PHED/GO Item 1
January 28,2013
Worksession
MEMORANDUM
January 24, 2013
TO:
Planning, Housing and Economic Development Committee
Government Operations and Fiscal Policy Committee
FROM:
'~iChael
Faden, Senior Legislative Attorney
Jacob Sesker, Senior Legislative Analyst
Worksession:
Bill 36-12, Taxation -
>:to
Use of Revenues
SUBJECT:
Hotel/Motel Tax
Expected attendee:
CVB Director Kelly Groff
BACKGROUND
The Conference and Visitors Bureau (CVB) is a §501(c)(6) non-profit organization. The CVB's
mission is to promote Montgomery County as a destination for visitors, including meetings and
conferences, conventions, group tour and leisure travel. Currently, at least 3.5% of the room
rental and transient tax revenue (hereafter "hotel/motel tax") must be used for the Conference
and Visitors Bureau. Bill 36-12 would amend County Code §52-16 to increase that amount to
7%. The Bill makes no other changes to §52-16 or any other provision oflaw.
Public hearing testimony
The Council held a public hearing on January 15, 2013. The following individuals testified in
support of Bill 36-12: Kelly Groff; Trish Heffelfinger; Vira Safai; Paul Warnquist; Bob Daley.
In testimony, speakers cited several justifications for the requested funding increase, including
the following:
• Staffing at the CVB has not kept pace with increases in (County-supported) cultural
attractions.
• Montgomery County is outspent by neighboring jurisdictions.
• The County must aggressively pursue market share in order not to lose market share to
Prince George's County or other jurisdictions with casinos.
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Staffing at the CVB has not kept pace with increases in (County-supported) cultural
attractions
In 1999, the CVB had a staff of 3 full-time and 2 part-time employees. In 2012, the CVB staff
consisted of 5 full-time employees. However, during that time the County has opened or
expanded several cultural attractions, including Strathmore, Fillmore, AFI Silver Theater, the
SoccerPlex, and the North Bethesda Conference Center.
Montgomery County is outspent by neighboring jurisdictions
Montgomery County spends less overall on the CVB than all neighboring jurisdictions except
Arlington County. Montgomery County also spends less per hotel room than all neighboring
jurisdictions except Arlington County.
-
CVB
Bud~et
Size per Hotel Room Inventory, by total
Bud~et
bud~et
i
MARKET
Destination DC
Fairfax County
Loudoun County
Alexandria City
Annapolis (AA County)
Frederick County
Prince George's County
Manassas (Prince WilliamCty)
Howard County
Montgomery County
Arlington County
Rooms
28,711
19,500
4,500
i
Per
Room
$597.33
' Staff
63
11
19
11
9
6
5
9
5
5
4.8
$17,150,000
$2,561,000
$2,526,029
$1,695,664
$1,305,727
$1,156,587
$1,086,504
$2,483,000 • 5,566
10,900
2,411
9,923
3,792
$131.33
$446.10 •
$561.34
$155.57
$541.57
$116.56
$286.53
$339.30
$104.70
$46.47
i
i
$1,017,900 • 3,000
9,500
$994,653
$500,000
10,759
Source: CVB
The County must aggressively pursue market share in order not to lose market share to Prince
George's County or other jurisdictions with casinos
With the opening of the Gaylord Hotel at National Harbor, total visitors to Prince George's
County increased by more than 36% from 2007 to 2008. Hotel/motel tax revenues in Prince
George's County increased by more than 75% from 2007 to 2008, and have continued to
increase at a more modest pace. Montgomery County could see a reduced share of the regional
market with the opening of a casino at National Harbor and the introduction of table games in
other nearby jurisdictions.
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ISSUES
1. Should the Council act on this Bill before the operating budget is reviewed?
A threshold question is whether the Committees should consider the Bill before looking at the
County Government and DED operating budget. One reason to do so is that time constraints
may limit the ability of Council Committees to consider legislation during the operating budget.
On the other hand, deciding now to dedicate additional revenue to the CVB, rather than
competing non-CVB uses, will limit the Council's flexibility in addressing other needs, in DED
or elsewhere. Council staff recommendation: Schedule the next worksession after transmittal
of the operating budgets.
2. What is the budget impact of increasing the CVB's minimum share of hotel/motel tax
revenue?
Under current law, at least 3.5% of the hotel/motel tax revenue must be used for the CVB. The
Council may appropriate more than that amount (e.g., an amount equal to 7% or 70%) in any
given year. Bill 36-12 would increase that minimum to 7%.
Actual hotel tax collections in FY12 were $18.1 million, and in recent years ranged from $17.3
million in FY09 to as high as $18.8 million in FYl1 (the year when the County hosted the U.S.
Open). Assuming hotel/motel tax revenue of$18 million, the Bill would increase CVB funding
from the hotel/motel tax by $630,000 each year. Put differently, this Bill would reduce
hotel/motel tax revenue available for the general fund by $630,000 if gross revenue from the tax
does not change. See fiscal and economic impact statement at ©4-8.
3. How much would hotel/motel tax revenue need to increase in order to offset the increase in
the CVB's share ofthe revenue?
If the hotel/motel tax needs to generate the same amount of revenue for non-CVB purposes as it
does today, then total hotel/motel tax revenues would need to increase by 3.8% (from
$18,000,000 to $18,677,419). At the current "average daily rate" this would require an increase
of 5,507 room nights over the course of a year. For perspective, currently about 6,200
Montgomery County hotel rooms are occupied on an average night. For analysis, see the table
below.
