A specialized district aimed at assisting hotels in Half Moon Bay to increase occupancy is relying on city funding to maintain a sales contractor position and certain public relations services.
Recently, the City Council was asked to consider funding $40,000 for the Hotel Business Improvement District as part of the city’s fiscal budget for 2019-2020.
Since 2013, the city has supported a corporate sales manager and various marketing activities for the business district. The district formed about 15 years ago as a way to promote lodging at hotels within the city, administer marketing programs to increase overnight lodging and to fund other business-related activities.
Hotels play an important role in city revenues because approximately 40 percent of the operating budget comes from transient occupancy taxes. Such taxes generate about $6 million to $7 million annually for the city, with 95 percent of the taxes from hotels and the remainder from bed-and-breakfasts and short-term rentals.
“It allows the hotels to do a collaborative effort. It gives us an extra arm, which is always needed,” said Dana Dahl, chair of the district and general manager of the Beach House Hotel. “It provides a beautiful website and PR efforts, which individually not all hotels can do.”
In 2017, the San Mateo County Board of Supervisors allowed the district to expand its boundaries to include the entire Coastside. The Half Moon Bay Coastside Chamber of Commerce and Visitors’ Bureau remains the designated managing agency of the district.
While the district plays a role in uniting the hotels, it’s struggled financially in the past few years. A 2018 annual report shows the district’s expenditures outpaced the revenue earned. This caused the district to dip into its reserves to the tune of $8,505. At the end of 2018, the district reported earning $208,870 from a $1 per room per night collection by member hotels, website advertising revenue, and the city’s contribution.
Last year, the city opted to fund $17,500 of the $40,000 request. Projections for 2019 also show the district will fall into a deficit and need to use reserve funding to break even if the full request is not met.
“They (the district) need to make some tough decisions on how they manage the organization going forward,” said Deputy City Manager Matthew Chidester.
Dahl explained the funding is necessary to keep what hoteliers think is a vital corporate group sales contractor and public relations person.
Councilman Adam Eisen said he was in favor of the funding request, but asked Dahl to explain why the district needed city funding.
“Because the district will increase occupancy and the city depends on TOT to be a healthy community. I would say this is a partnership,” Dahl said.
The 2018 report shows the largest expenses from the district go toward public relations, travel writers and digital marketing. Dahl stated the district is spending resources on promoting weekday lodging and making the Coastside a destination for corporate retreats or meetings.
City Council voted unanimously to fund the request of $40,000 for the next fiscal year but will postpone a decision on whether to reimburse monies held back from last year’s request.