BALTIMORE TOURISM IMPROVEMENT DISTRICT (BTID)

Transcription

1 BALTIMORE TOURISM IMPROVEMENT DISTRICT (BTID) STATE ENABLING TO CITY COUNCIL OVERVIEW CONTACT VISIT BALTIMORE S PUBLIC AFFAIRS TEAM FOR MORE INFORMATION ALLISON BURR-LIVINGSTONE ASSOC. VP OF PUBLIC AFFAIRS / ablivingstone@baltimore.org KIMBERLY ROUTSON PUBLIC AFFAIRS MANAGER / kroutson@baltimore.org

2 BALTIMORE TOURISM IMPACT (CY2016) 25.9M VISITORS spending an average $221 per day $411 Million In State & $294 Million in City Revenues Generated saving each Baltimore household $680 85,000* JOBS created or sustained *52,000 JOBS held by Visit Baltimore member businesses Q: How do we grow one of our City s most important industries? A: Baltimore Tourism Improvement District (BTID) Challenge: #1. The primary motivator of a trip is usually the experience of a destination beyond a single business. #2. Effective marketing requires scale to reach potential visitors. #3. Future funding via traditional hotel tax dollars at risk and/or set to decline. Solution: Destination Promotion via Visit Baltimore Articulates the brand message consistent with consumer motivations. Pools sustained resources and marketing infrastructure required to generate impact. BTID: WHAT IS IT? + A public-private partnership providing supplemental and protected funds for tourism promotion activities; + The City s hotel industry votes to assess itself: an assessment is levied on lodging businesses within a certain geographic area, with the funds used only for specific purposes associated with driving visitation and hotel occupancy in turn, benefiting the assessed business, the City and the entire community through increased economic activity; + Assessed lodging businesses may pass the assessment (not a tax) on to customers (visitors not residents); + Visit Baltimore manages and directs programmatic spend on behalf of, and with oversight from, the industry via a committee representative of the assessed lodging businesses. Opportunity for a self-funding mechanism that passes costs to visitors, involving no new taxes. 1

3 BTID: WHY NOW? Funding for Baltimore convention sales and tourism promotion is allocated to Visit Baltimore through state legislation in the form of a percentage share (40%) of city occupancy tax collection. Unfortunately, we have been historically under-resourced in a competitive tourism market; and asked to do more with those increasingly limited dollars. For example: + Financial incentives averaging +$1M per year, new annual commitments for Light City and other City events are depleting our available resources for core marketing and sales activities. Beginning in FY19, a Memorandum of Understanding with Baltimore City places a cap and a later cut on this revenue stream (40% up to $15Million through FY21, and, $14Million beginning FY22). While we recognized a need to be a good partner, we also recognize this new budget reality threatens the success of our destination and the many businesses reliant on our promotional and sales efforts. As a 501c6 not for profit, we have limited means of increasing revenues from other sources especially given an organizational goal to keep membership as inclusive as possible. Further urgency exists given: Destination + Positive movement behind a Convention Center Expansion and/or Renovation: Visit Baltimore presently has no way of meeting the sales, marketing and displacement needs associated with such an essential and significant opportunity for our City and the State. BALTIMORE VS. THE COMPETITION Est. DMO Annual Budget Philadelphia, PA* $35,000,000 New Orleans, LA* $34,000,000 San Francisco, CA* $32,000,000 Chicago, IL $30,200,000 Nashville, TN $28,150,000 San Antonio, TX* $24,000,000 Seattle, WA* $21,550,000 Washington, D.C. $20,400,000 Atlanta, GA $18,650,000 Baltimore, MD** $16,050,000 + Market research quantifies a lack of overall awareness and real perceptual challenges: more marketing and communications is necessary, that we have no funds to deliver. * ** Destinations with active and/or pending TIDs Includes non-hotel tax revenues. PHILADELPHIA: PHL SPORTS $680k; 3 FTEs International Tourism $1.6M; 6 FTEs BALTIMORE: 0 FTEs City Hotel Tax - YOY Collection/Forecasts Forecasts could range at $35M+ per year, based on: inventory growth; Short-Term Rental taxation; etc NEVER TO EXCEED Total City Hotel Tax Collection DID YOU KNOW? Hotel Taxes compromise ~88% of Visit Baltimore s annual operating budget 2