3
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A
B
1
2
I
i
3
4
5
6
7
Line
1
times
3.5%
Line
1
minus Line
2
C
Sta!!!~quo
(CVB receives 3.5%)
Average annual hotel/motel tax revtmue
CVB share
A vailable for non-CVB uses
D
$18,000,000
$630,000
$17,370,000
I
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Line
6
times
7.0%
Line
6
minus Line
7
Proposed alternative (CVB receives 7%)
Average annual hotel/motel ta:l( revenue
CVB share
A vailable for non-CVB uses
Analysis
. Difference or gap for non-CVB uses
Target available for non-CVB uses
"Break even" hotel/motel
tax
revenue
Required increase in hotel/motel tax revenue
Additional room nights necessary to break even
$18,000,000
$1,260,000
$16,740,000
I
Line
3
minus Line
7
Equals Line
3
Line
3
dhrided by
93%
Line
14
minus Line
1
Line
15
divided by Line
20
$630,000
$17,370,000
$18,677,419
$677,419
5,507
i
Line
20
times Line
21
Assumptions
Rooms
Average daily rate (A DR)
Occupancy rate
Revenue per available room (RevPAR2
9,532
$123.00
65%
$79.95
4. Is
7%
o/hotel/motel tax revenue the appropriate share/or the CVB?
The Bill would increase the eVB's share of hot
ell
motel tax revenue from 3.5% to 7%. As stated
above, to do so would increase the eVB's revenue by approximately $630,000. For each 0.5%
increment above 3.5% the eVB would receive approximately $90,000 in additional hotel/motel
tax revenue. Council staff recommendation: This number should be set during review of the
eVB operating budget.
5. How would the CVB use the additional/unding?
Additional funding would enable the eVB to increase its marketing capacity. In her testimony,
attached at ©9-14, eVB Director Kelly Groff said:
new funding allocation is approved, the additional funds
if
allocated would be
spent on furthering our business development of the meetings and group market through
sales positions with special emphasis on weekend occupancy, special projects like a
countywide calendar of events, re-branding, a grant pool to expand current event
marketing in an effort to increase attendance beyond the region like the Silver Spring
Jazz Festival or Gaithersburg Book Festival, and Heritage Days, bid fees for sporting
events, collateral material development and increased electronic advertising.
if
this
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If the Committees wish to act on this Bill before taking up the operating budget, the Committees
could still discuss the proposed additional expenditures at this time. One reason the Committees
might consider the proposed budget is that doing so could inform the Committees' consideration
of whether 7% is the appropriate number (see Issue 4). A second reason that the Committees
might consider the proposed budget is that the Committees may want to discuss, at a future
worksession, whether the proposed expenditures are likely to achieve any targeted increase in
hotel/motel tax revenues.
In response to Staffs inquiry, Ms. Groffprovided a summary of proposed expenditures.
Staffing Resources
-
$300,000
Business Development Representative
room night generator of group sales in
sports/group tour and other weekend market business. The CVB currently has one full
time position on staffin business development.
Director of Marketing and Communications
~
position responsible for generating more
free eaitorial coverage and manages paid advertising placement to increase Visibility of
Montgomery County as a tourist destination thereby increasing out-ol-town visitation
from the leisure markets.
Social Media and Digital Marketing Manager This is currently a part time initiative
that is outsourced. The CVB recommends a new foil time position be created in-house to
manage digital strategies. The traveler relies heavily on research ofdestinations through
the internet. In addition, according to etrack, eMarketer and Alexa.com,
57%
of all
travel reservations are made on the internet. Of this
65%
are made directly with the
brand and the balance with third party vendors (Expedia, Priceline, etc.)
Community Outreach and Partnerships Coordinator (part time) This is a new position
that would work on the Mobile Visitor Center project proposed, development of new
revenue sources for the CVB, and coordination of partnerships and cooperative
advertising and marketing initiatives with urban district offices, regional CVBs, county­
funded projects (AFI, Strathmore, Fillmore, etc), Arts
&
Entertainment Districts,
Heritage Tourism and the Arts and Humanities Council ofMontgomery County.
Special Projects:
(lst
year countywide calendar ofevents launch)
-
$75,000
The second year and ongoing, the funding would be allocated to: economic impact
studies, surveying of visitor spending habits/research, customer service surveys, funding
of specific new or existing special events, mobile applications, creating and marketing
themed promotions like Restaurant Week, and re-branding strategies.
Advertising/Sales Missions/Collateral Material Development
-
$130,000
The CVB currently manages a $450,000 print and electronic advertising program
annually. Of this $450,000, approximately $200,000 is provided from the Maryland
Office of Tourism. This grant is not consistent and varies year to year. The allocation is
based on the CVB 's expenditures in advertising and marketing, tourism tax revenues, and
percent changes in Maryland tourism-related sales tax revenues. This third category of
the grant program can be impacted significantly with the development of new casinos in
5
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Maryland and competing counties. The CVB is mandated to spend the $200,000 in print
advertising, research and trade show attendance. The CVB recommends additional
funding be appropriated for the following initiatives: sales mission in target markets;
sponsorship of meeting professional industry events; additional electronic advertising
placement; and, familiarization tours (bringing customers here to Montgomery County to
site tour the county, experience the culture/entertainment/dining, stay in our lodging
facilities with the goal that they bring their next meeting or event to Montgomery
County).
New collateral materials are needed for distribution within the community and for use as
fulfillment collateral in response to leisure and group tour inquiries. New collateral
includes: maps, printed calendar of events quarterly, community brochures by
areas/town centers, special interest literature (i.e. Silver Spring Urban District, Arts and
Entertainment Districts, Wheaton, specialized historical tourslcultural tours). The CVB
currently produces a Meeting Planner Guide and a Visitors Guide annually.
Grani Program
-
$100,000
Provide a grants program for organizations to apply for marketing funds to use for:
promoting and attracting more attendees to existing and newly launched events;
development of collateral materials and/or advertising of museums, historic sites, and
special tours/itinerarieslpackages that promote individual and/or mUltiple venues; sports
event bidding fees to bring more weekend overnight business; transportation fees or
other services and sponsorships that can assist in bringing more meetings business to
Montgomery County.
