Experience Columbus has a bold plan to bring millions more dollars and visitors to the region. It has plenty of support, but funding the goal will take a lot more than a stack of endorsement letters.
Less than halfway in, 2012 is shaping up to be a big year in Columbus. It’s a yearlong celebration of the city’s 200th birthday. A casino will open in late fall on the West Side, and a new full-service hotel is expected to open Downtown in September.
Such a confluence of events makes it a perfect time to tell Columbus’s story to the rest of the world, according to the folks at Experience Columbus, the city’s convention and visitors bureau.
There’s just one problem. The kind of outreach the organization has in mind costs money. Lots of money. Experience Columbus says it needs $11.2 million annually—an increase of $3.7 million from its 2011 budget—to pursue “Destination Columbus,” an aggressive and ambitious plan to make the community competitive with its peer cities in the destination marketing biz.
To make that happen, Experience Columbus is pitching a reallocation of the city’s bed tax. Officials are careful to point out they don’t want to rob Peter to pay Paul. But the money will have to come from somewhere. A committee studying the issue could make a recommendation in June.
Without additional marketing dollars, supporters say, the city will fall behind and potentially lose events business—even with the new Hilton Columbus Downtown opening this year. Maintaining the status quo, proponents say, simply isn’t an option.
Dollars and Visits
Anyone who’s been Downtown during the Arnold Sports Festival or near the Ohio Expo Center during the All American Quarter Horse Congress or Goodguys PPG Nationals knows that events are big business for the region’s economy.
Indeed, travel and tourism is a $36 billion-a-year industry in the Buckeye State, according to Experience Columbus. Visitors spend $7.23 billion annually in Central Ohio—10 percent of the local economy—and pay $1.02 billion in local, state and federal taxes. Experience Columbus’s more than 850 members impact 61,789 jobs.
Longtime Columbus restaurateur Cameron Mitchell, a former Experience Columbus board member, says the impact of events is so great that his Downtown eateries plan their schedules around them. “When we have conventions in town, it just does great things for us, for our people and for our businesses,” he says. “Experience Columbus is the entity that helps drive that business to Columbus.”
Experience Columbus uses the number of room nights booked—and the rate at which they’re billed—as the major measures of its performance. In 2011, it recorded 395,417 room nights in Columbus’s 239 hotels. The average rate was $81.42—$112.75 Downtown. (Those figures reflect only bookings made through Experience Columbus, which does not track business or personal trips.)
Columbus Chamber President and CEO Michael Dalby says tourism’s effects ripple through the economy. “It helps relieve the tax burden on our citizens because of the new dollars that come into our community,” he says. “A dollar invested in tourism marketing comes out multifold into our economy—and not just for our businesses, but our citizens as well.”
Still, Experience Columbus can and must do better, says President and CEO Paul Astleford. “We have the capability as an economic development engine to do that,” he says. His goal: maximizing visitor spending “so that it becomes, in my mind—and I say this in an aspirational way—the primary economic development and funding effort for our community.”
With a bigger budget, Astleford says, Experience Columbus could seek more national business by increasing its sales staff and paying for site visits to Columbus as well as “funding incentives” for conventions, such as free transportation for attendees at outlying hotels. Staffers also could attend more industry trade shows and make in-person calls on potential customers. “Those are things we are going to have to fund and do if we are going to ever allow Columbus to truly reach its potential in the visitor world,” says Astleford.
According to a 2011 study by Oxford Economics, the Destination Columbus plan could bring an additional 2.5 million annual visitors. (In 2010, Central Ohio saw 52.6 million visitor trips.) Those new visitors could support as many as 5,500 new jobs and have an annual economic impact of $689 million, including almost $7 million in new tax revenue to the city and $2.4 million to Franklin County.
Because event planners are still limited by the slow national economy, top-tier destinations such as San Francisco aren’t as attractive as they once were, says Phil Craig, executive director of the Ohio Association of Convention & Visitor Bureaus. “They’re looking for a Pittsburgh, they’re looking for a Columbus—so we’re hitting our stride at just the right time,” he says.
Experience Columbus has a staff of 40. Recently, it opened sales offices in Chicago and Washington, D.C., epicenters for the types of national associations that mid-tier cities such as Columbus hope to court.
The organization has seen positive momentum in its adoption of the “Open and Smart” marketing initiative, as well as a new logo that emphasizes the “us” in Columbus with uppercase letters and a star. The branding has been adopted by organizations including the Columbus Partnership, Columbus Chamber, Columbus Jazz Orchestra, the Ohio Statehouse and others.
“Columbus’s lack of brand image has been a challenge facing civic leaders since the 1960s. It’s been studied about seven times,” says Mike Brown, Experience Columbus’s director of development and public affairs. “There’s been some great work done on it and some great analysis, but we’ve never seen the entire community come behind an entire piece.” Until now.
