title
APPROVAL OF THE 2018 STOCKTON TOURISM BUSINESS IMPROVEMENT DISTRICT BUDGET AND SERVICE PLAN AND THE 2017 ANNUAL REPORT
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution:
1. Approving the 2018 Annual Service Plan;
2. Approving the 2018 Operating Budget and Assessment;
3. Approving the 2017 Annual Report for the Stockton Tourism Business Improvement District; and
4. Authorizing the City Manager to take necessary and appropriate actions to carry out the purpose of this resolution.
body
Summary
The City of Stockton contracts with the Stockton Convention & Visitors Bureau (Visit Stockton) to manage assessed funds collected from the Stockton Tourism Business Improvement District (STBID) and provide services as described in the approved Management District Plan. The contract requires Visit Stockton to submit an Annual Service Plan for the upcoming year, as well as an Annual Report from the prior year. The 2018 Annual Service Plan consists of the proposed operating budget, assessment, and anticipated goals for this calendar year. The Council is also being asked to review and approve the 2017 Annual Report. The 2018 Annual Service Plan, the 2017 Annual Report, as well as the 2018 Budget for the Stockton Tourism Business Improvement District, are attached as Exhibits 1, 2, and 3 to the Resolution, respectively.
DISCUSSION
Background
The STBID was formed and established in December 2010, with a five-year term. Prior to its expiration in 2015, it was renewed and extended for an additional ten years, currently set to expire on December 31, 2025. The STBID includes all lodging businesses, existing and in the future, available for public occupancy within the boundaries of the City of Stockton.
The formation of the STBID was made possible under the California Property and Business Improvement District Law of 1994 to act as a funding mechanism to promote tourism in Stockton. These businesses are assessed a 4% rate of gross revenue for short-term stays that are less than 31 days. Tourism Business Improvement Districts (TBIDs) allow lodging and tourism-related business owners to use the assessed funds for marketing and tourism-related activities.
The City of Stockton contracts with the Stockton Convention & Visitors Bureau (Visit Stockton) to manage the funds and report annually on services and marketing activities. Its mission statement is to promote Stockton by increasing the awareness and enhancing the image of the diverse cultural, historical, and recreational assets of Stockton. The contract requires Visit Stockton to submit an Annual Service Plan and Annual Report to be approved by the City Council. The 2018 Annual Service Plan describes the proposed activities, goals, objectives, and budget for the coming year.
The STBID Management District Plan stipulates proportionate budget allocation as follows, per year:
• Sales and Marketing - 75% or greater
(Designed to increase occupancy rates)
• Administration and Operations - 20% or less
(Office Administrative/Operational Expenses)
• Contingency/Renewal - 5%
The Management District Plan allows for the proportionate budget allocation percentages to fluctuate based on the proposed objectives, but not to exceed 15% per category each year.
Present Situation
The Visit Stockton 2017 Annual Report summarizes the activities and services administered by Visit Stockton last year. A few of those accomplishments are listed below:
• Successful execution of the NCAA Division I Women’s Basketball Stockton Regional in March, which brought national attention and an economic impact of $1.5M to the city.
• The launch of the Stockton Savings Pass program. A mobile coupon book for locals and visitors.
• A record number of participants in the 8th annual Stockton Restaurant Week, 6th annual Stockton Beer Week, 2nd annual Stockton Brew Fest, and the 2nd annual Stockton Arts Week.
• The refresh of the Visit Stockton website and implementation of the #StocktonTrue campaign, a campaign that works to clear up misconceptions about Stockton by highlighting the positives our city has to offer.
The primary goal of Visit Stockton is to increase hotel occupancy; 2017 demonstrated a positive increase in the occupancy rate from 66.3% (2016) to 67.5% (2017). In addition, the following statistical trends from 2017 demonstrate a positive hotel market performance, benefitting from an overall increase in revenue:
• The average Hotel Occupancy for Stockton in 2017 was 67.5%
• The 2017 Average Daily Rate (ADR) for Stockton hotels was at $85.79, up from $79.53 in 2016
• Overall hotel demand was increased 2.1% in 2017
• Stockton hotel revenue in 2017 was $57.5M. A 9.9% increase from 2016.
These positive indicators result in increased revenue coming into the STBID annual budget, allowing additional marketing opportunities to expand the efforts of Visit Stockton.
The 2018 Annual Service Plan addresses the proposed budget for the year, as well as the enhanced goals, strategies and objectives of Visit Stockton for this year. A summary of the 2018 Annual Objectives and Strategies are outlined below:
Increase Hotel Demand and Visitor Volume in Stockton
• Continue to grow the sport and group markets
• Target key California markets that drive hotel business to Stockton
• Focus on group and visitor experience to differentiate Stockton from competition
• Increase room nights in the primarily leisure and transient properties
• Increase presence at targeted industry tradeshows
• Continue local engagement of hotels through meetings, social media, and tours
• Conduct meetings with a sports advisory group
Enhance the Stockton Visitor Experience
• Continue to grow the Stockton Tourism Ambassador Program
• Promote and distribute outreach materials throughout the community
• Continue to promote the Downtown Stockton Visitor Center
• Expand the Stockton Savings Pass to local hotel partners
• Expand the use of the Visit Stockton text “concierge” program
Marketing and Public Relations
• Host social media boot camp sessions for local Stockton Businesses
• Continue to create positive public relations campaigns that promote the assets of Stockton through multi-media engagement, social media, and collateral materials
• Promote and execute the Feast at the Fox (May 11, 2018) farm to table event
• Expand the #StocktonTrue campaign to combat negative perceptions about the City
Organizational
• Continue to work collaboratively with regional partners
• Broaden networking opportunities
• Continue communication methods for sharing information with partners
The anticipated budget for 2018 amounts to $1,669,560.
|
2018 Total Revenue |
|
TBID Assessment |
$1,550,000 |
|
Miscellaneous Revenue |
$64,560 |
|
Fund Balance from Previous Year |
$55,000 |
|
Total |
$1,669,560 |
The majority of the expenditures in 2018 are allocated as follows:
• Sales and Marketing - Total expenditure $1,396,622 or 83%
• Administration and Operations - Total expenditure $195,438 or 12%
• Contingency/Renewal - Total expenditure $77,500 or 5%
The above percentages are consistent with the STBID Management District Plan that was adopted by the City Council on November 4, 2014. The 2018 Service Plan is consistent with the intent of the Tourism Business Improvement District Assessment.
The proposed Resolution summarizes the action items needed for approval.
FINANCIAL SUMMARY
The City will retain 3% of the collected STBID revenue amount (approx. $46,500) to offset the ongoing cost of processing and collecting the assessment. There is no other direct financial impact to the City of Stockton with this action.