Billings Chamber/ hamber/convention & Visitors Bureau. Comprehensive Tourism Research and Strategic Plan

Billings Chamber/ hamber/convention & Visitors Bureau Comprehensive Tourism Research and Strategic Plan Prepared By: Randall Travel Marketing, Inc. Mooresville, North Carolina February, 2010

Table of Contents Section Subject Tab Pages Table of Contents Project Overview 1. Executive Summary 1 1.1-1.15 2. Study Objectives, Methodology 2 2.1-2.2 3. Project Team Experience and Credentials 3 3.1-3.2 Research Segments 4. Performance Review 4 4.1-4.10 5. Reconnaissance Report 5 5.1 5.40 6. Lodging Survey and STR Analysis 6 6.1-6.14 7. Visitor Intercept Survey 7 7.1-7.62 8. Mail Survey of BC/CVB Inquiries 8 8.1 8.54 9. Convention and Meeting Planner Survey 9 9.1 9.15 10. Attraction Survey 10 10.1 10.5 Strategic Plan 11. Recommended Strategies 11 11.1-11.37 Addendum 12. Glossary of Terms 12 12.1-12.10

Executive Summary Executive Summary Study Objective and Methodology The objective of this study was to conduct comprehensive travel research for the Billings Chamber/Convention & Visitors Bureau (BC/CVB) in Montana. The Billings Chamber/Convention & Visitor Bureau retained Randall Travel Marketing, Inc. (RTM) of Mooresville, North Carolina, to conduct this study. Study Methodology Research was conducted in Billings, Montana, during the seven-month period of April 2009 through October 2009. Many methods of data collection were used as part of this research project. 1. Initial Meeting and Materials Gathering: Initial meetings were conducted between BC/CVB and RTM professionals to review study methodology, deliverables, and questionnaires and to collect materials and other pertinent information. 2. Reconnaissance Trips: A professional Reconnaissance Team visited the Billings area April 27 through May 3, 2009. The region was fully evaluated from the perspective of the tourist. The team mystery shopped visitor information centers, attractions, hotels, restaurants, retail stores, and amenities. Other elements evaluated included signage, gateways, wayfinding, and front-line hospitality training. 3. Performance Audit: RTM conducted an evaluation and analysis of the organization's governance and structure, mission statement, funding, budgeting, program of work, and performance measures. 4. Lodging Property Survey: A confidential fax survey was sent to a total of 47 lodging properties (4,017 rooms) in Billings. A total 24 hotel/motel lodging properties (2,442 rooms) responded to the survey. A response rate of 61% is a solid and reliable response rate as RTM typically receives a response in the range of 55%-60%. In addition, a five-year report was purchased from Smith Travel Research for analysis. 5. Intercept Interviews (by season and market segment): Visitor intercept interviews, by season and market segment, were conducted as part of this comprehensive travel and tourism study for Billings, MT. Intercepts were conducted during three sessions in 2009: May 27 through May 31 July 16 through July 24 October 11 through 18 The intercept interviews were conducted at various lodging properties, attractions, and venues. Three-hundred-seven intercept interviews were conducted with the following respondent mix: Spring: (17) Business (14) Group (10) Leisure (14) Visit friends/family (7) Pass through (4) Meeting/convention (1) Other/medical Summer: (31) Business (20) Group (24) Leisure (11) Visit friends/family (24) Pass through (25) Meeting/convention (5) Other/medical Fall: (37) Business (6) Group (9) Leisure (9) Visit friends/family (7) Pass through (31) Meeting/convention (1) Other/medical 1-1

Executive Summary A two-page survey instrument (questionnaire) was written by RTM and approved by the BC/CVB. The survey contained 28 questions. The interviews were conducted by RTM staff. The survey included an incentive for a drawing for a free weekend in Billings, MT, to be selected from those who participated in the survey. The survey responses have been tabulated and are a part of this written study. 6. Visitor Profile and Conversion Survey Random Sample of Inquiries: The BC/CVB provided RTM with the total inquiries received and fulfilled by the BC/CVB during a twelve-month period. Two thousand, four-page questionnaires were mailed to a stratified random sample of people who had requested visitor information from the BC/CVB over that one-year period. The sample was stratified by time of year received as well as by source of inquiry. The survey was mailed at the first-class postage rate and included a postage-paid, return-addressed envelope. The survey contained 41 questions and included an incentive of a drawing for a free weekend visit to be selected from those that responded to the survey. A total of 266 surveys were returned for a 13.30% response rate and have been tabulated as part of this report. 7. Convention and Meeting Planer Interviews: Interviews were completed with 43 convention and meeting planners. Interview respondents were chosen from a list of qualified meeting planner leads provided by the BC/CVB. Interviewees included those who had brought conventions, tour groups, and meeting to Billings and those who had not. The survey contained 17 questions. 8. Attraction Manager Survey: A total of 13 attractions elected to participate in this study. A one-page survey was written by RTM and approved by the BC/CVB. The survey contained six questions. 9. State, Regional, and National Data: Travel research data from the State of Montana, the Travel Industry Association of America, and Destination Marketing Association was obtained and analyzed as part of the study. Regional and national travel databases also were studied. 10. Marketing Materials Evaluation: Marketing materials, including brochures and advertising, were obtained from BC/CVB. Materials were evaluated based on research findings and the marketing experience of the RTM team. Analysis and recommendations are a part of the marketing strategies in this report. 11. Report and Recommendations: Based on the research findings, a comprehensive report was written and presented to the BC/CVB. 1-2

Executive Summary Summary of Reconnaissance and Mystery Shopping Overall: Excellent interstate access. Good, on-the-route location. Reputation for being the big city in Montana and the region. Montana creates outstanding visitor appeal. Thus, Billings has the opportunity to capture those coming to the area due to the appeal of the state. Although Billings is rich in shopping, dining, and amenities, it needs to do more to create a memorable sense of place. Gateways, signage, and wayfinding: The airport and city limit gateway presents a good first impression. Arriving by auto on Interstate 90, the primary impressions are of industrial complexes, a big city, and lots of traffic. Better gateway signs are needed and first impressions. Signage and wayfinding are problematic throughout Billings. Traffic easily creates frustration and places added burden on signage/wayfinding. Visitor center and basic visitor information: The visitor center is conveniently located, attractive, and well managed. The visitor guide is good compared to other destinations. The map could be improved. The website is good compared to others. Lodging, dining, and shopping: Obvious, wide assortment of dining, lodging, and shopping. Attractions, historic sites, museums, and entertainment: Consistency in names is needed. Interpretation at specific sites is problematic (Yellowstone Kelly Grave, Boothill, etc.). Technology needed to help boost interpretation (Moss Mansion, Western Heritage Center, etc.) and help turn average attractions into a more WOW experience. Hard to determine must sees in Billings. Regional attractions overshadow in-town sites. Facilities for meetings/conferences, sports, etc.: Meeting/conference hotels appear dated but somewhat renovated. Sports facilities are good. Trade show and event facilities are good. Arts and entertainment venues are good. Outdoor recreation: More orientation and facilitation is needed to help visitors know where and how to engage in outdoor recreation. Hospitality: Residents are friendly and helpful. Front line is fairly knowledgeable about facilities and attractions in Billings in order to assist visitors. 1-3

Executive Summary Summary of Lodging Report Billings has approximately 4,017 lodging rooms. (This number fluctuates regularly as lodging properties add and delete rooms from their inventory.) Lodging built prior to 1980 accounts for 44% of room inventory. Slightly more than one-forth (27%) of lodging inventory was added from 1980 1999, with a total of 12 properties (1,087 rooms) being developed. Explosive growth occurred from years 2000 2008, with the opening of 13 chain-affiliated properties (1,153 rooms) accounting for over 29% of current lodging inventory. Occupancy in Billings outperformed national averages in 2003, 2006, and 2007. The market has steadily absorbed the increase in room supply. Business travelers account for the largest portion of reported market segmentation at 29% of lodging occupancy. Individual business travelers represent 20%; blue collar workers represent 9%. The conference/meeting market segment accounts for approximately 24% of lodging occupancy. Group travel accounts for an additional 11%. Billings is centrally located in the northwestern United States and is one of the state s top destinations for meetings. Three, full-service lodging properties (200+ rooms each), with conference and meeting space, account for nearly onequarter (21%) of the lodging inventory with 842 rooms. However, all three conference hotels are 30-38 years old. Even with renovations, this may still be a threat for the future. Leisure travel is strong and accounts for 29% of market segmentation. It consists of: tourists visiting the Billings area (16%); visiting friends and relatives (7%); and transient passing through as part of a longer trip (6%). The winter months of December and January are slowest; summer months of August, June, and July are consistently the strongest. Friday is the highest average weekday occupancy at 70.3%, while Sunday is the lowest at 47.1%. 2008 Annual Lodging Market Mix (Source: RTM Lodging Survey) 2008 Category 29.2% Business 19.9% Individual business travelers (white collar) 9.3% Blue collar workers (mineral industry, commercial, construction laborers) 23.6% Conference/Meeting 6.9% Government 6.5% Corporate 3.9% SMERF 3.4% Association 1.5% Medical 1.4% Motor enthusiasts (Harley-Davidson, RV, motorcycles, cars) 23.1% Leisure 16.2% Tourists visiting or passing through as a part of a longer trip 6.9% Visiting local friends & relatives 12.9% Transient/Medical/Other 6.3% Transient: passing through as part of a longer trip 4.0% Medical: visiting Billings for medical reasons personal or friends/family 2.6% Other: (specify) 11.2% Group 5.7% Team sports/events (team tournaments, rodeo, BMX, etc.) 3.4% Group tour/motor coach 2.1% Weddings/reunions/family events/social events 1-4

