The Buncombe County Tourism Development Authority closed out the year on a nervous note Wednesday during its monthly meeting. Local tourism officials saw occupancy numbers dip in October, a concerning decline despite the fact that room rates were up.
Meanwhile, tourism officials are looking ahead to 2016 and bracing for a new wave of hotel rooms becoming available to tourists. More available hotel rooms could decrease occupancy rates and room rates for hotel owners, which is why hoteliers worked with local state lawmakers earlier in the year to increase the Buncombe County hotel room tax for the first time in decades. The increase from 4 percent to 6 percent was approved, and went into effect in November.
That increase generated no small amount of controversy this year. Some city residents told TDA officials and City Council members that part of the room tax increase should be devoted specifically to city infrastructure projects, noting that increased tourism is taking its toll on streets, sidewalks and other core services. The room rate increase and hotel building boom also played into Asheville City Council elections, which saw one incumbent defeated (Marc Hunt) and three new council members (Julie Mayfield, Brian Haynes and Keith Young) elected, including two who were vocal about slowing city growth, including hotel growth.
The TDA estimates that 1,700 new hotel rooms will become available over the next two to three years, a 25 percent increase over what’s currently available. Some 600 new rooms will come online this year. Stephanie Brown, executive director of the Asheville Convention and Visitors Bureau and a TDA member, underscored the challenge of filling all those new rooms on Wednesday: The TDA’s budget used to attract tourists will increase significantly in the new fiscal year, up roughly $5 million to $13.4 million. But Brown noted that the local market added 700 hotel room from 2007 to now, and that it took about 7 years to “absorb” them and maintain a room rate that could sustain hotels and their employees. (The Buncombe County room rate increased 38 percent during that time.)
(In response to one board member’s question, Brown said that she is tracking the construction progress of the new hotels and that many are in a phase where it’s too early to tell whether they’re on track to open next calendar year. Two new hotels have recently opened in Buncombe County – one near the Asheville Regional Airport, and the other on the property of the Biltmore Estate.)
The TDA’s goal now is to increase demand 6 percent every year for 6 years to keep room rates stable and support hotels, Brown said. “It is really an unprecedented challenge,” she said.
Even with an increased marketing budget, the Buncombe TDA will be looking to make media buys in markets where other big players, with even bigger budgets, will be buying, added Marla Tambellini, vice president of marketing and second in command at the Asheville Convention and Visitors Bureau. (A couple of TDA members mentioned that another major factor in the new year, in terms of media buying, will be effect of the U.S. presidential election – candidates will be buying up lots of ad space.)
Brown said she and Tambellini recently made a trip to New Orleans to visit the TDA’s advertising firm, Peter Mayer. The ad firm will present its plan for how to handle the new supply of hotel rooms in January, Brown said. The essence will be sticking with the marketing plan the TDA has already approved, she said. The revised plan will suggest putting more resources into specific advertising markets, but not begin advertising in new markets until later in the year, she said. (Peter Mayer is estimating an 8 percent increase in room rate for the coming year, she added.)
Brown added that she and Tambellini “hired some help involving communications strategies to support TDA, and I will engage each of you as those plans are formalized.”
Regarding hotel occupancy rates during Asheville’s peak tourism month of October, several TDA members noted that occupancy rates were down while room rates were up. A couple of members noted that the first two weekends of October were especially rainy and dreary. For context, Brown reminded the board that 2013 was the high-water mark for occupancy rates in Buncombe County, and that 2014 saw a 9 percent increase over that, so while October 2015 was down, it will still come in as the second best month on record for occupancy rates.
“Obviously, we don’t want to see a decline,” Brown added.
On the room rate front, TDA member John McKibbon of McKibbon Hotel Group said, “I think we priced a lot of people out of the market” with high room rates, “but they will moderate and demand will grow as rates moderate.”
The TDA heard updates on several other fronts. Here’s a quick look:
Awards: The Buncombe TDA recently won awards from the Hospitality Sales and Marketing International organization for its “Discovery Inside and Out” advertising campaign, as well as its campaign developed in-house to explain the science behind fall leaf color.
Air Service: Brown said a plan to improve service at the Asheville Regional Airport will be released soon. A task force including the airport board and officials from the city, Asheville Area Chamber of Commerce and Economic Development Coalition for Asheville-Buncombe County was convened, and a consultant delivered a 165-page assessment of the market and potential opportunities, she said. It will be presented to the public on Jan. 20. “The rigor of the analysis is impressive,” Brown said, adding that the gist of the report will offer some short-term opportunities that the community can build upon.
