Sedona AZ (July 27, 2018) – In response to questions related to the city’s tourism management and marketing contract with the Sedona Chamber of Commerce, the city is sharing some of the questions it has fielded over the past few weeks, and the answers provided.
The contract is available for download at https://www.sedonaaz.gov/Home/ShowDocument?id=35229
Does the city have input on establishing the Sedona bed tax rate? What is the mechanism for that? How was that arrived at?
Sedona has more than simply input on the local tax rate: the city sets local tax rates through adoption of ordinances. Sedona adopted the three percent bed tax during the first year of its incorporation in 1988. Later,in 2013, the city held a number of discussions and public meetings to get citizen and council feedback about the possibility of making additional investments in destination marketing to help the community recover from the significant impacts of the Great Recession. That public conversation resulted in an increase of the bed tax rate from three percent to 3.5 percent.
How did the city determine how much of the tax would be given to the Chamber of Commerce?
The Sedona area hotel industry agreed to the tax increase, which could impact their businesses, as long as the city committed the proceeds of the tax to tourism management and promotion. As these discussions were taking place, the city investigated examples of how other communities manage tourism. At that time, the city’s investigation suggested that the average tourist community commits 60 percent or more of bed tax proceeds to tourism promotion.
In Sedona, the city ultimately agreed to dedicate 55 percent of total bed tax proceeds to that effort under the condition that the Chamber get city council approval of an annual work plan that outlines how the funds will be used. As an example, as the contract has grown, based on growth in tax revenues, the city has directed that monies spent on marketing remain relatively flat; instead, the chamber has received council approval to make new investments in improving Visitor Center operations and developing new ways to mitigate tourism impacts. The latter includes things like the Red Rock trail maintenance program, promoting walkability, and investing in transportation improvement projects, public transit, and more parking options.
How do the bed tax revenues flow, mechanically? Do the funds come directly to the city?
Bed taxes are paid as a component of sales taxes to the state of Arizona: the taxpayer pays the taxes to the state and the state then distributes the money to the city. The city distributes the funds to the Chamber.
Does the city have specific input into how the chamber expends the funds it receives under the contract?
The Chamber cannot spend any money until the city approves a chamber budget and work plan for the funds that are generated through the bed tax. These work plans must include measurable outcomes and the focus is expected to be on quality over quantity. In other words, the city council has directed the chamber to find ways to get visitors to spend more money in Sedona, rather than trying to generate more visitors. The Chamber was also directed to focus its promotional efforts on weekday and off-season tourism.
While the city can control this one element of tourism marketing, there are many factors that influence tourism, and many other promoters including marketing via social media sites such as Trip Advisor, and marketing by individuals who rent their homes to visitors through companies such as Airbnb, Tripping, HomeAway, VRBO and many others.
The city’s focus is on maintaining control of Sedona’s brand and influencing the type of tourist who visits, one who stays longer and spends more money, during the off-peak times of the year.