County Commission President Connie Hudson was told last week most of Mobile’s hotel community wasn’t interested in another lodging tax increase to fund a 10-field soccer complex, and some in the Mobile Area Lodging Association (MALA) say that’s partially due to issues that arose well before the current administration took office.
According to Chuck Cuff, a former president of MALA, a 2 percent county tax on lodging added in 2001 was the idea of the lodging association. However, some hoteliers today say the funding isn’t currently being used as it was originally intended and instead is helping fund specific events and organizations instead of promoting general tourism and conventions.
The marketing fund, as it was formerly referred to, is something Cuff said a group of hotel managers started working on in 1998 to help fund tourism marketing.
“We canvassed every hotel, everyone that we had in the association and hotels that were not in the association were in favor of it, as long as it was used for those things,” Cuff said. “We were expecting around $1.2 million. The marketing fund would end up being capped at $1 million with the rest going to the county, which was fine.”
Cuff said about half the money was used to promote tourism, and the other half was used to promote conventions at hotels. He also said the money was managed by a committee that included representatives from hotels in the downtown area, those along Interstate 65 and those in the more rural parts of the county.
According to an archived report from the Press-Register, the county first started sending “a large share of its (lodging) tax receipts to the Mobile Bay Convention and Visitors Bureau in 2007.” The report said the bureau then created a six-member committee to make recommendations for spending the money that included three hotel operators, someone from a local tourist attraction and representatives from the county and the MBCVB.
However, Cuff claims a committee was overseeing the spending from the marketing fund before he left the industry in 2003, one that wasn’t set up to pass money through to the MBCVB. According previous reports, county commissioners entertained the idea of cutting $1 million from MBCVB in 2007 after some hotel operators complained about how the money was being allotted. However, those discussions didn’t yield a change in policy at the time.
“(The marketing fund) was set up not just to give money to [the convention bureau], but to give events to the hotels, and that’s what we had a criteria for,” Cuff said. “We didn’t just give money to anybody that approached us, it had to benefit at least three hotels and guarantee X amount of room nights and so on.”
After the county agreed to the lodging tax increase, the city of Mobile added a 2 percent increase of its own to help fund, among other things, the construction of the University of South Alabama Mitchell Cancer Institute in 2005. Together, the two increases brought the lodging tax in the city up to 14 percent, where it remains today.
Cuff said when he left the industry in 2003, the committee was still controlling all of the marketing funding that was generated from the 2 percent tax, but According to Cuff, when he returned to the business in 2008 the funding was “in disarray.”
Around the same time, marketing funding to the MBCVB was entirely eliminated for a period of two years, which reports show was the result of discrepancies between the lodging association, the MBCVB, the county and the city of Mobile.
Current MALA president Kent Blackinton said over time the committee stopped meeting to determine how the marketing fund would be spent, and membership in the MALA slowly died off.
“The committee just started breaking down,” Blackinton said. “This was at a time when there were only two county commissioners, and when it came time to renew the contract with MBCVB at one point, there was not two votes. We worked very hard to try and restore the marketing fund, which we did in 2010, but with very different funding levels.”
Since then, Blackinton said the MALA’s membership has grown significantly, but the county started disseminating its lodging tax revenue to multiple organizations and events. Those include the MBCVB, the Mobile Sports Authority (MSA), the Reese’s Senior Bowl, the GoDaddy.com Bowl, the Mobile Arts Council, the GulfQuest Maritime Museum and others to the tune of about $1.8 million in 2014. A lot of the same events and organizations receive funding through the city of Mobile as well — though many of those “performance contracts” were cut or discontinued in Mayor Sandy Stimpson’s proposed 2015 budget.
It’s been previously reported that the 2 percent county lodging tax yielded roughly $2.3 million in 2014.
Of that, $280,000 went to the MBCVB, and almost $600,000 went to the Mobile Sports Authority through contracts with the county — contracts that according to MSA Director Danny Corte have indeed helped generate significant tourism for area. Corte said the sports authority receives $150,000 for operations and $265,000 for bidding on events annually from the lodging tax. Another $180,000 is passed through MSA to the Mobile Tennis Association.
Corte said sports tourism is the fastest growing form of tourism in the Mobile area, and according to data collected by the MSA, 37 sporting events generated an estimated $62 million in economic impact in Mobile County last year alone.
Despite the MSA’s purported success, some hoteliers are still concerned about the way the plan to disseminate the tax changed overtime.
Blackinton told Lagniappe earlier that only about 12 percent of the tax makes its way to marketing lodging establishments, which is far from the 85 percent he claims hotels in the area used to benefit from. However, county officals weren’t able to identify any documentation that guranteed that figure exclusively to hotel marketing.
Despite the lack of a written agreement, Cuff said the current way the funding is spent is in conflict with what hoteliers had in mind when they first discussed adding a tax to their own industry in 2000.
“The marketing fund committee probably wouldn’t have approved funding a sports event at that point,” Cuff said. “We were promoting the county as a whole for tourism and conventions. We weren’t sponsoring events. We weren’t sponsoring organizations. That was never the original intent of the marketing fund.”
Cuff said, at the time, the hotels’ move to self-tax was unprecedented and took a lot of groundwork from managers. He also said it was a system that worked well for a number of years.
“It was an idea by the hoteliers that was put in place and worked,” Blackinton said. “But, the way it’s being spent now, is just not what the original intent was.”