CAEDC’s Strategy for Increased Hotel Tax Revenue

The Cumberland Area Economic Development Corporation (CAEDC) and its tourism arm, Cumberland Valley Visitors Bureau, is proposing an adjustment to the county’s hotel occupancy tax from the present 3% to the allowable 5%. Funds raised from this incremental tax increase on overnight stays in Cumberland County lodging properties would enable CAEDC to better support its strategic plan.

This increase would allow Cumberland Valley to remain competitive in marketing and selling our destination to drive visitation and support projects that enhance the visitor experience, ultimately benefitting local businesses and strengthening the community’s overall quality of life.

CAEDC currently has 10 letters of support representing over 20 tourism businesses, including hotels, B&Bs, attractions and grant recipients.

According to STR (Smith Travel Research), our lodging data vendor, Cumberland County hotels have seen increased growth over the past couple of years while still being the budget-friendly option compared to Dauphin, Lancaster and York markets.

The data shows that this modest increase in hotel tax would still allow our hotels to remain competitive and have room to grow rate, revenue and occupancy. CAEDC plans to use additional hotel tax funds to increase and drive new visitation through the following key investments.

Tourism Grants

The majority of the dollars created by the increase in hotel tax funding will be used to support our popular Tourism Grant Programs.

Revamped grants will focus on larger tourism product development needs, maintenance and development efforts for smaller tourism businesses and events that bring in significant overnight stays to our County.

View a list of past Tourism Grant Recipients Here

Experience Trails

CAEDC’s Experience Trails, including the Beer Trail, Ice Cream Trail, Coffee & Chocolate Trail and new Farm Fresh Trail have made it possible to promote sets of partners that may not drive travel on their own, as well as package experiences that are easy to understand and participate in.

The trails are heavily utilized, with over 15,876 passport sign ups and over 24,582 check-ins March 2021 – August 2023.

Survey data from the trails shows that the average per location spend on the Coffee & Chocolate Trail is $17.17, the per location spend on the Ice Cream Trail is $12.68 and the 15-location total spend (including meals, mileage, overnights, etc.) is $327.61 for Beer Trail.

The estimated economic impact of the trails far exceeds their cost, and CAEDC plans to continue adding trails tying in new and different partner sets.

Marketing & Advertising

A 2022 Economic Impact of Advertising study revealed that Cumberland Valley advertising generated over $12.9M of the total $311.2M tourism related economic activity (GDP); contributed to 7.0% of all hotel tax revenue ($5.0M) and had a ROI of $21.20 for every $1 invested.

Cumberland Valley’s leisure tourism budget for 2023 is $667,455; 51% of which is comprised of grants from Google, PLCB and DCED. These grant funds will not always be available, and the Economic Impact of Advertising study estimates that a 50% decrease in marketing spend could result in a $4.6M decrease in total tourism GDP.

CAEDC needs to budget approximately $300,000 more on tourism advertising to maintain current GDP benefits, and budgeting approximately $600,000 more is expected to increase tourism GDP by $6.4M.

Compliance & County Assistance

CAEDC would like to partner and invest in Short Term Rental compliance software and occupancy reporting. These investments will help level the playing field by ensuring all lodging properties are being assessed the proper hotel tax and allow staff to better understand occupancy and overnight stays in Cumberland Valley.

In a February 2022 demo, a potential vendor identified 305 short term rental listings, representing 261 unique properties. This was a 32% YOY listing growth of short-term rentals in Cumberland Valley.

An increase in hotel tax will also increase the admin fees collected through the County Treasurers office. We see this as an opportunity to continue to unify our messages and working relationship between the County and CAEDC.

Increased Cost of Vendors

CAEDC works with a variety of vendors who assist with technical tasks, making it possible for CAEDC to present high-end marketing materials without employing staff with technical skills including IT or coding.

Our vendors provide a CRM/CMS; host, maintain and optimize VisitCumberlandvalley.com; coordinate advertising strategy and ad design for leisure advertising; enhance VisitCumberlandValley.com and CumberlandBusiness.com search rankings through paid and organic efforts; host consumer data for research purposes; deliver Cumberland Valley print materials to welcome centers and over 100 CV locations where visitors find information; and maintain our networks and computer infrastructure.

Our vendors are experiencing higher costs in running their businesses, increasing rates for our services. We also started working with several vendors who offered introductory rates, so we expect to see our professional services line items increase.

Economic Development to Support Quality of Life & Tourism

Currently a small portion of hotel tax is dedicated to CAEDC for economic development. An increased 5% hotel tax with a larger investment in economic development would allow the economic development team at CAEDC to continue to function without the need to ask the County for funding from the general fund and be supported by taxpayers’ dollars.

Our economic development team supports community and business growth, revitalization and sustainability, workforce development and a balanced quality of life which are all important to make our towns and County capable of supporting a tourism industry.