destination, focusing on market trends on the macro level, and micro level. From there, the reader will be made aware of Visit Philadelphia’s specific target market, where they come from, and what they seek to get out of a leisure trip to Philadelphia. Once the target market is identified, an internal analysis of the organization will be provided, specifically looking at the destination marketing organization’s key destination competitors who target similar travelers. This will all culminate with a conclusion of the report including a table showing Visit Philadelphia’s strengths, weaknesses, opportunities, and threats side-by-side. We hope you enjoy, and are able to gain insightful knowledge as to the current state of Visit Philadelphia!

Source: Visit Philadelphia

Introduction to Visit Philadelphia

In the mid-1990s, Philadelphia was not much more than a gloomy city plagued by poverty, abandoned buildings, and hopeless faces. Far from a desirable destination, those who had traveled to the city would not stay for long, and those who had never been, had very little desire to change that. Philadelphia’s image was not turning heads, but thanks to a few forward thinking individuals, this was all about to change.

Recognizing the potential in the growth of the region as a travel destination, then-Mayor Ed Rendell, along with Pennsylvania Governor Tom Ridge and CEO of the Pew Charitable Trusts Rebecca Rimel took a gamble on the idea of a destination marketing organization. That gamble was the creation of the Greater Philadelphia Tourism Marketing Corporation, now Visit Philadelphia. The organization started as a three-year experiment to market Philadelphia and its four surrounding counties as a tourism destination. To lead the project, would be the extremely well-regarded civic leader and passionate Philadelphian, Meryl Levitz. Per the Philadelphia Inquirer, the creation was set to fulfill “Philadelphia Tourism’s Golden Promise,” and that is exactly what it did (Edward G. Rendell, 1996).

With monumental success in the first three years of its existence, lawmakers decided to pass a 1 percent increase in hotel tax in 1999 and later increasing that by 1.2 percent, creating a permanent funding source for Visit Philadelphia (Visit Philadelphia, 2016). This opened the door to various marketing campaigns to be carried out in the following years. Visit Philadelphia has since continued to exceed expectations and carry out its mission of in fact getting tourists to, visit Philadelphia.

Visit Philadelphia’s target market is focused on leisure tourism. Regardless if one wants to take a day trip, spend a weekend, or stay for two, Visit Philly can provide them with everything they need to know. Through cultivating a massive following in recent years on various social media outlets, Visit Philly is able to keep pushing its brand to the fingertips of its followers. By doing so, they are constantly entertaining, educating, and inspiring potential tourists to invest in the region.

When a tourist takes a trip to Philadelphia, they inevitably spend money in the city. Their contributions fund local businesses, provide revenue for local hotels and restaurants, and create thousands of jobs in the hospitality industry. In 2015, 41 million people visited Greater Philadelphia, and the leisure and hospitality industry generated over $10 billion in economic impact throughout the region (Visit Philadelphia, 2016). With continued positive results since its inception in 1996, and a consistently growing economic impact, Visit Philadelphia has been building the brand and image of the region. Their efforts not only boost the local economy, but also expand the sense of pride that residents have for their amazing city.

As the current market for destination marketing is developing every day, it is important for Visit Philly to stay ahead of the curve, tracking and adapting to market trends. This will allow the organization to maximize their impact on the local economy, while remaining a front-runner in innovative destination marketing. An analysis of the current market is imperative to Visit Philadelphia’s short-term success and longevity as an organization.

Macro Level Analysis

Political

When analyzing the role that politics has on Visit Philadelphia, it is important to know that 8 percent of Visit Philly’s Funding comes from city hotel tax (Visit Philadelphia, 2016). With that said, Visit Philly’s main business objective is to fill the city’s 11,000+ hotel rooms as often and as effectively as possible, year round (PHLCVB, 2016). Until Philadelphia became the first major city in the U.S. to implement their 8.5 percent hotel tax on Airbnb rentals, Airbnb guests were not being charged the hotel tax for using the service in the city. In July of 2015, a bill was passed unanimously by Philadelphia City Council that deemed any rental under 30 days must include the 8.5 percent hotel tax (Airbnb, 2016). This was huge news for Visit Philadelphia, as that tax generated would go directly toward funding for the organization.

Airbnb’s growth has been incredible since its start in 2009 and continues to impress. In the North American market, Airbnb added 229,000 rooms to its inventory while new hotel rooms only added up to 139,000 (Love, 2016). For Visit Philly, this trend is one to be excited about. With Airbnb guests now paying the hotel tax, they become a huge contributor to Visit Philadelphia’s overall funding.

