Door County Tourism Zone Commission : Meeting Minutes

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January 20, 2009 Informational Meeting on TZC and DCVB

DOOR COUNTY TOURISM ZONE COMMISSION
Minutes of the January 20, 2009
Informational Meeting � City of Sturgeon Bay/Council Chambers

Call to Order
Chair Robert Kufrin called the meeting to order at 10:05 a.m. He stated it�s the first time all communities in Door County have joined an organization. Some of the original members of the Commission are present. He introduced all Commissioners present: Chuck Tice, Dick Skare, Little Bit LeClair, Richard Briggs, Tom Benzshawel, and Debra Jeanquart. He noted that with the seven new municipalities joining, the number of Commission members has doubled in the last few months.

TZC Background
Kufrin gave an overview of The Tourism Zone Commission (TZC) background and actions: The TZC established a Mission Statement, approved in May 2008, to collect room tax on behalf of municipalities in a fair and equitable manner. The TZC retained Kerber Rose & Associates to act as its accounting and bill processing operation. The Door County Visitor Bureau (DCVB) is contracted to handle marketing targeted to transient tourists with a goal of funding activities that are likely to create overnight stays, whether hotels, B&Bs, or homes, and then enjoy the amenities that the different communities have to offer.

The TZC is not a super-Board of Directors over the DCVB. Our mission is to see that their tasks are reviewed, goals are measurable, and we receive feedback to make sure tax dollars paid by the visitors are spent in the most effective way possible.

The TZC keeps all the parties and businesses informed on Commission activities. It�s important to provide feedback to the community; we do not operate in a vacuum. The TZC website has a meeting schedule, agendas, minutes (which are also sent to all the Commissioners), approved and identified annual budgets and detailed statistics on individual activities in each of the communities regarding percentage of occupancy, average daily rate (ADR) and Room Tax income in individual communities, tracked by month and year, we are able to get detailed statistics to analyze whether the DCVB is increasing overnight stays and increasing revenue to the county.

In 2006/2007, in trying to create a budget, Dave Eliot (present today) was the Funding Task Force Chair, and several tried to identify how much money would be collected. Available numbers were sketchy at best. The first year, the budget was $1.5 million, and the TZC collected 1.7 million. For 2008, it is approximately $2.3 YTD, on track for $2.5 million projected. The TZC is finding businesses out there being identified as possible permit holders. Our entity is not concerned with where the lodgings are located, but if they�re operating a business with overnight stays, they need to be properly permitted and pay the tax. Early in 2008, the TZC established an online bill-paying system, which has not caught on as well as we want. Some are skeptical about electronic bill payments, but we�re hoping it will grow over time.

Kufrin stated that with 26 members of the Commission, it�s challenging to find spaces large enough for that group of up to 30 people plus an audience.. The TZC originally consisted mostly of Northern Door except for Gardner and Nasewaupee. The Commission has worked diligently to make sure we spread meetings throughout the county so that businesses and municipality officials can attend. Our next meeting is February 19th at the Ephraim Village Hall at 9 a.m., and back to the City of Sturgeon Bay on May 21st in Southern Door. All are welcome.

The primary purpose today is to inform and answer questions from business owners and officials. We will go over information for forms, the payment process, and offer whatever assistance we can provide. When the Tourism Zone was created, the Room Tax was authorized through ordinances in each community. Each municipality also signed the TZC Intergovernmental Agreement and Bylaws, so the framework has been constrained by the ordinances, Intergovernmental Agreement, and Bylaws, with a specific set of guidelines as to how the tax is collected by the lodging owners and by the TZC. One of the paramount concerns from innkeepers was about releasing confidential sales information to a local organization. We provide specific confidentiality requirements that we cannot violate under State statues. None of the information we provide publicly includes information about income generated by any specific lodging. The information to the municipalities includes a report identifying the names of businesses renting each month and the total Room Tax, aggregated in terms of monthly income, percentage of occupancy, and average room rate; however, no one sees information related to an individual business. Kerber Rose maintains confidentiality.

