Visitors to Moore County spent about a half-billion dollars locally in 2019. Taking a wide-angle view, tourism means more jobs, more investments in infrastructure while, at the same time, lowering the local tax impact on residents.
“The halo effect of destination marketing is real,” said Chris Cavanaugh of Magellan Strategy Group, referring to the constellation of benefits that derives from a thriving hospitality economy.
On Wednesday, Cavanaugh addressed the Moore County Board of Commissioners. The special meeting also brought together members of the Pinehurst Southern Pines Aberdeen Convention & Visitors Bureau (CVB), municipal officials and other stakeholders to discuss a proposed increase in the local occupancy tax rate —- the so-called “room tax” — from 3 percent to 6 percent.
Tom Pashley, president of Pinehurst Resort, spoke on behalf of the CVB Board. He said the hospitality community, including Pinehurst Resort, Pine Needles and Mid Pines, Pine Crest Inn, McPeake Hotels and Residence Inn, supports the request to double the existing room tax rate.
They said they do not believe this action will have any negative impact on their businesses.
“If you think about the tax revenue generated by visitors, that creates a tax savings for residents. 2019 was the high water mark for occupancy tax collection at nearly $1.9 million. This (fiscal) year we anticipate about 12 percent down from that peak. We have some work to do to get back to where we were.
“We do believe our destination is growing and we have a strong desire to market what is happening here,” Pashley said, listing off a number of non-golf-related special events such as Carthage’s Buggy Fest that are held across the county. “We can’t make a meaningful impact on all these (with limited funding).”
Golf — and Much More
State law requires the CVB to use two-thirds of room tax revenue to promote travel and tourism initiatives. The balance can be spent on tourism-related expenditures, including developing cultural or recreational brick-and-mortar facilities that would attract out-of-town visitors.
Putting more dollars into the two-thirds bucket “allows us to market ourselves more successfully,” Pashley said.
Chris Dunn, executive director of the Arts Council of Moore County, said he represented the creative and artistic communities, which also support the proposed room tax increase.
“We are golf and so much more, from potters to traditional music, this area’s culture has always been the flip side to the resort,” Dunn said, suggesting some of the additional funds could promote art or literary tours as a shared vision with golf and hotel stays. “Come for the golf, stay for the arts.”
Ben Owen III, a world-renowned potter from the Westmore/Seagrove community, said he meets people from all over the country in his studio.
“We are able to provide something that is more than a day's trip,” he said of the dozens of studios on the N.C. 705 Pottery Highway. “What you are doing (room tax increase) and what you have set a path for, I think, is really wonderful.”
According to a report provided by the CVB, its 2019 “marketing mix” of promotional campaigns targeted leisure consumers (43 percent), golfers (32 percent), and convention/business group travel (22 percent).
“Our focus at the (CVB) Board is to get back to where we were. We have some catching up to do. We need more resources to pull people in during the midweek, in particular,” Pashley said, noting that group travel has dropped precipitously as a result of the COVID-19 global pandemic.
One Distribution Option
The CVB would like to see the 6 percent increase effective July 1, which would restore the organization’s marketing budget to pre-pandemic levels.
As presented Wednesday, the CVB recommended that 1 percentage point — approximately $600,000 annually — of the increased room tax be set-aside for marketing outreach, which would also provide additional funds to promote area events. The other two percentage points — approximately $1.2 million annually— would be earmarked for municipal event grants and major project grants.
For the past two years, Pashley has chaired a CVB subcommittee that has explored how an increase in room tax revenue might be used. He said one-quarter of the one percent increase could go to a municipal grant program and used to promote local events that appeal to visitors. The remainder of the tourism-expenditure funding could be used to provide a 50 percent match for major projects. Local government, nonprofit organizations and public/private partnerships would be eligible to apply for the grant money.
A list of potential “destination enhancement” ideas the task group came up with included improvements to the Moore County Sports Complex (formerly Hillcrest Park); adding outdoor lighting to the new Aberdeen Sports Complex; working with the village of Pinehurst as it makes plans for the Tufts Archives; adding rail sidings for private train cars to Aberdeen Carolina & Western Railway; and improvements to Reservoir Park including the recent expansion of the Whitehall Tract.
“These are the types of projects we would love to fund, working together as the CVB and with the municipalities to find the best way to move forward,” Pashley said.
Cavanaugh noted that destination enhancement projects can also include “placemaking initiatives” such as streetscapes and public art, adding wayfinding signage, building new attractions like museums, holiday decorations, and non-capital investments like promoting concerts and special events. Typically, grants for these types of projects would be distributed through a competitive application and review process, ensuring the room tax revenue is spent in-keeping with state law.
An Alternative Approach
Southern Pines Mayor Carol Haney said there are 11 municipalities in Moore County “and we all have events and things that we are proud of...to showcase what is Moore County. We all bring something to it. We are just looking for what is fair.”
Recently, the municipal managers of Southern Pines, Aberdeen and Pinehurst working with Triangle J Council of Governments developed an alternative approach for how the proposed room tax increased revenue could be allocated. Rather than a formal plan, they view their distribution formula, which provides a portion of revenue annually to every municipality, as a “good starting point for discussion.”