Figure 1

Source: Visit Philadelphia

Economic

When it comes to leisure travel, the largest factor of whether or not there will be high volume to a destination, is the level of discretionary income individuals have to spend. The simple truth is that in times of economic stability, rising job rates, and growing GDP, travelers will take more trips, stay for longer, and spend more money. To prove this, one can look at the state of travel when the U.S. went through its worst economic recession since the great depression, from 2008 through 2009. According to the U.S. Travel Association’s 2015 U.S. Travel and Tourism Overview, from 2008 to 2009, total domestic and international travel and tourism expenditures in the U.S. decreased a total of -9.4 percent compared to consistent growth in the previous years before the recession (U.S. Travel Association, 2015). This goes to show undoubtedly that when the economy suffers, as does tourism spending.

The reauthorization of Brand USA is positive news for all DMOs across the nation as this entity provides guaranteed tax revenue for each DMO to operate (Keefe & Morris, 2014). Ultimately with more funding, Visit Philadelphia can devote increased marketing efforts towards fulfilling its mission.

However, something that could be severely problematic for Visit Philadelphia is that its target market, the Millennials, are faced with more debt than any other generation prior to it (Pew Research Center, 2014). This could hinder Visit Philadelphia from fulfilling its mission because it has implications that this generation will have minimal, if any, discretionary income to spend on visiting the city let alone spending nights.

With all of that said, Visit Philadelphia needs not to worry. With their target market being domestic travelers, Visit Philly can find promise in the news that 2015 saw a growth in average household income amongst Americans of 4.5 percent. More specifically, the Northeast region of the U.S., Visit Philadelphia’s primary target market, saw an average growth of 3.8 percent in average household income in the same year (United States Census Bureau, 2015).

UNITED STATES

Region and year

Number(thousands)

Median income

Mean income

Currentdollars

2015dollars

Currentdollars

2015dollars

2015

125,819

56,516

56,516

79,263

79,263

2014

124,587

53,657

53,719

75,738

75,825

2013 (39)

123,931

53,585

54,525

75,195

76,513

Source: United States Census Bureau

Figure 2

NORTHEAST

Region and year

Number(thousands)

Median income

Mean income

Currentdollars

2015dollars

Currentdollars

2015dollars

2015

22,347

62,182

62,182

87,011

87,011

2014

22,179

59,210

59,278

83,722

83,818

2013 (39)

22,511

56,868

57,865

82,252

Source: United States Census Bureau

83,694

Figure 3

If this trend continues, Visit Philadelphia can expect to see more travelers looking to spend that extra income that they may not have had the year before. Ultimately, this spending will come full circle and boost the economy, creating more jobs and continuing to earn potential domestic travelers more and more money that they can continue to spend. While domestic travel will continue to benefit Visit Philly from this trend, it may not have the same effect on the international travel market.

With U.S. income on the rise, the U.S. dollar is extremely strong. This is great news for the U.S. traveler, but not so much for the international traveler, as their currency does not have the buying power in the U.S. marketplace. While domestic travel spending increased by 2.7 percent from 2014 to 2015, international spending declined by 2 percent in the same time frame (U.S. Travel Association, 2015). Although Visit Philly focuses their efforts on domestic travel -- specifically regional -- international travel still plays a large part in Philadelphia’s leisure travel market. According to the Philadelphia Convention and Visitor’s Bureau, who focuses on international destination marketing, 79 percent of Philadelphia’s 620,000 international visitors in 2014 were visiting for leisure purposes. The total economic impact of international tourism in 2014 was $954,000,000 (PHLCVB, 2015). These numbers are staggering, and as a destination marketing organization, Visit Philadelphia wants to see them continue to grow. This should not be an issue as long as those making the trip can afford the exchange rate of their native currency with the increasingly powerful U.S. dollar.

