A Deep Dive into Travel Improvement Districts, with Tiffany Gallagher

Episode 111

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Tiffany Gallagher is eastern USA branch manager for Civitas, where she helps clients form and manage Tourism Improvement Districts. Throughout her career, she has shown a strong commitment to the tourism and business communities. Most recently she served as the President of the Greater Syracuse Hospitality and Tourism Association and currently serves on the New York State Hospitality and Tourism Board of Directors. Relevant experience also includes; serving on the Board of Directors of Destination Marketing Organizations, Strategic Planning Councils, and Business Improvement Districts. On this episode of Destination on the Left, I talk with Tiffany about how Tourism Improvement Districts (TIDs) can create a public/private partnership that brings huge benefits to a travel region. These can be formed around hotel accommodations, wineries, breweries or ski resorts. TIDs create a stable funding stream and puts decision-making in the hands of industry leaders in the region.

What You Will Learn:

  • The role that Tourism Improvement Districts (TIDs) play in building a destination’s competitive advantage
  • How TIDs are getting more traction in the eastern United States
  • How to set up a TID as a legal entity
  • Why TIDs are a benefit to both the public and private sector in the district
  • The crucial role of relationships in DMOs, local government, and industry in a successful TID partnership
  • How to gather the general data needed and the buy-in to form a TID in your area
  • How a TID establishes a stable funding stream to market your region as a unique travel destination
  • Why there are no size requirements for establishing a TID – from one hotel to major cities
  • How TIDs can form around any travel-related industry (wine, brewery, skiing, etc.) that agrees to form one

When and Why to Form a TID

TIDs are an exciting concept that has been a big factor on the west coast of the US and are slowly growing in popularity across the eastern US. What makes a TID such an attractive idea? The power, Tiffany tells us, is that this funding mechanism is championed by the industry. It is also managed and spent by the industry. TIDs are a stable form of marketing funding that hotels or other travel categories in a region can use until it doesn’t make sense anymore. If the payers are not benefitting, they can disband the TID.

How to Form a TID

A Tourism Improvement District is a legal entity. Tiffany has formed organizations as small as one hotel and as large as all the hotels in a mid-sized city. Relationships are key, as this is essentially a public/private partnership between local governments and the industry players in a given region.


Nicole Mahoney: 00:18 This is Nicole Mahoney, host of destination. On the left. I am passionate about travel and tourism and love learning from the experiences of professionals in the industry. That is why I am so excited to introduce today’s guest. Tiffany Gallagher from sevetus tests is the nation’s leading firm and tourism improvement district. They are the expert in all aspects of t I d creation, adopting, enabling legislation, building support among tourism businesses, Andy electeds, and guiding the formation process throughout her career. Tiffany has shown strong commitment to the tourism and business communities. Most recently she served as the president of the Greater Syracuse Hospitality and Tourism Association, and currently serves on the New York state hospitality and Tourism Board of directors. Additional relevant experience includes serving on the board of directors of destination marketing organizations, strategic planning councils, and business improvement districts. Thank you for joining me. Tiffany.

Tiffany Gallagher: 01:17 Pleasure.

Nicole Mahoney: 01:18 Um, I’m looking forward to talking with you and actually learning about this topic. I know it’s definitely been a topic and a lot of the circles that I’m involved in and I’m really interested in diving deep. Um, but before we get started, I’m hoping that you can just share a little bit more about your background and your story and your journey with our listeners.

Tiffany Gallagher: 01:41 Happy to. I began my journey in tourism when I was in high school. I was a housekeeper at a local hotel and I did that through high school and some point I was asked to be a front desk agent. So I did that for awhile. I went to college for a bit and during that time I was a night auditor, the overnight shift at the hotel. And from there I projected through all departments really at the hotel level. I was a purchasing manager for a large hotel locally in New York. Stayed stated that hotel and was able, it was fortunate enough to be promoted and promoted through a number of shops. They’re catering director for pretty large facility, a director of sales and marketing, front office manager, etc. Finally I was the assistant, a general manager and

Tiffany Gallagher: 02:44 I was coached and taught by a veteran who every day and then from there I, I didn’t have a path within that hotel to continue my growth. So I took a job heart hotels, which a well known hotel company in New York state and I was general manager oF the holiday inn in New York where I was able to really begIn my civic work. I was vice president of special events for the downtown business improvement district. I was on the strategic planning board, which is an alliance of industry members in tompkins county, um, that helps facilitate the bed tax fund and the spend on that. I was engaged in a local, a dispute, if you will. There was some need for some support of some local government entities and request from the government to divert some of our bed tax funds. And uh, I was asked to, to really champion that effort having to hotels.

