A historic challenge
Colonial Williamsburg’s exiting CEO faced deficits, declining visitors
- September 3, 2019
When Mitchell B. Reiss steps down as president and CEO of Colonial Williamsburg Foundation in October, it will mark the end of a five-year tenure heading up a hybrid complex of 18th-century historic sites and modern-day commercial businesses.
It will also mark the end of a roller coaster ride of ups and downs in the foundation’s financial health as its commercial ventures — operated under the Colonial Williamsburg Co. umbrella — are on track this year to have a positive cash flow for the first time, says Reiss.
He came to Colonial Williamsburg after a career in diplomacy and education. His diplomatic duties included playing a key role as a special envoy in the Northern Ireland Peace Process. He also served as the director of the State Department’s Policy Planning Staff, its principal strategic planning arm.
He previously served as president of Washington College, a liberal-arts college in Chestertown, Maryland, and was William & Mary’s vice provost of international affairs.
Colonial Williamsburg’s $1 billion in assets include its 301-acre historic campus, two art museums, five hotel properties, a spa, 11 restaurants, 14 retail outlets and a Robert Trent Jones-designed golf course, among other recreational amenities.
Stopping the bleeding
With nearly 2,000 full- and part-time employees, Colonial Williamsburg is one of the region’s largest employers. Upon his appointment in 2014, Reiss was charged with reversing the organization’s numerous challenges, which included a seven-year decline in visitation, a bevy of businesses that had yet to turn a profit in 36 years and a dwindling foundation endowment. At the same time, he was tasked with bringing the foundation into the future, including diversifying Colonial Williamsburg’s leadership and overseeing upgrades of its technology, amenities and educational efforts.
“There were two urgent challenges: One had to do with our financial health, and the other had to do with our core mission of attracting people to come and visit,” Reiss says, citing long-term operational losses on Colonial Williamsburg’s commercial side and a 30-year decline in visitation for the historic site. Ticket sales reached a high of 1.2 million in 1988 and dropped to 550,171 last year, the lowest point since the 1960s.
In the face of what Reiss called “daunting” financial losses, he instituted a June 2017 restructuring that resulted in the layoffs of 71 employees and the outsourcing of an additional 262 jobs in the foundation’s hospitality and leisure businesses.
“That was a very difficult time because these folks had been wonderful employees … for many years,” says Reiss. “But financially we were not sustainable, given the structure of the foundation and what the market was telling us in terms of visitation.”
At the end of 2016, midway through his tenure, the foundation was losing $148,000 every day — down from $176,000 in daily losses in 2014. But the organization’s debt stood at $317 million, forcing significant endowment withdrawals that ate into the fund’s principal. Colonial Williamsburg was withdrawing as much as 12% of the endowment in some years, compared with a typical 5% for similar nonprofits. At the rate the endowment was diminishing, Reiss estimated it would be exhausted by 2026. At the same time, the organization’s revenues decreased from about $148 million in 2016 to $127.3 million in 2017.
Today, Reiss forecasts that Colonial Williamsburg will see a $4 million to $5 million positive cash flow this year from its commercial side, which includes its lodging and restaurant businesses. However, Reiss and a Colonial Williamsburg spokesperson would not comment on whether the organization’s historic tourism and exhibitions division, which operated at an
$18.39 million deficit in 2018, was expected to lose money again this year.
Reiss does say that Colonial Williamsburg is on track to withdraw 42% less from its endowment this year than it did in 2014.
“We’ve stopped the bleeding,” he says, adding, “We believe we have turned a corner with the endowment and can see a better future; however, no organization’s financial health is ever assured.”
On the museum side, Reiss says, the challenges were many, ranging from a “broader, secular trend of less visitation to historic sites” to revamping Colonial Williamsburg’s marketing and updating its technology.
In addition to staff reductions, Reiss slashed the foundation’s advertising budget from $11 million in eight urban markets to $6 million in two: the Northern Virginia/D.C. area and New York. He oversaw a reallocation of ad spending away from costly television spots and toward more affordable social media. Colonial Williamsburg also overhauled its online presence, consolidating seven websites into a single umbrella landing page. Overall, it reduced its total marketing and communications spending nearly 43% — from $21.4 million in 2014 to $12.3 million in 2018.
Placing more emphasis on digital marketing enabled Reiss’ team to target audiences with precision and understand their return on investment.
