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Visitors spent a record $21.3 billion here in 2014, according to the N.C. Department of Commerce. That money supports more than 40,000 businesses and nearly 205,000 jobs statewide. Ensuring that North Carolina continues to attract guests involves more than beautiful beaches and mountains. Business North Carolina magazine gathered travel and tourism executives to discuss what the industry is doing well, the challenges it faces and the moves needed to keep North Carolina one of the most visited states.
The discussion was moderated by Ben Kinney, Business North Carolina publisher. VisitNC hosted the discussion at its Cary offices. Support was provided by Greenville-Pitt County, Greensboro and Greater Raleigh convention and visitors bureaus and The Umstead Hotel. The transcript was edited for brevity and clarity.
How is the tourism industry?
TUTTELL: There’s growth. Through the third quarter, lodging is up nearly 4%. It’s up about 2% nationally.
FULLARD: Kimpton opened its first North Carolina property — Cardinal Hotel in Winston-Salem — in April. The building is the former [Winston-Salem-based] R.J. Reynolds Tobacco Co. headquarters and an inspiration for the Empire State Building. Kimpton is opening two Charlotte properties in fall 2017. One is a downtown mixed-use building with 216 rooms and a rooftop bar. The second is a boutique hotel with 128 rooms in Dilworth.
SCHMIDT: Tax revenue is up about 5% this year. Greenville fared better than expected in the flood that followed Hurricane Matthew in October. Our eastern North Carolina neighbors weren’t as fortunate. We’re helping other destinations in the region. Unfortunately, we have experience with flooding, so we plan for it. Our convention and visitors bureau gauges hotel room availability for evacuees and recovery workers. They share other information such as road closures, curfews and where to find resources.
NICHOLSON: Umstead will celebrate 10 years in January. Business has been strong, and we’re looking to finish the year that way. We’re significantly ahead of pace for next year.
FOURRIER: Our tax revenue is up about 5% as of the beginning of November, but we’ve had a lot of bad legislative decisions. There will be a point in time when those will collide. I hope it doesn’t cause a severe loss in revenue. We’re optimistically cautious.
MINGES: About 18,000 businesses work within the state’s restaurant and lodging industry. Restaurant sales are up about 4%, and that increase is driving supply. About 150 hotel projects are scheduled to be completed over the next few years. We’ll have to drive business to fill those rooms. They will add to the 55 million room nights already for sale each year.
EDWARDS: We’ve seen slightly more than 6% growth in lodging and tax collections this year. We’ve seen about 4% growth in hotel inventory. About five restaurants open each week. We’re up to 26 breweries. Raleigh-Durham International Airport traffic is up 10.8% from September 2015 to September 2016. Part of that is because of [Atlanta-based] Delta Air Lines Inc.’s nonstop flights to Paris, which began in May. Visitors use the airport as a gateway to the state’s attractions.
How is House Bill 2 affecting tourism and travel?
TUTTELL: House Bill 2 [the Public Facilities Privacy and Security Act, which requires people to use restrooms and changing facilities that correspond to the sex on their birth certificate] caused a media storm of negative publicity. We want to discuss vacations, travel and the state’s attractions, not laws and bathrooms. More than 1,000 people emailed to tell us that they were canceling their vacation because of HB2. About 20 people emailed us to say it encouraged them to visit. There are people on both sides, but that’s a significant difference. The big unknown is HB2’s impact on our brand. This isn’t a one- or two-year issue. It will affect us the next five to 10 years. We lost major events to South Carolina, Tennessee, Virginia and Florida — North Carolina’s competitive set. South Carolina said it’s going after North Carolina’s business.
SCHMIDT: Greenville, which is more of an in-state destination compared with larger cities, lost sporting events, but HB2 gave us the opportunity to re-educate people about travel and tourism’s importance. Trade show attendees wouldn’t speak to our folks because we are from North Carolina. Everybody focuses on HB2’s economic impact, but it has a macro impact, too. Every convention or meeting brings first-time visitors. You don’t know who they are. They could be planning a meeting or relocating a business. Every event that’s canceled is one fewer opportunity to make an impression on them.
FOURRIER: Some groups say they aren’t coming because of HB2. Others are still coming but without some members. HB2’s full impact will never be known. We’re in the relationship-building business. It takes three, five or more years to convince a group to consider your destination. Now North Carolina is off many lists, so we have to start over in many cases. And planners aren’t going to follow up to see
if this gets resolved.
FULLARD: Kimpton has supported the lesbian, gay, bisexual and transgender community for more than 30 years. The Orlando, Fla., shooting, when 49 people were killed and 53 wounded at a gay nightclub, happened about the time we opened. As a sign of support for those affected, our building was lit with rainbow colors for the next several nights. We felt it was the right thing to do. It ended up on page 1 of the Winston-Salem Journal, and my phone went crazy. Some callers were mad, but most were appreciative. We didn’t do it because of HB2, though many people believed that. Kimpton has sponsored pride festivals for years. It sponsored the one in Winston-Salem this year, and that decision was made last year.
MINGES: The industry has become collateral damage in a fight that it didn’t start. This industry embraces the LGBT community and employs many of its members. Many hotel brands are progressive and liberal, but cancellations have cost them business. We’ve tried to quantify the losses, but we can’t count the phone calls or requests for proposals that weren’t made. It may take a year or two to realize the impact on leisure traffic. Many families signed contracts and paid nonrefundable deposits in advance to rent vacation homes this past summer, so they couldn’t cancel. Will they sign and pay those again? HB2 is pushing major events to my colleagues across the country. We’re losing market share. That impacts long-term investment. Less demand for rooms means they sell for less. That will encourage hotel chains to build properties elsewhere.
