Saturday, August 17, 2013
With the annexation to the City of the Westcliff Drive lodging properties decided upon, the implications will come to bear on a wider range of our local Hood River economy than many expect. The discussion of how taxes are taken in, allocated, and spent is a conversation that is long overdue in this community.
Transient room tax has become an increasingly important component (11 percent, second-largest line item) of the City budget. It is a 9 percent tax, imposed on lodging properties (hotels, B&Bs, vacation rentals) based on revenue. In short, it is a sales tax. One percent is used to fund state tourism marketing. The original intention of the remainder of this tax was to help communities encourage and grow tourism.
Today, many communities have shifted the use of this tax to general fund government business. In Hood River County, 90 percent of the funds collected through TRT are reinvested with the Chamber’s Visitors Council to be used for collective marketing of the Hood River area as a whole.
The City has allocated only 25 percent of its growing TRT revenue to market through the Visitor’s Council; the other 75 percent is lumped into the general fund.
TRT allocated to the Visitors Council has been well-used to bolster demand for the Hood River area. A 1 percent reduction in lodging industry occupancy results in, very conservatively, $300,000 fewer dollars spent in our local economy. This number is derived from the current Hood River lodging market size and extrapolated using the Longwoods International Report.
Simply put, a reduction in Hood River marketing will reduce aggregate demand, thus reducing growth and tax revenues compared to what would be more economically beneficial.
We have two options: Fight over allocating stagnant money, or reinvest to increase demand for everyone’s businesses.
The Chamber of Commerce and Visitors Council has long taken on the role of Hood River marketing and promotion. This marketing is done on a scale very few of the local businesses could afford or accomplish alone.
By pooling of the TRT marketing revenue, Kerry Cobb has created cooperative advertising opportunities for Chamber businesses, that provide additional leveraged funds to attract more visitors — who will generate even more TRT. It is the primary marketing vehicle and largest influencer of non-organic aggregate demand Hood River has.
Proof of this effort is manifest in our economic performance relative to the surrounding area. For 2012, the Mt. Hood/Gorge area saw occupancy drop 6.4 percent compared to 2011, according to Smith Travel Research. For the entire state, occupancy increased 1.3 percent.
Despite this, the lodging industry increased its TRT contribution to the City of Hood River by 5.2 percent. This outperformance, compared to the state, brought in an additional $1.228 million to our local economy using Longwoods ratios.
The Visitors Council’s marketing efforts played a very large role in achieving our shared outperformance.
Ask any tourist-related business in town and they will tell you how important it is to get people to Hood River. Yes, we need drivable roads, police, firefighters, teachers, and everyone else who serves the general public; but without people visiting our area from around the world, our local economic growth will be stunted.
If we want a higher quality of life, we need to focus on the things that bring money into a community as a whole, not play 3 Card Monte with what we already have.
Grant Polson lives in Hood River.
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