2027-2036
Prepared pursuant to the Property and Business Improvement District Law of 1994, Streets and Highways Code section 36600 et seq.
August 11October
2, 2026
SANTA MONICA TOURISM MARKETING DISTRICT
MANAGEMENT DISTRICT PLAN
CONTENTS
I. OVERVIEW...................................................................................................................... 3 II. BACKGROUND................................................................................................................. 5 III. BOUNDARY ..................................................................................................................... 6 IV. ASSESSMENT BUDGET AND SERVICES.............................................................................. 7 A. ANNUAL SERVICE PLAN ............................................................................................................. 7 B. ANNUAL BUDGET ..................................................................................................................... 9 C. CALIFORNIA CONSTITUTIONAL COMPLIANCE ................................................................................ 10 D. ASSESSMENT ......................................................................................................................... 13 E. INTEREST AND OVERDUE CHARGES ............................................................................................ 14 F. TIME AND MANNER FOR COLLECTING ASSESSMENTS..................................................................... 15 V. GOVERNANCE .............................................................................................................. 16 A. OWNERS’ ASSOCIATION .......................................................................................................... 16 B. BROWN ACT AND CALIFORNIA PUBLIC RECORDS ACT COMPLIANCE.................................................. 16 C. SEGREGATION OF SMTMD FUNDS ........................................................................................... 16 D. ANNUAL REPORT ................................................................................................................... 16 E. MILESTONE REPORT ............................................................................................................... 17 APPENDIX 1 – LAW .............................................................................................................. 18 APPENDIX 2 – ASSESSED BUSINESSES................................................................................... 31 APPENDIX 3 – TIER BENEFITS ............................................................................................... 31 APPENDIX 4 – BENEFIT STUDY.............................................................................................. 32 Prepared by
Civitas
(916) 437-4300
www.civitasadvisors.com
SMTMD Management District Plan 3
August 11October 2, 2026
I. OVERVIEW
Developed by Santa Monica lodging businesses and Santa Monica Travel & Tourism (SMTT), the Santa Monica Tourism Marketing District (SMTMD) is an assessment district proposed to continue to provide specific benefits to payors by funding marketing and sales promotion efforts for assessed lodging businesses. This approach has been used successfully in other destination areas throughout the country to provide the benefit of additional room night sales directly to payors. The SMTMD was initially created in 2012 for a five (5) year term and was subsequently renewed in 2016 for a nine and one-half (9.5) year term. Santa Monica lodging businesses and SMTT now wish to renew the SMTMD for an additional nine and one-half (9.5) year term.
Location: The renewed SMTMD includes all lodging businesses, existing and in the future, available for public occupancy located within the boundaries of City of Santa Monica (City) with an average daily rate of $100 or more, as shown on the map in Section III.
Services: The SMTMD is designed to provide specific benefits directly to payors by increasing awareness and demand for room night sales. Sales & Marketing programs, and other improvements and activities set forth in this Management District Plan (Plan), will increase demand for overnight tourism and market payors as tourist, meeting and event destinations, thereby increasing demand for room night sales.
Budget: The total SMTMD annual assessment budget for each full year of operation (January 1- December 31) is anticipated to be approximately $6,500,000. The initial “year” of operation will be a partial year consisting of six (6) months (July 1- December 31), for which the anticipated assessment budget is $3,250,000. A similar assessment budget is expected to apply to subsequent years, but this assessment budget is expected to fluctuate as room sales do, as businesses open and close, and as the assessment rate is increased or decreased pursuant to this Plan.
Cost: The annual assessment is a fixed amount per occupied room per night. The assessment is based on the businesses’ average daily rate, based on the previous year’s performance. Average daily rate figures shall be updated annually. Based on the benefit received, assessments will not be collected on: stays of thirty-one (31) or more consecutive days by the same natural person; stays paid by any Federal, State of California, or City, official or employee when on official business provided that an exempt certificate is executed at the time of registration; stays associated with occupancy by a natural person who has occupied, or had the right to occupy, a room or rooms in a lodging business for at least thirty-one (31) consecutive days, where any portion of the room rental is paid by a person other than a natural person and the occupancy is necessitated by (i) displacement from a residence caused by fire, natural disaster, or other casualty, (ii) extended medical treatment, or (iii) other comparable circumstances beyond the natural person's control; stays paid to any hospital, medical clinic, convalescent home or home for aged people; and stays paid by any person as to whom, or any occupancy as to which, it is beyond the power of the City to impose the assessment herein by reason of federal, State, or local law or regulation. Lodging businesses with an average daily rate less than $100 will not be included in the district or assessed. Initial assessment rates are:
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August 11October 2, 2026
Tier Average Daily Rate Assessment Per Occupied Room Per Night 1 $300 and above $7.50
2 $200 - $299.99 $6.50
3 $100 - $199.99 $2.40
Assessment rates may be subject to an annual increase of no more than twenty-five cents ($0.25) per year for Tier 1 and Tier 2 lodging businesses and no more than ten cents ($0.10) per year for Tier 3 lodging businesses. The table below demonstrates the maximum with the assumption that the rates will be increased by the maximum amounts for each category in each year of the SMTMD’s nine and one-half (9.5) year term, as it is a required disclosure, it is not the anticipated course of action. The maximum assessment rate for each category is:
Year Tier 3
$100 - $199.99
Tier 2
$200 - $299.99
Tier 1
$300 and Above
July 2027- Dec 2027 $2.40 $6.50 $7.50
2028 $2.50 $6.75 $7.75
2029 $2.60 $7.00 $8.00
2030 $2.70 $7.25 $8.25
2031 $2.80 $7.50 $8.50
2032 $2.90 $7.75 $8.75
2033 $3.00 $8.00 $9.00
2034 $3.10 $8.25 $9.25
2035 $3.20 $8.50 $9.50
2036 $3.30 $8.75 $9.75
*The initial “year” is July 1, 2027 through December 31, 2027 Collection: The City will be responsible for collecting the assessment on a monthly basis (including any delinquencies, interest, and overdue charges) from each assessed lodging business located in the boundaries of the SMTMD. The City shall take all reasonable efforts to collect the assessments from each assessed lodging business.
Duration: The renewed SMTMD will have a nine and one-half (9.5) year life, beginning July 1, 2027 or as soon as possible thereafter, and ending nine and one-half (9.5) years from its start date. After nine and one-half (9.5) years, the SMTMD may be renewed pursuant to the Property and Business Improvement District Law of 1994, Streets and Highways Code section 36600 et seq. (94 Law) if assessed lodging business owners support continuing the SMTMD programs.
Management: SMTT shall continue to serve as the SMTMD’s Owners’ Association. The Owners’ Association is charged with managing funds and implementing programs in accordance with this Plan, and must provide annual reports to the City Council.
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II. BACKGROUND
TMDs are an evolution of the traditional Business Improvement District. The first TMD was formed in West Hollywood, California in 1989. Since then, over 100 California destinations have followed suit. In recent years, other states have begun adopting the California model –Illinois, Minnesota, Massachusetts, Montana, South Dakota, Washington, Colorado, Texas and Louisiana have adopted TMD laws. Several other states are in the process of adopting their own legislation. The cities of Wichita, Kansas and Newark, New Jersey used an existing business improvement district law to form a TMD. Additionally, some cities, like Portland, Oregon and Memphis, Tennessee have utilized their home rule powers to create TMDs without a state law.
California’s TMDs collectively
raise over $300 million annually
for local destination
marketing. With competitors
raising their budgets, and
increasing rivalry for visitor
dollars, it is important
that Santa Monica lodging
businesses continue to invest in
stable, commerce-specific
marketing programs.
TMDs utilize the efficiencies
of private sector operation in
the market-based promotion of
tourism districts. TMDs allow
tourism business owners to
organize their efforts to
increase commerce. lodging business owners within the TMD pay an assessment and those funds are used to provide services that increase commerce.
In California, most TMDs are formed pursuant to the Property and Business Improvement District Law of 1994. This law allows for the creation of a benefit assessment district to raise funds within a specific geographic area. The key difference between TMDs and other benefit assessment districts is that funds raised are returned to the private non-profit corporation governing the district.
There are many benefits to TMDs:
• Funds must be spent on services and improvements that provide a specific benefit only to those who pay;
• Funds cannot be diverted to general government programs; • They are customized to fit the needs of payors in each destination; • They allow for a wide range of services;
• They are designed, created and governed by those who will pay the assessment; and • They provide a stable, long-term funding source for tourism promotion. 1 2
4 6
9 12
19 25
29 32
38 46
61 64
70 75
88 95
99 101
104
109
110
114
113113113
115
116
DISTRICTS OPERATING IN CALIFORNIA
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August 11October 2, 2026
III. BOUNDARY
The SMTMD will include all lodging businesses, existing and in the future, available for public occupancy within the boundaries of City of Santa Monica with an average daily rate of $100 or more.
Lodging businesses whose average daily rate increases to $100 will be assessed upon determination of the increase; likewise, lodging businesses whose average daily rate decreases to below $100 will not be assessed upon determination of the decrease. Average daily rate figures shall be updated annually.
The boundaries of the SMTMD are shown in the map below.
Lodging business means: Any public or private hotel, inn, tourist home or house, motel, rooming house, bed and breakfast or other lodging place within the City of Santa Monica offering lodging, wherein the owner and operator thereof, for compensation, furnishes lodging to any transient.
Lodging business shall not include short-term rentals, home-shares, or hostels.
A complete listing of assessed lodging businesses within the renewed SMTMD can be found in Appendix 2.
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IV. ASSESSMENT BUDGET AND SERVICES
A. Annual Service Plan
Assessment funds will be spent to provide specific benefits conferred or privileges granted directly to the payors that are not provided to those not charged, and which do not exceed the reasonable cost to the City of conferring the benefits or granting the privileges. The privileges and services provided with the SMTMD funds are Sales & Marketing programs, and other improvements and activities set forth in this Plan, available only to assessed lodging businesses. The assessment rate for each Tier will be commensurate with privileges and services provided to assessed businesses in each Tier as detailed in Appendix 3.
A service plan assessment budget has been developed to deliver services that benefit the assessed lodging businesses. A detailed annual assessment budget will be developed and approved by the SMTT Board. The chart below illustrates the initial annual assessment budget allocations. These activities and allocations will also apply in subsequent years. The total SMTMD budget for each full year of operation is anticipated to be approximately $6,500,000. The total initial “year” of operation will be a partial year consisting of six (6) months, for which the anticipated assessment budget is estimated to be $3,250,000.
Sales & Marketing,
$2,762,500, 85%
Contingency / Reserve,
$325,000, 10%
Administration,
$162,500, 5%
Initial Partial Year Assessment Budget
(July-December) - $3,250,000
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Although actual revenues will fluctuate due to market conditions, the proportional allocations of the budget shall remain the same. However, the SMTT Board shall have the authority to adjust budget allocations between the categories by no more than fifteen percent (15%) of the total budget per year.
A description of the proposed improvements and activities for the initial year of operation is below.
The same activities are proposed for subsequent years. Any and all assessment funds may be used for the costs of defending the SMTMD in the event of a legal challenge, for contributing to reserves, or for renewal of the SMTMD. Policies relating to contributions to the reserves, the target amount of the reserve fund, and expenditure of monies from the reserve fund shall be set by the Board of Directors of the Owners' Association.
Each budget category includes all costs related to providing that service. For example, the Sales & Marketing budget includes the cost of staff time dedicated to overseeing and implementing the Sales & Marketing program. Staff time dedicated purely to administrative tasks is allocated to the administrative portion of the budget. The costs of an individual staff member may be allocated to multiple budget categories. The staffing levels necessary to provide the services below will be determined by SMTT on an as- needed basis.
Sales & Marketing
A Sales & Marketing program will promote assessed businesses as tourist, meeting, and event destinations. The Sales & Marketing program will have a central theme of promoting Santa Monica as a desirable place for overnight visits. The program will have the goal of increasing overnight visitation and room night sales at assessed businesses, and may include the following activities:
• Internet marketing efforts to increase awareness and optimize internet presence to drive overnight visitation and room sales to assessed businesses; • Print ads in magazines and newspapers, television ads, and radio ads targeted at potential visitors to drive overnight visitation and room sales to assessed businesses; • Attendance of trade shows to promote assessed businesses; • Sales blitzes for assessed businesses;
• Familiarization tours of assessed businesses;
• Research and analytics to promote assessed businesses; Sales & Marketing,
$5,525,000, 85% Contingency / Reserve,
$650,000, 10%
Administration,
$325,000, 5%
Initial Full Year Assessment Budget
(January-December) - $6,500,000
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August 11October 2, 2026
• Transportation services designed to drive overnight visitation and room sales to assessed businesses;
• Staff to implement and support expanded marketing and promotion efforts to promote assessed businesses;
• External public relations firms to promote assessed businesses; • Preparation and production of collateral promotional materials such as brochures, flyers and maps featuring assessed businesses;
• Attendance of professional industry conferences and affiliation events to promote assessed businesses;
• Lead generation activities designed to attract tourists and group events to assessed businesses; • Director of Sales and General Manager meetings to plan and coordinate tourism promotion efforts for assessed businesses; and
• Development and maintenance of a website designed to promote assessed businesses.
