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Published March 07, 2012, 11:30 AM

Fargo-Moorhead lodging tax helps pay for tourism advertising to bring in more travelers

FARGO – The hundreds of players, parents and fans who descend on Fargo this week for the boys’ and girls’ Class A basketball tournaments will bring with them passion, athleticism and cold, hard cash – the kind that fuels the engine of local tourism.

FARGO – The hundreds of players, parents and fans who descend on Fargo this week for the boys’ and girls’ Class A basketball tournaments will bring with them passion, athleticism and cold, hard cash – the kind that fuels the engine of local tourism.

And like all visitors who stay overnight in Fargo and Moorhead hotels, they’ll pay a little extra – a lodging tax of 3 percent of the bill – to keep that engine humming.

The tax, levied on about $70 million in annual hotel room sales, generates an estimated $2 million a year. A little less than a third of that goes toward a capital improvement fund that supports projects at places such as the Fargo Theatre, Fargo Air Museum and Hjemkomst Center in Moorhead. The remaining $1.4 million makes up the operating budget of the Fargo-Moorhead Convention and Visitors Bureau.

So what does the CVB do with the money? The Forum sat down with Cole Carley, CVB president and chief executive, to break down the organization’s budget and track the dollars as they’re put to work promoting Fargo and Moorhead.

For an organization marketing a metro area of about 208,000, $1.4 million is a relatively lean budget. Rochester, Minn., which has about 186,000 metro-area residents, has a budget of about $1.8 million for its own CVB. Duluth’s publicity bureau has a budget of about $2.5 million for a metro area with 276,000 residents.

    Among other things, the hotel tax pays for:

  • $642,000 in staff costs. The organization has 11 full-time

    employees dedicated to sales, marketing, event services and operations. It also has a variable number of part-time and temporary employees.

    Salaries for all employees total $523,000; the rest of the cost comes from benefits and payroll taxes.

  • $133,000 in advertising. The CVB advertises Fargo-Moorhead in about 40 media outlets, most of them trade and travel publications.

    Carley said the primary targets are groups that plan conventions and travel en masse. “We put more money into convention marketing because we have a lot of full-service hotels with convention facilities,” he said.

  • $144,000 in CVB travel. The CVB attends about two-dozen trade shows and a handful of other conferences a year, in destinations ranging from St. Louis to Washington to Scandinavia (though domestic trips are far more common than international ones).

    The costs are split more or less evenly between travel expenses, food and lodging, and trade show costs like materials and booths. The trips build relationships with customers who are shopping for destinations.

    How does the CVB sell Fargo at these events? “We emphasize value,” Carley said. “We also pitch the fact that you’re going to be a big deal when you come … we’re going to fuss all over you, and you’re going to get great value for your money.”

    At larger trade shows, the CVB sometimes bands together with other regional cities to establish a stronger presence and compete against bigger cities and entities.

    “We’re up against Hawaii, who’s bringing in grass in their stuff,” Carley said. “The Hilton Corporation might have a waterfall in their booth.” The CVB employs nothing so extravagant.

  • $49,600 in event support. To help grease the skids for big events such as sports tournaments, the CVB helps event organizers defray costs like transportation and venue rental. It supports 20 to 30 groups with contributions ranging from a few hundred dollars to a few thousand dollars.

    The CVB also spends $22,800 on 100,000-plus name badges for visitors. Carley said it’s part of an aggressive effort to make visitors feel special.

    “When they get here, we want to make sure that they feel very welcome,” he said. “The marketing process is beginning to end. It’s creating an impression all the way through to, in our case, they leave town.”

  • $72,000 in promotional materials. That includes $48,000 to make and distribute 100,000 Fargo-Moorhead visitor’s guides, $10,600 on other brochures and guides, and $13,550 on other promotional products. The CVB also spends $6,000 a year on maps.

    All of it adds up to 81 events booked here last year either via CVB leads or from other sources with CVB assistance. Carley estimates the CVB was directly responsible for perhaps 60 percent of those.

    Those events brought in 146,000 people, who booked about 55,000 hotel rooms.

    That’s a sliver of the 1 million-plus hotel rooms booked in Fargo-Moorhead last year – and a small slice of a local tourism industry that Carley estimates to be worth about $250 million.

    But if the CVB is responsible for even a fraction of that industry, he said, it’s done its job.

    “If we can account for about 10 percent of what the tourism industry in general means to Fargo-Moorhead, that’s really good,” Carley said.

    As for the lodging tax, the hotels themselves aren’t complaining. Four of the CVB’s nine board members are hotel general managers to give the industry a voice.

    Tom Kasper, chairman of the board and general manger of the Homewood Suites by Hilton in Fargo, said the CVB can use lodging tax dollars to market the city in ways the hotels can’t.

    “We as hotels don’t have the dollars available to do the appropriate marketing to some of those outside areas,” he said. “It’s a reasonable tax. I think it’s working.”


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Readers can reach Forum reporter Marino Eccher at (701) 241-5502

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