Selling Winnipeg as a tourist destination a good lesson in economics

Images of Winnipeg (source: Wikipedia)

Images of Winnipeg (source: Wikipedia)

Oh, you’re thinking about taking a trip to the States this summer? Could I interest you in a nice holiday in Indianapolis? Baltimore? How about Houston?

Why not Houston? Frommer’s lists 21 noteworthy attractions awaiting those courageous enough to brave the Texas city’s notorious heat and humidity, including 10 “star” attractions.

Houston is, after all, a big city. More than two million people live in Houston proper, and six million live within commuting distance. Its local attractions include museums, a zoo, the famous Space Centre and — wait for this, Winnipeg! — the SplashTown water park. The fine folks at the Houston Convention and Visitors Bureau even offer a handy trip-planning guide, intended to ensure that the whole family has a great time.

Nice hotels will set you back more than $120 U.S. per night for a July visit, but if you’re willing to settle for a Super 8 just off the Interstate, it will cost you just $40 to $65 U.S. per night. That will offset the relatively high cost of airfare — ranging from $668 Cdn. after taxes and fees on Air Canada to $725 on Delta.

Still not interested? No problem. There are plenty of other choices out there.

That might very well be an understatement. Today’s vacationer has more choices than ever before, a point made on this blog last November, noting that a trip to Europe for a couple traveling together is now only just barely more expensive on an airfare-plus-hotel basis than a trip to the United States; and that Europe now routinely offers better value for the solo Canadian traveler than the much-closer U.S. does.

The fierce competition for the tourist dollar hasn’t caused local tourism authorities to give up, however. Virtually every city around with a metro area population of 100,000 or more — and many with less than that — have at least a web site dedicated to giving people good reason to visit. Larger centres, no matter how far down Virtual Tourist’s rankings of top North American destinations (Houston ranks 21st, Winnipeg ranks 79th), offer comprehensive trip planning services.

Indeed tourism was the topic of the week at a Mar. 27 Winnipeg Chamber of Commerce breakfast session, during which Tourism Winnipeg noted that visitors contribute more than $500 million annually to the local economy — more than the cost of police, fire and community services combined.

The tourist dollar is a nice thing to get ahold of. Tourists spend abundantly on meals, hotels, taxis and various other goods and services, and generally impose minimal costs on the hosts as long as the city isn’t overwhelmed by them.

But attracting tourists isn’t as simple as giving out trip planning guides. Tourism is an excellent example of the laws of economics as they apply to real life, and tourism marketing always must be done with economic principles in mind if it is to make any sense.

Cost: One important factor that vacationers take into consideration is the cost of getting to a destination and staying there, as this will easily be the bulk of their travel budget. The cost of staying in Winnipeg is comparable to other Canadian cities and slightly-to-significantly higher than similarly sized cities in the U.S. and even cheaper European countries such as Germany and Italy; while airfare ranges from $300 to $700 per person from most of North America.

Thus, the easiest markets to go after will be those who face the lowest costs getting to Winnipeg — such as those within easy driving distance, passing through on the train or the Trans-Canada Highway, or attending conventions and business meetings. Don’t count on flying people in from Toronto, New York, L.A. or Paris, who will find a visit to Winnipeg very expensive compared to other options. This leads us to our next factor.

Availability of adequate substitutes: Some places in the world are just so unique that they can command a premium by virtue of the fact that you can’t get the same thing anywhere else in the world. You can’t find the overwhelming grandeur of Paris anywhere but in Paris; there are a lot of cities in America, and a few that try to imitate Las Vegas, but if you’re looking for a sinful, over-the-top party town, there is only one Las Vegas.

By comparison, there are hundreds of cities where you can go to get something very similar to the Winnipeg experience. The Torontonian can always go to Hamilton or Buffalo, and the New Yorker can always go to Pittsburgh or Baltimore. So it makes sense to market Winnipeg in markets where you can’t easily swap Winnipeg for something else. For example, if you live in Brandon or Kenora, where else could you go to get a bit of a taste of bigger-city life for just the weekend? After Winnipeg, the next closest city with a population of half a million or more is Minneapolis, a seven-to-nine hour drive away. Those regional markets might be small, but their proximity makes Winnipeg more competitive as a tourist destination.

