HomeMy WebLinkAbout20210218_LegislativePlatformLetter_Tourism Marketing_City of SLOCity of San Luis Obispo, Office of the City Council, 990 Palm Street, San Luis Obispo, CA, 93401-3249, 805.781.7114, slocity.org
February 19, 2021
The Honorable Nancy Skinner The Honorable Phil Ting
Chair, Senate Budget Chair, Assembly Budget
State Capitol, Room 5019 State Capitol, Room 6026
Sacramento, CA 95814 Sacramento, CA 95814
Fax: (916) 651-4909 Fax: (916) 319-2119
The Honorable Jim Nielsen The Honorable Vince Fong
Vice Chair, Senate Budget Vice Chair, Assembly Budget
State Capitol, Room 5064 State Capitol, Room 2002
Sacramento, CA 95814 Sacramento, CA 95814
Fax: (916) 651-4904 Fax: (916) 319-2034
Re: Visit California Funding Request
Dear Budget Legislative Leaders:
Unfortunately, as you know, the coronavirus has had an especially devastating impact on
California’s travel and tourism industry. This is why a broad coalition of advocates—ranging
from tourism, hospitality, labor, and local chambers—respectfully request a one-time,
emergency allocation of $45 million in this year’s budget for Visit California. This funding
will enable them to execute a marketing campaign that will jump start quick recovery of this
key segment of our economy once it is safe to travel.
The coronavirus pandemic has impacted travel and hospitality more than any other industry,
confirmed by the recent report of the Governor’s Task Force on Business and Jobs Recovery.
More than half of California’s 1.2 million travel and hospitality industry workers lost their
jobs because of the pandemic. Lower-wage workers have disproportionately borne the impact
of job losses and the January Budget proposal suggests that these jobs may never return. Not
only that, but for every tourism job lost, a ripple effect occurs in the ecosystem that supports
the travel industry. Every three travel industry jobs support another two California jobs.
Prior to the coronavirus, California’s travel industry was one of the largest economic drivers
for the state. In 2019, more than 1.2 million California workers earned their livelihoods in
hospitality. Visitors spent $145 billion annually at California businesses, generating $12.3
billion in state and local tax revenues. (Source: Dean Runyan Associates) International
travelers spent $28.1 billion in California, making travel the state’s largest export.
California lost $78.8 billion in visitor spending in 2020 — a 54.5% decline. Local
governments lost $6.6 billion in tax revenues that fund vital local services like police, fire and
public health and safety. (Source: Tourism Economics) The transient occupancy tax (TOT)
paid by hotel and vacation rental guests directly powers communities across California — 46
cities rely on TOT revenue to cover at least 30% of their overall general fund expenditures
(Source: California State Controller). Cities anticipate an immediate impact to their core
revenue sources due to COVID-19, with an 89% decline in TOT in 2020 (Source: League of
California Cities). The federal stimulus enacted in early January fails to provide additional
funding to local governments, further jeopardizing the critical services they provide our
communities.
California’s success as a world class tourism attraction is due in large part to Visit California—
their programs delivered $14.8 billion of revenue to the state’s economy in 2019. However,
they are funded by private businesses through a self-imposed assessment, which means the
closure of the state’s tourism industry immediately and dramatically reduced Visit California’s
revenue. This has forced the organization to cancel all existing marketing programs and
dramatically reduce staff.
Without help, California’s travel and hospitality industry will not recover until 2024. (Source:
Tourism Economics) Local governments that rely on TOT will have significant budget gaps
for years. A $45 million, one-time appropriation to fund an in-state and western drive market
campaign would deliver $10.3 billion in revenue to California businesses and $865 million in
additional state and local tax revenue. (Source: SMARI Marketing Insights). This campaign,
launched when the California Department of Public Health declares it is appropriate to resume
travel, would emphasize that it is safe to travel and how to travel safely. For every $1 invested
in Visit California, state and local governments will reap $19 in additional tax revenue.
Tourism has proven itself to be one of the fastest industries to recover in the aftermath of a
crisis. This was the case post-9/11, when Governor Gray Davis made a one-time allocation of
$8.3 million to Visit California that fueled a multi-tiered, in-state/drive market campaign
designed to get Californians to rediscover our great state. The campaign was successful and
drove an incremental $3.2 billion of visitor spending and generated $10.6 million in direct
state tax revenue that more than repaid the state’s one-time investment.
Domestic leisure travel offers the best immediate opportunity for recovering California’s
economy from the pandemic. However, as COVID-19 begins to be controlled, it will be an
extremely crowded marketplace. California needs to actively market itself to prevent decay in
awareness, preference, and travel intent. California is already behind as other states allocate
funds to their tourism sectors in anticipation of marketing to visitors once the pandemic is
under control. For example, New Mexico, with a travel economy 20 times smaller than
California’s, is earmarking $25 million for tourism marketing as part of its COVID-19
recovery plan.
It is critically important that we equip Visit California so they can accelerate California’s
economic recovery. This strategy will provide a ripple effect that moves beyond the travel and
tourism sector to infuse money back into our communities. We believe this allocation will be
an impactful down payment to help California recover from the dire economic impact of the
coronavirus once it is safe to travel again. Thank you for the consideration of this request.
Sincerely,
Heidi Harmon
Mayor
City of San Luis Obispo
CC: Members, City of San Luis Obispo City Council
U.S. Senator Nancy Skinner, Fax: (916) 651-4909
U.S. Senator Jim Nielsen, Fax: (916) 651-4904
U.S. Senator Phil Ting, Fax: (916) 319-2119
State Assembly Member Vince Fong, Fax: (916) 319-2034