May 25, 2022

Months before the pandemic, local hotel leadership advocated for a change in the way the occupancy tax is allocated in Buncombe County, pursuing more funding for investment in community projects related to tourism and decreased funding for promoting Asheville and Buncombe County to visitors.

Those efforts continue and momentum is building to change the existing allocation of three-quarters of the occupancy tax to be used for tourism promotion and one-quarter for projects expected to increase visitation to the community, to a split of two-thirds/one-third. (That's the maximum allowable under state guidelines that govern more than 150 local occupancy tax legislations in North Carolina.)

At the Legislative Breakfast hosted by Asheville Area Chamber of Commerce on May 23, Sen. Chuck Edwards said "it looks good" that occupancy tax changes will move in the short legislative session now underway in Raleigh. In addition to advocacy by members of the Asheville Buncombe Hotel Association – a group chaired by Buncombe County Tourism Development Authority board member Michael Lusick – the Buncombe County Commissioners at their recent meeting approved a resolution supporting reform of the tax.

Taking into consideration potential legislative changes that, if introduced, will impact the allocation, Explore Asheville staff with assistance from the Buncombe County TDA Finance Committee, chaired by Highland Brewing Company President & CEO Leah Ashburn, prepared two budget scenarios for fiscal year 2023, presented at the May meeting of the BCTDA. We invite you to read more below.

The Buncombe County TDA has the fiduciary responsibility to ensure that occupancy tax dollars are spent in accordance with the specific legislation governing their use. Our goal is balancing this responsibility with the needs of local residents and guests to our community who are vital in sustaining economic stability. We value your continued partnership in these efforts.

APRIL LODGING OCCUPANCY

Hotel occupancy hit 75% in April, just surpassing occupancy for the same month in the benchmark year of 2019. Vacation rentals, while down three points from last year, were up 10 points from April 2019, still a healthy 68%. These numbers continue to reflect more balance between hotels and short-term rentals, providing opportunities to win for both local residents who operate hotels as well as residents who own partial or whole-home short-term rentals.

As previously reported, the growth in vacation rental occupancy tax collections is expected to be up $8 million from FY19 through the end of this fiscal year in June – that's sales growth of 180%. Growth in hotel occupancy is estimated to be up $3.4 million (sales growth of 17%). These are just two of the trends and statistics that the BCTDA Finance Committee considered in establishing a revenue objective and subsequent proposed budget for Fiscal Year 2023.

DOWNLOAD: Destination Performance Metrics >>

PROPOSED BUDGET FOR FISCAL YEAR 2023

As previously reported, the BCTDA Finance Committee, under the leadership of Chair Leah Ashburn and with help from Tourism Economics, undertook a comprehensive process earlier this year to project a revenue forecast of $40.8 million for the fiscal year starting July 1. This represents a 12% increase in revenue over FY22 projected revenue and takes into consideration a thorough review of trends, projections, key economic indicators, industry research, and a variety of scenarios.

The committee with Explore Asheville leadership then considered potential legislative changes that, if introduced, will impact the allocation from a split of three-quarters destination marketing/one-quarter investment in community projects to two-thirds/one-third – a change that local hotel leadership supports. Two proposed budget scenarios were then created:

FY 2023 BUDGET SCENARIOS
BASED ON STATE APPROVED ALLOCATION LEVELS

Just over half of the proposed operating budget will be directed to paid media partnerships based on our strategic imperatives and aligned with broader community priorities ($23 million under the existing allocation or $21.9 million if the allocation is changed), guided by the storytelling foundation developed by our agency of record, MMGY Global, with input from hundreds of conversations with local residents.

The TDA will vote to approve a final budget for FY23 at the June 29 meeting in compliance with state legislation in place at that time. Public comments are invited at that meeting, in person or virtually via the Zoom webinar platform. Review the budget ordinances here and find out how to participate in the public hearing.

The proposed FY23 budget is built on the BCTDA's strategic imperatives adopted last year that continue to inform and guide the direction of Explore Asheville’s program of work and community investments. This strategy and topline objectives for fiscal year 2023 were developed with insights from local stakeholders, partners and other community members – to date, Explore Asheville President & CEO Vic Isley has met with more than 300 individuals. MMGY's Stewart Colovin, whose team developed the foundation for telling stories about Asheville and its people, has met with 130.

Deliver Balanced Recovery & Sustainable Growth

Balance resident and visitor needs, recognizing the necessary role that sustainable, long-term growth of travel has in achieving a healthy, collective economy. Focus on the quality of each visit to our community – balancing growth across the seasons, business and leisure travel, and throughout Asheville and Buncombe County.