Southern Pines Town Manager Reagan Parsons said the CVB, under the guidance of CEO Phil Werz, has made great strides in modernizing its marketing efforts. He said it was also clear from Pashley’s presentation that the CVB Board is listening to the municipalities’ concerns.
“The first question is whether to increase the room tax. To not do so would be a missed opportunity. This is money coming in from outside that can benefit the entire community,” Parsons said. “The second question (of allocation) becomes the more difficult one.”
Parsons said the alternative approach would ensure that even the county’s smallest municipalities would see gains. He added that many of the suggested “tourism expenditure” related projects that were listed as potentially eligible for grant funding are already being done by the individual towns.
“All of us in one way or another are already stepping up with signage, visitor centers, and beautification. We are already doing that and seeing no direct benefit from the occupancy tax,” said Parsons. “I implore the county commissioners to move forward with the increase and look at some methodology that all municipalities can benefit from.”
Pinehurst Mayor John Strickland said while his comments reflected his own thoughts, he acknowledged the majority of the Village Council supports the requested increase.
“We have been waiting for some additional details we thought would be helpful in making a final decision,” Strickland said. “We need to make sure we understand the justification for the increase and how the increased revenue would be spent. And what, in the end, is the effect on Moore County’s citizens — all citizens not just those in the southern end.”
He said he agreed with the alternative approach “that sharing with all the municipalities is the appropriate way to use some of these funds at the local level,” and also being cautious about long-term ramifications. “I urge the county commissioners to think about what is the appropriate use of funds to deliver a Moore County in the future that we all want to live and work in.”
No Total Agreement
Whispering Pines Village Councilman Bob Zschoche was the only elected official present at the meeting who said he opposed an increase of the room tax.
“The CVB is doing an excellent job with the current rate. Any downturn is due to the pandemic,” he said. “The fact that other counties have a higher rate is not justification for a higher rate...visitors can pay by their feet, they have the option to go elsewhere. We need to be competitive. If visitors go elsewhere, Moore County jobs can go with them.”
Bonnie McPeake of McPeake Hotels, developer of Hilton Garden Inn, Hampton Inn and Town Place Suites in Aberdeen, responded to Zschoche’s assertion that an increase in room taxes would deter visitors.
“Believe me, with my debt, I would not vote for anything that would hurt my business. Our mayor was saying that Aberdeen has 400 (hotel) rooms and I have 300 of those,” McPeake said.
Mayor Robbie Farrell said the Aberdeen Board of Commissioners support the proposed room tax increase and also the alternative funding allocation approach.
“Every town brings something to Moore County. We would like to take a small percentage of this raised tax and see it directed to our municipalities so we can advertise what we have,” Farrell said. “The CVB does an excellent job with money they get now. It brings people to Moore. But we would like some way to advertise what we have.”
In an open letter sent to Commissioners Chairman Frank Quis, Farrell noted that the CVB has controlled all occupancy tax proceeds for over a decade. In that time, no funding that could be used for “tourism expenditures” has been used to build, expand or improve any tourism-related facilities.
“The funds have only been used for marketing and promotion,” Farrell wrote.
Cavanaugh also touched on this topic during his presentation. In recent years, he explained, there has been an evolution for Tourism Development Authority organizations — such as the CVB — to shift from being a destination marketer to a destination manager. In this role, the CVB would take on an active supporting stance when it comes to tourism growth and economic development, bringing together various interested parties to collaborate for mutual benefit.
“The question to ask is what destination do you want to be when you grow up?” said Cavanaugh.
‘We Can Erase the Lines’
Moore County is a $563 million brand and the eleventh largest tourism economy in North Carolina, he added. For residents, this annual infusion of cash equals out to around $1,084 in combined local and state tax savings for each household.
Kelly Miller of Pine Needles and Mid Pines resorts, who has served on the CVB Board for several years, said it’s “not a big secret” that he and Pashley had opposed any increase to the occupancy tax.
“We’ve come to this point here and really what I see is a lot of agreement with everybody. The real issue is how are we doing it,” Miller said.
He said rather than seeing a competitive grant program as something where there could be “winners or losers” for funding, Miller said any new project would serve as a benefit to the entire community.
“We can erase the lines we have here and look at what is in the best interest of the tourism industry and visitors,” he said. “I would argue there are no losers. You may not get grant funding, but whatever we do will make Moore County better.”
“We are willing to work with you. What are the big issues, the big things we can do? I would argue it is not in hacking it up, dividing it up. The CVB has the marketing expertise. We are the marketing arm for the community. There are no losers with this. We will all be winners.”
Quis, who also serves on the CVB Board, said he was impressed with all of the comments and opinions he’d heard. He recommended the small working group that includes the CVB, county officials, and officials from one or two municipalities work together to begin a process of collaboration.
“Whether it is Carthage, or Pinehurst, or Moore County, I think all of us see an opportunity to move forward,” Quis said.