Conference & Meetings World Issue 99 | Page 41

Cover story EDINBURGH SHOCKED THE DMO WORLD WITH A PROPOSAL TO SLASH THE CITY MARKETING BUDGET AND INTRODUCE A BED TAX (SEE P.37). PHILIP COOKE LOOKS AT GLOBAL EXPERIENCE OF USING SUCH A FUNDING SYSTEM any countries and cities are able to devote large sums of money to promoting and developing their tourism industries via a system that taxes the visitor, not the host. These competing regions, most notably in the USA and Canada, use a Transient Visitor Tax system to raise funds that can only be used for the promotion and development of their tourism industries, and they do this by means of a locally-determined tax that is placed on related expenditure. Hotel accommodation is just one of several related transient visitor taxes that are employed in the USA and which include a Food and Beverage Tax added to restaurant bills and a Convention Centre Development Tax added to the cost of hiring a conference centre or similar venue. Transient visitor taxes are ‘hypothecated’ taxes which means that the income they generate can only be used, by law, for specific purposes – in this case to attract more visitors, to invest in business tourism facilities and resolve environmental problems created by visitors. When I first visited Miami in the 1990s it was operating four different Transient Visitor Taxes which were then generating US$40.5m for re-investment in the city’s visitor economy, derived from: - a 3% Convention Centre Development Tax, yielding $17.2m pa - a 2% Resort Tax (i.e. the Bed Tax), yielding $12.5m pa - a 2% Food and Beverage Tax, (hotels and restaurants only) yielding $6.7m pa, and - a 1% Sports Facilities Tax, yielding $4.1m pa. These taxes were then used to fund the Miami Beach Convention Center and Miami’s Orange Bowl Football Stadium, Lipton’s Tennis Stadium and even Miami’s Formula One Grand Prix circuit - activities which were to then “Transient visitor taxes are hypothecated taxes and this income can only be used, by law, for specific purposes.” attract further high-spending overnight stay visitors in a virtuous economic development cycle. In New York, my hotel bill in those days included a 6% City Occupation Tax, a 6% Room Occupation Tax and a 13% Liquor Consumption Tax! Next stop on that trip was Albany, the state capital of New York - a hugely politicised city with a suitably massive hotel stock that was needed to accommodate visiting politicians and media. Here, a 3% Accommodation Tax generated c.$670,000 pa, which was being used to repay money borrowed by the city for the construction of the Albany Convention Center. Self-regulating Today, transient visitor taxes are also self-regulating and can help prevent the modern-day scourge of ‘overtourism’. For instance, if a US city gets greedy and taxes its incoming transient visitors at too high a level, then ISSUE 99 / CONFERENCE & MEETINGS WORLD / 41