Bureau Sets Budget Mark

December 3, 2007
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GRAND RAPIDS — The Convention and Visitors Bureau has grown since 1996, or maybe erupted would be a better word to describe what has happened to the bureau’s budget over the last dozen years.

In 1996, the CVB annual budget was a solid $800,000. In 2008, the bureau’s spending plan will top $4 million for the first time in its history, marking a five-fold increase since 1996. The 2008 budget is also 22 percent larger than this year’s, which stands at $3.3 million.

And if you ask Bureau President Steve Wilson, he will tell you those extra dollars are needed and will be put to good use to draw tourists and convention delegates here.

“We’re now competing with cities all across the country,” he said.

The bureau’s budget got bigger even though Kent County’s financial support of the CVB got smaller. The five-year agreement the CVB has with the county ends in a few weeks, and the two sides recently hashed out a new two-year pact that gives the bureau $240,000 less each year than what it received this year.

The county awarded the CVB $943,000 this year, money that comes from the struggling lodging-excise tax fund. (See story below.) That award was the largest from the county since 2002 when it gave the bureau $1.1 million. The county then followed that contribution with $895,000, $833,000, $853,000 and $853,000, from 2003 through 2006, respectively.

In the new agreement, though, the county will fund the CVB with $700,000 a year for the next two years and will give the bureau 30 percent of lodging-excise revenues in excess of a 5-percent overall increase to the account.

Total revenue to the levy, more commonly known as the 5-percent hotel-motel tax, is expected to only rise by 3 percent this year from 2006. The account, however, had only grown by 1 percent through the end of October. So for the CVB to collect that incentive from the county, the occupancy rate at hotels and motels in the county next year will have to exceed this year’s projected increase, or room rates will have to rise.

But even with the county’s contribution down by 26 percent, the bureau has been able to increase its revenues for next year from other sources. The CVB’s biggest gain will come from the Kent County Lodging Association, which recently agreed to up its assessment to the bureau by another 54 percent, to $2.99 million next year.

Hotel operators will collect the additional dollars from their guests through a slightly higher room tax. In return, the CVB has enacted a 10-point strategic sales plan designed to increase occupancy at suburban hotels and motels.

CVB Chairwoman Kathleen Stewart-Ponitz said the goal is to promote all the hotels in the county and not just those located downtown, which receive an overwhelming majority of the business that comes from conventions held at DeVos Place. She said larger meetings can push that business to suburban hotels, noting that delegates to the American Rabbit Breeders Association meeting held here last month stayed at 16 hotels across the county.

The bureau also got funding for the first time this year from the Convention and Arena Authority and the Grand Rapids Downtown Development Authority. The CAA is giving the CVB up to $75,000 this year and will give the same amount next year. The DDA gave the CVB $40,000 this year for a downtown advertising campaign and will raise that amount to $50,000 next year.

“We’re just kind of getting our toe in the water with the DDA. But it’s been successful,” said Wilson.

The CVB’s biggest expense next year will be $1.9 million for its sales effort. Another $1.5 million will go toward marketing. About $300,000 will go into operations, and roughly the same amount will go into the reserve account.

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