Social

As 2017 quickly approaches, the destination marketing industry finds itself having to constantly adapt to the ever-changing trends of society. Philadelphia is at the forefront of welcoming all tourists with open arms. One community that plays a huge role in tourism spending, is the LGBT community. These travelers are looking for destinations which can provide an exciting and comfortable experience where they will not be discriminated upon. Once that destination is determined, the spending power quickly follows. In fact, the LGBT travel market is valued at approximately $200 billion annually (Chesnut, 2015). This means that a destination that can attract this market segment and provide the experiences they are seeking, will certainly be able to cash out on their visitation. Visit Philadelphia was ahead of the game from the beginning of this trend when they became the first destination in the world to create a LGBT specific marketing campaign in 2004 (Visit Philadelphia, 2016). As this market continues to grow and spend more money, Visit Philly will be able to capitalize on their spending power, as one study found Philadelphia to be the 5th most LGBT-friendly city in America (Miller, 2015).

In addition, the generations that are spending money on leisure travel have a significant effect on what Visit Philly should focus their marketing efforts toward in the future. The largest generation in the U.S. is now Millennials (age 18-34) while the second largest is now Baby Boomers (age 51-69) (Fry, 2016). With that said, the spending power, especially for leisure travel, is far higher with the Baby Boomer, as they spend over $120 billion annually on leisure travel (AARP Press Center, 2016). Additionally, Baby Boomers will plan 95 percent of their leisure trips domestically (Patty David, 2015). This is great news for Visit Philadelphia, as they are a primarily domestic travel destination, which favors toward the Baby Boomers’ travel desires.

Millennials on the other hand, planned to take 13 percent of their leisure trips to international destinations in 2016 (AARP Press Center, 2016). And, according to another travel report, 86 percent of Millennial travel to experience a new culture (Price, 2016). This allocentric travel style could pose a threat to Philadelphia as a desirable destination. These individuals may see Philadelphia as just another U.S. city in terms of not offering a new experience and different culture.

Technology

The 21st Century has seen an incredible advancement in technology and in today’s day and age it is impossible to escape. As a destination marketing organization, there is certain technology that enable you to reach your target market and beyond in volumes unimaginable 20 years ago. Social media has been a trend that has played an enormous part in spreading the word about something to millions of individuals in a matter of seconds. This has effected the way people plan their trips and also what they do once they get there. A recent study found that 87 percent of Millennials use Facebook for travel inspiration (Price, 2016). This means that for a destination like Philadelphia, the more people post about it in their social media feeds, the more impressions it will make, and ultimately more people will decide to travel there. Across their social media platforms, Visit Philadelphia has an astounding 1.2 million followers. This means each time they post, they reach at least that many individuals, and even more when those individuals re-post the content (Visit Philadelphia, 2016).

The same effect could very possibly hurt Philadelphia’s image as a destination if negative content is trending on social platforms. As Visit Philly would never post on their own feed anything negative about the city, a third party could always share a negative story. This negative story about the city that goes viral could dissuade potential tourists from choosing Philadelphia as their travel destination.

As technology is continuing to advance, another trend that has emerged is one where travelers are utilizing mobile platforms more frequently as they allow for the flexibility of updating plans at a moment’s notice (Workman, 2014). Visit Philadelphia must be cognizant of this behavior because if the city’s hotels and attractions do not offer mobile platform capabilities, prospective tourists may look to other travel destinations.

Also, Visit Philly relies almost entirely on its official website www.visitphilly.com to communicate what there is to do in Philadelphia for a tourist. Additionally, Visit Philly’s blog, www.uwishunu.com, is updated daily with content covering all events that are going on in the city. These two sources have generated over 100 million web visits since they have been in existence (Visit Philadelphia, 2016).

Environmental

Being that Philadelphia is in the Northeast United States, seasonal weather certainly effects the number of visitors the city sees. In the winter months, as temperatures drop, less tourists travel to the city as they do not want to endure the frigid weather. The city sees a drop in average hotel occupancy to just 60 percent in January, while occupancy peaks in June and October at 84 percent and 85 percent respectively (Visit Philadelphia, 2016). For Visit Philly, this means that they must push marketing campaigns in the winter months to entice tourists to visit the city despite the often undesirable weather.

The Millennial generation values sustainability of the environment. This is crucial for Visit Philadelphia to be aware of because it has identified the Millennials as a segment of its target market. To further emphasize the importance of green initiatives in today’s society, more hotels are finding that environmentally conscious campaigns have become an evaluation factor in guests’ decisions to book a hotel room (Johnson, 2014). This is crucial information for Visit Philadelphia to be aware of because whether or not the hotels in the city have sustainability programs could play a major factor in the amount of room nights sold, thus impacting an aspect of Visit Philadelphia’s mission.