Tiffany Gallagher: 03:55 and I did, gave me great experience. And from there, uh, I accepted a job back in syracuse working as general manager of the holiday inn circus liverpool’s staybridge suites, circus liverpool large facility for 25 rooms, a 40,000 square feet, 45,000 square feet of meeting space. Um, and from there I was moved to the crowne plaza, that really cool round hotel downtown syracuse. And I did that for a short period of time before I was recruited by sevetus and syracuse. I feel comfortable talking about this now because they’re, they’re kind of down the line and their tourism. Permanent district formation process. And I know daniel, the president would be comfortable with me talking about this, but a couple of years ago when we started thinking about a kid in syracuse, I was a crown plaza general manager. And then there was also on the board of directors of the syracuse, um, and has been named the president of the hotel association for syracuse.

Tiffany Gallagher: 04:55 And syracuse has a not so unique situation where the demand is flat. Supply was growing and the hotels were, were their occupancy. I’m just by nature of that formula was declining. Hotels began to, um, put a lot of pressure on the bureau, the travel tourism bureau, and we collectively got together looking for solutions. David holder was the president of, was in syracuse at the time, some really great longterm hoteliers and I got together and tried to brainstorm ideas. David holder a, attended a dei destinations international conference where she met the president of our firms on lambeth and was introduced to the concepts of [inaudible]. He brought that back to us and gave us a little overview of that and said, what do you think and what do you think the hotels would be open to something like this? and, uh, we decided that it was worthwhile to bring John Lamb without syracuse to educate the board of visitors are accused of augusta, greater searches, hospitality, tourism association on this concept.

Tiffany Gallagher: 06:05 So we did that and we spent some time together and shortly thereafter john called me and asked me If I would work for him. There was a need. There is a need for the development of this concept on the side of the country. A t ideas have present and active on the west coast for 20 plus years. John was the author of the legislation in California to authorize the legally authorized the formation of tid. Uh, and sInce then there has been a 107 tourism improvement district in the state of California alone as time goes on and, and people move and change and shift to the east coast in general, managers move to the east coast and all the way through there has been, um, the awareness of this concept to our side of the country which has change the demand for and really created a need for somebody to champion that effort on the side of the country. And here I am

Nicole Mahoney: 07:09 and it was such a straight path to. I appreciate you really taking us down that road because, um, first of all, I always love to hear my guests talk about where they started in and to hear you talk about, you know, that high school job as a housekeeper in a hotel. And kind of how that got you into the hospitality industry. And then where you went from there I think is really helpful, uh, for our listeners too to hear and to understand. Um, but I also find it so interesting that through your career journey, you were involved in many different ways in terms of how tourism was impacting the communities, where you worked from, you know, the, the experience you had that you shared to your experienced, you know, later in syracuse and how that kind of evolved into this exploration of a tourism tourism bid or a tourism improvement district for syracuse, which eventually led to you getting an offer to work for that company.

Nicole Mahoney: 08:14 So, um, I just think that that brings so much good perspective to our conversation and know we’re going to learn a lot from you. So I appreciate you taking us down that path. The other thing, tiffany, that, that I’m, I’m really interested in. I think we’ll get more into this as we go through this interview, is talking about your experience in syracuse in particular, especially because you’re an insider there. At least that’s what I, you know, how I perceive you to be as an insider having kind of grown up in the industry there. Um, but that ability for you to kind of share that story and so other listeners I’m sure can relate to this whole idea of demand, you know, demand is being flat, supply growing, you know, occupancy’s declining and these, the pressure that happens, you know, going back from the industry back to the cvb and how all that comes together to find these solutions.