Mobile Visitor Center
-
$25,000
In 2010, the CVB closed its Visitor Information Center in Germantown at the UpCounty
Regional Services Center. The Center closed due to poor directional signage, no
allocated parking for visitors, lack of CVB funding for staffing and, less visitor center
visits. More internet research is completed by the new traveler thereby decreasing the
value of Interstate Centers. A Mobile Visitor Center will benefit the entire county
because it can be moved to different locations for major events. The costs associated
include the vehicle purchase and/or lease, graphics, maintenance, part time staffing,
insurance, etc.
This packet contains:
Bill 36-12
Legislative Request Report
Fiscal and Economic Impact Statement
Testimony:
Kelly Groff
Trish Heffelfinger
Vira Safai
Paul Warnquist
Bob Daley
F:\SeskerIWordIRoom Rental And Transient Tax\012813 PHED GOFP Bill 3612.Doc
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Bill No.
36~12
Concerning: Taxation - Hotel/Motel Tax
- Use of Revenues
Draft No. 1
Revised:
11-20~
12
Introduced:
November 27,2012
Expires:
May 27, 2014
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective:
July 1, 2013
Sunset Date:
~No=n.!.l::e,-----,,--
_ _ __
Ch, _ _. Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Councilmember Floreen, Council Vice-President Rice, Councilmember Berliner and Council
President Navarro
AN
ACT to:
(1)
(2)
increase the funding from the hotel/motel
tax
that is designated annually for the
Conference and Visitors Bureau; and
generally amend the provisions governing the use of revenue from the hotel/motel
tax.
By amending
Montgomery County Code
Chapter 52, Taxation
Section 52-16
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bili by amendment.
Existing law uncif.fected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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BILL No. 36-12
1
Sec.
1.
Section 52-16 is amended as follows
2
52-16.
Room rental and transient tax.
3
4
5
6
7
8
*
*
*
U)
At least
[3.5]
1%
of the revenue from the tax levied under this Section
must be used for the Conference and Visitors Bureau, Inc., as
designated by the Council in a budget resolution to promote travel to
the County. The County Executive must report to the Council on the
use of these funds by March 15 each year.
9
10
Sec.~.
Effective date.
This Act takes effect on July 1,2013.
Approved:
11
Nancy Navarro, President, County Council
12
Date
Approved:
13
Isiah Leggett, County Executive
14
Date
This is a correct copy ofCouncil action.
15
Linda M. Lauer, Clerk of the Council
Date
(3)
f:\law\bills\1236 taxation-hotel motel tax-use of revenue\biIl1.doc
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LEGISLATIVE REQUEST REPORT
Bil136-12
Hotel/Motel Tax
-
Use ofRevenues
Taxation
DESCRIPTION:
Increases from 3.5% to 7% the share of the revenue from the hotel
tax that is designated for the Conference and Visitors Bureau each
year.
Need for more funding to County programs to attract tourism.
To increase the level of funding for County programs to attract
tourism that are run by the Conference and Visitors Bureau.
Department of Economic Development, Department of
El..fl.ml£~.
To be requested.
To be requested.
To be requested.
To be researched.
Michael Faden, Senior Legislative Attorney, 240-777-7905
Hotel tax applies County-wide.
PROBLEM:
GOALS AND
OBJECTIVES:
C(j)ORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIEN CE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIP ALITIES:
PENALTIES:
Not applicable
F:\LAw\BILLS\1236 Taxation-Hotel Motel Tax-Use Of Revenue\LRRDoc
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ROCKVILLE, MARYLAND
071294
MEMORANDUM
\.. 1 1
January
14,2013
9?
TO:
FROM:
SUBJECT:
Nancy Navarro, President, County Council
Jennifer A. HUghe\.4ctor, Office ofManagement and Budget
Joseph F. Beach,
~~or,
Department
ofFin~nce ~
Council Bill 36-12, Taxation -- Hotel/Motel Tax - Use of Revenues
'-J
Please find attached the fiscal and economic impact statements for the above-referenced
legislation.
JAH:a2a
c: Kathleen Boucher, Assistant Chief Administrative Officer
Lisa Austin, Offices ofthe County Executive
Joy Nurmi, Special Assistant to the County Executive
Patrick Lacefield, Director, Public Information Office
Joseph F. Beach, Director, Department of Finance
Michael Coveyou, Department of Finance
David Platt, Department ofFinance
Steve Silverman, Director, Department of Economic Development
Peter Bang. Department of Economic Development
Helen Vallone, Office ofManagement and Budget
Ayo Apollon, Office ofManagement and Budget
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Fiscal Impact Statement
Council Bill 36-12 Taxation-HotellMotel Tax - Use of Revenues
1. Legislative Summary.
This Bill is to amend the County Code Chapter 52-16
G)
to increase the revenue from the
tax levied under this section that must be used for the Conference and Visitors Bureau,
Inc.; (CVB) from 3.5% to 7%.
2. An estimate of changes in County revenues and expenditures regardless ofwhether the
revenues or expenditures are assumed in the recommended or approved budget. Includes
source of information, assumptions, and methodologies used.
The past several years' actual HotellMotel tax revenues that were distributed to the CVB
at 3.5% ranged from $530,000 - $720,000. Based on doubling the distribution percentage
to the CVB, the additional revenues per year will be in the range of $530,000 - $720,000.
3. Reyenue and expenditure estimates covering at least the next 6 fiscal years.
It is expected that the increase in revenues and expenditure will enhance CVB
>
s
marketing programs and would lead to increases in the overall HotellMotel tax collected.
However, at this time, it is premature to estimate the increased revenue impact due to the
marketing effort by the CVB.
4. An actuarial analysis through the entire amortization period for each bill that would affect
retiree pension or group insurance costs.
Not applicable
5. Later actions that may affect future revenue and expenditures if the bill authorizes future
spending.
Refer to responses from questions 2 and 3.
6. An estimate of the staff time needed to implement the bill.
As eVB has its own staff, no additional County staff time will be required to implement
the bill.
