G-02-10-10-12C1 - 10/10/2002ORDINANCE NO. 8- G-iOiO-i /
AN ORDINANCE ADOPTING THE HOTEL OCCUPANCY TAX
BUDGET OF THE CITY OF ROUND ROCK, TEXAS FOR FISCAL
YEAR 2002-2003.
WHEREAS, the City of Round Rock collects a seven (7) percent
tax on hotel/motel rooms, and
WHEREAS, the tax money is to be spent for promoting tourism
and the arts, and
WHEREAS, a proposed 2002-2003 budget for Hotel Occupancy Tax
funds is attached as Exhibit "A" which provides for expenditure of
the funds in a manner in compliance with Section 1.1809 of the City
Code (1995 Edition), and
WHEREAS, the entities desiring funding have provided written
information to the City of Round Rock, attached as Exhibit "B,"
that indicates which scheduled activities, programs, or events
offered by the entity will directly enhance and promote tourism,
and the convention and hotel industry, Now Therefore
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF ROUND ROCK,
TEXAS:
That the attached 2002-2003 Hotel Occupancy Tax Budget is
hereby approved and the disbursements shown thereon are hereby
authorized.
::ODMA\WORLDOX\O:\WDOX\ORDINANC\020926B3.WPD/SC
The City Council hereby finds and declares that written notice
of the date, hour, place and subject of the meeting at which this
Ordinance was adopted was posted and that such meeting was open to
the public as required by law at all times during which this
Ordinance and the subject matter hereof were discussed, considered
and formally acted upon, all as required by the Open Meetings Act,
Chapter 551, Texas Government Code, as amended.
READ and APPROVED on first reading this the �Li
day of fl Li.L&), 2002.
READ, APPROVED and ADOPTED on second reading this the
/ 0 day of D1±I2 L& , 2002
ATTEST:
XWELL, Mayor
City of Round Rock, Texas
CHRISTINE R. MARTINEZ, City Secreta
2
Summary of Proposed Budget Expenditures
City of Round Rock
Hotel Occupancy Tax Fund #710
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DESCRIPTION � F i:: .
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Expenditures:
Festivals & Events (bold indicates new in 2002-2003)
Central Texas Bluegrass Festival $6,000 $4,000
Central Texas Antique Fair 0 10,000
Cowboy Christmas Ball 8,000 8,000
Daffodil Days 1,500 1,500
Fiesta Amistad 8,000 8,000
Frontier Days 10,000 8,000
Old Settlers Reunion 2,500 2,500
Pony National Girls Softball Tourney 10,000 6,500
Quilt Round Up 0 10,000
RR Folk (Quilt and Cloth Doll) Art Show 3,000 0
Holiday Basketball Classic 3,800 3,800
Contingency 25,000 0
PARD Convention Marketing 0 10,000
Total Festivals & Events 77,800 72,300
Arts Support
Ballet Folklorico 5,300 7,990
Round Rock Community Choir 10,000 10,000
Sam Bass Theatre 8,300 9,500
Contingency 4,000 0
Total Arts Support 27,600 27,490
Tourism Support
Chamber of Commerce 85,000 86,900
Tourism Marketing Programs 48,500 65,000
Unallocated 11,100 310
Total Tourism Support 144,600 152,210
Museum Support
Palm House Museum 10,000 8,000
Total Museum Support 10,000 8,000
Subtotal -Tourism, Arts, Museum
260,000 260,000
Unallocated
Contingency 10,000 0
Total Unallocated 10,000 0
Convention Center Complex Project
Transfer to Reserve Fund at Trustee Bank 69,850 75,000
Transfer to Debt Svc. Fund at Trustee Bank 519,240 527,990
Property Insurance 26,500 30,000
Contingency and Trustee Fees 25,000 25,000
Capital Repair (Trustee Bank acct) 50,000 77,010
Total Convention Center Project 690,590 735,000
Total Expenditures $960,590 $995,000
Executive Summary
Tourism Plan
Fiscal Year 2002 - 2003
Prepared by: Denise Williams
Revised: September 5, 2002
Overview
Tourism is growing up in Round Rock, as evidenced by the number of hotel rooms and
revenue shown on the graphs below.
