Thursday, June 14, 2012

Funding Tourism?

It is the season of submissions to local council's long term plans around the country and it is interesting to follow the mixed messages from tourism groups as regional tourism funding goes under the blowtorch.

Collectively, councils dole out millions of dollars in corporate welfare in the name of tourism. Councillors like to be seen promoting tourism ventures. Compared to their own dreary lives, tourism is cool, wind-swept and exciting. The photo-ops are tantalizing and bearded, cardigan-wearing councilors have recurring wet-dreams about of running their own dynamic tourism business. While councils have a habit of subsidising the tourism sector, the tourism industry have become addicted to welfare and have lost sight of real net benefits. 

There is a new wind sweeping through local government that is giving lip-service to the rhetoric that nonessential "public good" areas of public expenditure need to more rigorously demonstrate a clear public good or be privately financed by those with a vested interest. Most rational business-minded folk believe in this mantra, however this means that many aspects of tourism funding need to rationalised along with other expenditure.

Tourism representatives should be joining mainstream business groups in their call to reign-in councils that have strayed into areas well beyond their core services. This includes fanciful spending on social, economic, cultural and environmental pet-projects. Councils should be exiting assets that are better managed in the private sector. ...and rationalising tourism expenditure. 

While there is a risk that some non performing tourism events or infrastructure may be abolished, tourism groups don't seem to have a desire or acumen to qualify the benefits of tourism funding by councils. As a consequence they may be saddled with an onerous targeted rates regime that return dubious benefits.

In Napier we have a local motel representative demanding an Obama style stimulus injection of $500,000 into the RTO to "create jobs, better market the area and align tourism services" - there is no mention of any cost-benefit-analysis or how this spend-and-hope proposal could be funded?

Meanwhile the Tourism Industry Association under new CEO, Martin Snedden have parked an ambulance at the bottom of the cliff by issuing a media release that kicks-back at the daft proposal by Napier and Hastings mayors to introduce a dreaded Bed Tax:
Proposed bed tax on visitors discriminatory

The bed tax on visitors being proposed by Napier and Hastings mayors is a ‘lazy tax’ that will unfairly penalise travellers who stay in commercial accommodation such as hotels and motels, says the Tourism Industry Association New Zealand (TIA).

Proposed bed tax on visitors discriminatory

The bed tax on visitors being proposed by Napier and Hastings mayors is a ‘lazy tax’ that will unfairly penalise travellers who stay in commercial accommodation such as hotels and motels, says the Tourism Industry Association New Zealand (TIA).

“It won’t capture the many visitors who stay privately with friends and family or those who stay in rented homes for example,” says TIA Chief Executive Martin Snedden.

“It also doesn’t target other businesses that benefit from visitors such as vineyards, restaurants, bars and caf├ęs, supermarkets and petrol stations.”

Mr Snedden says New Zealanders as well as international visitors will be hit by the tax.
“Kiwis who pay council rates in their own region will have to fork out again for another tax when they holiday in the Hawke’s Bay.

“A bed tax is also expensive to administer. Major hotels would need to employ extra staff just to process the red-tape associated with a bed tax on visitors.

“It will leave accommodation operators with the stark choice of increasing prices or absorbing costs in order to stay competitive in an already difficult trading environment. Many tourism businesses operate on slim margins, so absorbing the cost of a bed tax may risk the viability of some smaller operators such as backpacker hostels and B & Bs.

“I will be writing to both mayors outlining the industry’s position on bed taxes and why we do not support them and suggesting alternative rating proposals for them to consider.”

Mr Snedden says a bed tax will make visitors feel they are being unfairly used as a cash cow when they already pay GST of $1.7 billion annually, pump millions of dollars into local economies and support thousands of jobs, not only directly in tourism but all the downstream businesses that also benefit from the visitor economy.

“We are seeing an unwelcome trend from councils in many parts of the country to unfairly penalise people for visiting their regions.

“TIA only supports targeted rates if such a rate is evenly distributed across all businesses and the revenue generated from the rate is reinvested into tourism promotion and visitor infrastructure and services.”

Click the "Get Widget" link below to place this widget on your website or blog!