Tourism

Introduction

Today, tourism makes up 18 percent of all employment on the Mississippi Gulf Coast and is the largest segment of employment second only to government. That means that nearly one in every five jobs on the Coast is tourism-related, making it an incredibly important sector of the economic engine of the area.

Due to the diversity of tourism employment, the Tourism GoTeam initially formed six subcommittees to collect information and recommendations. These subcommittees were: Attractions, Convention/Trade Shows, Food and Beverage, Gaming, Lodging, and Retail. The Attractions subcommittee was broken further into more detailed work areas of Cultural and Museum, Defense, Ecotourism, Golf, Music, Recreation, Sports and Family Sports. Additionally, two subcommittees were added to focus on areas where support may be needed –Government and Transportation.

The Tourism GoTeam did extensive research and analysis of the existing tourism inventory of products and attractions as well as examining the challenges facing the Coast’s tourism economy today and in the future.

The Current Landscape

The following charts and graphs make clear the diversity of the current tourism industry, as well as its value to the Mississippi coastal economy. The charts and graphs below illustrate some key findings from the Tourism GoTeam including:
• Total Gross Sales reported for the Mississippi Gulf Coast exceeded $6.2 billion in Fiscal Year 2011. The Mississippi Development Authority (MDA) projects that visitors spent $1.7 billion on the Mississippi Gulf Coast during the same fiscal cycle.
• The Mississippi Development Authority (MDA) estimates that 11 percent of total Gross Domestic Product (GDP) in the Gulfport/Biloxi area is related to Leisure and Hospitality, and just under 2 percent in the Pascagoula area.
• When comparing current job inventories to pre-Katrina levels, the Leisure and Hospitality sector on the Mississippi Gulf Coast is the industry with the largest opportunity as this segment of the economy is gaining more jobs every year.

The Mississippi Gulf Coast currently lacks approximately 4,000 hotel rooms when compared to pre-Katrina levels. Notably, the gap between pre-Katrina and today along the beach exceeds the overall gap, as most redevelopment has occurred along the Interstate 10 corridor and near the Gulfport/Biloxi Airport.

Employment


Economics

Lodging Discussion

The lodging landscape of the Coast was altered dramatically by Hurricane Katrina in 2005. Hotel room construction quickly rebounded after the storm, but was stalled by the recession and then stalled again in 2010 due to the Deepwater Horizon oil spill. Hotels typically cannot be constructed without a combination of capital injection and lending, both of which became harder to secure by the oil spill. The preponderance of off-beach hotels are along I-10, at the Gulfport/Biloxi International Airport, or on US-90 in Hancock and Jackson counties.

When comparing peak months (March-August) versus offseason (September-February) months the Mississippi Gulf Coast fills approximately 50,000 fewer hotel rooms per month, and the Coast’s casinos fill approximately 23,000 fewer hotel rooms per month. Casino visitation in the offseason relies heavily on snowbird visitation,  including the ability to attract Midwest and Northern visitors who are vacationing in the Florida Panhandle, as well as golf visitors.

The inventory of hotel rooms slowly built back after Katrina, but swings in occupancy widened, creating a weekend-crunch and weekday-excess of room availability.

Lodging Usage Differs Between Locales

There are also widely differing uses for lodging among coastal counties. In Hancock and Jackson counties, hotel operators report that government and defense contractors drive room nights rather than tourists. Occupancy is generally good during the work week but less on weekends. Concentrations in occupancy also vary between I-10 rooms and “downtown” rooms in Jackson County. Hancock and Harrison counties lose the majority of overnight Stennis Space Center visitors to Slidell, Louisiana, primarily due to the perception of limited nearby hotel rooms. The hotels in Mississippi are actually closer to Stennis and have availability during the week. Attention to this perception gap is very much warranted. Visitors to Stennis who eventually relocate their job to this region are more likely to establish residence in St. Tammany Parish, Louisiana, because they became familiar with the area during extended hotel stays in Slidell.

In Harrison County, the opposite is generally true. Occupancy is concentrated more on the weekends, with weaker occupancy during the week. In fact, non-gaming hoteliers suggested that additional hotel rooms would be unattractive until they can improve weekday stays, suggesting concern that more hotels would drive down the average daily rate. In contrast, virtually every subcommittee opined the need for more hotel rooms on weekends.

