City Council OKs Hotel Marketing District Despite Resident Concerns

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Montage Laguna Beach is among the hotels that will fund the Laguna Beach Tourism Marketing District. (File photo) 

The Laguna Beach City Council unanimously voted Tuesday to establish the Tourism Marketing District to help attract overnight hotel guests once the coronavirus crisis subsides.

The approved five-year agreement, which replaces the current Business Improvement District, will fund the city’s tourism bureau through assessments collected from Laguna Beach hotels and motels. At least 21 hoteliers indicated that they support the 2% tax on gross short-term room rentals, which has also helped fund arts programs for years under the former business improvement district, according to a staff report.

The Marketing District is expected to raise $2.4 million in its initial year and will be managed by Visit Laguna Beach, according to city documents.

The Laguna College of Art + Design, Laguna Art Museum and Laguna Playhouse were slated to receive $240,000 from the Marketing District. City staffers anticipated receiving a total of $480,000 for cultural arts grants and art commission programs. It’s unclear how much the ongoing economic crisis will impact this budget.

The new district’s establishment follows the City Council’s decision earlier this month to defer the hotels’ first-quarter tax payments for six months. Gavin Curran, director of administrative services, said this extraordinary measure is unprecedented, at least his 16 years working for Laguna Beach.

Hoteliers collect the equivalent of 14% of the nightly cost of a room for city revenues, including the 2% tax for essential services approved by the voters through Measure LL.

Mayor Pro Tem Steve Dictrerow asked Visit Laguna CEO Ashley Johnson if there was any evidence to support the concern raised by a lot of residents that her team’s efforts also attract day-trippers who on average contribute far less money per person per day than hotel guests.

Johnson said there wasn’t any evidence to support that claim. She pointed to a pair or visitor profile studies commissioned by Visit Laguna Beach that showed the number of day-trippers went up a relatively small amount over the past decade, considering the city annually sees more than 6.5 million tourists.

“That number only increased 200,000 which I think makes sense if you look at cities like Irvine, Aliso Viejo, Laguna Altura being developed around Laguna Beach,” she said.

Resident Michael Morris said that the operation of the Marketing District should help pay for the increase in long-term fixed costs to staff police, fire, and marine safety services— a cost that will be shouldered by residents who pay for a majority of the city’s budget through property taxes,

He also argued that Visit Laguna Beach’s marketing operation, which includes social media, reaches both day-trippers and hotel guests.

“Any effort that they make cannot be guaranteed to deliver only high paying visitors, the net is wider than that,” he said.

Dicterow also asked Johnson if there’s any evidence of meaningful adverse impact on city budget for police, fire, and marine safety.

“I don’t believe so no,” Johnson said. “I think our overnight visitors and guests are extremely responsible. I think when it comes to parking, for instance, they are leaving their cars at the hotel, they’re taking the house cars, they’re walking on foot. They are the mid to high-end visitor who are really conscious about how they travel.”

Resident Penny Elia said in a phone interview Wednesday that Johnson’s statement doesn’t line up with what she’s personally heard from Laguna Beach public safety employees.

“I think the City Council should know whether Ashley has spoken to [Marine Safety Chief] Kevin, and Chief [Laura] Farinella and Jim Beres at the police department before answering that question,” Elia said.

She highlights city staffers are aware that the Montage Laguna Beach was not developed with enough parking to accommodate its guests, employees, and vendors.

Mayor Bob Whalen pointed out that Laguna Beach’s annually sees about 300,000 overnight hotel guests.

“It’s clear that a disproportionate amount of money is being paid in by hotel visitors who are just a small percentage of our overall visitors,” Whalen said.

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