sun valley marketing committee findings

5/3/10

QUO VADIS Sun Valley and Ketchum?

“where are you going”

Sun Valley Ketchum Region MarkeCng CommiEee Interim Report

May 3, 2010

1 SUN VALLEY KETCHUM RESORT AREA MARKETING COMMITTEE

5/3/10

Discussion Topics

•  Background –  CommiEee –  ObjecCves –  Approach –  Economic SituaCon

•  Issues Summary

•  QuesCons and Answers (fact based) –  How are we doing? –  How does that compare to other resorts? –  What role is/did construcCon play? –  What is the contribuCon of second homeowners and visitors? –  Do we have the right product for visitors? –  How easy is it for visitors to get here? –  Are we spending the right amount in the right ways to market?

•  Findings from our work

•  Interim RecommendaCons will be presented at May 3rd meeCng

SUN VALLEY KETCHUM RESORT AREA MARKETING COMMITTEE

5/3/10

Why do we need a MarkeCng CommiEee?

1.  Youngman research suggests markeCng is not achieving desired objecCves

2.  Lots of data, not much analysis or acCon

3.  Freedom from operaConal constraints – MarkeCng ‘R&D’ group

4.  Need for independence, and capacity to facilitate collaboraCon

5.  CollecCng a wide variety of ideas from wide set of consCtuents


5/3/10

CommiEee and Structure

AddiConal consulCng resources added as needed

Jim Knight Chair Jane Fairley Bill Wright

ConsulCng Resource: Bill White

ConsulCng Resource:

Stan Castleton

ConsulCng Resource: Tim Silva

ConsulCng Resource: Sheri

Howell & Cam

Hopkins

Sun Valley Co. Resort management experCse MarkeCng consulCng knowledge

Brand/retail/adverCsing/event experience ConnecCon to young markets

MarkeCng experience Deep business skills

Resort development experCse Deep business skills Deep understanding of Hotel Industry Branding expert


5/3/10

CommiEee and ConsulCng Members

member area residence type years of SV exp. background education

Jim Knight (committee member,

chairman) Sun Valley FT 20+

business CEO, management consultant, experienced in

marketing of commercial products

BS Boston U MBA Tuck

(Dartmouth)

Jane Fairley (committee member) Ketchum PT 10+

Arthur Anderson, Ernst & Young, business management, consulting,

marketing, organizational psychologist

BA, MA Univ. of Melbourne

Bill Wright (committee member) Sun Valley FT 10+ management consulting, marketing

specialist, sporting goods industry AB Stanford

MBA Harvard

Sheri Howell/Cam Hopkins

(consulting member) Ketchum PT (FT) 30+

experts in marketing/advertising, branding, TV industry, music

industry, active skiers with young children

BA U. Of Wash.

Bill White (consulting member) Ketchum PT 3+

Magazine industry, Marketing, Allen & Co, consulting, Banking industry,

strategic business acquisition, internet entrepreneur

BA Yale

Tim Silva (consulting member) Wood River Valley FT 30+

Ski industry, resort management, Resort area marketing, VP Sun

Valley Co.

BA UC Davis MS Utah State

Stan Castleton (consulting member) Park City FT 3+

Resort developer CEO, resort RE, branding expert, resort marketing

expert, Arthur Anderson Consulting in hotel business,

BA, BS, MS Brigham Young

Univ.