That being said, here’s where Winnipeg might make sense as a destination for a long-haul tourist. While Winnipeg itself might not be unique as an urban destination, it is the logical jumping-off point for adventurers in search of wilderness adventures in the north. Most of the world does not have easy access (if any) to big-game hunting, fishing, beluga whale and polar bear watching and the northern lights. For travelers from heavily urbanized Europe and Asia, these things have the potential to make for the cool sort of holiday they can show off to their friends and family at home. While on their way to and from the north, offering them things to do while killing a day at either end in Winnipeg makes sense.

Opportunity-cost and the allocation of scarce goods: Aside from the well-off-and-retired and the independently wealthy, tourism is an exercise in finding the best use of scarce resources. Many North Americans have only two or three weeks of holiday time at their disposal every year and, if they’re lucky, a budget of a few thousand dollars at most. Understandably, they will want the most bang for their buck: they don’t want to feel that their scarce vacation days have been wasted, and they want to have the most enjoyable experience they possibly can.

Thus, it’s vital to understand that much of that time and money will be allocated to winter holidays in the southern U.S. and the Caribbean, or to one of the Top 10 North American or international destinations. But there will always be those on more limited budgets that will be looking for a destination they don’t have to fly to or who will want to visit friends and family. For these people, a trip to Winnipeg might prove to be a good use of both money and time, while a trip to somewhere else might leave them with less money to spend on necessities or be a lost opportunity to see people who are special to them. Thus, these markets — the regional, low-budget and the “visiting friends and relatives” markets — are worth going after.

While Winnipeg will always be a small player in the hyper-competitive world of international tourism, it doesn’t necessarily mean that we should throw in the towel on tourism promotion. Tourism, even on a small scale, has spin-offs from the extra spending that people tend to do when they travel.

It is important, though, for tourism promotion to  be done with the “What’s In It For Me?” rule in mind if it is to be a good use of money. For most of the world’s tourists, Winnipeg is one of many hundreds of medium-sized cities that can’t really answer that question — and there’s nothing wrong with that. Even the world’s most prestigious destinations can’t provide a satisfactory answer to that question for everyone. Where there’s a group of potential visitors that Winnipeg can satisfactorily answer that question for, however, those visitors are worth going after.

Advertisements

About theviewfromseven
A lone wolf and a bit of a contrarian who sometimes has something to share.

2 Responses to Selling Winnipeg as a tourist destination a good lesson in economics

  1. portage & main says:

    Excellent post, Thanks for taking the time to think through some of the opportunities Winnipeg has to promote tourism. It is a refreshing change from the “happy talk” we hear from local tourism tall foreheads, and the belief among others that if only we had that “one big thing” tourist would flock here from around the world. Basically anybody who has championed a project in the last 30 years has made a direct connection between it and a marked increase in tourism (the Main Street bridge to St. Boniface, the Children’s Museum, MTYP, etc. and now the latest is the CMHR). None has had an appreciable effect, and I don’t see the CMHR attracting anywhere near the number of visitors they are projecting (unless they mean “virtual” visitors, in which case they aren’t really tourists). In both cases, I don’t think anybody has applied any realistic economic analysis.

    You have touched on some really good ideas. I especially like the idea of Winnipeg as a jumping-off point for visits further north. A few years ago I had the misfortune to be in Washington DC for a week in July, and had to endure the heat, humidity and endless crowds of sweaty tourists and locals shuffling through the city. A couple of weeks later I was in The Pas and had a chance to visit one of the local lakes and see some of the tourist attractions, and thought OMG what a relief to be out of the heat & humidity! Summers in Washington DC (and most of the U.S. south and east) are absolutely miserable in the summer. In the west you have 120 degrees of dry heat in Phoenix and Las Vegas, and in the east you have 100 degree with 100% humidity, which is almost worse. I’m thinking a certain number of people in those areas would pay money to escape for a week, much like we go south in the winter to escape 6 months of sub-zero weather. Currently there is kind of niche market up north for fly-in fishing/hunting lodges but nothing on a very large scale. It would be an interesting test to see if you could draw people up to unused hotel rooms in The Pas or Thompson in the summer from the Phoenix’s and Washington DCs of the world. Maybe lure them in with a package deal that includes air & hotel?

    It’s way over my head, but thanks for posting on this.

  2. theviewfromseven says:

    Thanks!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: