Tourist Development Council ROI Final Report

Tourist Development Council Return on Investment

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Tourist Development Council Return on Investment:

Economic Impacts & Cost-Benefit Analysis Report

by

C1C Jazmin Furtado

C1C Dakotah Hogan

United States Air Force Academy

July 2015

The views expressed in this paper are those of the authors and do not necessarily reflect the

official policy or position of the U.S. Air Force Academy, the U.S. Air Force, the Department of

Defense, or the U.S. Government.


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© United States Air Force Academy (2015)


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Table of Contents

Executive Summary ........................................................................................................................ 4

Introduction .................................................................................................................................... 4

Methodology .................................................................................................................................. 5

The Impact of the Palm Beach County Tourist Development Council ......................................... 5

The Impact of Discover the Palm Beaches .................................................................................... 8

The Impact of the Palm Beach County Cultural Council ............................................................. 10

The Impact of the Palm Beach County Sports Commission ........................................................ 12

The Impact of the Palm Beach County Film & TV Commission .................................................. 14

Analysis Limitations ..................................................................................................................... 15

Future Recommendations............................................................................................................ 16

Appendices ................................................................................................................................... 17

Appendix A ....................................................................................................................... 17

Appendix B........................................................................................................................ 24

Glossary of Terms ......................................................................................................................... 26

Works Cited .................................................................................................................................. 27


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Executive Summary

Palm Beach County (PBC) attracts over 6 million visitors per year, creating more than

$6.8 billion in total economic impact for fiscal year 2014 and making tourism the county’s

second largest industry (PBC TDC Budget). The Tourist Development Council (TDC) is focused

on attracting visitors to the county to occupy hotel rooms. The following study focuses on the

dollars spent by the Tourist Development Council and the relative returns to the community in

terms of direct and total economic impacts. During fiscal year 2014, the TDC spent $16.7

million in total operating costs and generated $185 million in direct and $283.5 million in total

economic impact (PBC TDC Budget). This equates to a return on investment of $11.09 and

$16.97 for direct and total economic impact, respectively. The TDC is also shown to be directly

attributable for 10% of all hotel room nights in Palm Beach County in fiscal year 2014 and

analysis estimates that county hotel occupancy rates would drop approximately 7.7% if the TDC

ceased to exist. Additionally, the four TDC sub agencies can be shown to have attributable and

significant positive impacts to Palm Beach County in other forms outside of economic impacts.

Introduction

The Tourist Development Council (TDC) is a county-level organization focused on

increasing visitation to PBC. The mission of the TDC is to “lead the promotion of tourism in

Palm Beach County by empowering collaborative partnerships, advocating appropriate

designation-defining development, and ensuring steady growth of high-value visitors” (PBC TDC

Budget). The TDC functions as the county head for all tourist development activities in PBC

providing management and oversight of four sub agencies: Discover the Palm Beaches (DPB),

Palm Beach County Cultural Council (Cultural Council), Palm Beach County Sports Commission

(PBCSC), and Palm Beach County Film & TV Commission (FTC) along with their oversight of Palm

Beach County Convention Center (PBCCC) activities, the Environmental Resource Management,

Airlift Relations, and other funding and administration programs.

The TDC and its sub agencies are funded completely through bed tax revenues, which

are generated by a percent tax on any rent, lease, or hotel accommodation that is occupied for

6 months or less in PBC (Local Option Tourist Development Act). In Fiscal Year 2014, the

timeframe in which this report is focused, bed tax rates were 5%; however, the tax rate has

increased to 6% following recent legislation that went into effect in February 2015 (Local

Option Tourist Development Act). A portion of these bed tax revenues are divided among the

four aforementioned sub agencies (DPB, Cultural Council, PBCSC, PBCCC) by the TDC with

remaining funds going to other TDC operations. Specifically, the TDC sub agencies receive three

cents per tax revenue dollar of the 5% bed tax and four cents per tax revenue dollar of the 6%

bed tax, which equates to total sub agency bed tax revenues equal to 3% and 4% for each fiscal

year, respectively. Each sub agency’s operating budget is dependent on its size, function, and

expenditures. While there have been return on investment (ROI) reports rendered by each

agency in the past, there has yet to be a conglomerate report completed for the TDC in general

and its sub agencies.

Due to the recently increased bed tax rate and, thus, increased funding to the TDC, it is

imperative that a study be conducted to establish a standard, cohesive ROI in order to track the


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costs and benefits of TDC organization on PBC. Each sub agency’s performance will be

measured by the number of hotel room nights that can be directly and significantly attributed

solely to each agency while attempting to minimize any overlapping hotel room nights that may

be attributed to multiple agencies. From this analysis, a conservative, lower-bound ROI will be

estimated for each sub agency and the TDC in general. In addition to this, economic impacts of

TDC sub agency efforts will also be included. In effect, through the use of this study, the TDC

and its sub agencies will be able to confidently measure attributable room nights, ROIs,

economic impacts, and model trends over time.

Methodology

Attributable room nights for each organization were calculated using the same basic

analytical approach. Each unique sub agency required its own criteria for directly attributing

room nights. However, after finding these directly attributable room night numbers for three

of the four sub agencies, calculating the ROI was a matter of dividing the total and direct

economic benefit gained due to those rooms by each sub agency’s operating budget. The

overall TDC ROI was calculated using this approach with cumulative attributable room numbers

from each of the four sub agencies.

The TDC’s financial information, bed tax information, Florida Statute, and each sub

agency’s performance measures were obtained from the PBC TDC Fiscal Year 2015 Budget book

as cited. General PBC visitor statistics were derived from studies conducted by business

intelligence teams at DPB for Fiscal Year 2014 cited as “Weibull.” Visitor information from

survey reports published by PMR was taken from their 2013 study. Transient events for the

PBCSC were specified and provided by the agency’s executive director, Mr. George Linley, for

Fiscal Year 2014, cited as “Linley.” FTC lead reports and related materials were obtained from

the FTC December 2014 & Year-End Production Activity Report. Information related to

analyzing and filtering attributable room nights were defined and compiled by the United States

Air Force Academy research team, reviewing data from the sub agencies’ marketing plans,

economic impact studies, activity reports, and performance histories.

