Funding Tourism: Five Ideas and Tips for Government Support

2021 and 2022 saw an influx of state and federal grants, allowing destinations an opportunity to do what they otherwise wouldn’t have been capable of: funding tourism. New DMOs were started; campaigns were funded; brands and websites were launched. Today, many communities are back to a major pre-pandemic concern: how to raise funds to support ongoing destination marketing.

This could and probably should be my next book since there’s a lot more I could add to this article. But this is the high-level stuff to get the gears turning.

Transient Occupancy/Meals Taxes

I’ll get this one out of the way early since it’s one of the most common. Hotel taxes, or “heads in beds”, is the standard form of funding tourism. It’s relatively consistent, highly dependent on tourism doing its job properly, and a win-win for all parties involved (except maybe the tourist).

Some localities have restrictions on where the funds go; some require them to be managed by a non-profit like a CVB or other standalone tourism organization. Some handle the funds from an internal tourism department. To make the most of these funds, first, make sure they’re available, then build a budget to support how they can best be spent and do it early because there are typically more than a few hands in that cookie jar.

I’ll get into how to make the most of this process in a bit. Moving on…

Friday Night Fundraising

The way we look at tourism marketing audiences on the weekends is:

• Friday nights are for the locals to come downtown for dinner, drinks, local concerts, etc.
• Saturdays and often Sundays are when you have the best chance for out-of-towners. This is a good time for sidewalk sales, community scavenger hunts, and more involved festivals—the bigger stuff.

With this approach, we can easily see that each timeslot has its own unique challenges, and the most common for Friday nights is that people are eating and drinking but not shopping. In Manassas, we helped to solve this issue with the idea of a Friday Night Fundraiser to increase foot traffic in shops.

On the First Friday in February, Old Town Manassas hosts the “Souper Bowl” which partners with downtown shops and restaurants. Each restaurant will feature a signature soup at their assigned partner’s shop and visitors can try as many tastings at all shops for a single price (around $10). To increase restaurant involvement, the visitors will then vote on their favorite, and the winning restaurant is announced on social and presented with a trophy. The event sells out every year.

Coming up with a program that not only brings people downtown but also raises funds and solves a longstanding business concern is a great way of funding tourism.

Convert your DMO to a public non-profit.

I call this the “nuclear option” since it takes a lot of time, changes almost everything about how the DMO does business, and it’s rather hard to reverse. Let me break down the pros and cons of this approach.

Pros:

• As a non-profit, transient occupancy taxes are still available.
• The organization gains a more diverse range of grant opportunities.
• Previously unavailable programs like corporate sponsorships are now an option.
• There’s an independent balance sheet and sometimes less government involvement.
• Oversight is typically provided by a Board of Directors (or Trustees or Regents—whatever you want to call it), filled by people in the tourism industry with a vested interest in the success of the organization.

Cons:

• You’re one level further away from those hotel taxes, giving you less control over how they’re spent.
• Running a non-profit requires a different skill set and tolerance for risk. The organization will be independent and all of the hazards of the non-profit world are now on its shoulders.

I can’t say one way or another if this is a good idea unless I’m acquainted with the community. We always find this out during our Destination Immersion, performed at the onset of most client relationships. A lot of it has to do with how the government is funding—or not funding tourism.

“Taste of” Award Campaign

Here’s another campaign that solves more than one problem at once: an award campaign. Chances are, the community you serve already has a restaurant week but it may not raise money for tourism. Here’s how you can turn it into a fundraiser.

For a set price, your visitors can receive a “Taste of (insert name here)” card that, when presented at participating restaurants during the week, entitles them to a prix fixe menu at an exclusive price. These costs would need to be agreed upon by the restaurants, of course (and with food prices the way they are, it could be a challenge) but the price of the card comes straight to your department.

Additionally, it allows for a promotion that the restaurants can share with their audiences. The restaurant with the most redemptions—much like in the case of the “Souper Bowl”—can get additional visibility as a reward.

Public/Private Partnerships

When many people think of P3, images of major infrastructure projects can easily come to mind. However, these projects can also be small and focused entirely on tourism and community development. Parks, pavilions, sports complexes, and coworking spaces are some of the most common. As an example, we were brought into a P3 for a football complex more than 11 years ago that still funds the County to this day.

For each, there’s an ongoing admission or usage fee structure that can be split between tourism, parks & rec, and the private entity. The DMO increases its inventory and outside investment comes into the community. If you can’t tell already, I’m really big on solving more than one problem at a time.

Investing in Outside Perspective

I know I said there are five tips in this article, so consider this one a bonus. I’ve written about it at length in a previous article but it bears repeating. An agency or consultant will deliver experience and perspective, guiding your destination down the best path forward. In many cases, the investment for ongoing support and consulting won’t cost more than one full-time employee and the results will – at a minimum – help you afford one.

There’s immense value in working with people that are outside of the jar, able to read the label, and have read many others before it.

Getting Local Government On Board

For all of these ideas, it can be easy to come up with a refrained response: the local government doesn’t see the value in tourism. I hear it more times than I care to count. For this issue, it’s important to help them see the value. It can be a challenge and it will definitely take some time to sway elected officials since virtually everyone they encounter is also trying to sway them in one direction or another, but here’s the process I’ve found to work the best.

First, tourism needs a plan. Taking into account all current assets (community centers, parks, main street, vacant lots—whatever), create a narrative that shows how each of these could be used to bring in funds from outside of the community. Show case studies of how your approaches have worked in other areas. The more details and visuals, the better. Work out a timeline and rough costs involved to accomplish the plan.

Second, show the potential outcomes and incomes. Provide a clear picture of what the community stands to gain, always focusing on the impact on the residents and businesses. Remember, they’re the real stakeholders of the community.

Third, be careful with your timing. Every locality has a budget cycle and make sure to present the plan early in the cycle so you have the most time to reinforce the need before others get in the way.

Fourth, get community support. I’m not talking about a petition to save the clock tower; I’m talking about advocacy from community and business leaders on the positive potential impacts. Statements and testimonials should be worked into the plan, and if you have some area leaders that want to do more, ask that they contact elected officials directly.

Finally, be the squeaky wheel. Funds almost always go to quiet the loudest noise, so be persistent.

Conclusion

Funding tourism is and will always be an ongoing need, and the best destinations have found ways to diversify their income sources to be resilient, solve multiple problems at once to be efficient, invest in outside support, and work with local government to ensure that tourism remains a priority.