Another technology piece included activating Wi-Fi in the historic area and creating a mobile app that included digital ticketing and real-time event notifications.
“There hadn’t been proper investment in IT, and we had to put systems in place to measure what we think we knew, but we didn’t have any real data for,” Reiss says. “If we couldn’t measure it, we couldn’t manage it. … Dragging the IT options into the 21st century has been an understated but very important contribution to the success we’ve had.”
Though the foundation studied technology at other cultural and historic sites, it concluded that high-tech bells and whistles didn’t have a place on-site at Colonial Williamsburg.
“We use the technology for process, but we use the people we have here for the substance of the experience,” Reiss explains. “Once they’re here, they want to talk to [a historical interpreter playing] Thomas Jefferson, not a hologram. … They want to have a conversation with an 18th-century interpreter who is an expert on the Constitution or farming or trades.”
Back to basics
Citing a return to Colonial Williamsburg’s core values of education and organic experiences, Reiss instituted programming with a more tactile focus: an archaeological dig for kids, axe-throwing, a musket-shooting range, a historic tavern crawl and events such as haunted ghost walks. He also diversified and expanded interpretive programming to include focuses on women and African American heritage, a tactic that has worked at sites such as Thomas Jefferson’s Poplar Forest estate in Bedford County.
Former Poplar Forest CEO Jeffrey Nichols, who left in August to become executive director of nonprofit Georgetown Heritage, says Poplar Forest’s expansion of such story‑telling represents a shift away from traditional historical narratives that don’t resonate as well with people. “It’s a way to personalize and humanize people and give depth to people we knew very little about,” he says. With 30,000 visitors a year, Poplar Forest is much smaller than Colonial Williamsburg, but its visitation has also been trending downward.
Both Nichols and Reiss cited the ongoing challenge of attracting audiences that are disinclined toward history, coupled with competition ranging from amusement parks to video games. Reiss referred to the teenager who recently won $3 million at the Fortnite World Cup, a video game competition held in New York City this summer. “He had 10,000 people in the stadium watching and millions watching around the world, so you tell me — do you think the world has changed?”
Philip G. Emerson, executive director of the Jamestown-Yorktown Foundation, which oversees the living-history recreation at Jamestown Settlement and the American Revolution Museum at Yorktown, concurs. “Like many institutions, we are faced with time poverty and the abundance of leisure-time activities that attract consumers and their wallets,” he says.
Paid visitation at the combined Jamestown-Yorktown sites totaled 533,730 in 2018, a decrease of 12.6% from 2017. The umbrella foundation has invested in visitor research for more than 30 years and employs a research specialist in that area to assist with identifying trends and driving programs that attract various audience segments.
Other historic sites experience similar issues. Even at George Washington’s Mount Vernon, last year’s attendance of 1,067,754 was down 62,646 visitors from 2017. “Typically, we do see more in a year after an election,” says Matt Briney, vice president of new media at Mount Vernon.
Having reached the end of his tenure, Reiss asks, “How do you revive a love of American history — among young people especially? That’s our challenge, and I don’t have the answer for that.”
As Washington College’s president, Reiss oversaw a $60 million annual budget. He says the practice of being “aggressively transparent” with those financials helped inform many of the decisions he made at Colonial Williamsburg. His academic career taught him to create on-the-ground advisory teams of “front-line employees” who interacted with stakeholders regularly.
“I think not sequestering yourself in your office but actually having folks who are dealing with customers every day and understanding what that means are two very important takeaways from my previous lives,” he says.
From his years at the State Department, he learned “putting the mission first is absolutely crucial for any institution to have a chance of success.”
Reiss has not formulated plans beyond his departure, saying only that he would like a new challenge.
“If you look at my experience, the longest I have ever been in a job is four years — this one will be five,” he says. “This is a tough gig, and it’s not without its challenges and certainly not without a lot of joy and gratification … but I think it’s time to hand it off to somebody else who will take the baton, continue to build and make the place even better.”
In a statement, Thurston R. Moore, chairman of the Colonial Williamsburg Foundation board of trustees, lauds Reiss’ accomplishments.
“We’re deeply grateful to him,” Moore says. “He’s done a remarkable job of getting our operations and finances in better shape, without losing sight of our core educational mission and while providing guests an experience that is both relevant and fun. We hate to see Mitchell go, but we understand, and we thank him for putting us in the position we’re in today.”