Nicole Mahoney: 09:11 So, um, I, I love that you’ve started us down that path talking about syracuse and that you’re able to use that in our conversation. And I’m, so that’s gonna lead me to my first question, which for, you know, regular listeners of this podcast, they know that we like to focus on creativity and collaboration. I think everything we’re going to talk about here requireS both. Um, and I’d like to start with, you know, thinking about the tourism and hospitality industry and how competitive it is a, as we just said, you know, supply is growing, new hotels are popping up all over New York state. And that, and I know all over the country and so I often ask my guests to elaborate on creative ways that, you know, destinations are really standing out from the crowd, but instead where they’d like to ask you is to hear more about how, you know, this solution of a tourism improvement district can really help those destinations with a competitive advantage. So can you talk to us a little bit more about kind of how that works and how that really sets up a destination for success?

Tiffany Gallagher: 10:19 Sure, of course. So we should give some background information for those listeners who are unfamiliar with. Although I feel like we are doing a good job of educating most of the country on this concept. I still encounter everyday folk who are unfamiliar with the concept. The concept, and I’m glad you, you said it the way you did a tourism bit. I often explaiN it as it is a business improvement district did for hotels. So in a general sense in generally a bid is a district is a group of businesses of all different types that gets together in one geographical area. Usually that’s the downtown or a high demand retail

Tiffany Gallagher: 11:01 restaurant area. Those businesses get together because theY need supplemental services, so they have a baseline services that are delivered by the local government typically in terms of police presence and garbage pickup and beautification, etc. But those businesses decide that they need more, uh, in order to be successful. So they pool their resources, they self assess themselves, they pull their resources and create a fundIng stream to, uh, generate more fun so that they can go above and beyond that baseline. So at tourism, bit as the same thing for hosts, but for hotels, so tourism bid, and it can also be, by the way, for any like industries. So this concept of applies to not just the hotel industry but also to a wind districts. We have wind districts, brewery districts, gulf districts, districts that are all using the same concept. So for an industry, same same concept where the business operators get together and decide, uh, through an assessment of which is typically a pass through to the traveler by a line item on the room folio, that then those monies have been funneled back to a district, uh, so not directly to the dmo, to a district which is set up upon the legal formation.

Tiffany Gallagher: 12:18 That district is managed by a typically by a board of directors, a of folks that are stakeHolders, business owners and have a vested interest in the bennett or the benefits and the overall production of this district. Often times in a bid, you typIcally have an organization that is formed upoN the formation process because there is no entity that can execute, okay. These funds, because the government usually does that. In our case, we have an existing entitY that already exists, which are our ebs or destination marketing organizations. So we already have an organization that is a professIonal and doing this work and delivering this work has a base, has a staff, etc. So it doesn’t make any sense to create a new organization upon these formations to execute these plans. So district the revenues, the expenditures are decided upon by the hotels and by that governing board of directors and the execution of those funds is charged back to the tourism. Uh huh. Bureau destination marketing organization.

Nicole Mahoney: 13:32 Okay.

Tiffany Gallagher: 13:34 I’m sorry. Do you have a question?

Nicole Mahoney: 13:36 I actually. So, uh, I, I think that that was really good for you to kind of back up and explain how this works and my question is then the organization that gets formed when the tourism, uh, tourism improvement district is formed, becomes just a governing board that then contracts back to the dmo. I just wanted you to kind of explain that structure a little bit to make sure that we’re clear.

Tiffany Gallagher: 14:11 Sure. Of course. I would love to tell you that it’s a clean answer, but it’s not because they’re really depends on the formation process and what the stakeholders decide how they want that to look. Most cases I’ll give you in the, in most cases the district illegal into, I don’t want to call it an organization because it doesn’t necessarily have a [inaudible] or any particular status, but it is a legal entity that kind of holds the funds, right. And typically what governance looks like is a committee of, and this is illegal, a legal committee by the way, not a typical committee, but a committee of the destination marketing organization that committee and slash or board of directors that is established in the formation process of the details on the governance and the authority and the relationship between the two that is developed in the formation process. It really depends on the destination. In some destinations we find that the hotel’s really trust and really wants to give all of the power to the destination marketing organization to do what they feel is best for those funds. In other areas. We find that what a little bit more control. So there’s some checks and balances that are developed. we really helped them both sides customized. Um, and I say it that way it because it’s a team effort. Everyone customize the best possible governance structure for the district.

