July 2008
By Dale J. Venturini
By Dale J. Venturini
President & CEO, Rhode Island Hospitality and Tourism Association
While all of Rhode Island is feeling the economic pinch, from skyrocketing gas and food prices to the increase in layoffs and a slow down in job growth. The picture is even more bleak at the State level with a $450 million budget deficit lawmakers are trying to close. There is no question these are trying times, and there are no new found sources of revenue and no easy answers.
Through this most recent economic downturn, there are a few bright spots. Rhode Island’s hospitality and tourism industries continue to show consistent growth. And, it is not by chance. Rhode Island’s stewards of tourism – the state’s convention and visitor’s bureaus – word extremely hard and smart to keep Rhode Island competitive in attracting convention business and leisure travel. Compared to other regions and states, Rhode Island has just a fraction of dollars to spend on marketing and advertising. Despite the limited budget, the convention and visitor’s bureaus enjoy great returns on their investments.
As with any budget deficit, there is a natural inclination of legislators to find new sources of revenue, most notably in the form of taxes, to offset the cost of programs. Being an election year and with taxpayers already feeling pinched, raising taxes is not high on the list of our elected officials. Not a single legislator wants to explain to constituents why he or she raised taxes in this economic climate.
With increases in taxes off the table, legislators look to cut funds to social programs, which can again result in an outcry of demonstrations and opposition from advocacy groups.
That doesn’t leave many new sources of revenue. Unfortunately, history has proved that when in need of monies, elected officials look to what is perceived as victimless cuts – state agencies and public/private agencies. In this instance, the state has its sights set on the budget of the Providence Warwick CVB.
A proposal has been put forth by the Rhode Island Senate to redistribute some monies received from hotel tax, which currently fund the Providence Warwick Convention and Visitor’s Bureau, back to the cities and towns. The proposed legislation would increase the percentage of hotel tax that is returned to the city or town in which the hotel is located from 25 percent to 28.5 percent. Further, an additional 3.5 percent would be re-directed to fund the Newport/Providence ferry service, not to exceed $500,000 per year.
In real dollars, this redistribution of monies means $XXX,000. That translates into XX (need some examples of what this would mean in terms of actual events, opportunities, etc…)
This is a dangerous policy, as the Providence Warwick CVB is primarily responsible for marketing Rhode Island, and more importantly, marketing and selling the Rhode Island Convention Center, a state-owned convention center. As state-owned, it is ultimately owned by the taxpayers of Rhode Island. It could be said, the Legislature has found a back door to take more money out of Rhode Island taxpayers.
The role of the CVB is to sell Rhode Island. Not just sell conventions, although conventions and business meetings result in $XXX million in direct and indirect revenue to the state, but to sell Rhode Island as a good place to host a convention, visit with families, and to sell Rhode Island as a good place to start or relocate a business.
In 2007, the return on investment from the Providence Warwick CVB was XX percent, bringing in XX million in convention and meeting business with a budget of XX million. As a comparison, the budget of the City CVB is XX million and City CVB is XX million. These two cities are in direct competition with Rhode Island in selling and booking conventions.
Dr. First Name Mazze, former dean of the Business College at the University of Rhode Island and a distinguished professor of business administration, recently wrote, “The State needs to expand tourism promotion as a way of business marketing. An investment in tourism may bring individuals to the State who may then consider Rhode Island as a place to locate their business.”
Taking XXX,000 is not an investment in tourism promotion. Yes, Rhode Island is an ideal location – convenient to airports, wonderful hotels, great restaurants, lots of attractions – but when corporations and associations look to book conventions, they are more interested in their bottom line than the view from the hotel window. And, if our tourism stewards can’t market to those booking conventions, then no one will no how ideal a location it is.
There is a secondary victim to this assault on tourism promotion – Rhode Island taxpayers. If there is a reduction in the number of conventions and events at the Rhode Island Convention Center and Dunkin’ Donuts Center, there will be fewer people in the state’s hotel rooms, fewer guests at area restaurants and fewer people visiting the State’s attractions. And, that will result in fewer tax dollars to the state’s bottom line, putting the state in an even more precarious financial situation.