Music marketing: The TDA and the Asheville Convention and Visitors Bureau are working on a plan to market the city as a music destination, a focus similar to the one it undertook several years ago to market Asheville as a food destination with its “Foodopia” focus. The CVB “will announce the bones of the music campaign” at a meeting in January, with a full public announcement following in February. Brown offered one hint of what’s to come: the exploreasheville.com website will be home to an online “radio station” that will feature songs by local musicians. The songs will be licensed through an arrangement that’s being worked out now with the Asheville Commercial Music Enterprise, a newly incorporated company.
Tourism product development fund: The TDA each year provides funding to projects aimed at increasing tourism in Buncombe County, and Brown offered two quick updates on that front. The Montford Park Players are somewhat behind on their building project but are making progress, Brown said. And when asked about the status of the Asheville Art Museum renovation and expansion project, Brown said the museum had met a requirement to commence construction by ordered an elevator system and an HVAC system, and that the museum is due to deliver another update soon.
Finally, Julie Mayfield, Asheville City Council’s appointee to the Buncombe TDA, reminded board members that the city is working on three hot issues that pertain to tourism:
Interstate 26 Connector: Mayfield told board members that City Council recently approved a resolution essentially asking the N.C. Department of Transportation to to make the project smaller and less impactful. She said council members hope Buncombe County commissioners will take a similar stand, and that the Metropolitan Planning Organization, the official voice of the region as far as DOT’s concerned, will reflect that unified stance.
Short-term rentals: City Council will take up the continuing conversation of short-term rentals, and whether an accessory dwelling unit can be used as such. A council committee will take up the issue in January, Mayfield said.
Downtown Master Plan revisions: City Council is planning to consider changing development rules that would give council more say over smaller development projects.
“These visitors generate millions of tax dollars annually, and all you do is complain and whine.”
The City gets none of the room tax – that’s all used by TDA to attract more tourists. And the sales taxes both from the rooms and everything else tourists spend on, only a tiny fraction of that eventually gets to the City coffers. The State, rural counties, Buncombe County, and other non-tax generating Buncombe municipalities all get a huge bite of the pie, leaving Asheville’s share a single-digit percentage of the taxes generated here.
The City services impacted by the tourism industry are shouldered almost exclusively by Asheville taxpayers, most of whom would probably enjoy the City more if it wasn’t turning into Myrtle Beach of the Mountains™.
I rather think that actual city residents might enjoy the city more if it *was* becoming something akin to Myrtle Beach. Myrtle Beach actually has things for Blacks, the middle class and the young to do. Increasingly, Asheville is more just old white people going to Biltmore and bumping into other old white people at art galleries.
Funny how you didn’t mention the millions of dollars in city and county property taxes paid by the businesses those visitors support. No visitors means no businesses supported by those visitors, like my own. And that means no property taxes generated by my business.
Relative to the city’s overall budget, the room tax revenue is a drop in the bucket. I’ve never understood why people are so fixated on it.
And if the city doesn’t receive much in the way of sales taxes paid, then fix that problem! Even if there were no hotels in the city, there would still be millions of dollars of sales taxes generated by people living outside the city limits.
Funny how you didn’t mention the millions of dollars in city and county property taxes paid by the businesses those visitors support.
Property taxes are also generated by residential buildings vs. hotels, stores & restaurants that pay better wages to local residents who could then afford to live downtown, etc. Instead of a balanced approach to economic development, the binge tourism/hotel/advertising/more hotels/more advertising/more tourism/lower wages cycle we are on is a downward spiral for locals. Sure – developers, hotel owners, tourism officials and some local businesses do well, but the downtown becomes more expensive and less attractive to people who actually live here. I know I hardly ever feel like doing anything downtown, as opposed to when I first moved here 20-ish years ago.
And if the city doesn’t receive much in the way of sales taxes paid, then fix that problem!
Yes, just fix that! Why didn’t we think of that? I’m sure the mostly-Democratic-city-friendly General Assembly will get on that right away, now that it’s occurred to someone to ask.
Have you been following this? The NCGA has cut the already-small percentage of sales-taxes that go back to the cities that generate the lion’s-share of them, and have threatened to cut it even more. They are sending more of that revenue to counties that don’t generate any. It’s called re-distribution of wealth, only in their minds it’s the ‘good’ kind.