5/3/10

Scope of work

•  Sun Valley and Ketchum asked the commiEee to build on the Youngman work and report back with a plan for markeCng SV/K

•  CommiEee has NO vested interested

–  No business interests in the valley

–  100% pro bono work by commiEee and consulCng resources

•  Desire for community to thrive and prosper

•  Create a tent big enough for everyone to live in and want to be part of it


5/3/10

We invested over Cme in an inclusive approach


Define short term and long term objecCves

Clarify project results and Cmeframe

Establish project work plan

IdenCfy what we know and what we need to know

Solicit stakeholder input

• Over 65 Interviews • Email input • ExisCng research

Gather independent perspecCve

• Industry • Other CommuniCes • Industry consultants

Research comparable

communiCes, tax and economic

data

Analysis

Present interim results and “strategic roadmap”

5/3/10

Background

•  Youngman study found local opCon tax (LOT) revenue DOWN 35% in Ketchum and DOWN 23% in Sun Valley

•  LOT is a good surrogate for spending and therefore spending in our community(s) is DOWN 30% in aggregate over last 8 years

•  Suggested ImplicaCons from Youngman study: –  Spending has declined but not all resort communiCes are suffering equally –  Visitors are disproporConately down in our community relaCve to others –  Visitors spend less in our area than other resort communiCes –  MarkeCng effecCveness and budget are less than desirable

•  Many issues are well recognized in the community –  ExternaliCes

•  Economy is terrible •  ConstrucCon and related are down •  Real estate business is suffering •  Resort business is down •  TradiConal Alpine skiing demographic is stagnant

–  K/SV specific issues •  Product open does not meet visitors’ expectaCons •  Brand fractured and confusing •  No high end hotel properCes and too few hot beds •  Lack of consumer brand awareness and recogniCon •  WaiCng for SV Resort to solve the problem


5/3/10

The paCent is ill and we see the symptoms •  PresenCng symptoms-‐

–  LOT is down in Sun Valley and Ketchum –  Overall economic acCvity ($ spend) is below acceptable levels-‐as quanCfied in Youngman study

–  ConstrucCon acCvity is off –  Low occupancy rates

–  Empty store fronts –  Businesses going broke –  Fewer visitors

•  What disease (s) is creaCng these symptoms? –  US economy

–  Are other resort economies in the same trouble? Some resort economies are doing well (Jackson), others not (Vail) –  Has Sun Valley lost market share to other resorts? –  Lack of high quality accommodaCons (hotel/condo)

–  Baby Boomer wave has crested and boomer offspring will not automaCcally replace them –  MarkeCng approach

–  Other factors •  The community has a lot of ideas about what to do-‐examples include:

–  MarkeCng spend

–  MarkeCng efficiency –  Brand Awareness

–  Product offering –  Lodging availability –  Accessibility

•  However, we need to make sure we are spending limited resources (people, $ and Cme) on the highest impact opportuniCes •  To do this we needed to do addiConal diagnosis to clearly idenCfy the disease

–  -‐-‐otherwise we risk placing our limited resources and future in the hands of relying on anecdotes and opinion

…but are we clear on the disease?


5/3/10

SV/K is a special place with many unique strengths facing challenge of building new relevance

Economy •  Strong heritage and a “community” surrounded by natural

beauty •  A deteriorated local economy

•  How much of the downturn is a result of the naConal economy?

•  How does this compare to other resort communiCes?

•  What role has construcCon played in the economic acCvity of the area?

•  Sense of pluralism and special interests overshadowing community cohesion

Product •  Is product suited to target demographics? •  What does the product “brand truth” i.e. what does product

stand for? •  Do we have enough hotel rooms?

•  Are the hotel rooms we have the right kind?

•  What is the relaCve importance of the lodging product?

•  How important is accessibility (air, bus and car)?

•  How important are Ccket prices-‐to full Cme and visitors? •  What is personality of SV/our product?

•  Do we have enough and the right post sport acCviCes and entertainment?


Visitors •  What is our visitor profile (age, income, desired experiences,

etc) ? •  Are we meeCng customers’ expectaCons? •  What is the relaCve spend of visitors, 2nd home owners and full

Cme residents? •  How many visitors come to the area? •  Why do they come or choose not to come? •  What do they spend? •  What is the historical trend?

Marke@ng •  Is there consistency in our markeCng message (image, logos,

etc)? •  How effecCve is our markeCng? •  Do we spend enough on markeCng and is it well spent? •  Do we market an overall SV/K experience or just fragments? •  What is the threshold markeCng budget required to create/

promote/renew/and or redefine as brand such as SV? •  How do we make second homeowners brand evangelists?

