the growing landscape of tourism improvement districts
TRANSCRIPT
DMAI Webinar Series:THE GROWING LANDSCAPE OF TOURISM IMPROVEMENT DISTRICTS
November 19, 2014
Presenters
■© DMAI
Michael GehrischPresident & CEODMAI
John LambethPresidentCivitas Advisors
Carl RibaudoPresidentStrategic Marketing Group
Agenda
•Michael Gehrisch
Introduction & Executive Summary
•John Lambeth
TIDOverview
•John Lambeth
Methodology & Profile of Respondents
•John Lambeth
District Formation Process
•John Lambeth
Assessment Rates & Fund Oversight
•Carl Ribaudo
Results of Increased Promotion
•Carl Ribaudo
Metrics Utilization
•Carl Ribaudo
Strategic Implications
•Michael Gehrisch
Questions & Answers
Evaluating & Evolving the DMO Business Model
Changing Tourism Ecosystem
Governments temptation to use tourism taxation non related tourism use
12% of DMO leaders expect change in business model in the next 5 years
DestinationNEXT
One of the fastest growing funding mechanisms for DMOs
124 destinations in 9 states now receive funding through a TID
Provide a stable funding source for tourism promotion
Governed by those who pay the assessment
Tourism Improvement Districts
STR projecting 1.14 billion rooms sold in 2014
Average tax on hotel room is 12.6%, of which 10.4% is hotel tax
All-time record $17.9 billion hotel tax receipts collected, with $3.0 billion going to DMOs
79% of DMAI members receive 75% of their revenue through occupancy tax
Why Is This Important?
TID Structure
Hotels pay an assessment…
Collected by the local government…
And managed by the DMO.
Characteristics of TIDs
Structure• Usually citywide, multiple cities or countywide
The TID Revolution
Started in West Hollywood, 1989
Slow initial growth
Rapid expansion in last decade
Districts Now•85 California• 17 Montana•11 Washington•5 South Dakota•1 Oregon•1 Texas•1 New Jersey •1 Kansas• 1 Louisiana•1 Scotland
Considering•Pennsylvania•Oklahoma•Wisconsin• Florida• Tennessee
Methodology
Who • Executive Directors, Presidents/CEOs, or other senior level TID executives
What
• Questions related to the formation process, funding levels before and after formation, challenges, and measureable effects
When • May ‐ June 2014
Where • TIDs in nine US states participated
Why • To have the first look at TIDs with a national perspective
Profile of Respondents
At the time the survey was conducted, there were 123 TIDs in 9 states. 88 TIDs, accounting for 70% of the existing TIDs nationwide, responded to the survey.
A Rose by Any Other Name
TIDs go by many names, but all have similar structures and goals. Respondents were asked to provide the type of their district. Over 60% of responding districts are Tourism Business Improvement Districts (TBIDs).
TBID60.2%
TID12.5%
TMD7%
HBID2%
BIA4%
TPA7%
Other 7%
District Capacity
We asked respondents to provide the number of rooms available in their districts. Over 50% of TIDs surveyed have 1,000‐5,000 hotel rooms available.
14%
6%
13%
55%
2%
8%
0%
10%
20%
30%
40%
50%
60%
<100 100-500 500-1,000 1,000-5,000 5,000-10,000 10000+
District Makeup
We asked respondents about the boundaries of their district. Almost two‐thirds of TIDs only encompass a single city.
One city64%
One county 8%
Multiple cities13%
County and multiple cities
14%
Multiple counties and
cities1%
District Formation by Year
The number of TIDs forming each year continues to increase. Over 75% of respondents formed their district in the last 10 years and close to 50% formed their district in the last 5 years.
4
16
24
42
0
5
10
15
20
25
30
35
40
45
Pre-2000 2000-2004 2005-2009 2010-Present
Reason for District Formation
Loss of City/County Funding,
11%
Insufficient existing
funding/Require base funding, 61%
Competitive destination(s)
increasing their budget, 10%
Secure funding from maximum
rate chargeable to guests, 3%
Other, 14%
Who was the Primary Organizer During District Formation?
Lodging Industry, 36.8%
Local DMO, 36.8%
City or County, 6.9%
Chamber of Commerce, 19.5%
How Long Did it Take to Form Your District?
