Strategy, Structure and Best Practices that Make a Destination Management Organization (DMO)
What is a DMO?
Destination management organizations (DMO’s) may be public, private or hybrid entities, that promote a location and work with its stakeholders to build a rich experience as well as long-term value for residents and businesses.
DMOs have expanded their role from simple promotion to the complete management of the destination, which means combining marketing with product development, governance, and sustainability.
Here’s how leading DMOs are making this happen:
Visit Austin has embraced the city’s creative scene, from the background in live music to the relevance of its independent artists, and established a unique brand for the city, separate from what people know about the Texas state, and that has helped the city attract major events.
Visit Philadelphia created the “Filadelfia – You Gotta Feel It” campaign in 2019 aimed at Latinx visitors by using Spanish elements and collaborating with local influencers in order to increase engagement from the Latinx community, whose purchasing power is reported to have tripled over the previous years.
These examples showcase the modern DMO approach: strategic, data-driven, and community-focused. Here are the key roles behind it.
What are the roles of a DMO?
DMOs now execute integrated strategies that involve multiple fields. That is important to strengthen institutions and to make the Destination Management Organizations impact broader than simply promoting a destination. Before our deep dive, here is a quick overview of its roles and functions nowadays:
DMOs help build a clear identity for the destination and make it strong and profitable over time by managing demand throughout the year
Product and Experience Development
Deeply understand local culture and habits so as to offer visitors authentic and sustainable experiences that go beyond tourist traps
Act as a mediator between residents, business and the government, fostering agreements that reshape regulations and benefit everyone
Data, Research and Performance Management
Use data collection and analytics to draw relevant KPIs, monitor them, and measure progress to make informed decisions
DMOs work hard to improve life for everyone in the destination. Their main goal is to operate while increasing quality of life in the long term
Strategic Marketing and Branding
Even though marketing is still a major function of these organizations, it has expanded from simply printing brochures and setting up ad campaigns to encourage people to visit.
Now, DMOs build the whole brand identity of a destination and protect it over time through segmenting their audience, tailoring actions to different markets, and using digital tools to reach travelers in productive ways.
The Kansas Office of Tourism & Travel applied a strategy to advertise state tourism on its website. The content was curated in order to preserve its quality and retain the website’s visitors, and turned out to offer impressive results:
- The annual click-through rate (CTR) went from 0.1% to 0.35% in the first year
- The DMO generated over 6.5M impressions, which is great to attract advertisers
- The website became a strong source of referrals for the advertisers’ services
Besides all that, their marketing work is no longer restricted to increasing the number of people who visit the destination; they focus on shaping demand and aligning it with the local demands and capacity.
A typical example of that is when Destination Marketing Organizations boost off-season visiting in order to reduce pressure during the peak season. That plan makes demand from visitors constant throughout the year and ensures quality service.
Tourism Vancouver created a website in early 2014 to promote Dine Out Vancouver, Canada’s largest annual dining celebration. The event gathers 300 participating restaurants and tens of thousands of visitors, whether residents or visitors.
- The monetized website served 10M impressions and 30K clicks in only 16 days
- The overall CTR went to 0.34%, which is considerably above the industry average
- The email campaign announcing the program to industry partners had a 51% open rate
Product and Experience Development
It goes without saying that marketing is not enough to make a destination thrive; it must offer valuable, unique experiences based on the best the local culture and history can offer. These organizations strive to curate the activities to offer.
DMOs play an important role in that by working with product development as well. They interact with local businesses, nearby communities and even governments in order to support local events, develop themed itineraries and encourage community-led initiatives.
By doing all that, DMOs manage to perfection their selection of experiences based on local culture and identity. This way, they can help destinations stand out, especially in places where there are many options available.
This management work is also helpful to deal with shoulder season promotion: by creating activities for the entire year, it is possible to balance the flow of visitors on and off season.
The “It’s better live” campaign, started by Visit Austin in 2021, paired the city’s quirky side with strong musical scene built from the many live concerts and independent artists who often perform in the city to promote it as the Live Music Capital of the World.
- Austin had its authenticity promoted; the campaign emphasized visiting its attractions in person
- Visit Austin helped support the community in the post-pandemic era, ensuring tourism could survive
- It also shed light on upcoming ventures, like airport expansions, to keep the city attractive in the future
Governance and Policy Advocacy
There are many stakeholders when it comes to tourism: hotels, transportation agencies, attraction managers, local government and residents, to name a few. Many entities participate in the destination’s economy, so they want any new activity to be productive to them.
When the efforts to promote a given destination are not coordinated, they can lose themselves and become counterproductive. DMOs step in as neutral interveners, which brings a shared vision in order to interact with all those stakeholders.