600
500
400
300
200
100
0
1997 1998 1999 2000 2001
25000
20000
15000
10000
5000
0
■ Revenue ($000)
1111111111 1 1
PM I 1 I
11 11111
1997 1998 1999 2000 2001
These figures represent an increase of 279% in room availability and 259% increase in room
revenue over the past five years.
While travel trends show signs of suffering from the economy and the aftermath of September 11
(first quarter Austin -San Marcos MSA down 20.5%), automobile travel is increasing and this should
bode well for Round Rock's tourism industry.
Dallas/Fort Worth and Houston still contribute the lion's share of visitors to the Austin -San Marcos
MSA (Metropolitan Statistical Area). And both markets are strong auto travel markets.
Round Rock also remains very competitive with an average room rate of $68.22 versus the MSA
average of $83.62, approximately 18.4% Tess per room per night. (First Quarter, 2002)
100
90 —
80 —
70 —
60 —
50 —
40 —
30 —
20 —
10 —
0
Strengths
Austin
—4—Round Rock
I I I 1 1 1 1 1 1 1
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
• Proximity to a variety of recreational, cultural, historical, educational and governmental entities
• Convenient access via Interstate 35
• Safe
• Affordable
• New facilities; state -of -the art amenities
• City's can -do attitude
• Outstanding Parks and Recreation programs; sports venues
• Climate—over 300 days of sunshine per year
Challenges
1 Assimilation of the increased room night availability, which will allow us to regain and retain
the occupancy rates to which our hotel properties have become accustomed (87.50/0 in 1995
versus 56.1% in 2001).
600
500 -
400 -
300
200
100
Room Nights Available (000)
—10—Room Nights Sold (000)
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
2. Budget constraints.
3. While group business (multiple room night sales) seems a logical target, the size of our
largest meeting facility in Round Rock keeps us focused in the "under 500 category."
4. Not only do we lack public transportation; we are dependent upon transportation a) to
utilize hotels/motels and the United Heritage Conference Center b) to take advantage of
Austin attractions and c) for dining and shopping.
5. Highly competitive industry. Many properties are closer in to Austin and will continue to
drop rates to improve occupancy.
6. Difficulty in marketing United Heritage Conference Center during the baseball season due to
game day conflicts for space.
7. Mobility of hospitality personnel makes continuity in programming difficult and education a
necessary component of the marketing plan.
2001 —2002 Accomplishments
General Advertising and Promotion
The Round Rock Chamber of Commerce/Tourism Division provided information to approximately
12,000 people who contacted us by phone, sent an inquiry by mail, fax or email; or visited the
information center.
Information on special events and festivals were sent regularly to the following publications for
inclusion in their Calendars:
• AAA's Texas Journeys Magazine
• ACVB Events Calendar
• ACVB Holiday Direct Mail Piece
• Austin360 Website
• LCRA Events Calendar
• Texas Events Calendar
• Texas Monthly
• USA Tourism Website
In addition, information on Round Rock, including city description, attractions, meeting facilities
and hotels appeared in:
• Austin Meeting Planners Guide
• Convention South
• Texas Accommodations Guide (Round Rock was the first city to pay for a complete listing in
the guide...many cities have followed our lead)
• Texas Tour Guide
• Texas Lodging Website—Banner with Click -through (No charge in 2002)
• Trip South
• USA Tourism Website
Advertising for Round Rock appeared in the following publications:
• Texas Monthly—Spring Travel Planner (generated 1,900 inquiries)
• Texas Travel Guide
Hotel Alliance
In 2000, the Round Rock Chamber of Commerce created a forum for hotels/motels to share
information and develop a stronger working relationship through what has become the Hotel
Alliance of Williamson/North Travis Counties. Participants included Rock hotels and motels; hotels
and motels that were members of the Round Rock Chamber, but not within city limits; hotels and
motels in Cedar Park, Georgetown and Taylor; Cedar Park, Georgetown, Taylor and Pflugerville
Chambers of Commerce and area meeting facilities.
Group Initiatives
Developed a cooperative trade show plan, with the alliance, to attend TSAE (Texas Society of
Association Executives) Southwest Showcase. Round Rock provided the booth and participating
hotels paid a small fee to cover space and promotional items.