The Impact of the Palm Beach County Tourist Development Council

The individual missions of the sub agencies as well as the values presented in this

section will be further explained in subsequent sections. The hotel room nights directly

attributable to the four TDC sub agencies along with any rooms booked by the Palm Beach

County Convention Center (PBCCC) are directly attributable to the TDC organization. However,

hotel room nights from the Cultural Council are not included in attributable rooms to the TDC

because no hotel room nights could directly and significantly be attributed to the Cultural

Council. Instead, the assumption was made that DPBC efforts primarily motivate tourists to visit

PBC and the Cultural Council’s efforts provide secondary, complementary motivators for

tourists to visit the county. Additionally, the Cultural Council may provide incentives for tourists

to stay longer, spend more money, or revisit Palm Beach County in the future; however, with

the data collection procedures in place at this time, this is not quantifiable. Additionally, this

further supports the role of DPB as this organization is intended to market to the general tourist


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whereas the Cultural Council has a more targeted audience. Lastly in support of this

assumption, DPB data indicates that cultural attractions were secondary reasons for visiting

PBC for 18% of tourists (DPBC Collateral Conversion Study). The approach to discount all

possible Cultural Council hotel room nights also followed the conservative approach taken in

this analysis as it avoids double counting visitors that may have been accounted for as being

brought to PBC by both DPB and Cultural Council efforts.

It could also be likely that visitors to PBC on account of the PBCSC could also be double

counted in Cultural Council hotel room nights if athletes, athlete families, or sports fans

attended cultural attractions in the area during their visit. Our assumption further decreased

this possibility of double counting. However, it is unlikely that these athletes, athlete families,

and sports fans are accounted for in any hotel room nights on account of DPB as this

organization’s advertising efforts do not specifically target these groups of people and any

overlap would be negligible. If any DPB and PBCSC hotel room night attribution overlap existed,

it would be for the largest transient events to include the Honda Classic and Winter Equestrian

Festival, which have already been removed from the analysis.

Additionally, FTC attributable room nights would not be accounted for as DPB

attributable room nights as DPB advertising efforts do not target this type of audience. Lastly,

the PBCCC was established and is managed by the TDC and all rooms booked by visitors to

PBCCC are, therefore, directly attributable to the TDC as these visitors would have been unable

to stay at the PBCCC without direct efforts from the TDC. Therefore, the following room night

attributions for the TDC organization are displayed below in Table VII.

Table I

Analysis and Allocation of Room Nights Occupied, FY 2014

Total Room Nights Occupied in PBC 4,200,000 100%

Room Nights Attributable to the TDC:

Discover & Cultural Attributable Room Nights 349,218 8.31%

Sports Commission Attributable Room Nights 69,230 1.65%

Film & TV Commission Attributable Room Nights 10,436 0.25%

Convention Center Room Nights 11,150 0.27%

Total Room Nights Attributable to the TDC 440,034 10.48% (Reference Appendix B and Glossary of Terms for sources and equations)

From these calculations, it is estimated that the TDC is directly and significantly

attributable to 440,034 hotel room nights for fiscal year 2014, representing 10.48% of all

occupied hotel room nights for PBC. After calculating these directly attributable room nights,

analysis can be performed to display the impact of county hotel occupancy without TDC efforts.

As Table VIII on the following page suggests, the quantitative impact that TDC efforts have on

occupancy for PBC is approximately 7.7%.


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Table II

Impact of TDC Activities on Hotel Occupancy Rates in PBC, FY 2014

Total Room Nights Available 5,721,740

Actual Room Nights Occupied 4,200,000

Actual Annual Occupancy 73.40%

Room Nights Attributable to TDC 440,034

Percent of Room Nights Attributable to TDC 10.48%

Occupancy (Less TDC-Attributable Room Nights) 65.71%

Difference in Occupancy Rate without vs. with TDC 7.7% (Reference Appendix B and Glossary of Terms for sources and equations)

Estimating return on investment and economic impact from these generated hotel

rooms requires the assumption that one party occupied one hotel room. This latter assumption

is conservative as previously addressed PMR data findings concluded that, for at least cultural

tourists, each party occupies 1.28 rooms on average. Additionally, it was estimated that each

party spent $421 directly per day with a total economic contribution of $644 when indirect and

induced economic impacts are calculated in fiscal year 2014 (Weibull). When this analysis is

carried out, $185.3 million of direct spending and $283.5 million of total economic impact are

generated from these directly attributable room nights for fiscal year 2014. These two

estimates represent the benefits tourism brings to PBC, but operating costs should also be

calculated to determine a cost-benefit analysis. Table IX below summarizes the actual operating

expenses of the TDC and its sub agencies, which totaled $16.7 million in fiscal year 2014.

Table III

TDC Operating Expenses Summary, FY 2014

TDC Administration &

DPB $10,319,811.00

Cultural Council $4,409,714.00

Sports Commission $1,307,408.00

Film & TV Commission $674,522.00

Total $16,711,455.00 (Reference Appendix B and Glossary of Terms for sources and equations)

All operating costs of the four TDC sub agencies and operating cost of the TDC

organization for overseeing these four sub agencies will be viewed as the total community

investment in the tourism industry whereas the previously calculated economic impacts will

represent the community benefits derived from all TDC operations. From this analysis a return

on investment can be calculated for the TDC at large. This return on investment is calculated on

the following page in Table X. As outlined, the direct economic impact is valued at

approximately $11 to $1 and increases to $17 to $1 when direct and indirect impacts of

visitation are factored into the analysis.

