TOURISM CREATES MAJOR ECONOMIC BENEFITS FOR LANCASTER COUNTY

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Everett Wood
6 years ago
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1 TOURISM CREATES MAJOR ECONOMIC BENEFITS FOR LANCASTER COUNTY Tourism is one of the largest industries in Lancaster County and contributes greatly to the county s quality of life. Many residents know someone who either works in tourism or whose job benefits from tourism and the economic development it brings. Every year, Lancaster tourism has a total economic impact of reduces each household tax burden by almost $1,000 $2.6 BILLION attracts visitors supports more than 24,000 jobs in the county 8.3 million generates $2 billion in visitor spending benefits businesses and jobs in a wide range of industries Data from 2015 Every dollar spent on tourism marketing by smaller metro and regional DMOs like Discover Lancaster typically returns Create a place where people want to visit. $50 in visitor spending. Tourism supports a vibrant cycle of economic development. You create a place where people want to live. Create a place with diverse businesses, and you we re OPEN Create a place where people want to live, and you create a place where businesses want to be. SOURCE: Tourism Economics report Competitive Analysis of Destination Marketing, Lancaster PA; Dec. 2016

2 LANCASTER COUNTY IN A TIME OF NEW OPPORTUNITIES The expanded emphasis of our new brand Everything you expect, and everything you didn t. allows us to continue highlighting Lancaster s well-known attractions, but also capitalizes on the growing synergy between our visitor offerings and changing travel tastes & demographics. A Broader Appeal Research shows that Lancaster County appeals to visitors in many ways that add to our traditional Amish culture and farmland, especially for Millennials, who are now the largest population segment. TODAY OUR FUTURE Amish Outdoor & adventure Foodie Amish Farmland Market Feedback In focus groups conducted in Long Island and Farmland Shopping Towns & villages Visual and performing arts City Philadelphia with both visitors and non-visitors, participants had the following pre-conceived notions about Lancaster: Market Feedback After seeing Discover Lancaster s expanded branding in commercials and the Getaway Guide, They thought of Lancaster as sleepy and quaint. The only lodging available is mostly low end or motels with exterior corridors Love the Amish, outlets, Dutch Wonderland, and PA Dutch Dining, but not much to do beyond that participants perceptions changed to: Hip, active, and definitely worth a visit Delighted that there were more lodging, dining and shopping options Amish is the heart of the brand, but there is so much more to do and experience SOURCE: Discover Lancaster 2014 Visitor and Non-Visitor Focus Groups

3 PUBLIC FUNDING FOR TOURISM Visitor-based tax revenues play a major role in supporting SOURCES REDUCED FROM THREE TO ONE tourism marketing across the nation, including Lancaster. However, recent cuts and ongoing reallocations have left Discover Lancaster with a single public funding source one whose rate has not increased in 17 years. Lancaster s Hotel Tax 5% Currently set at 5% and comprised of two elements: HOTEL TAX a 3.9% hotel room rental tax (HRRT) a 1.1% excise tax HRRT REVENUES are divided between the Lancaster County Convention Center Authority or LCCCA (80%) and Discover Lancaster (20%). However, the latter portion is reallocated to the LCCCA for three months whenever its financial reserves do not meet their quarterly minimum. This scenario has been in effect since 2012 and will continue at least until July 2019, although we can get any yearly overages back if the minimum is met, beginning in 2016 (via a separate, temporary agreement). The HRRT applies only to lodging properties with 10 or more rooms, and current law sets its maximum level at 5%. 1.1% 3.9% EXCISE TAX HRRT 20% to Discover Lancaster 80% to LCCCA 100% to Discover Lancster EXCISE TAX REVENUES are 100% directed to Discover Lancaster. This tax applies to all lodging properties, and current law sets its maximum level at 3% (though a recent change in state law would allow the county to raise that maximum to 5%). Overall Picture of Our Public Funding State funding started declining in 2008 and was fully eliminated in Our 20% of the HRRT has been reallocated since 2012, with a one-year rebate received in January 2017 (but nothing further guaranteed going forward). Extra reserves we had built up helped cushion the funding cuts during , but these have now been fully drawn down. The cuts from the above two revenue sources are a primary reason why our total budget is now down 35% from a decade ago, from $4.9 million in 2007 to $3.2 million in It s an open question if some or all of our 20% of the HRRT will come back on a consistent basis, thus, for public funding at present, Discover Lancaster has gone from three revenue sources down to one the 1.1% excise tax, whose rate has not changed in 17 years, since its inception in SOURCES: Discover Lancaster financial and Collaboration Agreement files

