HomeMy WebLinkAbout5.4a 2023 Q1 Lodging Tax Collection and 2024 Preliminary Budget
TO: Board of Directors, Cottage Grove Convention and Visitors Bureau
FROM: Jaime Mann, Assistant to the City Administrator
DATE: June 23, 2023
RE: 2023 Q1 Lodging Tax Collection and 2024 Preliminary Budget Approval
Discussion
2023 Q1 Lodging Tax Collections
Due to a short history of lodging tax revenue collected and the variability of the industry for the
past couple years, the 2023 budget used conservative monthly revenue estimates of $5,529 at a
60% occupancy rate in lodging tax collections for all months of 2023. The City of Cottage Grove
has collected all the 1st quarter lodging tax and received the following amounts:
In total the lodging tax collections for the 1st quarter of 2023 was $13,050 which is $3,537 below
revenue projections for the quarter. We also had visitor’s guide ad sales which totaled $5,645 in
revenue and brought us to $2,108 over our projected revenue. The CVB is 12.7% over our
budgeted revenue projections for 1st quarter.
Budget
Revenue
Projections of 60% occupancy were used when forecasting for 2022 and 2023 lodging tax
revenue estimating the total to be $66,348 in revenue. In looking back at the past two years, on
average, the CVB have averaged a revenue of almost 65% occupancy for the full year. For
2024, the recommendation is to increase the projected occupancy and use a 63% occupancy
rate for budgeting total lodging tax revenue which would give a projected revenue of $72,276.
This falls more in line with what has historically been collected from our lodging facilities yearly.
Also under the revenue category, are American Rescue Plan Act (ARPA) Funds which are used
to cover a portion of the salary for our Marketing and Communications Specialist. The ARPA
Funds are considered revenue to the CVB and are offset by the salary and benefit expense. The
CVB will not receive enough money from the ARPA Funds to cover 100% of the salary and
Q1 Q2 Q3 Q4 Total
Lodging Tax Revenue 13,050$ -$ -$ -$ 13,050$
Other Revenue 5,645$ -$ -$ -$ 5,645$
2023 Total Revenue 18,695$ -$ -$ -$ 18,695$
2023 Budgeted 16,587$ 16,587$ 26,587$ 16,587$ 76,348$
Board of Directors, Cottage Grove Convention and Visitors Bureau
Page 2 of 3
benefits of that position in 2024. It is estimated that the advertising in the Visitors Guide in 2024
will be $5,095 which helps offset the cost of printing the Visitors Guide.
Newly added for 2024 are estimates for the Food Truck Festival. Based on projections, it is
estimated that the CVB will collect $8,750 in food vendor payments and $2,750 from donations
and sponsorships of the event.
In total, it is estimated that there will be $143,564.00 in revenue collected by the CVB in 2024.
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 2024 budget are based on
actual and projected spending for 2023.
Marketing Expenditures
Website Hosting/Domain $1,380.00
Collateral Development & Printing $8,000.00
Marketing and Local Events $1,025.00
Food Truck Festival $13,650.00
Social Media $15,504.00
Professional Services $240.00
Advertising in Publications $1,100.00
Other Types of Advertising $300.00
Total Marketing Expense $41,199.00
In total marketing expenses for 2022 are at $41,199.00. Website hosting is budgeted at $1,380
for 2024. Printing of the Visitors Guide for 2024 is estimated to be $8,000. 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. Expenses related to the
Food Truck Festival are budgeted to be around $13,650. Advertising in publications includes the
brochure program with the Mall of America and the airport have been budgeted at $1,100.
Professional services has been budgeted at $240 and include transcription services. 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 $1,325.
Board of Directors, Cottage Grove Convention and Visitors Bureau
Page 3 of 3
The second expense category is operations and represents the funds needed to carry out the
mission of the Visitors Bureau.
Operating Expenditures
Marketing and Communications Specialist Salary and Benefits $83,325.00
Office Supplies/Equipment $360.00
Postage $720.00
Continuing Education/Classes/Seminars $1,750.00
Dues/Subscriptions $325.00
Administration Fee (City of Cottage Grove) $3,613.80
Contractual Services (City of Cottage Grove) $17,165.55
Total Operating Expense $107,259.35
Many of the operations expenditures are for day-to-day expenses like office supplies and
postage that equal $1,080. For 2024, the Visitor Bureau will continue its membership with the
Minnesota Association of Convention and Visitors (MACVB) for $325 and has $1,750 budgeted
for continuing education which includes attending the MACVB annual conference. $3,613.80 is
budgeted as the 5% administrative fee that is paid back to the City for facilitating the CVB.
Contractual services to the City of 25% covers services like accounting, audit, clerical, and legal
services and totals $17,165.55. Finally, the largest expense is for the salary and benefits of the
Marketing and Communications Specialist for a total of $83,325.
The final expense is the other category. Since the CVB completed all of our payback expenses
after the 2nd quarter of 2023, it no longer has that debt to pay back to the City or the EDA.
With a total revenue projection of $143,564.00 and total expenses projected at $148,458.35 in
2024, equates to a net loss of $4,894.35. The CVB is still determining best practices and
methods for marketing the city therefore the 2024 budget is meant as a guide that allows for
flexibility to adapt and change as we move forward.
Recommendation
Approve the 2024 Cottage Grove Convention and Visitors Bureau preliminary budget.
Attachments:
2024 Preliminary Budget Worksheet