Future Destination Marketing Funding Models
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This document summarizes a presentation on tourism improvement districts (TIDs) given at a 2013 CEO forum. It discusses how government tourism funding is being cut and how TIDs can provide stable alternative funding. TIDs involve hotels and other businesses paying an assessment on rooms or sales that is collected by the local government and managed by a destination marketing organization. The document provides examples of successful TIDs across several states that have increased tourism revenues and budgets. It also outlines some challenges in forming TIDs and managing the partnerships between public and private organizations.
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Future Destination Marketing Funding Models
- 1. 2013 CEO FORUM Future Funding Models
- 2. Tourism Matters! 1 of 9 jobs depends on tourism Tourism is a top-ten employer in 48 states $124 billion tax revenue
- 3. But, government funds for tourism marketing… Are being cut!
- 4. Tourism Funding Public Private • Untethered allocations • Tethered allocations • Dedicated tax • • • • – Tax increment financing • Assessment Membership Event revenue Sponsorships Contract services
- 5. Traditional private funds simply aren’t enough.
- 6. TIDs are an answer… Funding Stability Oversight
- 7. Hotels pay an assessment… Collected by the local government… And managed by the DMO.
- 8. Partnerships are best… Private Public Drivers Guidelines Beneficiaries Compulsory Managers Sunset
- 15. Why did your destination form a TID? Other Budget Reduction Competitor s No Funding
- 16. How many months did it take to form your TID? 80 70 68 60 50 40 30 20 24 10 0 6 <6 6 6-12 12-18 18+
- 18. California has two TID laws… 1989 Law 1994 Law • • • • • • • • • • • • No petition 1 year term Annual renewal Business only Appointed advisory board City can disestablish 50% + 1 petition 5 or 10 year term Business or property Non-profit management Annual report Payors can disestablish
- 19. Montana has 1 TID law… Property-based 60% footprint petition Collected with property taxes 3-10 year term Payors can disestablish DMO must manage
- 20. Montana has seen results… + 4.3% demand (Billings) 3.50:1 ROI 10 districts Awareness up 5-10X +9.2% ADR (Billings)
- 21. Budgets have increased… 283 Helena 80 418 W. Yellowstone 93 Post-TID Pre-TID 850 Billings 200 434 Average 98 0 400 800 Thousands
- 22. Washington has a TID law… Convention and tourism promotion 40+ rooms 400,000 < Population > 1,000,000 $2.00 per room Payors can disestablish
- 23. Texas has a narrow TID law… 100+ rooms Special benefit Population > 1,000,000 Councilmanager government
- 24. Portland formed a TID by charter… 50 + rooms 2% assessment 5-year termination hearing Travel Portland
- 25. Five steps to TID formation: 1 • Legislation 2 • Structure 3 • Business Plan 4 • Owner Approval 5 • Government Approval
- 26. Management is a balancing act... DM O
- 27. There are many different ways to structure TID management.
- 28. An existing nonprofit can manage… Board Hotel, Restaurant, Retail Government Representatives Elect directors & officers Executive Committee Set Policy Duties delegated by Board Nominating Committee Audit Committee Compensation Committee Sales Committe Marketing Committee
- 29. Or work with a new corporation… Contract Existing Corporation Program Implementation Executive Committee New Hotel Corporation Oversight Sales & Marketing Committee (formerly the TMD Executive Committee) Nominating Committee Audit Committee Finance Committee
- 30. Or, a hotel corporation can manage. Board of Directors Hotels (Funding Only – No Marketing) DMO Other Vendors Lodging & Other Representatives Special Initiatives Develop annual budget Events
- 31. Existing TIDs have seen great returns.
- 32. Los Angeles created a TID in 2011. It raises over $13 million annually The total paid by guests, with TOT, is 15.5%
- 34. 3 cities & county 88 hotels Since 2010 $0.50 - $2.00 per night =47,888 room nights generated
- 36. Napa Valley created a TID in 2010. It raises over $4 million annually The total paid by guests, with TOT, is 14%
- 37. Funding Levels 6 5 4 3 Pre-TID Post-TID 2 1 0 Napa Valley Sonoma County Monterey County Livermore
- 38. 5 cities & county $4 million annually Since 2010 2% of room revenue 25% goes to local committees
- 39. 10.0% 2012 – 2013 Growth 9.0% 9.0% 8.0% 7.0% 6.0% 5.7% 5.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.6% 0.0% Occupancy ADR RevPAR Revenue
- 40. 2012 – 2013 High / Low Season Growth 12.2% 7.4% 6.1% 5.0% High Season Low Season Total Seasons Running 12 Months
- 41. 3 employees 19 employees 6 partners 170 partners
- 42. Some state tourism offices also have districts…
- 43. There are four types of state funding… General fund appropriations Room / bed tax Tax increment financing Variegated sources
- 44. Funding Sources By State General Fund TN, NC, ND, WY, MN, PA, RI, NY, MI, MS, MA, MD, VT, VA, GA, CT SC, KY Variegated KS, CO, WA, WV, AZ, CA, LA, OK FL, NM, WI, AK, I A OH Sales TIF IN, SD, AR NH, ME Room Tax IL, HI, MT, DE, ID, TX, OR, AL, NE, NV, NJ, KY MO, UT
- 49. It isn’t always easy…
- 50. California has Proposition 26… Voters approved in November 2010-Article XIIIC of CA Constitution All levies are a tax and require a 2/3 vote of the electorate, unless: Seven exceptions: • A charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged • A charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged
- 51. Partnerships aren’t always perfect… Strong mayor District approved, but contract not signed Council strongly supports district Mayor successful at delay
- 52. If hotels can do it, why not others? Restaurants Retail Attractions Wineries Auto
- 53. Mammoth Lakes TID Included Business Types • • • • • Attractions Restaurants Retail Transportation Other tourism related Challenge is linkage between programs and assessees as defined businesses Restaurant/Retail Districts have been created
- 54. Newport Organizational Chart Newport Beach Foundation Visit Newport Beach 501 (c)(6) 6-member board 501(c)(3) Fundraising Arm (Potential Future Organization) TBID management/Brown Act Newport Beach & Co. 501(c)(6) TOT Funds 24-member board No Brown Act Film Newport Beach Attract film companies Revenue from permits Celebrate Newport Beach Execute events Develop new events Dine Newport Beach RBID Management Marketing Enterprise Newport Beach B-2-B & BID marketing
- 55. Questions and Comments Thank you! John Lambeth, Presdient Civitas www.civitasadvisors.com (800)999-7781
Notas do Editor
- Despite this, governments are diverting funds away from tourism marketing.
- Since the TBID was created, Santa Barbara has been able to use the additional funding to outpace the state average in both ADR and occupancy.
- Gains in RevPAR for high and low seasons from Feb 2012 – Feb 2013. Low season is November – April, high season is May – October. TBID funds have been used to target low seasons. As such, growth in low seasons has been stronger than in high seasons.
- Gains in RevPAR for high and low seasons from Feb 2012 – Feb 2013. Low season is November – April, high season is May – October. TBID funds have been used to target low seasons. As such, growth in low seasons has been stronger than in high seasons.
- Many state blend financing mechanisms – often have one general fund or hotel tax revenue plus one of the miscellaneous items. Miscellaneous items will be discussed.
- Kentucky has both general fund and room tax $ - this is the only state that doesn’t fit into the diagram as it should, so it’s shown in both circles