Skift Take

Expect more Colorado communities to introduce ballot measures that will divert funding raised through hotel taxes away from tourism promotion and back into communities. Next time it won't just be in the mountain communities.

Residents of more than a dozen cities and counties in Colorado are going to vote on November 8 on local ballot measures to decide how much of their collected lodging tax revenue they wish to redirect away from pure tourism promotion. 

These ballot measures highlight the Skift 2022 megatrend pointing out that communities are no longer spectators in travel, with much of the Colorado tax revenue proposed to be earmarked instead for community initiatives, such as infrastructure and housing.

Residents in Estes Park, Glenwood Springs, Snowmass, Gunnison County, Summit County and others, for example, will vote to enact a new lodging tax or move existing collected lodging tax revenue toward affordable housing. Lodging tax revenue typically finances the budgets of destination marketing organizations (DMOs).

In Eagle County, a new two percent lodging tax will go toward funding housing workforce and early childcare initiatives are up for a vote, according Chris Romer, president and CEO of Vail Valley Partnership, a regional developmental organization that also provides tourism promotion. It’s projected to collect $3 million in its first year, he said.

Some residents will vote to redirect the direct flow of funds away from tourism marketing. Voters in Chaffee County, for example, will decide whether to change the allocation scheme collected from their existing 1.9 percent lodging tax such that 40 percent goes to marketing and advertising and 60 percent to providing and funding affordable housing and childcare.

The ballot measures came about after Colorado Governor Jared Polis signed House Bill 1117 this year. The legislation allows local governments to let voters decide how to allocate up to 90 percent of lodging tax funds to areas outside of tourism marketing. 

Many of the measures being introduced are concentrated in the mountain destinations, where DMOs are small or not as organized. “It’s an easy money grab because some of these smaller destinations don’t have the structure within their organizations to defend,” said Bruce Dalton, chair of the Colorado Association of Destination Management Organizations and president and CEO of Visit Aurora said.

In recent years, small Colorado mountain towns experienced strong growth in visitation. Tourism was already growing in mountain towns, but it grew faster during the pandemic, according to Margaret Bowes, executive director of the Colorado Association of Ski Towns (CAST). Rural and outdoor recreational destinations became popular with people escaping crowded cities amid the pandemic, a megatrend Skift highlighted

Visitor spending in Summit County, for example, totaled $1.8 billion in 2021, compared to $1.4 billion in 2019, according to the Colorado Tourism Office. In Eagle County, visitor spending amounted to $1.3 billion in 2021, compared to $1.2 billion in 2019.

The growth in visitor interest has led to stress on communities and natural resources. Hiking trails that were supposed to handle 12 groups of people at most can experience 300 people, said Bowes. All of this leads to negative impacts on the trail, water quality and surrounding wildlife. Residents also can’t access their public lands freely as they used to because of congestion and traffic.

Some communities have started to manage recreational access to their public lands most impacted. For its most popular trails, Eagle County has introduced reservation systems, parking limitations, shuttles and volunteer ranger programs, according to Vail Valley Partnership’s Romer.

The memory of the stress pushed CAST’s towns to pivot away from focusing on tourism marketing. In fact, most of its members support the ballot measures for its overtourism mitigation effects and destination management priorities, said CAST’s Bowes.

“The task is increasingly looking at destination stewardship, recognizing that all of our towns have been discovered and maybe we don’t need to be marketing and advertising these towns as much as we used to in the past,” said Bowes. “It’s now more of a matter of how do we keep these towns wonderful places to visit.”

One ongoing regional issue has been the reduction of affordable housing, which has emerged as a crisis in many communities, according to CAST’s Bowes. Tourism has been a contributor in many counties. Apartments are increasingly being converted into short-term rentals to service tourists instead of residents, she said. 

Summit County, for example, had to put a nine-month moratorium on new short-term rental licenses in some neighborhoods. One survey found 65 percent of residents blame short-term rentals for their housing shortage. In the upcoming ballot measure, residents will vote on a new 2 percent lodging tax on short term rentals to provide local workers with affordable housing and childcare.

For the tourism industry, the lack of housing has contributed to labor shortages. If workers can’t find affordable housing, they move out and tourism businesses are short staffed, Bowes said. The ballot measures put money toward solving this problem.

In Eagle County, affordable housing and childcare are the biggest barriers to attracting and retaining young professionals to tourism and all other sectors, said Vail Valley Partnership’s Romer. The county is short of 5,000 housing units and there are 3,500 jobs remaining unfilled across all sectors, according to Romer.  

How many of the ballot measures will pass remains to be seen. Surveys by the Tourism Industry Association of Colorado indicate not all of them will pass, according to Colorado Association of Destination Management Organization’s Dalton, who also sits on the industry association’s board.

Dalton expects this current wave of tourism marketing funding redirection to be only the beginning for Colorado DMOs. “Everyone truly believes this is going to be a trend that they need to hit head on as making sure that they are not only aware of it, but they are defending the funding for marketing,” he said. 

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Tags: climate change, colorado, destination marketing, DMO, overtourism, short-term rentals, sustainability, tourism

Photo credit: Colorado voters will decide on November whether to divert lodging tax revenue away from tourism promotion back into communities. Brad Barmore / Unsplash

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