As the old adage goes, don’t kill the goose that lays the golden eggs.
Through this most recent economic downturn, there are a few bright spots. Rhode Island’s hospitality and tourism industries continue to show consistent growth. And, it is not by chance. Rhode Island’s stewards of tourism – the state’s convention and visitor’s bureaus – word extremely hard and smart to keep Rhode Island competitive in attracting convention business and leisure travel. Compared to other regions and states, Rhode Island has just a fraction of dollars to spend on marketing and advertising. Despite the limited budget, the convention and visitor’s bureaus enjoy great returns on their investments.
As with any budget deficit, there is a natural inclination of legislators to find new sources of revenue, most notably in the form of taxes, to offset the cost of programs. Being an election year and with taxpayers already feeling pinched, raising taxes is not high on the list of our elected officials. Not a single legislator wants to explain to constituents why he or she raised taxes in this economic climate.
With increases in taxes off the table, legislators look to cut funds to social programs, which can again result in an outcry of demonstrations and opposition from advocacy groups.
That doesn’t leave many new sources of revenue. Unfortunately, history has proved that when in need of monies, elected officials look to what is perceived as victimless cuts – state agencies and public/private agencies. In this instance, the state has its sights set on the budget of the Providence Warwick CVB.
A proposal has been put forth by the Rhode Island Senate to redistribute some monies received from hotel tax, which currently fund the Providence Warwick Convention and Visitor’s Bureau, back to the cities and towns. The proposed legislation would increase the percentage of hotel tax that is returned to the city or town in which the hotel is located from 25 percent to 28.5 percent. Further, an additional 3.5 percent would be re-directed to fund the Newport/Providence ferry service, not to exceed $500,000 per year.
In real dollars, this redistribution of monies means $XXX,000. That translates into XX (need some examples of what this would mean in terms of actual events, opportunities, etc…)
This is a dangerous policy, as the Providence Warwick CVB is primarily responsible for marketing Rhode Island, and more importantly, marketing and selling the Rhode Island Convention Center, a state-owned convention center. As state-owned, it is ultimately owned by the taxpayers of Rhode Island. It could be said, the Legislature has found a back door to take more money out of Rhode Island taxpayers.
The role of the CVB is to sell Rhode Island. Not just sell conventions, although conventions and business meetings result in $XXX million in direct and indirect revenue to the state, but to sell Rhode Island as a good place to host a convention, visit with families, and to sell Rhode Island as a good place to start or relocate a business.
In 2007, the return on investment from the Providence Warwick CVB was XX percent, bringing in XX million in convention and meeting business with a budget of XX million. As a comparison, the budget of the City CVB is XX million and City CVB is XX million. These two cities are in direct competition with Rhode Island in selling and booking conventions.
Dr. First Name Mazze, former dean of the Business College at the University of Rhode Island and a distinguished professor of business administration, recently wrote, “The State needs to expand tourism promotion as a way of business marketing. An investment in tourism may bring individuals to the State who may then consider Rhode Island as a place to locate their business.”
Taking XXX,000 is not an investment in tourism promotion. Yes, Rhode Island is an ideal location – convenient to airports, wonderful hotels, great restaurants, lots of attractions – but when corporations and associations look to book conventions, they are more interested in their bottom line than the view from the hotel window. And, if our tourism stewards can’t market to those booking conventions, then no one will no how ideal a location it is.
There is a secondary victim to this assault on tourism promotion – Rhode Island taxpayers. If there is a reduction in the number of conventions and events at the Rhode Island Convention Center and Dunkin’ Donuts Center, there will be fewer people in the state’s hotel rooms, fewer guests at area restaurants and fewer people visiting the State’s attractions. And, that will result in fewer tax dollars to the state’s bottom line, putting the state in an even more precarious financial situation.
As the old adage goes, don’t kill the goose that lays the golden eggs.