Source: 65+ local interviews, Team Analysis

5/3/10

“Prejudices are what fools use for reason” -‐Voltaire

“Just the facts Ma’am; just the facts” — Dragnet’s Joe Friday


5/3/10

Sun Valley/Ketchum Region is suffering worse than the economy in general and other areas

•  US Economy (GDP Q4 2007 TO Q4 2009) down 6.3%

•  Tourism and related acCviCes down ~5%

•  Tourism Employment down >6%

•  Ski oriented resorts down 0%-‐6%

•  Sun Valley/Ketchum Region1 down 20% –  Sun Valley down 18% –  Ketchum down 21%

•  Tourism Spending dropped from a high rate of ~$620B in 2007 to an annualized rate of ~$590B in 2009 (measured in constant $)

•  In 2008 there are 21M Americans with incomes over $100k and they spent $2.1T up from 19M Americans and $1.9T in 2006 of which less than 2% was spend on vacaCon related acCviCes—Source: US Bureau of Labor StaCsCcs

•  Net loss in real spending power in this group

Note 1-‐-‐based on LOT (adjusted to eliminate Ketchum building LOT)

SUN VALLEY KETCHUM RESORT AREA MARKETING COMMITTEE 12

Source: US Government, Youngman study, Team Analysis

5/3/10

Two CiCes

Ketchum Sun Valley SV/K

PopulaCon 3,272 1,466 4738

Median age 43 52 45

Median value of residence $723K $1.1M $840K

Aggregate household income

Per capita income (2008)

$152M

$46K/per capita

$86M

$58k/per capita

238M

$49.5k/per capita

Spending by residents

Per capita spend

$126M

$39K/per capita

$60M

$40K/ per capita

$186M

$40k/per capita

Size of locally taxable economy $136M $40M $176M

Property Taxes $3.4M $3.0M $6.4M

EducaCon 95% HS/52% College 95% HS/60% College 95%/55%

PopulaCon growth (2000-‐2008) 9% 3% 7%

Housing

Total 2,947 Vacant ~ 50%

Owner occupied 865 Renter 710

Total 2,339 Vacant ~75%

owner occupied 465 renter 133

Total 5286 Occupied 2173

Owner 1330 Renter 843

Source: US Government, Zoom data, Gem State Prospector, Team Analysis


5/3/10

30

35

40

45

50

55

60

65

70

75

80

30 32 34 36 38 40 42 44 46

Age affects Brand Image and Sustainability-‐-‐We are 10% older than Aspen and 20+% older than other resorts

45

41

37

36

35

35

34

32

30 35 40 45 50

SV/K (1936)

Aspen (1946)

Park City (1963)

Vail (1962)

Jackson (1963)

Telluride (1972)

Big Sky (1973)

Whistler (1965)


Bringing down the average age will not be easy. Example: If 500 thirty year olds move to town as full Cme residents, the average age will drop by only 1.5 years to 43.5.

Resort Age

PopulaCon Age

SV/K

Aspen

Source: US Government, Team Analysis

5/3/10

CommuniCes differ in size and income


SV/K

Park City

Big Sky

Vail

Aspen

Whistler Telluride

PopulaCon

Hou

seho

ld Size

Source: US Government, Zoom Data, Team Analysis

1.5

1.7

1.9

2.1

2.3

2.5

2.7

2.9

3.1

0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000

Resort Communi@es

Jackson

5/3/10

SV/K resort economy is not as economically diverse as other resorts

5

5.5

6

6.5

7

7.5

8

8.5

9

2000 3000 4000 5000 6000 7000 8000 9000 10000

Economic Diversity

More Diverse

Larger

PopulaCon

Econ

omic diversity Index

SV/K

Aspen

Jackson

Steamboat


5/3/10

SV Company directly represents approx. 13% of the local economy and yet influences much more


