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Tourism Marketing District Helps Bring Jobs And Revenue to Town Along With Tourists

The battle over tourism marketing and tourism’s very future in San Diego is being waged at City Hall and in the courts. But what’s being lost in the drama that surrounds the battle are the jobs that could be lost as a result of this political brinksmanship.

The story is told most effectively in numbers: 160,000 jobs; $18.3 billion in economic impact; 7 percent of the city’s general fund revenue; 32 million visitors spending $8 billion in 2012 — and, sadly, the potential for an avalanche of layoffs in San Diego’s third-largest industry.

It was last December that the City Council voted to renew the contract of the city’s Tourism Marketing District in order to promote our city and remain competitive for precious few tourist dollars. But now it’s mid-March, and the approved contract that would enable TMD’s marketing to protect our tourism economy is still unsigned. In the meantime, the fallout has already begun. With the funds in limbo, the TMD-funded San Diego Tourism Authority has cancelled a $5.1 million spring marketing campaign, and the first 100 layoffs are looming.

One bright spot in this gloomy story came last March 5, when Superior Court Judge Timothy Taylor, acknowledging the imminent risk to jobs and the economy, agreed to schedule a speedy hearing to resolve the contract dispute. The hearing is scheduled for March 22. We hope for a quick resolution, but we’re disappointed that it’s devolved to this.

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Meanwhile, the battle of words continues. And the facts matter.

First, there’s the matter of the Tourism Marketing District’s bank balance. While rumor spreads that the TMD has a $10 million reserve, the truth is that there is no reserve, the opportunity catastrophe fund is down to $1.8 million, and what’s left is budgeted to zero by March 31.

City Could Opt Out in 2018

And then there’s the question of how long the city would be bound to the contract with the TMD. The opposition says 40 years. In fact, the 39 ½-year operating contract is up for renewal in five years. If the city wishes to end the agreement, it could opt out in 2018.

On the charge that the TMD board of directors is dominated by multinational mega-hotels, quite the opposite is true. In fact, five of the nine board members represent local, family-owned hotels that have been in San Diego for decades.

And as for the charge that the Tourism Marketing District is a subsidy for hoteliers, it’s simply untrue. It is a private, self-assessment based on longstanding business improvement district law, to raise marketing funds to promote the San Diego brand.

What is ignored is the huge pipeline of money leading from our city’s tourism industry straight into city coffers. It began in 1964, when voters approved a Transient Occupancy Tax (TOT) on visitors who stayed in San Diego hotels and motels. The money was to be used for promoting the city. That first year, the TOT generated $700,000, with 56 percent dedicated to the Convention & Visitors Bureau and marketing efforts. The balance remained in the city’s general fund to be used for police, fire, potholes or whatever else the City Council wanted.

An ‘Ever Larger Slice’ for the City

Over the years, as the city took an ever larger slice of the TOT revenue, the percentage going to tourism marketing dwindled. By 1986, while the tourist tax had increased, the amount set aside for tourism marketing had decreased to 20 percent. And by 2007, the last year tourism took any share of the TOT, it had dwindled to just 6 percent, while the tax had grown to 10.5 percent. And so, the Tourism Marketing District was born.

Designed along the lines of business improvement districts, the TMD allows hotels within the district to assess themselves 2 percent on room charges as a fee, passed along to their guests, and then designated only for organizations producing room nights. At the same time, the tourism industry gave up any claim to revenues collected by the TOT, the organization originally designated, ironically, as a “Transient Occupancy Tax.” In 2007, TMD’s were a new concept. Today, there are 75 of them in California. And those cities, along with others around the country, are spending marketing dollars to take our tourists and their dollars away.

So now, while TMD funds generated by San Diego’s lodging industry are held hostage, awaiting a day in court, it’s not only the hospitality industry that’s suffering. A whole host of worthwhile San Diego organizations may well be impacted.

District’s Big Role

Here are a few of the San Diego organizations the Tourism Marketing District has funded or helps fund: Balboa Park 2015 Centennial Planning, San Diego Bayfair, the San Diego Crew Classic, craft brewers San Diego Beer Week, the Maritime Museum of San Diego, Accessible San Diego, the Holiday and Poinsettia Bowl games, and the San Diego Rock ’n’ Roll Marathon.

All these and more are reasons why visitors flock to San Diego and why the TMD works. It’s also the reason there are 160,000 men and women working in San Diego as part of our vital tourism economy. We can ill afford to lose this marketing and these jobs. In the end, it’s about the jobs and the people. Not political games.

Jody Blackinton is president of the board of directors of the San Diego Hotel-Motel Association and general manager of Courtyard by Marriott San Diego Downtown.

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