Nicole Mahoney: 15:43 Yeah, that makes. That makes complete sense. And what I really like about that is we’re not talking about duplication, right? Because most communities will have some sort of a tourism board or a dmo or cdb and so we’re now creating necessarily another entity to do the same thing. It’s really in concert with with what’s already being done and I’m in strengthening what’s already being done, what I’m hearing. Is that right?

Tiffany Gallagher: 16:13 Absolutely. Absolutely. And in terms of collaboration to your point, you mentioned here this must take a lot of collaboration and it takes collaboration at the highest of levels. It requires everyone to come to the table. In our current setup, our most common setup of facts and that’s typically administered, at least in our state, is administrated by the local governments and some counties we have, you know, a direct legislative tie back to tourism and some we don’t, but it typically is okay, here is the, here is the attacks, this is the allocation to tourism and this is the amount of money we can give you to finance your marketing efforts. So your original question was how does this benefit, how does this make a difference for destinations? And the best analogy I can give you is in most corporations, a marketing budget is set up and determine based on goals.

Tiffany Gallagher: 17:12 We want to make a certain amount of money and we want to make a certain amount of money we need to be able to and this money to make this money in our industry. We flew back into it, here is the amount of money you have marketing, we need you to, we need you, we need your to boost tourism exponentially, but you only get this much money to do it. right? So what we, when we for me is what we’re doing is creating the supplemental revenue stream in order to closer to achieving those goals. And oftentimes most times the amount of revenues that are collected by bed tax and slash or allocated by bed tax or just simply not enough to move the needle in. Syracuse is a great example of that is while we have. And we do, we have really good vet tech setup. We have a good legislation that really helped kind of guarantee that the money is used towards tourism, but that looks differently in every area. Then we have arts and culture and we have a convention center that needs to be managed and operated and so because of all of those needs, the actual marketing dollars available are just not enough to generate enough demand to fill all the hotels. And while one day it used to be adequate, not adequate anymore. So we need a new, a new solution for that, for businesses.

Nicole Mahoney: 18:37 So kind of break this down a little bit as a community, as you know, maybe thinking about introducing this idea, who are the, what are the first conversations that, that you need to have. I mean, I liked how you described what happened in syracuse, where, you know, your dmo president found out about, uh, and you know, brought that president to do some education with the tourism board as a starting point. Is that a typical scenario or how does this usually kinda geT off the ground to get the conversation started?

Tiffany Gallagher: 19:15 Just the general education and introduction to the concept, at least on our side of the country is really necessary. If you’re in California, most destinations are already really familiar with it. There’s actually a whole conference around it, so it’s a little different. But on our side of the country, generally the baseline education has to, has to be introduced. So we do that. We generally do that. We’re usually engaged by the destination marketing organizations and we come in and do an education most times to the board of that organization and field the questions. If the board feels like it is an avenue that they’d like to pursue, we then generally engaged key stakeholders, key leaders, business owners, Community leaders that have a vested interest in the tourism economy. We then kind of do the same thing, run the education by field the questions, uh, all of the what if and if we feel as though we have general kind of consensus and buyin than our work will begin.

Tiffany Gallagher: 20:17 So once we are completely engaged, uh, we then start to move down a couple of paths, candle in tandem, we will moved down the public path. And the private path, this is private public partnership. This requires engagement of the local municipality in our state. I think that most likely will look like the county and in most cases, so we need to do the same thing, education at the county level where we will talk with legislators, uh, executive attorneys about what this concept is and how to relate it from a legal perspective, relating it to the existing bid that do exist in New York state and how that, how that relates to our effort. That generally takes a little time because it is new and different. and we also do the education true the hotel side, and then start to talk to the hotels about what it is that they need out of these districts.

Tiffany Gallagher: 21:19 What do your businesses need? I’ll often ask the question, you know, if I had a pile of money and I gave it to your hotel and you want it to generate more business, what would you do with that? If you could do anything. And the good news Is with these districts as the only requirement of the spend of money is that it legally, this is a requirement that it goes back to benefit the payers in our case that’s hotels. So really whatever it is that we need and that could be any range of items can be, can, can be part of the plan for the spends of these funds once it’s formed. and from there we go through a legal formation processes and really developing all of the parameters of the district in terms of assessment percentage boundaries, exemptions from those assessments, what the governance structure looks like.