Less than 6 months, 16%
6 - 12 months, 57%
13 - 18 months, 16%
More than 18 months,
11%
5%
26%
39%
26%
5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Very easy Easy Neutral Difficult Very difficult
Ease of Formation
We asked respondents to gauge the ease of forming their TID.
21%
3%
54%
5%
17%
0%
10%
20%
30%
40%
50%
60%
Overcoming politicalissues
Overcoming legalissues
Educating locallodging industry
Developing andreaching agreement ona plan to use funding
Other
Challenges in District Formation
Over half of respondents indicated that educating the local lodging industry was the most difficult challenge in forming their TID. The majority of “Other” responses indicated there were no major challenges.
Prior Funding
Respondents were asked to indicate the amount of tourism marketing funds that were available before TID formation. Over a quarter of respondents indicated that there was notourism marketing funding before the TID.
$0, 26%
< $250,000, 20%< $500,000,
19%
< $750,000, 9%
< $1,000,000, 4%
< 5,000,000, 13%
> 5,000,000, 5%
Assessment Basis
Respondents were asked to indicate the basis by which the assessment is calculated. The vast majority of TID assessments are based on either a percentage of lodging revenue or a specific dollar amount per night per occupied room. “Other” methods included flat fees and percentages not based on lodging revenues.
50%44%
6%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Percentage of lodging revenue A specific dollar amount per nightper occupied room
Other
Assessment Amount
Respondents were asked to provide the amount of their assessment. This information is split into two graphs illustrating assessments based on a percentage of lodging revenue and assessments based on a fixed dollar amount.
7
17
9
0%
10%
20%
30%
40%
50%
60%
1% 2% 3%
14
16
2
0%
10%
20%
30%
40%
50%
60%
$1.00 $2.00 $3.00
Assessment Rate Variance
Most TIDs charge the same assessment rate to all lodging businesses within the district. Some TIDs however, charge different assessment rates based on several factors. Respondents indicated that the most common factor for variable assessment rates is room count.
98
16
3
18
1
Average DailyRate
Geographic zone Room Count Limited vs. fullservice
No variance Other
Threshold to Determine Hotels Subject to Assessment
Respondents were asked to indicate whether or not a threshold exists to determine which lodging business pay the TID assessment. The majority of TIDs do not have any threshold, however, a threshold for room count is much more likely than one for revenue.
No65%
Yes35%
Room count threshold
No95%
Yes5%
Revenue threshold
Assessment Rate Increases
A majority of respondents indicated that they have not increased the assessment rate set forth in the original TID formation. Approximately one‐third of TIDs have increased the assessment rate, with the most common increase being either 1% or $1.
Yes31%
No69%
Have you increased the assessment rate set in the original formation of your TID?
1
7
2
1 1
2
1
5
2
3
0%
5%
10%
15%
20%
25%
30%
0.50% 1% 1.50% 2% $0.25 $0.50 $0.75 $1 $1.25 Other
How much has your assessment rate increased?
Fund Management
Over half of respondents indicated that a Destination Marketing Organization (DMO) manages TID funds.
52%
15%
7%
14%
5%8%
0%
10%
20%
30%
40%
50%
60%
DMO Chamber ofCommerce
Localgovernment
Advisory board Lodgingcorporation
Other
Managing Body Advisory Board Representation
Nearly all respondents indicated that hotels were represented on the TID’s managing body.
99%
41%31%
43%
21%12%
0%
20%
40%
60%
80%
100%
120%
Hotels Local government Chamber of CommerceOther tourism businesses Non-tourism businesses Other
Difficulty of District Management
Respondents were asked to indicate the degree of difficulty in district management ranging from “Very Challenging” to “Not at All Challenging”.
6%
17% 17%
14% 15%
24%
6%
0%
5%
10%
15%
20%
25%
30%
1 2 3 4 5 6 7
Very Challenging Not at All Challenging
76%
22%29% 32%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Ongoing education of lodgingindustry members and local
city/county municipality.
Dealing with lodgingmembers or others who
opposed the formation of thedistrict.
Providing specific track ableresults for district funding.
Developing a common visionfor how funding should be
used.
Challenging Aspects of District Management
Three‐fourths of respondents indicated that ongoing education of lodging industry members and local government officials has been the most challenging aspect of TID management.
TID Satisfaction Rates
Respondents were asked how satisfied they were with their current TID. Almost two‐thirds indicated they were “Very Satisfied”.
