The Sonoma County Tourism Business Improvement District (TBID) achieved a return on its investment of $85 for every dollar spent for tourism promotion in 2010. This was higher than the statewide ROI average of $63 for each marketing dollar spent in other TBID’s responding to a statewide survey. Napa Valley’s Tourism Improvement District reported an ROI of $63.80 for every promotional dollar spent, also exceeding the state average.
These findings were part of a new study conducted by Patrick Tierney, Ph.D., chairman of the Department of Recreation, Parks and Tourism at San Francisco State University (SFSU), and funded by the California Travel Association (CTA). This survey offers the first statewide assessment of economic impact from TBIDs, also know as Tourism Marketing Districts (TMD).
“We have wanted to determine the net effect and the ROI from TMDs in California since the inception of this program 17 years ago,” said John Severini, president of the California Travel Association. “Our goal is to conduct a similar study every five years.”
Before initiating the survey, the CTA brought in representatives from each district and asked them what information they believed should be collected, and what questions should be asked.
wenty of the 63 Tourism Marketing Districts in 28 California counties responded by supplying data included in the initial report covering local and statewide results for 2010. These findings were released in May 2012.
According to Mr. Severini, these data are revealing and help establish a solid basis for evaluating the effectiveness of TBIDs when it comes to creating jobs, stimulating tourism spending, growing the local economy and increasing tax revenue.
For example, Sonoma County collected an estimated $2.5 million in total TBID funds in 2010, and of this amount, $1.8 million was allocated for promotional spending, or 72.6 percent.
The estimate for all funds collected by TBIDs in California was $125 million of which $78 million was spent for promotions, or 62.2 percent.
Direct destination spending generated by promotions in Sonoma County totaled $209 million in 2010, providing an ROI of $84.60 for each promotion dollar spent. Combining direct, indirect and induced spending (for other goods and services while touring the county) the figure was $468 million.
From an economic impact perspective, personal income for workers produced by TBID activity in Sonoma totaled $66 million. County marketing promotions created 1,918 jobs and resulted in $4.6 million in local tax revenue, according to the report.
This resulted in a tax ROI for the county of 1.9 for every dollar invested for tourism promotion, which is higher than the total for all reporting TBIDs (1.4), and higher than the estimate for all TBIDs in California (1.6).
While TBIDs in Marin and Solano Counties did not participate in this study, the Napa Valley Tourism Improvement District reported that its TBID collected funds totaling $2.1 and spent $1.2 million on promoting the region, or 57.1 percent.
Direct spending generated by Napa Valley TBID promotions was estimated at $134 million, and direct, indirect and induced spending combined in the Napa Valley was estimated to be in excess of $300 million.
These marketing activities resulted in the creation of some 1,230 jobs, $42 million in personal income for workers and $2.9 million in tax revenue.
TBIDs were created in 1995 under provisions of SB 256 (The California Marketing Act) to increase the state’s share of the travel and tourism market.
This legislation authorized the levy of an assessment on all tourism and travel-related businesses and also provided for the establishment of a non-profit, public benefit corporation to manage the funds.
Both the Sonoma County TBID, established in 2005, along with the Napa Valley TBID, formed in July 2010 (half way through the initial reporting year in the study), are funded by a two percent ad valorem assessment on certain lodging stays which is in addition to the Transit Occupancy Tax (TOT) levied by local municipalities.
Statewide in 2010, TBID marketing promotions were responsible for creating a total of 81,500 jobs, growing the state economy by $8.9 billion in direct new tourism spending, and provided state budget relief by creating $493 million in new California tax revenue.
At the same time, statewide promotions created $2.8 billion in personal income for workers, $19.9 billion in total, direct, indirect and induced tourism spending and $196 million in new tax revenue for local governments, according to the California Travel Association.
California, Montana and Washington State currently have tourism business improvement districts in place, and Florida and South Carolina are in the early stages of adopting enabling legislation. While most tourism districts are confined to a city or county, there are two large-scale districts – one covering the State of California and another covering the United States (called Brand America).
Sonoma County’s Tourism Bureau is also planning to launch its Certified Tourism Ambassador program later this year to train residents and provide them with important information about the county they can share with visitors. Classes are scheduled to begin in October. For information about the Certified Tourism Ambassador program, go to www.ctanetwork.com.
For more information about the California Travel Association, go to www.caltravel.org.
