By Jim Giammarinaro
President & CEO of the MetroWest Chamber of Commerce
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FRAMINGHAM – Guests at hotels frequent our restaurants, retail establishments and entertainment venues during their stays in the MetroWest Region. When occupancy rates at hotels are near or at capacity, multiple industry segments benefit. A Tourism Destination Marketing District (TDMD) is designed to put “heads in beds” and increase occupancy rates at hotels.
WHAT IS A TDMD?
Modeled loosely on the existing Massachusetts Business Improvement District law, a Tourism Destination Marketing District (TDMD) is a hotelier-proposed and locally approved assessment on overnight hotel visitors, providing a stable source of funding to support sales, marketing, and tourism promotion. The ultimate goal of a TDMD is increasing hotel occupancy and overall visitor spending in the region.
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TDMDs are not a new concept. They have been implemented successfully in over 177 jurisdictions in states from coast-to-coast and are currently under consideration in several others. This is a model that is rapidly becoming the industry standard. It was successfully adopted locally as a tool to provide for effective tourism marketing campaigns, targeted improvements, and tourism related services.
THE NEED
Tourism is Massachusetts’ third largest industry, providing billions of dollars in economic impact and hundreds of millions in tax revenue to support state and local services.
For the past several years there has been increasing frustration throughout the tourism industry at the unpredictability of state funding to promote Massachusetts as a tourism destination.
Repeated mid-year cuts to tourism related budget line items have impaired the ability of Regional Tourism Councils (RTCs) to plan and execute effective marketing campaigns, and left the Commonwealth losing market share to competitor states.
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The plan would establish what are known as “Tourism Destination Marketing Districts” (TDMDs) in which a portion of overnight hotel visitor revenues are assessed and directed to a local management entity (the local RTC) for the expressed purpose of promoting the local region as a destination for overnight tourism.
“Without effective promotion, states and cities cede the economic benefits to competing destinations and fall behind the competition. It is a mistake from which it takes many years to recover. And it is a mistake that is easily avoided when governments take a long view on their economic outlook,” said the US Travel Association
BENEFITS OF A TDMD
Everyone Benefits. Large regularly hosted events such as the Boston Marathon, MetroFest, The Taste of MetroWest, bring thousands of people to the Metro West area to experience our unique visitor assets. When large hotels sell out in one area of the region, surrounding hotels also benefit by receiving an influx of hotel guests. This scenario produces a ripple effect and greater economic impact for the tourism businesses in the MetroWest region.
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ONE OF THE LARGEST REVENUE DRIVERS IN THE STATE
Tourism is the third largest industry in Massachusetts; It is a vital economic driver for Boston and the Commonwealth.
How is a TDMD created?
The designated Regional Tourist Council (RTC) for a region would serve as the management entity for a TDMD. A TDMD committee, the majority of which are hoteliers, would develop a TDMD plan which specifies the supplemental services to be provided by the TDMD, as well as the TDMD assessment formula and budget, the classification of properties which would participate, and the geographic boundaries of the TDMD. This plan would be proposed to the municipalities which the TDMD seeks to include in its district along with a petition signed by more than 62% of affected lodging businesses in support of the proposal. The municipality would hold a public hearing on the proposal and would vote to either approve or disapprove the TDMD. A vote is required of each municipalities’ legislative body.
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How could the funds collected by the TDMD be spent?
The overarching purpose of a TDMD is to encourage overnight visitor stays and “put heads in beds” to create a self-perpetuating income stream. The specific uses of funds would be left up to each region and would be spelled out in their TDMD plan.
Each community knows best the tourism assets which make them a unique and desirable destination for visitors and it would be up to each community, with hotelier input, to decide specifically how to market their communities in a way that they feel would maximize visitor stays.
How would a TDMD be funded?
Lodging businesses which meet the criteria set-forth in the TDMD plan would collect 2% of overnight room revenue. Each region has the flexibility to propose a plan that suits their needs within the above parameters. The rate and which lodging entities are included are part of the plan submitted to the municipality.
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Hoteliers would remit the collected assessment to the Massachusetts Department of Revenue (DoR) at the same time as rooms tax is collected. The Commonwealth would return the assessment to the RTC as the management entity of the TDMD from which the assessment was originally collected on at least a quarterly basis for use in accordance with the purposes described in the TDMD plan. TDMD assessments may not be diverted for any other state or local government purpose.
What is the purpose of TDMD legislation?
In response to hotel owner concerns raised to the GSCVB over the insufficiency and unpredictability of tourism funding from the Commonwealth, Representative Michael J. Finn (D-West Springfield) filed legislation to allow, but not require, regions to form Tourism Destination Marketing Districts (TDMDs). TDMDs would provide a recurring funding source to carry out activities designed to drive overnight tourism and visitor stays to that region. Funding would be assessed locally and expended for local benefit.
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What responsibilities will the TDMD Advisory Board have?
• Scheduled meetings at the call of the MWVB President and appointed Chair of the Advisory Board
• Approve marketing plan with strategies, tactics and goals outlined for the TDMD as presented by MWVB staff (will require a majority vote of voting members, i.e. hoteliers)
• Review results of the plan with an emphasis on occupancy and Revpar growth and adjust accordingly
• Review financials for the TDMD at all meetings; TDMD funding will be subject to annual audit
HOW DO I GET INVOLVED?
Your support is important. If you agree with the TDMD proposal we need your support and advocacy. To create our TDMD we need 62% of our targeted hotels to vote in favor of TDMD. We also need community support. Each municipality will hold a public hearing and vote on the
proposal.
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Editor’s Note: SOURCE and the MetroWest Chamber have formed a partnership. The Chamber’s column will run on Tuesdays on the digital news media outlet.
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