Are DMOs worth it?

Q: I’ve taken over a business recently and keep getting requests to renew various subscriptions and memberships, including nearly £1,000 for my local DMO. Are DMOs worth it in your opinion, and how should I decide what marketing channels to renew or not?

A: When I was a hotelier, DMOs (and other similar channels) used to exist as a consortium to gain group exposure with new audiences – they were valued for their listing function that profiled your business in front of guests, agents and resellers in the hopes of gaining business. Initially, they existed pre the internet, operating through guidebooks, and then, after websites become more mainstream, they fulfilled a sort of online listing function. Now, as they’ve had to deal with a rise in ‘competition’ from online travel agents, the perception is that they’ve lost their value because the listings specifically aren’t relevant, when in fact their value is and always has been far beyond the listing of your business.

Being honest, some DMOs are better and more proactive than others and they’re a mixed bag when it comes to value. Visit Somerset is one of the leaders, taking a proactive and innovative approach to ensure their membership is great value and delivers for their members. They’re also adopting new and exciting technology like AI to deliver a better experience. However, it’s not about my opinion of DMOs or Visit Somerset, but about how you can determine the value for your business.

In their most basic form, DMOs do have a listing function and it is here that hoteliers place the most attention and where you can start to assess value. The listing will refer people through to your website – great for commission free sales – and they often have APIs with the major booking engines so you take more bookings through there too. It is however hard to quantify exactly which bookings came via the DMO, so this shouldn’t be your only validator.

You also need to look at the bigger picture and the role of DMOs on the national and international stage. If DMOs do their job right, they build the profile of the region and in doing so they push the number of visitors, and therefore the potential scope for bookings, higher. You only have to look at the Discover England Fund projects running at the moment, or visit one of the trade shows like ITB Berlin to see just how much the DMOs are representing their regions.

Next, they offer the potential for press, tour operator and agent visits, which in turn convert to future sales. I was at a dinner organised by Cotswold Tourism only last week, and they’d done an exceptional job of lining up agents and representatives looking to bring groups to the region. They ranged from bookings of five rooms at a time to 150 rooms at a time, and the hoteliers were given opportunity to showcase themselves. One introduction has connected a group agent who books 40 rooms at a time for five nights for eight consecutive weeks through the summer, with a hotel in the region. That’s the potential for 1,600 bed nights per year, just through one introduction.

Of course, I am quoting the best practice bits, but it’s definitely a case of in it to win it. If you aren’t part of the DMO, you can’t benefit from their work, but it’s also essential that you put work in to maximise it and hold them accountable too. Most DMOs will issue ‘calls for content’ where they are looking for information to fit the content they are promoting and the businesses which do best are those that take the time to proactively respond to these opportunities.

So, here’s a quick summary of how I evaluate if it’s worth it:

• Direct value: what did you pay and how many booking did you get in return?

• Cost-savings: assuming a £100 room rate and a 16%-32% commission rate through OTAs (example figures of course) you’re losing anything between £16 and £32 per booking. Direct bookings are worth more and boost your income for very little effort.

• Exposure: how much would you pay for equivalent exposure elsewhere? Using other services as a benchmark, consider the potential cost per lead and cost per view of one against the other. Which is the most cost-effective?

• Indirect value: this one is for DMOs specifically, but they can only exist and function with the support of local businesses. There is an intrinsic, indirect value to their work in that without proactive promotion of the region, footfall usually drops. True, they benefit all tourism, leisure and hospitality businesses through improved regional footfall, but being part of their membership enables you to support their mission, and then gain the direct value cited above.

Frankly, you have to make a commercial business decision for all subscriptions, identifying how and when your business needs revenue support, and assessing those channels which effectively deliver on them, but I’d say unless your occupancy is consistently above 90% every day, you’ll need external channels like DMOs to boost your revenues.