Administration and Operations
The administration and operations portion of the budget shall be utilized for administrative staffing costs, office costs, and other general administrative costs such as insurance, legal, and accounting fees.
The City shall be paid an administrative fee to cover its costs for administering, collecting and reviewing the SMTMD assessments paid to the City. For the initial year, the amount shall be $20,056.
The administrative fee may be increased annually, not to exceed five percent (5%).
Contingency
The budget includes a contingency line item as a planning tool to account for unexpected circumstances, such as uncollected assessments or higher than anticipated program costs. If actual costs are higher than anticipated, contingency funds may be used to cover the difference. Any contingency funds not needed for these purposes may be utilized for other program costs, renewal, or for any other organization expenses in this Plan including allocations to reserves, at the discretion of the Owners' Association.
Reserve
The Owners' Association may maintain a reserve fund. The TMD Hotel Committee shall make recommendations to policies relating to contributions to the reserve fund, the target amount of the reserve fund, and expenditure of monies from the reserve fund , which shall be approved by the SMTT Board of Directors.
B. Annual Budget
The total SMTMD annual assessment budget for each full year of operations (January-December) is projected at approximately $6,500,000 annually. The initial “year” of operation will be a partial year consisting of six (6) months (July 1- December 31), for which the anticipated assessment budget is $3,250,000. The total SMTMD annual assessment budget through the nine and one-half (9.5) years term of the SMTMD is estimated to be approximately $72,025,000 if the maximum assessment rate increases are adopted. A similar assessment budget is expected to apply to subsequent years, but this assessment budget is expected to fluctuate as room sales do, as businesses open and close, and if the assessment rate is increased or decreased pursuant to this Plan.
The annual assessment is a fixed amount per occupied room per night. The assessment is based on the businesses’ average daily rate, based on the previous fiscal year’s performance. Average daily rate SMTMD Management District Plan 10
August 11October 2, 2026
figures shall be updated annually. Based on the benefit received, assessments will not be collected on:
stays of thirty-one (31) or more consecutive days by the same natural person; stays paid by any Federal, State of California, or City, official or employee when on official business provided that an exempt certificate is executed at the time of registration; stays associated with occupancy by a natural person who has occupied, or had the right to occupy, a room or rooms in a lodging business for at least thirty-one (31) consecutive days, where any portion of the room rental is paid by a person other than a natural person and the occupancy is necessitated by (i) displacement from a residence caused by fire, natural disaster, or other casualty, (ii) extended medical treatment, or (iii) other comparable circumstances beyond the natural person's control; stays paid to any hospital, medical clinic, convalescent home or home for aged people; and stays paid by any person as to whom, or any occupancy as to which, it is beyond the power of the City to impose the assessment herein by reason of federal, State, or local law or regulation. Lodging businesses with an average daily rate less than $100 will not be included in the district or assessed. Assessment rates are:
Tier Average Daily Rate Assessment Per Occupied Room Per Night 1 $300 and above $7.50
2 $200 - $299.99 $6.50
3 $100 - $199.99 $2.40
Assessment rates may be subject to an annual increase of no more than twenty-five cents ($0.25) per year for Tier 1 and Tier 2 lodging businesses and no more than ten cents ($0.10) per year for Tier 3 lodging businesses. The assessment rate might not increase starting in 2028, the increases may be implemented in later years at the discretion of the Owners’ Association. The table below demonstrates the maximum with the assumption that the rates will be increased by the maximum amounts for each category in each year of the SMTMD’s nine and one-half (9.5) year term, as it is a required disclosure, it is not the anticipated course of action. If the maximum annual assessment increases are adopted by the SMTT Board, the estimated annual budget will increase as shown in the table below.
Estimated Annual Budget if Maximum Assessment Rates Are Adopted 2027 – 2036
Year Sales &
Marketing Contingency/Reserve Administration Total
Jul - Dec 2027* $2,762,500 $325,000 $162,500 $3,250,000 2028 $5,703,500 $671,000 $335,500 $6,710,000
2029 $5,903,250 $694,500 $347,250 $6,945,000
2030 $6,103,000 $718,000 $359,000 $7,180,000
2031 $6,298,500 $741,000 $370,500 $7,410,000
2032 $6,494,000 $764,000 $382,000 $7,640,000
2033 $6,698,000 $788,000 $394,000 $7,880,000
2034 $6,885,000 $810,000 $405,000 $8,100,000
2035 $7,089,000 $834,000 $417,000 $8,340,000
2036 $7,284,500 $857,000 $428,500 $8,570,000
Total $61,221,250 $7,202,500 $3,601,250 $72,025,000
*2027 only covers a 6-month period (July – December). The estimate for the first full year of operation of the district (January-December) is $7,450,000. The subsequent years in the table assumes the assessment rate increase is enacted each year, beginning in 2028.
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C. California Constitutional Compliance
The SMTMD assessment is not a property-based assessment subject to the requirements of Proposition 218. Courts have found Proposition 218 limited the term ‘assessments’ to levies on real property.1 Rather, the SMTMD assessment is a business-based assessment, and is subject to Proposition 26. Pursuant to Proposition 26 all levies are a tax unless they fit one of seven exceptions.
Two of these exceptions apply to the SMTMD, a “specific benefit” and a “specific government service.” Both require that the costs of benefits or services do not exceed the reasonable costs to the City of conferring the benefits or providing the services.
1. Specific Benefit
Proposition 26 requires that assessment funds be expended on, “a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege.”2 The services in this Plan are designed to provide targeted benefits directly to assessed lodging businesses, and are intended only to provide benefits and services directly to those businesses paying the assessment. These services are tailored not to serve the general public, businesses in general, or parcels of land, but rather to serve the specific businesses within the SMTMD. The activities described in this Plan are specifically targeted to increase demand for room night sales for assessed lodging businesses within the boundaries of the SMTMD, and are narrowly tailored. SMTMD funds will be used exclusively to provide the specific benefit of increased demand for room night sales directly to the assessees. Assessment funds shall not be used to feature non-assessed lodging businesses in SMTMD programs, or to directly generate sales for non-assessed lodging businesses.
The activities paid for from assessment revenues are business services constituting and providing specific benefits to the assessed lodging businesses. Nothing in this Plan limits the ability of the Owners’ Association to enter into private contracts with non-assessed lodging businesses for the provision of services to those businesses.
The assessment imposed by the SMTMD is for a specific benefit conferred directly to the payors that is not provided to those not charged. The specific benefit conferred directly to the payors is an increase in demand for room night sales. The specific benefit of an increase in demand for room night sales for assessed lodging businesses will be provided only to lodging businesses paying the district assessment, with Sales & Marketing programs promoting lodging businesses paying the SMTMD assessment. The Sales & Marketing programs will be designed to increase room night sales at each assessed lodging businesses. Because they are necessary to provide the Sales & Marketing programs that specifically benefit the assessed lodging businesses, the administration and contingency services also provide the specific benefit of increased demand for room night sales to the assessed lodging businesses.
Although the SMTMD, in providing specific benefits to payors, may produce incidental benefits to non-paying businesses, the incidental benefit does not preclude the services from being considered a specific benefit. The legislature has found that, “A specific benefit is not excluded from classification as a ‘specific benefit’ merely because an indirect benefit to a nonpayor occurs incidentally and without cost to the payor as a consequence of providing the specific benefit to the payor.”3 1 Jarvis v. the City of San Diego 72 Cal App. 4th 230
2 Cal. Const. art XIII C § 1(e)(1)
3 Government Code § 53758(a)
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2. Specific Government Service
The assessment may also be utilized to provide, “a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product.”4 The legislature has recognized that marketing and promotions services like those to be provided by the SMTMD are government services within the meaning of Proposition 265. Further, the legislature has determined that “a specific government service is not excluded from classification as a ‘specific government service’ merely because an indirect benefit to a nonpayor occurs incidentally and without cost to the payor as a consequence of providing the specific government service to the payor.”6
3. Reasonable Cost
SMTMD services will be implemented carefully to ensure they do not exceed the reasonable cost of such services. The full amount assessed will be used to provide the services described herein. Funds will be managed by the SMTT, and reports submitted on an annual basis to the City. Only assessed lodging businesses will be featured in marketing materials, receive sales leads generated from SMTMD-funded activities, be featured in advertising campaigns, and benefit from other SMTMD-funded services. The assessed lodging business list was compiled from records provided by the jurisdiction and complies with the requirements of the 94 Law. Pursuant to Streets and Highways Code Section 36615, the City Council’s determination of ownership is final and conclusive, with no obligation to obtain other information. Non-assessed lodging businesses will not receive these, nor any other, SMTMD-funded services and benefits.
The SMTMD-funded programs are targeted directly to benefit assessed lodging businesses. It is, however, possible that there will be a spill over benefit to non-assessed lodging businesses. If non-assessed lodging businesses receive incremental room nights, that portion of the promotion or program generating those room nights shall be paid with non-SMTMD funds. SMTMD funds shall only be spent to benefit the assessed lodging businesses, and shall not be spent on that portion of any program which directly generates incidental room nights for non-assessed lodging businesses.
4. Benefit to NonPayors
The specific benefits provided by the SMTMD will only be directly provided to the assessed businesses; they will not be directly provided to non-assessed businesses. Possible indirect benefit does not preclude the SMTMD services from being considered a specific benefit. The legislature has directly indicated, in the context of tourism marketing districts, that services are not precluded from classification as a specific benefit merely because an indirect benefit to a nonpayor occurs as a consequence of providing the service and without cost to the payor.7 Although the legislature does not require the cost of any incidental benefit to non-payors be separated from the assessment, out of an abundance of caution, in 2016 a study was conducted on benefit generated by the SMTMD programs. The study is attached as Appendix 4. The study found that 6.6% of marketing programs generate incidental room night sales at non-assessed lodging businesses.
Although it is not required, the portion of programs that generate this benefit will continue to be paid for with non-assessment funds. Assessment funds will only fund that portion of the programs (93.4%) which represents a specific benefit to the assessed businesses. For example, if a program costs 4 Cal. Const. art XIII C § 1(e)(2)
5 Government Code § 53758(b)
6 Government Code § 53758(b)
7 AB 483 Ting (2014)
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$100,000 total, the SMTMD will fund $93,400 and the remaining $6,600 will be sourced from non-assessment funds.
The amount of the assessment is no more than necessary to cover the reasonable costs of the proposed activities, and the manner in which the costs are allocated to a business owner bear a fair share or reasonable relationship to the businesses’ benefits received from the proposed activities. The benefit study in Appendix 4 found that the benefits provided by the SMTMD do not exceed the reasonable cost.
The programs provided with SMTMD funding receive additional non-assessment funding in the form of grants, corporate sponsorships, event income, transient occupancy tax, and other funds. These funding sources shall be equal to or exceed the amount of benefit conferred to non-payors annually by the SMTMD services. These non-assessment funds will be used to pay for the benefit to non-payors provided by the proposed services, ensuring that assessments will only be used to provide benefits to assessed businesses.
D. Assessment
The annual assessment is a fixed amount per occupied room per night. The assessment is based on the businesses’ average daily rate, based on the previous year’s performance. Average daily rate figures shall be updated annually. Based on the benefit received, assessments will not be collected on: stays of thirty-one (31) or more consecutive days by the same natural person; stays paid by any Federal, State of California, or City, official or employee when on official business provided that an exempt certificate is executed at the time of registration; stays associated with occupancy by a natural person who has occupied, or had the right to occupy, a room or rooms in a lodging business for at least thirty-one (31) consecutive days, where any portion of the room rental is paid by a person other than a natural person and the occupancy is necessitated by (i) displacement from a residence caused by fire, natural disaster, or other casualty, (ii) extended medical treatment, or (iii) other comparable circumstances beyond the natural person's control; stays paid to any hospital, medical clinic, convalescent home or home for aged people; and stays paid by any person as to whom, or any occupancy as to which, it is beyond the power of the City to impose the assessment herein by reason of federal, State, or local law or regulation. Lodging businesses with an average daily rate less than $100 will not be included in the district or assessed. Initial assessment rates are:
Tier Average Daily Rate Assessment Per Occupied Room Per Night 1 $300 and above $7.50
2 $200 - $299.99 $6.50
3 $100 - $199.99 $2.40
Assessment rates may be subject to an annual increase of no more than twenty-five cents ($0.25) per year for Tier 1 and Tier 2 lodging businesses and no more than ten cents ($0.10) per year for Tier 3 lodging businesses. The table below demonstrates the maximum with the assumption that the rates will be increased by the maximum amounts for each category in each year of the SMTMD’s nine and one-half (9.5) year term, as it is a required disclosure, it is not the anticipated course of action. The maximum assessment rate for each category is:
Year Tier 3
$100 - $199.99
Tier 2
$200 - $299.99
Tier 1
$300 and Above
July 2027- Dec 2027 $2.40 $6.50 $7.50
2028 $2.50 $6.75 $7.75
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2029 $2.60 $7.00 $8.00
2030 $2.70 $7.25 $8.25
2031 $2.80 $7.50 $8.50
2032 $2.90 $7.75 $8.75
2033 $3.00 $8.00 $9.00
2034 $3.10 $8.25 $9.25
2035 $3.20 $8.50 $9.50
2036 $3.30 $8.75 $9.75
*The initial “year” is July 1, 2027 through December 31, 2027 The term “gross short-term sleeping room rental revenue” as used herein means: Any charge required by any such hotel for lodging and/or lodging space furnished to any such transient, including, but not limited to, furniture, fixtures, appliances, linens, towels, non-coin-operated safes, and maid service.