Yeah, I said it…fix the problem. I’m fully aware of what’s happening in Raleigh. But here’s the thing–it wasn’t much better for cities and their share of sales tax revenue generated when the Democrats ran the NCGA.
This has been a problem for every urban area in NC–including non-touristy places–that’s been made worse by the inability to annex, cuts in license fees, etc. As I said, occupancy tax is chump change compared to the amount of sales tax generated by visitors, people living in the county, and in adjacent counties. That’s true for every commercial hub in the state, but for some reason people are fixated on a small amount of tax money.
Killing tourism isn’t going to magically make new higher paying jobs appear. If we want balanced economic development, we can do it without blaming tourism (and my business) for not having it.
“They are sending more of that revenue to counties that don’t generate any. It’s called re-distribution of wealth, only in their minds it’s the ‘good’ kind.”
It is called payback. And as soon as the Democratic party wins the NCGA back, it will return to the old formula of taxing the “rich” (i.e. the successful) and redistributing that money to THEIR pet constituencies, the urban working class, while leaving those unsavory redneck crackers in the rural counties to fend for themselves.
…the TDA’s goal now is to increase demand 6 percent every year for 6 years.
By my calculation this would grow the number of visitors to Asheville from 3.3 million in 2014 to approx. 4.3 million by 2021. Seems like a lot more stress on the local infrastructure. Not to mention the traffic.
I’d be curious to know if the hotel revenues also dipped in October.
Some of you have clearly never worked in business. Shocker.
These visitors generate millions of tax dollars annually, and all you do is complain and whine.
Welcome to Asheville.
You’re from Gainesville I see hmm. Also, The hotel tax does not benefit taxpayers or the city/county…it goes to the commission for Tourism where the CEO makes over 150k a year. These tourists spend a lot of money in the center of our city on food, beer, etc but they do not contribute to the commonwealth of people actually trying to make a living here. They do not help create the types of jobs that actually sustain making a living, in fact they drive all the prices up. I’d be happy if one of these “BEST CITY” lists would feature somewhere else for a while, we’ll be fine.
Jason – In that 1,700 room increase, do you know if TDA is also factoring in competition from AirBNB rentals? If not, it seems to me that they’re going to need to have demand growth higher than 6% annually for the next 6 years to maintain room rates. 6% annual demand growth for 6 years is around a 42% increase in demand compared to today. Can anyone actually imagine what things would look like with 42% more people than today staying in area hotel rooms?
“Brown said she and Tambellini recently made a trip to New Orleans to visit the TDA’s advertising firm, Peter Mayer.”
Well, laisser les bon temps etc. Good to see they’re supporting the New Orleans tourism industry.
Of all the unaccountable boards and shitty committees that actually run Asheville, the TDA is probably the most gruesomely comic. Still, I’m sure they’ll produce some large reports.
And all this from a “progressive” city government.
Meanwhile, in spite of neighborhoods gentrifying and hotel and restaurant prices rising, hordes of hipsters continue to migrate here and complain about how they are not being paid (or GIVEN) enough to make a living here.
Wait – I know what the problem is. Not enough tax revenue spent on performance bonuses or profit sharing for TDA staff.
Or was it too much tax revenue spent on performance bonuses and profit sharing for TDA staff, leaving not enough money for advertising for more tourists?
Just to be safe, better build more hotels and spend a lot more on advertising for more tourists to fill them, so we’ll have more revenue next year for bigger performance bonuses and profit sharing in order to incentivize TDA staff to attract more tourists, and then we’ll have to build more hotels to accommodate the increased tourism.
Tourism officials are “bracing” for a new wave of hotel rooms? Like it’s a storm they have to weather?
Better spend mo mo mo money on tourism advertising. Oh good:
The TDA’s budget used to attract tourists will increase significantly in the new fiscal year, up roughly $5 million to $13.4 million.
And then that increase will inspire more hotel building. And then we’ll be bracing for another avalanche of empty hotel rooms, and then panicky tourism officials will tell us that $13 mil. is chump change. We need mo mo mo money for tourism advertising, or we’ll all die shivering in the dark…
My parents used to stay in a mid-priced hotel close by (and not downtown). This year the hotel decided to double the rates. They chose not to stay there anymore. Too soon to tell, but some tourists might be discouraged to stay here.
How is the second biggest month of occupancy on record a ‘dip’.
A dip from the first biggest.
You $ee more is never enough when you have the in$atiable greed for more, more, more, and more. $o the $second biggest month i$ a failure $ince i$n’t the bigge$t.