4 WHAT WE RE UP AGAINST Out of Sight, Out of Mind COMPETITORS ARE PULLING DISCOVER LANCASTER MEDIA SPENDING AHEAD OF LANCASTER COUNTY $1.8 $550,000 Discover Lancaster s media budget has been cut almost 70% in the past five years as a result of significant public funding cuts. Our competitors, however, are outspending us and are taking market share of potential visitors from Lancaster. MEDIA SPENDING (2016) 2011 PUBLIC DMO* FUNDING PER HOTEL ROOM ( AVG.) Poconos $6M Hershey $6M* Measures the amount of such support in relation to the size of the local tourism economy. Location Funding $1,224 Poconos, Pa. $5.7M Ocean City, MD $996 Niagara Falls, N.Y. $4.7M Virginia Beach 2016 $893 Virginia Beach, Va. $668 Ocean City, Md. $2.3M Williamsburg Wildwood, N.J. Valley Forge, Pa. $1M Valley Forge Williamsburg, Va. $750,000 Ocean City, NJ Harrisburg/Hershey, Pa. Lancaster, Pa. $550,000 Lancaster $511 $469 $347 $303 $236 AVERAGE: $627 *Hershey includes private ad dollars because the relevant entity markets significantly the same destination message as the DMO. *DMO (Destination Marketing Organization) Hotel Room Demand Is Lagging Demand in Increased a total of 12.6% in the Poconos and 12.2% in Hershey. Averaged 9.2% for entire competive set. Totaled just 7% in Lancaster. 7% 9.2% 12.6% 12.2% Hotel room demand is a good indicator for evaluating tourism growth in destinations, as overnight travelers represent a significant portion of total visitor spending. In fact, only two of our eight competitors ranked lower than us. SOURCES: Tourism Economics report Competitive Analysis of Destination Marketing, Lancaster PA; Dec. 2016, Discover Lancaster 2014 Visitor and Non-Visitor Focus Groups

5 TOURISM MARKETING HELPS STRENGTHEN LANCASTER S ECONOMIC GROWTH 53% Private Funding Stretched Private sector funding accounts for a much higher percent of Discover Lancaster s total budget than other DMOs with a similar total budget and a local convention center at least partially funded by a city/county hotel tax. Increasing the excise tax paid by overnight visitors will ensure a stable funding source dedicated solely to tourism marketing. 12% DISCOVER LANCASTER 2015 AVERAGE DMO % 88% Public (visitor-based tax revenue) Private (dues, advertising & sponsorships) Public Funding Needs to Increase AVERAGE DAILY (HOTEL) RATE ADR FOR LANCASTER AND ITS COMPETITORS Our private sector is doing more than its fair share to support tourism marketing. It s now time to replenish our tourism marketing fund through public dollars from the lodging excise tax. Location Average daily rate, 2015 $147 Poconos, Pa Overnight visitors pay the excise tax NOT hotels, businesses, or county residents. $140 Chesapeake/Ocean City, Md. $130 South Shore/Vineland, N.J. This is the proven, common, and expected revenue source for tourism marketing. $126 Virginia Beach, Va. Philadelphia West Suburbs, Pa. $122 We surveyed 13 U.S. DMOs that recently increased a lodging tax or fee, and all reported positive results from the change. Harrisburg/Hershey, Pa. Lancaster, Pa. 30 (53%) of eligible PA counties, including York and Chester, raised their lodging tax recently. H $120 $112 Niagara Falls, N.Y. $104 Williamsburg, Va. $104 0 Comparison of our average hotel rate (at right) plus a 26% rise since 2011 show that rates have room to grow, yet remain very competitive. 150 AVERAGE: $123 HOTEL TAX COMPARISON Even with an increase, our lodging taxes will still be in line with the industry. 11% Lancaster, PA - Current 11.7% Average of Competitive Set 12.8% Average of DMOs with similar budget 12.9% Lancaster, PA - Proposed (equals average of $2 extra per night) 13.1% Average of DMOs across the U.S.

6 A Proposal for Growth A rise in the lodging excise tax paid by visitors from 1.1% to 3% would add an average of $2 per night. $2 $5-5.5 Current 1.1% excise tax will contribute about $2 million in 2018 to our budget for growing tourism and the broader Lancaster economy. Proposed 3% excise tax would provide $3-3.5 million dollars in 2018, for a total of $5-5.5 million toward our tourism budget. Actions PLANS FOR ADDITIONAL FUNDS Returning to TV in NY & Philadelphia Billboards in NY & Philadelphia Potential investment in new markets such as Baltimore Investment in growing travel segments and price-sensitive groups Increase online video campaigns Increase social media advertising Increase investments in current media markets Explore development of travel app Results ESTIMATED RESULTS, (beyond current projections) 1.23 $367 visitors visitor spending 438,000 $81 room nights AVERAGE OF 550 room revenue new jobs per year Would push Lancaster to second in its competitive set for annual growth in lodging demand (versus near the bottom, currently) 2X Would more than double the amount of total growth in lodging demand over the 5-year period (versus current expectations) SOURCES: 2015 Destination Marketing Association International DMO Organizational & Financial Profile Study / Discover Lancaster Marketing Research/Planning / Tourism Economics report Competitive Analysis of Destination Marketing, Lancaster PA; Dec. 2016

Snohomish County Strategic Tourism Plan Snohomish County Office of Economic Development

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