SOUTHERN INDIANA — As a way to grow visitor spending in Southern Indiana, tourism officials are seeking an increase in funding to help level the playing field in a competitive industry.
In the coming weeks, SoIN Tourism staff will be meeting with the Clark and Floyd County councils in information sessions to make a case for increasing both counties' innkeeper's taxes from 4 to 6 percent.
The innkeeper's tax, also known as a hotel tax, is SoIN Tourism's sole source of funding, and the 4 percent rate in Clark and Floyd counties is among the lowest in the state, with only eight other counties in Indiana at the same rate or lower. Increasing the rate 2 percentage points would allow for more resources to market and promote Southern Indiana tourism — a critical necessity in an increasingly competitive industry.
Of the revenue from the innkeeper's tax, 75 percent goes toward the operation, sales and marketing of SoIN Tourism, while 25 percent is dedicated — per state statute — to capital development, which is the only arrangement of its kind in the state among tourism bureaus.
SoIN Tourism receives about $1.6 million each year from the innkeeper's tax. Increasing the rate to 6 percent would generate an additional $600,000 for marketing and promotion and $200,000 for capital development each year, with the marketing aspect being a key component to growing visitor spending, according to Southern Indiana tourism officials.
"The goal is to give us the resources to help make the destination more competitive in the marketplace," said Jim Epperson, executive director of SoIN Tourism.
A "business case" produced by SoIN Tourism in support of increasing the innkeeper's tax states that "in order to optimize opportunities to grow visitor spending, a greater investment in sales, marketing, promotion and event development is required."
The plea for additional revenue comes at a critical time: According to the 2016 Economic Impact of Tourism in Clark-Floyd report, as cited in SoIN Tourism's business case, visitors spent $310.3 million in the region, which was up only 1.2% compared to 2015 growth of 15%.
Tourism, though, is more about visitor spending, according to Luanne Mattson, assistant director of SoIN Tourism — it's also a commodity for Southern Indiana residents.
"Tourism helps foster things like great restaurants that you can go to, that people who live in our communities go to, fun things to do that tourists love, visitors love, but if you wanted to take your family it's something you'd like to do as well," Mattson said. "A lot of times tourism companies are local mom and pop shops, and that kind of money stays local."
But in order to market and enhance Southern Indiana's visitor destinations, funding is required, and SoIN Tourism needs more of it. According to the business case, some of the organization's programs "are not completely funded and and other best-practices are not pursued because of limited resources."
Additional revenue would allow the organization to develop a new tourism investment strategy, which would include expanding its marketing efforts on several fronts and content creation, specifically video, according to the business case.
As a result of the increased investment in destination marketing, visitor spending would increase $94 million over five years, according to a study cited in the SoIN Tourism business case. Additionally, in 2022 alone, business sales would increase $31.1 million; personal income would grow by $7.9 million, 310 more people would be working and $2.9 million in new state and local taxes would be collected, according to the study.
Because the innkeeper's tax is a hotel tax paid by visitors to the community, and not typically by residents, Epperson views an increase in the rate as a benefit to the Southern Indiana community.
"We put the money into the community by way of marketing and by way of sponsoring events ... those kinds of things to help develop visitor experiences that residents enjoy without it costing them tax money," he said. "The experience they get out of it, the enjoyment they get out of it, is thanks to visitors."
Implementing an increase in the innkeeper's tax requires the Clark and Floyd County Councils to pass substantially similar ordinances — which is why SoIN Tourism officials are hosting the public information sessions, the first of which is Tuesday, July 9, with the Floyd County Council. A session with the Clark County Council is scheduled for July 15.
The information sessions will allow SoIN Tourism officials to have a broader conversation with elected officials and the public about its role — something that is often misunderstood or misinformed, according to Epperson.
"By our nature a lot of what we do is outside [of Southern Indiana], our advertising is generally not seen locally. That has always been a challenge," Epperson said. "That's why we need to sit down with elected leaders and business leaders to let them know here's what we're doing and why it matters, and here's our accountability, here's the results we bring. That's a constant drumbeat of ours."