The Montgomery County Chamber of Commerce led an effective campaign for funding of a local tourism development initiative. Presenting this industry as an economic engine providing significant returns to stakeholders through combined efforts, this could be accomplished without tapping into already scarce local resources by dedicating a 1% increase to occupancy taxes.
Blacksburg and Christiansburg agreed, and increased lodging taxes for both towns went into effect July 1, 2005. Montgomery County needed to obtain special permission from the General Assembly and Virginia Tech opted out. Individual contracts between the chamber and three participating funding sources were subsequently executed, and a Tourism Development Council (TDC) established. Today, the TDC, Blacksburg-Christiansburg Visitors Center, and chamber have different yet overlapping missions under a single administration.
After three full years and more than a half-million dollars, many stakeholders are asking questions and trust appears low. In adopting its own budget for the fiscal year, the largest contributor established an annual limit of $100,000 requiring renegotiation or non-renewal of the existing contract.
To be clear, let’s define “stakeholders” as participating funding sources, fund managers, the industry required to collect this tax from customers, as well as other businesses which gain an indirect benefit. Let’s define “trust” as a belief in another’s competence and character, or abilities and intentions.
More than politics is at play here. Economic principles in the mix include special interest issues, both aspects of the shortsightedness effect, and changes in aggregate supply.
The Town of Christiansburg has been the largest contributor to this initiative. A cap on tourism funding may become a moot point due to current economic trends or because additional inventory is poised to come online via four major hotel projects in Blacksburg. Christiansburg’s recent increases to BPOL and water/sewer fees could further impact its ability to continue growing lodging interests or retaining other business tax receipts.
Christiansburg alone provided $335,000 to the TDC so far, yet it also gave itself an equal amount. When the 1% increase was requested, the town instead added 2% -- without designating anything for its own specific marketing or tourism needs. Requiring a total 7% lodging tax, it retains 6% of all lodging tax receipts. A change now gives the appearance Christiansburg’s approach was more to establish a personal savings account it could dip into for whatever tourism project it wanted to promote, instead of contributing to a larger initiative providing greater returns. It should be noted, too, there are no limits – other than normal market forces – to the meals or lodging tax rate town’s choose to adopt.
With a recent special event, downtown improvements and two new major recreational facilities, why is Christiansburg now renegotiating its level of regional participation? Will this be at the expense of a larger initiative in order to promote its own interests? If so, is this a positive or negative outcome?
If a complaint has been a comprehensive tourism and marketing plan is lacking or has been slow in its launch by the TDC, then is Christiansburg now indicating it has the necessary expertise and a specific or detailed plan it is ready to implement on its own?
Neither the chamber nor Christiansburg town council seems satisfied with communication or the exchange of information, even though TDC processes and actions were collectively decided upon. The TDC includes an employee from each participating funding source, the chamber’s president (as non-voting TDC secretary), and lodging industry representatives and has a stated goal of becoming fully independent. There are some who question if TDC funds have been used to augment normal chamber activities while providing specialized training and additional salaries for chamber staff.
Christiansburg Town Council is also asking for an external audit in order to gain a better perspective of how funds have been categorized and used thus far. Its contract stated specifically that 55% would be used for Marketing (which is expensive and requires branding research), 25% to Research and Development (which includes tourism grant funds), and 20% for Administrative functions.
The chamber has asked for but not received monthly lodging tax reports from the town. The TDC meets once each month, yet meeting information doesn’t seem to be flowing back to council or isn’t adequate. Since the contract became effective April 2007, the chamber has made two special presentations to council, yet questions and concerns remain on both sides.
Contract negotiations are expected to begin soon (and took more than a year the first time around). This process will shift the focus from tourism development, extending an already delayed timetable.
Developing a strong tourism presence remains a great economic opportunity, deserving of both regional and local efforts. Think of a place you’d like to travel to and visit within a day’s drive. What’s there? What pulls you back again? You can be assured those destinations receive significant funding in order to develop and sustain tourism as a part of that locality’s revenue stream.
Growing tourism and keeping dollars in our local economy is a no-brainer, as these revenues and related state sales and meals taxes take pressure off raising other taxes while creating job or entrepreneurial opportunities. There is no scarcity in supply or recreational choices, so the challenge is to distinguish our region and/or towns from other options (especially when demand is down) by making ourselves a destination of choice. This doesn’t happen quickly or by happenstance.
Charting a new course is the challenge facing TDC members, the chamber, and Christiansburg’s town leaders today. It won’t be an easy task, requiring effective leadership and lots of trust.
SMART plans (specific, measurable, actionable, realistic, time-driven) are a must from whomever is granted the necessary funding, assuring all stakeholders can see and understand immediate and long-term benefits which reasonably project a return on investment for known costs.