7. An explanation of how the addition of new staff responsibilities would affect other duties.
Not applicable
8. An estimate of costs when an additional appropriation is needed.
Beginning in FY14, $530,000 to $720,000 in additional appropriations will be necessary
to comply with the bill.
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9. A description of any variable that could affect revenue and cost estimates.
Regardless of CVB' s marketing effort, the overall Hotel/Motel tax collected is a function
ofmacro economics where the consumer's disposable income and confidence in the
economy will dictate the
non~local
travels. To a smaller scale, there are business
travelers and group (meeting/sports) travelers that are more immune to adverse economic
conditions and consumer confidence. If CVB' s marketing pro gram can expand the
volume of business travelers lodging in the County's hotels and motels, it will either
stabilize or increase the revenue collected from the HotellMotel tax.
There is also ongoing litigation by the County to collect from the
"on~line
booking
companies" that acquire rooms wholesale, sell to individual travelers at retail, and yet fail
to pay the Hote1lMotel tax. If the County wins the lawsuit (which is likely, based on DC
Government's recent win on an identical type oflawsuit), the overall HotellMotel
tax
collected, and the distribution to CVB would be larger than the historical range.
However, whether the County can win the lawsuit, or what additional HotellMotel tax
can
b~
collected from the on-line booking companies is unknown at this time.
10. Ranges of revenue or expenditures that are uncertain or difficult to project.
Not applicable
11. If a bill is likely to have no fiscal impact, why that is the case.
Not applicable
12. Other fiscal impacts or comments.
None
13. The following contributed to and concurred with this analysis:
Peter Bang, Department of Economic Development
Date
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Economic Impact Statement
Council Bill
36-12
Taxation - HotellMotel Tax - Use of Revenues
Background:
This proposed legislation would increase from 35 percent to
7.0
percent the share of the
revenue from the hotel-motel tax that is designated for the Conference and Visitors
Bureau (CVB) each year.
1.
The sources of information, assumptions, and methodologies used.
The Department of Economic Development
Conference and Visitors Bureau
Smith Travel Research
Tourism Economics
Hotel-Motel Industry representatives
2. A
description of any variable that could affect the economic impact estimates.
The number of additional tourists (including individual and business related travel)
visiting Montgomery County attributed to Bill
36-12
3.
The Bill's positive or negative effect, if any on employment, spending. saving,
investment, incomes, and property values in the County.
According to data provided by CVB, tourists spent
$1.5
billion in Montgomery
County last year and that spending impacts various economic sectors such as
restaurant, retail, recreation, and transportation sectors. The breakdown of spending
by tourists to the County is:
25
percent on food and beverage,
22
percent on
transportation,
18
percent on lodging,
18
percent on retail, and
15
percent on
recreation. According to eVB, if the number of visitors increases by
2
percent the
first year, the amount of direct spending in the local economy would increase by
$30.1
million from the current
$1.5
billion. Utilizing a multiplier of
0.9,
the amount
of indirect spending would be an additional
$27.1
million for a total of
$57.2
million
to the local economy.
While it is clear that business travel and tourism are important to the local economy
and that increases to hotel room night rentals would be advantageous
to
the local
economy, it is not clear that increased funding for the CVB would result in a
statistically significant increase or that the magnitude of such an increase could be
quantified with any certainty. This is because the decision on individual and business
travel to Montgomery County is influenced by a variety of factors that may not be
impacted by the outreach and promotion efforts of the CVE. Additionally, recent
Page
10f2
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Ec~nomic
bnpact Statement
Council Bill 36-12
Taxation - Hote1!Motel Tax - Use of Revenues
federal government restrictions on employee travel and conference attendance may
also dampen demand even if funding for local marketing efforts is increased.
4.
If
a Bill is likely to have no economic
irnpa~t,
why is that the case?
Please see item #3.
5. .The following contributed to and concurred
with
this analysis: David Platt and Mike
Coveyou, Fmance
Date!
I
Page2of2
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7
Bill 36-12 Public Hearing
Tuesday, January 15, 2013
Kelly Groff, Conference and Visitors Bureau of Montgomery County, IVID
111 Rockville Pike, Suite 800, Rockville, MD, 20850, 240-777-2062
Testimony
Madame President and members of the County Council I am Kelly Groff the
Director of the Conference and Visitors Bureau of Montgomery County,
Maryland, known as the CVB. I am here today to testify on behalf of the CVB
and the hospitality industry in support of Bill 36-12.
The CVB is recognized by the State's Department of Business and Economic
Development Office as Montgomery County's only destination marketing
organization. This recognition is needed to qualify for participation in cooperative
marketing programs, research and to be a recipient of annual grants.
The CVB's mission is to promote, market and sell Montgomery County as a
destination for meetings, conventions, group tour and other leisure travel
fostering economic development and benefiting the supporting members of the
overall business community. It is also the CV8's goal to show leadership and be
regarded as a quality organization of experts and advocate of its industry
partnering with local, county, state and regional organizations and governments
officials in an effort to further the tourism industry.
The CVB is gUided and supported by a volunteer board of directors representing
leaders from different sectors of the hospitality industry. The CVB is a 501 C6
non-profit organization serving as a subcontractor of the Montgomery County
Department of Economic Development.
1
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Visitors are vital to the local economy and through the work of the CVB we help
provide the community with jobs and taxes. In 2011, Montgomery County's
seven (7) million visitors left behind $1.6 billion in spending on the local
economy. Top spending by the visitor is on dining followed by retail, lodging, and
recreation. The tourism industry employs nearly 30,000 people, with a direct
labor income impact of $695 million. Total tourism tax receipts for 2011 from
Federal, State, Local levels were $484 million. Montgomery County collects
more than $18 million in hotel taxes annually.
Each destination has its own unique personality and character traits.