Impact of Katrina and Deepwater Horizon on Visitation

As stated earlier, Hurricane Katrina devastated the preponderance of hotels along the beachfront. Many gaming hotels were rebuilt and reopened within two years. Non-gaming hotels followed shortly behind, but almost all are new construction. Many new hotels were constructed along the interstate, where dirt and insurance are inexpensive relative to the beach. Lost are approximately 4,000 hotel rooms along the beach, primarily of mature construction, mature repeat business, and affordable rates.

Then the Deepwater Horizon incident delivered a double blow. Nearly all rooms were taken by temporary labor for an entire peak summer cycle, and the media repeatedly declared the air, water, seafood, and beaches were fouled. All momentum gained during post-Katrina efforts was lost, as was the preponderance of the repeat visitor book. The occupancy of temporary labor covered the loss of tourists for that year, but has not yet recovered the extended stay visitors. There is a need for more weekend hotel rooms, but it is difficult to build them to fit demand until more occupancy is generated during the week.

Another consideration of post-Katrina impact was the massive shift in hotel categories. The loss of older properties meant that replacement rooms were very nice and fresh but also more expensive. Replacement properties were rebuilt in tightly compacted classes – so there is now very little differentiation between quality and price of rooms. Inventory of upper midscale hotel rooms and better is steadily growing and makes up nearly two-thirds of the entire hotel room base. The Coast lacks enough cost-effective rooms for extended stays on the weekends and not enough demand for all hotel classes on the weekdays. Therefore, more demand is needed during the week while creating more capacity on the weekends.

Tourists can be broken into groups of similar spending behavior, or segments. This section will share the combined subcommittee estimated mix, as well as project the mix in the year 2020. It is expected that there will be increases in visitors to every segment, with differing levels of anticipated growth for each segment. The table below describes the major categories of visitors.

Chart 2 reflects the consolidated expectations of all reporting subcommittees. Again, each tourism segment is desirable, but they should grow at different paces given the offerings that are available. For example, until there are more affordable hotel rooms, focus should not be put on the segment who is interested uniquely on cost.

Envisioned Future

The Tourism GoTeam acknowledges that much work is to be done, but the outlook is bright for tourism on the Mississippi’s Gulf Coast. The following are conclusions from the Tourism GoTeam about the envisioned future that can be achieved:

• There is expected to be an overall increase in annual visitation from 5 million people in 2012 to 7 million in 2020
• Visitor spending can be transformed from its current $1.6 billion annual spending level to $2.3 billion in 2020
• 10,000 new tourism-related jobs can be created on the Mississippi Gulf Coast by 2020
• Cultural and Museum, and Ecotourism attractions estimate more than a 300 percent increase in the number of tourists visiting in 2020, while golfing anticipates an increase of more than 100,000 rounds played

Value Propositions

What will bring substantially more visitors to the Coast? What can be done to ensure they come back?

The Tourism GoTeam outlined a series of value propositions to demonstrate the offering made by the Coast to current and prospective visitors. If the proposition is deemed valuable, they will visit. If the visit meets or exceeds their expectations, then the guest may develop into the coveted loyal repeat visitor. The Tourism GoTeam produced three general propositions that are as follows:

Value Proposition 1: “Great Value for Low Cost”
The Mississippi coast is centrally located in the Gulf South region. Visitors can drive there by vehicle in less time and cost than required to other markets. Generally speaking, costs for activities, food, beverage, nightlife, and outdoor activities are attractive compared to other markets, provided such experiences are packaged in an easily procurable fashion.

Value Proposition 2: “Unique Offering”
Many decades ago, simply having a public beach was a unique offering. People didn’t drive as far without the current interstate system, navigation technology, web accessible peeks at things to do, and safe, comfortable family vehicles. Beaches are now available to the target segments on a broad basis. Markets that reached the Coast in seven hours in the 1940s can now be on beaches in five states in a similar drive. Therefore, beaches and outdoor activities alone are no longer a unique offering to the markets from which visitors are recruited.

