This content requires Adobe Flash Player version 10.0.0 or later. Get Flash.
If you believe you do have Adobe Flash Player version 10.0.0 or later installed, there is a problem with your Flash installation and we were unable to detect it.
CMP SERIES CERTIFICATION MADE POSSIBLE
Cities and states have become dependent on occupancy
taxes for general revenues, Terzi said, and can no longer afford to pay for projects like convention centers or business development. “You’ll see expansions happening with part- nerships and private sources of funding, because it’s the only way it will get done — not unlike building stadiums,” Terzi said. “It has to be a different funding model. There has to be other sources of income, because these municipalities just don’t have the capacity to do it anymore.”
WHY DESTINATIONS NEED MORE Because of a state’s or city’s “sticky fingers” on occupancy- and sales-tax revenues, Staples said, destinations use special assess- ments to fund local projects and tourism marketing. These assessments typically are voted on by the community and entail specific requirements on what the money can be used for. In Boise, Idaho, a 6-percent sales tax and a 2-percent
travel and convention tax on hotel rooms are remitted to the state for distribution, according to Patrick D. Rice, execu- tive director of the Boise Centre and the Greater Boise Auditorium District (GBAD) — which also levies a 5-percent “auditorium tax” on hotel rooms in the area to fund a pro- posed expansion of Boise Centre. With a total tax charge of 13 percent on area hotel rooms, Rice said, Boise is in the “lower- third tax costs of destination cities.” Without the auditorium tax, which is capped at 5 percent
by state law, an expansion of the center probably wouldn’t happen, because “auditorium districts in Idaho have no authority over other taxes,” Rice said. He added: “The funds for the district can be used for any statutory purpose, includ- ing our expansion plans and other costs associated with the district or Boise Centre. The current GBAD board of direc- tors has specifically designated $9 million, and other future funds for investing, to be used for an expansion. Other funds are used to support the capital expenditures and other proj- ects for the Boise Centre.” But is a special assessment the answer? GBAD thinks so.
Separate studies by PricewaterhouseCoopers and consulting firm Conventions, Sports & Leisure International indicate
66 PCMA CONVENE AUGUST 2012
that doubling Boise Centre’s 50,000 square feet of avail- able exhibit space and adding ballroom and meeting-room capacity, Rice said, would make the city more competitive as a second-tier destination for meetings and conventions. “The Boise Centre currently competes for 20 percent of the convention market,” Rice said. “An expansion would not only provide room for larger conventions — up to 60 percent of the convention market — but also allow for multiple events that cannot currently be accommodated in Boise Centre alone. The expansion is important to help economic development.”
HOW TO COME TO TERMS WITH THIS Once planners understand the role that special assessments play in funding infrastructure projects and vital services, CVB leaders says, they’re often very supportive. So it’s a bureau’s responsibility to make sure the message gets out. The San Diego CVB plans a comprehensive marketing campaign about the convention-center expansion now that the new tax has been approved. “Once [the new assessment] is set, there is some work to be done in how we position it,” Terzi said. “Meeting planners generally get it. We look very closely at where San Diego falls with most of the major cities around the country — which bounce between 14 and 18 per- cent overall [in hospitality and tourism taxes] once you add it all up. We’re in the ballpark. We’re not more expensive than most of our competitors.” Terzi said he also would remind planners of his bureau’s
advocacy on behalf of the industry in two failed proposals to increase the transient occupancy tax since 2004. (The first tax increase was opposed by the CVB because the money wouldn’t go directly back to tourism infrastructure, and it failed. The second increase was backed by the CVB because it would fund tourism infrastructure — but it failed as well.)
“We have to have enough money to be competitive,” Terzi said. “It’s big business, and I think the industry recognizes it wants to control its own destiny.” Planners say they do support these assessments and the
projects they fund — as long as they’re able to prepare their attendees for the extra expense in advance. “Some planners