Government and Travel & Tourism

Tourism contract extended

As occupancy rates continue to skyrocket, Experience Grand Rapids reaps rewards.

November 6, 2015
| By Pat Evans |
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(As seen on WZZM TV 13) As Experience Grand Rapids continues to fulfill its duty of bringing people to Kent County, county commissioners continue to see its value.

The Kent County Board of Commissioners unanimously approved the extension of the county’s relationship with Experience Grand Rapids for an additional five years at the Nov. 5 commission meeting. Previous agreements with the county were three years in length.

“The county understands our mission and the benefit of tourism-related revenues to the community,” said Doug Small, Experience Grand Rapids president and CEO. “It has the confidence in our efforts to continue to provide funding for marketing programs and participate as collaborative partners to make a great destination even better.”

At the Kent County Board of Commissioners Finance Subcommittee meeting on Oct. 20, Small said he hopes Experience Grand Rapids is returning the county’s investment “handsomely.”

Kent County receives 5 percent of tax on hotel and motel occupancies, known as the Lodging Excise Tax. The tax revenue is used to fund debt service for DeVos Place, Festival of the Arts, related administrative costs and contributions to Experience Grand Rapids.

In 2008, Kent County hotel occupancy was 48 percent. Last year, occupancy was nearing 70 percent, which is well above the national average of 64.4 percent. The county’s occupancy rate is also on par with or better than competitive markets such as Cincinnati, Pittsburgh and Columbus, Small said. He also noted the hotel room rates are nearing where they should be, after being “undervalued” for several years.

“We have two Four-Diamond hotels priced at Two-Diamond rates,” he said.

During the Oct. 20 meeting, Small said hotel revenues for the year were 13.4 percent ahead of 2014, the sixth year of record hotel revenue in a row. July saw an 81.2 percent occupancy rate, according to Smith Travel Research, the highest occupancy rate in county history.

“We are excited to see this continued momentum in tourism growth,” Small said in September.

“There are other indicators pointing to gains in the tourism economy, including increased passenger numbers at Gerald R. Ford International Airport, the record number of summer visitors to Frederik Meijer Gardens, and the excitement (surrounding) the new shopping center Tanger Outlets.”

Experience Grand Rapids receives 16.75 percent of the Lodging Excise Tax revenue under the current three-year deal with the county that expires this year.

The new agreement increases the percentage to between 17 and 18 percent, depending on financial benchmarks set within the agreement. Next year, the county estimates $9 million in overall Lodging Excise Tax revenue.

“This is the first time we have used dollar benchmarks as a mechanism to reward performance with Experience Grand Rapids,” Kent County Administrator/Controller Daryl Delabbio said in a release. “I believe this agreement acknowledges the excellent work performed by Experience Grand Rapids, and protects the county through a performance- and incentive-based payment process.”

Kent County officials expect Experience Grand Rapids to continue its promotion of Grand Rapids and Kent County and help increase the Lodging Excise Tax revenue 4 percent to 5 percent annually during the five-year agreement.

“The past five years have seen very solid growth in Lodging Excise Tax receipts,” said Dan Koorndyk, county board chair. “We believe that an annual 4 percent to 5 percent increase in those receipts during the next several years is a reasonable expectation.

“As a result, we can continue to meet our obligations and also increase our commitment to market the community through our partnership.”

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