Tourism Council eyes revenue loss to room reselling services
As more and more island visitors rent rooms and homes through such room reselling platforms as airbnb, less and less hotel tax revenue gets circled back to the Block Island Tourism Council. The hotel tax returned to the Council is its sole source of funding.
That this trend will continue in 2019 and beyond was cause for concern for the members of the Tourism Board at its meeting on Tuesday, March 26.
Tourism Director Jessica Willi provided the Board with some facts: in the third quarter of 2016 (July, August and September) there were 33 active rental units available through room resellers. In quarter three of 2017, there were 211 active units. That number jumped slightly for the third quarter of 2018, when there were 233 units available.
Demand is also keeping track with supply, according to Willi. In July of 2016, 13 rooms were booked through these services. In July of 2017, there were 72 rooms booked, and in July of 2018 there were 141 rooms booked.
In the past, when renters booked their rooms directly through the owners, and also paid for the home or the room directly, some of those hotel tax monies are sent back to the town from which they are generated. (The state funding mechanism is a complicated formula of dividing up the generated taxes.) However, due to changes in the state funding formula, when the rooms are booked through room resellers, as an example, payments are sent to those companies directly, and the tax generated by those sales are not sent back to the various local tourism councils in the state, which includes the Block Island Tourism Council.
Willi presented some figures that help illustrate her point. In January 2019, the hotel tax sent to the Tourism Council amounted to $759. Willi felt that number was oddly low, and then checked, through an online service called airDNA, which tracks the metrics of room reselling services, that about $12,300 had been collected in hotel taxes through room reselling sales during that month. If those tax monies had been collected locally, rather than through those third parties, and divided up by the state formula, the Tourism Council would have realized about $2,700 in revenue from those taxes.
Since it did not receive those monies, it resulted in the unusually low amount sent to the Tourism Council this past January.
“It’s important to stay on top of this,” Willi said. “These are huge corporations and they’re only going to get bigger.” She also made it clear that she understood why businesses and homeowners booked their homes and rooms through these platforms.
Newly-appointed Chamber of Commerce President Cindy Lasser reported back to the Tourism Council members about her quest to seek funding for two new employees at the Visitors Center that would be dedicated to promoting all businesses and tourist attractions on the island. The Chamber occcupies and staffs the Visitors Center, but feels come conflict in that many visitors seek information unrelated to their members, who pay dues and are their primary obligation to serve.
Lasser is hoping to secure funding from the town or the Tourism Council for the new staff, which she, and the members of the Tourism Council, feel would benefit the entire town. Lasser received a mixed reaction to her request to the Town Council earlier in the week, but said she is remaining hopeful that the funding could be found. Tourism Director Jessica Willi said she would send Lasser the forms to fill out for funding requests made to the Tourism board.
“I just want to have a person from the Tourism Council in that office,” said Lasser.
“I don’t know if it’s too late in the game to be asking the town for money,” said member John Cullen, referencing the fact that the town is in the final stages of finalizing its budget for 2020. “Everything you say is important, but the money has to come from somewhere.”
There was some discussion about operating the center just as a community resource, rather than just as the home of the Chamber, and possibly seeking a rent reduction from the town. The Chamber rents the property from the town for $11,700 a year.
“It does seem like you are doing a service for the town,” said member Zena Clark.
“If we’re going to give any money, it’s going to have to support all of the island,” said member Julie Fuller.