What is Discover Lancaster asking the County Commissioners to do?
Discover Lancaster is asking the County Commissioners to increase the lodging excise tax from 1.1% to 3%. The lodging excise tax is a major source of funding for tourism marketing and promotion for Lancaster County.
What is Discover Lancaster?
Discover Lancaster (formerly the Pennsylvania Dutch Convention and Visitors Bureau) is a non-profit organization certified as Lancaster’s “Destination Marketing Organization” (DMO). This means Discover Lancaster is the only organization charged with marketing and promoting tourism in Lancaster County. Discover Lancaster attracts visitors to Lancaster and stimulates economic growth.
How has tourism marketing been funded?
Since 2000, a significant portion of its funds for marketing and promotion have been generated by a 1.1% lodging excise tax, a portion (20%) of the 3.9% hotel room rental tax (the balance of which is allocated to the Lancaster County Convention Center), and the Commonwealth of Pennsylvania.
Isn’t current tourism marketing funding adequate?
The Commonwealth of Pennsylvania eliminated DMO funding in 2011. In addition, since 2012 Discover Lancaster’s portion of the hotel room rental tax has been reallocated to support the Convention Center and it’s an open question if it will return on a consistent basis. As a result, funding for marketing and promotion of Lancaster County has fallen from $4.9 million in 2007 to $3.2 million in 2016. Discover Lancaster’s budget for media buying (paid advertising) has dropped 69% since 2011.
What are the consequences of reduced tourism marketing and promotion?
As our budget for marketing the county has dropped, we are starting to see erosion in some key tourism metrics—data suggesting future declines in the county’s tourism industry. At the same time, York, Chester, and 26 other Pennsylvania counties have recently increased their lodging excise tax to support tourism marketing, and Discover Lancaster already compares poorly with regional competitors in media spending and public funding. Lancaster County is missing an opportunity and risks falling behind. We need to act now to counteract these trends.
Who pays the lodging excise tax?
The tax is paid only by overnight visitors staying in hotels or other lodging properties in Lancaster County. It is not paid by county residents or businesses. Lodging properties collect the tax and pass it along to Discover Lancaster.
Won’t a higher lodging excise tax discourage visitors to Lancaster County?
Lodging excise taxes are commonly used across Pennsylvania and the nation to fund tourism marketing. They are accepted and expected by visitors. Based on the county’s current Average Daily Rate (ADR) for lodging, a 3% excise tax will add about $2.00 per night to the average hotel cost. From research, we know that visitors to Lancaster should not be discouraged by a slight cost increase, and our average costs will remain very competitive. Most importantly, additional marketing and promotion will attract more visitors to the county.
What is the benefit of increasing the excise tax?
The higher tax will generate an additional $3 – 3.5 million annually to support marketing and promotion for Lancaster. The additional funding will allow Discover Lancaster to resume television ads in Philadelphia and New York; potentially enter new media markets like Baltimore; strengthen our group sales efforts; and significantly increase our online content & presence. With these expanded efforts, over the next five years, we project 1.23 million additional visitors, $367 million in additional spending, 438,000 additional room nights, $81 million in additional room revenue, and an average of 550 new jobs per year. Increasing the lodging excise tax will create a stable, dedicated source of funds to support tourism and will strengthen marketing and promotional efforts for the county.
Why should tax dollars go to supporting tourism?
Every resident, business, school, and organization in Lancaster County will benefit from the additional tourism marketing and promotion the increased excise tax will generate. Tourism is a foundation of Lancaster County’s economy and quality of life. In 2015, tourism accounted for over $2.6 billion in economic activity in the county. Tourism is one of the county’s largest industries, supporting over 24,000 jobs, and businesses and organizations in the retail, food and dining, arts and culture, lodging, and transportation sectors. Funding tourism marketing is pro-business. For destinations similar to Lancaster County, every dollar spent on tourism promotion returns about $50 in visitor spending. And taxes paid by these visitors reduce the tax burden of every county household by almost $1,000 per year.
How much money will the increased tax raise?
We estimate a lodging excise tax of 3% will generate an additional $3 – 3.5 million annually to support tourism marketing and promotion.
Didn’t Discover Lancaster recently receive money from the Convention Center?
In January 2017, Discover Lancaster did receive about $1.2 million from the county’s Collaboration Agreement with the Convention Center and other parties. These dollars represent Discover Lancaster’s portion of the hotel rental room tax for 2016 and were only received because the Convention Center’s financial reserves were met. These are not new dollars—it is money Discover Lancaster normally would have received earlier. We will use these dollars for marketing and promotion, but a one-time payment is not sufficient to make up for past budget cuts, and similar payments in the future are not assured. Increasing the lodging excise tax will create a stable, dedicated, and predictable source for tourism marketing and promotion.
Doesn’t increasing the excise tax hurt hotels?
The excise lodging tax is paid by overnight visitors to Lancaster County, not by hotels or other lodging properties. Attracting more tourists to Lancaster helps our hotel and lodging industry. With increased funds for marketing, we project that over the next five years lodging will sell 438,000 additional room nights and generate $81 million in additional room revenue. We will also work with the hotel industry on developing new group sales strategies.