Montgomery County's proximity to the nation's capital alone is our strongest
marketing fool. We are unique because we have multiple branded cities/urban
districts that can be marketed independently. We are also home to 19 federal
agencies which makes the County a bustling destination for meetings and
conferences and business travel. The County has great history which can be
found through tours of our Underground Railroad, African American historical
sites, C&O Canal, Glen Echo Park, Clara Barton House, Civil War Driving Trails
and our Heritage Areas. Not to mention our nearly 1,000 restaurants with
cultural flair, performing and visual arts offerings, arts and entertainment districts
and great shopping. We also have 10,000 hotel rooms and numerous meeting
facilities. All these amenities, allows the CVB to weave a story, brand the county
and develop and deliver effective messages about our destination to the buyers.
The CVB's current programming is in the area of sales, marketing and
advertising. We have 5 full time staff, just one more position than on staff in
1999. In the sales division, the CVB has one business development
representative sourcing leads, attending trade shows, handling site tours for
clients in all market segments.
We have a full time position assigned to fundraising in the hotel reservations
partnership with the Maryland SoccerPlex.
2
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We also have a full
time
administrator who assists our four staff members.
Myself and Bethany Mattocks, Marketing and Communications Manager, round
out the staff with development of partnerships with the Maryland Office of
Tourism, Maryland Office of Sports Marketing, Destination DC, Heritage
Montgomery, Arts and Entertainment Districts, Montgomery County Parks
Foundation, Silver Spring Civic Building, Arts and Humanities Council and
Capital Region USA to name a few. We also manage internally the placement of
a $450,000 electronic and print advertising campaign annually, handle web
development and maintenance, hotel packaging and marketing, community
outreach, membership development, overall strategic planning and special
projects like the US Open Championships held in 2011, and Inauguration in
2013.
Montgomery County was the host location of the 2011 US Open National
Championships at Congressional Country Club. This one event generated over
$300,000 directly in hotel taxes and a total economic impact of $140 million. This
7 day event created a great visitor experience and exposure of our community to
250,000 visitors. The CVB was the link from the tournament director to the
business community providing vital information in the days and months leading
up to the event. And the intangible benefit for a job well done is great word of
mouth advertising for attracting other events and return visits by those who
attended.
Our success is measured in the following manner:
-In the business development area, we measure return on investment through
the number of room nights directly resulting from the CVB sales efforts. For the
first six months of FY 2013, the CVB is nearly at its room night goal for the year
with six months remaining. This does not include the tracking of any room nights
that are not directly reported by the hotels back to the CVB.
3
®
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-In fundraising, we are measured through the revenues raised. In Fiscal Year
2012, we raised $436,000 between the $200,000 MD Tourism Grant program
and, membership dues, private sector revenues and hotel reservation service
rebates.
-In general advertising and marketing, success is measured in the number of
advertising inquiries. We sourced nearly 15,000 inquiries in Fiscal Year 2012
from print advertising. Total inquiries from the hotel reservation site, advertising,
and web was 16,700 in Fiscal Year 2012, up from 13,700 in Fiscal Year 2011.
The social media campaign, website visits and electronic advertising generated
253,000 website visits.
-Overall, the most direct measurement is the annual hotel tax collections, which
has brought in $71.5 million in just four (4) years.
The CVB as an organization hasn't grown at the same pace as the community.
Since 1999 numerous tourism-related projects have been added to the mix of
marketable product. The Maryland SoccerPlex, Silver Spring Redevelopment,
Bethesda North Marriott Hotel and Conference Center, American Film Institute
Silver Theatre, Music Center at Strathmore, Rockville Town Square, Silver
Spring Civic Building, the Fillmore and the Inter County Connector.
The CVB team works closely with the community. If this new funding allocation
is approved, the additional funds if allocated would be spent on furthering our
business development of the meetings and group market through sales positions
with special emphasis on weekend occupancy, special projects like a countywide
calendar of events, re-branding, a grant pool to expand current event marketing
in an effort to increase attendance beyond the region like the Silver Spring Jazz
Festival or Gaithersburg Book Festival, and Heritage Days, bid fees for sporting
events, collateral material development and increased electronic advertising.
4
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To illustrate the importance of the tourism industry, we saw the quick decline in
revenues after the September 11, 2001 terrorist attacks, where hotel tax
collections dropped $2 million in one year, the cancellations we received during
the Sniper Attack in the meetings industry, and, most recently the government
cutbacks that have impacted spending in the meetings arena.
We can't play catch up. The time is now. The competition is coming into the
marketplace, including the development of a new casino in our neighboring
county and the passage of table gaming at existing facilities in Maryland. In
Fiscal Year 2012, the combined jurisdictions of Howard, Baltimore, Annapolis
and Anne
~rundel
County carry 49% of the total tourism market share. We are
the seconded lowest funded CVB in the region. We need to be ahead of the
game. Please support this investment into a revenue generating agency by
approving Bill 36-12.
5
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Regional CVB Budget/Funding Analysis
Based on Fiscal Year 2012 Data
Destination DC
$17,150,000
$2,561,000
$2,483,000
28,711
19,500
5,566
_ _ _
+1.
~%
of 14.5%
6_3
11 I 12% of total collections
19
I
Of the five cents per dollar charged, two cents goes to the
county's General Fund and three cents is to be spent promoting
tourism, travel or business that generates tourism or travel in
loudoun County.
11
I
0%
I
~airfax
County, VA
Loudoun County, VA
Alexandria, VA
Annapolis
&
Anne Arundel
County, MD
$2,526,029
$1,695,664
4,500
10,900
9
1
7% of the hotel tax yield of the County's general fund. City of
Annapolis dedicates approximately 7% of hotel tax revenues to
the CVB.
rFrederick County, MD
!prince George's County, MD
,PrinCe William/Manassas, VA
Howard County, MD
Montgomery County, MD
Arlington, VA
$1,305,727
2,411
I
8*
5
5 f.t./4 p.t.
I
97.5% of total collections
0%
$1,156,587 .---9,923
$1,086,504
$1,017,900
$994,653
$500,000
1
I
I
3,792
3,000
9,500
60% of total tourism tax and 50% of that amount is split with
,
Historic Preservation
..
