New Funding for Texas DMOs: Tourism Public Improvement Districts

Texas destination marketing and management organizations now have another funding source to consider when evaluating opportunities to increase their annual budgets! These innovative funding sources, Tourism Public Improvement Districts (TPIDs), provide an unparalleled opportunity to increase demand for area hotel activity. Through enhanced funding for marketing and sales programming, destinations can attract additional group meetings, conventions, business and independent visitor activity to their communities.

TPIDs, also known as Tourism Improvement Districts (TIDs), were first authorized in Texas in 2012. Dallas led the charge as the first destination to establish a TPID, followed by Arlington, Fort Worth, and San Antonio. With the changes to the state legislation in 2019, more destinations in Texas are looking at TPIDs as a stable and reliable source of funding for tourism marketing programs.

Before TPIDs made their way into Texas, TIDs were making a local impact on destination marketing in California, South Dakota Washington, Colorado, and Montana. TIDs are now active in sixteen states with more than five introducing state legislation to allow for TIDs in 2020. Destination marketing has become increasingly competitive as more destinations are establishing secure funding dedicated to tourism marketing.

TIDs and TPIDs in Texas have evolved destination marketing funding as elected officials continue to look to hotel lodging taxes as revenue for general services such as police, fire, infrastructure improvements, or pension obligations. Typically, hotel lodging tax revenues for a jurisdiction are imposed and managed annually by the elected officials. Since there is no requirement to spend lodging taxes to benefit the lodging industry, the lodging tax is often diverted to pay for activities outside of destination marketing and management. However, TPIDs differ greatly from lodging taxes in that the funding generated from a TPID is from an assessment on hotel properties. These assessment funds are required to be spent on programs and services that directly benefit the hotel properties paying said assessment. To ensure the TPID funds are being spent to benefit those paying the assessment, the TPIDs are generally controlled by a board of directors or a committee composed of hotel owners and general managers. This oversight ensures the hotels that are raising the funds also control the expenditures of the funds.

Additionally, in order to establish a TPID, they require consensus building and approval from owners and general managers of the hotels that will be included in the district. TPIDs are established by a petition that outlines the TPIDs district parameters, to be signed by a majority of hotel property owners within the district, as well as approval of the district’s formation by the local jurisdictions elected officials.

TPIDs are highly successful when destination marketing and management organizations partner with their hotel community to build consensus on the direction of tourism growth for their district. Through partnership and collaboration, destinations can create opportunities to increase demand for hotel activity with stable and secure destination marketing funding.

Nichole Farley,
Director of Business Development & Client Engagement – Civitas

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