This article is adapted from ACCE’s white paper on chamber revenue models, which is sponsored by Insperity and produced with support from the Western Association of Chamber Executives. Download the white paper from acce.org.
Mountain View, Calif., has a population of about 75,000, but on the weekend following Labor Day, more than 150,000 flock to this Silicon Valley town to take in unique arts and crafts displays, exhibits by local businesses, lively entertainment, and, of course, wine. The town’s Art & Wine Festival, the first major fund raiser for the Chamber of Commerce Mountain View, celebrated its 42nd anniversary in 2013.
Leftover beer and wine glasses from the first festival helped propel organizers into arranging the second annual event. These days, chamber leaders don’t need to be convinced: the numbers speak for themselves. In 2013, the festival brought in approximately $440,000 in gross revenue. Even after accounting for staff time, the chamber netted about $220,000, according to Oscar Garcia, president. The proceeds are used for staff salaries, as well as a variety of programs, including a scholarship fund and the Young Professionals group, he says.
The event does more than raise money for the chamber. It increases the revenue of local businesses that weekend, sometimes by as much as 22 percent, Garcia says. And, the event provides exposure to community organizations. More than 30 non-profits receive free display space, which can lead to increased financial and volunteer support. One such group profits directly from the event: it raises thousands of dollars by overseeing parking lots and collecting parking fees.
Organizing a business networking event is all in a day’s work for most chamber executives, but some chambers also orchestrate community-wide festivals that become signature events for the organization, and for the community. These events can engender goodwill for the chamber, but may also exact a toll on staff morale. They have the potential to generate significant income, but may sap chamber reserves. They can delight tourists, but exasperate locals. And while they may lead to a front page article in the local newspaper, they also can put the chamber’s everyday work on the back burner. Such is the tightrope that chamber executives walk when overseeing parades, food festivals and other large-scale events.
Certainly the employees of the Mountain View chamber have figured out the formula for a successful festival, but managing a popular community event comes with its share of challenges. One of the biggest, says Garcia, is recruiting, training and managing a large volunteer staff, which means dealing with last-minute no-shows. In addition, the staff hires an outside events firm to help, adding an extra dimension to the communication picture. Staying abreast of ever-changing regulations and apprising vendors of changes is another critical and time-consuming component. And, it takes a concerted effort to get sponsors and vendors to commit early enough to keep planning running smoothly.
Not every community festival run by a chamber is the brainchild of chamber leaders. Sometimes chambers take over an event started by another organization. In Florida, the Daytona Regional Chamber of Commerce took a role in the city’s annual Bike Week for a different reason: to keep motorcyclists from taking over the city. Bikers had been converging on Daytona Beach at a certain time each year since 1937, with a break during World War II, says George Mirabel. He was president of the chamber for nearly 20 years until his retirement in early 2007. He also served as interim president for much of 2013.
When Mirabel took the job as chamber president in 1987, he asked business leaders about their role in Bike Week. We leave town, they said, to escape the mayhem. He asked what the chamber did to welcome bikers. “Nothing,” they said. He asked about restroom facilities for the 100,000-plus bikers who attended. There weren’t any. “People stayed away from Bike Week,” he says. “It was a frightening experience, and certainly not a place to take children.”
Mirabel saw that the event had economic value to the community, and he asked city officials if the chamber could get involved. They agreed. He called Harley-Davidson and secured the first sponsorship. The chamber put up banners welcoming motorcyclists to town and rented portable restrooms. It formed a festival task force, seeking input from the community about how to help orchestrate the event. The chamber wanted “to control something in disrepair and disrepute and all the other dis-es that go along with that,” he says.
Along the way, the chamber worked hard to gain community acceptance for the event by asking residents of various neighborhoods to sit on the task force, along with representatives of the city, the county and the local police and sheriff’s departments. “We knew from the beginning if [the task force] was dominated by the business community, it probably wouldn’t work,” he says.
The chamber educated motorcyclists about their behavior, including the need to cut down on the noise produced. (This effort was facilitated by the results of a chamber-funded noise study.) The public relations blitz included signs about expected behavior, a letter from the mayor, public service announcements and a 48-page “Ride Safely” guide. To help gain community support, the chamber funded economic impact studies showing how vital the event was to the local economy.