5 2/3 dedicated from 2% of the 7% collected
5
!
10,7591
'-----­
I
.
*Frederick County Manages the Heritage Areas Program with two
fuJI time employees assigned. Chart Updated: November, 2012
~
.
3.5% of total collected from 7% county tax, 4% of total
Gaithersburg Hotel Tax and 3.5% of Rockville Hotel Tax
4.8
!
.25% of the 5.25% was dedicated to the CVB but sunset
December, 2011. Arlington businesses will seek reinstatement
of the surcharge in 2013 VA General Assembly." The
reinstatement effort is being conducted by Arlington's
.hosPitality bUSinesses, as they are the voices the General
Assembly values most
@J
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Trish Heffelfinger
Bill 36-12 CVB Funding, Montgomery County
January 15, 2013 Hearing, 1:30pm
President and members of the County Council,
I
am Trish
Heffelfinger, Executive Director of
th~
Maryland SoccerPlex in Boyds, Maryland.
SoccerPlex celebrated its first decade of operation in 2010. The
SoccerPlex
~as
been a significant economic engine for Montgomery County and
Maryland.
It
is the largest and highest quality soccer complex on the east coast.
SoccerPlex is now welcoming 650,000 visitors annually. And,
approximately 50,000 of these visitors are from out of state.
players bring an entourage with them-mom, dad, brothers, sisters,
grandparents and friends. The groups stay in area hotels, eat in our restaurants
and shop in our stores. They are all visitors. They visit and go home. This
defines tourism.
estimate that on any given weekend, a family here for a youth sporting
event spends a minimum of $500. We are currently working on an economic
impact study in partnership with the CVB and George Washington University. The
findings will be presented this spring.
SoccerPlex has a partnership with the CVB. The CVB handles the hotel
reservations for the six largest youth soccer and lacrosse tournaments held
throughout tl1e year. Utilizing the CVB housing helps with managing a
"countywide" event so that the visitor has a good experience before and during
an event. The CVB processed in 2012 over 8,000 hotel reservations.
~
In
2012,
these top 6 youth soccer and lacrosse tournaments generated
~
The
~Madame
~
The
~
The
~
Team
~
We
15,000 room nights. Tournaments occupy 25% of all the hotel rooms in the
county over any given weekend.
1
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....The SoccerPlex is not the only facility generating hotel room nights and
economic impact. There are many other sporting events, including swimming,
diving, skating, and golf, that are held here in Montgomery County that
significantly benefit the local economy. A list of some of those events can be
found at the end of my testimony. Sports tourism is big business.
.... The Maryland SoccerPlex, CVB and the Maryland State Youth Soccer
Association will travel together this week to Indianapolis to bid on having
Montgomery County and the Maryland SoccerPlex as the host location for the
,2014
US Youth National Soccer Championships. This bid could not be pulled
together and presented or implemented without the support of a CVB. This one
event has an economic impact of $4 million in one week and is much needed
business during the slower months of the summer.
.... The CVB plays an intricate role in bringing events to Montgomery County. In
addition, they playa larger role in the months and days leading up to an event
with answering inquiries from visitors and connecting the event organizers with
the community .
....The CVB's role is invaluable in this community. The organization is funded at
levels well below our competitors. The staff resources are limited. Increasing
their funding is critical for our county to remain competitive as well as raising the
profile of our destination as a choice location for leisure tourist, group tourist,
sports tourists and meetings tourists .
.... Please support Bill
36-12
and our efforts as a community to grow the economic
impact of tourism on the local economy.
2
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Events Hosted in Montgomery County - Sports Market:
• .... Montgomery County hosted from 2008-2010 the AT&T National
Golf Tournament. Over 190,000 spectators attended over the six
day event.
• 2010, Montgomery County hosted the US Canoe/Kayak Slalom
National Championsl"lips, 200 athletes
• 2010, Montgomery County hosted the Constellation Energy Senior
Players Championship
.- 2010, The Speedo Championship Series Short Course Region II (The
South)
• 2010, Long Course Age Group Championship (swimming)
• 2011, Montgomery County hosted the US Open Championship
attracting over 200,000 spectators with an economic impact of over
$100 million.
• 2012, Adult Eastern Sectional Championships, Washington Figure
Skating Club
• 2012, Montgomery County hosted the first Hero Rush even in
Maryland at High Point Farm, 3,000 visitors.
• 2012, Montgomery County hosted the American Collegiate Hockey
Association D2 Showcase, 600 athletes
• 2012, ACC Championship Men's Semi-Finals and Finals scheduled
November 9 and November 11 at the Maryland SoccerPlex
• 2012, EI Salvador Olympic team vs University of Maryland
• 2012 ACC/Big East Men's Soccer Challenge
3
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f
Bill
36-12 CVB Funding, Montgomery County
January, 15,2013 Hearing, 1:30pm
Testimony:
Vira Safai
Comfort Inn Shady Grove
16216 Frederick Road, Gaithersburg, Maryland 20877
301-330-0023
.... Madame President and members of the County Council, my name is Vira Safai and I am one
of the partners and operator of the Comfort Inn Shady Grove Hotel. My partners, the Eisinger
and Kilbane Family built the property in 1986 and we currently have 39 associates on our
team. We also have a hotel management company that is headquartered in Montgomery
County and is responsible for operating hotels throughout the nation .
.... I am here today to testify in support of Bill 36-12 .
... Our property has won the Platinum Award and 15 Gold Awards from Choice Hotels
International, ranking us within the top 1% of all Choice Hotels worldwide. We have also won
the prestigious Top 1% Award from Expedia based on guest reviews rating the hundreds of
thousands of hotels worldwide and furthermore have received the Business Leadership Award
from the Gaithersburg-Germantown Chamber of Commerce .
.... Our hotel market structure is 40% corporate, 5% government and the remainder are Leisure
guests which are comprised of tour operators, sports groups and families .
... I have served as the Board President for the CVB and continue to remain an active member.