For these groups Asheville is nothing more than a product to be sold. It isn’t a community. It isn’t a home. It is a commodity pure and simple.
The data linked from the TDA website (go to the Asheville Convention & Visitors’ Bureau and click on Tourism Research, then Monthly Indexes) compares occupancy rates with the same month from a year ago which makes sense given seasonal fluctuations. October traditionally has the highest hotel demand of any month. This year’s data showed a 3.4% decrease in October 2015 occupancy rates vs. October 2014 occupancy rates. The hotel sales for October 2015 actually declined by 4.7% vs. October 2014. A nearly 5% decline in sales when you need 6% annual growth in demand just to maintain rates should be concerning to the TDA.
So we possibly have excess hotel rooms, with more coming online, when we really need more housing, so we need to spend over $5m more to attract people just to keep hotel rates steady? This is not going to end well.
I know better than to comment…but here goes. I think the increased marketing money is a HUGE waste. Asheville is on literally EVERY list as a “go to” destination for a long list of reasons…so spending more,in the manner it is being spent,is so ignorant and such an “old school” marketing thought process…as in “out of step”. Kind of like the new North Carolina logo. And also, I think McKibbon is correct (can’t believe I just typed that) in saying the existing hotels got greedy and priced themselves out of the market, pushing folks into STR’s…yes, particularly the illegal ones in my neighborhood. Since the additional hotel rooms are coming (for good or bad) this SHOULD bring down the price of a room. Most visitors want to stay in the thick of it downtown. If it doesn’t bring down the price of a room, expect the situation to get worse. This isn’t Telluride.
Frankly, all this hand wringing seems premature. But what else would these folks talk about at their meetings if not impending doom? Typical knee jerk reaction: “THROW MORE MONEY AT IT”
Nice comment! You should do it more ;).
I would say that, of all of the lists that Asheville is on, quite a few are a result of our city’s overall marketing strategy.
Most of the travel sites and other “Top 10s” are really just part of a larger advertising stream.
While some of the press is real, user-driven content, a lot is simply revenue-driven marketing dressed up like something more organic.
@jtroop – Well articulated and I concur.
The thing about marketing and advertising is, it isn’t static. You have to keep doing it because both change and competition are constant.
Example: it was 10-15 years ago that I read Coca-Cola, one of the oldest and most recognized brands in the WORLD, spends 200 million on advertising every year. I’m sure it’s even more now.
So many people have said
“What else is there to do? We’ve done everything.”
(from an insider that works in a downtown hotel)
Asheville has a limited number of things to do. Unless you venture out to outlying counties it can get boring.
If you pay 300.00 a night or more for a room the surrounding downtown better be some amazing sh$t! and it just isn’t.
Drinking every night and shopping only lasts so long, especially in the winter months.
If people don’t use hotels then the hotel will suffer a loss. If people use hotels then the hotel will enjoy a profit?
I don’t understand.
Asked how the proposed adaptive reuse of the BB&T building could receive his support, Gordon said, “Living wages, preference for local businesses and local artists, contributing to the Affordable Housing Trust Fund, and getting on the right side of dedicating a portion of the occupancy tax to the needs of people. – These conditions are necessary to a sustainable tourism sector and to a successful hotel application. I will be requesting all four.”
I run a five room airbnb downtown and it’s been full since spring. Our rates are considerably less than the hotels and we attract young professionals, travelers, and the budget minded. There is little downtown that is under $200/night, which for many is too much. The hotels coming on line are all higher end brands, so it’s hard to imagine them charging under $100 like we do. Of course, as more rooms become available rates should drop, and there’s always priceline and hotwire. Beyond that, I’ve noticed that downtown is already busting at the seams from tourism, its tiny sidewalks and narrow streets overwhelmed by the volume of tourists. Building all of these hotels will only add further strain to the city’s crowded streets. And that, ultimately, might be Asheville’s biggest problem. You can scale up the rooms, hype the hell out of the place, and attract legions of tourists but the experience will not be that of a charming, small city in the mountains. Finally, if Asheville is to attract the music tourist, it would’ve been wise to have kept Moogfest here. That would’ve been a smart way to appeal to young, affluent professionals who can afford the expensive hotels. I get the feeling that there’s a lot of push to develop, and not a lot of thought in what kind of experience is being created. I could go on, but there needs to be some serious introspection on what the Asheville experience, or there’s trouble ahead.
Well the solution is obvious. Build more hotels!!!