Today, the character of the event is vastly different, which Mirabel attributes in part to the rising age and income levels of visiting bikers. Now, no one thinks about discontinuing the event. “If it weren’t for Bike Week, a lot of businesses would be out of business,” he says. The 10-day festival draws half a million people to town, with an estimated economic impact of $1.1 billion. Bike Week also has had a positive economic impact on the chamber’s bottom line, although that was not initially the case. In fact, Mirabel and his associates were so successful that city leaders wanted to take over the event. To prevent that from happening, the chamber now provides 50 percent of the event’s net proceeds to the city.
In other communities, chambers may end up overseeing an event when another organization can’t. That’s what happened in southwestern Ohio. The Cincinnati USA Regional Chamber puts on a huge Oktoberfest celebration in the fall, as well as the Taste of Cincinnati USA in the spring; neither event originated with the chamber.
Oktoberfest Zinzinnati was founded in 1976 by a local brewery and some German social groups, says Patrick Sheeran, the chamber’s vice president of programs and Downtown Council. As the event grew larger, the Downtown Council eventually took it over; it also ran the “Taste” event. Both came under the chamber’s auspices when the Downtown Council was absorbed by the chamber in the 1980s. “We’re of the opinion that the community really owns the events, and we’re the stewards of them,” Sheeran explains.
Oktoberfest Zinzinnati is the largest Oktoberfest in the United States and the second largest one in the world, says Sheeran. Typically, the two-day Oktoberfest and three-day “Taste” draw 500,000 people each, according to police estimates. In 2013, the chamber expanded Oktoberfest to a third night. The longer event, aided by spectacular weather, a Bengals home football game and a popular grand marshal (George Takei, Star Trek’s Helmsman Sulu), drew an estimated 600,000 people, says Sheeran, breaking attendance and revenue records.
How much money do the events generate? Combined, they gross more than $2 million, according to chamber executives. Sheeran characterized net revenue as “significant.” Proceeds “take a burden off dues revenue,” he says, allowing the chamber to help fund other mission-related work that does not fund itself.
Revenue comes from sponsorships, beverage sales and fees collected from participating vendors. (The chamber collects a flat fee from food vendors but is responsible for beverage sales.) The beauty of a festival, says Sheeran, is that significant revenue can be derived from consumers, as well as businesses outside the chamber’s primary service market. “We are not going back to the same folks who are funding government affairs,” he says.
There are other indirect benefits of running successful festivals, say executives in Cincinnati. They help “build vibrancy in the region,” says former Chamber President & CEO Ellen van der Horst, making the area a more desirable place to live. In turn, an enhanced quality of place assists the chamber’s ability to recruit employees and employers to the region. “It really is our community at our finest moment,” says Sheeran of the events. They are “multicultural and multigenerational” and “a wonderful thing to see and experience.”
By virtue of working with certain city departments during festival planning, the chamber forges “deeper relationships” with city hall, says Sheeran. The staff expertise accrued in event planning has opened other doors, too. The chamber occasionally offers consulting services to others who want to put on festivals. Ten years ago, chamber employees helped organize and plan meetings associated with the United States/Central American Free Trade Agreement negotiations, something that would have been impossible without his team’s festival experience, says Sheeran.
Like the Cincinnati chamber, Florida’s Destin Area Chamber of Commerce took over a large-scale event from another group. Thirty-five years ago, the Destin Charter Boat Association started the Destin Seafood Festival to raise funds and bring visitors to town in the fall. The association ran it for two years; after that, the chamber took over.
Through the years, the festival proved popular with tourists and locals, but it was taxing for the chamber’s small staff. The annual affair was, “at very best, break-even,” says Shane Moody, CCE, FCCP, president and CEO. “The stress on the staff wasn’t worth it.” On top of that, “It dominated our lives for three months,” he says, “weakening other chamber programs and services.” Moody, who has headed the chamber since 2004, knew he needed to make a change.
But there were two obstacles. Given how important the festival was to the Gulf Coast beach town, he wanted to find another organization that would continue the tradition. And, he says, he needed a board chairman who realized that the festival was not the best use of the chamber’s resources. The two came together in 2011. Luckily, the Destin Charter Boat Association agreed to take the festival back under its wing.
There was no such happy ending for Oregon’s “Taste of Beaverton.” The three-day food festival run by the Beaverton Chamber of Commerce ended its 16-year run in 2004. At the time, its total budget was about $400,000, but the chamber was lucky to net $10,000 to $20,000 considering staff time, says Lorraine Clarno, president of the chamber.
In 2004, the festival was a “total rainout,” she says, and it lost $100,000. Although the chamber had investigated weather insurance, it did not purchase any because “you can’t afford weather insurance in Oregon,” Clarno says. In addition, the cost of event insurance, which the chamber did buy, rose sharply after 9/11.
