Buncombe County adopts $40.8 million revenue target for fiscal year 2022

ASHEVILLE — Citing a tourism economy that continues to accelerate, the Buncombe County Tourism Development Authority has adopted a “revenue target” of $40.8 million for the next fiscal year, which begins July 1.

This is a 12% increase over the current fiscal year. The TDA, which derives its revenue from occupancy tax paid by hotels, vacation rentals and bed and breakfasts, expects its revenue for this fiscal year (ending June 30) to reach $36.4 million. .

The board voted unanimously to set the revenue target of $40.8 million at its March 24 monthly meeting. One member, Andrew Celwyn, did not vote.

Established in 1983 to promote tourism, the TDA by law must spend 75% of its revenue on marketing and 25% on its Tourism Product Development Fund, which provides grants to businesses that can lead to more visits. In the region.

TDA CEO Victoria “Vic” Isley told the board that staff would prepare two budgets for the coming year, one with the 75/25 split and the other with a one-third/two-thirds split. Isley said this latest occupancy tax rate may resurface during the short session of the General Assembly, which begins May 18.

Some locals have criticized what they see as overspending on tourism promotion and want more money to be spent on projects that benefit locals and tourists.

Vacation rentals rebounded

While the situation for tourism turned grim in the spring of 2020 when the pandemic took hold, it has since rebounded.

Vic Isley, CEO of the Buncombe County TDA, said projections from the tourism economics society suggest tourism spending in Buncombe could hit $3.2 billion this fiscal year and $3.3 billion dollars in fiscal year 2023.

Isley said that for this fiscal year, which ends June 30, the board approved a revenue target of $27 million, which would have represented a 9% increase over the pre-baseline year. -COVID of 2019. But this year’s revenue actually came in much higher.

Isley said that based on current collections and the most recent financial data, our “forecast for the remainder of this fiscal year (fiscal year), we expect occupancy tax collections to be between $36 million and $37 million.” .

While hotels still provide the “lion’s share” of occupancy tax, Isley noted that much of the increase in revenue since the pandemic hit has come from vacation rentals.

“The rapid growth of the vacation rental segment and its resilience through the pandemic is evident,” Isley said. “So far in fiscal 2022, vacation rentals account for 34% of all revenue.”

Chip Craig of GreyBeard Realty told the board: “When the pandemic hit in 2020, it felt like summer never ended.

“People didn’t have to go back to school, and (they) were working where they chose to be, in the mountains, so the growth in vacation rentals has been irrelevant,” he said. he declares. . People are returning to work and schools are in session, so I expect spring to be mild for vacations (rentals), but still very strong compared to 2019.”

Isley said that based on projections for fiscal years 2019-2022, “we estimate vacation rental sales to grow 180%. 7% bed and breakfast.

“What this means in net numbers in dollar terms is that between FY19 and FY22, the growth in vacation rental occupancy tax collections was $8 million. “Isley said. “Growth in hotel resort tax collections was $3.4 million, and we expect growth in B&B partners to be $60,000 by the end of the (fiscal) year. “

Strong numbers for January, February

For February, hotel occupancy was 54%, up 9 points from February 2021, but still below the 60% mark in February 2020, which was pre-COVID, a Isley said. Vacation rentals stood at 52% occupancy in February, down 3 points from a year ago but ahead of 2020 by 6 percentage points.

Leah Wong Ashburn, TDA board member and CEO of Highland Brewing, said they see “great success” in their on-site business, which includes the main brewery and events center in East Asheville and a place downtown in the food hall of the S&W Cafeteria building. downtown.

“Supporting ongoing trends is definitely stronger than ever,” Ashburn said. “And we’re seeing these trends in most businesses in the city that aren’t inside event venues.”

Leah Wong Ashburn of the Buncombe County Tourism Development Authority board said the finance committee recommended a "income goal" for the next fiscal year of $40.8 million.  The TDA met virtually on March 24, 2022.

In his financial report, Buncombe County Chief Financial Officer Don Warn told council that the occupancy tax through February this fiscal year was up 49.9% from a year ago. For total accommodation sales for January of this year, sales were up 32% over last year, and for the year to date, they were up 54%.

