https://skift.com/2023/04/20/why-sedonas-tourism-bureau-fired-its-city-over-destination-marketing/
Why Sedona’s Tourism Bureau Fired Its City Over Destination Marketing
Dawit Habtemariam, Skift
April 20th, 2023 at 10:45 AM EDT
Skift Take
All eyes will be on Sedona, Arizona. If it can fund itself and promote tourism without the city’s dollars, other destinations could potentially follow its example.
Dawit Habtemariam
The Sedona Chamber of Commerce & Tourism Bureau recently ended its tourism partnership with the City of Sedona because the local government wouldn’t allow it to restart destination marketing. The move came in the wake of a November election that saw a mayor and council member voted out and that was seen as a referendum on resident attitudes toward tourism.
“It got to the point where somebody had to make a bold decision,” said city councilman Peter Furman. “The chamber pulled the trigger first.”
The non-renewal of the contract for the next fiscal year represents a broader tale of many places rethinking their spending on tourism promotion. Sedona’s tourism bureau is one of a growing list of entities put under greater pressure from legislators and constituents to redirect funds toward destination management and other community goals. A recent Skift megatrend noted that residents in many parts of the world no longer want to be spectators in tourism.
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Tourism Surge, Tourism Slump
Two years ago, the Sedona City Council revised its contract with the tourism bureau, stopping the bureau from spending money on destination marketing.
Before the pause, the tourism bureau spent between $500,000 and $600,000 a year on marketing and advertising per year to attract affluent, longer-staying visitors, said Michelle Conway, CEO and president of Sedona Chamber of Commerce & Tourism Bureau. The promotion expenses were only a minority of its expenditure, with destination management the bulk. Yet for the past two years, it only spent money on destination management.
Not everyone’s happy about the move.
Sedona benefited from a surge in tourism in 2021. But last year, business flagged.
Like other rural destinations, Sedona — a hiking and mountain biking destination — is facing wider competition now that the pandemic is over, international travel is open, and cities are attractive again to tourists.
In 2022, Sedona saw a decline in tourist traffic year over year. Meanwhile, direct competitors like Jackson Hole and Napa Valley haven’t seen the same drop and are eating away at Sedona’s share, Conway said.
Many hoteliers are concerned. Occupancy is now down 6.5 percent from its pre-pandemic level. Average daily rates have been dropping.
Hoteliers had been one of the most active stakeholders years ago in pushing for a 0.5 percent addition to the city’s 3 percent bed tax. The 0.5 percent was originally earmarked specifically for tourism promotion.
Businesses — 60 percent of which are tourism-oriented — are now “suffering” and “asking for help,” Conway said. Some have seen double-digit drops in revenue. On top of lost visitor spending, business operations costs are above pre-Covid levels.
The tourism bureau thought it was time to restart destination marketing. Yet the Sedona City Council wouldn’t budge. It denied requests to jump-start marketing.
To properly support its business stakeholders, the chamber had to break away from the city, its leaders said. It’s confident it will find alternative sources to support future marketing efforts.
2021: The Turning Point
Something of a split between residents and the tourism industry had been appearing before the marketing pause.
Many locals haven’t been happy with changes in their life due to tourism in the last five years, said Ryan Casago, a resident and local vacation rental owner.
The year 2021 was something of a turning point because of overtourism, said Conway. Like other outdoor destinations during the pandemic, Sedona saw an explosion in visitors, with 3.7 million in 2021, up from its annual 3 million, according to the Sedona Chamber of Commerce.
“We were super successful,” said Furman. “Tourists started to flock to Sedona.”
But there were negative consequences.
The city’s road infrastructure was being pushed “close to its limits,” said Furman.
Traffic congestion, longer wait times at restaurants, and poor habits from new outdoor enthusiasts hit the town of 10,000 people.
The influx of short-term rental properties has cut available housing and changed the community makeup. Conway said there are now more short-term rental rooms than hotel rooms (2,800), which has added to the angst of the locals.
Affordable and available housing has become harder to come by for large segments of the local workforce, said Furman.
Such stress on community, physical, and natural infrastructure was a common problem among destinations in 2021 and 2022 in response to unprecedented tourism. What commonly followed were communities questioning the value of tourism promotion. In Jackson Hole, Wyoming, for example, residents have directly questioned its tourism board about ceasing marketing.