In the aftermath of Hurricane Camille in 1969, the Mississippi Gulf Coast lost a great deal of drive-in family tourism business. Legalized gaming in the early 1990s resulted in growth of tourists visiting the Coast again. Gaming was the next great “Unique Offering,” replacing the beaches of the 1940s, 1950s and 1960s. Mississippi wisely adopted a capitalism-driven model, and soon a great variety of gaming options were available in Hancock and Harrison counties. But, other states legalized gaming, too, and began to allow a combination of private sector and Native American casinos. As of now, from any point in the Gulf South, a visitor can get to a casino within three and a half hours. This is projected to decrease each year. Consequently, gaming is no longer a unique offering.

The Coast casinos feel that same pressure, but because the Coast is not limited to one unique offering, they have held up a bit better. There are museums, nearly 400 festivals, entertainment, tremendous golf diversity, sports venues, and a high-end convention center. However, other markets have museums, festivals, concerts, and sports, too, so the question becomes what individual unique offering does the Mississippi Gulf Coast have to establish itself as unique as in the early days of beaches and the later days of gaming?

The Tourism GoTeam determined that the answer is simple but encouraging at the same time. The Mississippi Gulf Coast has no single, individual unique offering. The good news is that no other market today in the region – not one – has the combination of assets that are enjoyed on the Mississippi Coast. No other market can offer – from the same hotel room – access to NASA, almost 400 festivals, big name entertainment, gaming, world class golf, white sand beaches, sport fishing, sports tournament facilities, four and five star cuisine, pristine unspoiled habitat, Civil War era history, top-tier convention space, and big city nightlife. The variety of the experiences from one hotel is the Unique Offering.

Value Proposition 3: “Outstanding Service”
Southern hospitality on the Mississippi coast was legendary in decades past. Surveys continue to suggest that visitors encounter friendly people, but the Coast is not known as an “outstanding service” market. Markets who apply deliberate and relentless focus on providing quality service as a differentiator will benefit against competition. The Tourism GoTeam believes the Mississippi Gulf Coast, with focus, can achieve differentiation fromother markets by authentic, constant hospitality-driven tourism to encompass all attractions, locations and events.

Gaps:
Clearly, there are some gaps that exist which inhibit the success of the Value Propositions outlined above. These gaps include the following issues identified by the Tourism GoTeam:

• There are too few weekend hotel rooms available, particularly in the months when school is not in session. A need exists to improve the number of affordable rooms. Proximity of hotel rooms to attractions is a further impediment.
• Complicating room availability is the massive gap between weekend and weekday stays. There are too few visitors during the week to provide financial support for the construction of additional rooms thereby providing more weekend availability.
• There are bright spots in the technology landscape for particular activities, like lodging and golf. But the Coast is weaker than many of its competitors in enabling technology to book an overall and integrated experience.
• Harrison County taxpayers made a substantial investment in the Coliseum and Convention Center. The facility earns premium ratings from convention clientele, but the lack of a Headquarters Hotel at the site handicaps the procurement of a very large percentage of target conventions. Further, there is a shortage of “walkable” hotel rooms within a half-mile of the convention complex. This is the worst ratio of on-site/walkable hotel rooms compared to rentable convention space of any competing convention center.
• Visitors to the Mississippi Coast are left to their own to find the robust attractions available. Mature tourism markets have branded signage, such that visitors determine when they are near a site. A recent study in a competing market indicated that 20 percent of their visitors pass through one or all of the three coastal counties on their way to their market. Other than concerts at gaming venues, primarily for single night shows, there is very little directional signage on the major highways appealing to visitors.
• Prior to Hurricane Katrina, the Coast offered a large variety of family activities available at all price points. Miniature golf, go karts, water slides, wave pools, and more used to dot Beach Boulevard(s) in all three coastal counties. They are essentially gone, and the current attractions are poorly marked, challenging to schedule and book on-line, and an immense impediment to improving length of stay.
• There are successful sports facilities at various coastal sites, such as the Gulfport Sportsplex, Harrison County Fairgrounds, and the Ocean Springs Sports Fields. However, facility size and offering limit visitation much under what it could be. Competitive markets routinely field tournaments four or five times the size, with most of the attending teams driving right through the market as they travel. The Coast market is centrally located, with great weather and access, but there are no existing facilities to compete for the larger and longer events.
• The Convention Center has the space available to host indoor sporting tournaments, such as volleyball, basketball, table tennis, bowling, etc. These are huge tournaments with high-yield visitors, but there is no equipment available to host such events. Similarly, the harbors and marinas have very poor staging/weigh master/audiovisual facilities to operate game fish tournaments.
• There is no Coast-wide sharing of labor resource to conduct large sporting events and no central workforce training for event volunteers. There is no cadre of full-time professionals who have expertise in planning and executing massive events, nor enough reusable workforce available for event staging and management.
• Mississippi has extended public beach areas which are rare in many other states. No other market has contiguous, public beaches like Mississippi within the view shed of a major transportation corridor. Unfortunately, multiple jurisdictions along the Coast have a stake in keeping the property attractive. The counties are tasked with cleaning the beach, but do not have the hardware to respond to periodic high demands (after storms, etc.). The cities manage the landscaping, but are similarly not equipped. The Mississippi Department of Transportation (MDOT) has responsibility for Beach Boulevard and some cities have responsibility for their adjacent roadways, but they do not have equipment intended for sand removal. One of the greatest tourism assets is the beach and adjacent roadways, but not having matching hardware, staff, and strategy to the speed bumps that routinely occur is a hindrance.
• There is a major need for a Coast-wide Tourism leadership organization where the public and private sectors come together to make great progress towards the GoCoast 2020 envisioned future.
• There is no low cost airline with robust access. Enplanements/deplanements went down by 80,000 (10 percent) in the year after AirTran exited the market. This is a tremendous impediment to moderate to high convention business, an impediment to attracting extended stay visitors, and an impediment to general business and job creation. Landing a low cost airline would attract an influx of travelers to the region.
• There are tremendous unspoiled natural assets to explore, and worldwide ecotourism is exploding. But the Coast lacks quality campgrounds, walking trails, recreational parks, biking trails, etc.
• There is a vast concentration of military retirees, and there are billions of dollars in military and military contractor investments in the Coastal counties. But there is no tourism venue for this investment, whereas other markets have done very well.
• The State Port at Gulfport has flexible-use, but there is no home-ported cruise ship.
• Limited mass transit and congested roads hinder access between attractions.
• The Coast now has almost 400 annual festivals, and is widely known for very good musical entertainment. But the acts are generally limited to more of a local audience, or to specifically acquire a gaming audience. There are no major acts which command a high percentage of visitors, either as stand-alone events, or part of a major music festival (like Jazzfest), or as a very large enhancement to a festival (like Cruising the Coast).

Conclusion

With nearly one in five people on the Coast being employed in the tourism industry, this sector is a critically important and leading component of the economic makeup of the area. Growth in tourism provides jobs, income, tax revenues, and promotes many different businesses to prosper which results in a better quality of life on the Coast.

The Tourism GoTeam identified many specific recommendations that can be fully utilized in the future as details about how the RESTORE Act will be implemented come available. The Tourism GoTeam’s thorough examination of the needs, gaps, and opportunities for tourism on the Mississippi Gulf Coast demonstrates the potential for a very bright future if decisions are well-researched and planned to position the Mississippi Coast to attract more visitors.

Tourism GoTeam

Co-Chair      John Hairston, Hancock Bank
Co-Chair      Brent Christensen, Mississippi Development Authority

Woody Bailey, Bailey Lumber and Supply
Frank Bertucci, F.E.B. Distributing
Rick Carter, Island View Casino Resort
Richard Chenowith, Scranton’s Restaurant & Catering
George Corchis, Beau Rivage
Rep. Casey Eure (District 116)
Chet Harrison, Hollywood Casino
Bill Holmes, Mississippi Coast Coliseum & Convention Center
Mark LaSalle, Pascagoula River Audubon Center
Beverly Martin, Harrison County Tourism Commission
Denny Meachim, Ohr-O’Keefe Museum of Art
Margaret Miller, Ocean Springs Chamber of Commerce
Kimberly Nastasi, Mississippi Gulf Coast Chamber of Commerce
Sen. Sean Tindell (District 49)
Kathy Wilkinson, Harrison County Tourism Commission
Frank Genzer, Genzer-WHLC Architecture