Micro Level Analysis

Publics

Due to the fact that Visit Philadelphia is a non-profit organization, publics play a crucial role in decision making and funding for the organization’s daily operations. The organization is funded by multiple sources that ultimately decide how and to what extent money is allocated within the company. As mentioned in the introduction, a law is in place which designates a percentage of the tax revenue generated from hotel stays in the City of Philadelphia, an 8.5 percent tax in total, to Visit Philadelphia, Philadelphia CVB, and the Pennsylvania Convention Center Authority (Visit Philadelphia, 2016). In return, according to Econsult Solutions, Visit Philadelphia’s marketing efforts generated roughly $612 million dollars in local taxes in 2015 (Cineas, 2016). In addition, for its 20th anniversary, Visit Philly received a $2 million grant from its long-time funding source, Pew Charitable Trusts. This grant was also matched by H.F. Lenfest and Pennsylvania’s Department of Community and Economic Development (Cineas, 2016).

With Visit Philly being a non-profit, the state requires a board of directors to ensure that state-allocated funds are being used properly. The board consists of nineteen individuals from all different influential organizations around the city. These board members evaluate what and how Visit Philly spends their money, and whether or not the return is benefitting the city as a whole. It is Visit Philly’s job to keep the board happy and remain confident that the money they receive will be spent wisely.

Marketing Intermediaries

Considering Visit Philadelphia in itself is a marketing agency, they are essentially their own marketing intermediary. Much of travel planning and choosing a destination is done via internet reviews and research which will inform via statistics and first hand experiences whether a destination is ideal to travel to for a specific individual. With this in mind, Visit Philadelphia relies very much on positive reviews and press about the city to boost interest in the destination. Strong media relations can result in the publishing of positive and compelling content which will result in interest in the destination. This strategy resulted in Visit Philadelphia landing 5,100 editorials in 2014 (Visit Philadelphia, 2016). These editorials showcase what makes Visit Philadelphia, and Philadelphia overall, such a great destination to visit. If Visit Philly can continue to be featured in so many different editorials, they significantly increase their impressions on their target markets, which is hugely important.

Suppliers

As a marketing organization, much of Visit Philadelphia’s goal is to create advertisements that effectively engage the interest of their target market. In turn, this creates interest in the destination, and ultimately if successful, results in the individual making the trip to Philadelphia. The fact of the matter is that the average individual’s attention span is approximately just 8 eight seconds (McSpadden, 2015). This means that while creating an advertisement, the message must be concise and impactful. While Visit Philadelphia’s team creates much of their advertisements and campaigns, they also rely on a third party advertising agency to contribute ideas and help achieve maximum positive impressions from the advertisements. Visit Philly’s advertising partner is an agency called Red Tettemmer. They provide Visit Philly with ideas and strategies to maximize the impact of their marketing campaigns. If the product that is created does not catch the attention of the targeted individual almost immediately, the message will not get across, and the individual will likely not pursue further information on Philadelphia through Visit Philly.

Target Market Analysis

Identification

Being that Visit Philadelphia’s overall mission is to increase visitation to the City of Philadelphia, the markets that they serve are any and all individuals that may be interested in traveling to the city. With that in mind, they are not the only destination marketing organization serving the city. The Philadelphia Convention and Visitors Bureau (CVB) works to achieve the same goal as Visit Philly does; put heads in hotel beds and boost the economic impact of tourism in the city and surrounding counties. The difference between the two organizations though, is that the CVB focuses on business travelers, international travelers, and conventions. This leaves the market segment of leisure travelers to Visit Philadelphia.

Demographic

While all leisure travelers are important to Visit Philly, their focus is attracting leisure travelers from the East Coast within driving distance. The reason for this is because the average length of overnight stays in 2015 in Philadelphia was 2.6 nights and statistics show that 80 percent of visitors drive to the destination (Visit Philadelphia, 2015). Additionally, the largest market for overnight tourism visitors to Philadelphia is New York, NY at 20 percent of total leisure visitation, followed by Philadelphians themselves at 13 percent, and then Washington at 8 percent (Visit Philadelphia, 2015)

Source: Visit Philadelphia

Figure 4

The visitors coming to Philadelphia for overnight stays are an average age of 47 years old and 77 percent are Caucasian, 11 percent African-American, and 6 percent Hispanic. These individuals have a high spending power, with an average household income of $73,000 (Visit Philadelphia, 2015).