Topline Objectives:

• Balance quality of life for residents & experience for visitors through project investments
• Collaborate with broader community leaders to ensure sustainable growth & alignment
• Protect & evolve Asheville’s brand to further differentiate from competing destinations and inspire higher quality visits
• Improve quality of each visit by inspiring increased length of stay & dispersal
• Accelerate proactive sales efforts to increase net new business to the destination
• Drive revenue in need periods through updated group sales strategy
• Review & update wayfinding pedestrian signage to increase dispersal out of the downtown core

Encourage Safe & Responsible Travel

Engage residents and visitors with shared values to care for and respect natural, cultural and human resources vital in delivering quality guest experiences. Collaborate with community organizations, local businesses and environmentally focused partners to support the sustainability and growth of our outdoor economy.

Topline Objectives:

• Influence visitors to respect, protect & preserve natural, cultural & human resources
• Increase number of bookings that participate in community projects
• Identify, qualify & engage purpose-driven companies for purposes of holding meetings here
• Encourage partners to embrace sustainable & responsible tourism practices

Engage & Invite More Diverse Audiences

Extend a genuine invitation to Black (BIPOC) travelers and other diverse audiences including LGBTQ visitors – connecting them with local neighborhoods, businesses and entrepreneurs – creating more opportunities for all to win. Support product development, place making and community connections, enabling new experiences and business opportunities throughout our community.

Topline Objectives:

• Extend a genuine invitation to diverse audiences
• Develop & invest in community projects that attract & engage diverse audiences
• Increase outreach in recruiting diverse meetings & events
• Promote minority owned businesses through group sales initiatives
• Increase diversity of partner network

Promote & Support Asheville’s Creative Spirit

Share stories of creators and makers who help differentiate our destination through food and drink, visual and performing arts, experiences and more. Support product development, place making and community connections, enabling new experiences and business opportunities throughout our community.

Topline Objectives:

•  Elevate Asheville's creative experiences to differentiate & inspire visits
• Actively promote creative community & resources to groups & events
• Create opportunities for partners to learn about & support creative spirit

Run a Healthy & Effective Organization

Invest in people, policies and practices to serve our community with integrity within the organization’s legislative requirements.

Topline Objectives:

• Demonstrate organizational commitment to local, diverse creators, makers & vendors
• Increase team performance & effectiveness
• Prioritize professional development & training
• Increase diversity of candidate pool & employees
• Focus on events & communications strategy to increase community engagement

The benefits of visitors to our community are distributed across many business categories. While the lodging tax provides 100% of the marketing investment, local restaurants, shops, attractions, experience providers, entrepreneurs, outfitters, and breweries, wineries, distilleries and cideries generate significant revenue from visitors to support local employees.

This supports our local economy further, as food and beverage owners then purchase products from local farmers and purveyors, for example. And because more than 70% of Buncombe County’s hotels are owned by locals, there is far less leakage in our economy than in other destinations.

BENEFICIARIES OF TOURISM
$2.2 BILLION TOTAL VISITOR SPENDING (2019)

Buncombe County nonprofits and municipal partners are invited to submit applications to the Buncombe County TDA for grant support through the Tourism Product Development Fund. Phase I applications are due June 1; grant awards will be announced in late October, with $15 million expected to be available.

In the proposed budget for FY23, if legislation is introduced and passed to change the occupancy tax allocation as explained above from a split of three-quarters promotion/one-quarter product development to two-thirds/one-third, it is expected that an additional $10 - $13 million could be available for community projects.

The Tourism Product Development Fund is just one way the TDA invests in the community beyond marketing the destination. The proposed FY23 budget for Community Engagement is $300,000. In addition, the proposed budget for the earned revenue fund is $225,000, through which the BCTDA invests in community festivals, cultural events, and local sponsorships.

Find documents from the May 25 board meeting HERE >>

NEXT MONTH'S MEETING
Wednesday, June 29 | 9 a.m.–11 a.m.
Explore Asheville | 27 College Place | Asheville
Details to be posted HERE >>
Notice of Public Hearing on 2023 Budget Ordinance HERE >>

EXPLORE ASHEVILLE'S STRATEGIC IMPERATIVES
Deliver Balanced Recovery & Sustainable Growth | Encourage Safe & Responsible Travel |
Engage & Invite More Diverse Audiences | Promote & Support Asheville's Creative Spirit

Established by state law to administer the occupancy tax paid by overnight visitors according to the enabling legislation, the Buncombe County Tourism Development Authority is a public authority with a public purpose to enhance the economic vitality of Buncombe County. It is led by 11 local, appointed volunteers (two of whom are ex-officio members) who provide professional expertise to ensure the effective use of the tax to benefit our community and the people who live here. BCTDA meetings are open to the public.