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Retail Traffic

Malls' Drive for Tourists

Shoppers no longer travel across town to go to the mall, increasingly they are being lured across state lines and even continents.

In recent years, mall owners and managers have stepped up their efforts to court domestic and international travelers. The growing focus on tourists stems from recent studies of their spending habits. Shopping centers began to take notice 10 years ago when the Travel Industry Association of America began researching the favorite activities of tourists. “Shopping topped the list,” says Kathy Anderson, president of AZ Travel Marketing.

Data collected from in-flight surveys issued by the U.S. Department of Commerce confirms it. In 2005, 89 percent of international tourists shopped on their trips to the U.S., and 84 percent dined in restaurants, besting all other activities.

“You look at the most successful shopping centers in the United States today, they all focus on tourism,” says Rosemary McCormick, president and cofounder of the Shop America Alliance.

Mall of America, King of Prussia Mall, Fashion Show and Ala Moana were among those cited by McCormick as being popular tourist destinations.

Tourists account for 35 percent of the 40 million people who visit the Mall of America in Bloomington, Minn. annually. Since its opening in 1992, the mall's 400-plus stores has seen a steady increase in the number of international travelers.

International flavor

The recent increase in international tourist traffic can be attributed to the favorable exchange rates and the Mall of America travel packages offered through tour operators and visitors' bureaus, says Dan Jasper, director of public relations for the Mall of America.

“The shopping mall is very American,” Jasper says. “This makes it a perfect destination for them.”

According to Jasper, international visitors to the Mall of America spend an average of $275 per visit, compared with $165 for domestic tourists and $110 for locals.

In a 2005 study, the ICSC found local shoppers spent about $90 per visit at shopping malls. Shop America Alliance members say domestic tourists spend two to four times that amount. The Department of Commerce found that the average visitor from overseas spent upwards of $374 on gifts and souvenirs in 2005, although McCormick says that figure is probably conservative.

During the mid-1990s, industry observers say, just a handful of mall marketers visited international tourism trade shows in search of tour operators to promote their centers. Today, more have come to realize the importance of tourism.

It's a marked change from when tourist marketing was “the poor stepchild” within the industry, says McCormick.

A survey of shoppers at a Colorado mall in 2002 found that, tourists, on average, outspent local shoppers by $40, made more impulse purchases and lingered at the mall for an additional hour, according to the ICSC. And a 2005 study of a Florida mall found that tourists visited more stores than local residents spending more time at the mall.

Mounting competition among malls for local shoppers has also sparked interest in attracting tourists, opening the door for consultants such as McCormick and Anderson to help coordinate marketing strategies. Marketing managers at mall REITs are particularly receptive, McCormick says.

McCormick's Shop America represents 200 tourist-friendly shopping destinations throughout the United States, counting malls, outlet centers, department stores and some standalone retailers among its members. Based in Chesterfield, Mo., it sells more than 60 shopping tour packages, stages an annual conference and publishes Shop America, a twice-yearly magazine.

Before starting the Alliance in 1996, McCormick developed marketing strategies as part of the team that opened Mall of America in 1992. In Minnesota, where the residents number less than 5 million, “you quickly figure out how tourism works” when the mall needs 40 million visitors a year to succeed, she says.

Boasting an indoor amusement park, Mall of America has a ferris wheel, an aquarium and, soon, a third roller coaster — to attract and retain the attention of tourists. The mall's owners are also trying to push through a proposed $1.8 billion expansion that will double the property in size and add even more attractions. Triple Five Group wants to add up to 5.6 million square feet to the Mall of America. The expansion would include a 6,000-seat performing arts center, a Kimpton Hotels' brand boutique hotel and 8,000 new parking spaces. Mall officials contend the addition is neeeded in order to keep the center competitive as a destination for international tourists given some of the super-sized properties built worldwide. For example, the giant Mall of the Emirates in Dubai contains 6.4 million square feet of space, including an indoor ski slope and an upscale hotel.

While marketers say they have to play up their properties' distinctive attributes, not all centers have what it takes. The most promising centers are near tourist destinations and well-traveled cities and offer a mix of retailers unique to their locales.

