Post on 15-Jan-2015
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2013 CEO FORUM
Future Funding Models
Tourism Matters!
Tourism is a top-ten employer in 48 states
$124 billion tax revenue
1 of 9 jobs depends on tourism
But, government funds for tourism marketing…
Are being cut!
Tourism Funding
• Untethered allocations• Tethered allocations• Dedicated tax
– Tax increment financing
• Assessment
• Membership• Event revenue• Sponsorships• Contract services
PrivatePublic
Traditional private funds simply aren’t enough.
TIDs are an answer…
Funding
OversightStability
Hotels pay an assessment…
Collected by the local government…
And managed by the DMO.
Partnerships are best…
Drivers
Beneficiaries
Managers
Private
Guidelines
Compulsory
Sunset
Public
Payors
Government
DMO
TIDs are growing…
Competi-tors
No Fund-ing
Budget Reduction
Other
Why did your destination form a TID?
How many months did it take to form your TID?
<6 6-12 12-18 18+0
10
20
30
40
50
60
70
80
6
68
24
6
Laws
Plan
Classification
ApprovalSunset
Non-Profit
California has two TID laws…
• 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
1994 Law1989 Law
Montana has 1 TID law…
Property-based
60% footprint petition
Collected with property taxes
3-10 year term
Payors can disestablish
DMO must manage
Montana has seen results…
+ 4.3% demand(Billings)
Awareness up5-10X
3.50:1 ROI
+9.2% ADR(Billings)
10 district
s
Budgets have increased…
Average
Billings
W. Yellowstone
Helena
0
200,
000
400,
000
600,
000
800,
000
1,00
0,00
0
98,333
200,000
93,000
80,000
433,666
850,000
418,000
283,000
Post-TIDPre-TID
Washington has a TID law…
Convention and tourism promotion
40+ rooms
400,000 < Population > 1,000,000
$2.00 per room
Payors can disestablish
Texas has a narrow TID law…
100+ rooms
Special benefit
Population >
1,000,000
Council-manager governme
nt
Portland formed a TID by charter…
50 + rooms
2% assessment
5-year termination hearing
Travel Portland
1• Legislation
2• Structure
3• Business Plan
4• Owner Approval
5• Government Approval
Five steps to TID formation:
Management is a balancing act...
DMO
CVB
membersHotels
There are many different ways to structure TID
management.
An existing nonprofit can manage…
Board Hotel, Restaurant, Retail
Government RepresentativesElect directors & officers
Executive CommitteeSet Policy
Duties delegated by Board
Nominating Committee
Audit Committee
Compensation Committee
Sales Committe
Marketing Committee
Or work with a new corporation…
Existing CorporationProgram Implementation
Executive Committee
Sales & Marketing Committee
(formerly the TMD Executive
Committee)
Nominating Committee Audit Committee Finance Committee
New Hotel CorporationOversight
Contract
Or, a hotel corporation can manage.
Board of Directors Hotels
(Funding Only – No Marketing)
DMOLodging & Other Representatives
Develop annual budget
Other VendorsSpecial Initiatives
Events
Existing TIDs have seen great returns.
Los Angeles created a TID in 2011.
It raises over $13 million annually
The total paid by guests, with TOT, is 15.5%
3 cities & county
$0.50 - $2.00 per night
88 hotels
=47,888 room nights generated
Since 2010
Lodging Performance
2010 2011 $-
$50.00
$100.00
$150.00
$200.00
$166.4
5
$176.0
0 $109.9
4
$116.3
5
ADR
Santa Barbara
California
2010 201155%
60%
65%
70%
75%
67%70%
63%67%
Occupancy
Napa Valley created a TID in 2010.
It raises over $4 million annually
The total paid by guests, with TOT, is 14%
Napa Valley Sonoma County
Monterey County
Livermore0
1
2
3
4
5
6
Funding Levels
Pre-TIDPost-TID
5 cities & county
2% of room revenue
$4 million annually
25% goes to local committees
Since 2010
Occupancy ADR RevPAR Revenue0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
0.6%
5.0%
5.7%
9.0%
2012 – 2013 Growth
High Season Low Season Total Seasons Running 12 Months
5.0%
12.2%
7.4%
6.1%
2012 – 2013 High / Low Season Growth
3 employees
6 partners
19 employees
170 partners
Some state tourism offices also have districts…
There are four types of state funding…
General fund appropriations
Room / bed tax
Tax increment financing
Variegated sources
TN, NC, ND, WY, MN, PA, RI, NY, MI, MS, MA, MD, VT, VA, GA, CT SC,
KY
MO, UT
IL, HI, MT, DE, ID, TX, OR, AL, NE, NV, NJ, KY
KS, CO, WA, WV,
AZ, CA, LA, OK
General Fund
OH
FL, NM, WI, AK,
IA
NH, ME
IN, SD, AR
Variegated Sales TIF
Room Tax
Funding Sources By State
There are resources!
It isn’t always easy…
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
Partnerships aren’t always perfect…
Strong mayor
District approved, but contract not signed
Council strongly supports district
Mayor successful at delay
If hotels can do it, why not others?
Restaurants Retail Attraction
s Wineries Auto
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
Newport Organizational Chart
Visit Newport Beach
501 (c)(6)6-member board
TBID management/Brown Act
Newport Beach Foundation
501(c)(3)Fundraising Arm(Potential Future
Organization)
Newport Beach & Co.
501(c)(6)TOT Funds
24-member boardNo Brown Act
Dine Newport Beach
RBID Management
Marketing
Film Newport Beach
Attract film companies
Revenue from permits
Celebrate Newport Beach
Execute eventsDevelop new
events
Enterprise Newport Beach
B-2-B & BID marketing
Questions and Comments
Thank you!
John Lambeth, PresdientCivitas
www.civitasadvisors.com(800)999-7781