Tourism Trap : Plans to Levy Fees for Ad Campaigns Start a Controversy

Time was, California’s monopoly on surf, sunshine and movie stars fostered a laid-back attitude toward its now-$56-billion tourism industry.

But today, the Golden State’s share of the national travel market is shrinking and Los Angeles County is continuing to battle image problems. Accordingly, some big businesses such as MCA/Universal, Disneyland and the Beverly Center want the tourism industry to support state and Los Angeles County marketing blitzes similar to the dairy industry’s ubiquitous “Got milk?” campaign.

The marketing proposals, approved in two separate bills by the Legislature last year and signed by the governor, pave the way for the industry to tax itself.

But the two proposals put forward by leading tourism interests--which call for mandatory fees on businesses ranging from amusement parks to restaurants to hotels--are raising concerns among some small-business owners who fear they’d be subsidizing big tourist operations miles away.

“I don’t think they care about the little guy,” said C.K. Tseng, president of Northridge Travel, who agrees that more promotions are needed but is worried that the burden will be unfairly borne by small businesses.

Supporters, however, say new marketing campaigns are needed to spruce up the state’s tattered image.

“Competition for the entertainment dollar is tremendous,” argued Steve Lew, senior vice president of MCA/Universal recreation services. Lew points to the millions of dollars that are spent yearly by places such as Las Vegas and nations such as Australia, which spends tens of millions of dollars each year on splashy TV spots and other advertising.

Although some businesses may be reluctant to pay new fees, “this is the only approach we have right now,” said Anastasia K. Mann, owner of Corniche Travel of West Hollywood. “We can barely compete with these other states that have zilch to offer from a tourism point of view. . . . The industry has to take the issue into its own hands.”

Tourism is exploding worldwide, fueled by rising incomes, cheaper air fares and abundant flights, and by political change. International tourism revenues grew by 7% in 1995 to $372 billion, making tourism one of the world’s fastest-growing industries, according to the World Tourism Organization in Madrid.

Tourism in California is still growing at a healthy clip, expanding an average of 3% a year to $56 billion today from $49 billion in 1990, according to the California Division of Tourism.

But state officials are concerned that other states are crowding into California’s market. California’s share of total domestic leisure travel has slipped from 12.5% in 1989 to 10.7% today, the division reports.

And a much grimmer picture is emerging in Los Angeles County. According to a report by the Los Angeles Convention and Visitors Bureau, overnight visitors to Los Angeles County fell 12% to 22 million in 1994, compared with 25 million in 1990.

Tourism advocates blame image problems. “On a regular basis, some horrific image is broadcast on television that has underneath it the L.A. brand name,” said Michael Collins, senior vice president of the convention bureau. “Until we pay to have our story told on our terms, we will continue to have our product defined by people who don’t necessarily have our best interests at heart.”

With an annual budget of $7.3 million a year, the state’s Division of Tourism ranks 21st in the nation in terms of funding. “Arkansas is in front of us,” said Lee Adler of the California Travel Industry Assn., a leading proponent of the marketing program.

A target of $25 million per year has been set for the statewide tourism marketing campaign, and an additional $35 million for Los Angeles County’s.

By comparison, the California-wide “Got milk?” campaign, supported by a coalition of milk processors, costs about $22 million a year.

Whereas milk ads or dancing raisins clearly have a single purpose in mind, there is plenty of disagreement in the fractured tourism industry over how to market California--and who should pay for it.

Outlying areas are afraid downtown Los Angeles will grab the promotional spotlight, and say they’d rather promote their areas independently.

“When you think of Los Angeles . . . you don’t think of downtown L.A. Or at least you try not to,” said Jim Hall, who leads a group of Redondo Beach businesses that oppose the plan.

Even supporters of the plan had trouble finding agreement among themselves. Bob Roberts, executive director of the California Ski Industry Assn., who supports the statewide plan, said Los Angeles enthusiasts “stole a lot of our thunder” by insisting that the county needed an ad campaign of its own.

Jack Kyser, of the Los Angeles County Economic Development Corp., counters that the statewide plan might have “a Northern California bias. . . . Some people are annoyed with L.A. County, but we have to be assertive about these things.”

The marketing proposals are in fact closely modeled after agricultural commodity campaigns--such as “Beef--It’s what’s for dinner”--through fees assessed to an industry group. But it’s apparently the first time this model has been applied to tourism.

The details are complex. So complex, in fact, that the Los Angeles County Board of Supervisors, charged with launching the county’s plan, has postponed action because staffers are confused about the bill’s wording.

Basically, the idea is for tourism industries to create marketing commissions on the state and county levels. These commissions--stacked with elected representatives from the industry--would assess mandatory fees against members. Payment would be enforced by state law, and refusal to pay punishable by fines of as much as $10,000.

The fees would go into a pool to support, say, glitzy commercials touting California to Japanese television viewers. “We’re going to package the whole California experience,” Roberts said.

But before the industry votes on whether to tax itself, it must first be decided which tourism industries should be asked to pay, and how much. Preliminary committees of government appointees would be assembled to do that. Would restaurants count? Gift shops? What would be assessed? Ticket sales? Hotel beds?

“It’s a monstrous undertaking,” Adler acknowledges.

The strongest objections are likely to come from smaller businesses.

Assemblywoman Debra Bowen (D-Torrance) has sponsored a bill to allow firms to opt out of the fees if they choose, a change experts say would undermine the whole plan.

Tourism industry advocates concede they have a long way to go to match the agricultural industry’s milk, egg, beef and almond marketing campaigns.

One problem is that tourism-related businesses come in many forms, from recreational-vehicle parks to restaurants to Disneyland.

“How do you convince Yellow Cab they should put in money at the same rate as hotels?” asked Jeff Manning, executive director of the California milk processors’ board, which funds the “Got milk?” ads. “And what if the airline business then goes up and car rentals go down?”

“Advertising is simple. It’s the political infrastructure that’s difficult,” said Manning, who nonetheless supports the plan.

Even the agricultural marketing organizations have found it difficult to maintain the support of their members, he said. In recent years, several have been hit by lawsuits and by complaints from small farmers that they are being strong-armed into making payments from which they get no benefit.

Supporters acknowledge that a tourism market order might be difficult to manage. “It’s going to be fraught with all sorts of potholes,” Adler said. “But it’s one of those gotta-do’s.”

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Meager Gains

Los Angeles County tourism has yet to return to its 1989 peak. Overnight visitors, in millions:

1995**: 22.2

* Figure inflated by World Cup visitors

** Estimate

Source: Los Angeles Convention & Visitors Bureau