More than a year after state auditors admonished Anaheim for failing to keep a close enough eye on tens of millions of dollars a year in tourism spending by its marketing partner, the city is nearing a new deal that would set key performance standards and follow up on many of the recommendations made.
Anaheim for decades has contracted with Visit Anaheim to market the city and book the convention center for shows. Since 2010, Visit Anaheim has received 75% of a 2% assessment on nightly hotel rates guests pay at more than 90 participating hotels.
More than $30 million annually from that assessment flows through the Anaheim Tourism Improvement District and funds Visit Anaheim. The rest of the money is spent on transportation improvements in the resort area.
Before the state audit, city officials hadn’t considered it public money. State auditors in a January 2024 report said it was and gave a list of improvements the city should make when crafting an updated contract with Visit Anaheim.
The City Council recently discussed a new contract proposal between Visit Anaheim and the city, which wouldn’t change how much the organization gets from the tourism district, but would include new key performance indicators to help city officials gauge how well Visit Anaheim is making use of the money.
The proposed contract would require Visit Anaheim to report annually hotel occupancy rates and convention center bookings, any unspent money, and would forbid comingling public dollars from Anaheim with other sources from Garden Grove’s tourism district or separate private agreements Visit Anaheim has, such as promoting South Coast Plaza.
Visit Anaheim’s Chief Operating Officer Christina Dawson said Visit Anaheim began using a new accounting system in January that separates funding channels for the organization.
Dawson said sales missions that affect Anaheim, Garden Grove or private partners Visit Anaheim has, would be paid for by a percentage commensurate with the contributions each funding pool makes.
Councilmember Natalie Rubalcava said hotel tax revenue is the city’s “bread and butter” and has been down. She asked the city’s tourism director, Tom Morton, to solicit feedback on the new contract from hotels that pay into Visit Anaheim.
“My concern is we are hearing from a lot of the smaller hotels that they are not really being included in the process and maybe we are not booking conventions that are large enough to actually overflow into all of the hotels in our city,” Rubalcava said. “Thus the reason why we are probably not meeting our (hotel tax) goals.”
The contract will be reviewed again at a later council meeting after councilmembers proposed several changes to the language. Those included changing terminology throughout the contract, removing community engagement as a performance indicator and keeping broad language for the types of travel business Visit Anaheim will target to attract.
Councilmember Carlos Leon said the city moving forward should see “how we can ensure we are using every tool at our disposal, No. 1 to make sure Visit Anaheim is fulfilling their contract, but No2, that we are also doing everything we can to ensure public dollars are being used correctly and effectively.”
The city and Visit Anaheim have been in discussions for months on updating the percentage that hotels pay into the tourism district, which is currently 2%, to provide funding for affordable housing for hotel workers.
Updating that would require approval from participating hotels, which Disney holds a major vote share, Visit Anaheim and the City Council. Councilmember Norma Campos Kurtz requested that city officials present a timeline for how a possible approval would play out for a future council meeting.
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