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Posted on Thu, Jul 23, 2009 : 11:52 a.m.

Hotel occupancy falls in Ann Arbor but county tourism tax hike yields bigger marketing budgets

By Juliana Keeping

Ann Arbor area hotel occupancy dropped in the first half of the year, yet a hike last March in the county room tax means that local tourism officials have nearly $318,000 more to spend this year to market the region as a travel destination.

As a result, the executive director of the Ypsilanti Convention and Visitors Bureau said she hopes the extra money will pay dividends in hotel guests, given the the country's economic situation.

"What we can only hope for in this economy is that we're mitigating the losses people are having ... Hopefully losses won't be as substantial because of our marketing efforts," said Debbie Locke-Daniel.

Average hotel occupancy in the county is down from 63 to 56 percent year-to-date, said Charles Skelton, president of Hospitality Advisors Consulting Group-Inc., a national hotel appraisal and feasibility group based in Ann Arbor.

Yet the March 1 hike in the room tax from 2 to 5 percent means that the Ypsilanti CVB has received $208,920 so far this year, compared to $129,499 for the same period in 2008. The Ann Arbor CVB has received $626,760, compared to $388,499.

All hotel guests in the county's 59 lodging establishments pay a 5 percent accommodation tax based on their room costs. The county takes a 5 percent administrative fee, then gives 75 percent of the remainder to the Ann Arbor Area Convention and Visitors Bureau, and 25 percent to the Ypsilanti bureau, Washtenaw County Treasurer Catherine McClary said.

Mary Kerr, president of the Ann Arbor CVB, said her organization began receiving money from the increase in May. The bureau's operating budget is $2.2 million for 2009, a $1 million increase from 2008, Kerr said. 

"At a time when some other convention bureaus may cut back due to the poor economy, we had the opportunity to strengthen our programs to increase market share," Kerr said.

Locke-Daniel's budget is typically around $300,000, she said. This year, she's now anticipating $600,000 in revenue, down from $730,000 at the start of the year due to the hotel room occupancy dips.

As both bureaus try to use to the revenue increase to increase marketing, they're trying to keep their efforts in sync. Among them:

  • The Ypsilanti and Ann Arbor bureaus have contributed to expand the partnership with the $26 million "Pure Michigan" campaign. The state is matching Ann Arbor and Ypsilanti's $330,000 2009 contributions dollar-for-dollar. The money is being put toward new billboards and radio spots in Cleveland, Cincinnati and South Bend, Ind this year. A commercial about Washtenaw County has already been shot, and is scheduled to air in 2010, tentatively in the same markets.
  • Another new joint initiative brought 23 travel writers to Washtenaw County during the Ann Arbor street art fairs.
  • The Ann Arbor bureau's sales team has attended trade more trade shows in hopes of netting more conventions, Kerr said.
  • And the bureau helped to attact 1,800 members of the International Brotherhood of Electrical Workers for a one-week training at the end of July.

Despite the effort, Locke-Daniel said it's become increasingly difficult to bring big groups to town in light of the economic downturn and the area's lack of a convention center.

And despite the increase in tax revenue and resulting marketing, the fall in occupancy in the first six months of the year was larger than expected, Kerr said. As a result, the bureau is pushing back some planned efforts. Additional print advertising and Web site enhancements have been suspended, for example. The Pure Michigan Ann Arbor television shoot was done in one day instead of two.

Juliana Keeping covers the University of Michigan for She can be reached at 734-623-2528 or