Additionally, effective breakeven hotel room nights are also included in the calculations

below for both direct and total economic impacts. These hotel room nights represent the


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number of hotel room nights needed for a $1 to $1 return on investment for each of the

economic impact categories. For direct economic impact, 39,695 hotel room nights are required

to break even, which equates to 9.02% of all directly attributable rooms to the TDC. Lastly, for

total economic impact, 25,936 rooms are needed, which represents 5.89% of the total rooms

attributable to the TDC.

Table IV

TDC Operation Direct Return on Investment, FY 2014

Direct + Indirect Direct Only

Total Benefit $283,523,795.34 $185,254,447.88

Total Cost $16,711,455.00 $16,711,455.00

Return on Investment $16.97 $11.09

Break-even Hotel Room Nights 25,936 39,695

Break-even as a % of Total Attributable 5.89% 9.02% (Reference Appendix B and Glossary of Terms for sources and equations)

The Impact of Discover the Palm Beaches

The mission of DPB is “to enhance economic activity through increased travel visitation

to Palm Beach County, extending advertising to major cities across the United States and

international markets” (PBC TDC Budget). DPB hosts a wide array of general marketing and

advertising services while also providing research, visitor services, and industry relations to

further their mission. Differing from the other sub agencies, DPB does not advertise to a specific

audience but instead the general tourist and, therefore, is the most prominent source of

advertising for PBC at large.

DPB is a private not-for-profit 501(c)(6) entity that is contracted by PBC to promote and

market PBC as a tourist destination (PBC TDC Budget). DPB is primarily funded through the TDC

organization in the form of bed tax revenues and other sources of funding are negligible. DPB

has the largest operating budget of the four TDC sub organizations receiving 52% of 3% bed tax

allocation in fiscal year 2014 and is currently allotted 48% of the 4% bed tax (PBC TDC Budget).

The agency has measured its performance through a multitude of components including

database increases, ad inquiries, unique website visitors, booked room nights through their

agency, and press coverage. To help formulate a return on investment for DPB, these

performance measures could be grouped into two categories: marketing/advertising efforts

and directly booked hotel room nights to PBC hotels to include hotel room nights at the PBCCC.

In order to attribute hotel rooms to DPB, the room nights generated by these two categories

will be quantified.

The first step in estimating ROI for DPB is determining the potential tourists visiting PBC

that can be attributed to DPB marketing and advertising efforts. This question has been met by

a host of studies exploring advertising’s impact on tourism. The Colorado experience, a

common case study, suggests that when all destination travel advertising is stopped, tourism

can decline significantly. Between 1993 and 1997, Colorado stopped all destination travel

advertising, and although many states during this period experienced declines in visitation,


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Colorado experienced at least double those rates with a 7.7% decline in visitation (Public

Tourism Promotion ROI). Another economic impact study, conducted by the Las Vegas

Convention and Visitors Authority in 2009 used a mid-point value of 5.8 % impact on visitation,

signifying that advertising efforts add 5.8% to actual visitation (LVCVA Return on Investment).

Because Las Vegas is such a prominent city advertised by numerous other sources, this 5.8% is

conservative when applied to an organization with a more substantial presence in a smaller

economy, as it is with the TDC in PBC. Therefore, DPB can conservatively attribute 5.8% of the

total room nights sold in the county less the room nights that can be directly attributed to the

other sub agencies and less the booked room nights for PBCC and Hotel, which will be discussed

further in the next paragraph. This totals approximately 4 million hotel room nights (DPB

Marketing and Sales Plan 2014-2015).

DPB reported booked room nights for the purpose of conventions and conferences in

hotels and PBCCC are assumed to be independent of any advertising efforts included in the

aforementioned 5.8% because they are direct bookings by DPB. It is to be noted that these

booked room nights are not a reflection of the actual room night count that results from these

bookings and may be a source of inflation. The hotel room nights that are recorded are booked

during that fiscal year but are ultimately tentative and may not necessarily be filled during the

year that the rooms are booked. These booked rooms are also not equivalent to actual rooms

because they are not exempt from cancellation. In response to this, DPB added a new

performance measure for fiscal year 2016 for actual room nights from these bookings. This

performance measure will be added to the rooms from DPB advertising efforts in the future.

However, currently the best estimation of rooms that DPB has directly contributed other than

advertising is the reported hotel bookings. These rooms in conjunction with the rooms from

DPB marketing efforts minimize any possible double counting amongst all of the sub agency’s

performance measures and cover the majority of unique visitors to attribute rooms to the

agency. The total attributable room breakdown is shown in Table I below.

Table V

DPB Hotel Room Night Breakdown, FY 2014

5.8% of Total Possibly Attributable to PBC 231,505

Booked Room Nights for PBCCC and Hotels 117,713

Total Attributable Hotel Room Nights 349,218

(For PBCCC and Hotel Booked Room Nights, reference PBC DPB Budget)

According to studies done by DPB Business Development Team, the direct spending per

party in PBC per day is $421 in fiscal year 2014 (Weibull). Assuming conservatively that one

party occupies one room per day to the total attributable room night number results in $147

million of direct economic impact. Extending this calculation to include indirect economic

impact, DPB contributes a total economic impact of $225 million. These two metrics result in a

$14 to $1 and $22 to $1 return on investment for direct and total economic impacts,

respectively.


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Breakeven hotel room nights can be calculated to provide estimates of the number of

hotel room nights that would be required for PBC to breakeven on their investment, in the form

of funding to the DPB, direct spending generation, and total economic impact. From this

approach, DPB need only attribute 17,461 (5%) and 24,445 (7%) of their 349,218 directly

attributable hotel room nights to breakeven on their operating expenditures for direct and total

economic impacts, respectively, for Fiscal Year 2014. This suggests that the hotel room nights

directly attributed from DPB efforts is enough to greatly surpass the number of hotel room

nights required to breakeven. Table II on the following page details this summary of findings.