Source: US Government, LOT Data, Team Analysis

SV Company (esCmated from LOT)

SV/K (non SV Company)

5/3/10

Ketchum Retail is biggest segment of the local economy and far exceeds lodging


$0

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

$120,000,000

$140,000,000

$160,000,000

2001 2002 2003 2004 2005 2006 2007 2008 2009

total LOT category re

venu

e (200

9$)

year

Ketchum Retail Sales

Ketchum Bldg Material Sales

SV Retail Sales

SV Lodging Sales

And shopping is #1 acCvity pursued by visitors in resorts Source: LOT Data, Team Analysis

5/3/10

ConstrucCon supported 21% of the local economy


….and the loss hurts

0

100,000

200,000

300,000

400,000

500,000

2006/2007 2009/2010

Payroll

Total

ConstrucCon Economy est. scaled from LOT;

79%

Lost to Bldg bust; 21%

Construc@on revenue lost

Source: US Government, LOT data, Team Analysis

Majority of construcCon is one Cme capital investment…

$(000)

5/3/10

Full Cme SV/K residents account for over 35% of the economy


Full Time Residents; 38%

Visitors; 62%

Amount of Local Spending

Full Time Residents

Visitors

Source: LOT Data, Census Data, Team Analysis

5/3/10

Visitors make up over 60% of the SV/K Economy


Full Time Residents; 38%

Visitors without homes in SV/K; 24%

Visitors with property (2nd homeowners);

38%

Full Time Residents

Vistors without homes in SV/K

Visitors with property (2nd homeowners)

Source: LOT data, US Census, county Business PaEerns, Team Analysis

Second home owners represent the same % as full Cme

5/3/10

Where do Visitors come from?

Second Homeowners are highly concentrated in the NW (same is true for visitors) with remainder spread across the country…very liEle foreign ownership


California; 29%

Washington; 20% Idaho; 19%

NY; 3%

Utah; 3%

Oregon; 3%

Florida; 3%

Nevada ; 2%

Other; 18%

Foreign =~1%

Note: Data for Blaine County extrapolated to SV/K

Source: SVKVB, SVE Homeowners, Surveys, Team Analysis

5/3/10

Second Homeowners can make a difference

2nd Home owners spend

today 5% increase

$10M into local economy • Equivalent to bringing in 4000 new visitors


Source: Team Analysis

5/3/10

Do we have the right lodging product for visitors?

•  Big Sky is similar to Sun Valley in # of skier days 400k/yr –  Remote –  Access issues –  Vacant 66% in Big Sky vs. 55% in SV/K –  Similar number of condos but newer in Big Sky –  Similar populaCon size

•  SV/K does not have ski in/out lodgings—others such as Big Sky do and this is acknowledged as criCcal variable in aEracCng high-‐end visitors

•  28 hotels (mostly condos) are listed in SV/K with only one (SV Resort) rated higher than 3 star

•  Majority of SV/K lodging is condos (non rated)

…but over 40% more hotel rooms and 4 star properCes


0

500

1000

1500

2000

2500

3000

SV/K (blue) and Big Sky (red) lodging

Condos

Source: Public InformaCon, Team Analysis

5/3/10

Condos for rent are old and need rejuvenaCon

•  Housing Median Age: 24 years –  1986 is the norm –  70% is more than 20 years old

•  Over supply hinders reinvestment

•  No consistency in quality definiCons

•  Consequence is some visitors have two star experience at a four star price


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

<10 10-‐20 20-‐30 30-‐40 40+

Percen

t of H

ousing

Age

Ketchum and Sun Valley housing

0

500

1000

1500

2000

2500

<10 10-‐20 20-‐30 30-‐40 40+

Num

ber of Units

Source: US Government, SV Chamber, Team Analysis

5/3/10

How easy is it for visitors to get here?