River Park Square in Spokane, Wash., hardly enjoys a major-market location but draws tourists with the only Nordstrom between Minnesota and Seattle.

Shop America sells packages in nine states and the District of Columbia through its website, Visitors to Fashion Show in Las Vegas who buy the $80 Shop & Beauty package, for example, get a private facial, discounts, free cosmetics samples, a coupon book and complimentary concierge service. “These centers are tourist attractions for a reason. They deliver something,” McCormick says.

Web marketing has also emerged as an important tool in the marketer's belt. International travelers rely more on computers than any other source of information to plan trips, and shopping centers want to ensure that they aren't overlooked. Tourists who research their trips online are more likely to spend more time and money at the mall when they arrive, Anderson says.

“For us, it's about pre-awareness,” says General Growth Properties vice president of marketing Susan Houck.

“The more we can have a customer be aware of our properties, the better a chance we have of getting them there,” she says.

Centers also reach travelers through their own Web sites and popular travel sites such as Orbitz, Expedia and Travelocity. Potomac Mills, an outlet mall in Prince William, Va., near Washington, D.C., aims to attract tourists for repeat visits by posting special events and promotions on its site.

Though shopping centers may have more ways to reach travelers than ever before, they are also challenged to drum up tourists due to the U.S. government's visa restrictions. Residents of Mexico, a top target market for GGP, may have to wait up to six weeks to get a visa, Houck says. Meanwhile, Canada is luring Mexican tourists by advertising its looser travel regulations. And now tourists flying from both countries need passports to cross borders — a restriction that previously did not exist.

General Growth and others in tourist marketing are addressing the issue with help from TIA, which recently released its Blueprint to Discover America. The policy paper advocates speedier processing of visas and other measures to ease international travel to the United States.

Good publicity

Once a center or REIT decides to focus on tourism, its marketers get the word out through partnerships with key players in the travel industry, including travel agents, tour operators, convention centers, visitors' bureaus and air and bus lines.

They publicize tour packages, angle for online publicity and even solicit hotel concierges to recommend their venues to guests sidelined on rainy days.

Macerich Co. offers commissionable shopping packages to travel agents and tour operators, says Kate Cavaliere, senior manager of tourism. Cavaliere also visits major feeder markets such as Mexico and the United Kingdom to promote Macerich properties. It implements its tourism marketing strategies for 21 of its 86 shopping centers.

Resembling a French shopping district, in Carmel, Calif., Macerich's Carmel Plaza boasts 85 percent of its traffic is tourists. Its concierge center's luxury packages include guided tours, tea and champagne parties and private trunk shows.

Tourists who purchase Macerich's luxury packages may choose to take a limo from their hotel to the center, where they're provided personal shoppers, invited to meet-and-greet events, offered in-store refreshments and personalized shopping itineraries.

General Growth Properties has identified 40 of its 220 centers as properties where tourists represent a significant level of mall traffic and sales. Its efforts make up the largest organized corporate program targeting tourists, Houck says. The Chicago-based regional mall owner promotes its tourist-oriented properties on the Web site

General Growth divides its portfolio into two categories. One group includes centers that attract international tourists. Tourists make up 93 percent of the traffic at Grand Canal Shoppes in Las Vegas inside the Venetian casino, for example, and 60 percent at Fashion Show across the street.

The second category consists of GGP shopping centers in suburban markets located along major interstates, such as Jordan Creek Town Center in West Des Moines, Iowa. Jordan Creek depends on traffic from tour groups, RV drivers and day-trippers from Chicago 340 miles away.

GGP also has representatives in Mexico and the United Kingdom. It also trains merchants at its shopping centers about the cultural nuances of dealing with international visitors, says Anderson, who works on contract for GGP. Retailers are taught that Mexicans might be more touchy-feely, she says, while Asian visitors are more reserved.

Snagging tourists has been a longtime priority for outlet centers. Chelsea Property Group, the outlet-center division of Simon Property Group, was the first shopping center to join tourism associations, says spokesperson Michele Rothstein.

Located outside major markets, outlet centers are destinations by design, Rothstein says. “We create an environment where we recognize that a good percentage of our business is going to be someone from out of market,” she says. That is reflected in amenities, signage and other elements.

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