Lodging Occupancy Patterns Executive Summary Six-Year Billings & National Occupancy Trends Source: STR Six-Year Trend Report Billings, MT Four-Year Monthly Lodging Occupancy Trend Source: STR Six-Year Trend Report Billings, MT Occupancy by Day of the Week Source: STR Six-Year Trend Report Billings, MT 1-5

Six-Year Hotel/Motel ADR and RevPAR Trend Executive Summary Source: STR Six-Year Trend Report Billings, MT Annual Lodging Revenue Source: STR Six-Year Trend Report Billings, MT 1-6

Executive Summary Summary of Performance Review Governance for Billings Chamber/Convention & Visitors Bureau: Governance for the BC/CVB includes the Billings Chamber Board of Directors (19 seats) and a Tourism Business Improvement District (TBID) Board of Directors (7 seats). Billings Chamber/Convention & Visitors Bureau Staff: The Billings Chamber President/CEO reports to the Billings Chamber Board of Directors and is responsible for the day-to-day operations of the CVB. There are 11 full-time staff positions. Funding For Billings Chamber/Convention & Visitors Bureau: The BC/CVB tourism marketing program is funded primarily from the following sources: Lodging Tax: The BC/CVB receives a portion (4%) of the 7% tax collected on lodging revenues. Three of the 7% is retained by the State of Montana. The 4 of the 7% fund is remitted to Custer Country and is split among the destinations within Custer Country. TBID: A $1 tax (was $0.75 until July 1, 2009) is charged for each occupied lodging room. The total of this fund is remitted to the BC/CVB. Chamber In-kind and Other Funds: The Billings Chamber provides goods, services, and other revenues to the CVB. TBID/CVB Revenue Budget Category 2008-09 % 2009-10 % TBID ($0.75 / $1.00) $360,892 55.5% $526,133 66.5% State Bed Tax $244,777 37.6% $225,000 28.4% Carry Over $45,000 6.9% $40,000 5.1% TOTAL BUDGET $650,669 100% $791,133 100% It must be noted that the Chamber provides in-kind services to the TBID/CVB including management oversight, office space, and equipment. This annual contribution is estimated to be in the range of $125,000. TBID/CVB Budget Analysis: The following chart shows the three major areas of the BC/CVB budget as a percentage of its total budget and these same budget areas as a percentage of the total TBID and hotel occupancy taxes. Percentage of Total TBID/CVB Budget Budget Category 2008-09 % 2009-10 % Salaries & Benefits $159,503 29% $202,300 26% Office Expenses $79,102 14% $67,400 8% Outreach $321,434 57% $520,477 66% TOTAL BUDGET $560,039 100% $790,177 100% Destination Marketing Association International (DMAI) recommends: 25-40% Salaries and Benefits 10-15% Overhead 40+% Marketing and Outreach The average funding for tourism destination marketing in the United States is $350 annually per room in the destination. For Billings, with 4,017 rooms, this would be $1,466,205. 1-7

Executive Summary Summary of Convention and Meeting Planner Survey Primary factors for not bringing groups to Billings: o Inconvenient geographic location o Dated conference hotels/meeting facilities Strengths and weaknesses: Strengths Strengths: Volume and variety of restaurants, shopping, hotels; availability of meeting facilities, size, and location of Billings; things to do; CVB/Chamber/Community Top Ratings: Volume and variety of restaurants, shopping, and hotels; availability of meeting space Weaknesses Weaknesses: Dated facilities, hotels; location not convenient for their group; air transportation; prefer resort location; crime; dirty, unappealing visually Lowest Ratings: Dated hotels and facilities; location What is needed to increase appeal of Billings as a meeting destination? What is needed to increase appeal of Billings? Better conference hotels, updated meeting space, convention center Air transit, train transportation, better parking Top-rated facilities: Hilton Garden Inn; Hampton Inn; Crowne Plaza Aggressiveness of BC/CVB: 32% reported the BC/CVB was more aggressive than other DMOs; 50% reported about the same ; and 18% said less aggressive. Ratings for BC/CVB: Respondents report the BC/CVB performs average to somewhat above average on the following: (scale of 1-5, where 1=poor and 5=excellent) Ratings for the BC/CVB Avg. Development of effective marketing materials and advertising for meetings 3.79 Service for meetings (nametags, info booth, etc.) 3.74 Recruitment effort in bringing meetings to Billings 3.26 Attendance at trade shows 3.17 Direct sales effort 3.02 NOTE: Ratings above were lower for those who had not held meetings in Billings than those that had held meetings in Billings. Preferred methods of marketing to meeting planners: o One-fourth of planners use websites for meeting planning (approximately 23% do always or fairly often). Seventy-seven percent seldom use websites for planning. o Eighty percent of planners want to receive mailings directly from the BC/CVB. Only a few prefer to receive things directly from the hotels. o Planners prefer annually receiving hard copy mailings, with quarterly E-mail (digital) follow-ups and updates. Demographics: Planners tended to be an average age of 50.5 with slightly more females than males. The average number of years of experience for respondents was 15.9 years. In summary, Billings is currently doing well in the meeting segment because it is one of the largest cities in the state and region and has the volume and/or availability of desired amenities. However, the three primary meeting hotels are 30-38 years of age. Even with renovations, dated conference hotels and limited/dated meeting facilities threaten continued success. Currently, 23.6% of all lodging is conference/meetings. 1-8

Executive Summary Summary of Scientific Visitor Research Data Intercept Survey: Conducted on-site with visitors at hotels, attractions, meeting venues, etc. in Billings. Mail Survey: Survey mailed to those who inquired to BC/CVB about visiting Billings. Overall Intercept Survey Mail Survey Quantity of Interviews: 307 266 Demographics: Average Age 48.79 57.44 Gender: Male / Female 46.05% / 53.95% 41.70% / 58.30% Point Of Origin: MT, WY, WA MT, CA, ND Generations: Millennium Generation 9-27 3.34% 1.64% Generation X 28-48 44.15% 24.18% Baby Boomer 49-66 44.48% 45.08% Silent Generation 67-84 8.03% 27.46% War Generation 85+ 0.00% 1.64% Travel Party Size: Adults traveling without children 70.95% 82.72% Average # adults in party 2.15 2.17 Adults traveling with children 29.05% 17.28% Average # of children in party 1.78 1.75 Major Trip Purpose: Business 27.45% 4.15% Meeting/convention 19.61% 5.53% Vacation 6.86% 26.27% Weekend getaway 2.29% 3.23% Visit friends/relatives 11.11% 17.97% Shopping 2.29% 4.61% Outdoor recreation 0.98% 4.61% Attend a festival/event 1.63% 5.99% Pass thru - longer trip 12.42% 9.68% Participate/attend a sport event/tournament 6.54% 1.84% Attend a performance/concert 4.25% 1.84% Other (specify) 4.58% 14.29% Travel Planning: Spur of the moment 12.50% 2.44% 7-10 days before travel 16.55% 7.32% 14-21 days before travel 17.57% 10.37% 30-45 days before travel 22.64% 24.39% More than 60 days before travel 30.74% 55.49% Lodging Type: Hotel 79.93% 28.57% Motel 11.62% 46.10% Campground/Campsite 1.06% 8.44% Bed & breakfast inn 0.00% 1.30% Friends/family house 6.69% 12.99% other (specify) 0.70% 2.60% First Visit? Yes 25.82% No 74.18% Average number of prior visits 6.56 3.68 1-9

