How does the TDC spend its money?

PANAMA CITY BEACH — How money, particularly millions of dollars, is spent is always going to be a hot topic.

And how the Bay County Tourist Development Council spends its money was a hot enough topic to beat out two other questions in our first-ever Bay Asked, We Answered voting round, earning 43 votes and the green light to go and investigate.

Visitor’s bureaus were thrust into the spotlight last year when a tug of war between Gov. Rick Scott and the Florida legislature erupted over the statewide agency Visit Florida’s budget after news investigations discovered top execs spending $150,000 on travel in 14 months and a $1 million deal with rapper Pitbull led to a slash in the budget.

As part of Bay Asked, We Answered, we try to involve the person who submits the question for review. The person who asked “How are the millions of dollars that the TDC receives every year spent? Will they hold an out-of-state audit?” didn’t want to be actively involved in the story, but he did have one specific concern about marketing we tried to address.

Audit

Tackling the second question first, since it’s a little shorter, the TDC goes through several layers of auditing, according to TDC President/CEO Dan Rowe, including an internal audit of how money is spent. Externally, there are two additional layers of auditing. Because the Tourist Development Tax is collected by the county and the TDC is a county board appointed by the Bay County Commission, their invoices have to go through the clerk of court before the money is spent. Invoices are compiled, Rowe said, and then sent to the clerk of court, where they go through another pre-audit function through that office before the money is spent.

There’s also an annual audit done by an outside firm that is selected, not by the TDC, but by the county commission, as part of the “checks and balances,” Rowe said. This year’s audit was done by Carr, Riggs & Ingram, one of the largest certified public accounting firms in the Southeast. As far as it being an “out-of-state” firm, Rowe said that “doesn’t matter” as much as it being done by a licensed audit firm. Carr, Riggs & Ingram is headquartered in Alabama, but has offices in Florida and along much of the Gulf Coast. The results of the audit are presented annually at a public meeting.

“A lot of people are looking at what we do,” Rowe said.

Money and budgets

Next, we will dive into the money and budgets side of things. Apologies in advance, long strings of numbers are not generally very exciting, but we will do our best.

First, a few things to understand about the TDC. Unlike in Walton and Okaloosa counties, the Bay County TDC is not a county department. The TDC here has its own board of directors and spends the Tourist Development Tax (also known as the bed tax) on behalf of the county. The TDC oversees marketing for Panama City Beach as a destination through the Convention and Visitor’s Bureau (Visit Panama City Beach), but they also oversee, though not on a day-to-day basis, the other local Destination organizations — Destination Panama City and the Mexico Beach Community Development Council, both of which have their own board of directors but whose budgets go through the TDC.

The TDC’s priorities are set through its annual Program of Work document, a detailed look at everything the TDC plans to carry out for the next year and all the data behind it. In the 154-page document, you’ll find in-depth plans for how to attract just about every demographic to Panama City Beach at any given time; how money was spent the previous year and how well it worked out; and how money should be spent in the next year. The annual Program of Work is developed in September and approved by the TDC’s board, then taken to the county commission.

“We take it to the county commission for their approval because ultimately they have to approve the expenditure of the Tourist Development Tax so they can enter into a contract with us to do that work,” Rowe said.

The budgets are then taken to the county commission in October for full approval, Rowe said.

Because the TDC performs two functions — the TDC and the CVB — there are two sides of the budget. We will dive into the TDC side first.

Tourist Development Council

On that side, there are a few big buckets paid for with the five pennies of the Tourist Development Tax.

Beach nourishment gets one penny of the tax, Rowe said.

Next comes product improvement. In that bucket is: beach maintenance activities such as picking up trash, raking and grooming the sand on schedule, landscaping and public safety. Up to 10 percent of the first two pennies of the tax can be spent on public safety related to incremental tourism, which Rowe said this year added up to about $775,000 split between the city and the county for their patrols and lifeguard programs. Next year, Rowe said he expects that amount to be about $900,000.

Then comes the Destination marketing activities for Destination Panama City and the Mexico Beach CDC.

And then there’s the newest addition — debt service for the new sports park, at about $3.1 million per year. The sports park, Rowe said, is a major player in the TDC budget and will come up a few times from here on out.

Visit Panama City Beach

Left over is the $20.467 million used to market Panama City Beach as a “fun, dynamic tourist destination.” Here you’ll find marketing, special events, sports marketing and, yes, more sports park. These numbers are based on the draft 2018 budget.

