In an ongoing effort to remain competitive with other popular big-city destinations, a Tourism Marketing District (TMD) is being created for San Diego.
According to documents submitted by Mike McDowell, executive vice president and CEO of the San Diego Lodging Industry Association, the TMD was “conceived and developed by a coalition of lodging business owners representing the San Diego County Hotel Motel Association and the San Diego Lodging Industry Association “¦ to improve tourism activity and hotel room night consumption in the City of San Diego.”
According to Scott Kessler, deputy director of City Planning and Community Investment Department (CPCI) for the City of San Diego, the process of creating TMD is moving through local city government channels and, if all goes well, should begin operating in January 2008.
“It is a proposal from the hotel and motel industry to create a special fund in order to enhance the region’s ability to attract more business,” he explained. “The ordinance for this special fund follows statues from the state allowing the formation of these types of districts.”
The general guidelines for how the TMD will be funded and who is eligible are, as noted in the document from McDowell, “An assessment based upon 2 percent of total room revenue is proposed to be levied upon all lodging businesses with 70 rooms or more located within the city limits of the City of San Diego. Guest stays of more than 30 consecutive days are exempt from the assessment. Government employees on government business are also exempt from the assessment.”
Therefore, an owner of a Motel 6 with 50 rooms does not qualify either for the assessment or to be included in the marketing and promotional efforts.
According to both Kessler and McDowell, the approval process involves two critical phases, which is where the TMD is right now.
“The first step is the collection of petitions from the assessed members indicating over 50 percent of them are interested in the TMD,” Kessler said. “Then the second step is for City Council to mail out ballots for the actual voting on the TMD. In order for it to be approved, there must be a simple majority of assessed businesses in favor of the TMD.”
For example, if a business owner chooses not to sign the petition and votes no on the ballot but the TMD still passes, the owner will be required to pay the assessment.
This highlights one of the key differences between a voluntary similar effort and one that requires governmental approval, according to Kessler.
“A group of businesspeople can get together and create an organization on their own to help promote their line of business, but they cannot require other owners to either join the group or help pay expenses,” he said. “With the process involving the TMD, if approved in the voting, every owner who qualifies has to pay.”
If all goes according to plan and the TMD is approved, three key questions will remain: How much money is involved? Who will oversee the TMD? What types of services will the TMD provide?
The documents offered by McDowell address these issues as well. On the matter of how much money, the information reads, “The TMD budget for the first year of collections and disbursements is estimated to be approximately $25,600,000. It is anticipated that the TMD will generate approximately $145 million during its five-year initial term.”
As to who will oversee the TMD, “The implementation of this TMD Management Plan will be the responsibility of the Board of Directors of the San Diego Tourism Promotion Corporation (SDTPC), a private nonprofit entity composed exclusively of representatives from assessed lodging businesses. Oversight is provided by the City to ensure that the expenditure of funds is consistent with the TMD Management Plan.”
As to the types of services offered by the TMD, “Revenue generated from the assessment will fund marketing programs to increase tourism and promote the City of San Diego as a tourist, meeting, convention and special event destination that will specifically benefit the assessed lodging businesses. Annual fixed funding will be allocated to the San Diego Convention & Visitors Bureau and the San Diego North Convention & Visitors Bureau, at 50 percent and 10 percent of total annual revenue respectively, for comprehensive destination marketing.
“State law provides that funds must be spent to benefit those who pay and cannot be diverted for other government programs.”
For information contact Kessler, (619) 236-6405, or McDowell, (619) 725-5239.