City controller: combine Philadelphia's two marketing arms

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Meryl Levitz is CEO of Visit Philadelphia. She said she was open to considering a merger, calling the idea "very interesting." ED HILLE / File

The City Controller's Office has reviewed Philadelphia's two marketing agencies and concluded the city has one too many.

A 38-page analysis found that lack of coordination, interagency friction, and administrative overlap between the city's two marketing arms was undercutting Philadelphia's ability to sell itself to visitors.

Controller Alan Butkovitz recommended Tuesday that the city combine the two agencies - the Philadelphia Convention and Visitors Bureau (PHLCVB) and Visit Philadelphia - into a single entity.

The move, according to an analysis by Butkovitz's office, would bring Philadelphia in line with other major cities and free up at least $1 million in annual administrative costs that could then be used for promotion.

"In an era characterized by resource scarcity, we need to ask if it makes sense to have two virtually coequal agencies promoting this critical sector of our economy," the report said.

Meryl Levitz, chief executive officer of Visit Philadelphia, said she was open to considering a merger.

"I think it would be very interesting and could be very worthwhile to continue to look at this and see how one agency could be structured," she said.

Jack Ferguson, chief executive officer of PHLCVB, was in India on business and could not be reached directly for comment. In a statement released by his office, Ferguson said: "We are reviewing the report with our chairman and administrative committee. At first glance, we see many opportunities to respond with additional information and need more time to do a deeper dive especially on the numbers and market segment results."

The Controller's Office conducted the analysis in response to stories and an editorial in The Inquirer that raised questions about the wisdom of maintaining two marketing agencies with overlapping administrative costs, competing slogans, and little coordination of efforts.

Philadelphia has had two marketing agencies since 1996 when Visit Philadelphia - then known as the Greater Philadelphia Tourism Marketing Corp. - was created by then-Mayor Ed Rendell to promote leisure tourism. Visit Philadelphia, a nonprofit with its own governing board, was meant to complement PHLCVB, which, as an arm of the Convention Center, is charged primarily with bringing conventions to the city.

Both are funded by the city's 8.5 percent tax on hotel room rates. Visit Philadelphia has a budget of about $11 million. PHLCVB's budget is about $17 million.

The controller's report found that Visit Philadelphia was much more successful in bringing leisure tourists to the city than PHLCVB was in attracting business visitors.

From 1993 to 2013, the annual number of overnight leisure travelers to Philadelphia increased by 84 percent, according to the controller's office, which credited Visit Philadelphia's efforts for about two-thirds of that increase.

"Visit Philadelphia has been exceeding expectation, has been wildly successful," Butkovitz said.

In contrast, business travel "has been essentially flat since 1997," the report found, with PHLCVB actually booking 100,000 fewer rooms in 2013 than in 1997.

However, because business travelers spend more on average than leisure tourists, PHLCVB saw a better return on its investment, generating $74 for each tax dollar spent as opposed to $69 per tax dollar spent by Visit Philadelphia.

The controller's report found that over the years "competition between the two organizations has occasionally turned into more overt and counterproductive tension."

That tension was evident in March when PHLCVB launched a marketing campaign with its own slogan for the region - "PHL: Here for the making." There apparently had been little coordination with Visit Philadelphia, which has long had its own marketing slogan - "With Love, Philadelphia."

"The public display of acrimony between the two leading organizations and the ostensible lack of coordination certainly raised eyebrows locally," the report said.

The report faulted a lack of mayoral leadership, past and present, in ensuring the two organizations worked in tandem. It noted that under Mayor Nutter, the mayor's Hospitality Advisory Board, which was designed to coordinated tourism efforts, had met only "a half-dozen times in seven years."

Mark McDonald, Nutter's spokesman, said that over time the mayor had concluded he could be more effective working directly with each organization as opposed to working through the Hospitality Advisory Board.

McDonald said Nutter has been "clear in his message that he would like to see consolidation" by the two agencies, but as independent organizations with their own governing bodies, it was up to Visit Philadelphia and PHLCVB to take that step.

The report from Butkovitz - who is considering a run for mayor next year - recommended that a "planned, strategic, gradual consolidation" of the two agencies be undertaken.

It suggested that the new entity have two divisions - a "retail" or leisure division run by Visit Philadelphia's team and a "wholesale" or business division run by PHLCVB's team.

"Consistent messaging from a unified tourism sector will almost certainly produce a more coherent brand ID for the City," the report concluded. "Economies of scale will create new resources to be spent on destination marketing.. . . The time is right for intelligent succession planning toward a restructuring that will more efficiently utilize the resources generated by the hotel tax and maximize the potential of Philadelphia's critical hospitality sector."


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