Future Destination Marketing Funding Models

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This presentation gives a background on tourism improvement districts, including how they are funded, laws that affect them, and successful case studies.

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  • 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
  • Future Destination Marketing Funding Models

    1. 1. 2013 CEO FORUM Future Funding Models
    2. 2. Tourism Matters! 1 of 9 jobs depends on tourism Tourism is a top-ten employer in 48 states $124 billion tax revenue
    3. 3. But, government funds for tourism marketing… Are being cut!
    4. 4. Tourism Funding Public Private • Untethered allocations • Tethered allocations • Dedicated tax • • • • – Tax increment financing • Assessment Membership Event revenue Sponsorships Contract services
    5. 5. Traditional private funds simply aren’t enough.
    6. 6. TIDs are an answer… Funding Stability Oversight
    7. 7. Hotels pay an assessment… Collected by the local government… And managed by the DMO.
    8. 8. Partnerships are best… Private Public Drivers Guidelines Beneficiaries Compulsory Managers Sunset
    9. 9. Payors DMO Government
    10. 10. TIDs are growing…
    11. 11. Why did your destination form a TID? Other Budget Reduction Competitor s No Funding
    12. 12. 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+
    13. 13. Plan Non-Profit Classification Laws Sunset Approval
    14. 14. 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
    15. 15. Montana has 1 TID law… Property-based 60% footprint petition Collected with property taxes 3-10 year term Payors can disestablish DMO must manage
    16. 16. Montana has seen results… + 4.3% demand (Billings) 3.50:1 ROI 10 districts Awareness up 5-10X +9.2% ADR (Billings)
    17. 17. Budgets have increased… 283 Helena 80 418 W. Yellowstone 93 Post-TID Pre-TID 850 Billings 200 434 Average 98 0 400 800 Thousands
    18. 18. Washington has a TID law… Convention and tourism promotion 40+ rooms 400,000 < Population > 1,000,000 $2.00 per room Payors can disestablish
    19. 19. Texas has a narrow TID law… 100+ rooms Special benefit Population > 1,000,000 Councilmanager government
    20. 20. Portland formed a TID by charter… 50 + rooms 2% assessment 5-year termination hearing Travel Portland
    21. 21. Five steps to TID formation: 1 • Legislation 2 • Structure 3 • Business Plan 4 • Owner Approval 5 • Government Approval
    22. 22. Management is a balancing act... DM O
    23. 23. There are many different ways to structure TID management.
    24. 24. 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
    25. 25. 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
    26. 26. 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
    27. 27. Existing TIDs have seen great returns.
    28. 28. Los Angeles created a TID in 2011. It raises over $13 million annually The total paid by guests, with TOT, is 15.5%
    29. 29. 3 cities & county 88 hotels Since 2010 $0.50 - $2.00 per night =47,888 room nights generated
    30. 30. Lodging Performance ADR $200.00 $150.00 $176.00 $166.45 $100.00 $116.35 $109.94 $50.00 $2010 2011 Occupancy 75% 70% 65% 60% 70% 67% 67% 63% 55% 2010 2011 Santa Barbara California
    31. 31. Napa Valley created a TID in 2010. It raises over $4 million annually The total paid by guests, with TOT, is 14%
    32. 32. Funding Levels 6 5 4 3 Pre-TID Post-TID 2 1 0 Napa Valley Sonoma County Monterey County Livermore
    33. 33. 5 cities & county $4 million annually Since 2010 2% of room revenue 25% goes to local committees
    34. 34. 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
    35. 35. 2012 – 2013 High / Low Season Growth 12.2% 7.4% 6.1% 5.0% High Season Low Season Total Seasons Running 12 Months
    36. 36. 3 employees 19 employees 6 partners 170 partners
    37. 37. Some state tourism offices also have districts…
    38. 38. There are four types of state funding… General fund appropriations Room / bed tax Tax increment financing Variegated sources
    39. 39. 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
    40. 40. There are resources!
    41. 41. It isn’t always easy…
    42. 42. 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
    43. 43. Partnerships aren’t always perfect… Strong mayor District approved, but contract not signed Council strongly supports district Mayor successful at delay
    44. 44. If hotels can do it, why not others? Restaurants Retail Attractions Wineries Auto
    45. 45. 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
    46. 46. 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
    47. 47. Questions and Comments Thank you! John Lambeth, Presdient Civitas www.civitasadvisors.com (800)999-7781

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