SUPPORTS ITEM NO. 1
CS&B COMMITTEE AGENDA
MARCH 28, 1996
ADMINISTRATIVE REPORT
Date: March 20, 1996
TO: Standing Committee on City Services and Budgets
FROM: General Manager of Corporate Services
SUBJECT: Tourism Vancouver - 1996 Business Plan
RECOMMENDATION
A. THAT Council approve the portion of Tourism
Vancouver's 1996 Business Plan funded from the 2%
Hotel Tax in the amount of $6,809,629 ($6,360,000
projected and $449,629 carried forward).
B. THAT Council approve a contract with Tourism
Vancouver for publication and distribution of
tourism-related material for 1996, in an amount not
to exceed $600,000 before GST, subject to an
agreement satisfactory to the Director of Legal
Services.
C. THAT Council approve the cost-sharing arrangement
described in this report between the City and
Tourism Vancouver in connection with the Asia
Pacific Economic Cooperation summit (APEC) to be
held in Vancouver in 1997, on the understanding
that this arrangement and the $350,000 cost
contribution ceiling will apply to the total of the
hosting costs incurred by the City for the summit
and not to a more restricted subset of those costs.
COUNCIL POLICY
City Council must approve the portion of the Business Plan of
Tourism Vancouver which deals with the allocation of the 2%
Hotel Tax.
City Council has supported tourism promotion by way of grants
to Tourism Vancouver up to 1990 and, thereafter, by way of a
contract for the publication and distribution of promotional
material.
PURPOSE
This report recommends approval of the portion of the 1996
Business Plan submitted by Tourism Vancouver dealing with the
allocation of the 2% Hotel Tax and a fee for service contract
for the publication and distribution of tourism-related
material. Additionally, the report recommends a qualified
approval of Tourism Vancouver's proposed cost-sharing
arrangement with the City for the 1997 Asia Pacific Economic
Cooperation (APEC) summit as described below.
DISCUSSION
In accordance with Council policy, Tourism Vancouver has
submitted its 1996 Business Plan and its 1996 publication and
distribution services contract proposal for Council
consideration and approval. The Business Plan and publication
contract proposal are attached as the Appendix to this report.
Council will note that the Business Plan contemplates the
continued receipt and expenditure of the 2% Hotel Tax. The
plan also anticipates municipal contract revenues in addition
to the 2% tax. As in prior years, Tourism Vancouver will
conduct its business activities for the year in accordance
with the approved plan and budget. Additionally, the
Association will file its annual audited financial statements
with the City for review by the Director of Finance in the
normal manner.
An analysis of Tourism Vancouver's 1996 budget indicates the
following changes from 1995.
1995 1996 Percent
Actual Planned Change
Total Budget $7,947,829 $8,501,179 7.0%
2% Hotel Tax 5,725,000 6,360,000 11.1%
2% Hotel Tax Reserve 426,936 449,629 5.3%
Other Revenues 1,795,893 1,691,550 - 5.8%
The Association expects to realize a surplus of $1,015 for the
1995 business year.
HOTEL TAX
In order to recognize the lead time between the collection of
the 2% Hotel Tax and its receipt by the City and Tourism
Vancouver, the Association has based its 1996 Business Plan on
the 2% tax revenues to be collected during the 12 month period
from October 1, 1995 through to September 30, 1996. This
collection period treatment is consistent with the business
plans presented in prior years.
The following table shows the actual 2% Hotel Tax revenues as
collected from October 1, 1994 to September 30, 1995 and
compares those against the 1995 Business Plan. As indicated,
the majority of the 2% Hotel Tax revenues have been taken up
in the 1995 Business Plan, with the remaining funds ($449,629)
carried forward to 1996.
1995 2% revenues collected $6,174,629
1994 reserve funds 426,936
Actual revenues available 6,601,565
1995 2% revenues budgeted 6,151,936
1995 2% funds available for 1996 449,629
Tourism Vancouver projects the 1996 2% Hotel Tax revenues to
be $6,360,000. As noted above, these revenues have been
applied to the 1996 Business Plan.
PUBLICATION AND DISTRIBUTION CONTRACT
The City directly contributed to Tourism Vancouver's
activities by way of grants until 1990, when a contract for
publications was awarded in place of a grant. The provision
of publication services through the 1995 contract was reviewed
by the City's Economic Development Office during the year, and
funds were released as Tourism Vancouver successfully met all
of the terms and conditions of the contract. A copy of the
1995 contract is on file in the City Clerk's Office. The all-
in contract amount approved by Council after GST was $618,000.
With the recent closure of the City's Economic Development
Office, the Director of Finance or his designate will continue
to review the expenditures related to the publication contract
for conformity to its terms and conditions before release of
funds.
Tourism Vancouver's 1996 contract renewal submission and
analysis is presented in Schedule A of the Appendix.
COST-SHARING ARRANGEMENT FOR 1997 APEC SUMMIT
The City of Vancouver was chosen to be the host city for the
upcoming Asia Pacific Economic Cooperation summit in November
of 1997. The summit is expected to attract about 3,000
delegates, including foreign dignitaries and international
media personnel. The summit agenda includes 3 to 4 days of
meetings with senior officials, 2 to 3 days of meetings with
Ministers and a one-day summit with Heads of Government.Staff
have previously reported that the host City will have certain
responsibilities which include security, hosting a civic
reception, pageantry and coordination and regulatory
assistance. Given the aforementioned responsibilities, we
have estimated that the APEC summit could cost the City up to
$700,000. Moreover, there are no direct revenues accruing
back to the City to offset these costs.
Staff have also suggested that the indirect effects of hosting
the APEC summit could be significant in the area of image and
increased world awareness of Vancouver as the Canadian Gateway
to the Pacific Rim. Recognizing that this publicity would be
invaluable in promoting Vancouver as a tourist destination,
Council instructed staff to approach Tourism Vancouver to
discuss a cost-sharing arrangement around the City's hosting
costs.
Tourism Vancouver, in consultation with its Executive, have
proposed the following cost-sharing arrangement for the APEC
summit:
- that Tourism Vancouver will undertake to raise funds
toward costs pertaining to security and related
services for the APEC summit on a 50:50 cost-share
basis with the City, to a maximum ceiling of $350,000;
and,
- that payment to the City will be in two instalments.
The first instalment on December 1, 1996, in the amount
of $150,000 and the balance to be paid not later than
July 31, 1997.
Staff have reviewed this proposal and find it reasonable
provided the 50:50 cost-sharing arrangement and maximum
contribution will apply to the total of the hosting costs
incurred by the City for the APEC summit.
CONCLUSION
The 1996 Business Plan submitted by Tourism Vancouver is
consistent with Council policy and past practice. I am
therefore recommending approval of the 1996 Business Plan in
the amount of $6,809,629 representing the portion of the plan
covered by the 2% Hotel Tax. The 1996 contract for
publication and distribution of promotional materials
represents the same level of funding as approved by Council in
1995. Approval of the proposed publication contract is also
recommended along with a qualified recommendation on the APEC
cost-sharing arrangement.
Representatives of Tourism Vancouver will be in attendance to
speak to their 1996 Business Plan submission and to answer any
questions Council may have in that regard.
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