Advertising for Round Rock appeared in the following publications:
• Austin Meeting Planners Guide—official magazine of the Austin Convention and Visitors
Bureau sent to all meeting inquiries. Not only did we run an ad, we received comprehensive
listings of all Round Rock properties, their meeting space and amenities.
•
• Texas Tour Guide—distributed to 48,000 travel trade professionals to assist in planning
meetings, tours and packages to the state of Texas; 24,000 Texas Monthly subscribers and
20,000 through national newsstands.
2002 — 2003 Marketing Plan Summary
Key Audiences
Groups
• Meetings and Conventions
• Events and Festivals
• Bus Tours
• Organized Sports
Individuals
• Business Travelers
• Leisure Travelers
• Visitors
• Winter Texans
The chart below, provided by TIA (Travel Industry Association), shows what activity tourists named
as the primary motivation for their trip.
Theme Parks
Historic/Cultural
Outdoor Activities
Shopping
i
■ Persons %)
21
22
33
(A shopping weekend would not only enhance occupancy rates and taxes, it also adds to the
economic goal of diversification of the Round Rock sales tax base.)
General Marketing Strategies
• Support City's Tourism Initiatives
• Plan for the future
• Create milestones/tracking mechanisms
• Develop communications model that effectively collects and distributes information on all
activities occurring within the city
• Seek opportunities that maximize results with minimum investment
• Add "sweat equity" to the formula
Groups Strategies
• Rebuild vitality of Hotel Alliance
• Increase exposure of area through cooperative trade show participation with hotel
properties and meeting venues (i.e. TSAE Southwest Showcase)
• Create Meeting Planners' Guide
• Develop and/or enhance area sports organizations solicitation program, including the
creation of promotional materials to lure groups to Round Rock—i.e. GASA, CAYSA, UIL
• Devise a room tracking plan for Events & Festivals
• Initiate and investigate the value of a Bus Tour Operator Program
Individuals Strategies
• Create collateral materials that address key interests:
--Day Trips/Proximity to Austin attractions
--History and Heritage (The Crossing and Texas Heritage Trails Program)
--Convenience, Value & Amenities for business market
• Utilize proven advertising vehicles for reaching identified markets
• Maintain comprehensive visitor center inventory and trained staff
Advertising
Capitalize on Texas Tourism Advertising, $15,080,000 in 2001:
• Texas Accommodations Guide (circulation 1,000,000)
• Texas Travel Guide (circulation 1,000,000)
Capitalize on the Austin Convention & Visitors' Bureau Advertising:
• Austin Meeting Planner Guide (circulation 10,000)
• Austin Official Visitors Guide (circulation 200,000)
Focus on Group Business (biggest bang for the buck):
• TTIA File Folder Program (Texas Travel Industry brochure promotion to travel trade)
• Texas Tour Guide (circulation 92,000)
Maintain awareness of the general public:
• Texas Monthly Spring Travel Planner (circulation 305,000)
• See Texas First Newspaper Insert in 16 regional newspaper markets including Dallas, Fort
Worth and Houston (circulation 1,000,000)
Public Relations
• Seek out opportunities to expose Round Rock Tourism (story ideas, trade magazines)
• Research other sources of events calendars (Texas Monthly, Southwest Airlines Spirit)
• Develop a promotional item plan and inventory to support trade show and conference
prog rams
Event Funding
This year nearly $98,000 (38%) of the $260,000 tourism budget will be spent by groups and
organizations that request assistance in hosting their festival and events, or operating their non-
profit arts organizations.
Expenditures of the Hotel Occupancy Tax are required to pass a two part test.
"First the expenditure must directly enhance and promote tourism and the convention and hotel
industry. In other words, the expenditure must be likely to attract visitors who are likely to stay in
hotels and participate in local events. These visitors must be from outside the city...and must be
traveling into the city or its vicinity. If the expenditure is not reasonably likely to accomplish this
result, it should not be funded by hotel occupancy tax revenues." (Taken from Texas Town & City,
"What Cities Need to Know to Administer the Local Hotel Occupancy Tax," April, 2001 --The
complete article regarding Hotel Occupancy Tax usage is included in this packet for your
reference.)
