TEASER Aerial View of Pinehurst Village

Aerial view of the Village of Pinehurst. (Photograph by Ted Fitzgerald/The Pilot)

Moore County has spent the better part of five years debating whether to raise the hotel occupancy room tax visitors pay, but the COVID-19 pandemic and its sweeping impact on local tourism has rekindled the tax discussion, this time with more urgency.

“The key word is opportunity. It is an opportunity,” said Board of Commissioners Chairman Frank Quis, offering no promises or concessions in brief remarks during a meeting Thursday of the local Convention and Visitors Bureau.

The “room tax”, as it’s better known, is currently set at 3 percent on a visitor’s hotel bill, and raises about $1.7 million a year that is directed to the CVB. State law requires that two-thirds of revenue generated be used to promote travel and tourism initiatives. The balance can be spent on tourism-related expenditures.

Moore County actually lags behind most other counties with a strong tourism sector. In those coastal, mountain and urban counties, the room tax is at least 6 percent.

The Moore County Board of Commissioners received permission in 2015 from the legislature to raise the tax up to 6 percent. The board, however, never felt comfortable raising the tax — until possibly now.

In the wake of the global pandemic, area hoteliers have seen a 30 percent drop in sales, and local restaurants, bars, retailers and others who see business from visitors are hurting.

Quis holds a seat on the CVB board but was the lone holdout from the group when it voted last year to ask the county commissioners to raise the room tax. Since then, county leaders have unanimously approved two major economic incentive packages related to tourism: USGA’s Golf House Pinehurst project and Pinehurst Resort’s new 36-room boutique hotel proposal.

Also, the USGA last fall announced Pinehurst would become its first “anchor site” for future U.S. Opens, saying it would bring the prestigious championships to the village in 2024, 2029, 2035, 2041 and 2047.

County commissioners have scheduled a meeting for March 31 to talk this all through. The county will bring together the CVB board and municipal officials to discuss potential impacts of a room tax increase and, more importantly, how the additional tax revenue might be distributed.

Aberdeen, Pinehurst and Southern Pines leaders have said they would like to see at least a portion of any increase directed their way, to help offset their own tourism-related expenditures.

On the other hand, the CVB has been working on the notion of a product development fund. In this model, money from one or two percentage points of the room tax increase would be set aside in an account to fund grants for tourism-related projects. Towns or nonprofit organizations could apply to fund ideas that meet set criteria.

In preparation for that meeting, the CVB brought in several state-level experts to review how occupancy tax proceeds may be used.

Chris Cavanaugh, of Magellan Strategy Group, said other CVBs in North Carolina are evolving from being destination marketers to destination managers. He explained that while promoting Moore County to overnight visitors remains the core mission of the CVB, the organization should take a holistic approach and active role in tourism development and growth.

“You need to choreograph the overall destination experience,” Cavanaugh said, noting that includes enhancing the quality of life in the community. “Your job is to understand where this community is going and where the hospitality industry is going and match those two things.

“What are the things you are trying to do and will it help you achieve your objectives?” he added, outlining a list of priorities such as increasing visitor spending and attracting new audiences.

Cavanaugh, a marketing consultant, was tapped in 2020 to be the interim CEO of Explore Asheville CVB. He said the area has a county-led tourism product development fund that has funded $44 million for 39 community tourism brick-and-mortar projects since 2001.

Some of the examples he cited include restoration and expansion of theater and museum facilities, greenway and bike path development, parking lot expansion, building sporting fields and adding outdoor lighting, and development of a craft-maker innovation hub.

“All of the projects have to tie back to tourism. The question is how can we make the destination more attractive to visitors?” Cavanaugh said. “You have to focus on what you can do as a community with this investment, not what you can’t do.

How can room tax dollars best be leveraged for the good of the entire destination as a strategic investment?”

CVB Chairman Tom Beddow said that, in a good year, the CVB could take in $2 million in room taxes at the current 3 percent rate. Doubling the rate would bring in potentially $4 million, of which he estimated $1.3 million could be “applied to projects that benefit the entire county.”