Very satisfied
61%
Satisfied 28%
Neutral7%
Unsatisfied 3%Very
Unsatisfied1%
“We have received two national titles as a result of the work that was done by the TBID…we have received Rand McNally’s Best of the Road title for Best for Geocaching…we are also one of 19 national ride centers, as designated by the International Mountain Biking Associating. [This] would not have been possible without the TBID.”
Increased Tourism Funding
Respondents were asked how much the amount of total tourism funding increased as a result of formation. On average respondents reported an increase of roughly $1.6 million.
12
19
24
1312
5
0%
5%
10%
15%
20%
25%
30%
35%
100K $500K $1M $2M $5M $5M +
Increased Tourism Promotion Efforts
Respondents were asked how TID funds have impacted tourism promotion efforts.
94%
6%
How have tourism district funds impacted your destination's tourism promotion efforts?
Maintained Efforts
Increased Efforts 43%
1%
55%
2%
Since your tourism district's formation, have tourism
promotion efforts increased:
Neither
Domestically
Internationally
Both
77
61
26
5966
54
73
17
62
13
Increased Tourism Funding
Respondents were asked what areas of tourism promotion have increased since TID formation. A majority of respondents indicated increases in seven of the ten listed options for tourism promotion.
97%
0% 1% 2%0%
20%
40%
60%
80%
100%
120%
More competitive Less competitive About the same Unsure
Improved Destination Competitiveness
Respondents were asked how they felt the addition of TID funds has affected their destination.
Snapshot
“We have shown over
100% increase in weekend
stays.”
“Increased generated room nights by 550% since 2008.”
“45% increase in hotel stays
between 2010 and 2013.”
“Overall results of initial 5 year district (during Recession) was approximately
20:1.”
Return on Investment Analysis
Respondents were asked if they conducted a specific economic analysis on what additional funds could produce in Return on Investment (ROI).
Yes82%
No18%
Effectiveness of TID Funds
Respondents were asked if they have a program to specifically measure ROI of TID beyond traditional metrics.
No52%
Yes48%
“More than an 800% ROI on TBID funds to gross revenue generated by increased room night sales. Group bookings went from 10k a year to nearly 60k”
Measurement for Targeted
Programs 28%
Google/Website Analytics
27%
Average Daily Rate 17%
Occupancy Rate 29%
Rev PAR 22%
Room Nights Generated
40%
Social Media Measurement
21%
Other7%
Overall Performance Metrics
Respondents were asked which of the following metrics they used to track the performance of their TID.
Developing a Marketing Plan
Respondents were asked whether they created a specific Marketing Plan with input from the lodging industry and/or other stakeholders.
Yes82%
No18%
Visitor Segmentation and Focus
Respondents were asked to indicate the type of visitors they focus on attracting to their destination with the TID funds.
73
51
30 33
6
Leisure (FITTraveler)
Group Business Individual Other
Staff Positions Funded
Two‐thirds of respondents indicated that their TID funds between 1 and 5 staff positions.
11%
66%
14%8%
0%
10%
20%
30%
40%
50%
60%
70%
0 1 to 5 6 to 10 10+
Executive Director Compensation
Respondents were asked to indicate the amount of compensation for their TID’s Executive Director. Nearly half of respondents reported salaries ranging between $75,000 and $149,999.
15%18%
24%
20%
10%
14%
0%
5%
10%
15%
20%
25%
30%
Less than$50,000
$50,000 -$74,999
$75,000 -$99,999
$100,000 -$149,999
$150,000 -$199,999
$200,000 ormore
Program Reductions
Respondents were asked, “If your TID dissolved and your funding was eliminated, which program areas would be reduced?” Over half of those who indicated “Other” reported that their entire program would be terminated upon dissolution of the TID.
78%
68%
40%
71%
83%
67%
73%
33%
78%
18%
Web development/upgrades
Group sales
Special events (operating funds)
Special events (marketing funds)
Traditional media (print, radio, TV)
Destination collateral
Social media
Welcome centers
Staffing
Other
Questions & Answers
John Lambeth, President
Civitaswww.civitasadvisors.com
(800)999-7781
Carl Ribaudo, President
Strategic Marketing Group
www.smgonline.net(530)541-2462
Michael Gehrisch, President & CEO
Destination Marketing Association International
www.destinationmarketing.org(202)835-4219