Destination marketing tactics like filling in slow seasons and promoting lesser-used trails instead of popular attractions do more harm than good, said Furman. Lesser known trails not set up for parking suffered overcapacity, for example, which pushed the tourist parking to other locations.
“All those decisions have unintended consequences of pissing off the locals,” he said.
Tough Choices
The chamber doesn’t have an alternative funding source yet. The details of which funding model to use to replace the loss of bed tax dollars are still being worked out, but the business community said it’s fully behind whatever the chamber does.
Come July 1, when the current contract ends, the chamber will have to do “what it needs to survive,” said Conway. That may include operational and program cuts. Details on who will be responsible for which destination management programs and projects are still being worked out, but the chamber expects to have less on its plate.
With the contract over, Conway is “excited” about the new opportunities for creative marketing now that it won’t have its hands tied. One area of interest is potentially expanding marketing to include the greater Verde Valley that Sedona sits in — highlighting the region’s diversity of towns, wine country, and art communities.
Meanwhile, the city council is looking at hiring a consultant to help internally manage and mitigate the impacts of tourism.
“I don’t see a lot of energy in the near term to do destination marketing,” said Furman.
Tags: arizona, destination management, destination marketing, destination marketing organizations, funding, outdoor tourism, rural tourism, sedona, sustainable tourism, tourism boards, tourism marketing, us travel
Photo credit: Sedona’s tourism agency fired its city council and went its own way to pursue destination marketing. Source: Unsplash.
In the News
City Council Debates Freedom of Speech
City council debates freedom of speech, rejects 2 proposed restrictions
By Tim Perry
The members of the Sedona City Council refused to approve proposed changes to the council’s rules of procedure at their March 28 meeting on the grounds that the modifications would interfere with freedom of speech.
City attorney Kurt Christianson proposed three significant alterations to Rule 6, which deals with residents’ interaction with the council. The first amendment, to Rule 6.A.1, would have specified that subjects addressed by speakers during the public forum would have to be “within the jurisdiction of the council.”
The second amendment, to Rule 6.A.3, would have struck out the three-minute standard time limit for speakers and prohibited advocacy for or against any candidate or ballot measure. The third amendment, to Rule 6.B, would have added language stating that “members of the public shall not engage in disorderly, disruptive, disturbing, delaying or boisterous conduct, such as, but not limited to, handclapping, stomping of feet, whistling, making noise, use of profane language or obscene gestures, yelling or similar demonstrations, when such conduct substantially interrupts, delays, or disturbs the peace and good order of the proceedings of the council.”
Council members were not persuaded of the need for all of these changes. Councilman Pete Furman described them as unwarranted.
“I would rather be on the side of free speech than not,” Furman said.
“I find Councilor Furman’s argument for free speech to be compelling,” Councilman Brian Fultz agreed.
“Our citizens think everything’s in our jurisdiction,” Councilwoman Jessica Williamson said, addressing the proposed change to Rule 6.A.1. “The airport’s in our jurisdiction. ATVs weren’t in our jurisdiction, yet we’ve certainly embraced doing something about them, so I’m not sure that I think this is needed.”
“People are going to talk about whatever they want to talk about,” Councilwoman Melissa Dunn commented.
“I’d rather spend three minutes listening to them than spend two and a half minutes trying to cut them off,” Mayor Scott Jablow said.
“This is a problem that doesn’t exist,” Vice Mayor Holli Ploog said.
The council elected to preserve the addition of language to the rule reminding speakers to address their remarks to the council as a whole, but rejected the imposition of a content limitation.
Council also found the language of the second proposed alteration to the rules to be unacceptable, although Christianson argued that it was necessary to conform to state statutes prohibiting the use of city property for electioneering.
“I do not agree with Rule 6.A.3,” Councilwoman Kathy Kinsella said. “I think this is a forum for people to get up and speak about ballot measures, especially because some of them are city ballot measures … I want to know where the public stands on state ballot measures … I think this limits speech. I do not support this additional language.”
“I am really opposed to this, and I do not believe that a court is going to hold us accountable for a member of the public who comes up and speaks for three minutes, who has a right to free speech,” Ploog said.
“I would rather lean toward allowing it than cutting it,” Jablow said.
