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Department of Commerce plans to increase spending on tourism

Finishing touches are going on the Inn at 500 Capitol, the first of three downtown Boise hotels expected to open in the coming months. Photo by Teya Vitu.

A growing number of hotels and out-of-state visitors is causing revenue raised from Idaho’s lodging tax to outperform expectation. File photo.

Idaho is collecting more money than expected from its 2 percent travel and convention tax, and the Idaho Department of Commerce is asking the Legislature for authority to spend it.

The Department of Commerce had budgeted for a 7 percent annual increase in revenue raised from the tax between 2014 and 2017, but real revenue growth has been between 8 percent and 14 percent every year, according to Megan Ronk, director of the Department of Commerce.

The travel and convention tax is applied to hotel rooms, private campgrounds, vacation rentals and other short-term lodging options.

Revenue from the lodging tax is expected to grow 9 percent each of the next three years, Ronk said. Part of the reason is the construction of new hotels in several markets.

Revenue from its travel and convention tax goes into a dedicated fund for tourism programs, but the department can only spend a certain amount of money at a time – usually enough to last around three years, said Matt Borud, chief marketing office with Idaho Department of Commerce.

The department is on track to reach its spending limit a year early because of the increase in tax collections, he said.

“Asking for more spending authority is something we have to go and do every few years, but we don’t mind doing it because it means we are telling a good story,” Borud said. “It means that tourism is growing across the state and that we are raising more money that can then go back to communities.”

The department divides the revenue raised from the lodging tax into three categories. Local and regional tourism organizations get 45 percent, statewide programs get 45 percent and 10 percent goes to the Department of Commerce for administrative costs.

If the Legislature grants the spending increase, the department will buy additional TV advertisements for its statewide F.Y. 2018 winter campaign and F.Y. 2019 prime season campaign, said Megan Hill, spokeswoman for the the Department of Commerce.

The department will also build ad campaigns that target national markets with direct flights to Idaho, she said.

Idaho collected $8.8 million from its lodging tax in 2015 and $10 million in 2016, according to the State Tax Commission.

 

About Benton Alexander Smith

Benton Alexander Smith is a reporter for the Idaho Business Review, covering the Idaho Legislature, new business, technology and financial services.