Board May Fund Bureau

April 13, 2007
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GRAND RAPIDS — Members of the Convention and Arena Authority will take up the matter of funding the Convention and Visitors Bureau at their monthly meeting next week.

CAA Executive Director Rich MacKeigan, also SMG general manager overseeing daily operations at the city’s convention center, said the board has wanted to create a formal relationship with the bureau for some time now.

And as far as the CVB is concerned, that tie couldn’t come at a better time.

MacKeigan said the CAA will vote on establishing a marketing contract with the bureau that would give the CVB a minimum of $50,000 during the upcoming fiscal year to help sell

DeVos Place
to meeting planners. The funding amount could grow by another $25,000 if the CVB tops last year’s room-nights total of 89,903 by at least 5 percent. Reports on that progress would have to come to the CAA on a quarterly basis.

MacKeigan, who worked in tandem with bureau president Steve Wilson to create the funding plan, has advised the CAA to approve it, and he recently obtained approval for it from the board’s Operations Committee.

“This is just adding more arrows to the quiver. In order to stay competitive, this seems to be the direction to go,” said Lew Chamberlin, CAA board member and chairman of the committee.

The agreement would also give the bureau’s sales team a handful of incentives to help lure conventions here, including discounted rental fees above the current 20 percent, special setups or equipment rental, and a reception or food service from CAA.

The CVB wouldn’t be required to spend all the marketing dollars within the fiscal year the money is allocated, as the bureau could rollover some into the next year or years. But the CVB couldn’t build the fund’s total past $250,000.

Also, at least initially, the CAA would have to renew the agreement each fiscal year.

“The CAA would have the opportunity to walk away from this after a year,” said MacKeigan.

The bureau can use the funding to help maintain its $3 million annual budget, as KentCounty is likely to lower its yearly financial support next year by about half. The county awarded the CVB $850,000 from the lodging excise tax fund for this year, the final year of Kent’s agreement with the bureau.

But because revenue to the county’s lodging excise tax account hasn’t kept pace with outlays from the fund for the past five years and because the fund’s reserve is running out, the county’s support for the CVB next year is expected to be in the range of $400,000.

Fiscal help, though, could be coming from Lansing. State Rep. Michael Sak introduced a bill that would allow the CVB to collect up to an additional 2 percent on lodging tabs at hotels in the county with 35 or more rooms. His bill is in the House committee on commerce.

Sak said Wilson told him that the bureau would ask lodging operators for only a 1-percent hike, which would give the bureau about $1 million in additional funds and would replace the funding expected to be lost from the county next year.

“It has to be approved by members of the (KentCounty) lodging association before the CVB can collect it,” said Sak, a Grand Rapids Democrat.

Ed Wilson, president of the Kent County Lodging Association and general manager of the Country Inn & Suites Grand Rapids East hotel that opens next month at I-96 and the East Beltline, said hotel operators will vote individually on whether to support the one-point hike in the tax should the bill become law.

“We’ve had some meetings, but there have been more individual discussions. The association did not take a position per se. I’ve talked to a number of hotels that are very much in favor of it and some of the hotels that are not,” said Wilson

The hotels that are most likely to support the increase are those located closest to the downtown convention center, as these capture most of the room nights that come from a meeting. So it follows that the operators who don’t get convention bookings are more likely to oppose the increase because all it would do is raise their room rates.

But as Ed Wilson pointed out, the bureau isn’t ignoring those outlying hotel operators.

“One of the things the CVB is working on is a suburban hotel initiative, because they need to have the support of all the hotels. For the number of groups the CVB brings in, I couldn’t say how many are going to affect the outlying hotels. The downtown hotels have to fill first before the meetings would have an effect on those outlying hotels,” he said.

“For this to pass, the CVB needs support from more than just the downtown hotels.”

Two CAA members, Chamberlin and Joseph Tomaselli, are also on the CVB board, and they are likely to abstain from next week’s funding vote. MacKeigan is also on the bureau’s board, but his executive director post is a non-voting position.

“There has been a lot of front-end work done on this,” said MacKeigan. “The CAA expressed that it have a formalized relationship with the CVB. Right now, it doesn’t have one.”    

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