By consensus, the council decided to reject the new language.
The proposed changes to Rule 6.B, which would have involved the insertion of two new paragraphs, prompted more discussion and a somewhat different approach from council.
“Tighten that language up,” Furman suggested. “Don’t have that list.”
He argued that the language of 6.B.1, governing residents’ behavior, should be as similar as possible to the language of 6.B.2, governing council members’ behavior.
“I like the image of us having an equal playing field. I actually think the city council should be more limited,” Furman said.
Christianson explained that he had used the language from an ordinance of Costa Mesa, Calif., that had been found to be constitutional by the Court of Appeals for the Ninth Circuit in Acosta v. Costa Mesa in 2013. He described the inclusion of a list of prohibited actions as “a bit of a warning to the public … it’s always going to be a case-by-case basis.”
“I support this language change because it makes it clear that it’s only when the conduct disturbs,” Kinsella said. “It clarifies that if somebody does clap, it’s OK.”
“I don’t read it that way,” Furman said. “I think the public would interpret this as we’re telling them they can’t clap.”
Williamson said allowing nonverbal expression at council meetings could lead to proponents of minority views being “booed and hissed,” but acknowledged that such a concern was “overruled by the intent of free speech” and expressed support for Christianson’s choice of language.
“The notion of erring toward free speech has come up multiple times,” Fultz said. “I support Kurt’s assertion that following the Circuit Court language specifically is sufficient.”
“I believe, based on what I’ve heard out of this discussion, that this council wants to increase its commitment to freedom of speech, and I’m very confident with what we have in place right now,” Fultz added.
Furman agreed to accept the language approved by the Ninth Circuit, but reminded the council that the mayor also has the latitude to manage meetings as he sees fit, after which the council voted to accept the proposed changes to Rule 6.B.
The council also approved a modification to Rule 4.A.4.f.1 that brings the city into compliance with state law by removing the mayor’s power to order the closing of any business during a state of emergency.
City council members push pet project
City council members push pet project – Sedona Red Rock News
The grass is always greener on the other side of the dog park. Or at least it will be once the modifications to the Posse Grounds dog park expansion that the Sedona City Council approved on Jan. 10 go into effect.
The council had decided in September that the proposed surfacing material for the extension area would be decomposed granite for environmental and financial reasons. However, on Dec. 13, Vice Mayor Holli Ploog, supported by Councilwoman Kathy Kinsella, requested that the council reconsider the planned surfacing material.
“I do not have confidence that where we left things at our last meeting was leaving a surface that was going to actually be utilized in the long run,” Kinsella said, making the case that the expanded area of the dog park should be surfaced with grass rather than decomposed granite or artificial turf. “We thought we really need to have another discussion on where this could go in terms of making this a responsive amenity that will be well-utilized.”
“Subsequent to Dec. 13, I visited the Yappy Hour and talked to folks there, and synthetic grass is not a material they would be happy with, nor is it a material our staff would be happy with that,” Ploog added.
“Synthetic grass is a nonstarter,” City Manager Karen Osburn explained to the council. The city staff estimated that the cost of installing 7,000 square feet of artificial grass in the pilot area of the extension would be $140,000, and that the “intensive maintenance requirements” for it in the long term would be prohibitively costly.
“It seems the users prefer a natural grass surface,” Osburn continued. “That was what we had originally proposed, but given the additional approximately 3 million gallons of water usage it would require to maintain that surface, it was previously decided that we would go with a DG-type of surface.”
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Given the strong desire for a natural grass surface expressed by users, Osburn suggested that the city could find a way to install grass “without using one drop of additional water. No net increase to any of the water usage that we have today.”
‘Sobering’
Several council members expressed doubt over the proposed water requirements for a grass surface.
“I still am concerned about 3 million gallons of water a year,” Councilman Pete Furman said. “That just doesn’t strike me as something that our ethics want to promote.” He also noted installing irrigation in the area of the dog park would be difficult with bedrock close to the surface.
“It is very sobering thinking about committing to a 3 million gallon usage of water,” Councilman Brian Fultz agreed. He commended city staff for trying to find ways to achieve no net increase in usage.
Mayor Scott Jablow observed that he had originally opposed a grass surface given the expected water requirements, but that if city staff could achieve net zero usage, “I can change my opinion.”
