Proposed Marketing Levy –Case for Whitsundays

The Introduction of a Marketing Levy?

� Common throughout the USA, Canada & Europe (in the range of 2-14%)

� It sits on top of a GST or VAT� It sits on top of a GST or VAT

� All accom taxes in Australia deemed irrelevant with the introduction of the GST in 2000

� A marketing levy of 2%pa in the Whitsundays Regional Council would yield $2.5m and 10%pa would yield $12m on current accommodation turnover

Marketing Levy - Advantages

� It does not burden the normal income tax collection system but are a tax on consumption

� It does not drain state or local operating budgets

� It can be applied to the specific problem area, i.e. marketing of tourism by directing collections into relevant tourism authorities

Marketing Levy - Disadvantages

� Any new levy is generally opposed on principle, but this is not a levy on all taxpayers, rather it is user-pays

� There are additional administrative costs, as with the GST

� It can create market distortions if too large and not widely applied

Marketing Levy in Florida (introduced in1967)

Tax Percent

Municipal Resort 2%

Food & Beverage 2%

Tourist Impact 2%

Convention Development 2%Convention Development 2%

Tourist Development 1%

Total 11%

Enacted legislation to be used for:

• The creation and maintenance of convention centres, cultural/arts centres

•The enhancement and promotion of tourism

•Appropriate signage installation and maintenance

Accommodation Levies Around the World

Location Levy

Fiji 5%

Hawaii, USA 9%Hawaii, USA 9%

California, USA 10%

Florida, USA 11%

Bali 15%

Australian Industry Size – Annual Turnover 2007-08

Food & Beverage $72bn 9.0%

Tourism $75bn 9.4%

Retail $150bn 18.8%

Motor Vehicles $173bn 21.6%

Manufacturing (Incl Mining) $250bn 31.3%

Other – Education/Govt etc $80bn 10.0%

Total GDP (Approx) $800bn

Annual Council Funding for Tourism Marketing

Local Council Budget $ per capita

Brisbane $16.6m $8.00

Gold Coast $10m $16.80

Sunshine Coast $8.5m $25.50

Cairns $4m $21.60

Whitsundays $750,000 $21.40

Annual Federal Funding for Tourism Marketing

Country Budget $ per capita

New Zealand AUD$190m* $45.25

Bali AUD$43m $31.70

Fiji AUD$29m $27.65

Australia AUD$169m $8.45

* Air New Zealand contributes $90m

Return on Investment

(AEC Group, National Tourism Investment Strategy, 2006)

Business Type (AUST) ROI 1998-2004

Tourism Businesses 11.8% pa

All Businesses 14.9%pa

(AEC Group, National Tourism Investment Strategy, 2006)

� The tourism industry has been saved by technology and innovation

�Low cost airfares and accommodation packaging

�Online booking and virtual tours

Whitsundays Accommodation

Qtr

Rooms Avail Room Nights Sold Occupancy % Takings $m $ Av Nightly Rate RevPAR Income per room

2009 2009 2009 2009 2009 2009 2009

Whitsundays

Mar 2,937 124,008 46.9 27.9 224.46 $ 10,527.17 $ 38,424.19 Mar 2,937 124,008 46.9 27.9 224.46 $ 10,527.17 $ 38,424.19

Jun 2,939 119,924 44.8 24.7 205.25 $ 9,195.20 $ 33,562.48

Sep 2,911 152,202 56.8 30.5 200.28 $ 11,375.90 $ 41,522.05

Dec 2,906 153,176 57.3 35.7 233.34 $ 13,370.38 $ 48,801.89

Calendar 2009 2,923 549,310 51.5 118.8 215.83 $ 11,104.58 $ 40,531.72

Whitsundays = Regional Council boundary including Bowen and Hamilton Island (28% market share)Hamilton Island has 823 beds with approximately 80% occupancy

Source: ABS 8635.0

Whitsundays Accommodation

Qtr

Rooms Avail Room Nights Sold Occupancy % Takings $m $ Av Nightly Rate RevPAR Income per room

2009 2009 2009 2009 2009 2009 2009

Great Barrier Reef Islands

Mar 2,632 114,996 49.1 32.6 283.46 $ 13,917.89 $ 50,800.28 Mar 2,632 114,996 49.1 32.6 283.46 $ 13,917.89 $ 50,800.28

Jun 2,608 104,120 43.9 27.6 264.14 $ 11,595.75 $ 42,324.47

Sep 2,562 141,135 60.0 36.3 256.92 $ 15,415.20 $ 56,265.48

Dec 2,560 148,622 63.1 43.1 289.91 $ 18,293.32 $ 66,770.62

Calendar 2009 2,591 508,873 54.0 139.6 273.61 $ 14,781.65 $ 53,953.00

Source: ABS 8635.0

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