Increased competition and high fixed costs also contributed to the financial woes. Sponsors insisted the chamber hire big-name music acts but wanted admission prices kept below $10, Clarno says. On top of that, the number of festivals being held had increased since the event was founded in 1989. Given Oregon’s temperamental weather, festival organizers scheduled events within a six-week window, resulting in multiple events vying for attendees every weekend.
The Beaverton Chamber was fortunate. It had built up adequate reserves to cover the loss, but it took many years to restore them, she says. When Clarno announced that the chamber could no longer take on the financial risk of running the festival, she invited other non-profit organizations to consider doing so. A handful of leaders from non-profit groups visited the chamber’s offices and reviewed documents and financial data about the festival. None of them wanted to take on the risk, and the festival has never been revived.
It wasn’t the weather, but the economy, that led to a tough decision for John Quigley, president and CEO of the Elmhurst Chamber of Commerce & Industry in suburban Chicago. More than five years after he cancelled the town’s popular festival, he still jokes that his tombstone will read, “The Guy Who Killed Elmfest.”
The event was started in 1983 by the chamber and the downtown business organization. The long-standing tradition generated a front-page story in the local newspaper beforehand, as well as coverage afterwards. Quigley says the event came with high fixed costs, including tents, electricity, security and garbage clean-up. In 2008, three of the largest sponsors said they would not be able to help out. At the same time, the city notified the chamber that it might have to pay for police and fire expenses, which had been donated.
Quigley already knew that running the festival wasn’t very lucrative. He had convinced his board to adopt cost accounting a few years earlier. Because of this, he says, it was easier to justify eliminating the event. With staff freed up from the responsibility of overseeing Elmfest, the chamber brought ad sales in-house for its member directory and street map, eliminating the commission paid to an outside sales rep.
Some townspeople were “shocked and stunned,” he says, when Elmfest was canceled. Five years later, some people still harp about the absence of the downtown festival. Does Quigley miss it? “Yes, it was a great party and a great marketing tool throughout the Chicagoland area,” he says, “but I also don’t miss having to do it.”
Dave Woolson, president and CEO of the Walla Walla Valley Chamber of Commerce in Washington State, is in the unenviable position of trying to determine the future of the chamber’s annual Balloon Stampede. The festival, featuring hot air balloon ascensions, an art fair, live music and a kids’ coloring contest, was founded by the chamber in 1974.
At the time, Walla Walla depended on a regional services economy. Putting on a big community event proved a great way to draw people to town, explains Woolson. Since then, the economy and character of the region have evolved. Today, the area “has emerged as a world-class wine destination,” he says. The presence of nearly 150 local wineries has “led to a cuisine scene and a more robust arts and entertainment scene.” In other words, people travel to the town even when there isn’t a balloon festival.
Woolson has witnessed changes in the community firsthand. A Walla Walla native, he left town the day after high school with no plans to return. He became an entertainment lawyer and worked for major Hollywood studios, but was wooed back to take over the chamber. After overseeing the past three Balloon Stampedes, he knows all too well the toll the event takes on staff and volunteers. “Everyone is pretty well run through,” he says, and the chamber closes for a few days after the event to allow everyone to recover. Although the event brings in income, Woolson says he is “quite confident” that the organization is “breaking even or underwater” when staff time is taken into consideration.
“It’s a great signature event,” Woolson says of the Stampede, but he and his board are asking tough questions. Is it mission-centric? (That answer has changed over the years, he says.) Is it the best use of staff time? Is there a way to scale back the festival? Perhaps the event could be spun off into its own organization. Maybe another organization would like to take it over or run it as a joint venture.
While some chambers may have gotten themselves into the event business by necessity, it’s “a mistake,” Woolson believes, to constantly look toward the “next pancake breakfast” for revenue to do the chamber’s core work with members. Why not “skip a step and build value and relationships for members?” he asks. If an event “doesn’t do that directly, we need to take a hard look at kissing it good-bye.”
All of the other events put on by the chamber focus on the business community, Woolson says. He and his staff would like to focus more time and effort on its Business Summit, which was held for the first time in 2013. “We want it [the Stampede] to continue,” he says. “We want it to have a soft landing. But do we want to be a good balloon event organizer or do we want to be a good chamber? I’m not certain that we could be both.”
Katherine House is a business writer based in Iowa City, Iowa.
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