With these statistics in mind, it is also tremendously important to consider how Visit Philadelphia breaks its target market down further by focusing on an age demographic, specifically the Millennials. According to the Vice President of Communications for Visit Philadelphia, Paula Butler, when talking about the organization’s strategy she said, “The city itself is 40% millennial, and our office is very much millennial…we kind of go out of our way to not just think about what media we go into but the message that we that will appeal to Millennials” (Oates, 2014). Not only does this indicate that Visit Philadelphia specifically targets the Millennials demographic, but also that there may be a predisposition towards this group due to Visit Philadelphia’s staff being comprised mostly of this age bracket. It is clear that Visit Philadelphia targets Millennial leisure tourists from any part of the globe.

Psychographic

With the City of Philadelphia having so much to offer to its tourists, there is quite the range of activities that visitors will come for. The top five reasons Visit Philadelphia’s target market are traveling to the city for overnight leisure are shopping, visiting museums/galleries, fine dining, historical sight-seeing, and concerts (Visit Philadelphia, 2015). In 2015, day and overnight visitors spent $6.7 billion in the Greater Philadelphia region on various activities, with 26 percent of that money being spend on food and beverage alone (Visit Philadelphia, 2015).

Along with these attractions, as for any destination, potential visitors will analyze the price of hotel rooms, the ease of transportation once in the city, and the overall attractions once they are there. These three factors will generally determine where an individual will decide to take their trip to and if it will make for a financially practical vacation.

Figure 5

Figure 5

Source: Visit Philadelphia

These visitors are also likely interested in the city because they have seen the many accolades the city has been receiving lately. Big news sources such as The New York Times named Philadelphia #3 on “52 Places to Go in 2015.” When potential visitors see a source with credibility such as The New York Times, they immediately want to discover the city for themselves, as it must be worth it. For those living in New York, Philadelphia provides the ideal atmosphere to escape the chaos of New York City, while enjoying all the characteristics they still love about city life, by making the short trip to Philadelphia.

Source: Visit Philadelphia

Internal Analysis

When analyzing Philadelphia’s competitive cities for domestic tourism, one must consider New York, NY, and Washington, DC. These three destinations are all large East Coast metropolitan destinations. While their populations and sizes are certainly different, they all offer similar experiences for a traveler including historic attractions, a bustling central city district, and various hotel options for visitors to choose from.

One factor that sets Philadelphia apart from these two competing destinations, is the Average Daily Rate for a hotel room in the city. Many domestic travelers are conscious of the amount of money they have to spend while visiting a destination. As New York and D.C. certainly have enticing attractions and well regarded reputations, Philadelphia offers the lowest cost per hotel room at $153 per night (Hotels.com, 2015).

Another point of interest of Visit Philadelphia’s target market is the dining scene. As stated in Figure 5, visitors to Philadelphia spent $1.8 billion in 2015 on food and beverages alone. The Philadelphia food scene is growing drastically and earning national recognition among sources such as The Washington Post which named Philly #6 overall in “The 10 Best Food Cities in America…” while their competitors, New York and Washington, D.C., earned spots #8 and #9 respectively (Sietsema, 2015).

Visit Philadelphia is also involved in a number of campaigns, initiatives, and programs that are designed to encourage tourism in Philadelphia. On the Social Media side, Visit Philadelphia runs a total of 15 different platforms to interact with its following (Visit Philadelphia, 2014). These programs, teamed with Visit Philadelphia’s website, www.visitphilly.com, and its blog, www.uwishunu.com, have been considered extremely successful. In 2013, Visit Philadelphia received the Social Media in Travel & Tourism Award (SMITTY) for achieving 45,000 followers on its Twitter account, beating out hundreds of other domestic and international DMOs (Bean, 2013).

Finally, for many visitors, ease of transportation around a city can be a huge factor when visiting a destination, as a tourist needs to easily be able to get from one attraction to another and generally does not want to have a car in the city, as parking can be a nightmare. This is where Philadelphia is at a slight disadvantage to its competitors. Although Philadelphia’s public transit system, SEPTA, ranks #5 amongst major U.S. cities, New York City takes the top spot in public transit ranking, followed by Washington, D.C. at #4 (Klein, 2014). While this does not ruin Philadelphia’s chance of attracting visitors, it could potentially deter them from wanting to see the city if they fear not being able to get from one attraction to another.

