How to Make Your Destination Ready for Investors, Developers, and Tourists

By Bethanie DeRose and Dan Fenton

Positioning your destination for success today requires a strong public-private-community collaboration that goes beyond feasibility studies and other theoretical market norms to create a global destination that is truly prepared to harness its full potential and be ready for tourism growth.

Now more than ever, destinations are facing increasing competition for attention and new readiness challenges in the post-pandemic world. With borders reopening and pent-up demand hitting the market, being prepared to attract and retain that momentum should become the travel and tourism industry’s major focus.

Traditional destination investment evaluations tended to focus on “what is the current market and how much can be acquired?” Today it is more important to broaden that thinking to include “Is this the right destination, right country, and right strategic partner to pursue?” By going beyond the theoretical market norms, investors will be better positioned to make solid decisions.

To build back sustainably, inclusively, and resiliently and to attract investors and developers, cities, regions, and countries must take a holistic view that considers and includes a variety of factors to become a global destination that is truly ready to harness its potential. And as each destination has its own personality, the opportunities to unlock the tourism potential need an individualised strategy to be “ready” for tourism growth.

There are, however, commonalities among destinations that can provide a framework through which destinations can plan for the future. As such, city and tourism leaders must prioritise strategies that not only create meaningful travel experiences for their visitors but also enhance the residents´ benefit and find balance as a great place to live and work.

To position the destination for investment, it is best to have a local government that is proactive and willing to come to the table with funding opportunities. This could include identifying available land, enabling legislation for district-based funding i.e., Tax Increment Financing (TIF) or Tax Increment District (TID), or other financing options to show that they are an active and progressive partner in attracting investment into the destination. It’s being ready to be a partner in the investment – bringing together tourism strategy, economic development, and sustainable growth plans.

Destination leaders also need to understand the investor’s side of the equation, including the liquidity of the market. If a destination has an opportunity to secure financing or the ability to convert that financing into cash and enable an investor to see their entry and exit points – that is an advantage internationally. If the path is less clear, the destination will ultimately have bigger challenges attracting global capital.

Readiness planning is also policy-driven by enabling legislation to ease the steps of opening a business and streamlining the permitting process so that going from concept to door opening can occur within months or quarters as opposed to years. This would be a game-changer in terms of public/private partnerships and one that will resonate among investors and developers alike.

Some locations today even have full governmental agencies beyond economic development that are designed to create financing opportunities using public/private sector money that go all the way through contracts and loans to securing financing for the investor. This goes back to the readiness factor and moves the location to the top of an investor’s list.

It is speed to market that generates the return. Destinations proactive in this effort, outside of the global household names, are more likely to appeal to private investment.

Another key consideration is the local workforce and small business ties – considerations that should go beyond a simple demographic study. It’s more complex than that. It’s key to know that there are proactive strategies around housing, training opportunities, and local-related businesses. Are there restaurants nearby; activities such as hiking trails, fishing excursions, and sightseeing tours; boutique shopping options; and museums? The overall experience matters and aligning with small authentic businesses ensures a viable tourism economy. This can be particularly challenging today as the pandemic caused many local businesses to close and the rebuilding process can be slow – particularly in the more urban environments today.

Other key areas of consideration include:

Scale

To be prepared to sustainably welcome more visitors, cities need to improve and perhaps consider diversifying their value offering to include experiential travel through the creation of intimate experiences which can drive demand. This can include sports venues and festivals. For instance, London used its bid to host the 2012 Olympic Games as an opportunity to accelerate redevelopment and Paris complemented its strong hotel room offering with policies to support short-term city rentals.

Concentration

Having a thorough understanding of the level of tourist concentration within a city, specifically the concentration and density of tourist and visitor activity, can help a destination as it develops or refines its sustainable growth strategy. For instance, Berlin intensified its cooperation and visitor flow management with its districts, supporting many district-specific projects, events, cycle routes, and city tours.

Leisure

Leisure travellers come in all shapes and sizes from backpackers to luxury travellers and day-trippers. This requires destinations to examine their tourism mix and cater to the combination they currently have and the one they want to attract. Cities also need to consider, and potentially invest in, the quantity and quality of their attractions as well as their broader price competitiveness and local attractions.

Business

Business is not only a key segment for Travel and Tourism but is critical to supporting the growth of all economic sectors including manufacturing, pharmaceuticals, construction, and consulting, among others. Attracting business travel is essential. Beyond events and conferences which bring together leaders and business partners, the appeal of a city as a business hub is contingent on broader corporate presence, an enabling business environment, and the appropriate workforce availability.

Environmental Readiness

While measuring sustainability remains a challenge at the global and destination level, the importance of environmental sustainability should not be underestimated. This includes air quality, water availability and quality, the use of renewables, the risk of a natural disaster and protected areas. This is particularly important as travellers are increasingly prioritising sustainability in their decision-making process. For example, Copenhagen underwent a major infrastructural transformation to enhance sustainability through transportation, dubbing itself the “City of Cyclists”.

Urban Readiness

This includes both physical and digital infrastructure, healthcare availability, cost of living and workforce availability, among others. It’s the resilience of cities as urban centres and attractiveness as urban hubs. Other considerations include congestion and accessibility. It is essential to ensure that travellers are not only able to reach a city but can easily move within it. For instance, Abu Dhabi complemented its investment in air connectivity with ground transportation solutions to enhance the quality of life and improve the experience of visitors and residents alike. New York has made great strides in prioritising and showcasing accessibility across its five boroughs, including the experience it provides at its theatres, museums, sports stadiums, and dining facilities.

Safety and Security

This element focuses on crime and safety, stability, and the safety of specific segments of the population including women and the LGBTQ+ community, among others. While cities cannot mitigate all risks, destinations should closely collaborate with the Travel and Tourism sector to enhance their resilience and invest in the safety and security of both local communities and travellers.

Looking Forward

There are many challenges facing investors today including the current economic environment. It’s more competitive now than ever because of companies tightening their wallets as investment decisions are being scrutinised much more diligently. These elements speak to the competitive nature investors face today and the reasons destination leaders should consider these key factors to compete more effectively.

By evaluating potential destinations in terms of traditional return and these additional factors such as having the right mix of business friendliness, streamlined permitting process, liquidity, and destination appeal factor, it will point investors to the opportunities with the best possible returns. The traditional “feasibility study” simply doesn’t go far enough to give the investor the complete picture.

Partnerships and multi-stakeholder engagement have always been key to effective destination planning and management. To thrive today, destination stewardship must approach needs and goals holistically and requires public-private-community collaboration. Indeed, the collaboration and engagement of both public and private sector partners builds trust and commitment in the strategic plan as they work towards common goals.

About the Authors

Dan Fenton is an Executive Vice President based in San Francisco with JLL’s Hotels & Hospitality Group specialising in tourism and destination strategic planning. He provides operations, sales and marketing support for destinations, public assembly venues and hotels. With more than 25 years of experience in hospitality and tourism, Dan has extensive knowledge of market research and tourism development.

Bethanie DeRose is a Senior Vice President based in New York with JLL’s Hotels & Hospitality Group specialising in tourism and hospitality. She assists clients with strategic planning, asset development, public facility feasibility and destination positioning. She’s worked in the hotels and convention industries for eight years and is an expert in sales and marketing.