Nicole Mahoney: 22:11 Cetera. I’m curious on the hotel side, I liked this idea of education first and getting the buy in first. And I think that that’s so important and I can see, I can see why it’s so important. um, I’m curious on the private sector side, on both the public and the private, what types of, um, what types of feedback are you hearing as you’re proceeding with these conversations? Both positive and negative? You know, what should our listeners be thinking about that, that, um, you know, their communities may, their community perception may be going down this path,

Tiffany Gallagher: 22:55 positive and negative. I Think the biggest hurdle that I’ve found

Tiffany Gallagher: 23:01 in air quotes normal bid for usually there’s no dedicated tax revenue stream that are tethered to the tax revenue stream to those businesses. And so an additional assessment is seen as just a brand new opportunity and funding stream and our business because we have a typically a tethered or a tide tax back to a tourism. What the primary thought is. Well, we already have a mechanism, right? We already have a bed tax, we already have something established. Um, and so number one, how is this different? And number two, why are we doing it? Right? And I, I get that from both sides. He gets it from the public side. And from the private side, I think probably the simplest answer to why is this different and why we need it is that it’s different in that this funding mechanism is championed by the industry. It is managed by the industry, it is spent by the industry and are in our current paradigm or current funding model we championed maybe by the tourism industry, but it is implemented by the government management into the government and allocated by the government.

Tiffany Gallagher: 24:22 And so those, that’s one key difference also the tig fund is because it’s private dollars, there is legal requirements around the spend of that money. There must be direct tie to benefit back to the payers in order for the district to continue. The district has established for a period of time and at the end of that period of time, if the payers are not receiving benefits, they can simply just not do it. Um, and so that can be five years or 10 years or however long that initial district is set up for and attacks model. That’s not the case. It can be raised, the allocations can change, there can be a vote of legislature that changes that with our, without our consent. And so with that, um, you know, it’s, it, although it is sort of stable, it’s also not stable. T ids are very stable. So that’s kind of the key difference and that’s kind of the selling all the way through.

Tiffany Gallagher: 25:20 How does that benefit the public side? So how does a tid benefit the public side and why would they be supportive of our formation? And the answer is that we’re going to generate supplemental roommate or I’m sorry, incremental roommates not supplemental, incremental. And with that comes more tax dollars. So that bed tax and sales tax that is on every roommate is generated sales, sex goes back to the government bed tax, goes back to the government, the established baseline that we work hard to protect by the way, uh, you know, remains the same, but if there is not 100 percent allocation of that bed tax back to our gmos, which is often times the case, then there is a percentage that would increase with those incremental room nights as well. What we find is these districts start to solve problems. They start to solve the problems that are deemos are always going back to the municipality and saying we need more x. Whatever it is, we need more beautification. We need transportation help. We have a big convention coming into town. I need signage, I need this, I need this right, and every year our gmos go to the municipality and say, help me, help me, help me. Now the industry says we’re going to solve these problems for ourselves, self ourselves, and we’re going to ask you to bless that and that generally is received very, very well,

Tiffany Gallagher: 26:43 so it starts as a negative to a positive and then on the private side, the hotels really, this is probably the only real mechanism where they actually have a legal say and how these funds are spent and they have have legal recourse in the event that the spend that the spend isn’t in accordance with the plan and isn’t benefiting their businesses. So they love that and usually that’s also very positive, but I would say holistically in general, the most benefit that I’ve seen this bring, this really elevates tourism in respect to the economy. Often we come to a destination where tourism is not really seen as a vibrant piece of the economy. In some areas it’s obvious in some areas, some destinations only exists because I toured with him. Right. But most of the time tourism is a piece of the economy. Yeah. This because it is part of the public process, there are, there is actual reporting that is required and because of the additional revenue stream government is then able to see how those problems that we’re always kind of a burden on their shoulders are now being solved. It really gives tourism seat at the table and it elevates the collaboration between the two entities and in general becomes a very positive relationship and beneficial to both sides.