Gross short-term sleeping room rental revenue shall not include, and therefore the assessment shall not be charged upon, any federal, state or local taxes collected, including but not limited to transient occupancy taxes and any amount upon which a sales or use tax is imposed with respect to the sale of food products.
The assessment is levied upon and a direct obligation of the assessed lodging business. However, the assessed lodging business may, at its discretion, pass the assessment on to transients. The amount of assessment, if passed on to each transient, shall be disclosed in advance and separately stated from the amount of rent charged and any other applicable taxes, and each transient shall receive a receipt for payment from the business. If the SMTMD assessment is identified separately it shall be disclosed as the “TMD Assessment.” As an alternative, the disclosure may include the amount of the SMTMD assessment and the amount of the assessment imposed pursuant to the California Tourism Marketing Act, Government Code §13995 et seq. and shall be disclosed as the “Tourism Assessment.” The assessment is imposed solely upon, and is the sole obligation of the assessed lodging business even if it is passed on to transients. The assessment shall not be considered revenue for calculation of transient occupancy taxes.
Bonds shall not be issued.
E. Interest and Overdue Charges
The SMTMD shall reimburse the City for any costs associated with collecting unpaid assessments. If sums in excess of the delinquent SMTMD assessment are sought to be recovered in the same collection action by the City, the SMTMD shall bear its pro rata share of such collection costs.
Assessed lodging businesses which are delinquent in paying the assessment shall be responsible for paying:
1. If any person shall fail or refuse to remit to the City the assessment required to be collected and paid under this Plan, on or before the last day of the month in which said assessment becomes due, such assessment is delinquent.
2. Upon any assessment becoming delinquent, the City shall impose an overdue charge of ten percent (10%) of the amount of the assessment.
3. To the extent permitted by law, the City, or designee, may establish rules and regulations that establish an applicable interest rate for any delinquency.
4. If any assessment remains delinquent and unpaid for more than thirty (30) days, an additional overdue charge of ten percent (10%) shall be added.
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5. For collection purposes only, every overdue charge imposed and any such interest as accrues under this Section shall become a part of the assessment required to be remitted.
F. Time and Manner for Collecting Assessments
The SMTMD assessment will be implemented beginning July 1, 2027 or as soon as possible thereafter, and ending nine and one-half (9.5) years from its start date. The City will be responsible for collecting the assessment on a monthly basis (including any delinquencies, interest and overdue charges) from each assessed lodging business. The City shall take all reasonable efforts to collect the assessments from each assessed lodging business. The City shall forward the assessments collected to the Owners’ Association.
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V. GOVERNANCE
A. Owners’ Association
The City Council, through adoption of this Plan, has the right, pursuant to Streets and Highways Code §36651, to identify the body that shall implement the proposed program, which shall be the Owners’ Association of the SMTMD as defined in Streets and Highways Code §36612. The City Council has determined that SMTT will continue to serve as the Owners’ Association for the SMTMD.
The SMTT standing advisory committee known as the “TMD Hotel Committee” shall continue to be responsible for making recommendations to the SMTT Board regarding SMTMD funds and programs. The TMD Hotel Committee shall have between four (4) and nine (9) members, of which at least four (4) will be representatives of assessed lodging businesses.
Annually, SMTT shall hold a joint SMTT Board and TMD Hotel Committee meeting which will be open to the public. The purpose of the annual meeting will be mutual approval of the budget and programs for SMTMD funds for the upcoming fiscal year.
B. Brown Act and California Public Records Act Compliance An Owners’ Association is a private entity and may not be considered a public entity for any purpose, nor may its board members or staff be considered to be public officials for any purpose. The Owners’ Association is, however, subject to government regulations relating to transparency, namely the Ralph M. Brown Act and the California Public Records Act. These regulations are designed to promote public accountability. The Owners’ Association acts as a legislative body under the Ralph M. Brown Act (Government Code §54950 et seq.). Thus, meetings of the SMTT Board and certain committees must be held in compliance with the public notice and other requirements of the Brown Act.
Accordingly, the Owners’ Association shall publicly report any action taken and the vote or abstention on that action of each member present for the action. The Owners’ Association is also subject to the record keeping and disclosure requirements of the California Public Records Act.
C. Segregation of SMTMD Funds
Any SMTMD assessment funds that are received by SMTT shall be held in a separate SMTT bank account.
D. Annual Report
The SMTT shall present an annual report at the end of each year of operation to the City Council pursuant to Streets and Highways Code §36650 (see Appendix 1). The annual report shall include:
• Any proposed changes in the boundaries of the improvement district or in any benefit zones or classification of businesses within the district.
• The improvements and activities to be provided for that fiscal year. • An estimate of the cost of providing the improvements and the activities for that fiscal year. • The method and basis of levying the assessment in sufficient detail to allow each business owner to estimate the amount of the assessment to be levied against his or her business for that fiscal year.
• The estimated amount of any surplus or deficit revenues to be carried over from a previous fiscal year.
• The estimated amount of any contributions to be made from sources other than assessments levied pursuant to this part.
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E. Milestone Report
SMTT shall prepare a five-year Milestone Report, which will be due in November 2031 prior to the City’s approval of the annual report for Calendar Year 2032. The Milestone Report shall be submitted to the City and all assessed businesses. It shall include all information required in the annual report, as well as historical program and performance data, including key performance indicators for lodging businesses such as average daily rate, revenue per available room, and occupancy rates. The Milestone Report may serve as the annual report for Calendar Year 2032. If lodging businesses are not satisfied with the results of the Milestone Report, they may petition the City to disestablish the SMTMD pursuant to Streets and Highways Code section 36650.
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APPENDIX 1 – LAW
CURRENT THROUGH CH. 790 OF THE LEGISLATION FROM THE 2025-2026 REGULAR SESSION, EFFECTIVE AS OF OCTOBER 13, 2025
STREETS AND HIGHWAYS CODE
DIVISION 18. PARKING
PART 7. PROPERTY AND BUSINESS IMPROVEMENT DISTRICT LAW OF 1994 CHAPTER 1. General Provisions
ARTICLE 1. Declarations
36600. Citation of part
This part shall be known and may be cited as the “Property and Business Improvement District Law of 1994.” 36601. Legislative findings and declarations; Legislative guidance
The Legislature finds and declares all of the following:
(a) Businesses located and operating within business districts in some of this state’s communities are economically disadvantaged, are underutilized, and are unable to attract customers due to inadequate facilities, services, and activities in the business districts. (b) It is in the public interest to promote the economic revitalization and physical maintenance of business districts in order to create jobs, attract new businesses, and prevent the erosion of the business districts. (c) It is of particular local benefit to allow business districts to fund business related improvements, maintenance, and activities through the levy of assessments upon the businesses or real property that receive benefits from those improvements.
(d) Assessments levied for the purpose of conferring special benefit upon the real property or a specific benefit upon the businesses in a business district are not taxes for the general benefit of a city, even if property, businesses, or persons not assessed receive incidental or collateral effects that benefit them. (e) Property and business improvement districts formed throughout this state have conferred special benefits upon properties and businesses within their districts and have made those properties and businesses more useful by providing the following benefits:
(1) Crime reduction. A study by the Rand Corporation has confirmed a 12-percent reduction in the incidence of robbery and an 8-percent reduction in the total incidence of violent crimes within the 30 districts studied.
(2) Job creation.
(3) Business attraction.
(4) Business retention.
(5) Economic growth.
(6) New investments.
(f) With the dissolution of redevelopment agencies throughout the state, property and business improvement districts have become even more important tools with which communities can combat blight, promote economic opportunities, and create a clean and safe environment. (g) Since the enactment of this act, the people of California have adopted Proposition 218, which added Article XIII D to the Constitution in order to place certain requirements and restrictions on the formation of, and activities, expenditures, and assessments by property-based districts. Article XIII D of the Constitution provides that property-based districts may only levy assessments for special benefits. (h) The act amending this section is intended to provide the Legislature’s guidance with regard to this act, its interaction with the provisions of Article XIII D of the Constitution, and the determination of special benefits in property-based districts.
(1) The lack of legislative guidance has resulted in uncertainty and inconsistent application of this act, which discourages the use of assessments to fund needed improvements, maintenance, and activities in property-based districts, contributing to blight and other underutilization of property. (2) Activities undertaken for the purpose of conferring special benefits upon property to be assessed inherently produce incidental or collateral effects that benefit property or persons not assessed. Therefore, for special benefits to exist as a separate and distinct category from general benefits, the incidental or collateral effects of those special benefits are inherently part of those SMTMD Management District Plan 19
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special benefits. The mere fact that special benefits produce incidental or collateral effects that benefit property or persons not assessed does not convert any portion of those special benefits or their incidental or collateral effects into general benefits. (3) It is of the utmost importance that property-based districts created under this act have clarity regarding restrictions on assessments they may levy and the proper determination of special benefits. Legislative clarity with regard to this act will provide districts with clear instructions and courts with legislative intent regarding restrictions on property-based assessments, and the manner in which special benefits should be determined.
36602. Purpose of part
The purpose of this part is to supplement previously enacted provisions of law that authorize cities to levy assessments within property and business improvement districts, to ensure that those assessments conform to all constitutional requirements and are determined and assessed in accordance with the guidance set forth in this act.
This part does not affect or limit any other provisions of law authorizing or providing for the furnishing of improvements or activities or the raising of revenue for these purposes. 36603. Preemption of authority or charter city to adopt ordinances levying assessments
Nothing in this part is intended to preempt the authority of a charter city to adopt ordinances providing for a different method of levying assessments for similar or additional purposes from those set forth in this part. A property and business improvement district created pursuant to this part is expressly exempt from the provisions of the Special Assessment Investigation, Limitation and Majority Protest Act of 1931 (Division 4 (commencing with Section 2800)).
36603.5. Part prevails over conflicting provisions
Any provision of this part that conflicts with any other provision of law shall prevail over the other provision of law, as to districts created under this part.
36604. Severability
This part is intended to be construed liberally and, if any provision is held invalid, the remaining provisions shall remain in full force and effect. Assessments levied under this part are not special taxes.
ARTICLE 2. Definitions
36606. “Activities”
“Activities” means, but is not limited to, all of the following that benefit businesses or real property in the district:
(a) Promotion of public events.
(b) Furnishing of music in any public place.
(c) Promotion of tourism within the district.
(d) Marketing and economic development, including retail retention and recruitment. (e) Providing security, sanitation, graffiti removal, street and sidewalk cleaning, and other municipal services supplemental to those normally provided by the municipality. (f) Other services provided for the purpose of conferring special benefit upon assessed real property or specific benefits upon assessed businesses located in the district. 36606.5. “Assessment”
“Assessment” means a levy for the purpose of acquiring, constructing, installing, or maintaining improvements and providing activities that will provide certain benefits to properties or businesses located within a property and business improvement district.
36607. “Business”
“Business” means all types of businesses and includes financial institutions and professions.
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36608. “City”
“City” means a city, county, city and county, or an agency or entity created pursuant to Article 1 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code, the public member agencies of which includes only cities, counties, or a city and county, or the State of California. 36609. “City council”
“City council” means the city council of a city or the board of supervisors of a county, or the agency, commission, or board created pursuant to a joint powers agreement and which is a city within the meaning of this part. 36609.4. “Clerk”
“Clerk” means the clerk of the legislative body.
36609.5. “General benefit”
“General benefit” means, for purposes of a property-based district, any benefit that is not a “special benefit” as defined in Section 36615.5.
36610. “Improvement”
“Improvement” means the acquisition, construction, installation, or maintenance of any tangible property with an estimated useful life of five years or more including, but not limited to, the following:
(a) Parking facilities.
(b) Benches, booths, kiosks, display cases, pedestrian shelters and signs. (c) Trash receptacles and public restrooms.
(d) Lighting and heating facilities.
(e) Decorations.
(f) Parks.
(g) Fountains.
(h) Planting areas.
(i) Closing, opening, widening, or narrowing of existing streets. (j) Facilities or equipment, or both, to enhance security of persons and property within the district. (k) Ramps, sidewalks, plazas, and pedestrian malls.
(l) Rehabilitation or removal of existing structures.
36611. “Management district plan”; “Plan”
“Management district plan” or “plan” means a proposal as defined in Section 36622. 36612. “Owners’ association”
“Owners’ association” means a private nonprofit entity that is under contract with a city to administer or implement improvements, maintenance, and activities specified in the management district plan. An owners’ association may be an existing nonprofit entity or a newly formed nonprofit entity. An owners’ association is a private entity and may not be considered a public entity for any purpose, nor may its board members or staff be considered to be public officials for any purpose. Notwithstanding this section, an owners’ association shall comply with the Ralph M. Brown Act (Chapter 9 (commencing with Section 54950) of Part 1 of Division 2 of Title 5 of the Government Code), at all times when matters within the subject matter of the district are heard, discussed, or deliberated, and with the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code), for all records relating to activities of the district. 36614. “Property”
“Property” means real property situated within a district.
