July 23, 2003 – Tourism Commissioner Pamela Richards defended her Fiscal Year 2004 budget request with difficulty before the Senate Finance Committee on Wednesday, often placed in the position of defending herself as well.
Richards, in a meticulously detailed presentation, outlined the Tourism Department's projects, contractual agreements, sponsorships and offshore office operations. She asked for a Fiscal Year 2004 budget of $3.7 million, essentially the same as for the current fiscal year plus another $233,457 for personnel, fringe benefits and vehicles and $9,000 to cover an increase in rent for the Chicago office.
Tourism's biggest expenses are for advertising and public relations, both funded by the 8 percent hotel room tax which is deposited into the Tourism Advertising Revolving Fund. Richards said revenues for the first nine months of this fiscal year total $9.9 million, already more than the $9.5 million for all of FY 2002. The 2002 figure was down from $11.3 million in FY 2001 as a result of the Sept. 11, 2001, terrorist attacks that cut deeply into leisure travel abroad.
Richards noted that tourism worldwide has been affected adversely over the last two years by "an unprecedented series of events … 9/11, the Gulf War II and SARS." No one can predict when a recovery may occur in the global tourism market, she said, and "we are not holding our breath until that happens."
While "the stage is being set for long-term growth," she said, "we in this department are not counting on better economic or market conditions to trigger improvement in the territory's performance."
Sen. Adlah "Foncie" Donastorg, Finance Committee chair, asked about Tourism Web site costs. In addition to an initial cost of $700,000, Richards said it costs $40,000 a year for maintenance and $16,800 a year for IBM to host the site. She said her department is satisfied with IBM's work.
The site was designed by IBM for about $750,000, according to Tourism officials, and was launched in July 2001. The amount paid for the design work came under heavy criticism from the private sector and the public at the time as exorbitant. Richards said Wednesday that the U.S.V.I. Tourism site has had 1.6 million hits a month this fiscal year, peaking with 2.7 million in January.
Richards said her current advertising budget is $6.6 million, with Ogilvy & Mather/Atlanta the contracted agency. However, a new contract is "out to bid right now," she said. The agency is paid on retainer, she said, with an annual fee of $1,045,000 paid on a monthly basis.
Martin Public Relations is being paid $1.9 million for FY 2003, Richards said. Donastorg challenged the figure as high, but Richards replied: "It is in keeping with other jurisdictions' budgets. Actually, it is a low fee for the service we're getting. We are keeping up with the big boys at a fraction of the cost."
Sen. Louis Hill wanted to know why Richards hadn't mentioned the local marine industry in her extensive presentation. He asked what Tourism is doing to promote "our greatest asset, our waters and our marine life." He said he recently was in the British Virgin Islands, and "the focus on the marine industry there is amazing."
Richards replied: "I can't detail everything. We have ads in the diving and charter yacht magazines." She said one of the target groups Tourism focuses on for advertising the marine industry is the "affluent luxury traveler."
The St. Croix question
Sen. Luther Renee asked Richards how to increase St. Croix's tourism. She said more hotel rooms are needed and that the current ones need an upgrade to luxury quality. She said the island has few major luxury hotels.
Renee and Sen. Ronald Russell, both St. Croix senators, quizzed Richards, a St. Croix resident, on what Tourism's current efforts are for the island. "Tourism hasn't begun to work for St. Croix," Russell said. "St. Thomas just had a music festival. Why wasn't there one for St. Croix?" He asked to see the department's event policy.
Later in the hearing, Sen. Celestino A. White Sr. asked Richards what was going on with "the three hotels" the governor had talked about in his State of the Territory speech this year.
"There's one billion [dollars] with St. Croix projects supposedly," he said. "That's what the governor said. You say you need hotel rooms. There's three hotels with 680 rooms. The Robin Bay was supposed to be $500 million, and there's Golden Gaming, and Hyde Park on the South Shore."
Richards said she wasn't sure of the status of any of the hotels.
"Not only are you not sure, the St. Croix population wants to know where they are," White came back. "They are not happening, and we are asking you. Ask the governor. These are his statements."
Gov. Charles W. Turnbull in his 2003 State of the Territory Address cited "over $1 billion in planned private-sector investments in hotel and tourism-related projects." Among these he mentioned two planned St. Croix hotel complexes — the "$500 million Seven Hills Beach Resort and Casino" at Robin Bay and the "$150 million Golden Gaming hotel and time-share development." In two years, neither project has moved beyond the proposal stage, according to information made public. The governor's address contains no reference to a Hyde Park property.
In response to several senators' questions, Richards acknowledged that the local population is "detached" from her department's operations. She agreed that the local community should have some input into the marketing of the islands. Her proposed Tourism public relations budget includes $65,000 for on-island consultants, 3.3 percent of the total budget. Local publicist Steve Bornn was hired in March as the department's director of marketing at $50,000 a year.
