Buncombe TDA Passes $30.6M Budget, Awaits Distribution Formula Adjustment
The Buncombe County Tourism Development Authority board passed a $30.6 million operating budget on June 29, but it may make some changes to the budget distribution model in July.
The North Carolina General Assembly created the local TDA in 1983, with the authority receiving nearly all of its revenue from a now 6% occupancy tax on hotels, vacation rentals and guest rooms. hosts. Its state-mandated distribution model requires the TDA to devote 75% of its revenue to advertising and promotion, and 25% to its Tourism Product Development Fund, which funds projects and venues that can enable visitors to stay longer in the region.
In a unanimous vote, the board approved the budget for fiscal year 2023, which will come into effect on July 1. The approved budget also includes a Tourism Product Development Fund administrative budget of $415,000 and an earned revenue budget of $225,000.
Vic Isley, president and CEO of the TDA, told the board that the state legislature appears to be set to change the distribution formula this week.
Initially, local senators tabled a bill in the Senate on June 1, and it passed on June 28 as it was sent back to the House of Representatives, where it was read and referred to the Rules Committee. House Bill 1057 would change the distribution model from the current 75/25 split to two-thirds of TDA revenue going to advertising and promotion, and one-third to the Tourism Product Development Fund.
“So there will be more action in Raleigh in the coming days, with the (state) budget scheduled to close on Friday,” Isley said. “Because this is a local bill, once the House passes it, it will become so We will follow up on this with our leaders in Raleigh, as well as the North Carolina Travel & Tourism Coalition .
If and when the bill passes the House, it will become law immediately, Isley said. Like the TDA, the state operates on a fiscal year that ends June 30 and begins July 1.
At its May 25 board meeting, the TDA discussed two possible budget scenarios, based on whether the new bill might pass. The budget passed on June 29 works on the 75/25 model, but the TDA can tweak it in July.
TDA board member Leah Wong, a member of the budget committee, said that if the bill passes, “we will come back to the board at the July meeting with a budget amendment consistent to the new law and its effective date.
“Our expenses are not in violation or over anything in this very short period of time, so we’re just going to enforce this law the moment it was passed,” Wong said.
The funding and spending of the TDA has become controversial in recent years, as some local residents believe the organization spends too much money to promote visits to the area and not enough to fund local projects that could benefit locals and to tourists. Some locals have asked the TDA to allocate funds for public infrastructure or even affordable housing, but state law limits spending on advertising or funding projects that may result in stays or extensions to the hotel.
No one from the public has registered to talk about the budget.
Rebound in tourism still strong
In another action, the council received a financial report for May which showed tourism remains strong in the region as the COVID-19 pandemic eases. Tourism took a huge hit in 2020, but it continues to rebound.
Buncombe County Chief Financial Officer Don Warn, who tracks TDA finances, said home sales were up 23% in May from April and 48% for the year. An accompanying chart “shows 2022 surpassing all previous years,” Warn said.
Warn further noted that:
- Hotel and motel sales rose 30.5% for the month of May and 52.8% for the year.
- Vacation rentals were up 11.3% for the month and 40.8% for the year.
- Bed and breakfast sales rose 34.3% for the month of May and 26.5% for the year.
Isley noted that Buncombe was starting to “soften up” a bit in visits. The base year for the region was 2019, before the pandemic, and hotel and motel occupancy rates for May of this year were 77%.
“For May of this year, our hotel partners were at 70%, which is 7 points lower than the base year and just one point lower than last year of 2021,” Isley said. “So we’re starting to see a bit of a downturn in the market, both on the hotel and vacation rental side.”
Vacation rental occupancy in May 2019 was 58%, then hit 71% last year. This year they are down to 64%, down 7 points from 2021, Isley said.
But Asheville Regional Airport is seeing “really extraordinary” passenger numbers, Isley said, noting that traffic from January to April of this year was up 71%.
Gas prices could hurt local travel
Soaring gasoline prices could dampen more localized travel, Isley said, citing two industry groups that have conducted surveys.
A survey conducted in mid-June shows that “rising gas prices are beginning to impact respondents’ travel decisions,” Isley said.
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The survey noted that 41% of respondents said rising gas prices will affect their travel decisions over the next six months, and 39% plan to take a trip closer to home or reduce the number of trips. Respondents also said they would likely reduce retail spending and other purchases.
“But there is still a silver lining – despite these inflationary pressures and concerns, this travel demand is still at record highs, with 91%, or 9 out of 10 US travelers, indicating they plan to travel in the next six months. months,” Isley said. “So we’re going to want to make sure we’re in the hearts and minds of those travelers looking to take a trip.”