Imagine you live in SeaZle, San Francisco or even Minneapolis let alone Chicago, Dallas or NY

Flights per Days

Or, say you decide to fly to Boise (many flights) and try to get to Sun Valley

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Salt Lake City

Minneapolis Denver SeaEle LA

BOZEMAN

SUN VALLEY

0

2

4

6

8

10

12

BIG SKY/BOZEMAN SUN VALLEY/BOISE

Bus roundtrips/day

Source: Research and Team Analysis

5/3/10

Is SVKCVB spending the right amount on the right acCviCes?


$-‐

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

Source: SVK Chamber

Income

Sun Valley Ketchum Chamber and Visitors Bureau

Spending

5/3/10

New Visitor AcquisiCon Costs

Typical Revenue to community per visitor is

~$2100 1

Number of Visitors* ~55,000 2

Cost to Market (net of MRG, Business Support and Visitor Center)

$900,000 3

Visitors as a result of markeCng 10% 4

MarkeCng driven Visitors

~ 750 5

AcquisiCon Cost per New Visitor (not including Sun

Valley Company)

>$ 1300 5

Notes— 1.  From Visitor surveys 2.  55k is esCmate of total visitors –not family units 3.  From budget 4.  Team esCmate from visitor surveys 5.  CalculaCon Sources: Visitor Research, SVVB 2010 budget, Published Data, Team analysis


5/3/10

The Paradox of Scale and EffecCveness


0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80

Marke@ng Scale and Effec@veness

SV/K

Telluride

Steamboat

Vail

Spend Index

EffecCveness Index

Scale of Spending lags others…by at least $2M/yr

With no increase in $ we need to increase effecCveness by a minimum of 300%

Source: Interviews with Telluride, Steamboat and Vail and Team Analysis

5/3/10

Sun Valley Brand is an Umbrella for many messages

Sun Valley

Retail/Lodging and

Dining Experience

Resort

Experience

AuthenCc Community

Mountain and

Outdoor Experience


5/3/10

Findings


Economy • We are one economy • We are hurCng economically more than the US economy and more than most other resorts • ConstrucCon of second homes and SV faciliCes has masked the underlying economic problems for a long Cme and deluded us • Retail acCvity in Ketchum is extremely important to our economy • We suffer from too much economic concentraCon

Brand • We are an authenCc community first with a resort (not a resort town) • A unique niche/bouCque/special product unlike any other • We have a very small share of the ski market (<1%) and SV/K is not right for everyone—we have to market special aEributes • Brand is confusing, lacks clarity and consistency

Product • Our hotel lodging product has not kept pace, is taEered and needs to be both expanded and revitalized • Condos for rent are in serious over supply, quality is deterioraCng creaCng financial implicaCons for the owners and a need to reinvest

Transport • Tough to get here (but we knew that) • We have failed to maintain adequate local air service • Roughly 30% of visitors come through Boise airport but we lack acceptable transport • Compared to other resorts, may be more percepCon than reality • Other resorts have taken acCon to address this issue and we have not

MarkeCng • We are trapped in a markeCng paradox (scale and effecCveness) • Our markeCng effort is trying to do too many things with too liEle money • We need more resources for a full fledged re launch of the SV “brand” • Visitors are 2/3 of our economy and visitors who own property are 30/35% and can make a big difference • TacCcal markeCng to visitors who own homes is overlooked

5/3/10

Summary


•  We are blessed to have Sun Valley Resort and yet it is unreasonable to ask them to do everything for the community –  We are too caught up in waiCng for the Sun Valley Resort to solve our

problems

–  SubstanCal customer service improvement in last year—happy people make happy customers

•  Everyone’s job is customer service and we all have a role as salespeople for Sun Valley

5/3/10

Nothing will ever be aZempted if all possible objec@ons must first be overcome. -‐ Samuel Johnson


sun valley marketing committee findings

Travel

consulting member ketchumpt3

resort management

resort area marketing

banking industry

tv industry

music ba

consulcng sheri resource

resort developer ceo