Average Length of Stay (Nights): Executive Summary Overall Intercept Survey Mail Survey 2.66 3.60 B G L M/C O PT VFF Spring 3.50 1.17 2.50 2.50 1.00 1.00 3.46 Summer 3.75 2.10 2.00 4.52 2.80 1.04 2.45 Fall 3.68 2.40 1.71 1.90 4.00 1.00 3.44 Mode of Transportation: Automobile only 73.27% 55.76% Combination fly/drive 16.83% 29.70% Motor coach/bus 0.99% 3.64% Motorcycle 6.27% 6.67% Other (specify) 2.64% 4.24% Overall Satisfaction Rating: 4.16 4.39 B G L M/C O PT VFF Spring Average Rating 4.24 3.93 4.11 4.00 4.00 4.71 4.14 Summer Average Rating 4.10 4.16 4.21 3.90 3.60 3.87 4.18 Fall Average Rating 4.22 4.50 4.67 4.24 3.00 4.29 4.67 Specific Ratings for Amenities: Quality of the lodging rooms 4.14 4.08 Lodging value you received for the price paid 4.03 3.94 Range of choices for dining 4.21 4.12 Selection of shopping 4.17 3.95 Signage and wayfinding 3.72 3.86 Ease of finding visitor information once here 3.89 3.93 Level of service/employee training 4.09 4.02 Overall quality of attractions 4.01 4.17 Activities: Business 27.04% 9.52% Shopping 56.68% 57.14% Convention/meeting 20.20% 8.99% Dining out 80.46% 77.25% Driving/sightseeing 19.87% 59.26% Antique shopping 1.95% 14.81% Guided tour 0.98% 7.41% Outdoor recreation 6.19% 22.75% Movie theater/driving in 6.19% 8.99% Visit art/craft gallery 1.95% 14.81% Visit a state/national park (specify) 11.40% 19.05% Visit an attraction/museum/ historic site 8.79% 36.51% Visit Historic Montana Avenue 2.61% 22.22% Participate in Outdoor Recreation? Yes 11.23% 29.27% No 88.77% 70.73% Most likely to participate in outdoor recreation: Leisure, Group, Meeting, Visiting Family/Friends Participate/Attend Cultural Event? Yes 5.88% 8.07% No 94.12% 91.93% Most likely to participate/attend a cultural event such as a play, concert, or performance: Group Visitors 1-10

Executive Summary Mail Overall Intercept Survey Survey Shop During This Visit? Yes 69.64% 79.52% No 30.36% 20.48% Spring Bus. Group Leisure Meeting Other Pass VFF Yes 47.06% 84.62% 60.00% 50.00% 100.00% 28.57% 57.14% No 52.94% 15.38% 40.00% 50.00% 0.00% 71.43% 42.86% Summer Bus. Group Leisure Meeting Other Pass VFF Yes 67.74% 85.00% 70.83% 88.00% 80.00% 33.33% 90.91% No 32.26% 15.00% 29.17% 12.00% 20.00% 66.67% 9.09% Fall Bus. Group Leisure Meeting Other Pass VFF 100.00 Yes 65.71% 83.33% % 80.65% 100.00% 33.33% 100.00% No 34.29% 16.67% 0.00% 19.35% 0.00% 66.67% 0.00% Day Trips to Other Areas? Yes 17.24% 50.93% No 82.76% 49.07% Attend/Participate in a Sports Event/Tournament? Yes 9.77% 9.88% No 90.23% 90.12% Visit Any Attraction or Museum? Yes 13.40% No 86.60% Attend an Event/Festival? Last 3 yrs Yes 23.20% 32.32% No 76.80% 67.68% Spring Bus. Group Leisure Meeting Other Pass VFF Yes 0.00% 35.71% 0.00% 0.00% 0.00% 0.00% 28.57% No 100.00% 64.29% 100.00% 100.00% 100.00% 100.00% 71.43% Summer Bus. Group Leisure Meeting Other Pass VFF Yes 19.35% 10.00% 4.17% 88.00% 0.00% 0.00% 36.36% No 80.65% 90.00% 95.83% 12.00% 100.00% 100.00% 63.64% Fall Bus. Group Leisure Meeting Other Pass VFF Yes 54.05% 50.00% 37.50% 0.00% 0.00% 0.00% 11.11% No 45.95% 50.00% 62.50% 100.00% 100.00% 100.00% 88.89% Likes and Dislikes Overall Intercept Survey Mail Survey Likes Shopping options Restaurants/dining options People friendly/considerate Friendly people Scenery Dining/shopping Dislikes Traffic/road construction/detours Accommodations/hotel Weather Traffic Appeal of New Products: Overall Intercept Survey Mail Survey Scenic driving trails 46.58% 74.81% Antique shopping trail 24.43% 31.20% A green/sustainable lifestyle center 16.29% 18.05% Trail of arts/crafts studios/shopping 42.02% 35.34% Self-guided historic walking tours 40.39% 51.13% Walking/biking trails 39.41% 37.22% 1-11

Summary of Attraction Survey Thirteen attractions elected to participate in this survey. Executive Summary Daily and Trip Expenditures Overall Intercept Survey Mail Survey Lodging $102.27 $90.95 Foods/meals $59.44 $68.92 Attractions/entertainment $44.64 $44.38 Events/tournaments $29.21 $55.31 Shopping $100.45 $116.41 Transportation $56.76 $95.63 Other $58.75 $31.23 Average Daily Expense $451.52 $502.83 Average Length of Stay 2.66 3.60 Total Trip Expenditures $1,201.04 $1,810.18 Business Group Leisure Meeting Other PassThru VFF Spring Average Daily Expense $280.79 $529.93 $574.00 $395.00 $260.00 $416.29 $238.01 Average Length of Stay 3.50 1.17 2.50 2.50 1.00 1.00 3.46 Total Trip Expenditures $982.77 $620.02 $1,435.00 $987.50 $260.00 $416.29 $823.51 Summer Average Daily Expense $463.07 $529.57 $443.41 $400.61 $255.55 $306.80 $359.59 Average Length of Stay 3.75 2.10 2.00 4.52 2.80 1.04 2.45 Total Trip Expenditures $1,736.51 $1,112.10 $886.82 $1,810.76 $715.54 $319.07 $881.00 Fall Average Daily Expense $312.30 $657.92 $410.22 $341.67 $221.00 $298.94 $271.42 Average Length of Stay 3.68 2.40 1.71 1.90 4.00 1.00 3.44 Total Trip Expenditures $1,149.26 $1,579.01 $701.48 $649.17 $884.00 $298.94 $933.68 RTM Weighted Daily Expenditures (1 Person) $235.19 $329.12 $264.02 $269.00 $184.87 $177.24 $121.33 RTM Weighted Daily Expenditures (Per Party) $352.05 (1.60 ppl) $572.47 (2.55 ppl) $475.87 (3.04 ppl) $379.09 (2 ppl) $245.51 (1.90 ppl) $340.67 (3.15 ppl) $289.67 (4.07 ppl) Overall Visitor/Guest Mix at Attractions 2008 Individual Visitors (regular daily admissions) Local/regional residents 48% Out-of-town visitors (staying either at hotels or with family/friends) 22% Groups: School/education groups 12% Group Tour/motor coach 5% Church/social/youth/etc. 2% Other 3% Rentals: Weddings/reunions/family events 1% Meetings/Conferences (Associations, Business, Govt., etc.) 3% Social Clubs (Garden, Book, etc.) 3% Other (specify): 1% TOTAL (percentages must total 100%) 100% The primary point of origin is communities in Montana, Wyoming, and Washington. Summer was reported as the busiest season, and winter is the least busy. Overall attendance has been steady for most that participated in this study. 1-12

