Proposed 'improvement districts' would aid state's tourism industry recovery

Sep 17, 2020

In Erie County alone, the tourism industry is estimated at $1.8 billion. But it has taken a big hit with the COVID pandemic. A new bill is being introduced in Albany to help the industry recover by creating a new funding source to aid related businesses.

Since the arrival of the COVID pandemic, 41 percent of Erie County's 33,000 tourism sector employees have either been furloughed or laid off entirely.

State Senator Tim Kennedy speaks Thursday at the Martin House in Buffalo to announce legislation designed to give the tourism industry a new funding mechanism to help with its recovery. At left is Jonathan Dandes of Rich Products, while at right is Dottie Gallagher Cohen of the Buffalo Niagara Partnership.
Credit Michael Mroziak, WBFO

"According to Smith Travel Research, through the month of July hotel revenues in Erie County are down over $85 million year over year," said Patrick Kaler of Visit Buffalo Niagara. "This impacts not only the state and local bed tax collections, but also a significant loss to the state and local sales tax from visitors."

State Senator Tim Kennedy announced Thursday he is sponsoring legislation which would allow local governments to create Tourism Recovery Improvement Districts which would create new funding to support ongoing tourism efforts.

"Those funds are going to support tourism related purposes that will benefit the businesses by promoting and developing the destination to attract visitors," Kennedy said. "That can include advertising, marketing, sales and destination development, construction and maintenance and more with a singular goal, bringing more tourists to our respective regions."

The money raised to fund the districts would come from a surcharge paid by hotel guests.

An estimated 180 similar tourism improvement districts exist elsewhere in the nation, including locations representing the Buffalo-Niagara region's tourist competition: Ohio, Pennsylvania, New Jersey, Connecticut and other nearby states.

"Tourism is economic development," said the Buffalo Niagara Partnership's Dottie Gallagher. "And for many years, the partnership has had on our agenda a dedicated source of revenue for destination marketing. It's critically important. These (tourism improvement districts) are determined by the hoteliers whether or not they want to participate. The hoteliers are the ones who collect the money. Why do they do that? Because tourism promotion is a sure bet. And they know that any money that is collected will be reinvested and will generate more sales tax revenue. They're business people. They get it."

One thing the proposed legislation would also do, Kennedy stated, is prevent local governments from using dollars raised by the districts for other purposes.

"Government will basically not be allowed to sweep any of these funds, as we've seen, unfortunately, during this very difficult time in other states across the nation, where the tourism dollars are swept into the general fund, and the businesses that depend upon these tourism dollars, and the jobs that they create, are decimated because of that," he said.

A similar version of the bill is being sponsored in the State Assembly by Kimberly Jean-Pierre of Long Island.

Jonathan Dandes, Vice President for Governmental Relations & Special Projects at Rich Products, says the state's tourism industry is in crisis. Businesses big and small are in the crisis together and, Dandes added, so too should lawmakers be with passing the bill.

"This needs to be a bipartisan upstate-downstate effort," he said. "This is not about necessarily just Western New York or Long Island, or the city or the borough of Manhattan, the city of New York."

At the national level, the US Travel Association estimates tourism industry losses at $505 billion this year due to the pandemic. But Kaler says the industry has bounced back before.

"The tourism sector has a proven track record for strong recovery, following 9/11 and the 2008 economic downturn," he said. "But we know with patience, support and appropriate resources, we can turn the situation created by COVID-19 around, long term, and come back and come back bigger and stronger than ever, and retain New York State's status as one of the world's premier tourism destinations."