4 TIDS: THE NATIONAL PICTURE + There are currently 164 TIDs nationwide, in 14 states Most recent? Philadelphia. Active TIDs Considering TIDs + Many cities and counties are also currently in the process of forming new TIDs. + Collectively TIDs are raising over $370 million for tourism promotion. BTID: DRAFT TIMELINE Outreach to stakeholders October May 2018 State-Enabling Legislation Hearings in Annapolis January April 2018 Drafting and approval of district Service Plan December May 2018 State-Enabling Legislation Takes Effect July 1, 2018 Petition Drive July 2018 City Council Submission & Hearings August October 2018 TID begins collected assessment By January 2019 MGA SESSION 2018 LEGISLATIVE SUMMARY: BALTIMORE CITY TOURISM IMPROVEMENT DISTRICT ENABLING LEGISLATION (BILL NUMBERS TBD) + Authorizes the City of Baltimore to establish, through City Council Ordinance, a tourism improvement district (TID) and designate a not-for-profit entity (Association) to administer the TID. + TID may only be formed subject to the approval of and petitioned vote by the assessed businesses, who are City hotels. + Assessed businesses have an opportunity to provide comments on the proposed TID at a public hearing. + The Association is required to establish a financial plan for the TID. + TIDs are authorized to support marketing, sales and other promotional programs and activities to increase tourism and specifically benefit assessed businesses. + TIDs are funded by a special assessment levied on businesses within the TID. + TID funds are collected by the City and forwarded to the Association. + A majority of the Association Board of Directors / Committee managing TID funds must be representatives of assessed TID businesses. + The City may not reduce existing tourism promotion funding due to the creation of a TID. + If the TID is dissolved, TID funds revert to the City s general fund. 3

5 BTID FAQS: Q: How will the Baltimore TID be formed? A: The process requires a thorough approval process, beginning with the development of a Service Plan defining TID parameters (i.e. proposed programs to be funded, budget, boundaries, term, assessment rate and management). The plan will be prepared and approved by businesses paying the assessment. Petitions in support of the district are then collected. When the petition threshold has been met, a City Council hearing process is initiated. Q: Is there a written document governing the TID? A: Yes. The TID will be operated in accordance with a Service Plan (see above). Q: Is the TID permanent? A: No. The TID law allows the district to be in place for a set term. After the set term, the TID will automatically expire, unless it is renewed by assessed businesses and the City. It can also be disbanded at any time by a majority petition vote of assessed businesses. Q: What will the assessment be? A: At this phase in the process, we are working with stakeholders to build consensus around what the assessment rate will be. Q: Are we putting ourselves at a competitive disadvantage? A: No. We believe we can absorb an assessment within the industry TID average so long as it is utilized for specified purposes. We need to take this move to remain competitive in the convention/visitor game. Based on a national TID survey, only 1% of those with TIDs indicated that they had lost customers. By and large, the respondents indicated that their districts have increased the number of room nights sold. Draft BTID Budgetary Spend Marketing & Advertising 58% Sales 25% Administration & Operations 10% Contingency & Reserve 5% City Fee 2% Example Marketing, Advertising & Sales Activities: + Financial Incentives to secure future business opportunities, including large, mega conventions + Leisure marketing including national television campaigns and more frequent promotion on other platforms + Baltimore City-focused Sports Commission + Marketing and sales dollars to support new product (e.g. an expanded Baltimore Convention Center) and markets (e.g. international, aligned with BWI Marshall growth) TID National Average Assessment Structure 67% Gross Revenue 32% Fixed $ Amount Most common: % or $ leading each respective category 4

6 BTID FAQS: cont. Q: Isn t this the same as the hotel occupancy tax? A: No. Hotel occupancy taxes are utilized to fund marketing and promotional activities, but can also be used by cities for other nontourism related activities. For example, in Baltimore City, the City of Baltimore receives 60% of all hotel taxes annually to pay for general services, etc. Moving forward, an MOU will redirect an additional share of hotel tax dollars to the City from Visit Baltimore to underwrite the operating budget/debt service on the Convention Center, thus opening up the City s 60% share for other purposes. TID assessments, unlike hotel occupancy taxes, will ensure stable, supplemental and dedicated funding for tourism promotion activities. Q: How is the assessment collected? A: Hotels will collect the assessment via the room folio and remit to the City. Q: Are only hotels included? What about attractions and other hospitality-related businesses? A: Per the state enabling legislation, the district will only assess lodging businesses within the TID boundaries. Destination Total Customer Charge (%) Customer Charge based on ADR ($) TID Assessment Rate Atlanta, GA 21.00% n/a Nashville, TN 17.75% n/a New Orleans, LA 17.75% 1.75% Seattle, WA 17.60% $2.00 Chicago, IL 17.38% n/a Anaheim, CA 17.20% 2.00% Indianapolis, IN 17.00% n/a San Antonio, TX 16.75% San Jose, CA 16.70% $1.25-$2.75 San Francisco, CA 16.45% 1.31%-2.75% Philadelphia, PA 16.25% 0.75% Baltimore, MD 15.50% n/a Charlotte, NC 15.25% n/a Austin, TX 15.00% Washington, D.C % Pittsburgh, PA 14.00% Destinations with active and/or pending TIDs * 5