Tennessee Tourism asks for big budget increase for marketing

Published 4:22 pm Friday, November 17, 2023

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Tennessee’s Department of Tourist Development wants $9 million more to market the state in 26 areas outside of the state along with working on pursuing direct flights to Canada, Germany and France.

Commissioner Mark Ezell said the push for European marketing is to help recover from tourism dollars lost during the pandemic. He said the state is 72% recovered compared to pre-pandemic tourism from Western Europe but the 28% loss means $20 million in annual taxes for the state.

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Ezell touted numbers from marketing group Tourism Economics related to visitors coming to each county in the state over the past five years. But economists have questioned the validity of numbers from the marketing group, who they say groups pay to produce positive economic reports.

“I think it’s important to be skeptical of any for-hire economic impact report that is commissioned by a tourism agency that has an interest in showing a large impact from tourism,” economist J.C. Bradbury said of previous reports from Tourism Economics.

Ezell also touted hotel occupancy taxes added in Bledsoe, McNairy, Obion, Pickett and Fentress counties along with the municipalities of Pikeville, Tazewell, Gainesboro, Livingston and Elizabethton as being beneficial.

“We know that when a visitor stays in a hotel, they leave behind those tax dollars without it being a burden on the residents,” Ezell claimed.

But Bradbury has also pointed out hotel taxes aren’t simply a tax on tourists when addressing an increased Davidson County hotel tax that will go into a tax capture for a new Tennessee Titans stadium.

“Assume there is a hotel fee or tax rate (doesn’t matter if flat or %) on hotel night stays,” Bradbury said. “This requires hotel owners to remit that amount of tax revenue for each hotel night. Even though that amount may be listed on the bill, the total cost isn’t just passed along to the guest.

“The tax effectively raises the price to the guest. Some guests will simply just pay it, but the higher price deters marginal guests. Some guests may stay fewer nights (arrive early in the morning or leave in the evening), decide to stay with friends, or double-up on rooms, etc.”

Ezell said his group believes a day visitor is worth $10 per day in taxes to local communities while an overnight stay is worth $35 due to the potential for dinner, breakfast and retail spending.

Ezell said the department also has found Tennessee brought in $22 million in taxes on short-term rentals outside of the big five tourism areas of the state last year, which he believes is a testament to tourism work being done in rural communities across the state.

Ezell said he believes Obion County, for example, collected $43,000 in taxes related to tourism in 2018 and will bring in $349,000 this year.