Buncombe County Tourism Development Authority's projected revenue — fueled by visitor lodging tax — is expected to dip to its lowest level since the coronavirus pandemic. The organization recently said it has cut some of its tourism marketing spending amid other budget changes after Hurricane Helene.
At its most recent monthly meeting, the Buncombe TDA said it expects to take in about $11.5 million less revenue than originally projected for the 2025 fiscal year. The TDA draws its budget from occupancy tax dollars, which are taxes paid by visitors every time they stay at commercial lodging such as a hotel or vacation rental. The organization is tasked with promoting local tourism.
“Who would’ve thought that we would be seeing these financial reports, where we saw that trough from COVID in the spring of ‘20 and now we’re seeing the trough in the fall of ‘24,” TDA President and CEO Vic Isley said at the meeting. “The only other people I can think of that are dealing with this right now are our friends in California.”
The TDA’s original revenue projection for the 2025 fiscal year, which runs from July 2024 to June 2025, was $34.3 million. The revised projection is $22.8 million.
The last time the TDA’s annual revenue dipped that low was in the 2020 fiscal year, when it dropped to $20.5 million due to a months-long decline in tourism at the height of the coronavirus pandemic.
The recent fallout from Hurricane Helene and the public health crisis five years ago mar an otherwise mostly upward trajectory for the TDA’s revenue. A BPR analysis found that for four of the past seven fiscal years, revenue has increased year-over-year. It grew from about $20.7 million in the 2017 fiscal year to about $23 million in 2018 and nearly $25 million the following year.
Then, in 2020, the coronavirus pandemic caused a temporary slump. But revenue rose again in fiscal year 2021, to nearly $27 million. It reached a height of $36.4 million during the 2022 fiscal year. For the past two years, growth has tapered off, with last year’s revenue at about $34.2 million.
HP Patel, a board member and chair of the TDA’s finance committee, said at last week’s meeting that the committee decided on its newly-revised budget recommendations after discussing “the important role of travel and hospitality in helping the community recover economically.”
The TDA plans to draw additional money from its contingency fund in order to make up for the lost revenue. So while the newly-revised projection puts revenue at about 33% less than the original estimate, the actual TDA budget will only shrink by about 6%.
“Thanks to several years of building up our fund balance to a very healthy amount, the Authority now finds itself in a strong financial position to invest in marketing and messaging, supporting the revival of Asheville and Buncombe County’s economy,” Patel said.
The spending category facing the biggest dollar-amount cut is marketing, which will see $1.1 million less in spending than originally projected this fiscal year, for a total of $18.3 million. The figure marks a drop of nearly 6% from the original budget projection.
TDA leaders said they were planning on cutting marketing spending by an additional $1 million but ultimately decided against it. They pointed to the importance of marketing in fueling the region’s recovery as well as the TDA’s month-long pause in advertising in the immediate aftermath of Helene, which led to roughly $1 million in savings.
The budget category facing the largest percentage cut is Partnership and Destination Management, which supports local tourism-related businesses, meetings and community events. The category will see a decrease of nearly 29%. Administration and facilities will see a decrease of about 9%; business development will see a cut of almost 6%; and spending on salaries and benefits will decrease by about 2%.
Notably, much of the decline in occupancy tax revenue post-Helene seems to be driven by a slump in the vacation rental industry as opposed to hotels.
In December, hotel demand was up 6% year-on-year. By contrast, vacation rental demand was down 23%.
Isley said it’s an inverse trend to how the lodging sector was hit during the coronavirus pandemic. Part of the reason could be that some hotels are lodging displaced residents, either independently or through FEMA programs, while some vacation rentals were damaged and taken out of inventory after the storm, she said.
“Hotels are coming up a bit out of this where vacation rentals really bottomed out in October and are starting to build back up,” Isley said.
