HomeMy WebLinkAbout7.1 Work Plan and Budget Discussion
TO: Board of Directors, Cottage Grove Convention and Visitors Bureau
FROM: Jaime Mann, Assistant to the City Administrator
DATE: May 13, 2022
RE: 2023 Work Plan and Budget Discussion
Background
The city is starting the budget process for 2023 and the Cottage Grove Convention and Visitors
Bureau (CVB) needs to submit a draft budget within the city’s overall budget.
The purpose of this workshop is to discuss the 2023 CVB work plan and draft budget.
Discussion
Work Plan
A work plan must first be put together to begin to look at budgeting for 2023. This includes
looking at marketing items we are currently doing, what we would like to start doing, and what
we no longer wish to keep in our plan.
Items done year to date in 2022 along with what was spent are laid out below.
2022 Marketing Items – Year To Date
Visitor’s Guide – Printing, online software, envelopes $10,791.00
Mall of America and MSP Airport brochure program $828.00
Have Fun Biking $2,450.00
Discover Cottage Grove tent and tablecloth $2,279.17
Wedding photography $200.00
Website maintenance ($115/month) $460.00
Social media ad campaigns ($1,292/month plus two additional campaigns) $7,568.00
MN Monthly – summer bucket list ad $550.00
Saints game sponsorship $900.44
Strawberry Fest booth $125.00
Discover Cottage Grove event trinkets $11,147.76
In the 2021 CVB annual report, goals were laid out on items to accomplish moving forward and
can be used as a guide for 2023 planning.
Board of Directors, Cottage Grove Convention and Visitors Bureau
May 13, 2022
Page 2 of 2
Budget
Revenue
The CVB was started in May of 2020 at the beginning of the COVID-19 pandemic. As a result,
the CVB 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 CVB 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. For 2021, the total lodging tax collected was $59,987 showing a larger return to
travel than expected. For 2022, projections of 60% occupancy were used when forecasting for
lodging tax revenue estimating revenue at $66,348 in revenue. This all makes the case that the
CVB 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 that are increasing and for 2023 we
are recommending using the same 60% occupancy rate as 2022 for total lodging tax revenue of
$66,348 to remain conservative until we have a reliable history post COVID-19.
Expense
There are some fixed expenses that the CVB must account for in the budget. These expenses
include our website hosting/domain for $115 per month ($1,380/year), a 5% administrative fee
and a 25% contractual services fee that is paid to the City of Cottage Grove to administer the
CVB (variable based on lodging tax received), and the two quarterly payments of $1,375
remaining for the start-up cost payback to the City of Cottage Grove ($2,750 in 2023.)
The remainder of the 2023 expense budget is variable and up for discussion on how it should be
allocated based on the work plan.
Recommendation
Discuss the 2023 work plan and draft budget.
Attachments:
2021 Annual Report
2023 Draft Budget Worksheet