From a purely marketing perspective, the overall tourism budget (and even event support) could
be much more efficient and effective if it were administered collectively and professionally by the
Tourism Division, rather than being fragmented and budgeted individually by the groups.
Traditionally, most groups spend the majority of their advertising dollars in the Round Rock Leader
and the Austin American Statesman. While there is some validity to the fact that people traveling
to the area might well "pick up the Statesman" to see what activities were occurring, the primary
benefit of Statesman advertising is reaching the local population. This doesn't put "heads in beds."
If we took the $37,800 allocated for event advertising, and placed it in regional newspaper
markets, for example, the effect would be "heads in beds" but perhaps at the expense of event
or festival overall attendance.
Therein lies the dilemma.
Our Arts Support funding has a similar problem. While all of the true arts organizations clearly pass
the second part of the test, "Funding programs which enhance the arts," the purpose of "directly
enhancing and supporting tourism..." remains a gray area. Additionally, festival and event groups
are applying under the "arts" category by including their entertainment, music, etc. as an "art
form," to avoid the stricter requirements for advertising.
Finally, by law, sports groups are not allowed to receive support from the HOT other than for
legitimate advertising or registration of participants. This is truly unfortunate as the majority of
group business generated by our hotels and motels currently comes from sporting events and
tournaments. I am quite sure there will be additional debate over this topic during the upcoming
legislative session. We will keep you posted as to the events surrounding this important legislative
change.
ADDITIONAL DOLLARS WILL MEAN ADDITIONAL PROGRAMS.
There is a certain amount of administrative and overhead costs associated with any marketing
endeavor. Tourism is no different, for it is reaching a market that is distinctly different than the
Chamber or Economic Development programs. Because the "bases are already covered," the next
level of Tourism marketing could be accomplished with simply more time allocated to and support
materials for Tourism. "Hitting the streets," would be the next level of service that we would
recommend. Those recommendations are outlined in the budget breakout which follows. Layer by
layer, as additional funds are made available, we would enhance our existing programs, build
additional awareness, and generate direct traffic to our hotels.
For example, here's how additional, one-time monies could be allocated. These initiatives are not
comprehensive programs for the markets indicated; but rather a minimum required to "throw our
hat into the ring" and begin building results.
A. Focus on Group Initiatives $50,000
If we are to enhance our activity in the Convention & Meeting Solicitation market, we have to
devote more staff time to the development and implementation of bid solicitations. Increasing this
activity will require that we do such activities as travel to the sites for convention bids, make sales
calls on meeting planners in Austin, and participate in the travel shows that are targeting tourists.
This requires more staff time and in order to free up this time for these activities, someone must
be hired to take over some of the chamber and economic development responsibilities that those
chamber staff members currently perform. Convention bidding requires additional support
materials for custom presentations, additional promotional items, and funds to sponsor activities at
conventions. This is a very competitive market. Minimum Investment: $23,500.
The same reasoning applies to the Sports Marketing areas. In addition, a publication on sports
facilities in the Round Rock and surrounding areas and active participation in the Greater Austin
Sports Alliance would greatly enhance our ability to attract more sporting events. Minimum
Investment: $12,500.
In order to conduct a Tour Operator program, we should participate in both POW -WOW and the
National Tour Association Conventions. These are the primary industry events and the most
effective and expedient way to meet and network with a large gathering of tour operators.
Since we have such a wonderful facility in Dell Diamond, a familiarization (FAM) tour for tour
operators, as well as meeting planners from Austin, would be a beneficial and productive way of
promoting Round Rock to these markets. Minimum Investment: $14,000.
B. Focus on Building Awareness $ 50,000
With our current budget, we can only advertise in basic publications and with a minimum
frequency. We could strategically add publications, such as Southern Living Travel Texas or Texas
Highways, as well as enhance other media opportunities, such as increasing size for better
visibility. This would set us on a path of building our awareness to our key audiences, which are,
by no means, saturated. Additional collateral and postage would be needed for inquiry response.
C. Focus on Hotel Traffic and Room Revenue Generation $50,000
Developing a regional newspaper campaign in Austin -San Marcos MSA primary feeder markets
could be geared to key time frames; promotion of "hub and spoke" tours—stay in Round Rock and
take this special day trip; or specific strategies such as summer reunions, football weekends,
baseball weekends, legislative sessions, etc.
