Strategic Alliances: Sharing Risks And Rewards

The goal of any strategic alliance is to minimize risk and maximize revenues.

In our industry, attractions are probably among the most savvy and experienced at developing these relationships. Companies such as Walt Disney World, Sea World, Universal Studios and a plethora of smaller entities have dedicated staff to developing, selling and managing this business segment for nearly 50 years.

Today, the Grand Daddy of all strategic alliances is probably the IOC, or the International Olympic Committee.  While I can’t speak for the committee, I think they would prefer to have nations or major destinations foot the entire Olympic bill since it would greatly simplify their oversight. While that may work for nations like China, it won’t work in most free market economies. Why?

The public would prefer to have the Olympics – its legacy of new community venues, improved roads and infrastructures – without additional tax cost for its citizens.  

Sponsorships and Strategic Alliances are the only way to do this. Thus the Olympics becomes one big mosaic of strategic alliances.

How do strategic alliances relate to our industry?

The Olympics example shows the power of alliances. I am stunned that, given the challenges our industry is facing, we are not reading or hearing about the development and execution of more strategic alliances between destination marketing organizations. One would think that heavy budget reductions would drive the need to find alternative opportunities of communication to reduce or mitigate risk.

It’s my contention that the only strategic partnerships developed by most destinations now are a few measly sponsorships for local events or festivals. And most of those are throw-aways; viewed as their civic duty or a community service by the local radio, TV station or other standard players.

In my opinion, none of these sponsors should be at any event that cannot deliver a measurable and  competitive ROI. No one should be in the business of throwing away money because it gives the perception of doing something for the community.   

If you can’t quantify and analyze the sponsorship’s offered value, forget it. Make a charitable donation instead.

And if you are a destination; get real! Don’t just send a few letters and make a few calls to beg for money for your sponsored events. This has to be a business arrangement. Business means commerce and commerce means money. Give them a pro-forma that shows the value of their investment so they can run an ROI.

Another option is to look at the festivals and events that come looking for a hand out every and decide which ones are worth investing in and which ones are some board member's wife’s pet project. (By the way; If it’s the wife of the chairman of your board, you may want to reconsider.) 

Once you’ve identified your most profitable alliances, delete any that are not growing and contributing to your overall objectives, as hard as it may be.

A strategic alliance success story

Let’s take a look at another category’s approach to strategic alliances. Some of you may find what I’m about to say sacrilegious, but hear me out. 

The Timeshare industry figured out that people who originally bought their product really didn’t want to vacation at that same spot or same resort every year. So what did the industry do? They developed clubs by which their members could stay at a variety of destinations and accommodations, thus increasing their products’ appeal. A case in point here is Disney. Once the kids are grown, who wants to go back to see Mickey every year for the rest of their lives?  Now, I love Disney, it’s a fabulous product, but I also love the mountains and the beach. Give me that type of flexibility and you’ll get my attention.

Destinations are in a highly competitive environment. We all feel that if we don’t get visitors now, they’re gone forever. 

Guess what? This may not be the year I want to go to the beach (even though I am a dedicated beach person). It may be the year that my lifestyle yearning is for the mountains. I’ve spent the last 10 months talking to the family and thinking about that side of our family’s lifestyle persona. And you probably are not going to change my mind – this year.

Here’s the sacrilege: Why don’t you guys with different lifestyle destinations actually start talking to each other? Look for ways you might develop a strategic relationship that will benefit both parties. To me, you’re not competing – your complementing.