Visalia City Council approves 2% assessment on hotel bookings for tourism marketing district, loans $50K to kickstart new tourism district

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By Reggie Ellis @Reggie_SGN

VISALIA – Hotel owners in Visalia asked the city to tax them an assessment on bookings to help market the city as a destination. Then they asked for a $50,000 loan to kick start the program. The juxtaposition of back-to-back items on the City Council’s Dec. 5 agenda may seem contradictory, but both were approved, and with good reason.

The Council unanimously approved the formation of tourism marketing district (TMD) in Visalia at the request of hoteliers and lodging businesses in town as well as the Visalia Convention and Visitors Bureau. The district creates an assessment of 2 percent of gross short-term room receipts on non-governmental rentals of less than 30 consecutive days. The money generated by the district would be used to fund marketing and sales promotion efforts to increase nightly bookings by touting Visalia as a tourism, convention and event destination.

The TMD includes all lodging businesses with more than 20 rooms located within the city limits. Out of the 18 lodging facilities in Visalia, 15 would be included in the proposed VTMD, as Murphy’s Motel, Relax Inn and the Spaulding House Bed and Breakfast all have fewer than 20 rooms.

The Visalia Tourism Marketing District Corporation, an association of local hotel owners charged with managing funds and implementing programs in accordance with this spending plan, will begin collecting the tax on Jan. 1, 2018. Once per year, there will be a 30-day period in which owners paying more than fifty percent (50%) of the assessment may protest and initiate a City Council hearing to terminate the district. The tax will be collected through Dec. 21, 2022.

The TMD is expected to raise approximately $530,000 per year. With more than three-quarters (77%) of the annual budget will be spent on sales and marketing. The remaining 23% include administration and operation of the funds, a collection/processing fee to the City and to create a contingency or reserve fund. That would be in addition to the $295,000 the City currently contracts for with the Visalia Convention & Visitors Bureau.

The next item on the agenda was a request from minute-old Visalia Tourism Marketing District Corporation for a $50,000 loan. Deputy City Manager Leslie Caviglia said the district needed the loan because it probably won’t receive any money from the assessment district until April.

“With tourism’s ‘high season’ coming in summer people start planning those trips in January, February and March,” she said. “But this is a very low-risk loan.”

Caviglia said the loan would be paid back over three years and that city staff said revenues should be hired than the $530,000 estimated by the district based on recent bookings and cost information.

In addition, the city will be compensated 1% of the proceeds or approximately $6,000 annually, as a processing fee for the collection of the assessment.

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