SR-106-011-02 (3)
Council Meeting: February 24, 2004 Santa Monica, CA
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Authorize the City Manager to Negotiate and Execute a Contract with the
Santa Monica Convention and Visitors Bureau
Introduction
This report requests that the City Council authorize the City Manager to negotiate and
execute a five-year extension of the current agreement with the Santa Monica
Convention and Visitors Bureau (Bureau) to promote Santa Monica as a destination and
to assist visitors to the City. The extended agreement will also formalize the City
Council’s action of January 28, 2004 to provide an additional $200,000 to the Bureau.
Background
In 1983, recognizing Santa Monica’s potential as a regional, national and international
visitor destination and understanding the role of tourism in establishing a robust local
economy, the City participated in the formation of the 501c4 non-profit Santa Monica
Convention and Visitors Bureau. In the ensuing years, the Bureau has had strong
professional leadership, gained a reputation in the industry as an effective and efficient
organization, enhanced Santa Monica’s profile as a destination and provided warm and
personalized service to visitors to the City. The City and its residents have realized
financial benefit from the work of the Bureau as municipal services are supported by the
growth of sales and transient occupancy tax. The Bureau has crafted its messages and
promotional efforts to reinforce the image of Santa Monica as a “walkable” city, a center
for the arts and a fine-dining destination. They consciously target longer-stay visitors
who tend to spend more and have a lower-impact on traffic and parking.
The work of the Bureau is funded in large part by payments under the contract with the
City. Base funding of $1.2M is provided and the City has from time to time contributed
to special projects such as a winter destination promotion in New York City and the
establishment of a Visitor’s Center in downtown Santa Monica. The current contract
expires on June 30, 2004.
Discussion
The Bureau’s budget is modest in comparison to other bureaus in Southern California.
The staff of the Bureau has stretched its promotional reach creatively by partnering with
regional, state and national tourism organizations. Santa Monica hotels and restaurants
assist the Bureau’s efforts, largely through in-kind support.
The events of September 11, 2001 and the national recession have impacted tourism
nationwide. Santa Monica has experienced higher room vacancy rates and lower room
prices over the past two years. Compounding this reversal is the apparent loss of key
promotional partners. The structural fiscal crisis of the State of California has resulted
in closure of the state-funded Office of Tourism, a key partner of the Bureau. Funding
for tourism outreach at the federal level is also being reduced.
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While ongoing augmentation of base funding under the contract presents challenges in
the City’s current fiscal context, staff believes it is an essential strategy for maintaining
Santa Monica’s share of the visitor market as partnership opportunities diminish.
Tourism is one of several important components of the City’s enviably diverse revenue
base. Investing in its maintenance will benefit the broader community in coming years.
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The specific purposes of the funding augmentation approved on January 28 with
adoption of mid-year budget revisions are two-fold. First, the city encouraged the
Bureau to establish a downtown Visitor Center and they have done so. No increase in
funding was provided for Center operations and as a consequence, funds that would
otherwise have been spent for by the Bureau for promotion were diverted to the Center.
Second, only substantially enhanced promotional funding will begin to make up for the
loss of promotional partners in Bureau outreach to tour operators and media in target
markets.
Increasing base funding by $200,000 commencing with the current fiscal year provides
for Visitor Center Operations and restoration of the Bureau’s promotional activities.
Base funding would be adjusted during the term of the agreement by the cost of living
factor employed in prior modifications. Should the City Council place an increase in the
transient occupancy tax on the November 2004 ballot it would be appropriate to reopen
the agreement to discuss how further increase of base funding might benefit tourism
revenue flow to the City.
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Budget Financial Impact
Provision for the $200,000 increase to base funding level was made for the current
fiscal year and will be included in the proposed budget for FY 2004/05 and the budget
plan for 2005/06 at account number account 01274.566220 – Convention and Visitor’s
Bureau.
Conclusion
It is recommended that Council authorize the City Manager to negotiate and execute a
contract modification with the Santa Monica Convention and Visitor’s Bureau for an
additional term of five years with base funding augmented by $200,000.
Prepared by: Susan E. McCarthy, City Manager
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