Hotel Del Coronado - TID Letter San Francisco Visitors Bureau - TIDNew City America has rapidly become a national leader in the consulting on, and formation of these new financial mechanisms established to stabilize the marketing of local and regional destination management corporations.
Known as “TIDs”, these new Tourism Improvement Districts are the alternative to the dwindling resources allocated by City governments to their struggling Visitor’s Bureaus. TIDs are assessment districts established to fund new and improved marketing programs to bring more “heads on beds” to cities in an increasingly competitive visitor industry.
Marco Li Mandri, led the panel of experts at the recently held “Destination Management Association International” conference held in Atlanta Georgia in late July.
Currently, New City America has formed, or is under contract to form the following TIDs:
Hotel Del Coronado - TID Letter
San Francisco Visitors Bureau - TID
Based upon its research, it appears that two states, California and Montana currently have legislation on the books that would allow for creation of these business based Tourism Improvement Districts. This does not preclude the creation of districts in the other states, however, this is where TID experts such as New City America’s Marco Li Mandri, can help the Visitor’s bureau to determine what is possible.
TIDs have been formed in the following cities: California:
At the July 28th DMAI International Conference in Atlanta, a workshop was held on a new concept in financing DMOs – the Tourism Improvement District (TID). Initiated in California, these TIDs are demonstrating that an independent, reliable source of funding for your marketing, promotions, and administrative programs, is the most constructive way in which to deal with the fiscal crisis faced by DMOs throughout the nation.
The TID concept is based upon the old Business Improvement District (BID) concept. That is, benefiting stakeholders fund programs through special assessments that are used to enhance and improve a certain area or industry, and most importantly, those funds are controlled by the contributing group.
The panel on financing DMOs through TIDs was moderated by New City America and included Dan Fenton the CEO of Team San Jose, and the new Chairman of the DMAI, as well as Dan Goldes from the San Francisco Convention and Visitors Bureau and Ken Fischang from the Sonoma County Visitors Bureau. Each of these gentlemen’s organizations are benefiting for TIDs that were established under California state law.
The TID concept is simple: members of a DMO determine that they cannot rely on public funding or declining Hotel tax revenue to fund their operations and remain competitive. They work with the local DMO and a TID consultant to figure out an alternative financing mechanism that is independent from the increasingly squeezed general funds of the local government. Normally, those TID funds take the form of an assessment levied on each occupied hotel room. These TID funds can be used to supplement existing local funding or replace that funding and have the dedicated local funds be reallocated to improvement in the visitor industry infrastructure, such as Convention Center upgrades. The hotel owners and operators themselves determine the rate of TID assessment needed to fund the DMO operations.
The TID funds are generated from, and controlled by the local DMO or an affiliate organization. Those funds are then used to expand marketing programs, buy down conference costs, cover administrative costs or fund satellite offices.
New City America recently worked with the San Francisco CVB to form the largest district of its kind in the United States. The TID in San Francisco is estimated to generate approximately $24 – 27 million during its first year of operation. New City America is also under contract to form TIDs in Anaheim and Baltimore.
What you need to look for in determining if a TID is right for you is the following:
As cities are facing increasing financial hardships throughout the country, the choice of political leaders will increasingly be between libraries and parks vs. DMOs. Unfortunately, DMOs may be on the losing end of this battle for funding due to the constituent base.
The TIDs assures DMOs reliable, stable and independent funding so you can remain competitive in a rapidly changing market. This is the wave of the future in an increasingly changing visitor industry.
Marco Li Mandri