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36614.5. “Property and business improvement district”; “District”
“Property and business improvement district,” or “district,” means a property and business improvement district established pursuant to this part.
36614.6. “Property-based assessment”
“Property-based assessment” means any assessment made pursuant to this part upon real property. 36614.7. “Property-based district”
“Property-based district” means any district in which a city levies a property-based assessment. 36615. “Property owner”; “Business owner”; “Owner”
“Property owner” means any person shown as the owner of land on the last equalized assessment roll or otherwise known to be the owner of land by the city council. “Business owner” means any person recognized by the city as the owner of the business. “Owner” means either a business owner or a property owner. The city council has no obligation to obtain other information as to the ownership of land or businesses, and its determination of ownership shall be final and conclusive for the purposes of this part. Wherever this part requires the signature of the property owner, the signature of the authorized agent of the property owner shall be sufficient. Wherever this part requires the signature of the business owner, the signature of the authorized agent of the business owner shall be sufficient. 36615.5. “Special benefit”
(a) “Special benefit” means, for purposes of a property-based district, a particular and distinct benefit over and above general benefits conferred on real property located in a district or to the public at large. Special benefit includes incidental or collateral effects that arise from the improvements, maintenance, or activities of property-based districts even if those incidental or collateral effects benefit property or persons not assessed. Special benefit excludes general enhancement of property value. (b) “Special benefit” also includes, for purposes of a property-based district, a particular and distinct benefit provided directly to each assessed parcel within the district. Merely because parcels throughout an assessment district share the same special benefits does not make the benefits general. 36616. “Tenant”
“Tenant” means an occupant pursuant to a lease of commercial space or a dwelling unit, other than an owner.
ARTICLE 3. Prior Law
36617. Alternate method of financing certain improvements and activities; Effect on other provisions
This part provides an alternative method of financing certain improvements and activities. The provisions of this part shall not affect or limit any other provisions of law authorizing or providing for the furnishing of improvements or activities or the raising of revenue for these purposes. Every improvement area established pursuant to the Parking and Business Improvement Area Law of 1989 (Part 6 (commencing with Section 36500) of this division) is valid and effective and is unaffected by this part.
CHAPTER 2. Establishment
36620. Establishment of property and business improvement district
A property and business improvement district may be established as provided in this chapter. 36620.5. Requirement of consent of city council
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A county may not form a district within the territorial jurisdiction of a city without the consent of the city council of that city. A city may not form a district within the unincorporated territory of a county without the consent of the board of supervisors of that county. A city may not form a district within the territorial jurisdiction of another city without the consent of the city council of the other city. 36621. Initiation of proceedings; Petition of property or business owners in proposed district
(a) Upon the submission of a written petition, signed by the property or business owners in the proposed district who will pay more than 50 percent of the assessments proposed to be levied, the city council may initiate proceedings to form a district by the adoption of a resolution expressing its intention to form a district. The amount of assessment attributable to property or a business owned by the same property or business owner that is in excess of 40 percent of the amount of all assessments proposed to be levied, shall not be included in determining whether the petition is signed by property or business owners who will pay more than 50 percent of the total amount of assessments proposed to be levied. (b) The petition of property or business owners required under subdivision (a) shall include a summary of the management district plan. That summary shall include all of the following:
(1) A map showing the boundaries of the district.
(2) Information specifying where the complete management district plan can be obtained. (3) Information specifying that the complete management district plan shall be furnished upon request.
(c) The resolution of intention described in subdivision (a) shall contain all of the following:
(1) A brief description of the proposed improvements, maintenance, and activities, the amount of the proposed assessment, a statement as to whether the assessment will be levied on property or businesses within the district, a statement as to whether bonds will be issued, and a description of the exterior boundaries of the proposed district, which may be made by reference to any plan or map that is on file with the clerk. The descriptions and statements do not need to be detailed and shall be sufficient if they enable an owner to generally identify the nature and extent of the improvements, maintenance, and activities, and the location and extent of the proposed district. (2) A time and place for a public hearing on the establishment of the property and business improvement district and the levy of assessments, which shall be consistent with the requirements of Section 36623.
36622. Contents of management district plan
The management district plan shall include, but is not limited to, all of the following:
(a) If the assessment will be levied on property, a map of the district in sufficient detail to locate each parcel of property and, if businesses are to be assessed, each business within the district. If the assessment will be levied on businesses, a map that identifies the district boundaries in sufficient detail to allow a business owner to reasonably determine whether a business is located within the district boundaries. If the assessment will be levied on property and businesses, a map of the district in sufficient detail to locate each parcel of property and to allow a business owner to reasonably determine whether a business is located within the district boundaries.
(b) The name of the proposed district.
(c) A description of the boundaries of the district, including the boundaries of benefit zones, proposed for establishment or extension in a manner sufficient to identify the affected property and businesses included, which may be made by reference to any plan or map that is on file with the clerk. The boundaries of a proposed property assessment district shall not overlap with the boundaries of another existing property assessment district created pursuant to this part. This part does not prohibit the boundaries of a district created pursuant to this part to overlap with other assessment districts established pursuant to other provisions of law, including, but not limited to, the Parking and Business Improvement Area Law of 1989 (Part 6 (commencing with Section 36500)). This part does not prohibit the boundaries of a business assessment district created pursuant to this part to overlap with another business assessment district created pursuant to this part. This part does not prohibit the boundaries of a business assessment district created pursuant to this part to overlap with a property assessment district created pursuant to this part. (d) The improvements, maintenance, and activities proposed for each year of operation of the district and the estimated cost thereof. If the improvements, maintenance, and activities proposed for each year of operation are the same, a description of the first year’s proposed improvements, maintenance, and activities SMTMD Management District Plan 23
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and a statement that the same improvements, maintenance, and activities are proposed for subsequent years shall satisfy the requirements of this subdivision.
(e) The total annual amount proposed to be expended for improvements, maintenance, or activities, and debt service in each year of operation of the district. If the assessment is levied on businesses, this amount may be estimated based upon the assessment rate. If the total annual amount proposed to be expended in each year of operation of the district is not significantly different, the amount proposed to be expended in the initial year and a statement that a similar amount applies to subsequent years shall satisfy the requirements of this subdivision.
(f) The proposed source or sources of financing, including the proposed method and basis of levying the assessment in sufficient detail to allow each property or business owner to calculate the amount of the assessment to be levied against their property or business. The plan also shall state whether bonds will be issued to finance improvements.
(g) The time and manner of collecting the assessments.
(h) The specific number of years in which assessments will be levied. In a new district, the maximum number of years shall be five. Upon renewal, a district shall have a term not to exceed 10 years.
Notwithstanding these limitations, a district created pursuant to this part to finance capital improvements with bonds may levy assessments until the maximum maturity of the bonds. The management district plan may set forth specific increases in assessments for each year of operation of the district. (i) The proposed time for implementation and completion of the management district plan. (j) Any proposed rules and regulations to be applicable to the district. (k)
(1) A list of the properties or businesses to be assessed, including the assessor’s parcel numbers for properties to be assessed, and a statement of the method or methods by which the expenses of a district will be imposed upon benefited real property or businesses, in proportion to the benefit received by the property or business, to defray the cost thereof. (2) In a property-based district, the proportionate special benefit derived by each identified parcel shall be determined exclusively in relationship to the entirety of the capital cost of a public improvement, the maintenance and operation expenses of a public improvement, or the cost of the activities. An assessment shall not be imposed on any parcel that exceeds the reasonable cost of the proportional special benefit conferred on that parcel. Only special benefits are assessable, and a property-based district shall separate the general benefits, if any, from the special benefits conferred on a parcel. Parcels within a property-based district that are owned or used by any city, public agency, the State of California, or the United States shall not be exempt from assessment unless the governmental entity can demonstrate by clear and convincing evidence that those publicly owned parcels in fact receive no special benefit. The value of any incidental, secondary, or collateral effects that arise from the improvements, maintenance, or activities of a property-based district and that benefit property or persons not assessed shall not be deducted from the entirety of the cost of any special benefit or affect the proportionate special benefit derived by each identified parcel.
(3) In a property-based district, properties throughout the district may share the same special benefits. In a district with boundaries that define which parcels are to receive improvements, maintenance, or activities over and above those services provided by the city, the improvements, maintenance, or activities themselves may constitute a special benefit. The city may impose assessments that are less than the proportional special benefit conferred, but shall not impose assessments that exceed the reasonable costs of the proportional special benefit conferred. Because one or more parcels pay less than the special benefit conferred does not necessarily mean that other parcels are assessed more than the reasonable cost of their special benefit. (l) In a property-based district, a detailed engineer’s report prepared by a registered professional engineer certified by the State of California supporting all assessments contemplated by the management district plan.
(m) Any other item or matter required to be incorporated therein by the city council. 36623. Procedure to levy assessment
(a) If a city council proposes to levy a new or increased property assessment, the notice and protest and hearing procedure shall comply with Section 53753 of the Government Code. (b) If a city council proposes to levy a new or increased business assessment, the notice and protest and hearing procedure shall comply with Section 54954.6 of the Government Code, except that notice shall be SMTMD Management District Plan 24
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mailed to the owners of the businesses proposed to be assessed. A protest may be made orally or in writing by any interested person. Every written protest shall be filed with the clerk at or before the time fixed for the public hearing. The city council may waive any irregularity in the form or content of any written protest. A written protest may be withdrawn in writing at any time before the conclusion of the public hearing. Each written protest shall contain a description of the business in which the person subscribing the protest is interested sufficient to identify the business and, if a person subscribing is not shown on the official records of the city as the owner of the business, the protest shall contain or be accompanied by written evidence that the person subscribing is the owner of the business or the authorized representative. A written protest that does not comply with this section shall not be counted in determining a majority protest.
If written protests are received from the owners or authorized representatives of businesses in the proposed district that will pay 50 percent or more of the assessments proposed to be levied and protests are not withdrawn so as to reduce the protests to less than 50 percent, no further proceedings to levy the proposed assessment against such businesses, as contained in the resolution of intention, shall be taken for a period of one year from the date of the finding of a majority protest by the city council. (c) If a city council proposes to conduct a single proceeding to levy both a new or increased property assessment and a new or increased business assessment, the notice and protest and hearing procedure for the property assessment shall comply with subdivision (a), and the notice and protest and hearing procedure for the business assessment shall comply with subdivision (b). If a majority protest is received from either the property or business owners, that respective portion of the assessment shall not be levied. The remaining portion of the assessment may be levied unless the improvement or other special benefit was proposed to be funded by assessing both property and business owners. 36624. Changes to proposed assessments
At the conclusion of the public hearing to establish the district, the city council may adopt, revise, change, reduce, or modify the proposed assessment or the type or types of improvements, maintenance, and activities to be funded with the revenues from the assessments. Proposed assessments may only be revised by reducing any or all of them. At the public hearing, the city council may only make changes in, to, or from the boundaries of the proposed property and business improvement district that will exclude territory that will not benefit from the proposed improvements, maintenance, and activities. Any modifications, revisions, reductions, or changes to the proposed assessment district shall be reflected in the notice and map recorded pursuant to Section 36627. 36625. Resolution of formation
(a) If the city council, following the public hearing, decides to establish a proposed property and business improvement district, the city council shall adopt a resolution of formation that shall include, but is not limited to, all of the following:
(1) A brief description of the proposed improvements, maintenance, and activities, the amount of the proposed assessment, a statement as to whether the assessment will be levied on property, businesses, or both within the district, a statement on whether bonds will be issued, and a description of the exterior boundaries of the proposed district, which may be made by reference to any plan or map that is on file with the clerk. The descriptions and statements need not be detailed and shall be sufficient if they enable an owner to generally identify the nature and extent of the improvements, maintenance, and activities and the location and extent of the proposed district. (2) The number, date of adoption, and title of the resolution of intention. (3) The time and place where the public hearing was held concerning the establishment of the district.
(4) A determination regarding any protests received. The city shall not establish the district or levy assessments if a majority protest was received.
(5) A statement that the properties, businesses, or properties and businesses in the district established by the resolution shall be subject to any amendments to this part. (6) A statement that the improvements, maintenance, and activities to be conferred on businesses and properties in the district will be funded by the levy of the assessments. The revenue from the levy of assessments within a district shall not be used to provide improvements, maintenance, or activities outside the district or for any purpose other than the purposes specified in the resolution of intention, as modified by the city council at the hearing concerning establishment of the district.
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district boundaries to create a special or specific benefit to the assessed parcels or businesses may be provided, but shall be limited to marketing or signage pointing to the district. (7) A finding that the property or businesses within the area of the property and business improvement district will be benefited by the improvements, maintenance, and activities funded by the proposed assessments, and, for a property-based district, that property within the district will receive a special benefit.
(8) In a property-based district, the total amount of all special benefits to be conferred on the properties within the property-based district.
