19 Jul 2011

What is a Tourism Improvement District?

Tourism Improvement Districts, or TIDs, are a stable funding source for destination marketing efforts based on the traditional business improvement district model. 

They are typically funded by an assessment on hotel room sales, but can also include assessments on all tourism-related business. Funds are managed by a non-profit corporation, oftentimes an existing DMO, with representatives of assessed businesses sitting on the board. As a result, marketing efforts are industry-driven and not affected by reduced public funding.

In 2009, the United States government made headlines by creating a nationwide TID, estimated to raise $320 million a year through a $10 fee on foreign visitors. This was modeled after the California state-wide tourism district, which has operated with great success for over 15 years. In enacting its statewide tourism district, California followed a much smaller example - the City of West Hollywood. In 1992, West Hollywood pioneered the TID concept, igniting a revolution that sparked formation of over fifty additional TIDs throughout California. Ranging from small districts of five hotels to supersized districts with 350 hotels, with budgets from $100,000 to $30 million, in coastal havens and urban enclaves, California’s TIDs represent every type and size of destination.

The California state-wide tourism district levies an assessment on over 5,400 private industry businesses, raising $50 million annually. In addition to this, local TIDs raise in excess of $100 million to promote regional communities and local cities. This structure has been pivotal in maintaining California’s position as the number one travel destination in the United States. In the past two years alone, California promotion campaigns have reached 42 million consumers globally, yielding 3.3 million visits and $3.9 billion in annual spending. Once in California, it becomes easier to influence visitors to explore other localities within the state, something that would otherwise have not been possible without the marketing efforts of the numerous local tourism improvement districts.

The introduction of tourism improvement districts in the UK would facilitate the growth of the tourism industry anticipated by the recently published Government Tourism Policy. At a national level, a UK-wide tourism district would not only assist in plans to increase visitors to the UK, but would also provide funding for other tourism policies, such as VisitEngland’s new role as a ’tourism body of last resort.’ On a local level, TIDs have the potential to promote individual destinations or specific types of holidays, depending on the needs and desires of the particular locality.

Whether adopted on a national or local level, the tourism improvement district model can fill the gap between the vision of the Government Tourism Policy and the reality of implementing it. Most importantly, however, it accomplishes the Government’s ultimate goal to “reduce the sector’s dependence on taxpayer funding, increase the amount of money available for collective destination marketing, and create a sustainable new model of destination marketing and management.”