Experience Columbus kicked things up another notch at its annual meeting in March. The normally staid affair included a runway show, a performance by drag queen Nina West and an appearance by Bruce Harkey, executive director of the Franklin Park Conservatory and Botanical Gardens, dressed in a full-body Lycra suit and butterfly wings. The message is “much more funky, it’s much sexier, it’s young, and we’re going to keep using that kind of energy, because we think that represents the smart and open city we’re selling,” Brown says.
Obstacles and Opportunities
When prospects visit the city, Experience Columbus persuades 65 percent of them to hold their event here. That’s a respectable showing. But there are challenges.
Experience Columbus’s budget, for one, is far below that of its Midwest peer cities. In 2010, St. Louis received $13.7 million in funding for its conventions and visitors bureau; Indianapolis, $13.6 million; Louisville, $11.7 million; Charlotte, $11.13 million; Cincinnati, $9.6 million; Pittsburgh, $9.2 million; Cleveland, $8.49 million; and Columbus, $6.3 million.
One bright spot has been the new, $140 million, 532-room Hilton, owned by the Franklin County Convention Facilities Authority. The hotel was long-sought, even by competitors, because it enables the city to woo bigger conventions and events. Already, it has helped land the 2013 NHL All-Star Game (see “Sports Scores”) and the 16,000-guest 2015 Southern Baptist Convention.
But the hotel is a bit of a double-edged sword. Experience Columbus leaders say that without increased marketing to fill the additional rooms, the Hilton could cannibalize the existing market. Occupancy at 13 private Downtown hotels could drop 10 percent, costing $14 million a year in lost business. Compounding the issue is the fact that all bed taxes generated by the Hilton—estimated at $1.8 million a year—will be diverted for 30 years to pay construction costs.
Just to maintain Downtown’s 65 percent occupancy rate, says Astleford, “We will have to book 129,000 additional room nights into this community so that we are not decreasing the bed tax income.”
“If we don’t increase the number of visitors that come to Columbus, we actually will see a negative net result across the board because the money will be going toward debt services as opposed to funding basic city services, human services, Experience Columbus. If we do nothing, we stand to lose significantly, so we need to come up with a plan to move forward and make this work,” says City Council President Andrew Ginther.
“We are moving in the direction to becoming a better second-tier city,” says Geri Lombard, general manager of the Renaissance Columbus Downtown Hotel and chairwoman of the Ohio Hotel & Lodging Association, Columbus Council. But Experience Columbus must grow, she says. “If you continue to do the same things, you’re going to get the same results. We need different results. More volume. If we continue to do the same tactics, marketing and selling our city, we’ll get the same result.”
Taxes are the primary source of funding for Experience Columbus, a 501(c)(6) nonprofit business league. Bed tax revenues accounted for 66.74 percent of $7.7 million in income it earned in 2011, with Franklin County (14.88 percent), programs (9.51 percent), member dues (6.33 percent), contributed services (2.31 percent) and miscellaneous revenues (0.23 percent) representing the remainder. Some of those dollars come from private sources, such as corporate contributions (including American Electric Power, Huntington Bancshares, Nationwide and Wolfe Enterprises, an affiliate of The Dispatch Printing Company, parent company of Columbus C.E.O.).
In 2011, the city’s bed tax collections totaled $30.8 million—up from $28.6 million the prior year. To understand how the bed tax is allocated, take a $100 room at the 10 percent total bed tax rate (ignore, for this example, the 6.75 percent sales tax). That $10 in bed taxes is split two ways: $4.90 to the Franklin County Convention Facilities Authority to pay off debt on the Greater Columbus Convention Center and $5.10 to the city of Columbus. The city’s share breaks down as: $1.50 each to Experience Columbus and the Greater Columbus Arts Council (GCAC), $1.25 to the city general fund, $0.43 to the Columbus Housing Trust Corp. and $0.42 to emergency human services.
Experience Columbus expects its 2012 budget will be about $8.9 million, including a $2 million allocation from Mayor Michael Coleman’s budget. “We’re excited about the direction they’re going,” says Coleman’s chief of staff, Mike Reese, who’s also an Experience Columbus board member. “With things coming in like the new hotel and all the other amenities in our Downtown community, we want to give them more resources so they can get their job done.”
Experience Columbus leaders are grateful for the discretionary funding, to be sure, but what they’d really like is a long-term, predictable budget. City code allows the bureau to receive up to 1.84 percent of bed tax revenues, but the organization is currently getting 1.5 percent plus fluctuating discretionary funding—$2 million in 2012, $1.1 million in 2011 and nothing in 2010.
The desired solution: Amend the city code to allocate a fixed 2.83 percent of bed taxes, and no discretionary funding, to Experience Columbus—which would generate another $3 million to $4 million annually. For that to happen, Columbus City Council must pass an ordinance that is then signed by the mayor. If the city is agreeable, expect Experience Columbus to come calling at the county and private sector as well.