We�re concerned about businesses operating under the radar, and innkeepers by and large want to meet the requirements as a licensed business; however, some are not following the requirements. We�ve worked hard to identify possible lodging situations and have forms to remove those who are not transient rentals. We have a private investigator to reveal those operating without paying their share of room tax, and we have prosecuted those who have failed to report income or other information we look for such as occupancy. Everyone should have an even playing field; it�s our mission to have 100% compliance.

Tice noted that the TZC is not affiliated with the Door County government. We�re a separate organization, and the County has no authority over us. There had been concern voiced that the county is taking over, and that�s not true. Kufrin said we�re also a separate entity under the State. We carry our own insurance and so on. The name �Door County� Tourism Zone Commission was chosen because it was always intended to be all municipalities. Tice noted that we now have the marketing entity that we can advertise as a whole.

Permitting Procedures
Administrative Assistant Kathy Kirkland explained the permitting procedure. Kufrin said if a property is identified to us, Kirkland follows up with a query letter sent along with a Permit Application and information about the process. A permit does not cost anything. Kirkland said she follows websites closely and sends e-mails anonymously to confirm transient renting. Once a lodging owner returns the Permit Application, the owner is assigned a unique Permit Number along with a User Name/Password to access the website�s online filing. If the transient lodging does not respond, however, she follows up with a certified letter. If there�s still no response in a reasonable timeframe, the information is turned over to Vande Castle, our attorney, for follow-up and hopeful compliance. Kirkland also sends out reminder notices for late reports�owners must report during all months they state they are open, even if the report is $0. She answers questions and helps permit holders filing online. She is in The Zone all day Tuesdays and Thursdays from 8 to 5, and Fridays until noon.

One question that comes up often is that owners would like to report quarterly or annually instead of monthly. Kirkland explained the flow of money from the TZC to the DCVB and back to the municipalities; with such a short tourist season, filing quarterly would hold up payments to all concerned, making it difficult to get projects or marketing done. Further, the monthly statistics gathered are used to determine if marketing efforts are effective as well as the economic health of the county on a regular basis. The question was asked if anything done to simplify reporting status of smaller cottages? What if you rent weekly, but the days carry over at the end of the month? Kirkland said some owners do the math and calculate which days go to which month, but lodging owners can choose the month for the most days instead of trying to divide the stay. If you file online, it does the calculations for you.

City of Sturgeon Bay Clerk Stephanie Reinhardt asked what�s in the package sent to new lodgings. Kirkland noted that there is an introduction letter, instructions for becoming permitted and for filing, a Permit Application, sample Room Tax report, and FAQs. The same information and forms are also available online at www.doorcountytourismzone.com. Kufrin noted that since April 2007, the TZC has probably sent out close to 1,500 packets of the same materials. As we get questions and learn about concerns, we�re always editing the FAQs to make sure people�s questions are answered. We do provide a list to the municipalities of who�s permitted as well as who has contacted us in writing to say they do not meet the criteria to be permitted (e.g., 30+ day rentals only or no longer renting).

Kirkland explained that the legal criteria for needing a permit is not the income from renting but the �offer to rent�; therefore, if a cabin or unit has a website, advertising on Vacation Rental by Owner (www.vrbo.com) or otherwise showing availability, a permit is required even if income is $0.
Kufrin said trying to identify homes, inns, and properties operating without being permitted is a big job. We�ve identified 900 permit holders representing 4,000 rooms, all compiled on a database. We look to the municipal governments to identify properties they suspect are operating without getting a permit. We have to be fair and efficient so that everyone contributes. Kufrin�s recollection is that in January 2007, the DCVB�s marketing budget was $200,000, and later that summer, after the TZC was formed, it went to $1.2 million; the 2009 budget is closer to $1.8 million. The funds have grown dramatically to use for marketing strategies. We provide oversight but don�t micromanage; we�re responsible to the permit holders and the governments who created us.

