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Counties see hotel tax as win-win

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Central Indiana counties that charge a tax on hotel and motel stays are experiencing rising hotel occupancy rates, even higher innkeeper’s tax collections and survey results that show advertising brings in visitors.

Innkeeper’s taxes raise about $700,000 per year in Brown County and more than $40 million in Marion County. That money goes back into marketing by local visitor and tourism centers and helps promote businesses, such as convention centers, hotels, restaurants and wineries, which generate as much as $4.4 billion annually in Indianapolis.

Johnson County Council members will vote Monday — on whether to adopt a 5 percent innkeeper’s tax. That tax is an additional charge on guests’ bill at hotels, motels or bed-and-breakfasts. The money can be used to fund a visitor and tourism bureau, which would market county attractions, events and businesses.

Tourism bureaus in other counties spend from 60 to 80 percent of their innkeeper’s taxes for marketing and say those efforts are paying off. Counties track annual tax collections, hotel occupancy rates and website and social media hits to gauge how well the advertising is working.

In Brown County, innkeeper’s tax collections have increased 3 to 5 percent annually, showing more people are staying in hotels and cabins, Brown County Convention and Visitors Bureau executive director Jane Ellis said.

Visit Indy employees are working to book conventions and events in the city for dates as late as 2021 as well as fielding daily calls from people asking about wine trail locations or other attractions in and around Indianapolis, Visit Indy spokesman Chris Gahl said.

And in Hamilton County, advertising and development money put toward parks, historic districts and arts galleries have helped increase the county’s tourism revenue by about 10 percent in recent years, executive director of Hamilton County Convention and Visitors Bureau Brenda Myers said.

After paying administrative costs such as staff salaries and operating expenses to run a center, the rest of the money raised by hotel and motel taxes is spent on advertising, including printing and distributing travel books and brochures, taking out newspaper, radio or TV ads and maintaining a tourism website. In Brown County, the visitors bureau is limited to spending no more than 40 percent of its $700,000 in revenue on administrative costs, Ellis said.

Focus on promotion

County council members haven’t discussed whether to set a specific cap for administration expenses, such as salaries, in Johnson County, but council member Loren Snyder would want to put one in place.

Limiting the amount spent on salaries and running an office would make sure the most money possible is being spent promoting the county, which is the point of creating the bureau, Snyder said. He is in favor of the new tax.

Tourism generates about $209 million for Brown County each year, and Ellis said she has proof that the advertising works.

Local hotels ask guests to take a survey about where they’re from, what they’re doing in Brown County and how they found out about the activities they’re doing. If the tourism bureau advertises in the Cincinnati area, staff members watch for spikes in the number of web visits from southern Ohio and the number of guests booking rooms, she said.

Visit Indy tracks how full city hotels are and monitors occupancy rates to see if they go up with marketing programs, Gahl said. The tourism bureau also has staff members who contact national associations to get them to bring their events to Indianapolis, such as the NCAA Final Four basketball tournament, annual firefighters association conventions or the nation’s largest tabletop gaming convention, he said.

“A key barometer for any city as it relates to tourism is hotel demand. Are your hotels full? Certainly that is a key barometer we monitor and look to positively influence,” Gahl said.

Counties study different statistics and compile those numbers into an annual benchmarking report, Ellis said.

“There’s probably about 20 things on there. We look at innkeeper’s tax collection, we look at food and beverage tax, we try to look at sales tax, we look at our website traffic, we look at social media,” she said.

Measuring effectiveness

Both Indianapolis and Hamilton County use a Carmel-based marketing analysis group that will poll people in an area where they advertised to see how effective the campaign was. They’ll ask if people saw the ad, if they looked for more information about the area and if they planned a trip, Myers said.

For example, Indianapolis spends about $1 million for a summer ad campaign every year and one recent study showed that generated about $83 million in new tourism revenue for Indianapolis, Gahl said.

Gahl hopes Johnson County will open its own visitor bureau and become part of the regional tourism effort. While Indianapolis draws in the most people by far with large conventions and professional sports teams, visitors certainly may spend time across County Line Road in Johnson County, he said. For example, Visit Indy gets multiple calls each year about Mallow Run Winery in the Bargersville area as people look for central Indiana wineries, so staff already help direct tourists south of the city, he said.

Johnson County would be able to promote itself and add to the regional draw of the Indianapolis area, Gahl said.

“If they have a drumbeat of the tourism message going out, it helps the region,” he said. “Whether you’re a convention delegate or a leisure visitor, county lines aren’t visible.”

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