Additionally, New York has been recognized for years as America’s top destination city (TripAdvisor, 2016). While Philadelphia makes a strong case for leisure visitation, it is hard to overpower the reputation the New York City has established for itself, being the biggest city in America.

Competitor Comparison

Average Daily Rate per Hotel Room 2015

Ease of Transportation Ranking Amongst all Major U.S. Cities

Top 3 Destination Attractions According to Tripadvisor Ratings

Ranking in The Washington Post’s “Best Food Cities in America”

$153

#5

1. Philadelphia Museum of Art

2. The Barnes Foundation

3. Eastern State Penitentary

#6

$254

#1

1. Central Park

2. The Metropolitan 3. Museum of Art

National 9/11 Memorial & Museum

#8

$162

#4

1. Lincoln Memorial

2. National Gallery of Art

3. Smithsonian National Air and Space Museum

Sources: TripAvisor, Redfin, The Washington Post

#9

Figure 6

SWOT Analysis

Figure 7

Conclusion

Overall, after analyzing the external and internal factors influencing Visit Philadelphia and Philadelphia as a destination, once can see that there are various strengths, weaknesses, opportunities, and threats for the organization.

Visit Philadelphia’s strengths as a tourism destination are correlated to the many factors that make the city a desirable location. Compared to its competitors, the city offers affordable hotel rooms for its overnight leisure visitors and is a convenient distance from its target markets, making the drive to the city an easy task. Once visitors are in the city, they can take advantage of Philadelphia’s incredible dining scene with many cuisine options and a plethora of bars and pubs to grab drinks at. Additionally, as the city continues to develop in positive ways, media publicity will boost the image of the city and persuade visitors to choose Philly as their leisure destination to visit.

On the other hand, Philadelphia will have to continue to fight for the reputation that New York City has always had as the United States’ most popular tourist destination. While this is a weakness for Philadelphia, they are still able to capitalize on the millions of individuals that live in New York and want to take their leisure vacations elsewhere.

As for the opportunities that Visit Philadelphia has on their horizon, perhaps the most promising is that the overall economy is growing in the U.S., and that people are looking to travel more and spend more money. The strength of the U.S. dollar is on the rise, and opportunities to market to specific groups of travelers such as the LGBT community are consistently growing. With the success that Visit Philadelphia has proven to achieve, they can look forward to more government grants to fund their branding of the city as a whole.

Unless factors such as another economic recession or negative media press about the city end up hurting their image, Visit Philadelphia should be able to continue proving why Philadelphia is a must-visit tourism destination. Additionally, Visit Philadelphia will need to continue pushing unique marketing campaigns in the Winter months in order to overcome the seasonal trends of weak travel during cold weather.

To conclude, Visit Philly has been one of the nation’s leading destination marketing organizations for over 20 years. They know how to brand the city in all the right ways, and stay at the forefront of destination marking. The future is bright for Visit Philadelphia, and the tourism spending they bring to the city will continue to boost the economy and fuel their own mission.

Identified Marketing Opportunity

After putting together our SWOT Analysis, and carefully examining all weaknesses and opportunities, it was decided that our main focus would be on Airbnb and the benefits Visit Philly could gain from a partnership. It is no surprise that Airbnb is becoming one of the fastest growing businesses within the Tourism and Hospitality industry. It has become increasingly popular within major cities across the globe, and is one of the primary reasons why Visit Philadelphia should be considering this as a new marketing opportunity.

In order to give a visual to showcase the continued success of Airbnb, here is a table which shows the growth of active properties over a period of 7 years. For the sake of this marketing presentation, all tables and graphs listed throughout will be in reference to only the city of Philadelphia.

Airdna.co 11/16

As it lists above, the popularity has skyrocketed since 2013, and is projected to keep this trend in years to come. The success of this business is due to the large number of millennials who are traveling to different cities for the first time, and are looking for a truly unique experience.

With Airbnb, tourists have the flexibility to choose their exact location to stay, and are not limited to only where hotels are present. In addition, there is the option to rent single rooms, or even entire homes for the desired amount of time. As this service becomes more popular, the reviews of participating renters will become more prevalent, just as hotel reviews are today on websites such as trip advisors. This graph also shows how many of these listing rentals have the highest review ratings.

Another reason why this has become so successful, is that there is so much more flexibility with rates in comparison to surrounding hotels. When it comes to hotels and the rates they are putting out, there is a lot that goes into the cost from an operational standpoint. There is a large amount of overhead that needs to be paid for, and a fraction of the advertised rate is actually collected as profit. Airbnb has a unique advantage in the sense that they can offer extremely low rates for a single room, which would not have even close to the amount of expenses hotels face.

