North Dakota tourism officials assessing effects of state budget cuts
BISMARCK—Charley Johnson was watching a Twins baseball game recently when he saw a couple of North Dakota tourism ads featuring the actor and Minot native Josh Duhamel.
"I'm thinking, 'That's fabulous,'" said Johnson, president and CEO of the Fargo-Moorhead Convention and Visitors Bureau. "That's a huge boost for us."
The advertising campaign with Duhamel, who received $475,000, was launched to great fanfare last year by the state's tourism department and has been regarded as a success in attracting attention to North Dakota's recreational opportunities. And as Memorial Day weekend arrives, the state's hospitality industry is hoping for a steady stream of visitors during the vacation season.
But state budget cuts to the tourism division in the North Dakota Department of Commerce may affect future advertising blitzes. The division will see an 18 percent cut in the next two-year funding cycle compared with the original 2015-17 biennium budget of $13.3 million.
"We depend heavily on all the help we get from the state," Johnson said.
Sara Otte Coleman, the tourism division director, said they're still assessing how the cuts may affect marketing plans. The media plan is in place for this year, she said, but the cuts may be felt in the 2018 and 2019 campaigns.
Otte Coleman said they will probably skip research in the next biennium and likely won't produce any "major new campaigns." She hopes to extend the contract for the ad campaign with Duhamel and give a fresh look to existing material.
"We're analyzing every piece of this year's campaign," Otte Coleman said. "Every piece we're looking at and trying to make sure that it's well thought-out and it drives additional visitors to North Dakota."
Rep. Roscoe Streyle, R-Minot, said the tourism division faced larger cuts before House lawmakers shifted funds to soften the blow. The recent legislative session saw budget reductions in nearly every corner of state government as lawmakers grappled with diminished tax revenues.
"You don't stop advertising when your economy is down," Streyle said.
'Not giving up'
Already faced with a small tourism budget compared with other states, marketing won't be the state's only challenge in attracting tourists this year. A persistently weak Canadian dollar—one loonie was worth 74 U.S. cents about a week ago—has hampered traffic from North Dakota's northern neighbor.
There were 17,820 personal vehicles that crossed at the Pembina, N.D., border crossing in December, down more than 13 percent from a year prior, according to federal data.
"We hear that they're still coming, but they're definitely coming less often," said Julie Rygg, executive director of the Greater Grand Forks Convention and Visitors Bureau.
The state's tourism efforts are important to the Grand Forks CVB because the state has a larger budget and can cover a wider geographic footprint. The division's 2017 media plan is focused on two Canadian provinces, Minnesota, Wisconsin and Illinois, with an overall media spend of almost $2.9 million.
The state also provides cooperative opportunities that allow CVBs to advertise in outlets that would otherwise be too expensive for local organizations alone, Rygg said. But with diminished lodging tax revenue that largely funds the Grand Forks CVB, she worries about any cuts to the state's efforts to draw tourists to North Dakota.
"Unfortunately, when budgets get cut, it's the marketing that gets cut a lot," Rygg said. "It definitely will impact the state tourism industry."
Meanwhile, hotel occupancy rates have steadily declined over the past few years, dipping to 50.3 percent last year, according to the tourism division. North Dakota saw a boom of hotel construction recently, adding more than 10,000 rooms between 2010 and 2016.
Johnson said the jump in hotel construction is the main culprit in the drooping occupancy rate, but he acknowledged demand is down "a little." He said there's also been a slowdown in business traffic through Fargo as oil prices dropped.
But state tourism officials hope their marketing efforts will pay off and help attract visitors. Otte Coleman said marketing is important in not only driving visitor traffic and spending but also attracting a potential workforce.
"We're not giving up," she said.