Nicole Mahoney: 28:24 Interesting byproduct if you will. This whole idea that there’s this now the separate reporting structure that has to happen around these funds. So it’s a very, um, you know, high level look at exactly what’s happening, um, with tourism and I think that’s awesome and it’s something I hadn’t really thought about. very good. Yeah. So can we talk a little bit about, and I mean you just gave us so much to think about actually. So I’m sitting here taking notes furiously. I’m curious, um, what types of destinations, because I agree with you that this whole idea of elevating tourism and respect to the economy is really important and there are some destinations where it’s very obvious and others where it’s just a mix of, you know, of a number of other, of other industries, but I’m wondering if there are certain types of destinations that lend themselves better to exploring this as a solution or if there are certain types of things that a destination marketing organization should be thinking about. Um, in terms of is my destinAtion ready for these conversations? um, is there, Is there anything that comes to mind that you can share with us in terms of that?

Tiffany Gallagher: 29:48 Yes. The key as a key reason why these formations are successful is the people involved and the relationships. You really cannot. A destination marketing organization cannot do this without the support of the industry and can not do this without the support of the local government. So relationships are huge and if we come into a destination and we have destination marketing organizations and does not have good relationships with their hotels, that is

Tiffany Gallagher: 30:23 problematic because there’s typically a trust factor and the end to forge to be able to really educate and communicate how this district is going to benefit them if there’s no relationship becomes very difficult. So I would say foundationally relationships are key if you do not have good relationships with your hotels. And a good example of this is if you have your annual meeting or your quarterly meeting or whatever it looks like and you’re sending out your invitations to those meetings and you have the same 10 hotels, com, and that’s been the case for the last three to five years. You probAbly have some work to do because you cannot past this dIstrict with only a handful of hotels. You need it most of the time, half or more to agree in order to pass this district. Um, I would also say that the relationships on the public side, our weekly is as important because if you don’t have and understanding at the public level to what you do is your destination market organization is important to the local economy.

Tiffany Gallagher: 31:35 If you don’t have that established, then passing this district is also difficult. So I would say that relationships are big and relationships are big in general. Uh, in everything, right? What I find is really is my, if we have a barrier and the preparatory work, uh, that a destination can do is going to be, you know, in that, and when we start to move through these formations, uh, the hotels want to know what is it that you’re going to do with this money? Just good enough that, okay, your budget, your budget is $2,000,000 a year or $4,000,000 a year. And if you look competitively, uh, you know, we are higher or lower than that, whatever it is, and we need to even that out. So my destination marketing organization is allocated a million dollars a year, a three and maybe numbers. Disclaimer, buffalo, whatever it is. And so I need an extra $2,000,000 in order to be competitive.

Tiffany Gallagher: 32:43 Yeah, at the end that is an element for sure. But the hotels want to know more specifically if we’re going to bear the burden of this, if we’re going to ask our customers to pay us more money for this, what specifically are we going to do to elevate our destination? So having general plan and it doesn’t have to be very specific. We don’t hAve to say we’re going to spend x amount of advertising or internet or whatever it is. Yeah, you don’t have to be very specific, but you do have to have a general plan and have an understanding as to what date the need is in your area. What is it that you missed and why do you lose business and what. So we need. So that would be some advice that I would give in the preparatory stages, um, besides the relationship building.

Nicole Mahoney: 33:31 Sure. That’s excellent advice. Um, I have a question. You mentioned on the hotel side that uh, in order to form a, a tourism improvement district, do you have to have at least 50 percent or more than 50 percent have to agree? Um, does that mean if 50 percent or 51 percent of your hotels agree than the assessment goes though? I’m 100 percent of the hotels or so it’s not just an opt in. These 50 percent opt in and these 50 percent are not opting in. It’s across the board.

Tiffany Gallagher: 34:08 Sure. I’ll speak a little bit to that because we don’t strive to get be. This is a holistic effort. One hundred percent is difficult, right? We strive to have, you’d have 75 to 80 percent of the hotels on board with this. So yes, these are compulsory districts. They are compulsory and it really is the primary reason why we include the government and use legal mechanism that we do because we’re trying to establish a stable funding stream. If we have a voluntary district, we, it’s, it’s similar to membership and if you have membership or have been involved in an organization that has membership, do you understand how volatile that can be? And every year you spend a good amount of time advocating for why you are good enough to receive the membership dues and you are constantly striving for that. So a key reason that we use this mechaniSm is because we’re looking to establish a really stable, reliable funding stream so that we can plan long term. These districts are typically five or 10 years at the onset and that gives us the real ability for the first time ever to strategically planned long term. we don’t have to worry about what the money looks like next year or the year after. Um, and it really gives us that ability. Did that answer your question?