Amsterdam – Curbing Disruptive Tourism
In 2022, the city of Amsterdam started a public-private partnership to curb disruptive tourism in the De Wallen region. The goal was to discourage people who came exclusively for its party culture and sex workers and imposed stricter regulations on nightlife and cannabis use.
- Amsterdam projected to receive 18 million overnight visitors in 2023, over 21× its population of 822,000
- That rising number triggered several local interventions to shift tourism towards the city’s history, culture and heritage
- The campaign came with banning cannabis in some areas, earlier closing times for bars, and limiting river cruises
Those organizations advocate for regulations that support local tourism in a sustainable way, such as establishing limits for short-term rentals, fostering investments in infrastructure, or even capping visitor numbers in sensitive areas. Besides all that, DMOs can help in times of crisis by coordinating recovery strategies and communicating with both visitors and residents.
Data, Research, and Performance Management
Visit Tampa Bay started a digital advertising program in 2010. The actions included managing both online advertisement sales and backend operations, which required extensive data analysis, and had excellent results starting only a few months later:
- Revenue from the advertising program increased by 40% year over year
- 70 advertisers were participating in the program by the third year of activity
- An ongoing contract with the DMO that has reached 139,000 clicks per year
Modern DMOs make decisions based on data. They collect information regarding visitor arrivals, spending patterns, length of stay (LOS), feedback from residents, and much more.
They are also gathering more environmental data such as carbon emissions and water usage per guest night. All those metrics feed dashboards that allow DMOs to get a global understanding of the scenario.
As usual with data collection, viewing that dashboard allows the DMO to make oriented decisions. For example, if dissatisfaction is increasing because of pollution, the DMO may change its strategy and pressure local entities to approve regulations that curb noise, garbage and air pollution. This work can lead to planning both short and long-term measures for the DMO to take.
Sustainability and Social Equity
Research of 80 destination managers of Alpine regions found that, while DMOs take the Global Sustainable Tourism Council’s criteria very seriously, there is still work to be done regarding implementation.
DMOs must embrace the role of policy enablers and sustainability coordinators in order to ensure that tourism grows aligned with ecological limits, cultural preservation, and community wellbeing.
One of the most significant evolutions in the role of DMOs is taking responsibility for sustainability. While tourism can make local economies grow, it can also deplete their natural resources if not used properly.
Nowadays, destination management organizations include a wide array of sustainable principles in all their actions, from eco-friendly marketing messages to establishing partnerships with businesses that reduce their carbon footprint.
Another important aspect is social equity: DMOs strive to ensure that the gains from touristic activities are fairly distributed in the local community, and that local voices are heard whenever there is a decision to make in order to contribute with their vision and experience.
Organizations that work with those principles are not only actively protecting the destination of interest but also making sure they will stay competitive in the long term. They are making sure that their activities are interesting and desirable to everyone who is affected by them.
Destination Management Organization or Destination Marketing Organization?
Even though it is common for customers and even organizations to apply “management” and “marketing” interchangeably in this context, there are fundamental differences between them. Marketing implies a focused approach; destination marketing organizations work by identifying demand, setting target demographics, and crafting campaigns that truly attract attention.
The “M” in that acronym used to stand for “Marketing” because Destination Marketing Organizations used to act primarily as promotional offices or sales hubs. They aimed at boosting demand, which is often referred to as “hustling”, to maximize visitor volume. Their success was measured by occupancy rates and direct spending, with little to no concern with how the DMO’s work impacted the destination’s physical and social environment.
This industry has shifted to “Management” in order to broaden its scope. It expresses a holistic approach that coordinates infrastructure, local policies, and community well-being while still taking care of the marketing-related activities. This change came from the realization that, without active management, the very assets being showcased, such as natural landscapes and local culture, could be degraded by the Destination Management Organizations work.
Having that in mind, destination management organizations integrate marketing activities with overall administration and the social aspect of tourism. They work with many partners in terms of logistics, local services, and politicians to develop plans that can attract visitors and boost the local economy while being sustainable in the long run and helpful to the local community.
DMO vs DMC: Key Differences
The last word of the acronym is also subject to mistakes. Destination Management Companies are usually private, for-profit agencies that specialize in logistics for large groups, whether for business or tourism. They handle operational tasks such as booking airport transfers and hotel rooms and tend to promote suppliers with which they have established business partnerships.
Moving on to destination management organizations, the goal is to promote the entire region. They are often publicly funded and, as a result, operate more impartially in order to benefit all local inhabitants and entrepreneurs by stimulating demand from tourism. DMOs do not usually book specific trips or promote travel services for a commission.
As you can see, the DMC and the DMO are complementary. While one operates at a high level with impartiality, the other offers convenience with travel arrangements in exchange for profit that comes from partnering local suppliers. The DMO creates the overarching narrative for the destination while the DMC translates it into practical actions for the traveler.