Table VI

DPB Return on Investment, FY 2014

Direct + Indirect Direct

Total Benefit $225,009,047.87 $147,020,911.88

Total Cost $ 10,319,811.00 $ 10,319,811.00

ROI $21.80 to $1 $14.25 to $1

Break Even # of Hotel Room Nights 16,017 24,513

Break Even as a % of Total 4.59% 7.02%

(Reference Appendix B and Glossary of Terms for sources and equations)

In sum, DPB proves its success in its high return on investment ratio. With such a large

audience to advertise to, and a significant amount of funds invested in advertising and

marketing, it would only follow that visitation continues to increase. This ratio may experience

a decrease as a result of diminishing marginal returns with the substantial increase in next

year’s budget.

The Impact of the Palm Beach County Cultural Council

The mission of the Cultural Council of PBC is to “enhance the quality of life and

economic growth of the community by creating a cultural destination through support,

education, and promotion of arts and culture” (PBC TDC Budget). By partnering with and

providing grants to local, established cultural venues in PBC, distributing a variety of

publications to include their magazine Art & Culture to past and potential visitors of the county,

promoting their own advertising and social media campaigns through public relations efforts

and their website, along with a variety of other efforts, the Cultural Council attracts visitors to

PBC. As a county entity, the Cultural Council is also responsible for distributing Category B

grants to major cultural organizations and Category CII grants to mid-size cultural organizations

in the county, which assist these organizations in attracting tourists to the area through

advertisement and artist reimbursement.


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The Cultural Council is a not-for-profit corporation 501(c)(3) that is contracted by PBC

to promote and market the county as a major art and cultural tourist destination (PBC TDC

Budget). The Cultural Council receives approximately 40% of their funding through the TDC that

has allotted 22.51% of the 3% bed tax in 2014 and currently allots 20.72% of the 4% bed tax to

the Cultural Council (PBC TDC Budget). The remaining funds are sourced from private entities to

include individuals, foundations, corporations, and events.

Due to limited data availability and analysis techniques, hotel room nights could not be

directly and significantly attributed to the Cultural Council. In other words, there is not a

quantitative method to distinguish if a tourist visited PBC principally on account of efforts by

Cultural Council or if a tourist visited PBC primarily from marketing efforts from a specific

cultural organization, marketing efforts from other TDC organizations, namely DPB, or from a

variety of other factors. Instead, an estimated amount of possible hotel room nights that could

be attributed to the Cultural Council were calculated and analyzed to estimate if the Cultural

Council at least breaks even on their operating expenditures in two different categories.

Major Category B cultural organizations will estimate a total annual audience size. From

these reported annual audience sizes, it is estimated that 12% of attendees stay in a hotel from

research performed by Profile Marketing Research (PMR) for the Cultural Council in February

2013 (Profile Marketing Research 2013), which is consistent with the same study conducted in

2011 by PMR (Profile Marketing Research 2011). It was assumed that an entire party visited a

cultural event, and thus, the total number of attendees staying in a hotel was adjusted with the

average people per party, as assumed by the LVCVA study to be 2.1 people, to estimate the

number of parties that attended these cultural organizations (LVCVA Return on Investment). It

was then assumed that each party spent an average of 5.55 hotel room nights per visit (Profile

Marketing Research 2013) and occupied one room per party. This latter assumption is

conservative as the 2013 PMR study estimated that each party occupied 1.28 rooms per visit.

Lastly, it was assumed that each party attended only one Category B cultural event in the span

of their trip; therefore, double counting of parties is likely to be present in this analysis.

However, it should be noted that only audience estimations could be collected from Category B

cultural organizations, and therefore, our estimates discount all attendees to Category CII

grantee organizations or other events where it would be infeasible to estimate audience sizes.

Table III below summarizes these hotel room night calculations for fiscal year 2014.

Table VII

Calculation of Total Category B Grantee Room Nights, FY 2014

Sum of visitors to Category B cultural organizations* 2,984,822

x Percent of attendees staying in a hotel 12%

÷ Number of people per party 2.1

x Average number of hotel room nights per party 5.44

Number of Hotel Nights = 946,615 *Supplied by the Cultural Council


In addition to these hotel room nights, the Category B and Category CII organizations

also track hotel room nights booked by all performers and their respective staff if these artists


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are affiliated with some event at the cultural organization. As it is also unclear as to if these

room nights can be directly and significantly attributed to the Cultural Council, these actual

direct room nights, which totaled 13,489 in fiscal year 2014, were also added to the total

possible rooms that could be attributable to the Cultural Council. In total, it is estimated the

960,104 room nights could possibly be attributed to the Cultural Council for fiscal year 2014.

Cultural Council hotel room night analysis was limited because the Cultural Council

could not be shown to be directly and significantly responsible for any hotel room nights.

Therefore, breakeven room nights were mainly analyzed to provide estimates of the number of

hotel room nights that would be required for the county to breakeven on their investment, in

the form of funding to the Cultural Council, for direct and total economic impact. Table IV

estimates for the breakeven hotel rooms for both of these categories and calculates the

percent of these breakeven rooms in comparison to the total number of hotel rooms likely

attributable to the Cultural Council.

Table VIII

Breakeven Hotel Room Nights, FY 2014

Direct Spending 10,474 1.09%

Total Economic Impact 6,844 0.71% (Reference Appendix B and Glossary of Terms for sources and equations)

From these estimates, it is apparent that the Cultural Council need be responsible for a

very small percentage of the conservatively estimated possible hotel room nights. Thus, it can

be reasonably stated that the PBC is at least breaking even on their investment in the Cultural

Council in terms of direct and total economic impact if not greatly exceeding these breakeven

points.

