Traverse City Tourism: Budget Grows As Hotel Rooms Fill

Amidst what many say might be the biggest Traverse City summer tourism season in history, The Ticker took the opportunity to look more closely at Traverse City Tourism (TCT) -- the organization with a mission to drive more visitors to the area – how they’re funded and where the money goes.

TCT is funded by a “room tax,” a five percent levy tacked onto the hotel bill of guests at 68 properties with 10-plus rooms in Grand Traverse and Antrim Counties, according to Trevor Tkach, president/CEO of the organization.

“Our members represent about 4,000 rooms, about 1,000 within the city limits,” says Tkach, whose organization was launched in 1981 as the Traverse City Area Convention and Visitors Bureau.

The five largest members are the Grand Traverse Resort and Spa (585 rooms), Shanty Creek Resort (421 rooms), Great Wolf Lodge (280 rooms) West Bay Beach Resort (179 rooms) and Park Place Hotel (140).

TCT's staff of 16 and a cadre of volunteers work to tell the area’s story to potential visitors through marketing, trade shows, sales, PR and services at its visitor center on the busy corner of Grandview Parkway and Union Street in downtown Traverse City.

TCT gets the bulk of its almost $7 million budget from the room tax.

And where does it spend the money? About $4 million goes to marketing, $1 million to staff salaries and benefits, $600,000 for the Pure Michigan campaign and the rest to travel, trade shows and other destination development costs, according to Tkach. Within the 2019 $4 million marketing budget designed to attract more visitors to Traverse City, 51 percent goes to digital messaging, 16 percent to billboards, 15 percent to TV, 14 percent to print publications, and three percent to radio (one percent to cover production costs).

TCT declined to divulge how the marketing dollars are allocated by geographic market.

“One in six jobs depend on tourism in the region,” says Tkach. “We want to keep it up, make it better.”

Detroit had the first convention and visitors bureau in the state, followed by Traverse City. Now there are more than 60 similar organizations in Michigan, all vying for tourism dollars. In the beginning, TCT's room assessment was originally pegged at two percent by legislation. That was raised to five percent in 2011.

While the vast majority of such assessments are paid by out-of-towners, tourism industry officials concede that the fees are also collected from locals who may be enjoying a “staycation.” In Las Vegas, the room tax ranges from 13-14 percent and generates close to $800 million. Officials estimate that Nevada residents pay about five percent of that.

Locally, Tkach guesses that about 2-3 percent, (roughly $150,000) of TCT revenues come from the pockets of local residents who visit to a local hotel or resort.

As the region boomed over the years, so have revenues. Last year TCT took in $6.25 million in room taxes, up from $6.03 million in 2017. The hotels collect the assessments and then forward them to TCT each month. As might be expected, July is the most lucrative month, taking in more than $1 million. Lowest revenues come in January when TCT takes in less than $225,000.

“There's been average growth in annual revenues of about $250,000 a year (in recent years), adds Tkach.

As steady has the growth has been, it could have been even greater; companies like Airbnb and VRBO are impacting visits and dollars, he says.

In 2016 Airbnb accounted for 15,000 guests and $2.6 million revenues in Grand Traverse County. Those numbers climbed to 29,300 guests and $4.38 million in revenues the following year and 53,200 guests and $8 million in revenues in 2018.

“They are almost doubling in guests and revenues, year over year,” notes TCT PR Director Jenness. “And this is only Airbnb.”

“If Airbnb did not exist, we would have collected about 6.6 percent more in assessments,” estimates Tkach. 
Even considering the growth of Airbnb and other similar operations, Tkach sees continued regional growth in tourism growth, accompanied by more hotel rooms.

“I believe we'll see another 500 more rooms in the next five years,” he predicts.