HomeMy WebLinkAbout4.4a 2022 Budget Approval Memo
TO: Board of Directors, Cottage Grove Convention and Visitors Bureau
FROM: Jaime Mann, Assistant to the City Administrator
DATE: November 19, 2021
RE: 2022 Budget Approval
Background
A draft budget for 2022 was submitted and is serving as a place holder within the City’s budget.
A final 2022 budget for the Cottage Grove Visitors Bureau must be approved by the Convention
and Visitor’s Bureau Board of Directors by the end of November 2021 for approval at a
December 2021 City Council meeting.
At the July 27, 2021 Convention and Visitor’s Bureau Board Meeting, the 2022 draft budget was
presented.
Discussion
The Cottage Grove Convention and Visitors Bureau was started in May of 2020 at the beginning
of the COVID-19 pandemic. As a result, the Visitor’s Bureau has had to adjust revenue
projections to account for the drastic downturn in the lodging and hospitality industry. Initial pre-
COVID-19 projections for the Visitor’s Bureau had annual lodging tax revenue between $66,000
to $71,000 using a 60%-65% occupancy rate for Cottage Grove lodging facilities.
With the effects of COVID-19, revenue projections for 2020 were adjusted to 10%-15%
occupancy rate for a lodging tax revenue of $18,572. In total, final revenue for 2020 equaled
$29,758 showing a slow and steady return of occupancy rates over the course of the year.
Similarly, as the hospitality industry was still showing the effects of the COVID-19 pandemic,
2021 revenue projections used a 40%-45% occupancy rate for an estimate of $44,232 in
lodging tax. The Q1 revenue for 2021 is at $3,156 per month slightly lower than projected.
However, Q2 and Q3 numbers came in higher than projected at $16,075 and $19,680
respectively. This all makes the case that the Visitor Bureau does not yet have a reliable history
to base projections and will not until we can get 2-3 years of numbers post COVID-19. We are
seeing numbers however that are steadily increasing and for 2022 the Visitor’s Bureau is using
a 60% occupancy rate for total lodging tax revenue of $66,348. We have also been approved
for a $10,000 Explore Minnesota Grant to increase our revenue estimate to $76,348.
For expenses the budget breaks these down into three separate categories: marketing,
operations and other. Marketing expenses are the main core to the organizations mission of
“promoting Cottage Grove as a premier destination for leisure travelers, weddings, and outdoor
enthusiasts, a recognized and successful host city for meetings and conventions, and a
prominent and respected venue for sporting events.” The Visitor’s Bureau is still in the middle of
carrying out its first full year of activities since launching the brand and website in 2020. What
Board of Directors, Cottage Grove Convention and Visitors Bureau
July 20, 2021
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works and what needs to be adjusted is still being determined based on marketing outcomes.
With that being the case funding levels for each line item and initiative are being carried over
into 2022 with increases for each adjusted accordingly given the increase in revenue projections
and the Explore Minnesota Grant.
Marketing Expenditures
Website Hosting/Domain $1,860.00
Collateral Development & Printing $3,720.00
Marketing and Local Events $4,872.00
Social Media $12,000.00
Marketing Online $12,000.00
Advertising in Publications $7,008.00
Other Types of Advertising (Magazines, Billboards, etc.) $6,000.00
Total Marketing Expense $47,460.00
In total marketing expenses for 2022 are at $47,460. The organization will continue its focus on
carrying out on-line marketing with $24,000 going towards marketing on social media and on-
line in 2022. Marketing in publications like Havefunbiking.com or Let’s Play Hockey is budgeted
at $7,008. This leaves some areas that allow for flexibility in the budget in Other Types of
Advertising and Marketing at Local Events at a total of $16,452. In the past the Visitor’s Bureau
has discussed using this money for advertising on a billboard of a major highway or for a small
grant program for local events to do more advertising. However, this money could also be used
for Collateral Development & Printing which currently is at $3,000 for the year. With the
development of the Visitor’s Guide in 2021 more money might be needed for printing of the
guide and updating it in 2022. This budget allows for flexibility moving forward as the Visitor’s
Bureau continues to determine the best methods for marketing the city to visitors and tourists.
The second expense category is operations and represents the funds needed to carry out the
mission of the Visitors Bureau.
Operating Expenditures
Office Supplies/Equipment $410.00
Phone/Internet Services $0.00
Postage $460.00
Printing $410.00
Continuing Education/Classes/Seminars $375.00
Dues/Subscriptions $390.00
Non-recurring Expenses $0.00
Contractual Services (City of Cottage Grove) $15,756.00
Admin/General Office Expenses - Other $0.00
Total Operating Expense $17,801.00
Board of Directors, Cottage Grove Convention and Visitors Bureau
July 20, 2021
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Many of the operations expenditures are for day-to-day expenses like office supplies, postage,
and printing that equal $1,280. For 2022 the Visitor Bureau will continue its membership with
the Minnesota Association of Convention and Visitors (MACVB) for $390 and has $375
budgeted for a staff member to attend their annual conference. Finally, the largest expense is
for contractual services to the City of Cottage Grove to continue to operate the Visitors Bureau
for a total of $15,756. These funds make up services that account for management,
organizational, clerical, accounting, finance, legal and audit services. Per the establishing
ordinance these charges shall be $10,000 per year or 25% of the total local lodging tax received
by the City annually, whichever is greater.
The final expense is the other category and there will be a total of $5,954 paid under this
category. One expense is to reimburse the EDA Trust Fund for startup costs associated with
starting the Visitor Bureau. In total for 2022 this equals $3,204. With two payments of $1,602
each to the EDA Trust Fund for a total of $3,204. Payments will be completed for the EDA Trust
Fund payback after these two payments in 2022. Also under the other category, will be two
payments of $1,375 each for a total of $2,750 to the City for the payback of its own start-up
costs. These payments are slated to start once the EDA Trust Fund payback is complete and
and will be paid quarterly for four payments of $1,375.
With a total revenue projection of $76,348 and total expenses of $74,532 in 2022, equates to a
net income of $1815.60 for 2022. There are still many unknowns that the Visitor Bureau is
working through even after over a year of starting. The economic climate that the hospitality
industry still faces makes revenue projections difficult. Additionally, the Visitor’s Bureau is still
determining best practices and methods for marketing the city. The 2022 budget is meant as a
guide that allows the flexibility to adapt and change as we move forward.
Recommendation
Approve the 2022 Convention and Visitors Bureau budget.
Attachments:
2022 Final Budget