The Nuance of Assessments

If I had a Franklin for every time someone has said that the Destination Marketing sector needs to tell a better story of its sensational relevancy to our collective quality of life, I could've retired long ago. We keep saying it, we develop lexicons and we even have annual conferences to talk about how to share that story more effectively.

And yet, here we are. And, as the host of the Twilight Zone used to say, “for your consideration.”

The City Council of the City of Chicago recently passed (unanimously) the authority to create a Tourism Improvement District that will double the destination's marketing budget from $34 million to roughly $70 million. Not since Boston’s and San Diego's landmark TIDs has such a move been as impactful for a major American city as this. And Michael Jacobson from the Illinois Hotel and Lodging Association and Kristen Reynolds from Choose Chicago are a big reason that this measure passed…again, unanimously.

And yet, for your consideration, here is an opinion piece that blames the Democratically controlled city for being clueless about how to to jumpstart an economy; a tourism economy that has suffered mightily due to public safety concerns and the resulting brand damage for Chicago.

When I am out on the stump extolling the virtues of Destination Marketing (and why marketing our communities is critically important), I will often ask an audience to identify the murder capital of America. Invariably someone will say Gary, Indiana. Gary has not been the murder capital of America for decades. But those stigmas are like herpes… and require an aggressive marketing response, one that Chicago can now mount with an almost $70 million budget.

A Fox News correspondent recently opined that the new Tourism Improvement Assessment, adding 1.5% onto a hotel stay in the city, would backfire. The author also seems fixated on the fact that the new revenues would primarily be used to lure the 2028 Democratic National Convention to Chicago. Of course. It's Fox News.

He goes on to say: “It’s quite a thing: Only a leftist Democrat could possibly think that making it more expensive to visit Chicago will increase tourism. Maybe they should throw in a complimentary mugging to sweeten the deal.”

Hey David? It wasn’t the far left who cooked up this investment strategy for the future brand revitalization of the city. It was the local hotel community, frustrated by the fact that the majority of existing hotel taxes were not being used for their original intent (tourism promotion and development), that took matters into their own hands and asked the City to allow them to add a special assessment to get the job done right.

You see, there was a time when room taxes in Illinois, which were supported back in the early ‘80s by the hotel industry (so long as the proceeds would be used for tourism promotion), were, by law, restricted to that use. Over time, original intent was increasingly ignored and hotels saw the tax they originally supported get redirected to a myriad of other uses. 

Now, I get that the author of this hit piece doesn't understand the nuance of taxes on hotels. Why would he? But what happened in Chicago to drive the total tax paid on a hotel stay to 19% (which yes, is eye watering) is a combination of sales tax and hotel taxes…but there is a difference between a tax and an assessment. Tax is something that government imposes. An assessment is something that the assessed businesses request.

And yes, the revenue will go to Choose Chicago; the official Destination Marketing Organization for the Windy City. And yes, some of the new revenue will go to luring more conventions to the city because research has shown that convention attendees often realize homeowner and investment opportunities when visiting a city they have previously never experienced. But I know someone you don't. And that is Kristen Reynolds, the CEO of Choose Chicago. While she oversees an amazing team of professional convention sales professionals, she is, at her core, focused on the very leisure traveler about whom you claim to be so concerned. A lion’s share of these new revenues will be directed to upgrading Chicago's brand image for the world.

That Chicago got such a reputation for crime is a genuine shame. But so have other American cities. The difference is that Chicago's hotels (the private sector) have stepped up to say no mas.

Congratulations, Chicago. Can’t wait to see what’s next.

Til next time,

Bill

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