Room Tax Distribution
The question was asked if a municipality has restrictions on the 30% of the Room Tax it gets back. Can it go into the General Fund? Do they have to set up a separate account? Kufrin said the 30% is at the discretion of the local government; it can give all to the local advancement organization, split it with the business association, and do whatever they want. Groups can lobby on how to spend it, but it�s up to elected officials to decide. There�s no restriction in the State statutes or TZC Intergovernmental Agreement; unless it�s by local ordinance, those dollars are free and clear.

Commission Members
Kufrin stated that each municipality has the same freedom regarding who�s appointed to the Commission. The Commission has no ability to choose. It�s at the discretion of the municipality. As per State statute, we have two At Large members nominated within the Commission and confirmed: Andy Coulson/White Gull and Mary Boston/the Run Away Lodge in Valmy. The question was asked if Kufrin alone chooses the At Large members; as Commission chair, he stated that he does appoint those two. For the other Commissioners, the procedure is whatever is normally done locally, whether the Town Chair makes appointments or requiring confirmation by supervisors or village board. We don�t dictate how the appointment is made, but it must be in writing to us. Terms are for one year; that�s the only constraint. We do police ourselves, if members never show up; but since we didn�t appoint them, we can only suggest to the municipality that they reconsider the appointment and be well represented at the table. This situation has happened only once. If a municipality does not appoint someone, the absence of that appointee does not count toward a quorum. If a municipality has tried but can�t find someone for the Commission, it will continue to get the 30% checks but will not have a vote on the Commission. Our hope is for 100% participation, especially in preparation of a budget, review of the DCVB�s budget and Strategic Marketing Plan for the year, and to help determine how marketing efforts are working.

Door County Visitor Bureau Report
Jack Moneypenny, president/CEO of the DCVB, reported: First and foremost for 2009, the big difference is that we never again have to ask if something�s in or out of The Zone. All Door County municipalities are members, which is a huge opportunity to sell the four corners when marketing. The DCVB Strategic Conversation is online under www.doorcountyvisitorbureau.org or anyone can request a bound copy. If anyone has a vested interest in where we�re headed the next five years, you can see our future path. We are reestablishing the image of Door County. Studies show that we have a qualified typical visitor between 45 to 60 years old, with more than $70,000 in income. Prime indicators are that we�re going after the right market: Chicago, northern Illinois, Milwaukee, Madison, Twin Cities�all efforts been well received. The DCVB targets ZIP codes that match our demographics. Iowa is now surfacing, so we�re making them part of the plan.

Community Marketing Fund
When we talk about entire county, it has been a struggle with Sturgeon Bay/City, we�re different yet the same. There has been a tax for 10 years that the City and Sturgeon Bay Visitor Center have depended on. Therefore, for the next three years, the City Council has established a couple different approaches that include the Community Marketing Fund (CMF). There will be four meetings at the end of January to explain our path: One part of the meeting is �community branding,� distilling Door County into a workable brand. The DCVB will take that brand to the communities and work with them on developing that as a county brand. There will be templates and procedures to help with their portion of marketing, which has to be done through an identified marketing entity. The second half of the meetings will be about CMF. We�ll talk about these extra dollars coming in and how they can be spent, how much each can expect to receive. The total pot is approximately $300,000 and will be split among municipalities that were in the Zone as of May 2008. Since we peak in June/July/August, the funds will be coming in the last half of the year. Each community will get the same percentage of that money as they put into the total Room tax pot in 2008. Municipalities joining The Zone later have to wait a year for the CMF funds, which reduce in each of the three years. Sevastopol has linked with City of Sturgeon Bay as their local marketing arm. According to State statute, there�s a narrow set of ways these dollars can be spent. We need to find commonalities on the needs of communities.

The question was asked which State statute references a fund such as CMF? Kufrin said the same eligibility requirements apply for local marketing entities as for the DCVB. If an entity doesn�t qualify as a local marketing entity, then CMF money cannot flow to you. The WI State Statutes for the TZC is �66.0615.