The Impact of the Palm Beach County Sports Commission

The mission of the PBCSC is to “attract sporting events and other sports-related

activities to Palm Beach County…to maximize the positive economic impact of these events and

activities...and to utilize the events and activities to promote the image of PBC as a tourist

destination…” (PBC TDC Budget). PBCSC boasts a variety of services to achieve this mission

statement to include event planning, assisting events on-site, bidding on and seeking out

sporting events to host in PBC, marketing PBC as a sporting event and vacation destination,

seeking out the use and construction of county sports facilities, and a variety of other services.

However, as a county entity, the PBCSC uses grants to both incentivize and support sporting

events to come to and stay in PBC. Additionally, these grants are used to drive the success of

several sporting events. Through these efforts, PBCSC successfully brings players and their

families along with sports fans to PBC for both sporting and leisure purposes.

PBCSC is a non-profit 501(c)(4) agency that is contracted by PBC to promote and market

the county as a major sports tourism destination (PBC TDC Budget). PBCSC receives the

majority of their funding through the TDC that has allotted 7% of the 3% bed tax in 2014 and

currently allots 8.16% of the 4% bed tax to PBCSC (PBC TDC Budget). A small amount of their

funding is sourced from other events but is negligible to their overall expenditures.


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In order to directly and significantly attribute hotel room nights to the PBCSC, only hotel

room nights from transient sporting events were included in this conservative analysis. These

events were determined to be greatly incentivized to come to or stay in PBC or would not

successfully operate in PBC without significant PBCSC assistance. In addition to this, major

transient sporting events to include the Winter Equestrian Festival, Honda Classic, and Major

League Baseball Spring Training were not included in our analysis because these events were

deemed to be too large and integrated into PBC to easily vacate although it is realized that

great efforts on account of PBCSC may have motivated these sporting events to come to or stay

in PBC in the past. Because all athletes, families, and sporting events fans travel to and stay in

PBC mainly due to transient sporting events all hotel room nights associated transient sporting

events can be directly and significantly attributable to PBCSC. It is realized that more hotel

room nights could be attributable to PBCSC efforts; however, quantitative analysis limitations

coupled with a conservative approach led to these directly attributable room night conclusions.

In fiscal year 2014, PBCSC supported 100 transient events of the 128 total supported

sporting events. These events resulted in 69,230 hotel room nights (Linley). Assuming one party

occupies one room per day and total direct spending per party per day is estimated to be $421,

these hotel room nights result in $29.1 million of total attributable direct spending in fiscal year

2014 (Weibull). Extending this calculation to include indirect economic impacts, PBCSC

contributes a total economic impact of $44.6 million. These estimates result in a return on

investment of $22.29 and $34.12 for direct and total economic impact, respectively.

Additionally breakeven room nights can be calculated to provide estimates of the number of

hotel room nights that would be required for the county to breakeven on their investment, in

the form of funding to the PBCSC along with direct and total economic impacts. Table V below

summarizes the above calculations and estimates the breakeven hotel rooms for each of these

categories while also calculating the percent of these breakeven rooms to the total number of

directly attributable rooms to PBCSC.

Table IX

PBCSC Return on Investment, FY 2014


Total Benefit $44,606,412.61 $29,145,830.00

Total Cost $ 1,307,408.00 $ 1,307,408.00

ROI $34.12 to $1 $22.29 to $1

Break Even # of Rooms 2,029 3,105

Break Even as a % of Total 2.93% 1.74%


In conclusion, even with a very conservative amount of directly and significantly

attributable hotel room nights along with their relatively small target audience and operating


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budget in comparison to DPBC, PBCSC boasts a noteworthy return on investment and

effectively distinguishes themselves as an important contributor of hotel room nights to PBC.

The Impact of the Palm Beach County Film & TV Commission

The mission of the FTC is to promote business tourism and the PBC economy through

“the growth of the film, television, digital media, and still photography industry by attracting

on-location production, educating our local workforce and providing superior services to both

the visiting and the indigenous production community” (PBC TDC Budget). In support of this,

the FTC provides a range of services to include exposure for production projects in the county,

incentivizing and assisting potential production companies to film and photograph in PBC,

issuing permits for filming in PBC, and assisting production companies in finding set locations

within PBC.

FTC is a non-profit 501(c)(6) organization that receives the majority of their funding

through the TDC that has allotted 3.92% of the 3% bed tax in 2014 and currently allots 4.31% of

the 4% bed tax to FTC (PBC TDC Budget). A small amount of their funding is sourced from other

sources but is negligible to their overall expenditures.

Every out-of-county production crew that stays in PBC generates hotel room nights. As

the FTC is the only agency in PBC that provides near county-wide permitting, the FTC can either

directly or indirectly attribute all permitted production hotel room nights to their performance

measures because every production company must receive a permit to shoot in PBC. To directly

attribute hotel room nights to the FTC, the hotel room nights that result from production

companies that were greatly incentivized and assisted in coming to shoot in PBC, or converted

leads, are the only productions that can truly be considered. Many productions already plan to

shoot in PBC and the only interaction these production companies have with the FTC is

assistance with future planning or processing of a permit; these would be brought to PBC

without FTC efforts. However, there are a number of leads of which the FTC successfully

attracts to the county. Of the 331 permits issued in calendar year 2014, 70 permits were

converted leads which could be used to generate an ROI based on directly attributable hotel

room nights.

Due to limitations on attainable data, an ROI that included hotel room nights generated

from converted leads could not be calculated. As a result, possibly attributable FTC hotel room

nights from all productions totaled 10,436 rooms and generated a $7 to $1 return on

investment and $10 to $1 return on investment for direct and total economic impact for fiscal

year 2014. Breakeven numbers of hotel room nights were also analyzed. Regarding direct and

total economic impacts, the FTC would need 15% and 10%, respectively, of their total

attributable hotel room nights in order to breakeven on their operating expenses. Assuming

that the 70 converted leads out of 331 total productions directly correlates to 21% of the total

hotel room nights, analyzing purely the converted leads in this analysis would satisfy the

breakeven number. This information is summarized in table VI.


