Okaloosa County BOCC — March 24, 2016 — I. e. Allegiant Air Guidance

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. 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.  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 )  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