Funding Futures: Building Reserves & Short-Term Rental Revenue

In partnership with Miles Partnership, Tourism Economics, Civitas released a new research study entitled “Funding Futures,” highlighting funding options for state and local DMOs as we navigate the industry crisis posed by COVID-19. The report not only highlighted critical areas of concern, but also offered ideas and opportunities for DMOs to “build back better,” encouraging DMOs to look towards a future of more balanced, resilient, and sustainable funding sources tailored for each destination’s needs. As indicated by the breadth of different funding options displayed in the report, each destination will need to evaluate their own needs and find the particular mix of funding sources that best suit their needs. 

spilled coins from the jar
Photo by Michael Longmire on Unsplash


As the current COVID-19 crisis has shown us, the ability for DMOs to be resilient in times of crisis is an essential and previously overlooked component of a successful organization model. One of the most prudent ways to ensure resilience is the ability to retain and utilize reserve funding. Many DMOs find themselves without a safety net of reserves to rely on in cases of emergency. Beyond the COVID-19 pandemic, DMOs unable to retain reserves will find themselves susceptible to natural disasters, economic downturn, and any other unforeseen situation that poses a threat to their typical revenue sources. Economists recommend that DMOs retain at least one full year’s operating budget as their reserve fund, to ensure they will withstand crises. As we emphasized in the report: “DMOs with dedicated funding will almost certainly have an advantage in budgeting for annual investments in building their reserve funds, compared to DMOs relying on politicians to allocate this in the annual funding.”

As the COVID-19 crisis emphasizes the importance of travel to the economy, the time is now to approach local and state governments to build the case to build reserves.  For DMO’s to pursue local or state law to allow for a reserve fund, these reserves must be protected from government seizure and remain unaffected by any political interference. Having the ability to retain funding reserves can be the difference between being an organization that is resilient to crisis times and being faced with difficult decisions regarding options for your organization survival.  

Short-Term Rentals

Modern tourism has ushered in a new era of alternative vacation options. Short-term rentals (STRs) were expected to overtake traditional hotels in 2020 before the COVID-19 pandemic. As a product of the 2008 recession, tourists were looking for alternative ways to travel. While STRs have not been immune to economic downturns and the current COVID-19 pandemic, they have seen considerable popularity considering the circumstances. 

Local travel and “staycations” have become increasingly popular. STRs have significantly benefited from this trend, emphasizing safety and cleanliness measures and taking advantage of customer sentiment leaning towards a hotel-free getaway. 

Due to their rising popularity and resilience, even in the era of COVID-19, STRs pose an exciting opportunity for DMOs to generate an alternative source of revenue. However, STRs display a wide variance in operation across the country. By conducting a professional evaluation of these three components in your destination, jurisdictions, and DMOs can seize the opportunity to either take advantage of an existing revenue source or explore ways to implement new policies that will lead to enhanced revenue generation. 

To download the Funding Futures report, please visit:

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