HomeMy WebLinkAbout5.4a 2022 Q2 Lodging Tax Collection and 2023 Preliminary Budget Approval
TO: Board of Directors, Cottage Grove Convention and Visitors Bureau
FROM: Jaime Mann, Assistant to the City Administrator
DATE: August 19, 2022
RE: 2022 Q2 Lodging Tax Collection and 2023 Preliminary Budget Approval
Discussion
2022 Q2 Lodging Tax Collections
Due to a short history of lodging tax revenue collected and the variability of the industry for the
past two years, the 2022 budget used conservative monthly revenue estimates of $5,529 at a
60% occupancy rate in lodging tax collections for all quarters of 2022. The City of Cottage
Grove has collected all the 2nd quarter lodging tax and received the following amounts:
Table 1 2nd Quarter Lodging Tax Collections for the City of Cottage Grove
In total the lodging tax collections for the 2nd quarter of 2022 was $19,608. The total revenue
collections were $3,021 above revenue projections for the 2nd quarter which is up 18.2% over
our projections for Q2. Year to date, we are down by 0.8% from our 2022 revenue projections.
Budget
Revenue
Projections of 60% occupancy were used when forecasting for 2022 lodging tax revenue
estimating the total to be $66,348 in revenue. For quarters one and two of this year, the
combined total shows that our lodging tax is averaging right at the 60% occupancy rate. For
2023, we are recommending using the same 60% occupancy rate for budgeting total lodging tax
revenue which would give us a projected revenue of $66,348 for 2023.
Also under the category, it is estimated that the advertising in the Visitors Guide will be the
same amount as in 2022. For 2023, it is estimated that we will receive $6,290 in ad sale
revenue which helps offset the cost of printing the Visitors Guide.
In total, it is estimated that there will be $72,640 in revenue collected by the CVB in 2023.
Q1 Q2 Q3 Q4 Total
Lodging Tax Revenue 13,290$ 19,608$ -$ -$ 32,898$
Other Revenue -$ -$ -$ -$ -$
2022 Total Revenue 13,290$ 19,608$ -$ -$ 32,898$
2022 Budgeted 16,587$ 16,587$ 26,587$ 16,587$ 76,348$
Board of Directors, Cottage Grove Convention and Visitors Bureau
August 19, 2022
Page 2 of 3
Expense
As in previous years, expenses are being broken out into three separate categories: marketing,
operations, and other. Marketing expenses are core to the organization’s 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.” A reliable history for activities by the CVB is still being
established so funding levels for each line item and initiative for the 2023 budget are based on
actual and projected spending for 2022.
Marketing Expenditures
Website Hosting/Domain $1,380.00
Collateral Development & Printing $11,000.00
Marketing and Local Events $3,000.00
Social Media $15,504.00
Professional Services $1,444.37
Advertising in Publications $3,600.00
Other Types of Advertising $9,946.00
Total Marketing Expense $45,874.37
In total marketing expenses for 2022 are at $45,874.37. Website hosting is budgeted at $1,380
for 2023. The Board at the workshop in May approved an update and reprint of the Visitors
Guide for 2023 so $11,000 has been budgeted for printing of the guide. Social media will
continue to be the main focus for the CVB’s marketing efforts so $15,504 has been budgeted for
social media to maintain the presence of the CVB on social media. Advertising in publications
such as Havefunbiking.com and the brochure program with the Mall of America and the airport
have been budgeted at $3,600. Professional services has been budgeted at $1,444.37 and
include transcription services along with photography. This leaves some areas that allow for
flexibility in the budget in marketing at local events and other types of advertising which are
budgeted at $12,946.
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 $920.00
Postage $475.00
Continuing Education/Classes/Seminars $1,500.00
Dues/Subscriptions $325.00
Administration Fee (City of Cottage Grove) $3,317.50
Contractual Services (City of Cottage Grove) $15,758.13
Total Operating Expense $22,295.63
Board of Directors, Cottage Grove Convention and Visitors Bureau
August 19, 2022
Page 3 of 3
Many of the operations expenditures are for day-to-day expenses like office supplies and
postage that equal $1,395. For 2023, the Visitor Bureau will continue its membership with the
Minnesota Association of Convention and Visitors (MACVB) for $325 and has $1,500 budgeted
for continuing education which includes attending the MACVB annual conference. $3,317.50 is
budgeted as the 5% administrative fee that is paid back to the City for facilitating the CVB.
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 $15,758.13. 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 $2,750 paid. 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 end after these two payments are made in
2023.
With a total revenue projection of $72,640 and total expenses of $70,920 in 2023, equates to a
net income of $1,720.01 for 2023. The CVB is still determining best practices and methods for
marketing the city therefore the 2023 budget is meant as a guide that allows for flexibility to
adapt and change as we move forward.
Recommendation
Approve the 2023 Cottage Grove Convention and Visitors Bureau preliminary budget.
Attachments:
2023 Preliminary Budget Worksheet