Here is a current listing of the ADR for Airbnb in Philadelphia, followed by a quick google search of the current rates for Center City hotels:

Airdna.co 11/16

Now to compare, we can consider a hotel room to be the equivalent of a private room to 1 bedroom Airbnb space, and there is a significant price savings when choosing Airbnb. In addition to the price savings, there is the added benefit of having more diverse locations to choose from, as mentioned above. There is an amazing opportunity for Visit Philadelphia to promote Airbnb and the many unique neighborhoods that often go unnoticed throughout the city.

This type of exposure to Philadelphia could have snowball effect for when tourists come into the city for the first time. For example, if a millennial traveler utilizes Airbnb in Philadelphia for their first visit, when they return home they could share their experience with friends and family. Now if Airbnb is not for them, they would still have the option to visit the city and stay in a traditional hotel. This would guarantee that Visit Philadelphia is able to cater to all tourist demographics.

Despite this success, DMOs such as Visit Philadelphia are missing out on an amazing partnership which can help both themselves, and Airbnb grow at an even quicker rate. Currently, Visit Philly is missing out on the additional hotel tax revenue that is finally being paid by Airbnb, which was not even happening until 2015. The tax revenue itself is estimated to be around $1 million a year for the state of Pennsylvania. (Sheivachman 2016.)

However, pushback would be expected from partnering hotels to Visit Philly, as they are currently the only ones able to benefit from the DMOs resources. If Visit Philly decides to partner with Airbnb, this creates more competition within the industry, and furthers the exposure that Airbnb is currently getting. It would be up to the marketing team at Visit Philly to promote this as one of the best decisions for the entire city of Philadelphia, and show how the success of Airbnb can lead to their own success as well.

With this partnership, Visit Philly would not have to utilize many additional resources to help promote Airbnb as well. The current promotions that they run with hotel partners, would also apply for Airbnb. For this winter season they are running the “Visit Philly Overnight Hotel Package,” which includes free hotel parking, tickets to Jurassic World: The Exhibition and much more. The Fall 2016 promotion included a wide variety of Philly themed goodies as well including a two-night hotel accommodation, free hotel parking, two Indego bike share passes, coffee coupons, and more. This would only need to change slightly for Airbnb clients, and would be still be extremely valuable for them. Running similar promotions to this throughout the year would be the perfect way to begin to bring Airbnb into the spotlight.

Ultimately, this partnership shows great promise, and can be extremely beneficial to both Visit Philly, and the city of Philadelphia. It is up to the DMO to present this to its current partners, as well as Airbnb, in a way which outlines the positive outcomes to a merger. Airbnb is going to continue to grow with, or without, the partnership of Visit Philly. It would be in their best interest to do what they can in order to take advantage of this quickly evolving industry opportunity.