As with any strategic program, planning and implementation must and will include goals and
tracking. As the opportunities are more fully developed, we would like to present the plans to you
for your information, review and approval.
City of Round Rock
Hotel Occupancy Tax Fund #710
2002-2003 Proposed Budget
REVENUES:
Hotel -Motel Occupancy Tax $1,354,429 $1,325,000 $1,400,000
Interest Income 59,159 30,000 50,000
Transfer from Convention Ctr. Rev. Fund 312,932 0 0
Contributions 11,687 0 0
Total Revenues
1,738,207
1,355,000 1,450,000
EXPENDITURES:
Festivals & Events (bold indicates new in 2002-2003)
Accordion Kings 5,000 0 0
Central Texas Bluegrass Festival 4,000 6,000 4,000
Central Texas Antique Fair 0 0 10,000
Chisholm Trail Fine Arts Festival 8,000 0 0
Cowboy Christmas Bali 10,000 8,000 8,000
Daffodil Days 905 1,500 1,500
Fiesta Amistad 10,000 8,000 8,000
Frontier Days 9,000 10,000 8,000
Old Settlers Reunion 2,500 2,500 2,500
Outlaw Trail 100 14,288 0 0
Pony National Girls Softball Toumey 0 10,000 6,500
Quilt Round Up 0 0 10,000
RR Pan Am Golf Association 2,309 0 0
RR Folk (Quilt and Cloth Doll) Art Show 2,500 3,000 0
Sportsfest 6,896 0 0
Sunrise Kiwanis Holiday Basketball Classic 3,800 3,800 3,800
Contingency 0 25,000 0
PARD Convention Marketing 0 0 10,000
Total Festivals & Events 79,198 77,800 72,300
Arts Support
Ballet Folklorico
Round Rock Community Choir
Sam Bass Theatre
Contingency
Total Arts Support
Budget summary, page 1
7,200
10,000
8,500
0
25,700
5,300 7,990
10,000 10,000
8,300 9,500
4,000 0
27,600 27,490
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tSESCRIPflON OFJTEM:
Tourism Support
Chamber of Commerce
Tourism Marketing Programs
Unallocated
Total Tourism Support
79,804
52,944
0
132,748
85,000
48,500
11,100
86,900
65,000
310
144,600 152,210
Museum Support
Palm House Museum 10,000 10,000 8,000
Total Museum Support 10,000 10,000 8,000
Subtotal -Tourism, Arts, Museum 247,646 260,000 260,000
Unallocated
Contingency
3,811 10,000 0
Total Unallocated 3,811 10,000 0
Convention Center Complex Proiect
Transfer to Reserve Fund at Trustee Bank 68,237 69,850 75,000
Transfer to Debt Svc. Fund at Trustee Bank 494,240 519,240 527,990
Transfer to Conv. Center Revenue 281,952 0 0
Property Insurance 25,000 26,500 30,000
Contingency and Trustee Fees 0 25,000 25,000
Capital Repair at Trustee Bank 250,000 50,000 77,010
Total Convention Center Project 1,119,429 690,590 735,000
Total Expenditures $1,370,886 $960,590 $995,000
Estimated Fund Balance 10/01/02 1,857,373
Operating Reserves*
Reserve for Debt Service Transfer
(1,000,000)
(341,186)
Estimated Unreserved Fund Balance 9/30/03 971,187
*Operating Reserves are established in accordance with operating reserve policies.
Budget summary, page 2
DATE: October 4, 2002
SUBJECT: City Council Meeting — October 10, 2002
ITEM: 12.C.1. Consider an ordinance approving and adopting the Hotel
Occupancy Tax Budget for Fiscal Year 2002-2003. (Second
Reading)
Resource:
History:
David Kautz, Chief Financial Officer
Bill White, Finance Director
Sharon Prete, Parks and Recreation Director
The Chamber of Commerce Tourism Committee presented their
recommendations at the September 12, 2002 Council Meeting
regarding the Hotel/Motel event funding.
Funding: N/A
Cost: N/A
Source of Funds: N/A
Outside Resources: N/A
Impact/Benefit: N/A
Public Comment: N/A
Sponsor: Parks and Recreation Department and Finance Department