Executive Summary Strategic Direction 1. Billings enjoys a special designation as the big city for Montana s Big Sky Country and the surrounding multi-state region. It is the hub where regional residents come for dining, shopping, events, meetings, and more. Billings has the choice of strategically choosing to retain this designation or to lose it over time to others. 2. Understand the current visitor segments and those with best potential for growth. Leaders of Billings need to understand the current travel and tourism customer mix, how to meet the needs of each, and how to target segments for growth. 2008 Category 29.2% Business 19.9% Individual business travelers (white collar) 9.3% Blue collar workers (mineral industry, commercial, construction laborers) 23.6% Conference/Meeting 6.9% Government 6.5% Corporate 3.9% SMERF 3.4% Association 1.5% Medical 1.4% Motor enthusiasts (Harley-Davidson, RV, motorcycles, cars) 23.1% Leisure 16.2% Tourists visiting or passing through as a part of a longer trip 6.9% Visiting local friends & relatives 12.9% Transient/Medical/Other 6.3% Transient: passing through as part of a longer trip 4.0% Medical: visiting Billings for medical reasons personal or friends/family 2.6% Other: (specify) 11.2% Group 5.7% Team sports/events (team tournaments, rodeo, BMX, etc.) 3.4% Group tour/motor coach 2.1% Weddings/reunions/family events/social events Source: RTM Lodging Study 2010 3. The task of the BC/CVB is to promote Billings as a destination to new and repeat visitors. The task of leadership is to drive continued development of the destination as well as continued diversity of the customer base. 4. RTM recommends 20-Year strategic development of core visitor amenities: Conference/meeting/event facilities Arts & Entertainment: The Best Seat in the West Billings/Western Heritage (includes more/better improvements and interpretation to such sites such as Boothill, Yellowstone Kelly Grave, Stockyards, Norm s Island, etc.) Trails: Linking visiting Billings to the region o Driving trails that start in Billings o Cowboy Trail: Handmade hats, boots, saddles, etc. o Farm-to-Market Trails Sports: Facilities and development study Downtown: Visual appeal and people places 1-13

Executive Summary 5. Gateways: It is critical to continue creating memorable and impressive gateways along all major routes into Billings, especially interstates. 6. Improve signage and wayfinding: This was the most negative issue reported by visitors to Billings and can be a serious detriment to increasing economic impact. 7. Provide effective orientation and facilitation for all visitors: This means highly effective visitor guides, website, and materials found by visitors at the front line to lead them directly to cash registers. This includes technology such as cell phone interpretation that compels visitation to Billings attractions. Recruit volunteer information ambassadors for significant events, meetings, and time periods. Consider Billings Visitor Hotline for calls from visitors. 8. Priority BC/CVB marketing initiatives: Get visitor guide to each and every visitor drive them to cash registers, extend their stays. Provide tear-off maps (with reverse side listings) at every hotel, restaurant, etc. Website for advance trip planning. Prospecting and direct sales to recruit new leisure, SMERF, sports, meetings, and events visitors. Technologies (social media, database marketing, etc.) to build dynamic relationships with repeat visitors and entice new visitors. Develop mobile technologies including emerging technologies for information and interpretation. Development of database and E-marketing to frequent repeat visitors to Billings. 9. Initiate pay as you play program for additional marketing outreach: Waterpark Hotels - - winter regional marketing campaigns Great Chefs of Billings - - winter dining campaign Spring Birding - - spring campaign targeting birders Stay a Day - - campaign to extend stay of meeting attendees Etc. 10. Continue partnership in regional tourism (State of Montana, Custer Country, etc.). 1-14

Executive Summary 11. Recommended Positioning: Billings Montana s Trailhead The Big City in Big Sky Country Billings is where travelers find the largest regional variety of hotels, dining, shopping and entertainment. It s where the trail begins! In this study RTM asked respondents to answer the question What makes Billings distinct/different from other destinations? The significant majority of responses fell into the following categories (these are presented in rank order: Big City/Size/Selection Rimrock Shopping/dining Friendly people Scenery Small town feel Center of Montana/hub Mountains Variety of activities Western flair Oil & Industry Old feel Proximity to Yellowstone RTM interprets this data to reflect the perception of Billings as a big city in Montana, where one finds a rich variety of shopping, dining, and amenities. It is also noteworthy that numerous comments were made about scenery, Rimrock, mountains, western flair, etc. This is good evidence for the positioning of Billings as Montana s Trailhead. It is where one finds the trail, and it is where one finds the supplies and material goods for the adventure. RTM also feels the wording of Montana s Trailhead reflects accurately the western/mountain flavor that colors the perception of Billings. 1-15

Executive Summary A two-page survey instrument (questionnaire) was written by RTM and approved by the BC/CVB. The survey contained 28 questions. The interviews were conducted by RTM staff. The survey included an incentive for a drawing for a free weekend in Billings, MT, to be selected from those who participated in the survey. The survey responses have been tabulated and are a part of this written study. 6. Visitor Profile and Conversion Survey Random Sample of Inquiries: The BC/CVB provided RTM with the total inquiries received and fulfilled by the BC/CVB during a twelve-month period. Two thousand, four-page questionnaires were mailed to a stratified random sample of people who had requested visitor information from the BC/CVB over that one-year period. The sample was stratified by time of year received as well as by source of inquiry. The survey was mailed at the first-class postage rate and included a postage-paid, return-addressed envelope. The survey contained 41 questions and included an incentive of a drawing for a free weekend visit to be selected from those that responded to the survey. A total of 266 surveys were returned for a 13.30% response rate and have been tabulated as part of this report. 7. Convention and Meeting Planer Interviews: Interviews were completed with 43 convention and meeting planners. Interview respondents were chosen from a list of qualified meeting planner leads provided by the BC/CVB. Interviewees included those who had brought conventions, tour groups, and meeting to Billings and those who had not. The survey contained 17 questions. 8. Attraction Manager Survey: A total of 13 attractions elected to participate in this study. A one-page was written by RTM and approved by the BC/CVB. The survey contained six questions. 9. State, Regional, and National Data: Travel research data from the State of Montana, the Travel Industry Association of America, and Destination Marketing Association was obtained and analyzed as part of the study. Regional and national travel databases also were studied. 10. Marketing Materials Evaluation: Marketing materials, including brochures and advertising, were obtained from BC/CVB. Materials were evaluated based on research findings and the marketing experience of the RTM team. Analysis and recommendations are a part of the marketing strategies in this report. 11. Report and Recommendations: Based on the research findings, a comprehensive report was written and presented to the BC/CVB. 2

Six-Year Hotel/Motel ADR and RevPAR Trend Executive Summary Source: STR Six-Year Trend Report Billings, MT Annual Lodging Revenue Source: STR Six-Year Trend Report Billings, MT 6

Executive Summary Summary of Convention and Meeting Planner Survey Primary factors for not bringing groups to Billings: o Inconvenient geographic location o Dated conference hotels/meeting facilities Strengths and weaknesses: Strengths Strengths: Volume and variety of restaurants, shopping, hotels; availability of meeting facilities, size, and location of Billings; things to do; CVB/Chamber/Community Top Ratings: Volume and variety of restaurants, shopping, and hotels; availability of meeting space Weaknesses Weaknesses: Dated facilities, hotels; location not convenient for their group; air transportation; prefer resort location; crime; dirty, unappealing visually Lowest Ratings: Dated hotels and facilities; location What is needed to increase appeal of Billings as a meeting destination? What is needed to increase appeal of Billings? Better conference hotels, updated meeting space, convention center Air transit, train transportation, better parking No recommendation Top-rated facilities: Hilton Garden Inn; Hampton Inn; Crowne Plaza Aggressiveness of BC/CVB: 32% reported the BC/CVB was more aggressive than other DMOs; 50% reported about the same ; and 18% said less aggressive. Ratings for BC/CVB: Respondents report the BC/CVB performs average to somewhat above average on the following: (scale of 1-5, where 1=poor and 5=excellent) Ratings for the BC/CVB Avg. Development of effective marketing materials and advertising for meetings 3.79 Service for meetings (nametags, info booth, etc.) 3.74 Recruitment effort in bringing meetings to Billings 3.26 Attendance at trade shows 3.17 Direct sales effort 3.02 NOTE: Ratings above were lower for those who had not held meetings in Billings than those that had held meetings in Billings. Preferred methods of marketing to meeting planners: o One-fourth of planners use websites for meeting planning (approximately 23% do always or fairly often). Seventy-seven percent seldom use websites for planning. o Eighty percent of planners want to receive mailings directly from the BC/CVB. Only a few prefer to receive things directly from the hotels. o Planners prefer annually receiving hard copy mailings, with quarterly E-mail (digital) follow-ups and updates. Demographics: Planners tended to be an average age of 50.5 with slightly more females than males. The average number of years of experience for respondents was 15.9 years. In summary, Billings is currently doing well in the meeting segment because it is one of the largest cities in the state and region and has the volume and/or availability of desired amenities. However, the three primary meeting hotels are 30-38 years of age. Even with renovations, dated conference hotels and limited/dated meeting facilities threaten continued success. Currently, 23.6% of all lodging is conference/meetings. 8

