County A Key Player In Convention Business

June 14, 2002
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GRAND RAPIDS — Kent County officials are betting heavily that the local convention and tourism business will be successful for decades to come.

The board of commissioners is backing the new convention center and the Convention and Visitors Bureau with nearly $100 million for the next 30 years.

All of that money will come from the county’s lodging excise levy, better known as the hotel-motel tax, a 5 percent surcharge that is tacked on to every visitor’s lodging bill.

Last year, the tax, including earned interest, amounted to $4.89 million. All of it is targeted to boost the area’s appeal to organizations that hold conventions and trade shows, and to tourists looking for a vacation spot.

Kent County Administrator and Controller Daryl Delabbio explained that part of the tax revenue helps support the operation of the CVB, while another portion funds the bureau’s marketing efforts to lure exhibitors and visitors here.

He said the county turns over 20 percent of the lodging excise tax each year to the CVB for its operations, an amount that roughly accounts for 40 percent of the bureau’s annual budget. This year the CVB budget totaled $2.27 million.

“What we do is we pay them monthly, so we don’t transfer it all at once. Receipts are given and monthly they get them,” said Delabbio. “How they use that money is up to them.”

The bureau has used those funds to craft a new national identity for the city, to upgrade its Web site at www.visitgrandrapids.org, and to promote the county as a tourism destination in the northern sectors of Ohio, Illinois and Indiana.

The bureau also used some of that revenue to create a visitors information center at the renovated Gerald R. Ford International Airport. CVB President Steve Wilson said the center was fielding questions from over 1,000 visitors a week shortly after it opened last fall.

“It has exceeded our expectations and we are very pleased with that,” said Wilson of the center’s nearly instant success.

“It makes you wonder how those questions were getting answered before,” said Bruce Schedlbauer, marketing and communications director for the airport.

The Kent County Aeronautics Board gave the bureau $40,000 for the airport center.

The commission’s operational support for the CVB comes from a five-year commitment commissioners made to the bureau in 1997. The financial agreement expires next year.

In addition to those monies, the county board is also providing the bureau with $1 million to market the new convention center during the construction period and before it officially opens in early 2004. Those funds are being handed out in three annual installments.

“That money is part of the tax, too, but it’s over and above the 20 percent allocation,” said Delabbio.

But the largest and longest obligation Kent County will make will be to the building project, a $219.5 million expansion and renovation of the facility.

To make that happen, the county will be on the line for a 30-year bond package.

“We’ve made a commitment to fund roughly — and I say roughly because it all depends on interest rates — $86 million in the project itself,” said Delabbio. “So what we’ll do is bond for that amount and pay it off with hotel-motel proceeds over the next 30 years.”

So it’s pretty obvious that the county’s lodging excise tax is vital to the future of the local convention and tourism industry, as well as to hotels, restaurants and entertainment venues.

But it may be that the amount of revenue generated from the levy could drop for the next few years.

Construction at the convention center is expected to lessen the number of trade shows and conventions coming here for at least the next two years, and lower receipts for hotels and motels over that time frame.

“Well, a lot depends on how well the CVB does its business in other areas.

“What we have always done in our estimates is we’ve used a 70-percent occupancy rate on hotels and motels. That’s what we use for our projections,” said Delabbio. “And our projections have been slightly under what we’ve actually received in terms of revenues.”

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