Warn presented a graph showing the numbers and noted, “You can see the gap between previous years and how 2022 surpasses anything we’ve done in the past.”

Breaking it down by category, Warn said hotel and motel sales were up 26% in January and 55.8% year-to-date. Vacation rentals were up 39.3% for January and 53.4% ​​year-to-date, while bed and breakfast sales were up 2.1% for the month and 19. 9% since the beginning of the year.

More hotel rooms to come, visitor spending could hit $3 billion

Buncombe County has 8,830 hotel rooms on the market, Isley noted.

“We have 516 additional rooms that we plan to come to market and open (next fiscal year),” Isley said. “That would represent a growth of just under 6% in room inventory for Buncombe County.”

Visitors who come to town also spend a lot of money. Isley said data showed tourists spent $2.2 billion here in 2019, a figure that fell to around $1.6 billion in 2020, the worst year of the pandemic.

“What this graph shows, however, is that Asheville has seen a dramatic recovery,” she said, allowing visitor spending in our community to drop 26% from 2019 to 2020.

Isley said final economic projections from Tourism Economics, a company consulted by the TDA, will be released later this summer. However, this company has been looking at tourism forecasts and spending lately, and when the numbers come in, “they estimate visitor spending could be as high as $3 billion in direct spending” and they “look even better for this year at come,” Isley told the council.

Some people have become critical of downtown Asheville, complaining that they feel unsafe.  But on the afternoon of Friday August 6, it was very busy with tourists and relatively quiet near Pritchard Park.

Still, Isley and the board have indicated they will take a cautious approach as variants of the coronavirus persist across the country and gasoline prices have risen sharply in recent weeks.

Isley outlines three scenarios for the upcoming fiscal year, which begins July 1, and potential TDA revenue: a “drop” projection of $34.2 million in revenue, a “baseline” projection of $38.7 million and an “upward” projection of $42.8 million. .

Ashburn said she and the other members of the finance committee recommended a spot in the middle, $40.8 million, the figure adopted by the board.

Travelers want to travel

Citing survey data from Longwoods International, which has surveyed travelers since the pandemic began, Isley said COVID will become less of a factor in travel plans over the next six months. The Longwoods International survey found 38% of respondents said COVID was not a factor impacting travel plans, although Isley said they were taking this with caution as the pandemic was unpredictable.

Gasoline prices are a concern for travellers, however, with the survey revealing that 38% of Americans say gas prices will impact travel decisions over the next six months, up from 9% in two weeks. Additionally, 34% said they would reduce their trips and 33% would move closer to home.

On a positive note, only 7% say they will cancel trips.

“The bottom line here is that people will continue to travel, it’s just how they spend on travel that’s most impacted,” Isley said, noting that 90% of US travelers say they intend to travel in the next six months.

That, Isley said, indicates pent-up demand for travel remains strong.

Jobs also came back

Isley also noted that Buncombe County has a very low unemployment rate – 3.1% in January, well below the state average of 3.9%.

“Data from the Federal Reserve Bank of St. Louis indicates that we have recovered the majority of leisure and hospitality jobs lost during the pandemic, but we still lost approximately 2,800 jobs in our area,” Isley said. .

The pre-pandemic peak in the region with 31,057 jobs in leisure and hospitality, she said. In January of this year, “we returned to 28,256 employees in our sector,” Isley said.

The return of the Tourism Product Development Fund

In his presentation, Warn noted that the Tourism Product Development Fund has $11.6 million in funds available.

The TDA agreed last November to restart the TPDF, which has been on hiatus since the 2019 cycle. All of this money is unlikely to be shelled out in the next cycle.

Since 2001, the fund has awarded $44 million to 39 community tourism projects, ranging from zipline expansions and improvements to local football fields to Harrah’s Cherokee Center improvements and waterfront redevelopment.

The program has generated some controversy, however, and the TDA agreed in 2018 to suspend it for the 2019 cycle to develop a long-term plan, with input from the community. The COVID-19 pandemic prompted the TDA to pivot, and after obtaining special authorization from the North Carolina General Assembly, it disbursed $5 million from the fund to help struggling local businesses.

The TDA set an August deadline for applications and said it would make funding decisions at its October 2022 board meeting, with grant contracts issued in November and December.

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