By Marcy Stamper
A new state requirement that applicants for tourism-promotion grants tally the exact number of visitors spending the night has some in the tourism industry pulling out their hair and others welcoming the increased accountability.
As nonprofits across the county scramble to meet the application deadline for grants from the county’s hotel-motel tax – also called 2-percent money – many are finding it challenging to fulfill the new provisions of the state law, which was amended in June.
Nonprofits seeking the annual grants to promote events that attract tourists are used to providing receipts for advertising, but the law now requires precise data about the effectiveness of the groups’ advertising – and the number of people it brings to the county.
Grant applicants must estimate the number of visitors who have traveled more than 50 miles, how many spent the night in paid accommodations, and how many stayed elsewhere – such as with friends or in their own second home. At the end of the grant year, the groups are required to furnish actual numbers for these participants.
“The new regulations ask precisely how many stayed overnight – it’s an impossible thing to measure,” said Jane Hubrig, managing director of The Merc Playhouse in Twisp.
The precise numbers for people spending the night are not required until the 2015 grant year (for 2014 taxes), but the county’s Lodging Tax Advisory Committee (formerly the Tourism Advisory Board) is requesting the data this year to help organizations get used to collecting it, according to Laleña Johns, clerk of the board for the Okanogan County commissioners.
Nonprofits are also being asked to explain their methodology, said Johns.
The hotel-motel tax is a special sales tax on lodging of up to 2 percent that many jurisdictions – including Okanogan County – use to provide grants to promote tourism. In addition, some towns, such as Winthrop and Twisp, charge an extra 2 percent on lodging, which is also distributed in grants.
The grants are an important source of revenue for many nonprofits in the Methow Valley, which received $53,000 of the $95,000 awarded to 35 individual grantees by Okanogan County last year. The grants require a direct match by the recipients.
The grants go to organizations such as Methow Arts and The Merc, which use the money for radio, print and online advertisements about concerts and theater productions. Organizations such as Confluence Gallery also receive money to put toward advertising, even though they are generally not promoting specific events.
Heads in beds
Because the tax is levied on lodging, the goal of the grant program is commonly referred to as “putting heads in beds” – that is, to be funneled back into the lodging sector, even though visitors to the area also spend money in restaurants and stores.
Kristen Smith, marketing director for the Methow Valley Sport Trails Association (MVSTA) and for the Winthrop Chamber of Commerce, was assembling multiple copies of MVSTA’s 60-page application and supporting materials last week. The application is due next week. MVSTA is by far the largest grant recipient in the county, receiving more than $17,000 last year.
“We’re really lucky – we can make a good case,” said Smith. MVSTA has an extensive database with addresses of participants in two-day events that start early in the morning. The organization also keeps track of ski-pass sales. Last year MVSTA sold more than 16,000 multi-day passes, which indicates that people are spending the night, said Smith.
“Everyone in town is screaming – imagine you’re a gallery,” said Smith. But it’s valid to ask how the money is being used and to evaluate how it’s contributing to the county’s economy, she said.
The Merc distributes an audience survey in the summer that asks where people are from and if they are spending the night, but fewer than half complete it, said Hubrig. Of those, about 40 percent have come from outside the Methow Valley, she said.
The Merc also asks how people learned about a show. The Merc often advertises in newspapers in Wenatchee, Chelan and Leavenworth and is trying to track the efficacy of the ads, said Hubrig.
“A lot of organizations may not have a mechanism for capturing this information – it’s a bit like guesswork,” said Amanda Jackson Mott, executive director of Methow Arts.
Methow Arts gleans considerable information from online ticket sales, online surveys and social media, said Jackson Mott. When they sell tickets online, they can use the ZIP code to determine whether the person is likely to spend the night.
“People are pretty willing to participate – they like to be part of the community, so they fill out a survey,” said Jackson Mott.
Some data gathering is more informal and relies on small-town knowledge. Jackson Mott circulates in the audience and talks to people she doesn’t recognize. MVSTA can often identify participants who have second homes here, said Smith.
Many organizations applying for the tourism-promotion grants point to the mix of activities that attract tourists to the Methow. Hubrig explains in her application that productions at The Merc “enhance the whole visitor experience,” providing evening activities for people who come to the Methow to recreate. Similarly, MVSTA touts the arts.
“People aren’t going to come just to cross country ski – they only spend one to two hours on the trails,” said Smith.
How to keep count?
The Joint Legislative Audit and Review Committee, which collects and reports the information to the Legislature, has been fielding questions about how to obtain accurate visitor counts.
“Make a good-faith estimate – it’s the only advice we can give. We understand it’s a real challenge,” said Mark Fleming, research analyst for the committee. The group is developing an online reporting system to comply with the changes in the law, he said.
Although Jackson Mott acknowledged the difficulty of gathering the information, particularly for groups that don’t charge for events, she welcomed the change because it makes nonprofits more savvy and more accountable. “Having to track who we’re reaching is an important part of staying afloat,” she said.
Going through the process is also helpful in devising creative ways to boost the economy, said Jackson Mott. For example, Methow Arts and MVSTA are collaborating on a series of public art installations at trailhead kiosks that provide information about the artist and local arts organizations.
“The bottom line is, on a state and county level, everyone’s trying to figure out what’s the return on the investment to get this money. The rigor is good, but is it the best use of time for all nonprofits?” said MVSTA Executive Director James DeSalvo.
History of the tax
The lodging tax dates back to the construction of the Kingdome in Seattle and has been adapted over the years to finance tourism. In Okanogan County, this “first 2 percent” is split 60-40 between the grants to nonprofits and the Agri-Plex construction bond. An additional 2 percent lodging tax collected for the past 15 years by the county is divided 60-40 between the Okanogan County Tourism Council and MVSTA for trail maintenance (in addition to the grant money the group receives), according to Johns.
The overall allocation is set by the county commissioners, who also approve individual awards based on recommendations by the Lodging Tax Advisory Committee, said Johns. The board scores applications on a variety of criteria. Offering year-round activities – particularly in the shoulder season, when hotels are fairly empty – is worth extra points, according to Hubrig.
The county committee was reorganized as a five-member board earlier this year, down from13 members. The county is still looking to fill one spot on the board, according to Johns. Board members must represent a business that collects the tax, such as hotel or motel.