Billings Chamber/Convention & Visitor Bureau Study Objectives and Methodology Study Objectives & Methodology Study Objective The objective of this study was to conduct comprehensive travel research for the Billings Chamber/Convention & Visitors Bureau (BC/CVB) in Montana. The Billings Chamber/Convention & Visitor Bureau retained Randall Travel Marketing, Inc. (RTM) of Mooresville, North Carolina, to conduct this study. Study Methodology Research was conducted in Billings, Montana, during the seven-month period of April 2009 through October 2009. Many methods of data collection were used as part of this research project. 1. Initial Meeting and Materials Gathering: Initial meetings were conducted between BC/CVB and RTM professionals to review study methodology, deliverables, questionnaires, gather input, and collect materials and other pertinent information. 2. Reconnaissance Trips: A professional Reconnaissance Team visited the Billings area April 27 through May 3, 2009. The region was fully evaluated from the perspective of the tourist. The team mystery shopped a sampling of visitor information centers, attractions, hotels, restaurants, retail stores, and amenities. Other elements evaluated included signage, gateways, wayfinding, and front line hospitality training. 3. Performance Audit: RTM conducted an evaluation and analysis of the organization's governance and structure, mission statement, funding, budgeting, program of work, and performance measures. Comparability of funding and budget allocation with national averages. Staffing and organizational structure. Review of marketing programs. Results measures and program performance analysis. 4. Lodging Property Survey: A confidential fax survey was sent to a total of 47 lodging properties (4,017 rooms) in Billings, MT. A total 24 hotel/motel lodging properties (2,442 rooms) responded to the survey. A response rate of 61% is a solid and reliable response rate as RTM typically receives a response in the range of 55%-60%. In addition, a comparison of the data submitted to RTM and the data submitted to Smith Travel Research, revealed directly comparable statistics and confirmed the reliability of the data collected as part of this study. 2-1

Billings Chamber/Convention & Visitor Bureau Study Objectives & Methodology 5. Intercept Interviews (by season and market segment) Visitor intercept interviews, by season and market segment, were conducted as part of this comprehensive travel and tourism study for Billings, MT. Intercepts were conducted during three sessions in 2009: May 27 through May 31 July 16 through July 24 October 11 through 18 The intercept interviews were conducted at various lodging properties, attractions, and venues. Three-hundred-seven intercept interviews were conducted with the following respondent mix: Spring: (17) Business (14) Group (10) Leisure (14) Visit friends/family (7) Pass through (4) Meeting/convention (1) Other/medical Summer: (31) Business o (20) Group o (24) Leisure o (11) Visit friends/family o (24) Pass through o (25) Meeting/convention o (5) Other/medical Fall: (37) Business o (6) Group o (9) Leisure o (9) Visit Friends/family o (7) Pass through o (31) Meeting/convention o (1) Other/medical A two-page survey instrument (questionnaire) was written by RTM and approved by the BC/CVB. The survey contained 28 questions. The interviews were conducted by RTM staff. The survey included an incentive for a drawing for a free weekend in Billings, MT, to be selected from those that participated in the survey. The survey responses have been tabulated and are a part of this written study. 2-2

Billings Chamber/Convention & Visitor Bureau Study Objectives & Methodology 6. Visitor Profile and Conversion Survey Random Sample of Inquiries: The BC/CVB provided RTM with the total inquiries received and fulfilled by the BC/CVB during a twelve month period. Two thousand, four-page questionnaires were mailed out to a stratified random sample of people who had requested visitor information from the BC/CVB over that one-year period. The sample was stratified by time of year received as well as by source of inquiry. The survey instrument (questionnaire) was printed on a single sheet of 11 x 17 white paper and folded to a four page, 8 ½ x 11 letter-sized format. The survey was mailed at the first class postage rate and included a postage paid, return addressed envelope. The survey contained 41 questions and included an incentive of a drawing for a free weekend visit to be selected from those that responded to the survey. A total of 266 surveys were returned for a 13.30% response rate and have been tabulated as part of this report. Additionally, it should be noted that our team noted a homogenous nature to the responses. The findings from the survey were tabulated, and a written report of the data and conclusions was developed as part of this overall study. 7. Convention and Meeting Planer Interviews: Interviews were completed with 43 convention and meeting planners. Interview respondents were chosen from a list of qualified meeting planner leads provided by the BC/CVB. Interviewees included those who had brought conventions, tour groups, and meeting to Billings and those who had not. The survey contained 17 questions. The interview responses have been tabulated and are a part of this study. 8. Attraction Manager Survey: A total of 13 attractions elected to participate in this study. A one-page survey instrument (questionnaire) was written by RTM and approved by the BC/CVB. The survey contained six questions. The survey responses have been tabulated and are a part of this study. 9. State, Regional and National Data: Travel research data from the State of Montana and Travel Industry Association of America was obtained and analyzed as part of the study. Regional and national travel databases were also studied. 10. Marketing Materials Evaluation: Marketing materials including brochures and advertising were obtained from BC/CVB. Materials were evaluated based on research findings and the marketing experience of the RTM team. Analysis and recommendations are a part of the marketing strategies in this report. 2-3

Billings Chamber/Convention & Visitor Bureau Study Objectives & Methodology 11. Report and Recommendations: Based on the research findings, a comprehensive report was written and presented to the BC/CVB. 2-4

Project Team and Credentials Project Team and Credentials Randall Travel Marketing Company Overview Randall Travel Marketing, Inc. (RTM) focuses solely on market research, strategic planning, consulting, marketing planning, product development, education, and trend analysis for the travel and tourism industry. Comprehensive Research and Strategic Planning RTM provides comprehensive, research-based, strategic planning for the travel industry with a primary focus on destination marketing organizations. Each project conducted by RTM is designed to meet the unique needs of the client. Research methodologies utilized by the RTM team include but are not limited to: Reconnaissance and mystery shopping reports Audit of destination and DMO current status, history and market share analysis Visitor market mix analysis Visitor profile and conversion research (including comparability to state and national research) Economic Impact Studies Focus Groups and Focus Forums Creative evaluation of marketing materials, advertising, and placement Recommended marketing position Complete marketing strategies based on research findings Consulting RTM also provides consulting services based on individual client needs: Site evaluations and feasibility studies Board of Directors retreats, training, and vision sessions Tourism product development consulting Marketing planning sessions 3-1

Project Team and Credentials Client Project History The Randall Travel Marketing team has conducted research and planning in over 100 destinations. Recent work includes: Alabama Montgomery CVB Decatur CVB Florence/Lauderdale CVB Alabama Mountain Lakes Assn. Auburn-Opelika CVB Anniston CVB California Mendocino County The Inn at Occidental Florida Brevard County CVB Polk County CVB Highlands County CVB Georgia Georgia Dept. of Tourism Macon CVB Atlanta Metro Travel Assn. Gainesville-Hall County CVB Coweta County CVB Clayton County CVB Columbus CVB Dalton CVB Helen-White County CVB Toccoa-Stevens County CVB Statesboro CVB Cartersville-Bartow County CVB Augusta/Richmond County CVB Americus-Sumter County CVB Port Columbus Civil War Center Douglass Theatre Illinois Peoria CVB Kansas Kansas Dept. of Tourism Topeka CVB Kentucky Kentucky Dept. of Tourism Lexington CVB Big South Fork Scenic Railway Louisiana Louisiana Dept. of Tourism Shreveport-Bossier CVB Ascension Parish CVB Massachusetts Oak Bluffs Inn, Martha s Vineyard Mississippi Mississippi Dept. of Tourism Greenville CVB Starkville CVB Missouri Saint Charles CVB Nebraska Lincoln CVB New York Finger Lakes Tourism Assn. Corning-Steuben CVB Wayne County CVB Ithaca-Tompkins CVB Ontario County CVB Cayuga County CVB North Carolina N.C. Dept. of Tourism Brevard-Transylvania CVB Salisbury CVB Wilmington-Cape Fear CVB Goldsboro-Wayne County CVB Mount Airy CVB Rutherford County CVB Stanly County CVB Lexington CVB Onslow County CVB Hickory CVB Richmond County CVB Edenton/Chowan County CVB Boone CVB The Swag Inn, Waynesville Greystone Inn, Lake Toxaway North Carolina Performing Arts North Dakota Grand Forks CVB North Dakota Dept. of Tourism Oklahoma Oklahoma City National Mem. Norman CVB Bartlesville CVB Shawnee CVB Pennsylvania Cumberland County CVB York County CVB Bucks County CVB Hershey-Harrisburg CVB South Carolina Rock Hill CVB Greenville CVB Tennessee Memphis CVB Oak Ridge CVB Cleveland-Bradley County CVB Clarksville CVB Rutherford County CVB Monroe County CVB Blount County CVB Anderson County CVB Tennessee Aquarium Texas Bryan-College Station CVB Lubbock CVB South Padre Island CVB Virginia Chesapeake CVB Fredericksburg Area CVB Crater Dist. Planning Comm. Lexington-Rockbridge CVB Newport News CVB Loudoun County CVA Arlington CVS Martinsville CVB Natural Bridge West Virginia Cabell-Huntington CVB Morgantown CVB Greenbriar County CVB Parkersburg-Wood County CVB Wyoming Wyoming Dept. of Tourism Cheyenne CVB Laramie CVB Casper CVB Sweetwater County CVB 3-2

