JAN 18, 2023
Bill awaiting Pritzker’s signature would create new funding mechanism for local governments to use for tourism promotion
Sen. Sara Feigenholtz (D-Chicago) speaks at a news conference last March alongside Illinois Hotel and Lodging Association President Michael Jacobson, right. [Blue Room Stream]
State lawmakers approved legislation last week creating a framework for local government to tap into that could boost budgets for local tourism bureaus in hopes of attracting more visitors to Illinois.
The General Assembly approved HB268 on bipartisan votes in the House and Senate last week. The bill creates the Tourism Preservation and Sustainability Act and now awaits Gov. JB Pritzker’s signature. The bill establishes a framework for local governments to use to create tourism districts where fees will be collected from hotel patrons to fund local convention and visitors bureaus.
Under the legislation, local governments can establish the boundaries of tourism preservation districts with support from at least half of the hotels inside the district. Hotels joining the district would be able to charge up to a 5 percent fee for each night a person stay in the hotel and revenue from the fee would go directly to a special fund that is directly used by a local tourism bureau.
“This bill creates a lifeline for destination development activities – ensuring that tourism and hospitality operations in every corner of Illinois can count on a sustainable, business-led local fund to help them promote the world-class attractions we have to offer,” sponsor Sen. Sara Feigenholtz (D-Chicago) said in a statement.
Illinois Hotel and Lodging Association President Michael Jacobson told The Daily Line the legislation includes guardrails that require the districts to submit annual reports showing how the funds are used and the funds are only able to be used for projects that directly attract visitors to Illinois.
“It’s rare that we support a cost increase on a hotel stay,” Jacobson said, noting the fees hotels charge are not a tax increase because the money is not going to local governments.
The fees will only be on bills for hotel stays and will not be applied by restaurants, stores or other tourist destinations within the districts.
“In the years coming out of COVID, a lot of cities and states have doubled down on that investment [in tourism] to makes sure that they remain competitive in the very changing landscape of winning a traveler over,” Jacobson said.
Allowing Illinois municipalities to create these districts will boost budgets for local tourism bureaus and make Illinois more competitive in efforts to attract visitors and events that bring visitors to Illinois, Jacobson said. More than 200 cities and 19 states already have similar districts in place.
“When you look at the additional funds that those districts have generated to local convention and visitor bureaus, our Illinois… groups were falling behind,” Jacobson said.
Boston established a tourism district last year resulting in massive increases to the local tourism bureau’s budget, Jacobson said. The district’s budget quadrupled in 2022 and boosted the city’s competitiveness attracting tourism.
Illinois’ occupation tax brought in $4 billion each year at its peak, according to the Department of Revenue. But those funds remain sluggish since the pandemic and have left tourism bureaus searching for additional funds to remain competitive.
The extra funding will help convention and visitors bureaus better attract events, Jacobson said.
“Just to submit a bid… that [convention and visitors bureau] has to pay a fee just to submit a bid with no guarantee that convention is going to come to your city,” Jacobson said, adding the bureaus often offer to cover other costs like transportation to and from the event.
With a bigger budget from the fees assessed at hotels, he hopes Illinois tourism bureaus will be able make bids for larger events that will bring more visitors to the state.
“It really helps us remain competitive with all the destinations throughout the country that already have this,” Jacobson said.
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