“Trading use isn’t the goal of conservation and responsible water use,” Councilwoman Jessica Williamson said. “Without grass, you would be saving [3 million] gallons.”
“Maybe we let the dogs vote,” Furman remarked. He suggested that the city install grass on half the surface and then “observe for a period of time and see what the dogs actually want and what the people want.”
“I would like to see us do better than no net gain in water use,” Furman added.
Jim Gale, of West Sedona, offered a similar argument during the public comment period.
“I think that we should think about our ethics here,” Gale told the council. “You’re no different than the governors of all the Western states. The Colorado River is drying up; 3 million gallons for dogs that for hundreds of thousands of years romped … we’re using way too many resources … I think we need to think first about people. We live in the desert, so we need to mimic the environment of the desert.”
“No net increase is not sufficient because we’re already using too much,” Gale finished.
As the discussion proceeded, council and staff realized that the 3 million gallons of usage in the agenda referred to the calculated usage for a grass surface that would cover the entire 20,000-square-foot area of the extension, not the 7,000- square-foot pilot area. On that basis, the water usage for a grass surface on the pilot area would consume about 1 million gallons per year.
The Motions
After making an initial motion to reconsider the previous decision, Kinsella proposed opening the dog park extension with a temporary sand surface, with the expectation that a grass surface would be installed later. Kinsella’s motion added the requirements that the city achieve a net decrease in water usage, that Yappy Hour continue at the softball field until grass is installed, and that any other changes be brought back to council for approval. Kinsella changed “sand” to “composite surface” after discussion.
Furman remarked that he was not comfortable setting a requirement for a 50% reduction in greenhouse gas emissions while maintaining a much lower bar for water usage reductions. Kinsella asked him if he would be comfortable with a 10% decrease in water usage.
“No,” Furman replied.
Ploog seconded the motion after Kinsella formally offered it, and Jablow joined them in supporting it, but the motion failed 3-4.
Furman then moved to install dual surfaces at the extension area and reconsider the matter in two years based on usage. He received no support for this motion and withdrew it.
Kinsella responded to Furman’s concerns by submitting her motion again and changing the requirement for no net increase in water usage to “a 20 percent decrease in city water use.” Furman seconded this motion. Ploog clarified that the baseline for determining this water savings would be park-related water usage only, not city-wide water use. Kinsella accordingly rephrased the motion to refer to recreational water use.
Kinsella’s final motion to use a composite surface temporarily until grass is installed in the pilot area passed the council 6-1, with Williamson dissenting.
How Much is that Dog Park?
The city of Sedona spent $27,433 on the dog park in Fiscal Year 2011. In FY 2014, it budgeted $5,000 for new gazebos and picnic tables. The city’s FY 2016 budget included spending of $18,120 in that year and $152,510 in the coming fiscal year for dog park upgrades, while the 2017 budget increased the dog park spending allocation to $203,010.
The FY 2018 budget specified $292,983 for dog park improvements, which included carryover from previous years. It also projected an additional $330,000 in spending for more improvements in FY 2024. The future years’ estimate increased to $360,000 in the FY 2019 budget. On Sept. 13, 2022, the city voted an additional $155,000 in funding to expand the area of the dog park.
The city’s total budgeted spending on the dog park through FY 2024 comes to $807,983. In addition, dog enthusiasts raised $37,000 toward the park’s construction in FY 2015.
According to city communications manager Lauren Browne, actual costs so far have been $346,500. The original buildout cost $279,200, which was split between $37,600 in design costs and $241,600 in construction costs, while the latest expansion cost $67,300.
Letter to Red Rock News Editor: City-Chamber Divorce
Letter Submitted to the Red Rock News on 1/30/23.
Printed in the Red Rock News on 2/1/23
Say No to Divorce!
A recent editorial suggested that the City of Sedona and the Sedona Chamber file for divorce due to struggles over the need to better manage marketing and tourism. The Tourism Bureau side of the Chamber has cooperated with the City over time to market Sedona, bolster the local economy, and help manage tourism. It’s now time for the Tourism Bureau to become independent and fully assume its critical role in our community.
