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APPROVE THE 2019 STOCKTON TOURISM BUSINESS IMPROVEMENT DISTRICT BUDGET AND SERVICE PLAN AND THE 2018 ANNUAL REPORT
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution to:
1. Approve the 2019 Annual Service Plan for the Stockton Tourism Business Improvement District;
2. Approve the 2019 Operating Budget and Assessment for the Stockton Tourism Business Improvement District;
3. Approve the 2018 Annual Report for the Stockton Tourism Business Improvement District; and
4. Authorize the City Manager to take necessary and appropriate actions to carry out the purpose of this resolution.
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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 2019 Annual Service Plan consists of the proposed operating budget, assessment, and anticipated goals for this calendar year. The Council is being asked to approve the 2019 Annual Service Plan, the 2018 Annual Report and the 2019 Operating Budget for Visit Stockton, which 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 2019 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 2018 Annual Report summarizes the activities and services administered by Visit Stockton last year. A few of those accomplishments are listed below:
• The Amgen Tour of California, the second largest cycling event in the world, returned to Stockton for the first time in eleven years.
• Continued successful promotion of the Stockton Savings Pass program, a mobile coupon book for locals and visitors.
• First Feast at the Fox dining event was held at the Bob Hope (Fox) Theatre. This farm-to-table event was a fundraiser for the San Joaquin Delta College Culinary Arts Program and featured all locally sourced food and beverages, as well as local chefs.
• Comprehensive marketing and social media campaign which has generated over 109,000 followers on social media and distribution of 40,000 copies of the Stockton Visitors Guide in 2018. Website visitation increased by 2.7% with over 1.3 million views in 2018.
• Social Media Boot Camp, a three-part marketing education program that trained local businesses on ways to optimize their social media to better promote their organizations.
• 27 sponsored events hosted in 2018 resulting in $3.2 million in economic impact and 3,770 hotel room night stays.
The primary goal of Visit Stockton is to increase hotel occupancy; 2018 demonstrated a positive increase in the occupancy rate from 67.5% (2017) to 69.2% (2018). In addition, the following statistical trends from 2018 demonstrate a positive hotel market performance, benefitting from an overall increase in revenue:
• The average Hotel Occupancy for Stockton in 2018 was 69.2%
• The 2018 Average Daily Rate (ADR) for Stockton hotels was at $89.84, up from $85.84 in 2017
• Overall hotel demand was increased by 2.1% in 2018
• Stockton hotel revenue in 2018 was $61.5M, a 9.9% increase from 2017
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 2019 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 2019 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, including the Downtown Stockton Alliance
• Expand the Stockton Savings Pass to local hotel partners
• Expand the use of the Visit Stockton text “concierge” program
Marketing and Public Relations
• 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 10, 2019) farm-to-table event
• Promote Amgen Tour of California, Stage 3 (May 14, 2019)
• 4th annual Stockton Arts Week (Oct. 11-20, 2019)
• Expand the #StocktonTrue campaign to combat negative perceptions about the City
Organizational
• Continue to work collaboratively with regional partners
• Maintain and develop highly productive, well-informed staff, board, and organization to best promote Stockton
• Work closely with economic development professionals
• Broaden networking opportunities
• Continue communication methods for sharing information with partners
• Produce Visit Stockton Events
The anticipated budget for 2019 amounts to $1,827,096.
|
2019 Total Revenue |
|
TBID Assessment |
$1,645,000 |
|
Miscellaneous Revenue |
$128,402 |
|
Fund Balance from Previous Year |
$53,694 |
|
Total |
$1,827,096 |
The majority of the expenditures in 2019 are allocated as follows:
• Sales and Marketing - Total expenditure $1,527,088 or 83%
• Administration and Operations - Total expenditure $217,758 or 12%
• Contingency/Renewal - Total expenditure $82,250 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 2019 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. $49,350) 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.