Project Team and Credentials Project Team Biographical Information and Credentials: Judy L. Randall, President and CEO Over 25 years of travel, tourism and marketing experience. Randall has worked with numerous attractions, lodging, and destination marketing organizations. The team of Randall and Gustke worked together in developing the unique destination research and assessment model implemented by Randall Travel Marketing in communities throughout the United States. Randall, along with Dr. Larry Gustke, authors the annual Top Ten Trends in Travel and Tourism, which is used internationally by travel and tourism marketing organizations. Her speaking, writing, and reports on travel and tourism marketing and promotion are well known throughout the travel industry. Larry D. Gustke, Ph.D. Over 30 years experience in conducting research on outdoor recreation, traveler behavior, and travel marketing. Dr. Gustke holds degrees from Michigan State and Texas A&M and has conducted research throughout the United States. He is currently a tenured professor with North Carolina State University and works with Randall Travel Marketing, Inc. as a research mentor and supervisor participating in all client projects. Gustke, along with Judy L. Randall, authors the annual Top Ten Trends in Travel and Tourism, which is used internationally by travel and tourism marketing organizations. Berkeley W. Young, Young Strategies, Inc., President Over 20 years of travel/tourism marketing, management, and retail experience. Young s experience includes serving as the Executive Director of a rural tourism development authority (CVB) and chamber of commerce which then led to his tenure as Director of Sales and General Manager of a large golf resort managed by the nation s largest hotel management company. Young joined Randall Travel Marketing, Inc. in 1998 as Director of Client Services and served as Vice President from 2000 to 2004. In 2004, Young formed his own Charlotte, NC, based company focusing on research and strategic planning for all aspects of the travel industry. He continues in active partnership with the RTM team. Project Research Implementation Team Amy Stevens Jan Sigmon 3-2

Performance Review Performance Review Billings Overview Billings, Montana, located in the Yellowstone River Valley of south central Montana, is a thriving regional hub sitting directly on the axis of Highways I-90 and I-94. It is said to be where the eastern plains meet the Rocky Mountains, which accounts for the spectacular views that can be seen from every angle of the city. Sandstone rimrock cliffs surround Billings and rise 400 feet above the valley and provide visitors with panoramic views of seven different mountain ranges. Located just a few hours southwest is Yellowstone National Park where visitors leaving Billings have three different routes from which to choose including the 11,000 foot high Beartooth Highway, one of the most scenic highways in America. Billings is the largest city in Montana, home to an estimated 103,994 people and accounting for slightly more than 10% of Montana s total population. Montana is one of four states in the United States that have no state sales tax (Alaska, New Hampshire and Oregon do not have state sales tax). Travel and Tourism Promotion in Billings Background Billings has long been a travel destination and a transportation hub. For over 100 years, the Billings Chamber of Commerce (BCOC) has been promoting the destination to travelers. In 1987 a statewide lodging tax was implemented with some funds allocated to travel promotion. In 1998, the Billings Convention & Visitors Bureau was established as a branch of the BCOC to promote tourism in the city of Billings. The Billings Chamber/Convention & Visitors Bureau (BC/CVB) was established to oversee the tax revenues received from the occupancy tax that was levied by legislature in 1987. In 2007 Billings was the first destination in the state to create a Tourism Business Improvement District (TBID) with a fee on local lodging allocated specifically and totally to the promotion of Billings as a travel destination. The Chamber and TBID Board work in partnership to market Billings. Billings Chamber of Commerce Mission and Guiding Principles The Billings Chamber of Commerce first began operations in 1905. The mission of the BCOC is to develop a strong business climate and vibrant economy by serving the community in a leadership role, thereby enhancing the quality of life. The vision of the BCOC is to achieve excellence in community leadership and growth. The BCOC brings together the interests of government, trade and civic associations, and individual travel suppliers (hotels, motels, restaurants, travel agencies, attractions, and local transportation) in building outside visitor traffic to the area. The BCOC is also the area s liaison between potential visitors to the area, and the businesses that will host them when they come. The Billings Chamber of Commerce has been a good steward to the travel industry in many ways. Specifically, the Chamber has provided funding, staffing, office space, equipment, and leadership to the destination marketing effort over the years. 4-1

4-2 Performance Review 2009 Billings Chamber of Commerce Board of Directors The BCOC By-Laws states in Article III, Section 2: The Board of Directors shall consist of no more than 19 and no less then 15 voting members elected by the membership. The Directors and Officers of the Board shall be elected by the active membership by a ballot sent by mail or electronically at least 30 days prior to the end of the current fiscal year. Each director and officer shall hold office until the expiration of his/her term of office or until his/her respective successors are elected and qualified. All terms begin at the start of the new fiscal year. Directors elected by the members shall serve for three years on a staggered term basis so that one-third of the elected directors retire in any given year at the end of the fiscal year, leaving one-third f the elected directors with an additional year of service, and the remaining one-third of the elected directors with an additional two years of service. Directors may serve no more than two consecutive complete terms in addition to any partial term to which they have been appointed prior to election. The Chair of the Board may appoint one or more ex-officio members, as approved by the Board, to serve in an advisory position throughout the Chairperson s term. Ex-officio member have no voting authority. FY 2008-2009 Billings Area Chamber of Commerce Executive Committee Mike Gulledge Chair Billings Gazette Communications Allan Karell Chair Elect Karell, Dyre, Haney PLLP Keith Cook Treasurer First Interstate Bank Kendall Merrick Past Chair Rimrock Mall Roger Huebner Chair, Finance Committee Eide Bailly, LLP Linda Gallagher Chair, CVB Days Inn David Irion Chair, Member Development St. Vincent Healthcare Foundation Rick Burt Chair Government Affairs Northwestern Energy John Brewer President/CEO Billings Area Chamber of Commerce FY 2008-2009 Billings Area Chamber of Commerce Board of Directors John Bowman Qwest Rick Burt Northwestern Energy John Cech MSU-B College of Technology Keith Cook First Interstate Bank Chris Ervin Best Realty, Inc. GMAC Linda Gallagher Days Inn Mike Gulledge Billings Gazette Communications Jim Haar High Tech Construction Roger Huebner Eide Bailly, LLP David Irion St. Vincent Healthcare Foundation Val Jeffries Holiday Station Stores Allan Karell Karell, Dyre, Haney, PLLP Greg McDonald Wendy s of Montana Kendall Merrick Rimrock Mall Dr. Joe Michels Solomon Bruce Consulting Sean O Donnell Bresnan Communications Michael Sanderson Engineering, Inc. Michael Schaer Computers Unlimited Bryon Stiller National Information Systems, Inc. John Brewer Billings Chamber of Commerce

