Much Coveted Tourism Fee Treasury Could End Up Half Full

Increased legal protections in the city’s contract with hoteliers could mean less available cash to market the region and support major events including the Centennial celebration at Balboa Park.

The city’s new deal with its Tourism Marketing District calls for hotels across the city to sign waivers clearing the city of any liability in two ongoing lawsuits and any others that may arise. And some don’t want to do it, which means the city may not release proportionate dollars.

I touched on this point in a fact check but thought it was worth explaining further.

Hotels that don’t sign the indemnification paperwork can still tack an extra 2 percent charge on visitors’ bills. But the money they collect won’t be released to the Tourism Marketing District.

This could severely restrict the district’s budget next year.

At a meeting last week, the board considered budget projections should only 60 percent of hotels sign the waivers. That’s the percentage of city hoteliers who submitted petitions supportive of the district in 2012.

Here’s an excerpt from my fact check that explains how the board’s budget might look under that scenario:

If only that portion of hoteliers submit necessary paperwork, the district expects its budget for next year will drop from $23.4 million to about $12 million.

Both estimates include another hit too. The new contract also requires the district to set aside up to $2.3 million to cover the city’s legal expenses.

Such a drastic drop in funding could necessitate deep cuts at the San Diego Tourism Authority , which relies heavily on tourism marketing dollars, and mean significantly less available cash for the Balboa Park Centennial.

Last week, the tourism board voted to give about $21 million to the Tourism Authority and $2.3 million to Centennial organizers but it’s not guaranteed those funds will be available. Board members have to wait to see how many hoteliers sign legal paperwork.

Clarification:  A previous version of this story said 2 percent surcharges collected by hotels that don’t sign indemnification paperwork  will be routed to a city fund. The money will flow into the Tourism Marketing District fund but won’t be released to the district.

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