Investing in Visitors: Growing the Pie

Imagine having a community where visitors like to flock and help the locals out with their tax burden. Then imagine leveraging it fully.

Madison has the first point, but it's lagging on the second and probably will continue to lag until the economy rebounds.

In terms of support from local government, the Greater Madison Convention and Visitors Bureau is well behind similar organizations in other locales. It's something the City of Madison, understandably, does not have the ability to address at the moment — especially with an expensive central library project about to add to its debt.

However, once the economy surges back and tax collections reflect that, the city should give strong consideration to gradually increasing the share of room tax collections spent on luring visitors here. These visitors come from around the world to take in Madison's natural beauty, intellectual capital, and sports madness, and in 2008 they contributed $1.24 billion to the local economy, including $386.6 million during the summer.

The annual economic impact of traveler spending includes more than 30,000 jobs, $670 million in resident income, $124.4 million in state tax revenue, and $61.8 million in local tax revenue, according to Davidson Peterson Associates.

Why not give the big gun more ammo?

Through its destination marketing, the GMCVB has a lot to do with that, so why not give it more ammunition? Among its competitive set of 40-plus destinations, Madison is way behind in terms of the percentage invested in destination marketing. Under GMCVB's current contract with the City of Madison, it receives 20% of the prior year room tax collections. Among its peer set, the average is closer to 35%, according to Tim Hyland, vice president of the GMCVB.

"It becomes a competitive issue for us because the competition has more resources available to market and ultimately sell the destination," Hyland stated.

Another 15% would put $1.5 million more toward this often overlooked but essential purpose. Hyland realizes that the city, like all units of government, faces fiscal challenges due to a contracting economy and cannot realistically begin moving toward that 35% threshold right away. In fact, given present circumstances, the bureau would be happy not to see a decline.

"We would like to go from 20 to 35% over a period of years," Hyland said, "but the question is when can we conceivably start some sort of progression?"

That would be soon, hopefully, because the best thing about visitor spending is that all this money comes into Madison from the outside, bolstering hotels, restaurants, and cultural attractions in addition to local tax collections. With more money available for destination marketing, the bureau could attract more visitors, fill more rooms, and generate more room tax.

It's called growing the pie.