Petaluma seeks promotions with new hotel fees

Officials want to use a new fee on hotel stays to attract more visitors.|

Petaluma could soon find itself the darling of travel magazines and social media influencers in the not-so-distant future if its impending tourism promotion overhaul proves to be successful.

A comprehensive marketing strategy was revealed last week that plans to advertise the city as a desirable photography destination or the perfect place for a new event – all with the hopes of increasing overnight visits and boosting tax revenue.

The new policies are the product of Petaluma’s forthcoming Tourism Improvement District, which the Petaluma Downtown Association and the city’s hoteliers believe will bolster the local economy by utilizing a better-funded and more modernized approach to promotion.

The Petaluma City Council cleared a path for TID to finish forming Monday night, voting unanimously in support of the newly-revealed management plan. Mayor David Glass was absent.

The city will now host a public meeting to gather community input on Nov. 5 before a final council hearing to potentially establish the district on Dec. 3.

“There’s a saying a rising tide raises all ships, and we feel … that if we all effectively rise together, tax revenues rise with it,” said Kirk Lok, president of The Lok Group, which owns Quality Inn Petaluma. “Our goal is to make sure our city is healthy and is able to provide the resources to provide the services that we all enjoy.”

The TID will be funded by assessing an additional 2 percent tax on overnight guests staying at hotels citywide. Based on the current occupancy tax rates, the tourism district is estimated to generate $660,000 in revenue the first year.

According to the newly-adopted management plan, which was formed in collaboration with Civitas, a Sacramento-based consulting firm, and was approved by all nine of Petaluma’s hotel owners, the TID will allocate 60 percent of its budget on wide-ranging marketing, research and communications. In the first year, that will amount to approximately $396,000.

The district will have a five-year life, starting Jan. 1, 2019. Hotel owners paying 50 percent or more of the taxes will have 30 days at the start of each year to initiate a council hearing on TID termination, if they choose to, according to the agreement.

In addition to relieving the city of its $248,000 General Fund obligation to pay for the Petaluma Visitors Program, the TID will provide an additional 17 percent of its proceeds for “destination development” activities. According to the management plan, that would be any undertaking that helps improve the visitor experience or increase the profile and notoriety of Petaluma as an overnight destination.

“This will give the city … the opportunity to talk about what we need on a year to year basis to improve, and how we can use this money,” said City Manager John Brown. “It would be brought to the council as part of the annual budget process every year.”

The city will also collect 3 percent in administration fees to provide its officials with some oversight.

The formation of the TID, which began in July, was met with pushback from some city officials that preferred an increase in the transient occupancy tax, or TOT, over the formation of a separate tourism district. The current TOT rate is 10 percent, and is projected to generate $4 million in 2018.

The city has the authority to use TOT proceeds for any governmental purpose and, in recent years, has used them to fund many basic services. Over the last three years, occupancy taxes have been used for capital expenditures like building projects and financing police and fire truck replacements. In the fiscal year 2018-19, the city plans on increasing its TOT use by $300,000.

Tourism Improvement Districts have been successful in cities throughout the state, with 100 others operating by the end of 2017, according to the management plan. Statewide, they generate over $250 million annually. If the experiment is successful, Petaluma Downtown Association executive director Marie McCusker believes the influx of tax dollars from tourists could help buoy Petaluma’s economy.

“I fundamentally believe in this way going forward,” she said to the council. “I believe that reinvesting in yourself will help raise the TOT exponentially.”

(Contact News Editor Yousef Baig at yousef.baig@arguscourier.com or 776-8461, and on Twitter @YousefBaig.)

UPDATED: Please read and follow our commenting policy:
  • This is a family newspaper, please use a kind and respectful tone.
  • No profanity, hate speech or personal attacks. No off-topic remarks.
  • No disinformation about current events.
  • We will remove any comments — or commenters — that do not follow this commenting policy.