Wednesday, June 12, 2013
San Diego Mayor Bob Filner wants major hotels to commit money to the city in case lawsuits against the Tourism Marketing District prevail, but only 10 percent have done so, the agency's executive director said Wednesday.
The low commitment level could lessen the amount of money the district directs toward promoting San Diego as a tourist destination in the coming fiscal year, according to a presentation to the City Council's budget committee.
"Private ownership properties were coming in the quickest,'' said TMD Executive Director Lorin Stewart. "The properties that are corporate, with national brands, have to go through a process.''
Only 14 hotels have provided the commitment so far, he said.
The waivers were a key component of an agreement that ended a dispute between the mayor and the district. In order to release money to the TMD, the mayor said he wanted the city's general fund protected in case two lawsuits filed over the agency's funding mechanism prevail in court.
The district is funded by a 2 percent charge on hotel room rates, which is collected to the city.
According to the agreement, the city will only disperse to the TMD the money that comes from guests at hotels that have issued waivers.
The revenue from other hotels will be held in an account to pay damages in case the 2 percent charge is struck down in court as an illegal tax. That way, any legal awards would not come out of the city's general fund, which pays for basic services like public safety and libraries.
Meredith Dibden Brown of the city's economic development department said officials are hoping at least 50 of the largest hotels in the city will step in with waivers.
"They'll just come in when they come in,'' committee Chairman Todd Gloria said of the waivers.
According to the TMD presentation, the district tentatively plans to provide $22 million to the San Diego Tourism Authority, which used to be known as the Convention and Visitors Bureau, or ConVis. Another $2.3 million would go to organizers of a yearlong celebration of Balboa Park's centennial in 2015.
However, the actual funding levels will be determined by the number of hotels that issue waivers and could be much lower, Stewart said.
In a separate meeting with reporters, Filner said tourism industry leaders "can't convince their own hotel owners that this is important. I think that speaks for itself.''
The funding concerns come amid a slowdown in the growth of the number of visitors to San Diego, which the district forecasts to be only around 2 percent this year.
Stewart said San Diego has been hit by "a perfect storm'' of heightened competition around California, heavy advertising from Los Angeles and the cancellation of a TMD ad buy for San Diego while the mayor was negotiating the agreement with local tourism officials.