THE PROSPECT FOR CAPTURING more revenue for Ventura's city coffers is looking bleaker these days with a skidding economy sending collection of sales taxes down 10 percent and a faltering housing market setting off alarm bells that property tax revenues will soon be on the decline. City Hall has announced belt-tightening measures that will cut back some city services.
Yet in the middle of this gloom and doom is a bright ray of Ventura sunshine: our Transient Occupancy Tax (TOT) collections are up. What does that mean to those of us who don't converse in "Cityspeak"? More and more tourists are coming here and staying in our hotels. They are also eating in our restaurants and shopping in our boutiques. They are going out to visit the Channel Islands, hiking in the nearby mountains and relaxing on our beaches. All this activity brings TOT revenues to the general fund, keeps locals employed and brings in sales tax revenues, too.
According to Jim Luttjohann, director of the Ventura Visitors & Convention Bureau (VVCB), annual TOT revenues have grown from $3 million in 2003 to $4 million as of December 2007. We've also enjoyed an increase in revenue per available room of 7.9 percent while nearby Oxnard has remained nearly flat, he said. According to a recent study, visitor spending in Ventura was $458,315,800 in 2006.
Unfortunately, the engine helping to drive this mini-economic boom is falling under the budget axe itself. The VVCB's contract is housed within the City of Ventura's Cultural Affairs Division, which is being recommended for an across-the-board 11 percent reduction in funding. Cultural Affairs also supervises other revenue-generating activities like ArtWalk and the Street Fairs.
The VVCB budget will likely see a reduction of $83,000 from current year funding (about $132,000 from anticipated funding based on a contract funded at 2% of collected TOT). The cut will greatly affect the VVCB's ability to reach the tourist market, Luttjohann noted. "For us to shrink right now is potentially devastating."
IS SHRINKING A REVENUE-GENERATING portion of
city government a good idea in bad economic times? Not according to Monterey's City Manager, Fred Meurer. In 2002-04, when Monterey experienced a loss of $8 million in revenue over three years, it actually grew its tourism budget while cutting other services, Meurer said. "One area the City Council wanted to increase was tourism and marketing promotion to help build its coffers," he said.
"When business is down, you should be working on increasing your bottom line."
Bill Watkins of the UCSB Economic Forecast Project also noted an uptick in county tourism in his latest report: "Sectors that we expect to add a significant number of jobs from 2008-2010 include trade and leisure hospitality."
Ventura's VCB has been successful in drawing visitors interested in three major areas, Luttjohann explained: heritage and cultural tourists, gourmet diners or "foodies," and outdoor adventurers. "The foodie tourism market has been great to us," he said.
Two new hotels are also scheduled to be built here within the next few years: an Embassy Suites near the Fairgrounds and a Hyatt Place near Seaward and the 101 Freeway. "It will be very difficult to sell more rooms with fewer dollars," Luttjohann said.
But marketing all these great amenities involves employing a sales force to attend trade shows in addition to placing stories and making expensive ad buys in magazines like Sunset, Westways, Southwest Art, Gourmet and National Geographic Traveler. "We have to be in the really high-profile publications," Luttjohann said. "That's where you're getting your leisure travelers." And a state-of-the-art online presence is essential. "Sixty percent of travel planning is now done online," he said.
AN 11 PERCENT REDUCTION in marketing will certainly mean fewer visitors, Luttjohann said, which could also mean millions in reduced spending. A cut in Colorado's tourism and marketing budget a few years back, he said, caused a decline of 37 percent in overnight stays. And Monterey's Meurer pointed to nearby Pacific Grove, which recently withdrew from a regional cooperative advertising contract only to quickly opt back in the following year.
The bureau is considering taking on additional services for the city in exchange for maintaining its current budget structure, Luttjohann said. "Alternatively, we will have to reduce staffing and media placements and programs like the non-profit marketing grants that help our local organizations reach tourists in marketing they would not otherwise be able to afford."
Is cutting $130,000 from the Visitor's Bureau and then potentially losing millions from tourists a wise budget move?
It's time to visit this again.