The Challenge

Many programs funded by tourism districts support increasing awareness and making connections in order to raise a location’s profile. While these efforts are instrumental to attracting visitors, there are additional creative and sophisticated ways through which district funding can dramatically enhance the drawing power of a destination.

Sacramento, the capital of California, is a unique confluence of many of the state’s strengths. Located in the Central Valley, one of the most productive agricultural regions in the world, the city has growing urban flair without losing its identity as a “City of Trees”, a Gold Rush town, and a leader in the farm to fork movement. It is also in the same market for visitors with places like Portland, San Jose, and Long Beach, all with stellar name recognition and significant appeal.

In order to remain competitive, Sacramento commits to investing in dynamic improvement projects. In 2017, The City of Sacramento planned on using bed tax for a major facilities renovation and expansion of the Sacramento Convention Center. Sacramento hotels recognized an opportunity to augment the benefits of this plan and requested a 40,000
square foot second ballroom as part of the expansion.

The Innovation

The City and hotels worked with Visit Sacramento to create a tourism improvement district (“TID”) assessed at 1% of gross short-term room rental revenue. This TID will raise over $3,100,000 per year.

The City will bond against the revenue stream and raise approximately $45 million to construct the new ballroom. The addition of this ballroom is expected to bring in new groups who would have a need or interest in the space, as well as allow for the expansion of groups who are already customers. The accommodation of more than one group at a
given time will also be made possible by the ballroom.

This arrangement is designed to form a “virtuous circle” — lodging businesses provide TID funds to finance the ballroom, which attracts more visitors, who generate more overnight stays, which increase revenues to the original contributing businesses.

The Results

The TID was championed by the hotels through a petition with 73% in support. It was approved by a unanimous vote of the City Council on October 30, 2018. A construction schedule has been set, with work to be commenced in December 2018. The ballroom is anticipated to be completed in early 2021. In just a little over two years, that extra meeting space will generate new event and group opportunities for Sacramento and is projected to produce an extra 260,000 room nights per year for the community.

Also projected is approximately $12,520,500 in annual incremental revenue for assessed lodging businesses, as a result of concurrent bookings for ballroom events. The ballroom expands Sacramento’s capacity as an event destination, increasing it’s ability to compliment and contribute to the quality of this booming region.