(b) The adoption of the resolution of formation and, if required, recordation of the notice and map pursuant to Section 36627 shall constitute the levy of an assessment in each of the fiscal years referred to in the management district plan.
36627. Notice and assessment diagram
Following adoption of the resolution establishing district assessments on properties pursuant to Section 36625, the clerk shall record a notice and an assessment diagram pursuant to Section 3114. No other provision of Division 4.5 (commencing with Section 3100) applies to an assessment district created pursuant to this part. 36628. Establishment of separate benefit zones within district; Categories of businesses
The city council may establish one or more separate benefit zones within the district based upon the degree of benefit derived from the improvements or activities to be provided within the benefit zone and may impose a different assessment within each benefit zone. If the assessment is to be levied on businesses, the city council may also define categories of businesses based upon the degree of benefit that each will derive from the improvements or activities to be provided within the district and may impose a different assessment or rate of assessment on each category of business, or on each category of business within each zone. 36628.5. Assessments on businesses or property owners
The city council may levy assessments on businesses or on property owners, or a combination of the two, pursuant to this part. The city council shall structure the assessments in whatever manner it determines corresponds with the distribution of benefits from the proposed improvements, maintenance, and activities, provided that any property-based assessment conforms with the requirements set forth in paragraph (2) of subdivision (k) of Section 36622. 36629. Provisions and procedures applicable to benefit zones and business categories
All provisions of this part applicable to the establishment, modification, or disestablishment of a property and business improvement district apply to the establishment, modification, or disestablishment of benefit zones or categories of business. The city council shall, to establish, modify, or disestablish a benefit zone or category of business, follow the procedure to establish, modify, or disestablish a property and business improvement district. 36630. Expiration of district; Creation of new district
If a property and business improvement district expires due to the time limit set pursuant to subdivision (h) of Section 36622, a new management district plan may be created and the district may be renewed pursuant to this part.
CHAPTER 3. Assessments
36631. Time and manner of collection of assessments; Delinquent payments
The collection of the assessments levied pursuant to this part shall be made at the time and in the manner set forth by the city council in the resolution levying the assessment. Assessments levied on real property may be collected at the same time and in the same manner as for the ad valorem property tax, and may provide for the same lien priority and penalties for delinquent payment. All delinquent payments for assessments levied pursuant to this part may be charged interest and penalties.
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36632. Assessments to be based on estimated benefit; Classification of real property and businesses; Exclusion of residential and agricultural property
(a) The assessments levied on real property pursuant to this part shall be levied on the basis of the estimated benefit to the real property within the property and business improvement district. The city council may classify properties for purposes of determining the benefit to property of the improvements and activities provided pursuant to this part.
(b) Assessments levied on businesses pursuant to this part shall be levied on the basis of the estimated benefit to the businesses within the property and business improvement district. The city council may classify businesses for purposes of determining the benefit to the businesses of the improvements and activities provided pursuant to this part.
(c) Properties zoned solely for residential use, or that are zoned for agricultural use, are conclusively presumed not to benefit from the improvements and service funded through these assessments, and shall not be subject to any assessment pursuant to this part. 36633. Time for contesting validity of assessment
The validity of an assessment levied under this part shall not be contested in an action or proceeding unless the action or proceeding is commenced within 30 days after the resolution levying the assessment is adopted pursuant to Section 36625. An appeal from a final judgment in an action or proceeding shall be perfected within 30 days after the entry of judgment.
36634. Service contracts authorized to establish levels of city services
The city council may execute baseline service contracts that would establish levels of city services that would continue after a property and business improvement district has been formed. 36635. Request to modify management district plan
The owners’ association may, at any time, request that the city council modify the management district plan. Any modification of the management district plan shall be made pursuant to this chapter. 36636. Modification of plan by resolution after public hearing; Adoption of resolution of intention
(a) Upon the written request of the owners’ association, the city council may modify the management district plan after conducting one public hearing on the proposed modifications. The city council may modify the improvements and activities to be funded with the revenue derived from the levy of the assessments by adopting a resolution determining to make the modifications after holding a public hearing on the proposed modifications. If the modification includes the levy of a new or increased assessment, the city council shall comply with Section 36623. Notice of all other public hearings pursuant to this section shall comply with both of the following:
(1) The resolution of intention shall be published in a newspaper of general circulation in the city once at least seven days before the public hearing.
(2) A complete copy of the resolution of intention shall be mailed by first class mail, at least 10 days before the public hearing, to each business owner or property owner affected by the proposed modification.
(b) The city council shall adopt a resolution of intention which states the proposed modification prior to the public hearing required by this section. The public hearing shall be held not more than 90 days after the adoption of the resolution of intention.
36637. Reflection of modification in notices recorded and maps
Any subsequent modification of the resolution shall be reflected in subsequent notices and maps recorded pursuant to Division 4.5 (commencing with Section 3100), in a manner consistent with the provisions of Section 36627. 36638. Assessment as government imposed fee on Civ C § 1770 transaction
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(a) A business assessment pursuant to this part is a fee imposed by a government on the transaction for purposes of paragraph (29) of subdivision (a) of Section 1770 of the Civil Code. (b) This section shall become operative on July 1, 2024.
CHAPTER 3.5. Financing
36640. Bonds authorized; Procedure; Restriction on reduction or termination of assessments
(a) The city council may, by resolution, determine and declare that bonds shall be issued to finance the estimated cost of some or all of the proposed improvements described in the resolution of formation adopted pursuant to Section 36625, if the resolution of formation adopted pursuant to that section provides for the issuance of bonds, under the Improvement Bond Act of 1915 (Division 10 (commencing with Section 8500)) or in conjunction with Marks-Roos Local Bond Pooling Act of 1985 (Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the Government Code). Either act, as the case may be, shall govern the proceedings relating to the issuance of bonds, although proceedings under the Bond Act of 1915 may be modified by the city council as necessary to accommodate assessments levied upon business pursuant to this part. (b) The resolution adopted pursuant to subdivision (a) shall generally describe the proposed improvements specified in the resolution of formation adopted pursuant to Section 36625, set forth the estimated cost of those improvements, specify the number of annual installments and the fiscal years during which they are to be collected. The amount of debt service to retire the bonds shall not exceed the amount of revenue estimated to be raised from assessments over 30 years.
(c) Notwithstanding any other provision of this part, assessments levied to pay the principal and interest on any bond issued pursuant to this section shall not be reduced or terminated if doing so would interfere with the timely retirement of the debt.
CHAPTER 4. Governance
36650. Report by owners’ association; Approval or modification by city council
(a) The owners’ association shall cause to be prepared a report for each fiscal year, except the first year, for which assessments are to be levied and collected to pay the costs of the improvements, maintenance, and activities described in the report. The owners’ association’s first report shall be due after the first year of operation of the district. The report may propose changes, including, but not limited to, the boundaries of the property and business improvement district or any benefit zones within the district, the basis and method of levying the assessments, and any changes in the classification of property, including any categories of business, if a classification is used.
(b) The report shall be filed with the clerk and shall refer to the property and business improvement district by name, specify the fiscal year to which the report applies, and, with respect to that fiscal year, shall contain all of the following information:
(1) Any proposed changes in the boundaries of the property and business improvement district or in any benefit zones or classification of property or businesses within the district. (2) The improvements, maintenance, and activities to be provided for that fiscal year. (3) An estimate of the cost of providing the improvements, maintenance, and activities for that fiscal year.
(4) The method and basis of levying the assessment in sufficient detail to allow each real property or business owner, as appropriate, to estimate the amount of the assessment to be levied against his or her property or business for that fiscal year.
(5) The estimated amount of any surplus or deficit revenues to be carried over from a previous fiscal year.
(6) The estimated amount of any contributions to be made from sources other than assessments levied pursuant to this part.
(c) The city council may approve the report as filed by the owners’ association or may modify any particular contained in the report and approve it as modified. Any modification shall be made pursuant to Sections 36635 and 36636.
The city council shall not approve a change in the basis and method of levying assessments that would impair an authorized or executed contract to be paid from the revenues derived from the levy of SMTMD Management District Plan 28
August 11October 2, 2026
assessments, including any commitment to pay principal and interest on any bonds issued on behalf of the district.
36651. Designation of owners’ association to provide improvements, maintenance, and activities
The management district plan may, but is not required to, state that an owners’ association will provide the improvements, maintenance, and activities described in the management district plan. If the management district plan designates an owners’ association, the city shall contract with the designated nonprofit corporation to provide services.
CHAPTER 5. Renewal
36660. Renewal of district; Transfer or refund of remaining revenues; District term limit
(a) Any district previously established whose term has expired, or will expire, may be renewed by following the procedures for establishment as provided in this chapter. (b) Upon renewal, any remaining revenues derived from the levy of assessments, or any revenues derived from the sale of assets acquired with the revenues, shall be transferred to the renewed district. If the renewed district includes additional parcels or businesses not included in the prior district, the remaining revenues shall be spent to benefit only the parcels or businesses in the prior district. If the renewed district does not include parcels or businesses included in the prior district, the remaining revenues attributable to these parcels shall be refunded to the owners of these parcels or businesses. (c) Upon renewal, a district shall have a term not to exceed 10 years, or, if the district is authorized to issue bonds, until the maximum maturity of those bonds. There is no requirement that the boundaries, assessments, improvements, or activities of a renewed district be the same as the original or prior district.
CHAPTER 6. Disestablishment
36670. Circumstances permitting disestablishment of district; Procedure
(a) Any district established or extended pursuant to the provisions of this part, where there is no indebtedness, outstanding and unpaid, incurred to accomplish any of the purposes of the district, may be disestablished by resolution by the city council in either of the following circumstances:
(1) If the city council finds there has been misappropriation of funds, malfeasance, or a violation of law in connection with the management of the district, it shall notice a hearing on disestablishment.
(2) During the operation of the district, there shall be a 30-day period each year in which assessees may request disestablishment of the district. The first such period shall begin one year after the date of establishment of the district and shall continue for 30 days. The next such 30-day period shall begin two years after the date of the establishment of the district. Each successive year of operation of the district shall have such a 30-day period. Upon the written petition of the owners or authorized representatives of real property or the owners or authorized representatives of businesses in the district who pay 50 percent or more of the assessments levied, the city council shall pass a resolution of intention to disestablish the district. The city council shall notice a hearing on disestablishment.
(b) The city council shall adopt a resolution of intention to disestablish the district prior to the public hearing required by this section. The resolution shall state the reason for the disestablishment, shall state the time and place of the public hearing, and shall contain a proposal to dispose of any assets acquired with the revenues of the assessments levied within the property and business improvement district. The notice of the hearing on disestablishment required by this section shall be given by mail to the property owner of each parcel or to the owner of each business subject to assessment in the district, as appropriate. The city shall conduct the public hearing not less than 30 days after mailing the notice to the property or business owners. The public hearing shall be held not more than 60 days after the adoption of the resolution of intention.
36671. Refund of remaining revenues upon disestablishment or expiration without renewal of district; Calculation of refund; Use of outstanding revenue collected after disestablishment of district
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August 11October 2, 2026
(a) Upon the disestablishment or expiration without renewal of a district, any remaining revenues, after all outstanding debts are paid, derived from the levy of assessments, or derived from the sale of assets acquired with the revenues, or from bond reserve or construction funds, shall be refunded to the owners of the property or businesses then located and operating within the district in which assessments were levied by applying the same method and basis that was used to calculate the assessments levied in the fiscal year in which the district is disestablished or expires. All outstanding assessment revenue collected after disestablishment shall be spent on improvements and activities specified in the management district plan. (b) If the disestablishment occurs before an assessment is levied for the fiscal year, the method and basis that was used to calculate the assessments levied in the immediate prior fiscal year shall be used to calculate the amount of any refund.
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August 11October 2, 2026
APPENDIX 2 – ASSESSED BUSINESSES
LODGING BUSINESS NAME
Bayside Hotel
Cal Mar Hotel Suites
Comfort Inn Santa Monica
Courtyard by Marriott Santa Monica
Days Inn Santa Monica
Fairmont Miramar Hotel & Bungalows
Gateway Hotel Santa Monica
Hampton Inn & Suites Santa Monica
Hilton Santa Monica Hotel & Suites
Hotel Carmel
Hotel Casa Del Mar
Hyatt Centric Delfina
Maison Twenty Seven
Ocean Lodge Hotel Santa Monica
Ocean Park Inn
Ocean View Hotel
Oceana Santa Monica
Regent Santa Monica Beach
Rest Haven Motel
Sandbourne Santa Monica
Santa Monica Hotel
Santa Monica Proper Hotel
Sea Blue Hotel
Sea Shore Motel
Shutters on the Beach
SureStay by Best Western
The Ambrose Hotel
The Cottage Santa Monica
The Eden
The Georgian
The Huntley Santa Monica
The Pierside Hotel
The Shore Hotel
The Sovereign
Viceroy - Santa Monica
Jurisdiction list as of July 2026
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August 4, 2026
APPENDIX 3 – TIER BENEFITS
SMTMD Management District Plan 32
August 4, 2026
APPENDIX 4 – BENEFIT STUDY
Table of contents
Executive summary 3
Section 1: The vital role of destination promotion 5
Section 2: Recent performance in Santa Monica 16
Section 3: Benchmark analysis of marketing budget 21
Section 4: SMTT marketing activities and TMD benefits 30 Section 5: Conclusions 38
Executive summary
Executive summary
1. Destination marketing is fundamental to broader economic development.
Destination marketing plays an integral and indispensable role in the competitiveness of the local and national visitor economy, and acts as a catalyst for broader economic development.
