Small tax delivers big bang
If a lodging tax is a barometer of the economy, things are looking up in Alexandria. The 3 percent tax brought in record amounts of revenue in August and September, according to Sara Stadtherr, executive director of Alexandria Hotel and Hospitali...
If a lodging tax is a barometer of the economy, things are looking up in Alexandria.
The 3 percent tax brought in record amounts of revenue in August and September, according to Sara Stadtherr, executive director of Alexandria Hotel and Hospitality (AHH), which manages the funds.
The tax is collected at 13 local lodging establishments, which includes motels, hotels, two bed and breakfasts and two resorts.
Stadtherr told the Alexandria City Council at its November 22 meeting that the lodging tax raised about $210,000 this year - a 2 percent increase from the previous year.
The trend has also been going up. After four straight months of slightly decreasing revenues, the tax posted revenue gains in the last three months, Stadtherr said.
About 38 percent of the lodging tax revenue is derived in the busy summer months of June, July and August, she added.
Proceeds from the lodging tax are used to draw more people into Alexandria through advertising, promotions, tradeshows and other marketing strategies.
An AHH board, comprised of five members representing the 13 properties, two from the local tourism organizations and one city council member, decides how the money is spent.
Stadtherr provided the council with a breakdown of the 2011 budget:
Expenses will remain about the same as this year.
AHH staff will receive $53,000, which includes payroll, payroll taxes, mileage, staff lodging and meals, cell phone and meeting expenses.
The Alexandria Lakes Area Chamber of Commerce will be reimbursed $9,350 for postage, telephone, copies and staffing help.
Operating expenses will total $9,400 for website maintenance; bookkeeping; insurance; dues; office and computer supplies; tax fees and audit; AHH annual and monthly meetings; conferences, conventions and industry meetings; education and training; and bank charges.
What will AHH do with the $210,000 it received?
The biggest chunk, $75,000 will go to advertising - through billboards ($35,000), the Internet ($15,000), print ($10,000 for ads in newspapers, magazines, guides and other print media), TV ($5,000), radio ($5,000) and general advertising ($5,000).
AHH also gets many funding requests from groups that plan to hold events or activities in the area that will draw people into town. It will fund $60,000 of the requests, which are made in April and October.
AHH also plans to spend $16,000 on branding and marketing. This includes printing charges, ad development for copy and graphics, photography and initial branding purchases.
Other funds will go toward sponsorships of local and regional events ($8,000), FAM and group tours ($5,000), and trade shows ($2,000).
The total expenses of $237,750 will exceed the $210,706 of revenue by $27,044 so the AHH will tap into its reserves to make up the difference. "I'd rather spend the money to draw more people to Alexandria than have it sitting in the bank," Stadtherr said.
Mayor Dan Ness noted that the AHH's decision to spend more money on the Internet and less on trade shows is a good idea.
Stadtherr agreed, saying that research has shown that 75 percent of the people making vacation plans do it online.
The AHH may whittle down the money it's spending on billboards, Stadtherr told the council. Right now, it's renting four billboards that promote Alexandria - two on Interstate 94 near Monticello and Moorhead, and two on Highway 10 near Detroit Lakes and St. Cloud.
The council thanked Stadtherr for the report and unanimously approved the budget.
Council member Cindy Bigger, who serves on the AHH board, added that Stadtherr, the AHH director since April, is the right person for the job.
"She knows a lot," Bigger said. "We're fortunate to have her."