Lodging tax revenue sees unexpected increase
More funding will be sent to Kent County’s destination marketing organization.
An unanticipated amount of tax revenue from Kent County’s lodging excise tax will result in more funds appropriated to Experience Grand Rapids.
The Kent County Board of Commissioners held its Finance and Physical Resources Committee meeting last week to address an amendment to the County’s 2017 lodging excise tax budget.
The county levies a lodging tax of 5 percent on lodging facilities, such as hotels and motels. This amendment requests an additional $238,750 to be appropriated to the 2017 budget.
Per the budget agreement, the county will distribute 17 percent of the 2017 budget revenue to Experience Grand Rapids, but if tax revenue is greater than $9.25 million, the county will distribute 17.25 percent to the organization.
For 2017, it originally was estimated the lodging tax would generate $9.2 million, and 17 percent — or $1.55 million — would be appropriated for distribution to Experience GR. It is now estimated the lodging tax will generate between $10 million and $10.5 million. At the new 17.25 percent figure, $1.8 million will be distributed to Experience Grand Rapids.
Because of the unanticipated revenue from the lodging tax revenue, the amendment requires an additional $238,750 to pay the difference. The board approved the amendment.
Doug Small, president and CEO of Experience Grand Rapids, explained the increase in revenue is based on a number of variables, one of which is the city hosting the State Games of America this past summer, which he said filled a significant number of hotel rooms.
“We had anticipated when we set a revenue budget that we would exceed 2016 by 5 percent. We’re on pace to exceed it by about 7 percent,” Small said. “You hope your market programs are working so you can drive demand, but when you set your projections, there’s that uncertainty.”
Small added Grand Rapids always has done well with attracting convention and sports groups and are seeing an increase in interest from convention groups to host events in the area.
Small recently passed his budget plan for 2018, which predicts a revenue increase of at least 3 percent for next year.
Experience Grand Rapids is the official destination marketing organization for Kent County. The organization also distributes a percentage of its earnings from the lodging tax to the West Michigan Sports Commission.
The lodging excise tax budget originally was provided by Act 263, adopted by the state of Michigan in 1974.