Nicole Mahoney: 35:37 Yeah. Oh yeah. Absolutely. And then as a followup to that, you know, you, you and I live in the same region of New York state in the finger lakes region and, and I’m sure other parts of the country have similar makeup of communities, which you’ve talked about syracuse, which is a, which is a, um, so your tier two or tier three city, right? A small city, but there are even smaller communities among us, smaller counties who might not have as much hope as many hotels, um, let’s say as a syracuse does. And so I’m wondering on size of community, what type of mass do tHey need in order to really be effective? Uh, would this type of a revenue stream?

Tiffany Gallagher: 36:26 There’s no rule we have right in statistics for you, you know, roundly 170 fIve districts in the country. Smallest distriCt we have is one hotel and generates $10,000 a year.

Nicole Mahoney: 36:40 Okay.

Tiffany Gallagher: 36:41 And the biggest one we have in san diego, California, which generates upwards of 38 miLlion dollars a year with our district. So we have districts that range from the smallest of small building too. And so there’s no rule, you know, if you can self assess yourself, if you have customers coming into your market and you can generate an assessment then to do that. And yeah, if you can find a revenue stream, and I’ll give you another example of newport. Rhode island formed last year in october of last year. Um, I traveled there for their final hearing. Um, and they have 13 hotels, I think in their district, super small destination, right? And they’re only charging $1 per occupied room, which is generating about $375,000 a year. It’s additional $375,000 a year for marketing. Substantial number 13 hotels, small but $1 per occupied room. give them quite a bit of money, you know, in respect to what they’re base. uh, funding was then less than 24 hours at 2:00 in the morning to avoid New York city traffic to drive through to philadelphia, philadelphia for 10:00 AM hearing where we formed, they’re at a point seven, five perCent assessment per occupied room, which is generating a million dollars a year. So both and both or destinations are benefiting from it. It’s proportionate to their scale, but the same can appLy in any size destination.

Nicole Mahoney: 38:15 And it brings up just a couple other questions. In terms of the hotels that are covered, is it, is it purely a hotels or do other types of accommodations falL under that such as a bed and breakfast, for example,

Tiffany Gallagher: 38:31 really up to the formation and the stakeholders decisions. Remember that this process requires approval from, oh, that will be potentially assessed. Oftentimes what we find is there is a room count threshold implemented with these districts are forming in pittsburgh and we’re only Forming for hotels and the reason why is because the dmo cbb engagement is generally from hotels that size or greater. Sometimes our bed and breakfast and our smaller mom and pop hotels don’t really engage in the destination marketing effort and it’s hard,

Nicole Mahoney: 39:23 okay.

Tiffany Gallagher: 39:24 For them to understand the direct benefit that that effort brings to their particular hotels. So getting them engaged in the conversation even though they will benefit, right? Because it’s compression benefits, everybody, but sometimes just having them engaged with that at the onset is not a, is not something that at we spend a lot of time and effort on and therefore they’re not assessed either. So that room threshold is. However, in newport, Rhode Island there is no room confessionals no, I take that back. There is, but it’s, it’s small because they only have certain hotels and some of their really great hotels or little in comparison to even syracuse to rochester or buffalo. so it really just depends on the makeup of the destination. We have local communities here that their primary lodging is camera or very small. Right. And the answer is you can apply it however you need it to apply, but there’s just some thoughts that has to go into that.

Nicole Mahoney: 40:32 Sure, absolutely. And then kind of as a followup to that, because you know, these questions are really coming from a place of these might be destinations with fewer hotels, but earlier you had mentioned the idea of wine districts and brewery districts and ski districts. And can you elaborate a little bit more on, on how that happens? So, uh, you know, just the example of the finger lakes region where, where we live, um, as you know, we have a huge density of wineries in this region and so we do a, if we could imagine them for pursuing a wine district, how would that look? How, how does that work?