Performance Review FY 2008-2009 Ex-Officio Members Steve Arveschoug Big Sky EDA Bill Kennedy Yellowstone County Commissioners Tina Volek City of Billings Jack Copps School District 2 Shelli Mann Boothill Inn & Suites Tourism Business Improvement District In 2007, the Montana Legislature and the Governor of Montana approved resolution 07-18593 allowing local governments to create Tourism Business Improvement Districts effective October 1, 2007. The BC/CVB, in conjunction with their lodging partners, was instrumental in the establishment of the first Tourism Business Improvement District (TBID) in the state of Montana. The mission of the TBID is to generate room nights for lodging facilities in the City of Billings, MT, by effectively marketing the Billings region as a preferred travel destination. TBID legislation requires all lodging properties in the City of Billings with six rooms or more to collect a flat rate of $1.00 per occupied room night. The Tourism Business Improvement District Board of Trustees authorizes the uses of the TBID tax revenue and works in partnership with the Billings Chamber/Convention & Visitors Bureau to pursue the growth of the travel industry for Billings, MT. This new bed tax generated approximately $400,000 in new revenues for the TBID/CVB in its first year and TBID collections are predicted to be $526,133 in the TBID/CVB 2009-2010 budget. 2009 Billings Tourism Business Improvement District Board of Directors The TBID By-Laws state that the Board of Trustees shall consist of not less than five or more than seven owners of property within the TBID or their designees. Trustees are appointed by the Mayor of the City of Billings and approved by the Governing Body. Three of the trustees who were first appointed were designated to serve for terms of one, two, and three years, respectively, from the date of their appointments, and two were designated to serve for terms of four years from the date of their appointments. There were two additional appointments for terms of two years and three years, respectively. All future trustees must be appointed for a term of office of four years, except that a vacancy occurring during a term must be filled for the unexpired term. A trustee shall hold office until the trustee s successor has been appointed and qualified. FY 2008-2009 TBID Board of Directors Shelli Mann, Board Chair Steve Wahrlich, Vice Chair Cheri Mine, Secretary/Treasurer Linda Gallagher Ginny Hart Joyce Bratland Chris Johnson John Brewer Boothill Inn & Suites Best Western Clock Tower Inn Holiday Inn Grand Montana Days Inn Wingate by Wyndham Best Western Kelly Inn & Suites Crowne Plaza Billings Billings Chamber of Commerce 4-3

Performance Review Billings hoteliers and community leaders are to be praised for their hard work and diligence. Not only did these visionaries come together to create the first TBID in Montana; now because of their work all municipalities in the state will have the ability to establish their own TBIDs. All residents of Montana benefit as tax relief generated by visitor spending means less taxes for residents to pay. BC/CVB/TBID Offices and Visitor Center The offices and visitor center for the Billings Chamber/Convention & Visitors Bureau are located in an attractive two-story building at 815 South 27 th Street in Billings. Motorists arriving in Billings cannot miss the facility, which is prominently situated on the right side of the road when heading into the downtown area on 27 th Street. The facility has excellent directional and name signage and ample front door parking. This facility provides a good first impression for arriving visitors. The Visitor Center is spacious and attractive. The center is clean and modern looking and offers a large space to present an overview of the area. Ample brochures and information are available and the center is well staffed to assist travelers. Offices for the Chamber and CVB are found on the second floor of the building. BC/CVB Staff The BC/CVB President/CEO reports to the BC/CVB Board of Directors and is responsible for the day to day operations of the CVB. A staff flow chart is provided following the staff listing below. Reporting to the CVB President/CEO are the following fulltime positions: Convention & Visitors Bureau, Director Government Affairs, Director Community Relations, Director John Brewer Joan Kronebusch Bruce MacIntyre Alex Tyson Tom Krause Kimberly Garcia Kama Humphrey Kelly McCandless Dawn McCurtain Rene Beyl Nick Mann President/CEO Director, Convention & Visitors Bureau Director, Government Affairs Director, Community Relations Sales Manager, Convention & Visitors Bureau Membership Sales Manager Events Manager Leisure Sales, Convention & Visitors Bureau Administrative Manager Secretary/Reception Visitors Services, Convention & Visitors Bureau 4-4

Performance Review President/CEO John Brewer Administrative Manager Dawn McCurtain Director CVB Joan Kronebusch Director Government Affairs Bruce MacIntyre Director Community Relations Alex Tyson CVB Sales Manager Tom Krause CVB Leisure Sales Kelly McCandless Visitor Services Supervisor Nick Mann Secretary/Reception Rene Beyl Events Manager Kama Humphrey Membership Sales Kimberly Garcia Current as of October 2009 TBID/CVB Funding Recognizing the importance of tourism to Montana s economy, the Montana legislature created a 4% Lodging Facility Use Tax in 1987. Distribution of these funds is managed by the Tourism Advisory Council for the State of Montana s Promotion Division. Initial payment of funds: Montana Heritage Commission ($400,000) paid annually Department of Revenue collection costs and reimbursement to general fund of taxes paid by state employees Remaining funds allocated as follows: 6.5% - State Parks (operation and maintenance) 2.5% - University System (tourism and recreation research) 1.0% - Historical Society (historical sites and signage) 22.5% - Regional Groups (6 regional groups/cvb Marketing) 67.5% - Department of Commerce Programs, Montana Promotion Division, Travel Montana/Film Office. 4-5

4-6 Performance Review An additional 3% Lodging Facilities Sales Tax was passed through the Montana legislature in 2003; and 100% of this tax collection is deposited directly into the state general fund. Therefore, the total state tax collected on lodging in Montana is 7%. In October 2007, the first Tourism Business Improvement District (TBID) in the state was created by the legislature for the purpose of promoting tourism, conventions, trade shows, and travel to the City of Billings, MT. This legislation allows all lodging properties in the City of Billings with six rooms or more to collect a flat rate of $0.75 per occupied room night. The Tourism Business Improvement District Board of Trustees authorizes the uses of the TBID revenue and works in partnership with the BC/CVB to pursue the growth of the travel industry for Billings, MT. Therefore, travelers staying in Billings lodging pay a total of 7% state tax plus the $0.75 TBID tax which is well below the DMAI (Destination Marketing Association International) reported national average of 12.2% total tax on lodging (2005 data). In accordance with Montana state law, all revenues generated by the 4% lodging facility use tax are deposited in an account in the state special revenue fund to the credit of the Department of Commerce. The following chart shows the amount of revenue generated by the 4% lodging facility use tax collected by the six tourism regions in the State of Montana in 2006 (most recent data available at time of report). 4% Lodging Facility Use Tax Collections % of Tourism Region Amount Total Glacier Country $4,970,191 31% Yellowstone Country $4,774,674 30% Custer Country $2,628,445 16% Gold West Country $1,978,554 12% Russell Country $1,461,640 9% Missouri River Country $282,672 2% TOTAL $16,096,176 100% There are set expenditure appropriations in the legislation that must be followed before the allocation of the balance of tax proceeds can be distributed. Once these appropriations are made (see page 1 of this report section), the legislation currently states 22.5% of the 4% occupancy tax is to be distributed between the six tourism regions in Montana: Russell Country, Missouri River Country, Glacier Country, Gold West Country, Yellowstone Country, and Custer Country. A governor appointed Tourism Advisory Council oversees the distribution of said funds to the regional nonprofit tourism corporations and nonprofit convention and visitors bureaus for tourism promotion in the State of Montana. Funds are released to the tourism promotional agencies based on prior Council approval of: 1) a narrative marketing plan, 2) an annual budget, and 3) marketing projects. The Billings Chamber of Commerce appropriates the approved state bed tax funds to the TBID/CVB operating budget as a revenue line item. While many Chamber funding vehicles are in place, the BC/CVB supported the establishment of a Tourism

Performance Review Business Improvement District with funds dedicated to travel marketing. The following table shows the travel promotion funding for the TBID/CVB: TBID/CVB Revenue Budget Category 2008-09 % 2009-10 % TBID ($0.75) $360,892 55.5% $526,133 66.5% State Bed Tax $244,777 37.6% $225,000 28.4% Carry Over $45,000 6.9% $40,000 5.1% TOTAL BUDGET $650,669 100% $791,133 100% Chamber funding is derived from an annual dues supported membership program. The Chamber currently has 1,110 active members and is projected to generate $565,200 in dues for the 2009-2010 fiscal year. In addition, member events and ad sales are projected to generate $207,950 and $36,350, respectively, in the same time period. It must be noted that the Chamber provides in-kind services to the TBID/CVB including management oversight, office space, and equipment. This annual contribution is estimated to be in the range of $125,000. TBID/CVB Budget Analysis The following charts show the three major areas of the BC/CVB budget as a percentage of its total budget and these same budget areas as a percentage of the total TBID and hotel occupancy taxes collected. Percentage of Total TBID/CVB Budget Budget Category 2008-09 % 2009-10 % Salaries & Benefits $159,503 29% $202,300 26% Office Expenses $79,102 14% $67,400 8% Outreach $321,434 57% $520,477 66% TOTAL BUDGET $560,039 100% $790,177 100% A review of the three basic budget categories for the TBID/CVB (Salaries & Benefits, Office Expenses & Outreach) reveals the TBID/CVB is spending the money it receives appropriately as a percentage of the whole budget. These figures directly compare with the standards set by the Destination Marketing Internationals (DMAI). According to DMAI, salaries and benefits should fall within a 25-40% range. Marketing and outreach should be approximately 40-50%, and office expenses should be around 10-15%. Comparing the size of the CVB budget categories as a percentage of the total room occupancy tax collections in the market area is the best method to determine the highest and best use of the hotel occupancy tax dollar. A recent survey of the DMAI membership revealed that 55% of their member CVB s budgets come from the room occupancy tax collections. 4-7