Branding Meetings
Moneypenny would like everyone to come. All are open meetings but especially business associations of the communities and elected officials need to understand the funds. These funds do not go to the government side; they cannot go to a General Fund. The meetings are as follows:
� Tuesday, January 27, 10 a.m. on Washington Island
� Wednesday, January 28, 10 a.m. at the Sister Bay Fire Hal
� Wednesday, January 28, 5:30-8 p.m. in Baileys Harbor (evening meeting)
� Thursday, January 29, 9 a.m. at the Crossroads at Big Creek in Sturgeon Bay

Specific DCVB Marketing Efforts
Moneypenny spoke of Geiger and Associates, contracted to bring travel writers to Door County; an editorial article is a third-party endorsement. The advertising value is worth 3X that if we placed an ad. We have hosted 148 travel writers since July 2007. Before, we could only put them in The Zone and not talk about all of Door County; now we can promote Southern Door as well. The next trip is in February. Hundreds of stories have come from travel writers. They use niche writers for certain magazines such as fishing, snowmobiling, not only hitting the general public but those who make sense in Door County. The DCVB is also working with eBrains to help develop and build the website and develop users. An �organic user� is someone who wants content and has given an e-mail to opt-in for any information. When we started, there were 16,000 organic users who believed in Door County. By last month, the website had identified 156,000+. They each get a monthly newsletter, and the open and reopen rate is tremendous. We�re driving people to the website to get a Vacation Guide. These are fulfillment pieces to help book the vacation. About 60% to 70% of Door County visitors come from the website. A year ago December, the site had 2.1 million visitors. By comparison, Milwaukee�s site had 2,600,000 end of the year. We�ve had an increase of more than a half million people in the last year, touching the demographics we�ve identified.

Moneypenny said the DCVB will continue to have an integrated plan of radio and TV opportunities. They recently took a full-page remnant in Newsweek that was a $25,000 value; the DCVB was able to get for $4,000, and it�s promoting Door County in wintertime. It went to 115,000 homes on January 7 with 7,000 more on newsstands for a total pass-around readership of 745,000 from that ad alone. The DCVB keeps its eyes open for these opportunities for shoulder and off-seasons.

In the three-year Strategic Conversation Plan, it includes 2009 Specific Actions, and then we�ll assess how we need to shift. We�re not afraid to shift and be realistic with the economy and trends. He met with Directors of Sales and Marketing of visitors bureaus from all over the country in Chicago couple weeks ago: �Business travel� has all but died; they�re not sending people out to travel. Luckily, we don�t depend on business for our livelihood. There�s also a 40% falloff in convention/meeting traffic. Leisure travel is the strongest, but it has to be about packaging, value for the dollar. If a restaurant/inn partners with a lodging facility, for example giving dinners in package deal, those are the things consumers will look for in the first 6 to 8 months of 2009. We must think about sales that way and co-op opportunities.

The question was asked who decides about ad placement, radio, TV, print. Moneypenny researches the best bang for the buck but is always open to ideas. The DCVB has an internal marketing department with two people, including a new marketing director with 25 years� experience. Moneypenny explained that the staff positions are paid through tax dollars if they support marketing; however, the membership department is paid with membership dollars. Kufrin said it�s apportioned by the activity.

Future of Room Tax
The question was asked if the TZC has a vision on the amount of Room Tax it will collect. If the figures continue to rise, should the DCVB think about reducing its percentage for marketing? Kufrin said it�d be unlikely there�d be too many dollars. We�re competing with the Dells and other tourist areas. Part of the drive to create the Zone was to fund the DCVB�s marketing arm, which used to be driven only by membership money. If we collected $6 million, the governments would be enjoying more money to spend, and we�re returning 66% to DCVB to increase marketing. In 2008, it will be $2.5 million, in 2009; we�re projecting a 3% to 5% increase. When you look at the cost of marketing and the DCVB expense in the Midwest, it could double or triple before we�d regain the dominance Door County had 10 or 20 years ago as being the No. 1 location. The Room Tax is paid by tourists, not by local individuals. The dollars create and sustain jobs here. The economy of the county would vibrant and dynamic, and people could afford to just have one job and not work 80 hours a week to sustain themselves.