2. Santa Monica is a strong competitor to other key destinations and is ‘holding ground’ when measured by room revenues and occupancy rate.
Relative to competing regional destinations, growth in room revenues has kept pace since 2010. Santa Monica has enjoyed steady growth in average room rates, which accounts for much of the recent revenue growth. Demand growth has lagged behind that of competing destinations and has averaged 2.6% per year since 2010.
Supply growth has been even more restrained than demand, leading to rising occupancy rates, which reached 84% in 2014. With flat supply, there is little room for additional demand during the peak seasons; in this sense demand is constrained by supply.
3. Many destinations in California have formed Tourism
Marketing Districts (TMDs) to ensure reliable funding.
The recently formed TMD in Santa Monica is becoming an
increasingly important source of marketing funding and enables the City to compete effectively with regional destinations. Nearly 100 other destinations in California have formed similar funding mechanisms.
4. The overall SMTT budget is competitive compared to other destinations.
The amount of funding dedicated to marketing Santa Monica as a destination is small in absolute terms compared to much larger destinations, such as Los Angeles and San Diego. However, adjusted for the size of the destination, SMTT’s budget enables it to compete effectively and is consistent with those of other destinations.
5. SMTT marketing campaigns and projects are diverse.
Recent projects have included development of a five-year strategic plan, focus groups conducted in seven domestic and international target markets, a redesigned website with a new booking tool that only directs traffic to TMD hotels, a new visitor guide and map, a redesigned logo, and integrated marketing campaigns in the U.S., United Kingdom, Australia, and Brazil.
With 98% of the room inventory assessed under the TMD, the vast majority of benefits of these marketing efforts are realized by properties that pay into the TMD. Overall, based on bookings and sales data, TMD hotels enjoy more than 93% of the benefits of TMD spending.
| Tourism Economics 4
Overview
Santa Monica Travel & Tourism (SMTT) engaged Tourism Economics to conduct an independent analysis of the competitiveness of the marketing budget relative to other destinations. Below are the key findings:
1. The vital role of destination promotion
The vital role of destination
promotion
| Tourism Economics 6
Destination marketing plays an integral and
indispensable role in the competitiveness of
the local and national visitor economy by
addressing its unique challenges.
Challenge #1: The visitor economy is fragmented
The visitor economy is diverse with benefits accruing across various industries (e.g. hotels, restaurants, retail stores, transportation, performance venues and other attractions), and in many cases, these establishments are operated as small businesses that lack the capacity to conduct certain types of marketing. Moreover, certain benefits accrue across the economy rather than to just an individual business.
Because a visitor’s spending is spread across businesses, any single business may not capture sufficient share of a visitor’s spending to justify marketing to attract visitors to a destination. For example, an individual hotel could market the attractiveness of a destination, but it would only benefit from those additional visitors who not only choose the destination, but also choose that particular hotel; and the hotel would only benefit directly from the visitor’s spending at the hotel. In other words, at the level of an individual business, the returns on independent marketing to attract visitors to a destination can be less compelling. However, when viewed at the level of the destination, there is a more direct connection. The destination captures a substantial dollar amount per visitor, and in aggregate there are compelling returns on effective destination marketing.
Solution: destination promotion provides the scope and
strategic vision supporting a wide array of individual
businesses.
Destination promotion organizations play a role furthering the strategic potential of the visitor economy. Destination marketing organizations (“DMOs”) can take a long term view of the development of the destination, and pursue tactics to help develop a visitor economy that better fits the goals of local residents and businesses. For example, many destinations have a mix of peak, shoulder, and low season periods. DMOs take steps to build shoulder season and low season demand, and help fill slower days of the week, supporting a more stable base of spending and helping ongoing operations achieve a “break even” level of profitability. Similarly, DMOs can play a role helping to find solutions that balance the development of the visitor economy with the constraints and goals of a given destination, such as fostering the development of geographic areas with greater capacity for growth.
The vital role of destination
promotion (continued)
| Tourism Economics 7
The fundamental motivation driving a visit is
not usually the offerings of a single
business—instead it is the destination.
Challenge #2: The primary motivator of a trip is usually the experience of a destination, extending beyond the
offerings marketed by a single business
The fundamental motivation driving a visit to a given destination is frequently not the offerings of a single business—instead it is the destination, including a range of attractions and the overall experience of a place. This experience comprises a visitor’s interaction with, and patronage of, numerous businesses and local experiences: hotels and other accommodations; restaurants; shopping and galleries; conferences; performances and other events; family activities; sports and other recreation; and cultural sites and attractions.
Marketing efforts that focus on only one sub-sector of the visitor market, such as communicating the offering of a specific hotel or other business, do not also adequately address the core motivation for potential visitors. Through coordinated destination promotion, local businesses are able to represent the destination collectively, and in doing so drive demand for all segments of the visitor economy. Stand-alone marketing efforts would almost certainly be less effective than a collective destination marketing campaign.
Solution: destination promotion articulates the brand
message that is consistent with consumer motivations
The same holds true in the case of group travel, such as corporate meetings and trade conventions, for which event sponsors seek a destination that meets multiple success criteria. While the offerings of an individual headquarter hotel or convention facility are critically important, in many cases the merits of a destination overall are being considered relative to other potential options. In such situations, a coordinated strategy—from initial marketing and touch points that build familiarity, to the dedicated sales team that lines up the destination’s best offer of facilities, amenities, services, and experience—augments and rises beyond the message of a single operation.
The vital role of destination
promotion (continued)
| Tourism Economics 8
The scale of collaborative destination
marketing is more effective than what
individual businesses could accomplish.
Challenge #3: Effective marketing requires scale to reach potential visitors across multiple markets
Effective destination marketing requires significant and consistent funding and long term planning with the aim of gaining a sufficient “share of voice” to be heard and make an impact. Whether in the form of social media advertising, public relations efforts, or group sales, scale produces efficiencies that maximize the share of funding that goes to actual marketing and advertising, drives down per unit advertising costs, and enables higher impact, more specialized efforts.
As a result, the larger scale of collaborative destination marketing is more effective than what individual businesses would accomplish.
Simply put, the whole of destination marketing is greater than the sum of individual parts.
Solution: destination promotion pools resources to provide the economies of scale and marketing infrastructure required to generate impact
One of the benefits of coordinated marketing facilitated by a DMO is the ability to have a stable organization and funding base to support destination marketing. As a result, DMOs are able to efficiently leverage the brand, infrastructure and relationships that have been built over time.
For example, DMOs:
Initiate efforts in geographic markets with strong potential for the destination, giving partners the opportunity to engage in markets they could not pursue on their own
Conduct integrated sales and marketing campaigns that create destination brand awareness and drive visitation during need periods
Build upon existing infrastructure, such as websites and publications while staying on the forefront of marketing trends and consumer behavior shifts
Employ a staff and network of innovative agency partners with established relationships in the travel industry
Support ongoing market research, such as visitor profile and market feasibility studies, that help individual businesses and community organizations to better allocate their marketing resources
Through these channels, destination promotion expands the visitor economy and drives employment, income generation, and local tax revenues, and helps to build the types of opportunities that are a critical part of economic development.
Destination promotion helps
drive economic development
| Tourism Economics 9
Destination promotion supports the visitor
economy, but it also acts as a catalyst of
broader economic development.
In recent research, Tourism Economics / Oxford Economics identified four primary channels through which destination promotion drives broader economic development and growth.
1) Raising the destination profile
Destination promotion builds awareness, familiarity, and relationships in commercial, institutional and individual networks that are critical in attracting investment.
“We are learning a lot from Visit California by how they brand California and how to take their model and apply it to economic development.”
Brook Taylor
Deputy Director
Governor’s Office of Business and Economic Development (GO-Biz) 2) Building transport networks
By developing the visitor economy, destination promotion supports transportation infrastructure, providing greater accessibility and supply logistics that are important in attracting investment in other sectors. “Air service is profoundly important to corporate investment and location decisions... This is one of tourism’s most significant contributions since the levels of air service at New Orleans far exceed what local demand could support.”
Stephen Moret
Secretary
Louisiana Economic Development
3) Raising the quality of life
Visitor spending helps support a broader and higher quality set of local amenities than an area could otherwise sustain. The cultural, entertainment, culinary, and retail attractions that visitors support make a place more attractive to investors.
“Traveler attractions are the same reason that CEOs choose a place.”
Jeff Malehorn
President & CEO, World Business Chicago
4) Attracting strategic events and industries
By securing meetings and conventions, DMOs attract the very prospects that economic development agencies target. Not only do these events create valuable exposure among business decision makers, they create direct opportunities for economic development agencies to deepen connections with attendees. Further, the work of DMOs can also attract strategic industries, such as technology, that drive growth in a broader sense.
“Economic clusters and conventions have become synergistic” Tom Clark
Metro Denver Economic Development Corporation
Oxford Economics (2014, November) “Destination Promotion: An Engine of Economic Development: How destination promotion drives economic development.” Produced in connection with Destination & Travel Foundation.
Link to http://www.oxfordeconomics.com/engine
Destination promotion helps
drive economic development
| Tourism Economics 10
The four channels of catalytic impacts
generate benefits that extend beyond direct
effects of driving visitation.
Oxford Economics (2014, November) “Destination Promotion: An Engine of Economic Development: How destination promotion drives economic development.” Produced in connection with Destination & Travel Foundation.
Link to http://www.oxfordeconomics.com/engine
Destination marketing supports economic development through four catalytic channels, extending its impact well beyond the effects of visitor spending. Destination marketing raises the profile of a city among potential investors, builds transport accessibility, raises the quality of life for residents, and attracts major events that build awareness. Raising the destination profile can also help to attract businesses in strategic industries that drive growth.
As a result, cities that succeed as destinations are more likely to succeed in broader economic terms.
Case study 1: Colorado cuts
state funding
| Tourism Economics 11
Within two years, Colorado lost 30% of its
U.S. visitor market share.
Changes in promotion budgets in other U.S. destinations provide case study examples of what has happened when destination marketing spending is increased or reduced. We have summarized several of these case studies in this section, beginning with Colorado, which represents a powerful example of the impact of a dramatic reduction in destination marketing spending:
Prior to 1993, the Colorado Tourism Board (CTB) had a $12 million marketing budget, funded by a 0.2% tax on most tourism spend.
Within two years of repealing its tourism funding in 1993, Colorado lost 30% of its US visitor market share, which translated into the equivalent of over $1.4 billion annually in lost revenues. By the late 1990s, this had escalated to $2.4 billion a year.
After having moved from 14th to 1st position in the states’ summer resorts category, Colorado slipped to 17th in 1994. It also shifted back to being more of a regional drive destination opposed to being a national fly-in venue and attracting fewer international visitors.
The subsequent establishment of the Colorado Travel & Tourism Authority, which was an attempt to market the state with private sector funding in co-operation with the CTB, failed. This was attributed to the fact that private sector companies had separate priorities.
The new Colorado Tourism Office opened with a $5 million budget, and in 2003 approved funding for tourism promotion increased to $9 million. A campaign conducted from October 2003 through December 2004 resulted in 5.3 million incremental visits, representing 17% of total visitation to the state. In 2004, this generated $1.4 billion of additional spend and $89.5 million in state and local taxes.
These estimates are equivalent to an implied visitor spending return-on-investment (ROI) per marketing dollar of $140 (i.e. each dollar change in marketing spending resulted in a change in visitor spending of $140).
Case study 2: San Diego TMD
funding frozen by litigation
| Tourism Economics 12
San Diego market share declined when
tourism marketing was curtailed in 2013.
A series of events in San Diego resulted in a temporary reduction in tourism marketing spending, providing a case study of short-term impacts:
The San Diego Tourism Marketing District (SDTMD) was
established in 2008 with the support of the lodging sector to provide stable funding for marketing and promotion based on a hotel room assessment. For example, in FY2012, the SDTMD allocated more than $25 million in assessment funds.
In 2013, funds intended for the SDTMD were held in limbo through much of the calendar year, curtailing funding to local tourism marketing groups.
The San Diego Tourism Authority (SDTA), the region’s primary destination marketing organization, was one of the groups impacted. SDTA depends largely on SDTMD funding and was forced to cancel its important spring 2013 advertising campaign. Later, as the funding challenges persisted, SDTA laid off 40% of its staff in July 2013 and prepared to function as a bare-bones operation with only 15% of the funding that it previously received from SDTMD.
Ultimately, in late-November 2013, the local city council released a portion of the funds previously being withheld and the SDTA restored its advertising in January 2014. As a result, the cutbacks in destination marketing were largely contained in calendar year 2013, and San Diego tourism marketing resumed strongly in 2014.
