Capitola council to consider boosting tourism marketing fees

By Jondi Gumz, Santa Cruz Sentinel

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CAPITOLA >> Tourism promoters hope to boost fees on hotel guests and vacation rentals to $1.75 to $3 per night to raise $1.9 million for marketing initiatives designed to bring more overnight visitors to Santa Cruz County. Representatives from the Santa Cruz County Conference and Visitors Council will be on hand when the Capitola City Council considers the proposal at 7 p.m.

Thursday in City Hall, 420 Capitola Ave.

Hotels with 3,600 rooms in the county have rebounded from the economic collapse in 2008.

According to STR, which tracks the industry, occupancy for the first nine months of 2014 was 65.5 percent and the average daily room rate $144. Both surpass precrash levels.

To create the so-called “tourism marketing district” requires approval of the county supervisors, which unanimously signaled in mid-December their intent to approve, and all four city councils. Each jurisdiction gets 1 percent of the fees collected to cover costs of their services.

Two tourism marketing districts are already in effect. The first, created in 2010 in wake of the recession, set a fee of $1 to $1.50 per night, generating $845,000 the first year and $1.1 million annually thereafter. The second, in 2014, exchanged funding from city and county of Santa Cruz for a fee of 50 cents per night, generating $400,000.

Both expire June 30.

The new proposal would replace the two with a variable fee structure based on the “revenue per available room,” an industry metric, and leverage the fact that oceanview rooms command higher rates.

Guests at a hotel with $100 or more revenue per available room would pay another $3 per night.

A guest at a hotel with a revenue metric of $75 to $100 would pay $2.50 per night or $2.25 per night if the metric were $50-$75.

The fee would be $1.75 per room night sold by vacation rental management companies and hotels with a revenue metric under $50.

Tourism officials credit some of the 12 percent increase in occupancy rates in 2011, especially in the fall, to new promotions funded by these marketing fees.

Decisions on how to spend additional revenue have not been made.

The new rates would not take effect until July 1, “so we will have time to address expanded initiatives,” said Maggie Ivy, who heads the Conference and Visitors Council.

Programs that have performed well, she said, and warrant evaluation include online/digital initiatives including social media, international efforts with Visit CA and Discover America/Brand USA and destination marketing for meetings and events.

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