Their efforts continue to be invaluable to our community. They incorporate marketing and
sales initiatives that develop our economy through generating hotel taxes, state sales taxes, and
payroll tax revenues. In addition, visitor spending in the economy exceeds $1.5 billion
annually.
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"'The CVB has a very small staff, 5 employees, to market all of Montgomery County. Yet,
they efficiently utilize their resources and expertise to generate incremental new room nights,
better services for visitors, and coordinate between event organizers and the community. All
this provides for a great visitor experience.
"'Our
community has changed tremendously over the past 10-15 years. We have added one of
the largest soccer complexes in the country, opened a 2,000 seat concert hall, created arts and
entertainment districts and tmvn centers, and opened a large meeting facility, the Bethesda
North Conference Center. In addition, the hotel inventory has grown over 40%. Yet, the size
of our destination marketing organization has not grown at the same rate.
"'The approval of Bill 36-12 would provide new funding giving the CVB an opportunity to
hire more staff and increase the exposure of Montgomery County outside of the marketplace to
group tours, youth sports organizers, meeting planners and leisure tourists .
... I urge the Council to approve this modest request to fund the CVB with this slight increase
in their budget. Please keep in mind the CVB is a revenue generating body of Government; the
more we support them, the more revenues they will produce for our beautiful County and all
the industries they affect.
Please vote in support for Bill 36-12.
@
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)O
Bill 36-12 CVB Funding, Montgomery County
January,
is,
2013 Hearing, 1:30pm
Testimony:
Paul Warnquist, Adventure Park at Sandy Spring
16701 Norwood Road, Sandy Spring, MD 20860
(240) 389-4386
paulwarnquist@sandyspringadventurepark.org
www.sandyspringadventurepark.org
III-
Members of the Montgomery County Council. Good afternoon, my name is Paul Warnquist and I am
the director at The Adventure Park at Sandy Spring Friends School. The Adventure Park features over 30
zip lines and 13 separate courses and is currently the largest aerial forest adventure park in all of North
America. We are located on Sandy Spring Friends School land just off Norwood Road.
111-1
am here today to testify in support of Bill 36-12.
The Adventure Park is located on 6 acres of Quaker property and also borders the The Maryland
National Capital Park and Planning Commission's, Montgomery County Woodlawn Manor Underground
Railroad Site.
The Adventure Park at Sandy Spring Friends School was founded in 2010 and welcomed our first guests
in July of that year. The Park is a classified as a Small business and employs 8 full time employees and
over 40 part time employees. We collect 7% Amusement Tax from all our guests and we send those
funds to the Comptroller of Maryland.
III-
When the Adventure Park first opened in 2010, we had 10 courses that were constructed in the
trees. Today, we have 13 courses that offer various degrees of difficulty and our reputation for providing
a safe outdoor experience is growing. Early data shows that The Adventure Park will experience
tremendous growth in 2013. Our current customer inquiries have increased 4 fold over the same period
last year and we anticipate that in less than 2 weeks our Summer Camp allotment will be sold out. The
Adventure Park's has recently partnered with the Montgomery County Department of Parks to create a
new program for 2013. The new Full Day Experiential Program will combine an Underground Railroad
Experience Trail Hike and an afternoon of climbing and zip-lining in the trees at The Adventure Park. The
CVB was instrumental in helping come up with the idea for the new program and as of today, there are
already 24 tour groups that have embraced the new program and reserved their 2013 slots.
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The Adventure Park welcomed over 55,000 visitors in 2012 and we are projecting over 70,000 visitors in
2013 .
.... Our
customers range from Girl Scout Troops to Swat Teams and they come from Montgomery County
and as far away as Mexico City (we hosted 5 school visits from Mexico City this past Spring) and the
same group from Mexico has already booked 4 visits for 2013. The Park hosts many weekly corporate
team building events, family outing, reunions, birthday parties, and school visits. Our Night Climbing
events have become a big hit and we have added two overnight campsites that will allow Boy Scouts
and Girl Scouts the opportunity to sleep under the stars and climb in the trees. Our tented area (seats
120 guests) has also added to our offering and allowed us to host over 100 separate parties in 2012.
Although we host many group outings, our General Admission Guests account for over 60% of our total
guest count .
.... Our marketing budget is limited and our focus is on creating a safe, fun experience for our customers.
The incremental exposure provided in advertising and marketing efforts by the CVB brings new business
to our attraction and to all County attractions. Montgomery County has many hidden jewels from
heritage areas to Civil War trails, mule drawn barge rides on the C&O Canal, wine tasting at an award­
winning vineyard and exciting arts and entertainment offerings .
.... The CVB has been an integral partner in promoting our unique attraction to tourists that are both
local and throughout the Mid-Atlantic. We are a member of the CVB and the assistance they provide to
a small business like The Adventure Park is invaluable. We are fortunate to receive many bookings from
bus and tour groups from all over the country and many of those leads that were converted to
reservations were initiated by the CVB. The CVB attends several of bus and tour group trade shows per
year representing Montgomery County and all of its tourism attractions. Many Montgomery County
based tourist attractions including the Adventure Park do not have the means to be represented
individually at these trade shows and having the CVB attend as many of these meetings as possible helps
generate tourism dollars spent in Montgomery County .
.... The visitors choice in the marketplace is intensely competitive. The CVB has helped us grow and think
outside of the box by providing industry insights and recommendations. Since we are located on Quaker
land and next to the Woodlawn Manor, they recommended that we incorporate Quaker history, the
Underground Railroad Tour, and an Adventure Park experience into one complete program and market
the program to the student tour market. We created a new program based on their recommendation
and the new program was very well received in the market place. We now have an Adventurous­
Educational Full Day Program which is a unique experience unlike anything offered in the market. In less
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than one month, twenty four student groups have taken advantage of the new offering and already
reserved their 2013 visit .