The impact of the reduced funding was reflected in the performance of the San Diego hotel industry, as room demand leveled off in 2013, and occupancy rates and price levels increased more slowly than in competing markets. Overall, the city’s performance trailed other regional and national destinations that had maintained funding levels and marketing programs.
Further, occupancy tax revenues that would have been generated during this time were lost.
The graph below shows San Diego’s reduced hotel room demand market share relative to a competitive set (Los Angeles, San Francisco, Anaheim, Phoenix and Seattle) and top 25 US metro markets during the period of reduced funding, and subsequent recovery when marketing was restored.
3.80 3.84
3.88 3.92
3.96 4.00
15.6 15.7
15.8 15.9
16.0 11 12 13 14
Comp set (L)
Top 25 (R)
San Diego room demand market share
San Diego's % of total room nights, relative to...
Sources: STR, Tourism Economics
Defunding of
SDTA
Case study 3: Pure Michigan
success
| Tourism Economics 13
Michigan successfully invested in
destination marketing as part of a strategy
to ignite growth.
“Pure Michigan” is a nationally recognized advertising campaign. Less appreciated are the important decisions the state took during a period of economic recession to expand the campaign as an investment in future growth.
Bill Siegel, CEO of Longwoods, recently summarized this success story in a widely cited paper, “The Power of Destination Marketing” (link). The following highlights key points:
The “Pure Michigan” campaign had its fledgling start in 2006 as a regional campaign in an environment of relatively low funding. In preceding years, Michigan’s state tourism budget had declined, falling to as little as $7.9 million in FY2005 according to US Travel data. For several years, as the campaign ran in regional markets research demonstrated that it was building equity in the marketplace, improving Michigan’s image and generating positive financial returns.
In 2009, with the national economy still in recession, and Michigan’s manufacturing base hit particularly hard, the state legislature saw tourism as a potential growth opportunity, and approved a one-time doubling of the Travel Michigan budget to $28 million. This allowed the state to promote itself nationally for the first time, and “Pure Michigan” was well-suited to the opportunity.
In its first year, the national campaign dramatically increased unaided awareness of Michigan as a place in the Midwest US “you would really enjoy visiting”, and three out of ten national travelers were aware of the campaign. The campaign was
recognized by Forbes as among the 10 all-time best travel campaigns, and Michigan moved to 2nd place among competitors after the campaign, from 9th place before the campaign. The summer 2009 campaign has been estimated to have
generated almost two million additional trips to Michigan. As a result, based on a $12.2 million media budget, the campaign is estimated to have generated $588 million of incremental visitor spending and $41.0 million of state taxes, equivalent to $3.36 of state taxes per ad dollar.
In total from 2006 to 2014, Longwoods estimated that “Pure Michigan” results generated 22.4 million out-of-state trips to Michigan and $6.6 billion of visitor spending at Michigan businesses.
Michigan built on the initial success by maintaining annual funding slightly ahead of $30 million. Since then, “Pure Michigan” has become the singular brand for Michigan, with the state expanding its use across multiple lines of business to promote state objectives, such as economic development.
Destination marketing ROI in
other markets
| Tourism Economics 14
Many state and local DMOs conduct periodic assessments of marketing effectiveness. There are several goals of these studies, including understanding how specific marketing campaigns are perceived by households, how effective the campaigns are in having an impact on households’ intent to travel to a given destination, and which target markets are showing differing level of responsiveness to marketing. Frequently these studies include a specific analysis of the ROI of marketing spending in the form of a quantitative assessment of the level of incremental visitor spending and tax revenues that are attributable to destination marketing.
These studies use a variety of methods, and are measuring the impact of a range of different campaigns across different situations. For example, a specific study may look at incremental visitors attracted by a state-level marketing campaign conducted by a state that attracts travelers from a range of national markets, while another study may focus on the results of a more targeted regional campaign carried out by a city-level DMO. While the results of a specific study pertain most directly to the situation that was analyzed, and the corresponding assumptions, it is appropriate to consider broader inferences from the research.
We analyzed recent studies that included an estimate of the incremental visitor spending attributable to advertising campaign spending. For example, in a fairly typical approach, a study would:
use a survey to analyze the effect of a specific advertising campaign on households’ travel to a given destination, such as by analyzing the impact on actual travel among those that had observed the advertising or by analyzing the impact on
households’ intentions to travel;
project that effect to the broader set of households in the marketing area to estimate the number of incremental visits attributable to the campaign;
apply typical levels of spending per visitor to estimate incremental visitor spending; and,
compare incremental visitor spending to the level of advertising spending to estimate the ROI.
We summarized the estimates of incremental visitor spending per dollar of advertising campaign spending from these studies in the table on the following page.
Destination marketing ROI in
other markets
| Tourism Economics 15
Estimates of incremental visitor spending per dollar of advertising campaign spend from the set of studies we analyzed is summarized in the adjacent table, supporting the following observations:
The results range from as low as $12 for an analysis conducted for Syracuse, NY to as high as $326 for the average of several analyses conducted for California.
For state campaigns, visitor spending gains per dollar of advertising spending typically range between $100 and $200. Overall, we observe that recent marketing campaigns by destination marketing organizations at the state level have generated approximately $148 of incremental visitor spending per dollar of advertising spending.
Marketing ROI Matrix
Region Timing
Visitor spending
per ad dollar
States
California Average 2009 to 2013 $326
Arizona Average 2007, '11, '12, '15 221
Georgia Average 2011 and 2012 211
Colorado 2012 200
Florida 2011 177
Maryland 2012 160
Wyoming Average 2012, '13, '14 156
Kentucky 2014 151
Missouri 2013 131
North Dakota Average 2010, '12, '14 101
Utah Average 2010, '11, '13 83
Virginia 2006 71
Michigan 2009/10 54
New Mexico 2012 29
Metros and regions
Philadelphia, PA 2009/10 $100
Branson, MO 2012 79
Kansas City, MO 2013 65
Springfield, MO 2011 61
Finger Lakes Wine Country, NY 2012 44
Washington, DC 2013 27
San Diego, CA 2013 19
Syracuse, NY 2008 12
Average of states $148
Average of metros and regions $51
Sources: Local studies compiled by Tourism Economics
2. Santa Monica recent performance
Room demand growth in Santa
Monica has moderated
| Tourism Economics 17
A lack of supply growth is constraining
demand and boosting prices.
Santa Monica’s recovery in room demand was robust from 2010 to 2012, averaging nearly 5% growth per year. Demand has moderated since then, slowing to 0.6% per year on average. Overall, demand was about 8% higher in 2014 than it was in 2008. The supply of available rooms has grown less; overall, the inventory of rooms is 4.4% higher than 2008 levels, which is average annual growth less than 1%, with virtually no change in the last two years.
The supply and demand fundamentals in Santa Monica – restrained demand growth with little change in supply – have boosted occupancy rates to 84% in 2014, which in turn pushes up average room rates.
These price increases account for most of the recent growth in room revenues, especially since 2013.
-25
-20
-15
-10
-5
0 5
10 15
20 2009 2010 2011 2012 2013 2014
ADR
Demand
Total Revenues
Price Growth is Driving Revenues
Contribution to % change by component
Sources: STR, Tourism Economics
90 92
94 96
98 100
102
104
106
108
110
2008 2009 2010 2011 2012 2013 2014
Supply
Demand
Demand Outpaced in the Recovery
12-month moving sum, index June 2008 = 100
Sources: STR, Tourism Economics
Supply is constraining further
expansion
| Tourism Economics 18
Occupancy peaks near 95% during high
season.
In order to allow room demand to
expand further or for overall
occupancy to move higher,
additional supply will have to
come online or some demand will
need to spill over into the
shoulder season.
At peak occupancy rates of
nearly 95%, roughly 250 rooms
would be available in Santa
Monica.
Tighter occupancy rates during
peak season drives prices which
also exhibit significant seasonal
variation.
55 60
65 70
75 80
85 90
95 100
2008 2009 2010 2011 2012 2013 2014
Seasonal
12-month moving avg
Occupancy has Little Headroom in Summer
Occupancy rate, %
Sources: STR, Tourism Economics
Room revenues are expanding
in Santa Monica
| Tourism Economics 19
Room revenues growth in Santa Monica is
keeping pace with regional competitors,
while room demand lags.
Downtown Los Angeles and Santa Barbara are leading growth in room revenues among key competitors. However, with average annual growth of 10.8% in revenues, Santa Monica is keeping pace with or exceeding revenue growth in other destinations. Total room revenues reached $336 million in 2014, 50% higher than total revenues in 2010.
Room-night demand in Santa Monica has expanded at an average annual pace of 2.6% since 2010. This growth lags behind other key regional competitors. The lack of room demand growth, especially in the last two years, appears to be driven by supply constraints. 90 100
110
120
130
140
150
160
170
2010 2011 2012 2013 2014
Beverly Hills (+10.5)
Downtown LA (+13.2) Monterey (+9.1)
Santa Barbara (+13.3)
Santa Monica (+10.8) West Hollywood (+10.0)
Room Revenues are Keeping Pace
Indexed, 2010=100, avg % change in parentheses
Sources: STR, Tourism Economics
95 100
105
110
115
120
125
130
135
2010 2011 2012 2013 2014
Beverly Hills (+4.8)
Downtown LA (+6.4) Monterey (+6.9)
Santa Barbara (+7.1)
Santa Monica (+2.6) West Hollywood (+4.2)
Demand is flattening out
Room-nights Indexed, 2010=100, avg % change in parentheses Sources: STR, Tourism Economics
Strong occupancy rates drive
prices
| Tourism Economics 20
Occupancy reached 84.0% in 2014.
Price growth in Santa Monica leads other destinations and has averaged 8% per year since 2010. In level terms, Santa Monica’s price premium is clear at $308 per room-night in 2014 on average. Room rates in only two regional competitors were higher, in Santa Barbara and Beverly Hills.
Occupancy tightened across markets since 2010, including Santa Monica. The Santa Monica occupancy rate was 84.0% in 2014, 5.3 percentage points higher than four years earlier. Occupancy appears to be “maxing out” and changed little over the last three years. 60 65
70 75
80 85
2010 2011 2012 2013 2014
Beverly Hills (+9.5)
Downtown LA (+10.8)
Monterey (+12.8)
Santa Barbara (+7.3)
Santa Monica (+5.3) West Hollywood (+11.4)
Occupancy Rate
%, 4-year change in occupancy ppts in parentheses
Sources: STR, Tourism Economics
95 100
105
110
115
120
125
130
135
140
2010 2011 2012 2013 2014
Beverly Hills (+5.5)
Downtown LA (+6.3) Monterey (+2.1)
Santa Barbara (+5.9)
Santa Monica (+8.0) West Hollywood (+5.6)
Average Daily Rate
Indexed, 2010=100, average annual growth in parentheses Sources: STR, Tourism Economics
3. Benchmark analysis of marketing funding
Methodology
| Tourism Economics 22
Approach
To evaluate the level of destination marketing funding in Santa Monica, we conducted a benchmark analysis relative to other destinations. This analysis helped to quantify the level of destination marketing, including funding from TMDs, that other destinations with broadly similar characteristics are carrying out on an ongoing basis.
This benchmark analysis consisted of several steps in which we:
1. Identify a set of competing destinations;
2. Calculate comparative measures such as destination marketing organization (DMO) funding per hotel room; and
3. Benchmark current Santa Monica Travel & Tourism funding to its competitors.
A benchmark analysis was conducted to
assess how Santa Monica Travel & Tourism
funding compares to key regional
competitors.
The TMD model is expanding
| Tourism Economics 23
Destinations across California are
increasingly using the TMD model to
ensure more stable funding.
Since their inception, Tourism
Marketing Districts have
expanded rapidly. By 2015, a
total of 96 destinations in
California had designated
marketing districts to ensure
reliable and effective sources of
funding, often in addition to
existing DMO funding.
The combined budgets of these
nearly 100 TMDs in California
was nearly $200 million and
represents intense competition
among destinations.
As other destinations develop
and expand marketing funding
mechanisms, Santa Monica will
need to keep pace in order
ensure it can compete effectively
and at least maintain market
share.
0 20
40 60
80 100
1990 1995 2000 2005 2010 2015
Rapid Expansion of California TMDs
Source: Civitas
TMD funding is critical to
compete
| Tourism Economics 24
Total funding available to promote Santa
Monica is now $7.0 million.
The Tourism Marketing District in
Santa Monica was implemented
in 2013, and since then the
district has effectively doubled
the amount of funding available
to promote Santa Monica and
hotels within the district.
With TMD funding accounting for
between $3.0 and $4.0 million in
each of the last two years, the
total budget is now $7.0 million.
In Fiscal 2015 the TMD
accounted for 57% of total
funding and included 98% of
rooms in the hotel inventory.
0.0 1.0
2.0 3.0
4.0 5.0
6.0 7.0
8.0 2011 2012 2013 2014 2015
TMD
Non-TMD
TMD is a Key Source of Funding
$ millions
Source: Santa Monica Travel & Tourism
Comparing budgets
| Tourism Economics 25
Santa Monica ranks 6th out of 15
destinations, in terms of absolute budget.
