Nine resort hotels in Newport Beach’s Tourism Business Improvement District are asking the City Council to dissolve it so they can transfer their marketing activities, paid for by room rate assessments, to a privately run group that will continue those efforts without the added local government involvement.
The tourism district was created in 2009 to help fund marketing of Newport Beach as a destination after the beach town’s major resorts began feeling the effects of the Great Recession. To pay for the marketing campaigns, the resort operators agreed to have an extra 2% tacked onto the cost of a night’s stay, with the city collecting the assessment. The bulk of the proceeds were turned over to Visit Newport Beach, a tourism marketing group that then spent the money for the resorts’ desired purposes. The city kept a small amount to pay for associated administration costs.
The agreement forming the tourism district expired in January, and the nine resorts have decided to become a Marketing Assessment Partnership, which would still work through Visit Newport Beach, but without city involvement.
On Tuesday, Feb. 13, the City Council is scheduled to review their request to dissolve the district.
“They needed to figure out a way to come out of the recession stronger,” Gary Sherwin, president and CEO of Visit Newport Beach, said of the resorts first agreeing to the tourism district and the assessment on the room rates. “At the end of five years, it worked out so well that they decided to assess themselves at 3% for 10 years. That date was up on Jan. 31.”
The resorts involved are Balboa Bay Resort, the Hyatt John Wayne Airport Newport Beach, the Hyatt Regency Newport Beach, the Newport Beach Marriott Bayview, VEA Newport Beach: A Marriott Resort and Spa, the Newport Dunes Waterfront Resort and Marina, the Renaissance Newport Beach Hotel and the Lido House.
With the expiration of the assessment coming up, Sherwin said the resorts recognized the self-assessment had proven successful and considered how to move forward with what they termed a “proven concept.”
Instead of going through the city, they decided they could cut out some of the “government compliance and bureaucratic baggage” by becoming a Meetings Assessment Partnership, and in December formed a nonprofit mutual benefit corporation, as allowed under California law, Sherwin said.
As that group, the resorts – through Visit Newport Beach – will continue to market special events programs and other initiatives to promote tourism. And, instead of 3%, they will now add 5% of the room rate to visitor’s bills to raise the funding, Sherwin said, adding that the money will be pegged exclusively for marketing to the luxury travel and meeting market.
Sherwin said other marketing done by Visit Newport Beach to help the city’s smaller hotel properties and retail industry will come out of the 18% of the Transient Occupancy Tax – a 10% tax the city assesses on a night stay – that Visit Newport Beach receives from the city.