Marketing

The biggest piece — about 39.7 percent — of that pie is marketing, with $8.12 million budgeted to promote Panama City Beach with an emphasis, according to the budget document, on “digital first” platforms. Within this budget is $5.4 million spent on advertising Panama City Beach. Our question asker was concerned that the agency was spending too much money marketing in Alabama and Georgia, so we asked Rowe what markets they spend most of their money in, and what are some new markets emerging for Panama City Beach

Unsurprisingly, Rowe said their biggest market is the Southeast and the “big three” cities they advertise heavily in are Atlanta, Birmingham and Nashville. However, Rowe said they’ve seen their market expand recently and they’re pushing into new regions.

“Texas has come on as a very strong market,” Rowe said. “And right up the I-65 corridor when you’re getting into Kentucky, Indiana, Illinois, Ohio — all of those Midwestern states are big for us.”

Southwest Airlines, Rowe said, historically has been a big driver for them, and they have a joint-marketing effort with the airline. Where Southwest used to reach only Houston, Baltimore and Orlando, this summer the airline added flights to Austin, Dallas, Denver, Nashville, Chicago and St. Louis.

“That really extends our footprint,” Rowe said.

Surprisingly, though, Rowe said they’ve seen a new market open up in Orlando, when their ad agency noticed a large influx of web traffic and interest coming from the region. This year, according to their Program of Work, they’ve been testing that market to see if it warrants a bigger investment.

Also in the marketing budget is $357,000 for the advertising agency retainer. Currently, Visit Panama City Beach uses Luckie & Co., Lou Hammond Group and Simpleview. There’s also $500,000 for producing marketing materials, $312,000 for domestic public relations expenses and $750,000 for the website, social media and interactive marketing.

Tourism development

The next biggest pie piece is $5.48 million for tourism development, taking 26.8 percent of the total budget. This money is for CVB-owned or -developed tourism assets on Panama City Beach, according to the budget document, which includes $530,000 for the “Chasin’ the Sun” TV program now airing on the Discovery Channel, $165,000 in production costs for PCB Magazine and $135,000 in printing costs for the magazine.

The rest is $4.65 million for planning costs and project development, which includes the pre-opening work, such as engineering and design, for the sports park.

Special events

Special events takes up the next largest chunk at $2.4 million for 11.8 percent of the total budget. Here, the two biggest pots of money are events that the CVB sponsors and CVB-organized events.

The $1.233 million for CVB-sponsored events goes to what usually are ticketed events held by third-party organizers and include Gulf Coast Jam, Sand Jam, Emerald Coast Cruizin’, the Seabreeze Jazz Festival and Thunder Beach.

The $1.01 million spent on CVB-planned events goes to events that usually are free to the public, such as the pirate festival, Mardi Gras and Beach Home for the Holidays.

Personnel

Personnel expenses make up the next largest pot, at $1.7 million and 8.7 percent of the budget. Here, there’s $1.38 million for staff salaries and wages, $209,485 for insurance benefits and $110,566 for payroll taxes.

What’s left

After those bigger buckets, what’s left are relatively smaller portions of the budget. There’s $836,890 for operations expenses, which includes $150,000 for legal services; $25,000 for travel and meeting expenses for the executive office; $160,000 in postage shipping for CVB operations and fulfillment; and $200,000 for economic impact profiles and other studies.

Sports marketing accounts for $686,500, including $320,000 for bids and event hosting fees to bring events to Panama City Beach; and $168,000 for sponsoring sporting events that bring tourism to the area.

Community support for the city of Panama City Beach and other “not for profit” entities that have tourism promotion activities and functions accounts for $425,000 of the budget.

Sales is the next biggest amount, with $378,000 spent on sales efforts, including $125,000 spent on international representation travel/trade, $125,000 in trade show expenses, and $50,000 in travel costs for the sales department.

Then there’s $230,300 in visitor services to run the visitor centers, which includes $148,000 for visitor appreciation events.

Lastly, there’s beach management for $120,000, which covers the $109,809 for the CVB’s coastal engineering consultant.

Looking ahead

As the TDC continues to operate and market the area, Rowe said the already considerable budget will continue to grow. Last year, the TDC had a record-breaking year, up more than 12 percent in collections over their previous best year, but Rowe said all signs point to this year being even better, adding that they already are up 9 percent in collections.

“We anticipate that we will break this year’s record,” he said. “As we continue, we’ll be able to do new things.”