The annual level of DMO funding
ranged from a low of $0.6 million
in Coronado to a high of $46
million in Los Angeles. In
absolute budget size, Santa
Monica ranks 6th out of 15
destinations.
The average funding of the
competitive set is $10.3 million.
The competitive set was selected
as competitors that offer a similar
experience, located in the same
region of California or close by,
and could draw from the same
pool of potential visitors.
Rank Geography DMO Budget, $mils Budget Year
1 Los Angeles LA TCB FY15 45.7
2 San Diego SD TMD FY15 33.5
3 Anaheim Anaheim/OC VCB FY15 14.8
4 Palm Springs Palm Springs CVB FY15 13.1
5 Long Beach Long Beach CVB FY14* 8.7
6 Santa Monica Santa Monica TT FY15 7.0
7 Newport Beach Newport Beach Inc. FY15 6.9
8 Monterey Monterey Co DMO FY15 6.9
9 West Hollywood WH Marketing Corp FY15 4.4
10 Huntington Beach H. Beach MVB FY15 3.6
11 Beverly Hills Beverly Hills CVB FY14* 3.3
12 Pasadena PCOC CVB FY15 2.6
13 Santa Barbara Santa Barbara CVB FY14 2.2
14 Carlsbad Carlsbad CVB FY15 0.6
15 Coronado Coronado TID FY15 0.6
Group average 10.3
*Note: FY14 budget data are the most recent available data for some DMOs DMO Budgets
Characteristics of benchmark
destinations: hotel supply
| Tourism Economics 26
Measured by the hotel room inventory,
Santa Monica ranks 7th out of 15
destinations in the competitive set, in terms
of size of the industry.
Size of the destination can be
measured by the inventory of
hotel rooms. Los Angeles and
San Diego are the largest in the
competitive set with more than
30,000 rooms (including only the
downtown business districts).
The smallest competing
destination is Santa Barbara with
1,200 hotel rooms.
Santa Monica’s room inventory of
just under 3,600 rooms ranks 7th
out of 15 competitors, but is
closer in size to the smaller
competitors since the group
average is highly skewed by Los
Angeles and San Diego.
Rank Rooms, ths
1 Los Angeles 37.6
2 San Diego 34.0
3 Anaheim 15.6
4 Palm Springs 14.4
5 Long Beach 6.1
6 Carlsbad 4.1
7 Santa Monica 3.6
8 Newport Beach 3.2
9 Pasadena 2.8
10 West Hollywood 2.8
11 Beverly Hills 2.3
12 Monterey 2.2
13 Huntington Beach 1.8
14 Coronado 1.6
15 Santa Barbara 1.2
Group average 8.9
Room Inventory 2014-15
Funding metrics
| Tourism Economics 27
Benchmarks illustrate that Santa Monica is
competitively funded relative to other
regional destinations.
1.2 1.6
1.8 2.2
2.3 2.8
2.8 3.2
3.6 4.1
6.1 14.4
15.6 34.0
37.6 0 10 20 30 40
Santa Barbara
Coronado
Huntington Beach
Monterey
Beverly Hills
West Hollywood
Pasadena
Newport Beach
Santa Monica
Carlsbad
Long Beach
Palm Springs
Anaheim
San Diego
Los Angeles
Total hotel rooms
Thousands
Sources: STR; DMAI; Tourism Economics
0.6 0.6
2.2 2.6
3.3 3.6
4.4 6.9
6.9 7.0
8.7 13.1
14.8 33.5
45.7 0 10 20 30 40 50
Coronado
Carlsbad
Santa Barbara
Pasadena
Beverly Hills
Huntington Beach
West Hollywood
Monterey
Newport Beach
Santa Monica
Long Beach
Palm Springs
Anaheim
San Diego
Los Angeles
DMO total funding
Millions
Sources: STR, DMAI; Tourism Economics
Funding metrics (continued)
| Tourism Economics 28
Destination marketing funding tends to
increase with the size of the industry.
Carlsbad
New port Beach
Long Beach
Anaheim
San Diego
Coronado
Monterey
Santa Barbara
Los Angeles
Palm Springs
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
0 5 10 15 20 25 30 35 40
DMO funding compared to hotel inventory
Source: STR; DMAI; Tourism Economics
$ millions
Hotel rooms, ths
Santa Monica in red
Group:
West Hollyw od
Pasadena
Huntington Beach
Beverly Hills
Group
Funding metrics (continued)
| Tourism Economics 29
As the room inventory increases,
economies of scale drive per room funding
down. On this basis, DMO funding in Santa
Monica’s budget is competitive with other
regional destinations.
Carlsbad
Huntington Beach
New port Beach
Long Beach
Anaheim
San Diego
Coronado
Monterey
Santa Barbara
West Hollyw ood
Beverly Hills
Los Angeles
Palm Springs
Pasadena
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
0 5 10 15 20 25 30 35 40
DMO funding per room compared to hotel inventory
Source: STR; DMAI; Tourism Economics
Funding per room
Hotel rooms, ths
Santa Monica in red
4. SMTT marketing activities and TMD benefits
Summary of SMTT marketing
activities
| Tourism Economics 31
In fiscal 2015, total marketing funding amounted to $7.0 million that made possible numerous projects promoting Santa Monica as a destination. Recent TMD-funded activities and projects included:
Strategic plan: development of a 5-year strategic plan with input from a TMD hotel committee Focus groups: conducted in seven domestic and international markets to assess perceptions of the destination brand
Targeted marketing: integrated advertising campaigns intended to drive travel during Santa Monica’s soft season; the campaign included paid search and behavioral retargeting SantaMonica.com: a redesigned website with a new booking engine that drives traffic directly to TMD member hotels.
New marketing materials: a redesigned logo, a brand style guide, destination photography and video Visitor literature: a new visitor guide and destination map International marketing: integrated marketing campaigns in the United Kingdom, Australia, and Brazil. In Brazil for example, expanded marketing efforts included exposure in Marie Claire, Glamour, and other news media.
SMTT international marketing
| Tourism Economics 32
Enhanced business development and international marketing efforts were made possible by TMD funds in 2015.
These efforts included in the United Kingdom, Australia, and Brazil:
Full-time representation
Enhanced public relations support
B2B and B2C campaigns
Brand enhancing partnerships
Sales and media missions including local hotel partners Tradeshow participation
And in France and Germany:
Part-time representation
B2B campaigns
Tradeshow participation
Ongoing trade relationship development and trainings
Proportional benefits: payors
benefit from TMD funding
| Tourism Economics 33
The benefits of TMD funding accrue overwhelmingly to TMD hotels. TMD marketing efforts draw visitors to Santa Monica, and there is potential for some non-payors in Santa Monica or in neighboring cities to benefit, however that share is estimated to be small. Assuming benefits are distributed evenly across the hotel inventory, the TMD share of the room inventory is used as a proxy for the benefits of sales efforts. We estimate that more than 90% of marketing benefits and visitor services accrue to TMD hotels, based on web referrals and room inventory data. Admin benefits are assumed to be distributed based on the benefit shares of sales, marketing, and visitor services. Overall, TMD payors enjoy an estimated 93% of the benefits of TMD spending.
Tourism Marketing District Benefits by Component
Amount, $ths
(2 yr avg)
Budget
share, %
TMD
benefit
share, % Source/note
Tourism industry sales 1,062.5 28.8% 98.0% Room inventory data Marketing 1,421.7 38.5% 90.5% Web referrals, room inventory data Visitor services 76.8 2.1% 90.5% Web referrals, room inventory data Admin, salaries, contingency 1,130.4 30.6% 93.0% Average of above shares Total 3,691.5 100.0% 93.4% Overall weighted average
Website referrals and hotel
bookings
| Tourism Economics 34
The SantaMonica.com website serves as a
key source of information, and the Jack
Rabbit booking tool refers visitors directly to
TMD hotel websites and facilitates
bookings.
The redesigned
SantaMonica.com website
provides information on what
visitors can do in the City, where
to go, the different neighborhoods
and sites, and where to shop and
enjoy the City’s restaurants.
A key feature of the website is to
provide a comprehensive list of
accommodation options in Santa
Monica searchable by price and
location. A visitor to the website
can also click through directly to
a hotel’s website or click the
“Book Direct” button to book at
TMD hotels. The Jack Rabbit
booking tool directs traffic only to
TMD member hotels.
Website referrals and hotel
bookings
| Tourism Economics 35
The Jack Rabbit booking tool resulted in
more than 19,500 click-through referrals to
hotels in the TMD in 2015, including 1,700
mobile referrals.
The SantaMonica.com website
facilitates booking at the TMD
hotels in several ways; visitors
can click through to a hotel’s
website, click to obtain a phone
number, click on the hotel’s
picture icon, or use the
BookDirect button.
Most website referrals are made
as visitors click on the link with
the hotel’s title or through the
BookDirect button.
From May to December 2015, a
total of 19,526 website referrals
were made to TMD hotels
through the Jack Rabbit booking
tool, including more than 1,700
referrals from mobile devices.
100% of all website referrals went
to hotels assessed under the
TMD.
0 2
4 6
8 10
12 14
16 18
20 Get Phone link
Mobile referrals
Picture link
Book Direct button Website
Title link
Hotel Referrals from SantaMonica.com
From May to December 2015, thousands
Source: Santa Monica Travel & Tourism
Publicity value
| Tourism Economics 36
The estimated value of publicity resulting
from Santa Monica’s earned media
exposure and public relations increased
more than five-fold after the creation of the
TMD.
The estimated value of publicity
of Santa Monica’s exposure in
print media increased to nearly
$11 million in 2014, after one
year of the TMD. With an
investment of $0.3 million, this
corresponds to an return on
investment (ROI) of more than
37-to-1.
The publicity value was more
than five times that in 2013 at
$1.8 million.
Highlights of Santa Monica’s
publicity and exposure included
coverage in Forbes, Qantas
magazine, National Geographic,
Men’s Health, Top Santé
(France), Viaje Mais (Brazil), The
New Zealand Herald, InStyle
Australia, Le Figaro (France),
Woman Magazine, and Elle.
1.8 10.8
0 2
4 6
8 10
12 2013 2014
Estimated Publicity Value
$ millions
Source: Santa Monica Travel & Tourism
Publicity value (continued)
| Tourism Economics 37
Santa Monica received coverage in a
variety of print media, including
international coverage.
5. Conclusions
| Tourism Economics 39
1. James
1. Destination promotion is a critical economic development function and should be prioritized.
2. Santa Monica is a strong competitor to other key destinations and is ‘holding ground’ when measured by room revenues and occupancy rate.
3. The Santa Monica Travel & Tourism budget is consistent with competing destinations when adjusted for size of the tourism market. While recent performance has been solid, additional marketing funding would generate more demand and visitor spending in Santa Monica.
4. Many California destinations are creating TMDs in order to increase and ensure a stable source of marketing funding, and in order to maintain market share Santa Monica will need to keep pace with competitors’ marketing efforts.
5. The vast majority of Santa Monica’s hotels are in the TMD and realize the benefits of SMTT’s diverse marketing campaigns. Overall, TMD hotels enjoy an estimated 93% of the benefits of TMD spending.
Conclusions
Methods and data sources
| Tourism Economics 40
Budget data were compiled by Tourism Economics from several sources, including non-profit Form 990s filed with the IRS, the DMAI Organization and Financial Survey of DMOs, and information gathered directly from the respective DMOs, including marketing plans, annual reports, financial statements, and through direct correspondence. The benchmarking of DMOs was done with fiscal 2015 data for most destinations. For Beverly Hills and Santa Barbara, the most recent data available were for fiscal year 2014.
Lodging industry metrics are based on Smith Travel Research (STR) data and capture supply, demand, revenues, occupancy, and average daily rates. For some geographies, adjustments were made to industry metrics to capture the primary area covered by marketing efforts.
Estimates of benefits accruing to TMD and non-TMD properties were developed based on sales and bookings information provided by the client, STR data on room inventory in Santa Monica and the surrounding cities, and detailed TMD budget information. The amount of benefit captured by TMD hotels was estimated for each budget category. The overall benefit is a weighted average of the benefits captured for each spending category.
About Tourism Economics
| Tourism Economics 41
Tourism Economics is an Oxford Economics company with a singular objective: combine an understanding of tourism dynamics with rigorous economics in order to answer the most important questions facing destinations, developers, and strategic planners. By combining quantitative methods with industry knowledge, Tourism Economics designs custom market strategies, destination recovery plans, tourism forecasting models, tourism policy analysis, and economic impact studies.
With over four decades of experience of our principal consultants, it is our passion to work as partners with our clients to achieve a destination’s full potential.
Oxford Economics is one of the world’s leading providers of economic analysis, forecasts and consulting advice. Founded in 1981 as a joint venture with Oxford University’s business college, Oxford Economics enjoys a reputation for high quality, quantitative analysis and evidence-based advice. For this, its draws on its own staff of 30 highly-experienced professional economists; a dedicated data analysis team; global modeling tools, and a range of partner institutions in Europe, the US and in the United Nations Project Link. Oxford Economics has offices in London, Oxford, Dubai, Philadelphia, and Belfast.