Hotel tax hike proposed to fund Philly’s tourism marketing

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In a city long billed as a historic destination, Philadelphia’s promotional funding has been hard-hit by recent budget battles.

Gov. Tom Corbett this fiscal year slashed state dollars to the Greater Philadelphia Marketing Tourism Corporation, the city’s principal short-stay advertising vehicle, by more than 98 percent. “We now have a different governor who doesn’t understand the value that for every $1 you spend on marketing, you get $100 spent by visitors,” Councilwoman Blondell Reynolds Brown said on Thursday. “And they come as a result of tourism.”

The city, for its part, suspended its $2.5 million in annual financial support to the GPTMC three years ago during the economic recession, though it is expected to restore about ten percent this year.

The GPTMC is now chiefly funded by proceeds from the city’s hotel tax, which Reynolds Brown has proposed increasing to help offset the losses in government dollars. “Philadelphia is to culture and tourism what Detroit is to the automobile industry,” she said. “It means jobs, paychecks and growth for our economy, so it behooves us to take whatever steps are necessary to keep our economic engine running at full speed.”

The GPTMC has so far been able to do more with less, focusing on its website, social media outreach and catchy campaign slogans. As its budget continued to drop precipitously, overnight visits to the region grew 66 percent between its creation 1997 and 2011 – six times faster than the national average.

But the tax increase – from 1.2 to 1.5 percent – would raise an additional $2 million each year, with half of that going to the GPTMC and half to the Philadelphia Convention and Visitors Bureau, its counterpart for international visitors and trade affiliations.

According to Reynolds Brown, the hike will only add 50 cents to the average overnight hotel stay. “More importantly, it equals 52,000 jobs – 88,000 for the region,” she said. “And all of those become at risk when we take away marketing dollars.” If passed, the bill will go into effect on July 1, 2013.

Support from the hotel lobby

The Greater Philadelphia Hotel Association, the city’s largest industry lobbying group, supports the measure.

“We’re trying to be proactive and we support our two marketing agencies,” Executive Director Ed Grose said. “We need to make sure that they have the financial resources to continue to market Philadelphia. They’ve both lost a lot of money over the past few years in grants from the state and we need to help them find other forms of funding.”

He said that he’s been seeing many other cities raise hotel tax rates to help creatively fund their tourism advertising, but at about 50 cents per overnight stay, he doesn’t see the financial impact harming Philly’s lodging industry. However, according to Grose, the solution is not all-encompassing.

“With both agencies, this will help, but they’ll still need to find other sources of funding to market our city,” he said.

By the numbers

$6.6 million in state funding was allocated to the GPTMC in 2007.

$128,700 in state funding was granted to the GPTMC this fiscal year, a decrease of more than 98 percent.

$8.2 million is expected to be generated for the GPTMC this year by the city’s hotel tax, absent the increase.

$2 million extra would be generated annually for the GPTMC and the Philadelphia Convention and Visitors Bureau by raising the city hotel tax to 1.5 percent.

50 cents on average, would be added to the price of each overnight stay in Philadelphia if the tax goes into effect.

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