Practical Roadmap to Implement a DMO
Defining such complex roles requires taking practical actions as well. When it comes to making a DMO work successfully in this new context, there are a few major steps one should take, each of them with a few subdivisions:
Vision and Mandate
First of all, it is important to define the DMO’s mission and geographic scope. This way, all stakeholders will know the extents of its operation and use that knowledge to shape actions that are effective while remaining feasible according to the DMO’s goals.
It is also important to define a clear governance model so everyone involved knows whom to report whenever it is necessary.
VisitScotland, established by the local government, has defined itself the goal of promoting Scotland as a leading destination while ensuring tourism supports local communities and sustainability.
Asset Mapping and Gap Analysis
When it comes to practical aspects, it is necessary to discuss items such as logistics, visitor transportation, attraction selection and scheduling, inventory accommodation, and community capacity.
By addressing those and other relevant issues, the DMO can help guarantee that the chosen destination’s activity is feasible and sustainable in its community while still being profitable.
The Swiss Tourism Board has executed asset mapping to identify opportunities of improvement in their winter tourism infrastructure because of climate change. That initiative led to diversifying cultural and wellness tourism.
Funding Plan
This field implies making decisions on public and/or private funding, defining tourism levies, creating membership systems, and finding any other relevant strategies.
Their goal is not only to increase revenue, but also make it as stable as possible throughout the year (on and off peak season), and protecting the destination’s operational and financial health from typical negative events.
Valley REN, in Canada, established a regional marketing levy framework for its DMO to ensure stable funding thanks to applying visitor taxes and reinvesting those funds in infrastructure focused on tourism.
Product and Marketing Alignment
The DMO must respect the destination’s capacity at all times. That means starting campaigns and planning experiences that are always aligned with how many visitors the location can receive with comfort and safety and while respecting any specific restrictions there might be.
By ensuring a good experience any time of the year, the destination can ensure good feedback from its current visitors and recommendations which will bring new ones.
Most DMOs now align marketing and product development by promoting cultural experiences instead of simply selling attractions. This way, their campaigns become much more interesting to their target visitors.
Data Systems and KPIs
None of those steps would be helpful if there was no way to measure their results. DMOs collect data from many sources, and that information can be processed into dashboards that help managers determine which strategies to keep pursuing and which ones should be changed.
Here is a list of common KPIs that this industry uses to keep track of their operation’s overall success:
| KPI Category | Examples |
|---|---|
| Economic | Arrivals per day, Average spending, Length of stay, Spending patterns, Preferred locations |
| Social | Resident satisfaction, resident feedback, environmental impact, job creation, average salary, job segment |
| Environmental | Carbon emissions per visitor, water usage per day, power usage per visitor, volume of trash appropriately disposed |
| Governance | Stakeholder participation, compliance with applicable rules, number of complaints, number of compliance issues |
DMOs track KPIs like the ones above to measure the effectiveness of their marketing strategies. This knowledge is important to guide their upcoming decisions, such as where to invest and which strategies are working well.
Stakeholder Engagement
Since there are many stakeholders involved, it is important to build channels for easy communication, make those KPIs easily visible, and develop mechanisms to formalize complaints and to facilitate the resolution of conflicts.
This way, the number of problems that will happen at the chosen destination tends to be lower and, whenever one happens, its solution tends to be easier and faster to find and implement.
In regions like Costa Rica and Namibia, DMOs use destination stewardship councils to engage local communities, businesses and governments towards the shared goal of sustainable tourism planning, which benefits them all.
Risks and Mitigation
The operation of a modern-day DMO faces several risks. Over-tourism, for example, can lose resident support and even damage the local ecosystem; Funding volatility may render the whole operation inviable in the long term; Fragmented governance can cause duplicated commands and conflicts; and weak data systems simply reduce the benefits of oriented decision making.
Those risks can be mitigated with tools to manage visitor demands, with resources to diversify funding streams, with the creation of legal frameworks for coordination, and with the investment in building a robust data infrastructure.
Being transparent with the community is also essential to keep it engaged, which leads to building trust with the local residents and obtaining their support. This is extremely important because the DMO’s activity will directly impact their quality of life.
Conclusion
Among the latest trends reshaping DMOs, we can mention the rise of AI-driven visitor management to allow destinations to balance demand and capacity in real time. Amsterdam’s “Stay Away” initiative, for example, uses digital tools to discourage disruptive tourism while promoting cultural and historical activities.
As we can see, technology can be used to promote tourism in a given destination without forgetting to protect the wellbeing of residents and businesses as well as the local identity.
As DMOs embrace those actions, they expand their role from marketers to strategic supporters of the destination, blending several areas of knowledge to ensure it thrives as a vibrant, inclusive and resilient hub for visitors and residents.
