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Scottsdale City Council moves forward with destination marketing contracts

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Indian School Road: Scottsdale City Council — unanimously on consent — approved the Experience Scottsdale funding level at its June 25 meeting at City Hall, 3939 N. Drinkwater Blvd. (File Photos/DigitalFreePress)
Scottsdale sets funding levels at Experience Scottsdale, Phoenix marketing DMO
By Terrance Thornton | Digital Free Press

Scottsdale City Council has approved fiscal year 2024-25 transient occupancy tax — or bed-tax — funding levels at just over $14 million for the municipal destination marketing organization Experience Scottsdale, which has provided vital tourism services since 1977.

Municipal funding for Experience Scottsdale comes from a percentage of bed-tax funds administered by the Scottsdale Tourism Development Commission — but approved by the elected leaders of Scottsdale — whereas 50% of all tourism tax dollars are to be used for destination marketing efforts, per local ordinance.

“Since 1977, the city has maintained a destination marketing organization through a public-private partnership funded by transient occupancy (bed) tax to provide long-term development and marketing of Scottsdale and the immediate region through a travel and tourism strategy,” said Steve Geiogamah, acting director of Scottsdale tourism & events, in his June 25 report to City Council.

Scottsdale City Council — unanimously on consent — approved the Experience Scottsdale funding level at its June 25 meeting at City Hall, 3939 N. Drinkwater Blvd.

In March 2010, Scottsdale voters approved an increase in the transient occupancy tax from 3 to 5% effective July 1, 2010. Collections are found in the Tourism Development Fund where 50% of those tax collections are to be used for destination marketing and the other half for tourism-related event support, tourism research, tourism-related capital projects, and other eligible uses as determined by city ordinance.

Mr. Geiogamah points out the existing marketing terms are defined through a five-year marketing agreement, No. 2022-054-COS, brokered in June 2022, which among other things, requires certain performance evaluations that were reviewed in early May by the Tourism Development Commission.

“The agreement requires 45% of the bed tax funds be paid to Experience Scottsdale based on the prior month’s actual collections,” he explained in his June 25 report. “As such, the first payment in July will be determined by the Treasurer’s Division calculating 45% of the actual bed tax funds collected in June and so forth through the final payment in June 2025 based on actual bed tax funds collected in May 2025.”

Experience Scottsdale will be provided $14.2 million in bed-tax revenues this fiscal year, numbers show.

“For purposes of creating a budget, the city provides Experience Scottsdale with its projected 45% of bed tax, calculated to be $14.2 million in FY 2024-25,” Mr. Geiogamah said in his report. “Experience Scottsdale anticipates [its] total FY 2024-25 operating revenue budget to be $20.9 million of which the city agreement and 50 percent of the Fiesta Bowl contract amount is $14.4 million.”

On average, for every $1 spent on advertising, Experience Scottsdale generates $116 in visitor spending and $4 in state and local tax revenue, according to the Longwoods International 2022 Advertising Effectiveness Study.

Here is breakdown of operating expenses at Experience Scottsdale:



Furthermore, Mr. Geiogamah points out non-program operating costs at Experience Scottsdale must remain below 20% per the existing marketing agreement.

“The agreement also requires Experience Scottsdale to keep its non-program operating costs at or below 20% not to exceed 23 percent,” he said. “This is determined by reviewing the most recent annual audited financial statement, which was September 2023 based on FY 2022/23 Financials. The non-program costs for FY 2022-23 were 13% of the total program expenses, well below the 20% required.”

Here is a breakdown of performance metrics evaluated by the Tourism Development Commission:

Scottsdale OKs marketing program at Greater Phoenix Economic Council

Scottsdale City Council earlier the same evening approved a $121,711 allocation this fiscal year to the Greater Phoenix Economic Council to provide regional marketing services.

“The Greater Phoenix Economic Council is a performance-driven, public-private partnership,” Josh Utterback, Scottsdale economic development manager, said in his June 25 report to City Council.

“Since 1990, the city of Scottsdale has partnered with GPEC, along with Maricopa County, 22 other communities and more than 160 private-sector investors to promote the region’s competitive position and attract quality jobs that enable strategic economic growth and provide increased tax revenue for Scottsdale.”

According to Mr. Utterback over the last five years, GPEC has assisted 222 locates in Greater Phoenix, including 25 locates in Scottsdale. These businesses represent 2,176 new jobs and $191.1 million in capital investment, $386.1 million in total new consumer spending, and $27.7 million in new direct revenue.

“The cost of this program is determined utilizing the Arizona Office of Economic Opportunity 2023 population estimates, which lists the city of Scottsdale’s having a population of 248,542 and calculated at a per capita rate of $0.4897 for a total of $121,711,” he said. “According to GPEC’s economic impact calculations, the city of Scottsdale has received a return on investment from its relationship with GPEC of 46:1 over this period.”

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