Tiffany Gallagher: 41:14 It’s similar to the wineries would get together. We have a association that might be an organization that would be appropriate to kind of take the lead on something like this, but the wineries would collaborate, um, and decide to assess themselves on sales. So it’d be on retail sales and it looks a little different because because the positive part of having bed taxes, there’s already an established process for, for taxing or putting a faeana hotel room and how you’ve remit that. The businesses are accustomed to it, they understand it. So that is something that is a hump. We don’t have to go over in our side and the hotel side, but from a winery perspective this would be new. So it would take a little bit, you know, more on that side. But the process will look very similar

Nicole Mahoney: 42:18 and still be within the confines of a particular county or could something happen more region wide that might cross county lines.

Tiffany Gallagher: 42:30 Okay. That’s a very good question. So the legal mechanism that we have available for formation, and this would be by county,

Tiffany Gallagher: 42:41 however we would use home rule authority so that has the ability for a county to legislate, uh, self legislate on matters of local concern. So each county would have to, uh, form their own district. However, the governance of that district could be unified. So there could be one organization that manages all five districts, if you will, whatever that looks like. And so, so essentially the collection of the revenues would be five separate collecting points, but the maintenance of those back to one managing organization, that organization could be the facilitator of those funds. So it coUld operate like one district, but legally would have to have separate, um, you know, formation. Sure. There’s ways to kind of streamline that as well. Uh, but yes, to your point it would be separate.

Nicole Mahoney: 43:40 Absolutely. Well, I appreciate you, um, sharing that with us because I think that that really gIves us a lot more to think about in terms of, you know, um, challenges that our listeners might be facing, um, or as they’re thinking about, you know, ways to fund marketing efforts and I know there’s just a lot of folks out there that are working in the tourism industry and working to promote the areas that they’re in and they don’t all look like deemos necessarily and you know, and, and the destinations they represent might not, you know, hotels might not be the biggest industry in that particular destination. So being able to think outside of the box and think about other ways that you can kind of get to the same outcome I think is really cool.

Tiffany Gallagher: 44:27 It is, it is. And if there are attractions that are really a part of that tourism conversation in certain areas, we do have districts that also assessed their attraCtion, but it is, you really have to have those relationships built and they have to really understand how, what you do as a dmo benefits their business also. So it’s absolutely Possible to include different types of industry in one formation, just a matter of, of how you put it together in those relationships.

Nicole Mahoney: 45:00 So tiffany, this has been a really awesome conversation as I knew it would be, would be, I have several pages of notes. I’m sure our listeners are notes as well. Um, before we wrap up, I just wonder if you have any final thoughts or comments to share with our listeners and then also if you could share how they might find out more or connect with you and find out more about what you can do to help them. This is something they want to explore.

Tiffany Gallagher: 45:26 Sure, absolutely. I’m pleased to be able to share that we are actively pursuing a couple of districts in the state of New York. Syracuse and albany are in active formation processes now. We have learned so much in this state and I’m really excited. Two, you know, be helping those communities who I have close connections with both actually kind of get to the next stage in their tourism economy development. So if you have questions about that, you can reach out me. I like to, I’d like to keep the industry posted as we move along in these processes, you know, a new frontier if you will. I’d like to think danny, president of business syracuse for being the first security torch and being brave enough to do so. It’s not an easy undertaking. It is something that requires a, you know, a lot and a lot of support, a lot of strength and he’s doing great with it.

Tiffany Gallagher: 46:33 So if you have any questions you can reach out to me. Uh, if you’d like to share anything about, uh, we are based out of sacramento, California is where our home office is. I live in syracuse, New York from a couple of hours drive at most for most everybody in this state. My email is t gallagher, that’s gallagher with an h at the advisors home. Welcome to shoot me an email or go right to the center tax advisor’s website and we have a lot of studies available. We’ve been fortunate enough to be a partner with destinations international and us travel. We have been commissioned on a number of travel studies, lodging fees, trends, etc. Happy to share some information with you from those efforts, however we can be of service as a resource to our tourism friends. We like to do that

Nicole Mahoney: 47:34 and terrific, and we’ll make sure that your email address as well as the link to your website is on your show notes page, so for listeners who might be driving or jogging or doing something else as they’re listening to this podcast, you can find it there as well. And tiffany, I really appreciate you spending some time with us today and we’ll look forward to checking in with you again.

Tiffany Gallagher: 47:55 Sounds good. Thank you so much for having me. I appreciate it. It was a good experience.Speaker 1: 48:00 It’s time to hit the road again. Visit destination on the left.com. During your travels for more podcasts, show notes and fresh ideas.

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