Proponents say it would be a wise investment. According to the Oxford Economics study, every $1 in increased marketing expenditures leads to $90 in new visitor spending and $20 in new tax revenues. According to Experience Columbus, the visitor industry saves each household in Franklin County $1,880 in local, state and federal taxes annually.
Destination Columbus has the backing of many influential groups, including the Columbus Partnership, Columbus Chamber, Central Ohio Restaurant Association, the Ohio Association of Convention & Visitor Bureaus and numerous hotel managers.
“For me, it’s a bit of a lost opportunity to see funds that could be put into the Experience Columbus activities going to other organizations in order to provide short-term support when the long-term loss of incremental revenues is really what will hurt us,” says Joe Alutto, executive vice president and provost at Ohio State University and a former Experience Columbus chairman.
“Everybody has worked so hard to get us where we are and to have this opportunity to get the influx of the dollars … it would do so much for our city, and the long-term benefits would just be phenomenal,” says Greater Columbus Sports Commission Executive Director Linda Logan.
“One shouldn’t assume that if our funding remains static, we will be able to maintain business at the level we currently have. Every day, every city we compete with is investing to draw the visitor, and if we don’t move forward, we fall back. It’s competitive out there,” says Experience Columbus Chairwoman Lisa Hinson.
The Big Ask
The unanswered question, of course, is the issue of exactly where Experience Columbus’s increased share of bed taxes would come from. Will GCAC or human services lose funding? Or would the city simply reallocate dollars from the portion of the bed tax that goes into its general fund?
That will be determined, in part, by the 13-member Funding Review and Advisory Committee (FRAC), formed by Coleman and Ginther in September to look at reallocating the bed tax and other funding on behalf of Experience Columbus, GCAC and human services entities. Committee members “feel compelled to come up with a solution that provides sustainable, long-term funding for all of this,” says Tom Katzenmeyer, FRAC chairman and senior vice president of university communications at Ohio State University.
“I think Experience Columbus is motivated in their request. I think based on other cities, the ask can be justified,” Reese says. “The question is, ‘Where do the resources come from?’ and one of the things that the mayor has been clear about is we could have bed tax reform, but we also need to have a new revenue source. There’s just not enough money to go around.”
“We’re very much in favor of the bed tax [reform], but we’re very much in favor of doing it—which is what is occurring, by the way—in a discussion that thinks about the holistic vantage point,” says Alex Fischer, president and CEO of the Columbus Partnership.
Arts and human services leaders were initially nervous about Experience Columbus’s proposal, but have come around.
GCAC President Milt Baughman says the council, which supports local arts organizations, receives about $4.2 million in public sector funding, almost all from the bed tax. “We do think Experience Columbus plays a really important role in marketing the community and especially our arts and culture organizations in the community, and we also agree that Experience Columbus should have more resources to be effective in that whole marketing effort. But without taking a breath, the next phrase has to be that while we support increased funding, we just don’t want to see that funding come out of the pockets of the arts and cultural organizations in the community—and that’s the position that Experience Columbus has taken in their presentations, also.”
Those sentiments are echoed by Bo Chilton, chairman of the 43-member Human Service Chamber of Franklin County, CEO of the nonprofit Impact Community Action and a FRAC member. “We know they do important work to drive the growth of our tourism and convention business, and that generates additional revenue to help create jobs and generate additional tax revenue,” he says. “We just want to try and make sure we find a solution that is not a zero-sum game.”
FRAC members are considering a variety of funding scenarios, says Katzenmeyer, including a rental car fee, a surcharge for performance tickets, a food and beverage surcharge and taxes on alcohol or cigarettes. Some of those would require a vote of the electorate or state legislature to be enacted.
The plan’s supporters say time is of the essence. “Small conferences and large conferences, often those are scheduled three or more years out, so not taking action today not only hurts you today but hurts you for the next three years, so you have this cumulative effect that you’re trying to overcome,” says Dalby. “The bottom line here is the bottom line. This is an investment that brings new jobs into the community.”
Brown says the FRAC recommendation, which could come as soon as June, and how the city chooses to implement it, will have repercussions for years to come. “The question is, are we going to make the most of this moment in Columbus history to leapfrog into that place where we think we should be. The potential is there. The city has been built. The timing is just right, and public pride seems to be on the rise right now. People are engaged, the arts community is very active right now, and the sporting community has gone through some tough times, but they seem to be coming back. So what are we going to do with that? When do we do the game-changing move that really sets Columbus on its ascent?”
Jennifer Wray is a former staff writer for Columbus C.E.O.
Reprinted from the June 2012 issue of Columbus C.E.O. Copyright © Columbus C.E.O.