Let’s explore taking the Tourism Bureau (TB) to a new level that is independent from the Chamber. Other towns use this model. Its board of directors could include businesses, residents, government, and nonprofits. It could be funded by a portion of tourism tax receipts and have an agreement with the City to perform certain services and tasks. It must operate flexibly and efficiently. The TB could create and maintain an appropriate brand for Sedona, and market as needed (more at times, less at others). It should engage visitors (and residents) to respect the environment, honor our culture, and mitigate negative aspects of tourism. The TB must be a willing, enthusiastic, innovative, proactive, and motivated partner to the City, businesses, and residents. It must seek to balance the sometimes-competing needs in our community.
The growing conflict between the City and the Chamber isn’t healthy. If businesses, freed from their partnership with the City, begin an unconstrained marketing campaign, the conflict may widen and drag residents into a three-way argument. Nobody wins.
Managing tourism properly and effectively is a top priority for Sedona. This requires businesses, government, and residents to work together. This is no time for divorce. Everyone needs to pull together and make Sedona a great place to live, work, and raise a family.
Submitted by Pete Furman
“Opinions contained herein are my own, and do not necessarily reflect the views of the City of Sedona or the Sedona City Council.”
City councilors, staff explore splitting Chamber of Commerce from tourism bureau
The joint work session between the Sedona City Council and the Sedona Chamber of Commerce & Tourism Bureau on the afternoon of Wednesday, Jan. 11, revealed sharp differences in the priorities of both organizations and provoked discussion about the future of the SCC&TB as an organization.
While members of the City Council and city staffers focused on discussing the chamber’s organizational structure and the need for separate responsibility for decision-making on management and marketing, members of the chamber’s board expressed concerns over the ongoing availability of sales tax funds for marketing and the unity of destination management and marketing.
Clarity
Both council members and chamber staff went into the meeting looking for greater clarity from one another. Bed taxes, paid by tourists, can only be used on tourism promotion per Arizona state law, thus the city contracts with the nonprofit chamber to spend those funds to manage tourism programs and run the Uptown Visitors Center.
“We are where we are because I don’t think any iteration of council has given clear direction,” Councilwoman Kathy Kinsella said, adding, “More clarity needs to come from both sides.”
“At some point we really do need to determine what kind of relationship we want to have,” chamber president Michelle Conway agreed.
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“We really need you all to come to a clarification,” chamber Board Chairwoman Jennifer Perry suggested.
Conflict of Interest
Both council members and chamber staff differed in their views as to whether the city or local businesses should be the chamber’s primary customer.
“We are the customer,” Mayor Scott Jablow said. “I felt we weren’t being listened to.”
Vice Mayor Holli Ploog commented that the chamber board were “constantly telling us ‘we’re not your membership, your businesses are’ … and that’s the inherent conflict: ‘We’re the chamber and we’re not satisfying our chamber members.’”
Ploog added that what the chamber wants is not necessarily where the city wants to spend its money.
“Our job is to advocate for the businesses,” Perry agreed, which Councilwoman Jessica Williamson commented was “absolutely correct.”
“You need to be hearing from these businesses,” Perry added.
Conway pointed out that the chamber had agreed to pause destination marketing in 2021 in response to council and public concerns over tourism negatively affecting residents’ quality of life, and referred to ongoing claims on social media that the chamber is spending millions of dollars in city money on business marketing.
“We know better,” she told council.
Williamson remarked that the topic of city funds being spent on tourism marketing is a political issue, and that no matter how often the chamber tells Sedonans that city money isn’t being spent, “they’ll still say, ‘I don’t care.’”
Management vs Marketing
Chamber board member Al Comello reviewed the evolution of the chamber and its gradual development, with the growth of tourism, from a marketing organization into a marketing and management organization and then into a management organization as management became the overall mission.
“Be real careful trying to fix something that’s not broken,” Comello advised.
Comello also reminded councilmembers that the 0.5% bed tax that Sedona collects for tourism management and marketing should not be thought of as public funds. “It came from us taxing the tourists for the purpose of benefiting the city’s management needs,” Comello said, arguing that residents should “segregate it in our minds.”
“My interest first and foremost, beyond the structure, is that public funds are managed with propriety,” new Councilman Brian Fultz said after the meeting. “We’ve got to make sure that the funds are handled appropriately … and not to wind up benefiting chamber members. That’s the right thing to do.”