EDWARDS: We deal with groups that want to come but have concerns, such as bans on employee travel to North Carolina. Convention sponsors are backing out. Speakers are backing out. It’s no longer only a moral or social decision for many. It’s a business decision, too. The cancellations started with meetings and conventions. When the NBA moved its all-star game from Charlotte to New Orleans, amateur and college sporting events grew concerned. Most cancellations will impact 2017 and 2018. We have seen fewer leads compared with last year. We’re spreading the word that we still offer quality service. Our “All Are Welcome” campaign uses messages from local elected officials and [Fort Lauderdale, Fla.-based] International Gay and Lesbian Travel Association to encourage travel to North Carolina. We’re visiting associations, such as [Washington, D.C.-based] American Society of Association Executives and [Chicago-based] Professional Convention Management Association, and explaining that no one benefits from avoiding North Carolina. We met with one concerned group that suggested we share perspectives of people in the community, such as a small business owner who’s gay or lesbian. We’re producing that now. We’re sending staff to annual conventions that are scheduled to visit here in the next couple of years. We want to look the planners in the eye and reassure them that we haven’t changed. Some think we have police in every bathroom.
What other issues are affecting the industry?
FOURRIER: Some people believe hotels and restaurants are the only businesses that benefit from travel and tourism. The impact is much wider. Attractions, retail and even banks also benefit. Visitors pay local sales taxes, which, for example, pay to light and pave the streets and provide police protection.
TUTTELL: The biggest issue is the lack of marketing funds. We’re the sixth most visited state in the country, but we’re 37th when it comes to funding a state tourism office. All of the states in our competitive set essentially spend twice what we do. We’re way behind.
MINGES: The strong economy won’t last forever. We’re all vulnerable when it dips. It’s hard to attract and retain workers. We have to pay entry-level employees more to attract them. Significant changes to overtime laws went into effect Dec. 1. Raleigh-based North Carolina Justice Center says about 26% of the state’s salaried workforce is now eligible for overtime. That has a tremendous impact on restaurants and hotels. We have to continue to drive demand to our state and cities. That’s done in a couple of ways, including protecting occupancy taxes that fund convention and visitor bureaus. Some local officials want to use that revenue for nontourism purposes. That can’t happen.
How will the industry grow?
TUTTELL: We used to advertise often on morning television news. We wanted to be next to news stories about North Carolina because it doubles the impact. The stories usually were positive. That’s no longer true. People still see North Carolina as a beautiful place. Most think HB2 is an ugly law, so they are worried that we are ugly people. It’s not like a hurricane, which isn’t our fault. We elected the people who passed it. We’ve done our first fall campaign — “There’s Beauty Here.” It focuses on North Carolina’s beautiful places and friendly people. We need to emphasize the second part of that message. We’re attending consumer shows for the first time this year. We want attendees to meet North Carolinians and see they’re beautiful, too.
SCHMIDT: People are still forming perceptions. You have to make them feel comfortable again. We’re hosting discovery tours — in person and virtually — to introduce planners to Greenville and Pitt County’s residents and meeting spaces. It shows them that everything is OK.
MINGES: Hurricane Matthew and its floods and the Charlotte riots made for a challenging fall. They left an unsettling impression on folks who may not understand our geography. Restaurants and hotels, which sat empty for about a week during the riots, lost a fair amount of business. That inventory is perishable. It will never be recouped.
NICHOLSON: We’re doing our best for every guest who walks in the door, whether they’re visiting the hotel, restaurant or spa. We show them how warm and welcoming and wonderful our people are and give them the ultimate experience. It has been really good for us. We’ve tried more national promotion. You can come from anywhere and experience all the beauty that North Carolina offers.
What’s the relationship between tourism and economic development?
TUTTELL: Real estate, insurance, finance and legal are among 18 sectors in the state that see a more than $1 billion impact from tourism. A recent study asked people if they felt strongly that North Carolina was a great place to start a business. Only 23% of those who hadn’t seen a North Carolina tourism ad and hadn’t visited the state strongly agreed. That number went to 48% if they saw an ad or visited recently. Our ads don’t directly promote business development, but according to the study, they have the power to double the state’s positive image.
EDWARDS: Wake County Economic Development uses our messages in its talent and business recruitment and retention efforts. Much of what attracts tourists attracts businesses. We’re discovering that the conventions that we’re hosting are for the same industries that county economic developers target. Wake County Economic Development was at our recent All Things Open convention, rubbing elbows with nearly every high-tech company in the country. It was an opportunity to showcase Raleigh and convince businesses to work in Wake County. I see VisitNC and EDPNC as a perfect example of marrying the two.
SCHMIDT: It makes perfect sense for us to be at the same table. If you don’t have the talent, you won’t get the businesses. Many millennials are more concerned about the amenities of the community where they work than the job they’ll land. I have one at home who’s ready to graduate and doing just that.
FULLARD: Our restaurant and hotel employs 120. Many grew up in Winston-Salem but moved elsewhere to advance their career before returning to work for us. We brought in some internal transfers to increase institutional knowledge. They came from Chicago, Alexandria, Va., and Palm Beach, Fla., and said quality of life and cost of living were two reasons for relocating.
Photos by Bryan Regan