Moneypenny stated that the percentage based on the budget we�re in, about 64% of the 66% goes outside the county for marketing. Most people say 60% is a good number. He�d like to see two-thirds of every dollar go outside the county as opposed to support within The Zone. The DCVB is starting an Ambassador Program for visitor�s center staff to teach them how to better care for people when they get here. Part of the work the DCVB is doing is helping visitors centers become more aware and become a network of information. The Dells has a budget of $14 million, so they�re outspending us 7 to 1 in the same market to draw the visitor�s dollar.

TZC Five-Year Agreement
Kufrin said an early task force met about organizing a marketing program run by the Door County Chamber of Commerce, as it was known then, and the study identified the Room Tax collected in competing communities and identified a range. The agreed-upon percentage of Room Tax was 5.5%; at that level, it would not cause a visitor to go to a different area. It was decided there should be a five-year agreement with municipalities. If the TZC couldn�t prove its worth, communities can pull out after five years. The five years started on January 1, 2007, and all communities (no matter when they joined) start on that date, so that everyone is on the same footing, not different classes of communities. Because the DCVB makes contracts that extend into the future, there�s a procedure for a community to withdraw. They have to give one year�s notice. The municipalities are committed for five years because that�s the time it takes for marketing values to get into people�s minds. For example, most travel articles for winter this year were written in January/Feb of 2008, so you there�s a lag time. The jobs and sustainability of all businesses that are now disappearing, if we can collect that room tax, those vacant storefronts will be filled. Efforts to bring people to Door County to stay overnight�which is the specific Room Tax mandate�means they�ll also go to stores and restaurants. Yes, lodging dollars are paying to fill storefronts, but people won�t come if there�s no shopping, restaurants, amenities�the complete experience.

The question was asked if the articles can be viewed on a website. Moneypenny noted that the freelancers are hired by magazines, but the magazines retain all rights to the articles, so we cannot automatically put them on website. We can do a teaser paragraph and a link to that magazine�s archive to go read them. If anyone wants a disk with articles, e-mail Jon Jarosh at jon@doorcounty.com and he can get that.The question was asked how the DCVB know what�s been written. Moneypenny said that through a clipping service, we get all the clips, and they�re copied for all Commission members.

The question was asked whether efforts are made to target special interests group such as natural resource use, ice fisherman, off-season or shoulder seasons like birdwatchers, hunters. Moneypenny said much of that is done through the niche writers. Our first year was inviting people to come up and reconnect where came as a child or adult. Still have a way to go before we put an ad in bird watching magazine, because if you�re hitting them only once, that�s dollars not well spent. However, southern communities said, �We don�t get tourists; we get fisherman.� So they�re coming, renting a room, buying bait, food. People see different visitors, and we�ll move in that direction. It was said that niche markets have lower rates. Moneypenny agreed but it has to be done systematically. The perception that Door County is full in peak times is not true.
Kufrin said in August 2008, 107,000 nights were available but only 70% were filled. In July, it was just 68% filled, June had 44% occupancy, September was 46%, October was 50%, and November 18%, the shoulder season. Kufrin said we�re still gathering statistics to see if they�re going up and down historically. A suggestion was made to reduce room rates; Kufrin said that�s the choices the innkeepers make, we make no attempt to drive rates. Moneypenny said if we do have sell-out weekends, it doesn�t make sense to draw more people if there�s another weekend we can promote.
Moneypenny said the new Visitors Guide is out and being shipped throughout the county. This year, there two indexes, A-Z and A-Z by community to make it easier to find activities. There�s also a new church directory. There are 7,000 Guides going out to people who requested it.

Adjournment
Kufrin invited any interested parties to give us a call, see what�s available online, come to meetings, and contact their local Commissioner. The meeting adjourned at noon.

Respectfully submitted,

Kathy Kirkland
Administrative Assistant

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