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Tourism Marketing Dispute Appears Settled

San Diego City Council will soon clear the way for the first new funding to be disbursed for promotion of the region’s crucial tourism industry, after the mayor’s office and Tourism Marketing District officials apparently resolved a bitter dispute over the district’s renewal.

“I think it’s a big step for all of the parties that this was moved into negotiations,” said Lorin Stewart, executive director of the San Diego Tourism Marketing District. “The result is a positive for the city and for the tourism industry as well.”

At press time, City Council had not formally signed off on the agreement but had scheduled a vote for April 9 on a measure authorizing the city to expend approximately $11.7 million for TMD activities for the period of Jan. 1 through June 20, 2013.

Approval will clear the way for the first collections from local hotels to be disbursed under a TMD renewal agreement approved in late 2012 by the City Council, intended to raise $30 million annually for local tourism promotion through a 2 percent surcharge on hotel room bills.

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Averting Layoffs

It will also likely avert previously announced layoffs of 85 employees of the San Diego Tourism Authority, the region’s largest tourism promotion agency, which derives 80 percent of its budget from the TMD and has already canceled more than $5 million in multistate advertising purchases normally completed by this time of year.

Earlier this year, Mayor Bob Filner refused to sign off on the renewal agreement, saying he wanted to renegotiate its terms. San Diego County Superior Court sided with Filner in a lawsuit brought by the TMD executive board, aiming to compel the mayor to sign the agreement.

The court said the City Council’s renewal resolution authorized the mayor to enter into “an agreement” with the TMD but did not compel him to sign the specific agreement on the table. City Council revised the wording to address the technicality, and Filner then entered into talks with the TMD board.

In a statement, Filner said an agreement was reached with the aid of Councilman David Alvarez.

“There is more accountability and more transparency in this agreement and it ensures that taxpayers will have more information than ever about how these public funds are being used to pay the salaries of the top executives in the publicly funded organizations,” Filner said.

The agreement provides the city with indemnity if the TMD collection mechanism is invalidated by any of the three private lawsuits currently pending on the matter. It also calls for up to $3 million annually in TMD collections, depending on funding availability, to go toward costs for the city’s 2015 Balboa Park centennial celebration.

Alvarez has agreed to hold a future hearing on a “living wage” ordinance, including protections for hotel workers, to address issues Filner raised when he initially refused to sign the TMD renewal agreement.

More Work to Be Done

Terry Brown, chairman of the TMD’s executive board, said following the talks that there was more work to be done, but the agreement marked “a good day for all San Diegans, including the thousands of men and women who work in the tourism industry.”

“It was a difficult process to get here, but the most important part is that an agreement was reached to avert any further damage to the economy,” Brown said in a statement.

Tourism Authority officials declined at press time to discuss the agreement, referring queries to TMD officials. The TMD issue applies only to the City of San Diego, and it is not clear what direct impact the TMD dispute has had on local tourism so far in 2013.

Prior to the talks that led to the most recent TMD agreement, the Tourism Authority reported that hotel occupancy in San Diego County was down 4.8 percent from a year ago for the period of Feb. 16 to March 16, representing about 36,000 fewer visitors staying in local hotels, citing data from Smith Travel Research and CIC Research.

The agency said the average daily room rate was down 1.3 percent, representing a drop of $26 million in visitor spending at San Diego businesses and a decline of $828,000 in transient occupancy tax collections, about 80 percent of which is collected by the City of San Diego.

The latest full-month data available at press time from Smith Travel showed San Diego County hotels performing better than a year ago in the January-February period. Occupancy was up 3.2 percent, to 65.1 percent; the average daily rate rose 3.2 percent, to $125.84; and revenue per available room was up 6.5 percent, to $81.95.

Total county hotel revenue in the first two months rose 6.9 percent from a year ago, to just over $281 million. In percentage growth terms, the local region was tracking behind overall U.S. trends on all of the key measures except occupancy.

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