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APPROVE THE 2021 STOCKTON TOURISM BUSINESS IMPROVEMENT DISTRICT BUDGET AND SERVICE PLAN, AND 2020 ANNUAL REPORT
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution:
1. Approving the 2021 Annual Service Plan for the Stockton Tourism Business Improvement District.
2. Approving the 2021 Operating Budget and Assessment for the Stockton Tourism Business Improvement District.
3. Approving the 2020 Annual Report for the Stockton Tourism Business Improvement District.
4. Authorizing the City Manager, or designee, 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, and an Annual Report from the prior year. The 2021 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 2021 Annual Service Plan, 2020 Annual Report and 2021 Operating Budget for Visit Stockton, which are attached as Exhibits 1, 2, and 3 to the Resolution, respectively.
DISCUSSION
Background
The STBID was established in December 2010 for a five-year term. Prior to its expiration in 2015, it was renewed and extended for an additional ten years, set to expire on December 31, 2025. The STBID includes all lodging businesses, existing and 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, promotion, 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 enhance the region’s quality of life by collaboratively leading the promotion of Stockton’s richly diverse community and advocating for initiatives that will enhance the City’s quality of place. The contract requires Visit Stockton to submit an Annual Service Plan and Annual Report to be approved by the City Council. The 2021 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 (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 pandemic has significantly impacted the travel and hospitality industries nationwide. Stockton’s industry fared much better than other parts of the state since our community is less dependent on conventions, airlift, and international travel. The Visit Stockton 2020 Annual Report summarizes the activities and services administered by Visit Stockton last year. A few of those accomplishments are listed below:
• Stockton Healthy Pledge: Launched in May 2020, this voluntary business pledge currently has more than 300 participating businesses and is growing; providing PPE, window clings, and marketing support for the health and safety of our community.
• City of Stockton Small Business Relief Grant Program: Partnered with the City’s Economic Development Department to administer the grant program by reviewing applications, issuing payments, and completing tax reporting documentation.
• Dine Stockton: Implemented in March 2020, www.DineStockton.com <http://www.DineStockton.com> is a listing of more than 150 restaurants with delivery and take-out options for our community.
• A comprehensive marketing and social media campaign which has generated more than 115,000 followers, 13.7 million total impressions (down 17.3% from 2019), and 672,000 total engagements on social media (up 13.68%). Website visitation (www.visitstockton.org <http://www.visitstockton.org>) has decreased in 2020 due to lack of tourism caused by the pandemic. Top viewed pages of 2020 pertained to COVID-19 related pages, blogs, and restaurant relevant topics.
• Strategic Planning Efforts: City of Stockton Community Support Grant allowed investment in a post-COVID Strategic Recovery Plan toward the end of 2020. Members of the Board and staff met to identify realities of the present and future desires for Visit Stockton to increase effectiveness as well as help the City’s recovery efforts from the pandemic. (www.visitstockton.us/strategicplan2020 <http://www.visitstockton.us/strategicplan2020>).
• PPE Distribution: 49,130 masks, 30,300 gloves, 1,067 hand sanitizer bottles, 121 disinfectant bottles, and 1,220 social distancing floor decals.
The primary goal of Visit Stockton is to increase hotel occupancy. In past years, there has typically been a positive increase in the hotel occupancy rate from 2-4%, however 2020 demonstrated a hotel occupancy drop of 10.5% - with the loss of hotel inventory due to Project RoomKey (Motel 6 taken offline on Navy Drive), overall room demand dropped 12.2% in 2020. Lodging statistics also demonstrate the pandemic impact, in 2020 the average hotel occupancy rate was 64.7%, down from 2019 at 72.4%. In addition, the following statistical trends from 2020 demonstrate the limited leisure and business travel, with local attractions closed and stay at home orders in place, Stockton’s economic impact shows:
• The average hotel occupancy for Stockton in 2020 was 64.7%; 1,724 of the 2,665 rooms available in Stockton were sold out each night
• The 2020 Average Daily Rate (ADR) for Stockton hotels was $93.60 per night, which was an increase from 2019 at $91.20
• Overall hotel demand was significantly decreased by 12.2% in 2020 due to the pandemic
• Stockton hotel revenue in 2020 was $59.4 million, a decrease from 2019’s revenue at $65.2 million
In addition to the above data, the impact of COVID-19 is shown by the loss of six national championship sporting events scheduled for Stockton to host in 2020. Visit Stockton estimates if these events did take place as planned, they would have brought in additional room nights for a total economic impact of $2.4 million.
The 2021 Annual Service Plan addresses the proposed budget overview for the year, recovery goals, strategies, and objectives as well as planned community engagement of Visit Stockton. A summary of the annual recovery goals and strategies are outlined below:
Advocate for Destination-Enhancing Initiative to Build Community Magnetism
• Explore opportunities to expand Stockton’s attractiveness as a sports tournament destination; feasibility for adding destination enhancing assets as an incentive
• Engage with community leaders and development agencies to advocate for the renovation and restoration of Stockton’s infrastructure
• Lead a collaborative campaign to enhance the resident pride in Stockton
Increase Outreach and Support
• Initiate the development of a Community Development Summit to analyze opportunities for collaboration on initiatives of mutual interest
• Work with the corporate community to build Visit Stockton awareness
Build Capacity and Excellence
• Analyze alternative revenue streams to diversify budget; explore opportunities to relocate to a storefront location with easy parking
• Review and update, when appropriate, the bylaws
• Perform research to gauge resident sentiment toward the visitor economy and community at large; partner with University of the Pacific to develop and execute survey
Strengthen Destination Development and Community Leadership
• Launch a data and analytics dashboard to improve marketing efficiency; execute data-driven marketing strategies to support the recovery of our economy
• Increase destination storytelling efforts by highlighting businesses, unique selling points, and working with strategic partners to showcase the quality of life and quality of place, targeting potential visitors, relocating businesses, and future residents
• Develop a Sports Tourism Strategic Plan with facility analysis for an enhanced vision to identify, grow, develop, and service the Stockton community’s sports tourism efforts for continued economic impact
The anticipated budget for 2021 amounts to $1,538,055.
|
2021 Total Revenue |
|
TBID Assessment |
$1,270,000 |
|
Special Events, Co-ops & Program Revenue |
$78,055 |
|
Carry over from previous year |
$190,000 |
|
Total |
$1,538,055 |
The majority of the expenditures in 2021 are allocated as follows:
• Sales and Marketing - Total expenditure $1,253,725
• Administration and Operations - Total expenditure $220,830
• Contingency/Renewal - Total expenditure $63,500; 5% of the TBID Assessments
The above percentages are consistent with the STBID Management District Plan that was adopted by the City Council on November 4, 2014. The 2021 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. $38,100) to offset the ongoing cost of processing and collecting the assessment. These funds are appropriated in Account No. 6000-416-670002-270-052-00-60-000-000-.
There is no other direct financial impact to the City of Stockton with this action.