Performance Review Current Market Positioning for the BC/CVB The BC/CVB uses the following statement in its marketing materials whereby the word in is highlighted in the name of the city Billings and the word it s sits directly above the highlighted in : Previous Promotional Materials and Public Relations Efforts In auditing the past efforts of the BC/CVB, we reviewed brochures, advertising, press releases, media coverage, and website analytics. Please note our comments on promotional materials under the Marketing Strategies section of this report. Inquiry Records and Statistics The primary purpose of a destination marketing organization (DMO) is to advertise the destination to generate inquiries that are fulfilled by mailing a package of visitor information. This effort is intended to generate increased visitation to the destination, which creates economic impact as a result. One method of measuring the impact of the DMO s advertising efforts is to look at the number of inquiries that are generated each year. The true test of the success of the DMO s marketing efforts comes from research that determines the number of inquiries that are converted to actual visits and resulting economic impact. In the following chart, marketing expenditures is defined as the total advertising, fulfillment, and PR expenditures (includes expenses such as telephone, postage and printing, in addition to advertising). BC/CVB Inquiries Collection History Type of Inquiry 2008 2009 Phone 184 105 Advertising Response N/A N/A Internet Inquiries 138 748 Walk-ins 292 175 Email 71 10 Mail 53 21 Other N/A 46 (Information provided by BC/CVB) 4-8

4-9 Performance Review Economic Impact and Tax Relief RTM reviewed economic impact and visitor profile research conducted by the University of Montana Institute for Tourism and Recreation Research (ITRR) and contacted Norma P. Nickerson, Ph.D. The following data is gleaned from ITRR Economic Review of the Travel Industry in Montana (July 2008) and http://travelmontana.mt.gov/faq/fastfacts_jan10.pdf. Additional sources are cited at the bottom of page 4-10. Tourism is one of Montana s leading and fastest growing industries. In 2008, travel expenditures by nonresident visitors totaled over $3 billion. This is only down about 2.5% from 2007 where travel expenditures by nonresident visitors totaled over $3.08 billion, which generated over $4.31 billion in total economic impact. Approximately 10.68 million individual nonresident travelers visited Montana in 2007 and over 10 million nonresident travelers in 2008. This amounts to 4.36 million nonresident travel groups (2.45 people per group) and equates to 10 new customers per Montana resident for Main Street businesses. Nonresident visitor spending generated over 33,200 direct travel jobs to Montana and nearly 44,800 total jobs contributing to over $1.05 billion in total personal income for Montana residents. Montana state and local governments received an estimated $235 million in taxes attributable to nonresident traveler spending. The federal government collected over $271 million in taxes from nonresident spending in Montana. The nonresident travel industry in Montana comprises 7.0 % of the state s total employment, making it the fifth largest employer after construction (8% of total employment) but before agriculture (5%). Montana ranks 42nd in the U.S. for tourist spending, but 7th in the nation in per-capita tourist spending. Nonresident vacationers to Montana came primarily from the U.S. (89%), while 7% came from Canada, and 4% came from other foreign countries. Mountains and forests and Yellowstone National Park attract the most visitors to Montana, while wildlife watching and driving for pleasure are the most popular recreational activities. Visitation to Montana State Parks, including both resident and nonresident visitors, increased 3.0% in 2007 over 2006. Airline passenger traffic increased 3.4% from 2006 to 2007, which contributed to a 19.2% increase since 2000. In 2007, room demand and room supply increased 4.3% and 1.3%, respectively. Occupancy rates experienced a 3.0% increase while average daily rates had a 9.2% increase over the previous year. Prices in the foodservice industry rose 3.7% in 2007 compared to a 2.8% increase in the Consumer Price Index. Personal income in Montana s arts, entertainment and recreation services industry increased 9.3% in 2007 over 2006, while industry Gross Domestic Product by State rose 6.6%. Visitor spending generated $228 million in state and local tax revenue in 2008. Without tourism tax revenue, it is estimated that each Montana household (avg. 2.5 ppl) would have to pay $589 in additional local and state taxes. (total tax revenue / total households) Tourism and recreation businesses support 42,200 Montana jobs. Visitor spending provided $897 million in worker salaries. Montana s travel promotion budget is 26% lower than the national state average.

Performance Review Every bed tax dollar invested in promoting Montana yielded $3.50 in state and local taxes. Out of this $3.50, $2.12 is returned directly to the state s general fund. In a 2009 Brand Awareness Study, it was found that once Montana advertised in a market, awareness of Montana as a travel destination rose 5 to 10 fold. Of those who had seen the advertising, they were three times more likely to plan travel to Montana than those that had not seen the advertising. 2008 Visitor Expenditures Sources: The Economic Review of the Travel Industry in Montana 2008 Biennial Edition, ITRR s 2008 Montana Nonresident Economic Impacts & Expenditures, Montana Tourism & Recreation Strategic Plan 2008-2012; Montana Census and Economic Information Center and Susan Ockert, Economist, Montana Department of Commerce; U. S. Travel Association and Leisure Trends Group MTOT Brand Awareness Study 2009. 4-10

Reconnaissance Report Reconnaissance Report Methodology A professional Reconnaissance Team visited the Billings, Montana, region at the request of the Billings Chamber/ Convention & Visitors Bureau (BC/CVB). The dates of site visitation were April 27 through May 3, 2009. The goal of the team was to experience the Billings area from the eyes of the visitor. Therefore, the team made all of its schedules and arrangements using the tourism marketing materials made available by the BC/CVB, the Montana State Visitors Guide, and the Montana State Welcome Center s regional materials. Additionally, Internet sites for the state, BC/CVB and regional travel related organizations, and businesses were used. Attractions and visitor amenities in these materials were located and visited. The team explored a thorough sampling of restaurants, shopping, and lodging where possible. The area was seen in good conditions, as the weather was seasonally cool during the first part of the site visit and then turned warmer and sunny for the remaining days. It should also be noted that our team had visited Billings in spring of 2008. Dr. Larry Gustke, Ph.D., North Carolina State University, developed the professional method of selection, evaluation, and analysis used in this process. This report does not follow any chronological order, since we visited many areas more than once and tried to enter and exit the area from all possible routes used by visitors. The following narrative is a documentation of the Reconnaissance Team s findings. 5-1

Reconnaissance Report Overview of Billings, Montana Billings is located at the confluence of Interstates 94 and 90 in southeast Montana in Yellowstone County. The two interstates meet just east of Billings. It is apparent these are the two most traveled interstates in Montana. Billings is the largest city in Montana with a population of approximately 120,000. The population for Yellowstone County is approximately 150,000. Billings is the largest city between Denver (667 miles) and Calgary (443 miles) and between Sioux Falls and Spokane. With its substantial size, Billings is the amenities hub central for the region, including the Little Big Horn Battlefield to the east; Yellowstone National Park and the famed Beartooth Highway to the west; and significant Lewis and Clark Trail sites. There are approximately 4,000 lodging rooms in Billings and numerous restaurants, shopping, and other visitor amenities. Billings is the shopping central for the larger region, as well as the medical, university, and business hub. In addition to the interstates, this area is served by Billings Logan International Airport, with six major airlines providing multiple daily flights from major western and mid-western points of origin. Billings is not served by Amtrak, but it is available in Malta, approximately 212 miles north of Billings. Most visitors to Billings arrive by automobile. The major industries in Billings include healthcare, education, energy, financial, engineering, technical, and agriculture. In addition, Billings has the largest coal reserves in the United States, and eastern Montana is actively pursuing development of coal-toliquid technology into synthetic gasoline and other fuels. There is also a palladium mine, the only place in the United States where the mineral used in catalytic converters is found. The Billings area has a history of oil production, and there are three refineries. Two nationally recognized hospitals and over 30 clinics provide the most advanced healthcare services in a four-state area. Billings has adequate meeting and event facilities as well as excellent sports facilities. Thus, Billings is a regional (multi-state) hub for meetings, events, sports tournaments, and weekend getaways for shopping, dining, and entertainment. There is no sales tax in Montana and only a 7% tax on sleeping rooms, one of the lowest in the nation. 5-2