CVB courts local hotel tax supp

June 29, 2007
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GRAND RAPIDS — Convention and Visitors Bureau President Steve Wilson will be busier than usual for the next few months since a bill that State Rep. Michael Sak introduced last February made it through both chambers recently.

The legislation gives the CVB a chance to collect another $2 million annually in lodging taxes, but Wilson has said he will settle for half that amount. That $1 million, with revenue from other new sources such as the Convention and Arena Authority, would let the bureau raise its annual marketing budget from $3 million to $5 million.

Wilson said the additional dollars are necessary now that his staff is competing against larger urban areas such as Columbus, Milwaukee and Indianapolis to bring convention business to

DeVos Place
. A bigger budget would also let the bureau extend its marketing reach to bring more tourists to Michigan's "West Coast."

But Wilson has some selling to do here before he can start writing the new budget. His first pitches will go to friendly crowds, namely the bureau's board and the hotel advisory board. Then he will try to sway what could be a tougher group: the Kent County Lodging Association.

The association comprises hotel operators in the county. Some suburban operators said they haven't benefited much from the bureau's current marketing plan, which has largely been aimed at bringing traffic to

DeVos Place
and the nearby downtown hotels. So the question for them becomes: Why should they raise their guests' tab by 1 percent and help fund the new plan when they believe the old one hasn't done much for them?

Wilson's answer is the bureau's new marketing plan has four parts to it, and two are aimed at sending more guests to hotels on

28th Street
and the other major corridors in the county.

Wilson said one involves the new West Michigan Sports Commission, which has largely been put together to drive more business to the suburban hotels. The CVB will use $150,000 of that new $1 million each year to fund the commission and will give at least that amount of in-kind donations to it annually. The commission will operate from the bureau's office at no charge, and the CVB will design and maintain the WMSC Web site.

"It will be crucial for the suburban hotels," said Wilson of the commission. "Just a few weeks ago we hosted a major volleyball event, and that benefited properties all around the county. That's just one example and that's at a prime time. We also want to find weekends in January and February that we can bring events here."

The second is what Wilson called the suburban marketing plan, which highlights attractions in the suburbs such as the FrederikMeijerGardens & SculpturePark on

East Beltline Avenue
and suburban hotels such as the CrownePlaza on
28th Street
.

But part of the suburban plan is also tied to the convention business. The bureau is trying to bring the national Corvette owners annual meeting here, and that group prefers to have its event held at a hotel that has a lot of free parking.

"I believe we've got lots of opportunities with car-collector groups and sports-car groups like that that want free surface parking, and that's what the suburban hotels have to offer. Last year we did a BMW rally at the Crowne Plaza, and it had the parking lot there and was ideally suited with shopping right there," said Wilson.

"Those are the types of initiatives that we'll be focusing on for the suburban strategy."

Competing nationally to draw convention and trade show business to

DeVos Place
is the third segment. Extending the tourism marketing reach into Chicago in conjunction with Travel Michigan, the state's agency, and possibly into lower Northern Michigan specifically for the spring and fall months is the fourth part of the plan.

The CVB will visit individual hotels and the association to explain the plan and seek support for it. If a majority agrees to increase the room tax by 1 percent, then the entire association will be required to do that.

"There are steps within the legislation that, if ever there is a time that a sizable minority is opposed to it, they could repeal it or call for a vote at a future point — let's say five years down the road — if they didn't feel the marketing plan was meeting their needs," said Wilson.

Wilson added that the hotel advisory board, which is made up of hotel operators, can also call for a new vote.

If all three groups approve the bureau's new marketing plan, then the CVB will send it to Lansing for review by Travel Michigan. If Travel Michigan approves it, the agency will inform every hotel operator in the county of its action by registered mail. Although the bill gives the agency the right to reject it, Wilson said Travel Michigan has approved the bureau's previous plans.

The legislation allows for the lodging tax to be raised by 2 percent in Kent and Ingham counties if the respective hospitality industries agree to the increase. The bill exempts hotels and motels with fewer than 35 rooms from the new levy. The revenue would go to the CVBs in those counties. A 1 percent bump, which the local bureau is requesting, has been estimated to raise $1 million for the CVB.

Sak said he has been in touch with lodging association members and he feels they'll go along with the increase.

"They're extremely pleased, especially here in Grand Rapids and KentCounty, as well as Lansing. All of them testified on behalf of my legislation throughout the process, and they're extremely pleased that now they can provide another venue for economic development in their own area of expertise," said Sak, a Grand Rapids Democrat and House Speaker Pro Tem.

"This allows (the CVB) now to really focus on going out into other markets like Chicago to bring people to Michigan," he added.

At press time, Gov. Jennifer Granholm needed to sign the bill for it to become law, and Sak believes she will do that. Granholm vetoed Sak's first bill because it only included hotels in KentCounty. So Sak broadened his bill to include InghamCounty

The county's lodging operators now add a 13 percent tax to a guest's bill. The state gets 6 percent, the county 5 percent, and the CVB, 2 percent. If operators don't have reservations about the new levy, that number will change to 14 percent, and the bureau's take will rise to 3 percent.

"The state of Michigan is facing some financial challenges, and we now have a mechanism in place that can promote economic development," said Sak. "And this will only enhance and promote tourism and conventions in West Michigan."

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