ADMINISTRATIVE REPORT

Date: March 4, 1999
Author/Local: J. Beresford/7789

RTS #00630

CS&B Date: March 30, 1999

CC File No. 6008

TO:	Standing Committee on City Services and Budgets
FROM:	Director of Finance
SUBJECT:	Tourism Vancouver - 1999 Business Plan and Budget

RECOMMENDATION

THAT Council approve the portion of the Greater Vancouver Convention and Visitors Bureau's ( Tourism Vancouver's) 1999 Business Plan funded by the 2% hotel tax, and that the 2% Hotel Tax payments received by the City for the 1999 fiscal year be forwarded to Tourism Vancouver as and when they are received by the City.

GENERAL MANAGER'S COMMENTS

The General Manager of Corporate Services RECOMMENDS approval of the foregoing.

COUNCIL POLICY

City Council must approve the business plan of Tourism Vancouver, which details the allocation of the 2% Hotel Tax.

On November 20, 1997, Council approved a Statement of Intent which recognizes that: the 2% Hotel Tax was voluntarily initiated by the hotel and tourism industry; that the proceeds of the tax are paid to Tourism Vancouver by the City for tourism promotional purposes; that the City will continue a policy of dedicating all of the 2% Hotel Tax to Tourism Vancouver.

DISCUSSION

In accordance with Council policy, and legislative requirements, Tourism Vancouver has submitted its 1999 Business Plan for Council's consideration and approval. The Business Plan is attached as Appendix II to this report (limited distribution; on file in City Clerk's Office).

Council will note that the Business Plan contemplates the continued receipt and expenditure of the 2% Hotel 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.

1999 BUSINESS PLAN SYNOPSIS

Three major priorities drive the 1999 Business Plan and associated expenditure budget. The 2% hotel tax is a substantial component of this plan, providing 83% of the total revenues of Tourism Vancouver for 1999.

1. Investment in Meetings & Events

· $3.34 million in cash, in-kind and value-added.

Tourism Vancouver's key strategy is to re-energise Greater Vancouver's position within North America as an all-season destination, and to continue to cultivate relationships and pursue market development work in the international business sector. This will be accomplished through sales and marketing techniques geared towards motivating customers to choose Greater Vancouver over other destinations.

2. Investment in Leisure Travel

· $2.99 million in cash, in-kind and value-added

Tourism Vancouver's key strategy is to create unique customer development partnerships with major in-market tour operators and industry partners in North America, Europe and Asia Pacific. Focus on the leisure traveller is seen as the most effective way to fill low occupancy or "need periods".

3. Investment in Visitor Servicing.

· $1.21 million in cash, in kind and value-added.

Tourism Vancouver's focus is to ensure repeat and satisfied customers, which in turn influences how long visitors stay, how much they spend and encourages repeat business. This is to be accomplished through the continued development of visitor relationships, provision of member products and services through travel counselling, and working with a broad network of information providers.

1999 TOURISM VANCOUVER BUDGET

An analysis of Tourism Vancouver's 1999 Budget for Hotel Tax indicates the following changes from 1998.

1998 1999 Percent
Actual Planned Change

$7,865,248 $7,550,000 (4.3%)

Tourism Vancouver projects 2% Hotel Tax revenues to be $7,550,000 for 1999, a reduction of $4.3% from 1998 actual collections of $7,865,248. The conservative nature of the estimates reflects market uncertainties around local and world economies for 1999. As noted in the attached business plan, Tourism Vancouver is projecting an overall increase in business from existing customers, as well as continued growth in the supply of hotel rooms. In the short term the additional supply is creating downward competitive pressure on hotel room rates from which the 2% Hotel Tax is generated. Projections for 1999 anticipate that excess supply and lower pricing could negate the impact of higher overall occupancy. The 1999 budget and 1998 results of operations (unaudited) and results of operations are attached as APPENDIX I to this report.

Actual 2% Hotel Tax revenues collected and forwarded may exceed or fall short of this estimate. Tourism Vancouver will take appropriate steps to monitor Tax revenues and to adjust their business plan to reflect actual receipts, as has been the practice in prior years. Any additional revenues realized will be allocated to programs consistent with the stated business priorities of Tourism Vancouver as reflected in the business plan and approved by the Board of Directors. The City will flow-through the payments to Tourism Vancouver as and when received over the period covered by the Council-approve business plan.

In order to recognize the three month lead time between the collection of the 2% Hotel Tax by the province and its receipt by the City and Tourism Vancouver, the Association has based its business plan on the 2% tax revenues to be collected by the Province during the 12 month period of October 1, 1998 through September 30, 1999. These payments will be received by the City and forwarded to Tourism Vancouver lagged by the delay in processing by the Province, which means that the payments to Tourism Vancouver will fall in a January to December 12 month period. This collection period treatment is consistent with business plans approved in prior years.

CONCLUSION

The 1999 Business Plan as submitted by Tourism Vancouver is consistent with Council Policy and with past operations. The payment process reflects a flow-through of payments for the approved budget year. The Director of Finance recommends approval of the portion of the 1999 Tourism Vancouver Business Plan funded by the 2% Hotel Tax.

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(c) 1998 City of Vancouver