Internal Realignment Proposed For OC Tourism Industry

OCEAN CITY – The Tourism Advisory Board (TAB) returned to the Mayor and City Council this week to address concerns brought forward by a marketing consultant earlier this fall.

In September, a report was given by OCG President Joe Lathrop. Since then, TAB has reviewed Lathrop’s findings and suggestions concerning Ocean City’s tourism marketing.

Lathrop interviewed a long list of key constituents involved with tourism in Ocean City. He found that there is a lack of trust between the city and the tourism industry and that city tourism-related departments need a structural realignment to optimize communication and prevent splintering of efforts. Also, accountability and performance measures are not specifically defined, leaving marketing effort measurement unclear; the tourism sales and marketing efforts are not integrated in‐large part due to the splintering of efforts into different entities; sales and marketing efforts between the city tourism and the tourism industry needs improvement; and tourism lacks leadership that can motivate cooperative involvement among public and private sectors.

TAB members presented the Mayor and City Council on Tuesday with recommendations in moving forward. According to the presentation, there is a critical need for communication and streamlining of all tourism-related initiatives to optimize efforts and Return on Investment (ROI), which would increase visitation and spending. There is a clear need for change to improve communication and efforts of all tourism-related entities.

Lathrop provided three options for TAB to consider in re-organizing Ocean City into a Destination Marketing Organization (DMO) — privatization, the creation of a 501c6 organization or internal realignment.

“Privatization we have completely eliminated from discussion,” Chamber of Commerce President Tom Perlozzo said. “Our preference as a group is internal realignment, we think it’s easier.”

D3Corp owner and TAB member John Gehrig explained that the reason TAB is coming forward to recommend a change in the town’s tourism marketing is to generate trust and cooperation between the city and the industry and to have complete support and confidence of Mayor and City Council to reduce micromanagement of destination marketing.

Additionally, Gehrig said the change will help to make data‐driven decisions, create transparency for room tax dedication and itemized tourism expenditures, create clarity regarding advertising agency discounts, leverage the convention center and special events more aggressively to promote tourism, separates sales and marketing from operations, generate new and unique marketing ideas to stay ahead of tourism trends, among many other things.

“We think that the structure in town is somewhat outdated,” Gehrig said. “I think a lot of us agree with that already, and we really need to bring that together with what makes sense for the modern day.”

As proposed, the 501c6 would be a non-profit organization responsible for representing and selling the destination in order to bring in revenue to local businesses and tax revenue to the city. The organization would be funded through a portion of the room tax occupancy. It will be governed by a Board of Directors with by-laws and run by a director of tourism development.

Ocean City Hotel-Motel-Restaurant Association (OCHMRA) Board of Directors member G. Hale Harrison used the Ocean City Development Corporation or the Ocean City Volunteer Fire Company as examples of a 501c6.

Another option proposed was the internal realignment, which keeps the destination marketing within the government and it moves all sales and marketing functions to the same department. It will be led by a Tourism Development Council and a Tourism Development Director. Harrison used the Planning and Zoning Commission as an example of internal realignment.

“It can move all the sales and marketing functions into the same department under the same management structure, which we think is going to be more rational and it is going to lead to more coordinated, better decision making,” Harrison said. “There is going to be a public board … and what you would want to do is attract the best talent, the best people that Ocean City has to offer and bring their expertise to how to market Ocean City best.”

The proposed outline of a Tourism Development Council (TDC) is its membership would include the mayor, two council members, city manager, five OCHMRA representatives, five Chamber of Commerce representatives and one Economic Development Committee member. They would serve a three‐year term on a staggered basis and have a chair and vice chair elected annually by members. The TDC will create a five-year strategic plan, protect sustainable tourism funding resources and monitor performance, among other responsibilities. They would meet monthly for the first year and have a strategic issue to address.

“Realignment sounds like the best thing and getting all the players into one room,” Councilman Lloyd Martin said.

Martin added that the previously eliminated Tourism Commission worked in the same manner and it needs to come back into play.

“The other major thing was trust and trust to me is like having faith … I have faith in you guys in your jobs and I hope you have faith in us. It will all work, that’s what it is all about,” he said.

Councilman Joe Hall, an advocate for eliminating the town’s Tourism Commission, said that he is “going against the grain” and supporting a 501c6.

“If we do the internal realignment, I think it is important that the council serves as a full council at all times,” he said. “I don’t agree with the committees or dividing us. I believe we should all get the same information at the same time and make our decisions at the same time.”

Also, in moving toward internal realignment, Joe Hall asked for a stipulation to be included in the formation of the board that the Tourism Development Council includes five members that represent on-island properties.

“I think the reward is much greater than the risk on getting this right, and taking the time to getting it right,” Joe Hall said. “I do believe we should be willing to take the risk to make the major changes.”

Councilwoman Mary Knight is also leaning toward internal realignment over a 501c6, although she wasn’t in favor of the chain of command that was presented, in which the Tourism Development Director would fall under the TDC, which would fall under the Mayor and City Council.

“I saw it as adding more bureaucracy,” she said, adding that it would add another layer to gain approval of things such as proposed special events.

Knight said that she was taken aback by Lathrop’s accusation of lack of trust within the tourism community in Ocean City.

“I do believe that there is trust, and I do believe we have a good product,” she said.

One other item Knight was concerned over was risk verses reward. She said the town’s rewards are $4.5 million of room tax revenue dedicated towards advertising and $12 million dedicated to the general fund, but the risk is not knowing whether tourism will flourish or fail through its market being re-organized is concerning.

Mayor/Acting City Manager Rick Meehan suggested keeping in mind a system that was brought forward in early summer. It places the tourism director, who would oversee all components associated with tourism, under the city manager who would then report to the Mayor and City Council. The tourism director would work with TAB and the Chamber.

“So you would still have the chain of command through the town and through the city employees,” he said. “The city employees would be answering to other city employees and not to some other organization.”

The Mayor and City Council acknowledged that there were no actions to be made in making a final decision on Tuesday afternoon but it was a “good first step”.

“We don’t think we need to just drop a bomb on this whole thing,” Gehrig said. “We don’t need to form another company to manage tourism but we do think things can be better … there is always room for improvement.”