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Table X

FTC Direct Return-on-Investment, FY 2014


Total Benefit $6,724,144.48 $4,393,556.00

Total Cost $ 674,522.00 $ 674,522.00

ROI $9.97 to $1 $6.51 to $1

Break-Even # of Rooms 1,047 1,602

Break-Even as a % of Total 10.03% 15.35%


Although FTC has the smallest budget, it is important to note the services of the FTC

that are not accounted for in this analysis that could indirectly contribute to hotel room nights

or other economic impacts in the form of in-county spending by production companies. For

instance, there are numerous productions made throughout the year that advertise PBC as a

great vacation destination. Whether through product placement, productions or media releases

about PBC, or famous set locations, there is intrinsic value to publicizing the county through

these venues. Currently, there is no way to quantify the audience that views and recognizes

PBC as an ingredient of this indirect advertising, but if those who came to the county for those

reasons were able to represented in a quantifiable manner, they would be significant values to

consider.

Analysis Limitations

Although the analysis conducted in this study follows from logical trains of thought, it is

important to understand its limitations and factors for which it does not account. First, all of the

information concerning each sub agencies’ performance measures are taken from the sub

agencies themselves and have not undergone review or auditing.

Next, although each sub agency conducts their own form of advertising to attract

visitors to the county that may be combined with another agency or non-TDC organization’s

efforts to bring them in, this overlap is not taken into account. To take a more conservative

approach, this analysis focuses on DPB advertising efforts as it is the largest, most

encompassing sub agency with most of its funds dedicated to advertising. This assumes that if

a visitor is exposed to advertising efforts made by one of the other agencies, that visitor will be

included in DPB marketing reach.

There is also an assumption that there is no overlap between DPB advertising influence

and the attributable room bookings of both its own and any other sub agency efforts (e.g. a

visitor who was influenced to visit PBC from DPB advertising had no interaction with the other


16

agencies to be included in their booked nights). Similarly, it is assumed that visitors that are

attributable FTC and PBCSC were not exposed or influenced by DPB advertising.

Although there could not be any directly attributable rooms to the Cultural Council

based on the current data available, the Cultural Council’s operating budget is still included

when calculating the TDC ROI, lending itself to be more conservative. It is also to be noted that

the various impacts from the agencies that are not yet quantifiable would add value to the TDC

reported room nights. Furthermore, this analysis is not meant to be comprehensive or final by

any means. It is a baseline to stimulate a discussion of future research to conduct improved

data recording methods and get more accurate results

Future Recommendations

This analysis, although detailed, was incomplete in finding ROIs for every sub

agency. The primary reason for this is that many of the performance measures that the

agencies use to assess their progress are not reflective of their direct impact on PBC This is due

to a number of factors to include bias and the competitive pressure between the sub

agencies. So long as this persists, the TDC will be hard pressed to calculate accurate, let alone

conservative, impact measure of the organization. It is recommended that all sub agencies,

whether by themselves or through an independent source, sift through the performance

measures to identify how they can significantly and directly attribute rooms purely to their

efforts, as this study has advised and outlined. The rooms they attribute to themselves must be

rooms that would not have existed without their direct involvement/efforts; these visitors must

be viewed as actively recruited to travel to PBC.

Equally important is that each sub agency’s criteria for attributable rooms cannot

overlap or interfere with another sub agency’s reported rooms. Currently, each agency has its

own performance measures that are not necessarily cross referenced with the other agencies

to ensure its hotel rooms are not being double counted by another agency. Therefore, it is

recommended to take a very direct approach to determine attributable room nights; if there is

any question that data does not accurately reflect an agency’s efforts, it would be advised not

to include that data. Looking at the limitations of this study, it is imperative that the sub

agencies be unified under the common understanding that cooperation and communication are

essential to generate a reliable ROI.

The Cultural Council is the most complicated agency in terms of attributing room nights,

as it cannot accurately distinguish which of its visitors came to the county purely for cultural

reasons, what percentage of their visitors stayed in the county longer for cultural reasons, or

how many unique visitors attend all the cultural events/organizations. Although there is a

survey conducted every two years, it does not provide a solution to these problems. Moving

forward, it is recommended that the cultural council create a targeted means to filter out the

cultural visitors and eliminate the complications with the current data collection methods. This

may be through creating their own surveys on distributed collateral or recommending more

specific questions on the existing survey to the third party conducting it.


17

Appendix A: Detailed Economic Findings

Appendix A states detailed findings for each of the four sub agencies and the Tourist

Development Council for fiscal years 2013 and 2014. Fiscal year 2013 findings were included to

provide context. Reference appendix B for a list of assumptions and economic data to include

their sources used for both fiscal year findings. Reference the glossary for a list of definitions

and their accompanying equations if applicable.

Discover the Palm Beaches Economic Inputs & Findings

FY2013 FY2014

Inputs

Performance Measures:

Booked Room Nights (Hotels Non Convention Center) 85,846 109,603

Booked Room Nights for Convention Center 4,287 8,110

Total PBC Visitor Volume 6,000,000 6,300,000

Percent of Domestic Room Nights Sold in PBC 56% 56%

Percent of In-State Room Nights Sold in PBC 21% 21%

Percent of International Room Nights Sold in PBC 23% 23%

Calculated Room Night Outputs

Total Room Nights from Advertising/Marketing Campaigns 221,419 231,505

Total Attributable Hotel Nights 311,552 349,218

Number of Domestic Room Nights from Marketing Efforts 123,995 129,643

Number of In-State Room Nights from Marketing Efforts 46,498 48,616

Number of International Room Nights from Marketing

Efforts 50,926 53,246

Calculated Economic Impact Outputs

Direct Spending

Total

$123,063,132.4

3

$147,020,911.8

8

ROI $13.21 $14.25

Breakeven (Hotel Room Nights) for Total Expenditures 23,586 24,513

Percentage of breakeven rooms and possible attributable

rooms 7.57% 7.02%

Indirect/Induced Economic Impact

Total $65,135,571.39 $77,988,135.99

Total Economic Impact (Direct + Indirect/Induced)

Total

$188,198,703.8

2

$225,009,047.8

7

ROI $20.20 $21.80


18



rooms 4.95% 4.59%

Calculated Hotel Revenue Outputs

Total $46,203,196.30 $55,319,673.75

ROI $4.96 $5.36


Percentage of breakeven rooms & possible attributable

rooms 20.16% 18.65%

Calculated Bed Tax Revenue Outputs

Total $2,310,159.82 $2,765,983.69

ROI $0.25 $0.27


19

Cultural Council Economic Inputs & Findings

FY2013 FY2014

Inputs

From Profile Marketing Research Study:

Total Estimated Audience Size from all Category B applicants 2,441,971 2,984,822

Percent of Respondents staying in a hotel 12% 12%

Number of Actual Direct Cultural Room Nights 14,292 13,489

Estimated Number of Cultural Room Nights 422,645 489,236


Total Number of attendees staying in a hotel 293,037 358,179

Total Number of parties staying in a hotel 139,541 170,561

Total Hotel Room Nights from all Category B applicant venues 774,454 946,615

Total Room Nights possibly Attributed to the Cultural Council 788,746 960,104


Direct Economic Impact


Percentage of breakeven rooms and possible attributable rooms 1.31% 1.09%






Percentage of breakeven rooms & possible attributable rooms 3.49% 2.90%


20

Sports Commission Economic Inputs & Findings

FY2013 FY2014

Inputs

Transient Sporting Events Reported Room Nights 66,524 69,230

Number of All Sports-Supported Room Nights 170,997 178,112


Total Number of Attributable Room Nights 66,524 69,230



Total $26,276,980.00 $29,145,830.00

ROI $20.80 $22.29




Total $13,908,033.00 $15,460,582.61


Total $40,185,013.00 $44,606,412.61

ROI $31.82 $34.12




Total $9,865,509.20 $10,966,724.30

ROI $7.81 $8.39




Total $493,275.46 $548,336.22

ROI $0.39 $0.42


21

Film & TV Commission Economic Inputs & Findings

2013 2014

Inputs

Room Nights resulting from Converted Leads NA NA

Performance Measure Reported Room Nights 11,997 10,436


Total Number of Possibly Attributable Room Nights 11,997 10,436



Total $4,738,815.00 $4,393,556.00

ROI $7.80 $6.51




Total $2,508,187.60 $2,330,588.48


Total $7,247,002.60 $6,724,144.48

ROI $11.93 $9.97




Total $1,779,155.10 $1,653,166.76

ROI $2.93 $2.45




Total $88,957.76 $82,658.34

ROI $0.15 $0.12


22

Tourist Development Council Economic Inputs & Findings

FY2013 FY2014

Calculated TDC Outputs

Discover & Cultural Attributable Room Nights 311,552 349,218

Sports Commission Attributable Room Nights 66,524 69,230

Film & TV Commission Attributable Room Nights 11,997 10,436

Convention Center Room Nights 13,773 11,150


Total Attributable Rooms 403,846 440,034


Direct Spending

Total $159,519,262.43 $185,254,447.88

ROI $10.45 $11.09



rooms 9.57% 9.02%

Percentage of breakeven rooms of total county rooms

occupied 0.97% 0.95%


Total $84,431,284.18 $98,269,347.47


Total $243,950,546.61 $283,523,795.34

ROI $15.98 $16.97



rooms 6.26% 5.89%

Percentage of breakeven rooms of total county rooms

occupied 0.63% 0.62%


Total $59,890,396.50 $69,705,836.31

ROI $3.92 $4.17


Percentage of breakeven rooms & directly attributable

rooms 25.49% 23.97%


Total $2,994,519.83 $3,485,291.82


23

ROI $0.20 $0.21

Breakeven Bed Tax Revenue (Hotel Room Nights) for Total

Expenditures 2,059,149 2,109,899

Percentage of breakeven rooms and directly attributable

rooms 19.61% 20.86%

Impact of TDC Efforts on Hotel Occupancy Rates

Inputs

Census of Hotel Rooms at September of Calendar Year 15,402 15,676

Actual Room Nights Occupied 4,000,000 4,200,000

Calculations

Total Room Nights Available 5,621,730 5,721,740

Actual Annual Occupancy 71.15% 73.40%

Room Nights Attributable to TDC 403,846 440,034

Outputs

Percent of Room Nights Attributable to TDC 10.10% 10.48%

Occupancy (Less TDC-Attributable Room Nights) 63.97% 65.71%

Difference in Occupancy Rate without vs. with TDC 7.2% 7.7%


24

Appendix B: Detailed Economic Data & Assumptions

Appendix B includes a list of all economic data and assumptions used in this analysis for fiscal

years 2013 and 2014. Additionally, budgets for each of the four TDC sub agencies and TDC at

large are included. Sources for these economic data and assumptions are included. If not

directly stated, each sub agency’s economic findings used economic data and assumptions

detailed in General Economic Data. If a specific sub agency required differing economic data or

assumptions, that sub agency is included below.

FY2013 FY2014

General Economic Data

Average Daily Rate1 $148.30 $158.41

Average direct spending per party2 $395.00 $421.00

Average nights per visit3 3.6 3.5

Average number of people per party4 2.1 2.1

Average rooms per party 1 1

Percent of direct economic spending to total economic impact5 65.39% 65.34%

Cultural Council Economic Data

Average number of hotel room nights per visit6 5.55 5.55

Discover Economic Data

Percent of total visitors that result in a visit from marketing/advertising7 5.8% 5.8%

TDC Economic Data8

Bed Tax Percentage allocated to TDC 5% 5%

Bed Tax Funds allocated to TDC $30,523,693.00 $33,842,267.00

Sum of the four sub agencies' operating costs $15,268,590.00 $16,711,455.00

Total operating expenses/expenditures (not including reserves) for:

Culture $ 4,081,608.00 $ 4,409,714.00

Film & TV $ 607,340.00 $ 674,522.00

Sports $ 1,263,028.00 $ 1,307,408.00

Discover $ 9,316,614.00 $ 10,319,811.00

1 Smith Travel Research

2 Weibull

3 DPB FY 2016 Sales and Marketing Plan

4 LVCVA Return on Investment

5 DPB Marketing and Sales Plan 2014-2015

6 Profile Marketing Research

7 LVCVA Return on Investment

8 PBC TDC Budget


25

Bed tax revenue (2nd, 3rd, 5th, 6th cents) allocated to:

Culture $ 4,031,119.00 $ 4,116,833.00

Film & TV $ 701,999.00 $ 716,925.00

Sports $ 1,253,569.00 $ 1,280,224.00

Discover $ 9,396,393.00 $ 9,576,190.00


26

Glossary of Terms

Attributable room night- a hotel room occupied by a single visitor or visitor party for one night

during their stay in PBC purely due to the existence and efforts of one of the TDC’s sub agencies

Bed tax- a percentage of the nightly hotel room cost (5% or 6%) that is allocated for the TDC;

3% of this money is dedicated to the sub agencies in FY 2014 and 4% currently

Breakeven-the number of attributable hotel room nights from which a related performance

measure, such as hotel room cost or direct spending or indirect/induced spending, can be

calculated to equal the operating cost of the evaluated agency/agencies

Category B grants- money of more than $50,000 given to significant cultural organizations that

satisfy the criteria of the Cultural Council

Category CII grants- grants of less than $50,000 given to mid-size cultural organizations that

satisfy the criteria of the Cultural Council

Conservative- marked by moderation; in favor of disposing of performance measures that

cannot be sufficiently supported to be attributable to a sub agency for the purposes of this

study; in favor of measurements that may be sustained under scrutiny

Converted lead- an organization, production company, sporting event, etc. that was directly

influenced by the efforts of a sub agency and as a result chose PBC in which to conduct its

business and bring in visitors to PBC

Direct Economic Impact- the number of room nights attributable to a sub agency multiplied by

the daily spending in the county per party

Double count- to include a party’s visit in terms of room nights as a component of at least 2 sub

agencies’ reported room nights

Hotel revenue-the amount of money a hotel receives from sold room nights; the number of

room nights sold multiplied by the hotel’s daily rate; in this study, the average daily rate from

Smith Travel Research was used

Induced/Indirect Economic Impact- approximately 35% of the total economic impact that the

visitors/parties indirectly contribute to the local economy via a respending of their direct

impact in the county

Lead- an organization, production company, sporting event, etc. of interest that requires the

proactive response of a sub agency to consider the county as a location in which to possibly

conduct its business and bring in out-of-county visitors in the process

Operating cost- the amount of money from the allocated budget that a sub agency or agencies

use for its the full fiscal year operations, not to include its reserves or savings

Return on investment- a form of cost-benefit analysis reporting where, for this study, the

benefits are in terms of direct and total economic impacts to PBC and costs are the operating

cost of the sub agency or TDC; this study uses a ratio of $X to $1 to show the return of X to PBC

at a cost of $1.

Total economic impact- the sum of the direct impact and induced/indirect economic impact

Transient sporting event- one that could be held at another location and would not have taken

place in the county during the analyzed year if not for the efforts of the PBCSC during the

analyzed year

Visitation- the number of visitors that enter the county and stay at least one night; this study

measures visitation via room nights, with one party per room


27

Works Cited

Discover the Palm Beaches. DISCOVER THE PALM BEACHES: FY 2016 SALES & MARKETING

PLAN., 8 June 2015. PPT.

Discover the Palm Beaches. DPBC Collateral Conversion Study., 10 June 2015. PPT.

Discover the Palm Beaches Florida: Marketing and Sales Plan 2014-2015. Rep. Print.

Linley, George. TDC Room Night & Economic Impact Report FY 13-14. Palm Beach County: Palm

Beach County Sports Commission, Xlsx.

Local Option Tourist Development Act, 2014 Florida Statutes § 125 (The Florida Legislature

2014). Print.

"LVCVA Return on Investment: Operations and Advertising." Las Vegas Convention and Visitors

Authority Economic Impact Series 1.5 (2009): n. pag. Print.

Palm Beach County Film and Television Commission. December 2014 & Year-End Production

Activity Report. Rep. Print.

Palm Beach County Tourist Development Council. Annual Report: Fiscal Year 2015 Budget. Palm

Beach County: Palm Beach County Tourist Development Council, 2015.

Profile Marketing Research. Palm Beach County Cultural Council: Standardized Audience Survey

Summary Report Category 'B' Applicants Fiscal Year 2012. Tech. Lake Worth., 2011.

Print.

Profile Marketing Research. Palm Beach County Cultural Council: Standardized Audience Survey

Summary Report Category 'B' Applicants Fiscal Year 2012. Tech. Lake Worth., 2013.

Print.

"Public Tourism Promotion ROI: Cutting the Promotional Budget Is Tempting; Is It Worth It."

(2009): n. pag. Print.

Smith Travel Research. FY2013-FY2014. Raw data.

Weibull, Gustav. "Collateral Conversion Study Spending Numbers & Estimated Nights Spent."

Message to the author. 24 June 2015. E-mail.

Documents

Tourist Development Council ROI Final Report