.. The CVB is Montgomery County's only destination marketing organization. They tie together all
entities in the hospitality industry and charge forward as a unified voice to market the destination. A
permanent increase in their funding would allow the CVB to hire more staff and create more programs
to further promote all of the wonderful things Montgomery County has to offer.
In closing, I am confident that the Montgomery County tourism industry and many Montgomery County
businesses would benefit if additional funding were provided to the CVB with the passing of Bill 36-12.
Personally, I feel it would be great for the Montgomery County Tourism industry if the CVB could attend
more trade shows throughout the country and have access to more funds so they could advertise the
Counties many attractions. I would like to express my gratitude to the CVB for all they have done for the
Adventure Park and the Sandy Spring Friends School. The CVB is a great organization to partner with and
I am very happy to be a CVB member.
Please vote in support for Bill 36-12.
Thank you,
Pa ul Warnquist, Director of Sales
The Adventure Park at Sandy Spring Friends School
(240) 389-4386
paulwarnquist@sandyspringadventurepark.org
www.sandyspringadventurepark.org
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THE lINDERGROUr-;D RAILROAD
EXPERIEI\iCE
TRAIL HIh:E:
Planning your next School Field Trip?
Tlte At/ventllre Park and M
-NCPPC
Mon
tgomery Parks invite
yOll
to
Guided
hikes
are
provided
by
talen<ed
"conductors"
who
lead groups on a
si
mulated
Underground
Railroad
experience covering
2.0
miles from \Voodlawn
Manor
Cuhural
Park along a
wooded,
natural surface
'rail to the historic
Sandy
Spring,
then
back
to the
par k
Book A Full Day of Experiential Learning
in the Montgomery County / DC Area!
Spend your
morning on
an
Underground
Railroad Experience Trail Hike.
Then swing next door for an afternoon of climbing
and
zip-lining in the trees
at
The
Adventure
Park
at Sandy Spring!
Hikers
learn
about
various
techniques
that
freedom
seei<ers used to
elude trackers.
find
fOOd.
and
navigate
their way North
to
freedom.
Montgomery
Parks' Underground
Railroad
Experience Trail
is part
of
the
Narion.1
Underground Railroad
Nerwork
to
Freedom
program.
l..
.
t
-
~
~
('~~
~
.
.
f;;'.
~
~
Two
unique
experiences
in one ticket-
Enjoy
a
full day
of active
learning,
and
leave
the
planning to us!
THE AD\'ENTCR
E
PAR
K
AT SANDY
SPRIi\G:
Climb.
swing, and zip
from tree to
tree across a wide
variety
of bridges, obstacles
and
zip
lines, building
confidence.
self
--esteem,
and promoting
teamwork!
With
J3
differentlTails
for
ALL
SKILL
LEVELS
and
ages
ranging from beginner
to advance.
we are
the
largest
aerial
park in
North
Amel'ica~
ADVENTUROUS AND
SAFE! \\·e
use
the
sa
fest, most
advDnced
climbing
sys
tem in the world.
ensuring all skill
levels
are
able
to
ascend
into the tre
es
with
confidence.
Trips available Monday-Friday. Call to book today!
General Group Pricing:
(Price includes lunch and drinks)
• 50+ - $43.00 per person
• 25-49-
$45.00
per person
• 15-24- $47.00 per person
t"
MCPS please calf for
in-county
rates
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7
Montgomery County Council
100 Maryland Avenue
Rockville MD 20850
RE: Bill 36-12
Dear Council Members,
My name is Bob Daley and I am the Senior General Manager for Marriott Hotels in
Montgomery County. I am also in favor of Bill 36-12 for many reasons. I'd like to share
some of these reasons with you.
As recent economic times have been difficult we have had to lower rates to keep
occupancy up. The result is a much smaller margin, which results in reduced jobs and
hours fOLthe employees.
The Occupancy Tax will generate over $18 million for the County this year, and the
hotels will experience a cost of approximately $360,000 to process these tax revenues
through the credit card companies.
Montgomery County hotels are 6% more expensive to the consumer in order to provide
this revenue to the County. I believe we are the only industry that contributes
to
the
General Fund at this level. This request is merely to provide more funding for the
Conference and Visitors Bureau or CVB to benefit the industry that is producing these
revenues.
As cost conscious travelers and groups are now looking at a much wider range of options
due to lower occupancies, it is more important now than ever before to stay visible to the
consumer.
All hotels have been struggling for more occupancy and many of the hotels in
Montgomery County are smaller facilities with no site-specific sales or marketing
presence. They rely heavily on the CVB to distinguish themselves and our County from
the others that are vying for business that comes into the area.
To simplify things, when the demand is high the rates go up. When the rates go up, the
tax revenues increase. When demand is soft rates go down. When rates go down the tax
revenues decrease. There are lots of other issues but that's basically it, we need the CVB
to assist in creating demand.
The request to increase the funding of our CVB, is an investment in our future Growth.
To not stay competitive would be a shame. To not have the ability to be strategic is even
a greater concern. The more people that get to see our great community the more demand
there will be for new residents, new businesses and so on.
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An expanded CVB effort for our community will put us in a position to compete with
other communities in the area. The District of Columbia is the destination for over 15
million visitors a year, and the District funds their CVB at over $14 million a year.
If
the
visitors can't afford, or find accommodations in the District they look to the surrounding
area.
Currently the surrounding communities' budgets for attracting visitors look like this.
Alexandria - $2.5 Million
Arlington - $1.4 Million
Fairfax - $2.9 Million
Frederick - $1.5 Million
Prince George's $1.3 Million
Prince William -
$
1.3 Million
Montgomery County -
$
882,500
In
our industry we recognize that groups, both large and small, typically rely on a single
person to make their visit or event a success. That one person will deal with, and rely on,
someplace they have a relationship with. I would submit that although they are great at
what they do and have our best interests at heart, with a staff of only 5 people, the CVB
can't really seek out the best potential business for Montgomery County and establish a
relationship with them.
Thank you for your time and consideration.