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HomeMy WebLinkAbout2022-03-24; Carlsbad Tourism Business Improvement District; ; Group Incentive OptionsMeeting Date: Mar. 24, 2022 Subject: Group Incentive Options Recommended Action Adopt a resolution approving group incentive program guidelines. Item Explanation The Carlsbad Tourism Business Improvement District (CTBID) contracts with Visit Carlsbad to execute destination marketing services to increase tourism in Carlsbad. Part of these services have in the past included administering a group incentive program (GIP). GIPs are common tools used by destination marketing organizations, tourism authorities, and visitor bureaus to attract large meetings, events, conferences, conventions, and other groups to the destination, thereby increasing the economic impact of the tourism industry on the destination and increasing transit occupancy tax. Visit Carlsbad has previously administered a GIP as part of its services. However, in early 2021, a review of the program showed that there could be potential conflicts of interest and the program was suspended until the issue could be resolved. Since that time, Carlsbad hotels have been at a competitive disadvantage to other peer locations that have such programs in place. With the impact of COVID-19 on the tourism industry subsiding, Carlsbad hotels have expressed an urgent need to have a program in place that would increase the destination's competitiveness in booking new groups. On May 19, 2021, the CTBID Advisory Board approved a one-year contract with Visit Carlsbad that included funding for a GIP that could commence once a program was proposed that addressed the previous concerns noted in the program review. In February 2022, Visit Carlsbad proposed a GIP (Attachment A) that addressed the previous concerns and could be immediately implemented to bolster the competitiveness of Carlsbad hotels and the destination as a whole. The program includes two options to incentivize new group business in Carlsbad -new group business is defined as a group that has not held a particular meeting, event, conference, convention, or other similar activity (group) in Carlsbad in at least two years. The first option would allow for an incentive amount equaling 2.5% ofthe actualized room night revenue, up to $8,000, to be reimbursed to the booking business (client) for ancillary costs associated with the group. In this option, the client would need to submit an attestation that the funds are used on costs related to the group. The reimbursement cannot be used for costs incurred at the hotel where the group is taking place. The second option would allow for an incentive amount equaling 5% of the actualized room night revenue, up to $8,000, to be reimbursed to the client for ancillary costs associated with the group. In this option, the client would need to submit proof of costs incurred to be reimbursed. The reimbursement cannot be used for costs incurred at the hotel where the group is taking place. Expenditures that qualify for reimbursement may include but are not limited to: • Airport Transfers • Destination Management Company-Provided Transportation • Event decor or entertainment • Other ancillary expenses (must be approved in advance by Visit Carlsbad) This offer would be available to any group meeting with 50 room nights or more, staying at any hotel property in the destination provided there is an appropriate amount remaining in the Visit Carlsbad group incentive budget established by the CTBID. Next Steps Should the Board approve of program guidelines, staff would work with Visit Carlsbad to immediately make the program available to Carlsbad hotels. Fiscal Impact A budget of $396,000 was established in the FY 2021/2022 contract with Visit Carlsbad. No additional funds are necessary to execute this program in the current contract period. Should the program be continued in subsequent years, the budget request would be included in future contract proposals. Environmental Impact This action does not constitute a "project" within the meaning of the California Environmental Quality Act under California Public Resources Code Section 21065 in that it has no potential to cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. Exhibits • Exhibit 1-Resolution • Attachment A-Visit Carlsbad Group Incentive Program DocuSign Envelope ID: 9FDD798A-464A-4D19-A1D7-E2C627D36109 EXHIBIT 1 RESOLUTION NO. 2022-6 A RESOLUTION OF THE ADVISORY BOARD OF THE CARLSBAD TOURISM BUSINESS IMPROVEMENT DISTRICT APPROVING GUIDELINES FOR A GROUP INCENTIVE PROGRAM WHEREAS, the Carlsbad Tourism Business Improvement District (CTBID) works to increase tourism in the City of Carlsbad; and WHEREAS, group incentive programs are common tools used by destination marketing organizations, tourism authorities, and visitor bureaus to attract large meetings, events, conferences, conventions, and other groups to the destination; and WHEREAS increasing group business and tourism provides a benefit to the city by increasing the economic impact of the tourism industry on the destination and increasing transit