Consent to Separation
As the dicussion progressed, new Councilwoman Melissa Dunn wanted to clarify that there was a proposal for “a divorce” between the nonprofit chamber and its tourism bureau.
“Personally, I think separation is the right answer,” Ploog said. “I knew it had to be two separate entities. I was surprised that was news to you guys.”
“If you don’t make a clean split, it becomes very, very difficult to have two masters,” Dunn commented.
“There needs to be a clear separation,” Kinsella said.
“If you want to split it, it’s doable,” Comello said, but he advised the council to leave things as they are.
Holistic Tourism Bureau
“I think the solution is a new generation of tourism bureau,” new Councilman Pete Furman proposed. “A holistic bureau … it looks a little different.”
He suggested that the current SCC&TB, with all its employees, become a dedicated tourism bureau controlled by a board composed of business, city, resident and nonprofit representatives, thereby resolving issues of trust and control, and “we spin off a new chamber.” The chamber could then contract with the tourism bureau for needed services on behalf of private businesses, he suggested.
Sedona could be “one of the pioneers” for this model, Furman said, calling for the new bureau to be enthusiastic, proactive and “inherently motivated to think of the pluses and minuses of tourism management.”
Public Option
“Obviously, there is not consensus among council,” City Manager Karen Osburn said.
“Holistically, there is a need to morph into more destination management,” Osburn continued, replying to Furman’s proposal. She went on to say that the chamber may not be the right entity to do that, and that city staff might do a better job of handling destination management.
“Are you the right entity to take on tourism management and what does that mean?” Osburn asked. “Maybe those things are better suited for us.”
“As a city, we have the responsibility to do significant management,” Osburn said, noting that the chamber and its tourism bureau would still play a role in that process and could focus on branding and marketing.
Osburn emphasized to the council that the city’s Sustainability Department was concerned about the sustainability certifications being offered by the chamber, stating that they felt strongly that there was only room for one such program in the city and that the chamber effort did not have any teeth to ensure compliance.
“Some of this needs to come in-house to Sedona,” Kinsella said, adding that the city would likely have to hire an expert to help it assess and identify its needs.
“Sustainable tourism is really new,” Williamson said. “We don’t really know what it is, either,” commenting that eventually it will be someone’s job to figure that out.
“That already exists with Michelle [Conway],” chamber board member Lonnie Lillie countered. “You have an expert in tourism, just not under the city roof.”
“The problem is that she’s answering to the chamber,” Kinsella said. “There’s a conflict there.”
“It isn’t the staff, it’s the leadership,” Ploog said.
“I don’t think it’s city,” Furman differed. “Our plate’s full.”
“I would be cautious about assuming that we could just bring in the functions the chamber currently provides for us,” Fultz commented afterward, noting that the city does not have the chamber’s marketing skill set.
Fee for Service
As an interim measure, the council eventually agreed to accept the chamber’s proposed alternative of a fee-for-service business model for Fiscal Year 2023-24 while evaluating future options. Some council members nevertheless expressed concern about that model, particularly in the long term.
“The health care industry is fee for service. It doesn’t get good press,” Furman said. “Fee-for-service models look more transactional than partnerships.”
He added that it would open the door to higher prices for contracts that the chamber did not want or was not equipped to undertake.
Williamson pointed out that a fee-for-service model would require putting out a separate RFP for everything the council wanted to do.
“That’s not really the direction I’m interested in going at this point,” she said.
Ploog argued that fixed-price contracts produce better outcomes than time-and-materials contracts. “I’m supportive of going to fee-for-service for the upcoming fiscal year,” Kinsella said, identifying it as an “interim step” in the process of making a final decision about what functions should be incorporated into city government. She noted that “that fee-for-service model already exists on one side” of the chamber, as businesses can pay additional fees for services not included in their membership benefits.
“I would like to look more toward fee-for-service to start,” Jablow said. He suggested that although the city could permanently alter its relationship with the chamber in the future, if the fee-for-service model works out, it might not need to be changed.
Perry expressed that she would have preferred to continue with the existing partnership model, but she likewise concurred on a fee-for-service model as a temporary solution. She clarified that the chamber will contract with the city for specific services and will also have the ability to accept other clients.
“We’re talking about 2024 as the year of the exploration,” Kinsella said.
“This was very helpful. This was a conversation that needed to happen,” Conway concluded.