Beddow presented a few conceptual ideas based on what he’s seen other CVBs support and what he felt might make sense in Moore County. Those ideas included sports tourism; more robust wall mural programs in area towns; heavier promotion of Northern Moore’s pottery trail and Bear Creek trail system; a digital version of Pinehurst’s historic walking tour; plus possible capital projects like renovating and expanding the Tufts Archives, building an amphitheater at the Pinehurst Harness Track, adding new amenities at Southern Pines’ recently acquired Whitehall Tract park and creating more connections between area biking and walking trails.

Beddow said the Aberdeen Carolina Western Railway (ACWR) has received federal funding for rail enhancements and has approached the CVB with a potential idea to expand sidings to accommodate third-party private trains for special outings and events.

“These are just some ideas that have come to mind,” Beddow said. “They are very preliminary ideas that I just wanted to put out there. Everyone on this board is interested in making the entire county more tourism-friendly and attract things for visitors that can keep our taxes low.”

In his business report to the board, CVB CEO Phil Werz said the occupancy tax collection rate has been down every month since the pandemic began, overall 31.2 percent in 2020, primarily because of the loss of larger, group travel and conventions.

Golf and leisure tourism has continued at a fairly regular pace and is expected to pick up significantly as COVID-19 numbers decrease and state restrictions on social gatherings are lifted.

“When we look at the national and Southeast average (occupancy tax collection rate), we are doing better than most. But that should not be translated as we are doing okay,” Werz said.

He added that COVID-19 vaccines are helping to ease people’s fears, and a recent survey by the travel industry indicated people are planning trips by car in 2021.

Werz said the CVB is focusing its promotions on what he called “inspirational imagery” in its advertising. People are not going to big cities, right now, so they are looking for outdoor recreation, connecting with nature, culinary and food destinations, and to have a brand new experience, he said.

“It is a balance of trying to get out of the pandemic and put more marketing dollars out there with more positive messaging,” Werz said. “We are doing better than most and golf has carried us. We’d like to be in a better place. Everything is not hunky dory.”

(8) comments

Jack Farrell

It’s difficult to understand the logic here. Occupancy is down 30% so in response we double the tax on visitors!

Normal and accepted economic theory is that raising the price of something lowers demand. I guess that does not apply here.

Kent Misegades

Follow the lead of the Free State of Florida and stop wearing useless masks. I’ll bet golf courses in Florida are the big winners this year, thanks to DeSantis and Trump.

Conrad Meyer

Face it. Pinehurst is a golf destination. Period.

Raising taxes will make people go to Myrtle Beach instead. More golf courses, more restaurants, more entertainment for the entire family, and a beach.

This is a really bad idea unless you want to stifle the growth of Moore County.

Kent Misegades

Hoorah - someone else states my claim for years. Our economy is terribly out of balance. There are many golf alternatives to Pinehurst. You can not have a healthy economy when it’s based on entertainment, old people and government paychecks. All real wealth is created by making and growing things.

Sally Larson

When Caleb Miles, the head of the CVB was pushing this for years, no one was interested and thought the room tax was too much. He was supporting a sports complex to bring in tourism. It's still too much. How many of us have stayed at hotels only to see huge taxes at check-out raising the bill substantially. Is that the reputation we want for Pinehurst?

Kent Misegades

Sally, this is what Conservatives call Reaganomics. Money is best left in the pockets of the people who earned it, ie reduce ALL taxes to grow the economy. The result, as under Reagan and Trump - increased total tax revenue. Couple this with significant reductions in government spending and we can start paying down the national debt.

Barbara Misiaszek

Supporting the Southern Pines Housing and Land Trust's project as well as the Pottery Trail would be a good idea.

John Misiaszek

Kent Misegades

Oh yes, I can just imagine the throngs that would rush to Moore County to buy a clay pot. You can’t get them anywhere else, can you.

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