This past Friday, a press release announced the formation of a “Mayor’s Task Force on Travel & Tourism” appointed by the three North Mecklenburg Mayors, without the knowledge or notice to Visit Lake Norman, the experts charged with the promotion and marketing of the Lake Norman region since 2001. Media reports from Business Today and articles in the upcoming editions of the papers will likely detail the concerns from the multiple stakeholders in the hospitality industry and business leaders much better than I can.
I must admit many of us representing your chamber of commerce were surprised at the formation of any task force which would make “recommendations for a more focused vision for our small business, destination and tourism entities” stated in the release, without any representation from the Lake Norman Chamber or the leadership of Visit Lake Norman. However, the more troubling aspect of this was the lack of any hotel representation in this task force.
Perhaps there is no greater stakeholder in travel and tourism than our hotels whose properties generate the revenues and subsequently the accommodation taxes and are the real experts when it comes to how best to attract visitors and tourists to our region. While we can debate goals, objectives, mission statements, and priorities, ultimately what is at stake here is how we should best allocate the use of hospitality taxes.
According to the Annual Report by Visit Lake Norman, events recruited by their organization in 2009 – 2010 brought $11,987,300 in visitors spending (a 59% increase from the previous year). That visitors spending in Mecklenburg County saved each household in Cornelius, Davidson, and Huntersville $304 in taxes last year that would otherwise have been passed on through property taxes.
So what is the hospitality tax anyway and how can it be spent? There are several taxes: the sales tax we are all accustomed to, the accommodation tax 6% levied on the hotel rooms and the 1% prepared meals tax. In 1983, legislation was created which levied, at that time, a 3% tax on the gross receipts of hotel rooms (later amended an additional 3% in 1989). It was stated in this legislation that these funds would “be allocated for activities and programs aiding and encouraging convention and visitor promotion.” Section 8C of that bill went on to say the remaining money, after a dedicated portion (50%), could be spent for “acquiring, constructing, financing, maintaining, and operating convention centers, civic centers, performing arts centers, coliseums, auditoriums, and museums, and for visitor related programs and activities including cultural programs, events, or festivals.”
In essence, this was a tax that the hospitality industry at the time supported, having imposed on itself the task to create visitor’s spending. Much like Senate Bill 647 in 1990 when the restaurants agreed to a 1% prepared meals tax for the same use. In 2001, the Lake Norman Chamber led the charge for House Bill 715 which returned a share of the prepared food tax to the North Mecklenburg towns (previously all of it went to Charlotte) with the agreement we would create a tourism authority known today as Visit Lake Norman and formerly known as the Lake Norman Convention & Visitors Bureau. That agreement in 2001 allowed for a 50% investment of accommodations taxes and a 25% share of the prepared meals taxes to promote and create events resulting in increased visitors spending for hotels, restaurants, and local businesses!
Today, the North Mecklenburg town’s investment to Visit Lake Norman has been decreased steadily over time by the town boards to $428,145 or 28% of the accommodation tax and none of the prepared meals tax, which is thought to be well over $1 million dollars. It was $615,243 in 1999. The North Mecklenburg towns take in $1.6 million in accommodations taxes, leaving them collectively with $1.1 million or 72% to spend in ways which may or may not create room night stays.
The events created by Visit Lake Norman, whether a soccer or softball tournament or a fishing tournament on the lake bring in significant dollars as families and guests stay in our hotels, eat at our restaurants, fill up at the gas station, shop in our stores, etc.
While health care and the financial investment companies are strong economic generators in North Mecklenburg, they are largely so because of our proximity to Charlotte and being the second largest financial district in the country. However, we have two home grown industries that fuel our lake economy: the commercial and residential real estate market and the hospitality industry.
We all know when building and real estate have a downturn, we all feel it in the pocketbook. The same can be said with our hospitality industry – hotels, restaurants, attractions, marinas, boat dealerships, etc. When Visit Lake Norman has a tournament in town – our business community positively feels it!
Ironically, next week the Chamber will host a luncheon on Thursday, February 17 at Northstone Country Club in Huntersville on the “Direct Effect of Visitors Spending on Local Citizens and Businesses.” Featured at the luncheon is Lynn Minges, the Assistant Secretary of Tourism, Marketing and Branding for the North Carolina Department of Commerce; Mike Butts the Executive Director of Visit Charlotte; and Sally Ashworth the Executive Director of Visit Lake Norman. To register for the event click here.
While the statesman Edmund Burke was much stronger in his language, to paraphrase him, “All that is necessary for the triumph of our misfortune… is that good people do nothing.’’ That is not the case here, as the Lake Norman Chamber of Commerce will continue to support our hotels, restaurants, attractions, hospitality partners and our local business members!