Works CitedAARP Press Center. (2016, January 12). AARP Reveals How Different Generation Take Their Vacations. AARP The Magazine.Airbnb. (2016). In what ares is Occupancy Tax Collection and Remittance by Airbnb Available? Retrieved from Airbnb: https://www.airbnb.com/help/article/653/in-what-areas-is-occupancy-tax-collection-and-remittance-by-airbnb-availableBean, C. (2013, June 3). GPTMC wins "travel leisure" social media award. Retrieved October 03, 2016, from http://press.visitphilly.com/releases/gptmc-wins-travel-leisure-socChesnut, M. (2015, December 20). LGBT Travel Trends. The Global Traveler, p. 2015.Cineas, F. (2016, September 13). Visit Philadelphia Celebrates 20 Years With Big, $2M Grand. Philadelphia Magazine.Edward G. Rendell, T. J. (1996, May 6). Philadelphia Tourism's Golden Promise The Greater Philadelphia Region Has Failed To Market Itself Aggressively - But That's About To Change. The Philadelphia Inquirer.Fry, R. (2016, April 15). Millennials Overtake Baby Boomers as America's Largest Generation. Pew Research Center.Hotels.com. (2015). Hotels.com Hotel Price Index™ 2015. Retrieved from Travel in the U.S.A.: http://hpi.hotels.com/us-h22015/travel-in-the-u-s-a/Johnson, D. (2014, August 4). Why your hotel should have a carbon offset program. Hospitality Trends. Retrieved from http://www.htrends.com/trends-detail-sid-79116.htmlKeefe, C. & Morris, J. (2014, July 23). Brand USA reauthorization clears senate committee. Press Releases. U.S. Travel Association. Retrieved October 03, 2016, from http://www.ustravel.org/news/press-releases/brand-usa-reauthorization-clears-senate-committeeKlein, J. (2014, January 8). New Ranking of Best U.S. Cities for Public Transit. Redfin.Love, T. (2016, May 24). Airbnb Overtakes Hotel Industry with Red-Hot Growth. San Francisco Business Times.McSpadden, K. (2015, May 14). You Now Have a Shorter Attention Span Than a Goldfish. Time.Miller, C. (2015, May 27). The Top LGBT-Friendly Citites in the U.S. NerdWallet.Oates, G. (2014, January 27). Tourisme Montreal: How DMOs are attracting millennial age meeting planners. Prevue. Retrieved from http://prevuemeetings.com/meetings-and-incentives/tourisme-montreal-dmos-attracting-millennial-age-meeting-planners/Patty David, V. G. (2015, November). AARP Travel Research: 2016 Travel Trends. AARP Research.Pew Research Center. (2014, March 7). Millennials in adulthood. Pew Research Center, 1-5. Retrieved October 03, 2016 from http://www.pewsocialtrends.org/2014/03/07/millennials-in-adulthood/.PHLCVB. (2015). 2015 Annual Report: A year of Progress & Partnership. Philadelphia: PHLCVB.PHLCVB. (2016). Facts & Figures. Retrieved from Discover PHL: http://www.discoverphl.com/meet/choose-philadelphia/facts-and-figures/Price, W. (2016, April 5). Millennial Travel Trends: A Look at the Largest Generations' Habits. Internet Marketing Inc. Sheivachman (2016). Airbnb Guests and Hosts Will Now Pay Pennsylvania's Hotel Tax. Retrieved November 15, 2016, from https://skift.com/2016/06/15/airbnb-guests-and-hosts-will-now-pay-pennsylvanias-hotel-tax/Sietsema, T. (2015, December 21). The 10 Best Food Cities in America, Ranked. The Washington Post.TripAdvisor. (2016). Top 25 Destinations -- United States. Retrieved from TripAdvisor: https://www.tripadvisor.com/TravelersChoice-Destinations-cTop-g191U.S. Travel Association. (2015). U.S. Travel and Tourism Overview. U.S. Travel Association.United States Census Bureau. (2015). Historical Income Tables: Households. Retrieved from United States Census Bureau: http://www.census.gov/data/tables/time-series/demo/income-poverty/historical-income-households.htmlVisit Philadelphia. (2015). 2015 Overnight Leisure. Philadelphia: Visit Philadelphia.Visit Philadelphia. (2016). 2015 Annual Report. Philadelphia : Visit Philadelphia.Visit Philadelphia. (2016). 2016 Annual Report. Philadelphia: Visit Philadelphia.Visit Philadelphia. (2016). 2016 Destination Timelin. Philadelphia: Visit Philadelphia.Visit Philadelphia. (2016). About Visit Philadelphia. Retrieved from Visit Philadelphia: http://www.visitphilly.com/about/sm.0001fjj82mu1hdpqwcm2co7lalhi7#sm.0001fjj82mu1hdpqwcm2co7lalhi7Visit Philadelphia. (2016, September 1). Market Calendar: Q4 2016- Q3 2017 (Oct-Sept). Philadelphia: Visit Philadelphia. Retrieved from Vist Philadelphia.Workman, B. (2014, February 5). The mobile industry is racing to catch up with tourists' and business traveler's mobile habits. Business Insider. Retrieved from http://www.businessinsider.com/the-mobile-travel-industry-is-growing-2-2014

Visit Philadelphia

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

Public transit

Airbnb growth and hotel tax

ADR per hotel room

Dining scene

Driving distance from major target markets

New York City being the most popular U.S. destination

Positive Publicity

Partnerships with ad agencies

Economic recession

Government grants

Strength of U.S. dollar

Growing U.S. economy

U.S. dollar exchange rate

LGBT travel market

Baby Boomer travel market

Millennials traveling internationally

Negative media stories

Winter weather

Visit Philly Funding

Commonwealth GrantsHotel TaxOther Revenue0.58.30000000000000071.2

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