occupancy tax; and WHEREAS, absent a group incentive program, Carlsbad hotels are at a competitive disadvantage to peer destinations in attracting group business; and WHEREAS, the CTBID has contracted with Visit Carlsbad to administer destination marketing services from July 1, 2021 to June 30, 2022, having approved a contract on May 19, 2021; and WHEREAS, the contract with Visit Carlsbad allows for a group incentive program to be implemented and includes a budget for such activities; and WHEREAS, the CTBID Advisory Board requested to review group incentive program guidelines prior to a program being implemented. NOW, THEREFORE, BE IT RESOLVED by the Advisory Board of the Carlsbad Tourism Business Improvement District, as follows: 1. That the above recitations are true and correct. 2. That Advisory Board approves the group incentive program guidelines (Attachment A) to be administered by Visit Carlsbad via its existing contract. DocuSign Envelope ID: 9FDD798A-464A-4O19-A107-E2C627D36109 EXHIBITl PASSED, APPROVED, AND ADOPTED at a special meeting of the Advisory Board of the Carlsbad Tourism Business Improvement District on the 24 day of March2022, by the following vote to wit: AYES: STRIPE, RAUCH, CANEPA, ZUPANSKI, BECERRA, GRAY NAYS: N/A ABSENT: CHAPIN ABSTAIN: N/A ti... s f&t: TIM STRIPE, Chair FAVIOLA MEDINA, City Clerk Services Manager ATTACHMENT A (as edited based on Advisory Board requested program amendments approved at meeting on March 24, 2022) S, v&1-r.. ~ carlsbad Visit Carlsbad Group Incentive Program 2022 Purpose/Considerations: • Utilizing a group incentive program will support Carlsbad's business travel recovery. While leisure travel is expected to make a full recovery by end of 2022, business and meetings travel is not expected to make a full recovery until 2024. • Meeting groups support increased shoulder season occupancy and therefore tax revenues into City of Carlsbad -both from transient occupancy tax and retail sales tax. • Competitors such as Newport Beach, Huntington Beach, Santa Barbara, Phoenix, and Dana Point offer these programs. • Transportation & accessibility to nearby airports and other ancillary costs are often indicated as top reasons why meeting planners and Clients have NOT chosen to base their events in Carlsbad, putting the destination at competitive disadvantage. Definitions • "Property" is a hotel in Carlsbad with that is hosting a meeting including 50 or more room nights. • "Client" is a meeting planner or representative from a corporation or association that secures space and 50 or more room nights for the purpose of holding a meeting. • "Group" is a meeting held by a corporation or association that is utilizing 50 or more room nights. Proposed Carlsbad Group Incentive Program Components: Visit Carlsbad will offer a Group Incentive of 5% of total room revenue up to a total incentive amount of $20,000 for a qualifying Group. Approval from the Property, the Client and Visit Carlsbad must be completed and documented for this offer to be valid. Approval of the incentive must be consistent with the program goals. Visit Carlsbad will pay an incentive total of 5% of total actualized room revenue as a reimbursement for transportation or other ancillary costs to the Group, unrelated to the Property. The 5% incentive cannot be applied toward Property invoice and is payable upon completion of program and billing reconciliation. ATTACHMENT A (as edited based on Advisory Board requested program amendments approved at meeting on March 24, 2022) Expenditures that qualify for reimbursement may include but are not limited to: • Airport Transfers • Destination Management Company Provided Transportation • Event decor or entertainment • Other ancillary expenses (must be approved in advance by Visit Carlsbad) Program Process: Property sales contact completes application (Draft Exhibit "A") and submits to Visit Carlsbad for approval. Property sales contact requests Visit Carlsbad Addendum to Hotel Contract from Visit Carlsbad (Draft Exhibit "B") and routes for signatures from all relevant parties. The Visit Carlsbad Addendum to Hotel Contract will include an attestation from the Client that funds were spent on ancillary costs and that Visit Carlsbad reserves the right to audit Client's use of incentive funds to ensure they were utilized toward ancillary expenses unrelated to the Property, Upon completion of program, incentive is calculated based on actualized room Revenue. Client submits invoice for reimbursement of 5% of total actualized room revenue. Visit Carlsbad issues check directly to Client. Additional Notes: This offer can be made to any Group meeting with 50 room nights or more staying at any Property provided there is an appropriate amount remaining in the Visit Carlsbad group incentive budget established by the Tourism Business Improvement District (TBID). The Group must contract by December 31, 2022 and consume by December 31, 2024. OFFER IS VALID FOR NEW GROUPS ONLY. New is defined as any Group that has not actualized any meeting at any of the Carlsbad Properties within the last two (2) years of booking date.