Sen. Almando "Rocky" Liburd told Richards point blank: "There is a perception that you want to fight all the time. Your presentation is good, but your strengths get diminished … You are quick on the draw, and it is interpreted in not a very good way. Tourism is about people."
Liburd continued, "Let's get to the nitty gritty. Tell me how you feel about a tourism authority." Making its way through the legislative process is a bill mandating the creation of an authority that would supersede the Tourism Department. Liburd is one of its 10 sponsors.
Richards said she knows that many other islands have tourism authorities but did not elaborate.
Perceptions and realities
In her exchange with Liburd, Richard said: "I don't find myself so much defending as correcting the record. It usually depends on the staff — we hold our own. You say I pick fights; I'm setting the record straight, not correcting it."
Liburd asked Richards about what he termed the popular perception that "your department and the [tourism] industry seem far apart."
"Perception isn't reality," Richards retorted. "Just because I tell the truth, doesn't mean I'm going to be liked by people."
"Your department doesn't seem to be working well, it doesn't seem to be networking," Liburd persisted. "What is your relationship with the private sector?"
"Some excellent, some not so; it's fueled by misconception," Richards said.
"Which misconception? Tell me one," Liburd said.
"We do a lot of sponsorships," Richards replied, "and if I say 'no' to an event, then I am persona non grata."
Richards said holding office in the Caribbean Tourism Organization has given her insights that others don't have. She is currently the regional group's first vice chair and also chairs its Air Transportat
ion Services Committee. "I have access to information lots of times that the private sector doesn't have," she said. "And what they say here in these chambers is not accurate. Other people aren't in the know."
Again she said: "I know the private sector has misrepresented information." Then she added, " I can't do anything without the cooperation of the private sector."
Liburd also asked Richards why a St. Croix "branding" campaign with the slogan "St. Croix, Gem of the Caribbean" had failed. Richards told him: "I wasn't left to make that decision"
She said she couldn't allow the slogan to be used because another island has a very similar one.
Liburd noted that her department had paid for brochures with the slogan on it. Richards said she had not been aware of that at the time. "It's disheartening when I'm called confrontational when I'm the one that's putting out," she said.
"You should talk to your staff," Liburd replied.
Later in the hearing, Liburd leveled another accusation: "People say you don't respond, and you don't."
Richards said she does respond to telephone calls, and that if nobody answers, she leaves a message.
Liburd said he was not talking about just locally but nationally.
Richards said that "I know whom I have to respond to and whom I don't."
Why not ask for more?
Hill asked Richards why she wasn't seeking a bigger budget for her department.
Richards had shown the senators the current advertising budget figures for various Caribbean destinations — with the territory at the bottom of the list. Puerto Rico, at the top, has an $87 million budget, the Bahamas has $73 million; the Cayman Islands $23 million; the British Virgin Islands, $7 million; and the territory, $6 million.
Hill noted that Michael Bornn, who served for several months as acting Tourism director earlier in the Turnbull administration, had asked the Senate for $22 million to market the territory. "Why don't you look into another revenue source than the hotel tax?" he asked Richards.
"It would be presumptuous for me to ask the Senate for that amount," Richards said. "I just have to let them determine that."
"But you are the one with the expertise," Hill persisted. "You should put a cost on it."
Sen. Roosevelt David asked Richards where she stands with getting cruise ships back to St. Croix.
"We are increasing presentation of product," she said, adding that she believes ships will return because of the "redeployment" of vessels in the Mediterranean and because of people's desire to visit an American destination.
In her list of 15 goals for the coming fiscal year, Richards listed " increasing frequency of arrivals and numbers of passenger on cruise ships to St. Croix" as No. 14, following "striving for better coordination between government agencies responsible for infrastructure."
No. 1 on the list is to "develop a cost-effective method of providing fulfillment pieces to consumers through new cost-saving in-house measures."
Tourism's office rental costs also came under scrutiny. The department pays $334,060 a year for its offshore offices and $114,000 for local facilities. Donastorg and Liburd brought up the rent of $127,753 a year for the New York office, located on the 20th floor of a high-rise. Richards said the lease was in place when she took office and cannot be broken but that it expires in 2004. She said she had enlisted the help of Delegate Donna Christian's office in trying to get out of the lease, to no avail.
The Tourism testimony was to have been heard between 10 and 11:30 a.m. according to Donastorg's schedule. However, it didn't conclude until after 2 p.m. Scheduled for later were the budget hearings for the V.I. Cultural Institute and the Labor Department.
None of the hearings have kept to the schedule. LaVerne Ragster, University of the Virgin Islands president, testified until 5 p.m. Monday, although she was scheduled to conclude before a 1 p.m. lunch break. The hearings stretch into hours with each senator taking five or 10 minute rounds, with comments from Donastorg in between.
Committee members Donastorg, David, Hill, Shawn-Michael Malone, Luther Renee and Ronald Russell attended Wednesday's meeting along with non-committee members Liburd and White. Committee member Norman Jn Baptiste was absent.
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