Waco on the Verge of Proposing a New Tourism Public Improvement District

by Scott Joslove, President & CEO, Texas Hotel & Lodging Association

In the days of COVID-19, the Waco tourism industry and city officials are not sitting idle. Plans are currently underway by Waco hoteliers to propose and seek creation of a Waco Tourism Public Improvement District (TPID). The proposed District has received strong support from the Waco Convention Center & Visitors Bureau, Waco City Council, the Waco City Manager’s Office, and the City of Waco Legal Department. The process for creation of the District is being facilitated by Todd Bertka and Carla Pendergraft of the Waco Convention & Visitors Bureau (CVB). If approved, the District will include all hotels within the City of Waco that have 75 or more sleeping rooms. The creation of this District was actually initiated prior to the onset of the COVID-19 pandemic. However, the impetus has changed with the onset of the pandemic.

What was a great idea to promote the economic growth of a thriving Waco hotel sector will now be an essential tool for achieving the economic recovery of a COVID-19 impacted Waco tourism industry. COVID-19 shelter at home orders, travel bans, and the cancellation of conventions, group meetings, and large events has had a draconian impact on Waco hotels — that prior to the pandemic were leading the state in hotel occupancy growth. From January to April of this year, Waco hotel occupancy levels dropped from 72.0 percent annualized occupancy of all hotel rooms to a below subsistence level of 29.8 percent occupancy of Waco hotel rooms.

While we don’t expect the impact of COVID-19 to last forever, it is not clear when the ability to freely travel and meet will return. The creation of a Waco Tourism PID, however, will allow Waco to “hit the ground running” with enhanced funding to market Waco hotels and tourism venues once that time arrives. We will want to get the word out that Waco hotels are open for business and be able to provide incentives to secure group meetings, sporting events, and other gatherings that are essential to filling hotel rooms, restaurants, and countless other community businesses.

Texas currently has four operating Tourism Public Improvement Districts. The first District was created in Dallas, Texas. The work of the Dallas Tourism District resulted in a 17 percent increase in the overall occupancy level for Dallas hotels city-wide. And, for each dollar that the Dallas TPID expended in meeting incentives, it yielded an average of $14 in room night revenues to Dallas hotels. This unprecedented level of return on investments resulted in requests by the Cities of Fort Worth, San Antonio, Arlington, and Austin for state legislative authority to create a Tourism PID in each of their areas. This legislative authority was secured in 2013 followed by bills in 2019 that opened this state authority for all Texas cities to create a Tourism PID, including the City of Waco.

What is the secret to the success of these tourism public improvement districts? If you ask hoteliers that work with these districts, they will quickly point to its governance. The expenditure of all Tourism PID funds are closely managed by a non-profit board of the local hoteliers within the District in partnership with their area Convention and Visitors Bureau. These local hoteliers know better than anyone when their slow season is, the dynamics of a “shoulder season,” and what local events and programs have the capacity to have a meaningful impact on area hotel activity. And the Waco hoteliers will not feel pressure to spend the TPID funds unless there is a projected ROI that meets the board’s standard for investment of TPID funds. In the case of the Waco TPID, the criteria for spending TPID funds will require at least $7 in room nights for each dollar of TPID incentives. If the event turns out to have a lower ROI, the amount of any incentive award may be proportionately reduced. The marketing that is done by these tourism districts is also similarly measured and evaluated by the TPID Board of Directors. In fact, eight percent of the TPID funds are reserved for research programs that measure the impact of the TPID marketing and incentive initiatives. This research evaluates whether the TPID marketing and incentives had their projected impact in the number of visitors who were influenced to make a trip to Waco, the number of visitors who actually booked a Waco hotel room, how long they stayed, and the other area attractions that they visit while they are in town.

Todd Bertka, Director of the Waco Convention & Visitors Bureau, concurs with the need for the District. “The Waco Tourism Public Improvement District will be an important means to promote Waco hotels and tourism to the convention and event industry. There will be a 41 percent increase in Waco’s hotel product by 2023, and those hotel rooms will need to be filled with customers in order to support the hundreds of jobs they will generate in the Waco market,” said Bertka.

Waco will not be the only Texas city looking to create a Tourism District in the near future. The cities of Austin, Amarillo, Frisco, and Denton are actively pursuing local tourism districts for their areas and expect to have them operational within the next year. That being said, Waco will be the first of these cities to implement its District.

And it could not be soon enough for the Waco area hoteliers. The organizers of the Waco TPID, and the Waco CVB which will administer the District, will be laser focused on retaining and growing local hotel occupancy to generate economic activity for Waco tourism and nontourism businesses alike. The hoteliers have been before the Waco City Council once to secure approval of the general format for the proposed Waco Tourism PID. Subsequent city council meetings will consider formal creation and implementation of the Waco Tourism PID. Target implementation date for the new district to begin is October 1, 2020.