This coming Wednesday, July 3 Mammoth’s Town Council is expected to vote to approve the formation of a local TBID (Tourism Business Improvement District).
The proposed TBID would impose varying fees on restaurant, lodging and retail establishments, as well as a 2% fee on all Mammoth Mountain lift tickets, and is expected to raise approximately $4.7 million annually.
The money would be spent on a massive marketing push administered by Mammoth Lakes Tourism, the Town’s NGO (non-governmental organization) dedicated to marketing and tourism.
Approximately $2 million would be earmarked for commercial airline subsidies.
Until now, these subsidies have largely been paid by Mammoth Mountain.
Mammoth Mountain will contribute 2% of ski and bike lift ticket sales and by itself is expected to pay more than half of the $4.7 million.
As TBIDs are a fairly recent phenomenon, there doesn’t appear to be any academic research out there which analyzes their effectiveness. There is some research on BIDs in general.
Anecdotally, Mammoth Lakes Tourism Executive Director John Urdi specifically pointed to the Napa Valley Tourism Improvement District as a success story, so The Sheet spoke with Clay Gregory, President and CEO of Visit Napa Valley, this week to learn more.
Gregory worked in the wine industry at Jackson Family Wines for five years before joining Visit Napa Valley in July 2009.
At that time, the organization had three employees and an annual budget of approximately $500,000.
Gregory saw that the tourism business in Napa had hit a wall, and also recognized that virtually all his competitors – from Sonoma County to Paso Robles to Mendocino – had a TBID in place.
So Gregory hired Civitas Advisors (the same firm Mammoth is using to establish its TBID) in October 2009, and Napa’s TBID went into effect in July 2010.
The TBID, which levied a 2% fee on transient room rentals, increased Napa’s marketing budget by about 750%.
Between 2009 and 2012, here’s what happened.
Lodging properties in Napa Valley saw a 45.8% increase in revenue, from $190.9 million to $278.4 million.
In 2008, just as the recession came crashing down, revenue was approximately $223 million.
The City of Napa, one of the five key municipalities within Napa County, saw 20% year-over-year growth in Transient Occupancy Tax (T.O.T.) from 2010-2011, and another 16% increase for the 2011-2012 fiscal year (ending June 30, 2012).
For FY 2012-2013, the City is projecting another double digit, year-over-year increase in T.O.T.
In the City of Napa, T.O.T. revenue accounts for approximately 20% of all General Fund revenue, not 60% like Mammoth.
Gregory now has 19 employees and an annual budget in excess of $5 million.
He also wants more.
“We’re not seeing a limit yet,” he said, in terms of growth, noting Napa still has plenty of extra capacity for weekdays and off-season (November through April). And the next logical step, he believed, was to extend the BID to restaurants and retail.
According to the most recent census, Napa County has a population of roughly 138,000. According to a 2012 Economic Impact Report prepared by Destination Analysts out of San Francisco, Napa had 2.94 million unique visitors in 2012 and 4.9 million visitor days. 67% of its visitors are day visitors.
The report states, however, that 75% of total visitor spending comes from overnight lodging guests.
A Contrarian View
While the above are compelling numbers, it may be helpful to put them in context.
Can Napa’s recent success be directly correlated to marketing expenditures, or have there been other contributing factors? Such as the zooming popularity of the wine industry.
According to the Demeter Group’s 2012 Wine Industry Outlook, “Spending on wine, especially in the luxury segment ($15/bottle and above) drove a total increase in dollar and unit sales of approximately 6% (year over year).
Luxury sales grew 12.9% in 2010 and 16.5% in 2011.
And that luxury market is exactly where Napa lives. According to the www.countyofnapa.org website,”Napa produces only 4% of California’s wine by volume. But as the largest producer of high-end wines, delivers almost 27% of the sales value of the state’s wine.”
As Danny Brager, V.P. of the Beverage Alcohol practice at Nielsen told the wine institute: “Retailers recognize that wine is a large and growing category, even in economically challenging times, and tends to attract upper income consumers.”
Did the wine drive the marketing, or did the marketing drive the wine?
If business is booming, does anyone really care?
Is it legitimate to make an apples-to-apples comparison between Napa (wine) and Mammoth (skiing)?
Finally, is it fair?
According to an academic paper by Lorlene Hoyt and Devika Gopal-Agge on the “Business Improvement District Model: A Balanced Review of Contemporary Debates,” the authors write “Researchers have criticized the organizational structure of BIDs where Boards have inequitable representation of residents and the less privileged class and the legally enabled provision of weighted voting that devolves larger property owners more authority. Critics argue that such practices are not democratic as they serve the interests of and concentrate power with the privileged classes …”
Dartmouth College Professor of Economics Bruce Sacerdote, a Sheet subscriber, had a more direct and simple response: “Seems like the townspeople should get to vote since so many of their goods and services would go up in price!”
If Council votes to approve the TBID formation Wednesday, the TBID would be eligible to go into effect by August 1. So … townwide sale in July! Everything discounted at least 1%!
Good News For Speeders
The Justice Court in Beatty, Nevada, on the border with Inyo County, will now allow California motorists receiving a ticket; to attend a California DMV approved classroom traffic school.
“This is good news for folks in the Eastern Sierra who drive through Beatty on the way to Las Vegas,” says Ken Harrison of the California Traffic School Association. Harrison points out that in most Nevada counties, a California motorist receiving a violation will need to make another time-consuming and costly trip back to Nevada to attend a traffic school. Nevada courts do not allow violators to take on-line courses.
“Nevada needs to recognize the economic contributions of Californians, and do what Arizona, and 18 other states do – automatically advise California’s licensed drivers it is okay to attend a local, DMV approved, classroom traffic school,” said Harrison.
His organization has petitioned the Justice Courts in the other Nye County, NV areas of Tonopah and Pahrump, requesting the judges there follow Beatty’s lead. Unlike California, each court in Nevada is autonomous as far as traffic school policies.
Harrison is owner of the Oceanside-based I’ll Never Speed Again Comedy Traffic Schools. His school is the only classroom course offered in the Eastern Sierras. His next class will be at the Bishop Church of Religious Science, 129 E. Line St. on Saturday, Aug. 10. Pre-registration is required by calling 800.941.2687.
Odds and ends
John Arnold is back! The pharmacist is now back working in Mammoth, at Vons.
Jimmy’s Taverna and the Red Lantern will be closed for the next few weeks according to Sierra Nevada Resort G.M. Brent Truax. The closure was precipitated by the resignation of Red Lantern Chef Justin Rado, who is leaving to take a job in Austin, Texas. Wife Dympna Rado, the chef at Jimmy’s, had been prepared to run both restaurants through the summer before joining her husband, but Truax said she changed her mind and chose to leave early. He is now in the process of recruiting a new chef team.
The official story had been that the restaurants were closed for renovations, but when challenged on it, Truax told the truth.
According to one server, employees were told that they are all being dismissed and will have to reapply for their jobs.
This same employee was disappointed by the sudden turn of events, noting that Jimmy’s was ranked among Mammoth’s top three restaurants on yelp.
Rafters remains open daily.