City Council, facing unprecedented budget shortfalls, made the decision to reduce the city’s contract for promotional services with Experience Colorado Springs at Pikes Peak, the Colorado Springs Convention and Visitors Bureau by nearly $600,000 or about 25 percent.
News of this reduction in CVB funding has led some to question the role and value of our organization.
The money entrusted to the CVB is an investment, not an expense and not a local taxpayer burden. CVB activities bring in more economic activity and sales tax revenue than what is spent — for every $1 spent on tourism promotion, there is a $90 return on investment.
Because travelers pay sales tax, in addition to Lodgers and Automobile Rental Tax, encouraging more leisure and business travel directly reduces the share of local government costs that are borne by our citizens.
The CVB budget is funded partly by an industry-initiated tax on hotel stays and car rentals and partly by businesses that choose to be a member of the CVB.
Colorado Springs leaders created the local LART to fund promotion of the local community in 1980. The ordinance states: “The purpose of this tax shall be to attract visitors and to enhance the economy of the city and the Pikes Peak region.”
These types of assessments are common across Colorado, the United States and the entire world today. Hotels willingly collect an additional 2 percent tax, and car rental businesses collect an additional 1 percent, understanding that much of it will be used to generate marketing and advertising to bring more people to town.
Some have questioned why advertising our city as a vacation or business meeting destination is not simply left to the individual hotels, restaurants and attractions.
While most of these businesses do market individually, they realize that there is strength in numbers when promoting the city and region as a whole. By showcasing the many choices and diversity of the region, potential visitors are engaged by the variety of things to do and more likely to travel to our city.
Members of the CVB contribute about 20 percent of the CVB’s budget. For many small tourism-related businesses, the CVB’s advertising is the most cost-efficient way they can market and may be the only advertising they can afford.
We face stiff competition in our own state from towns and cities such as Denver, Boulder, Breckenridge, Aspen, Vail, Steamboat Springs, Durango and Glenwood Springs, to name just a few. In the group market, numerous secondary and tertiary market cities aggressively compete against us — such as Albuquerque, Austin, Palm Springs, Phoenix, San Diego and San Antonio.
We’ve also seen statements by citizens that question the return on investment that we provide.
The CVB tracks the economic impact of its expenditures and activities, using conservative estimates. Although it may vary from year to year, we show that every dollar spent in promoting and marketing the region by the CVB results in over $90 of economic impact.
Therefore, each time the CVB invests $1, it translates into over $2.25 in city taxes — $1.80 for the city general fund and 45 cents for the Public Safety Sales Tax. The direct return in taxes is more than 2-to-1.
The LART is one of the only citywide funds that generates more tax revenue than it utilizes.
While some may claim that requesting City Council to restore the CVB’s budget is self-serving, it is in the best economic interests of this city and its citizens.
It is a self-funded organization that promotes our city as an attractive place to visit and meet, bringing in visitors and their dollars. The organization is recognized by the industry as an award-winning CVB consistently exceeding expectations of the traveler and group organizers.
More advertising and marketing of the city provides more tax revenue, economic activity and employment. Tourism equals tax revenue and jobs.
In a down economy, marketing is one of the last expenses a business should cut. Marketing and business development are the lifeblood of any business, and the City of Colorado Springs is no different.
Terrance W. Sullivan is president and CEO of Experience Colorado Springs, The Convention & Visitors Bureau