Okaloosa County BOCC — March 24, 2016 — Agenda Packet — reading text

Tourist Development Council Meeting: 03/24/16 02:00 PM 1540 Miracle Strip Parkway Department: Tourist Development Council Fort Walton Beach, FL 32548 Category: Information Prepared By: Aida Wilkinson SCHEDULED Initiator: Aida Wilkinson Sponsors: TDC ITEM (ID # 5396) DOC ID: 5396 Allegiant Air Contract guidance (Ed Schroeder) Updated: 3/21/2016 4:10 PM by Aida Wilkinson Page 1 Packet Pg. 25  1.e.a TOURIST DEVELOPMENT DEPARTMENT MEMORANDUM DATE: March 24, 2016 TO: Tourist Development Council FROM: Ed Schroeder, Tourist Development Department Director SUBJECT: Allegiant Air Contract Guidance STATEMENT OF ISSUE: Request TDC guidance on Allegiant Air contract provisions. Attachment: I. e. Allegiant Air Guidance (5396 : Allegiant Air Contract guidance (Ed Schroeder)) BACKGROUND: In October 2015 the Interim Airports Director presented a request to the TDC for funding to bring new airline service and points of origin to the Destin-Fort Walton Beach airport. The airline recruitment package included the airport waiving all fees for the first two years, a VisitFlorida incentive package, and TDC marketing funding. The TDC recommended and the BCC approved $2M in FY16 and $1M in FY17 from tourist development taxes for marketing to support the Destin-Fort Walton Beach airport’s airline recruitment efforts. As a result of the three-pronged incentive package offered, Destin-Fort Walton Beach airport was successful in securing Allegiant Air. BUSINESS/ADVERTISING PLAN: Allegiant’s business model is to bundle low-cost airfare with hotel packages and car rentals to provide a complete travel experience.  The call-to-action for advertising is to drive customers to www.allegiantair.com only.  Allegiant’s advertising must comply with FAA regulations for fare-based advertising. Therefore, Allegiant will develop all creative at no cost to the County, and the County will reimburse the actual cost of paid media placements.  On a quarterly basis in advance, Allegiant will provide a Media Plan identifying the media type, market, unit, impressions, and cost.  The Media Plan will be presented to the TDC and BCC for approval, similar to the process for the County’s Strategic Marketing Plan.  For each specific media placement, Allegiant will email the TDD Director the media buy sheet and associated creative. The media buy sheet will be approved in accordance with the County’s procurement approval thresholds and the creative will be approved by the TDD Director.  The TDD Director may waive the Emerald Coast logo requirement on a case-by-case basis when approving creative.  Quarterly reporting of advertising and marketing services and relevant performance metrics (e.g. incremental web traffic, conversions, flights in/out by point of origin, percentage of deplaning passengers who booked lodging in Okaloosa County) will be provided to the County within 30 days of quarter-end. GROWTH OF SERVICE: Allegiant’s expansion decisions are driven by the success of current flights and bookings, as well as available resources (i.e., crews and planes).  In January, non-stop service twice per week to St. Louis and Cincinnati during late May – early September was announced. The high demand for those routes led to an additional day of service and the season being extended through mid-October.  In March, non-stop service to Memphis, Oklahoma City, Knoxville, and Fort Lauderdale was announced for late May through mid-August. Demand and advance bookings may result in an extended season, as occurred with the first two routes. Packet Pg. 26  1.e.a  Flight Seasonality – Currently, flights are primarily an extension of the summer season, starting in late May and ending in mid-October. Allegiant has verbally committed to starting the 2017 season in March and has already demonstrated that seasons will be extended as demand warrants. FUNDING:  A $1.5 million ad spend from May – December 2016 (launch year, with strong peak months and lighter off-peak months )  Attachment: I. e. Allegiant Air Guidance (5396 : Allegiant Air Contract guidance (Ed Schroeder)) A $1.5 million ad spend from January – December 2017 (maintenance year, with media presence in peak months only, except Cincinnati also has radio in off-peak months).  The media mix is TV, radio, and out-of-home. TV only in peak months and excluding very expensive markets (St. Louis and Miami-Ft Lauderdale).  Preliminary media plan attached. LODGING OFFERINGS ON WWW.ALLEGIANTAIR.COM:  Currently, only hotel properties appear on the lodging section of www.allegiantair.com due to the company’s affiliation with Priceline. Sixty percent of tourist development tax funds are raised by condos and rental management companies.  Current lodging searches reveal half the hotels on the first page of results are outside the taxing district. Staff has been very clear with Allegiant that Okaloosa tourist development taxes cannot be spent to promote lodging in neighboring counties and that Okaloosa condo rental companies must be listed. Allegiant is working on a software solution, but has indicated this may take until December to complete. ACTION REQUESTED: For TDC discussion to provide staff with direction with respect to contract language for provisions that directly impact ROI. Specifically,  The reallocation of advertising funds between 2016 and 2017.  Priceline’s inclusion of lodging outside of the taxing district until December 2016.  Allegiant’s exclusion of condos and rental management companies. A draft contract and sample creative will be brought forth to the TDC for consideration at a future date. RECOMMENDATION TO BCC: N/A, for staff direction only. Packet Pg. 27  Allegiant VPS Media Plan 2016 Estimated Totals Estimated Average Media Market Unit January February March April May June July August September October November December A25‐54 Weekly GIMP Cost CPM 28 4 11 18 25 1 8 15 22 29 7 14 21 28 4 11 18 25 2 9 16 23 30 6 13 20 27 4 11 18 25 1 8 15 22 29 5 12 19 26 3 10 17 24 31 7 14 21 28 5 12 19 Impressions Primary Elections Political Window X General Election Political Window X BLV $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ Radio St. Louis 1,553,356 :60 125 125 150 150 150 150 150 Flight W‐Su 150 150 $ 30,383 $ ‐ $ 39,000 $ ‐ $ 60,750 $ ‐ $ 40,500 $ ‐ 13,980,200 $ 170,633 $ 12 OOH St. Louis 1,203,808 4‐5 Digital $ 14,500 $ 14,500 $ 14,500 $ 14,500 14,445,696 $ 58,000 $ 4 Panels Co‐Op Total $ ‐ $ ‐ $ ‐ $ ‐ $ 44,883 $ ‐ $ 53,500 $ ‐ $ 75,250 $ ‐ $ 55,000 $ ‐ $ 228,633 Allegiant Total $ ‐ $ ‐ $ ‐ $ ‐ BLV Total 2,757,164 $ ‐ $ ‐ $ ‐ $ ‐ $ 44,883 $ ‐ $ 53,500 $ ‐ $ 75,250 $ ‐ $ 55,000 $ ‐ 28,425,896 $ 228,633 $ 8 CVG TV Cincinnati 866,600 :30 100 100 100 100