Call to Order and Roll Call
The 3rd meeting of the Interim Joint Committee on Economic Development and Tourism was held on Monday, September 30, 2013, at 11:00 AM, at Breaks Interstate Park, Breaks, Virginia. Representative Keith Hall, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Alice Forgy Kerr, Co-Chair; Representative Keith Hall, Co-Chair; Senators Perry B. Clark, Ernie Harris, Jimmy Higdon, and Dennis Parrett; Representatives Larry Clark, Leslie Combs, Tim Couch, Jeffery Donohue, Jim Gooch Jr., Mike Harmon, Dennis Keene, Adam Koenig, Tom McKee, Terry Mills, Ruth Ann Palumbo, John Short, Arnold Simpson, Wilson Stone, and Russell Webber.
Guests: Austin Bradley, Interim Superintendent, Breaks Interstate Park; Bob Stewart, Secretary, Tourism, Arts and Heritage Cabinet; Michael Mangeot, Commissioner, Department of Travel and Tourism; and Elaine Wilson, Director, Office of Adventure Tourism.
LRC Staff: John Buckner, Louis DiBiase, and Dawn Johnson.
Breaks Interstate Park
Austin Bradley, Interim Superintendent of Breaks Interstate Park, which is one of only two parks in the nation created by interstate compact, outlined the history of the 4,800 acre park and provided a general overview of how Virginia and Kentucky jointly fund the park.
Responding to Representative Hall’s question, Mr. Bradley explained the makeup of the park’s commission and park funding. Of the park’s $2 million budget, 7 percent is provided by Kentucky and 8 percent from Virginia. Forty percent of the park is in Kentucky and 60 percent is in Virginia. The commission has four Kentucky appointees and four Virginia appointees.
Adventure Tourism
Bob Stewart, Secretary of the Tourism, Arts and Heritage Cabinet, discussed his role as the newly appointed secretary of the cabinet. He noted the success of the Governor’s School for the Arts, the Berea Kentucky Artisans Center, and the Kentucky crafts movement. The tourism industry in Kentucky is now a $12.2 billion industry. In 2003, when Secretary Stewart left the Tourism Cabinet, social marketing did not exist. Social marketing has revolutionized the world of marketing. Secretary Stewart noted the success of the bourbon industry and the Kentucky Bourbon Trail, which receives over 500,000 visitors per year. The “Bourbon Country” initiative, featuring destinations with bourbon connections, continues to expand. Traditionally, the demographics of people who visit Kentucky show that visitors are predominantly Midwestern families with children looking for wholesome outdoor activities, while bourbon destinations and adventure tourism attract young, upwardly mobile, professional visitors from all over the world.
Secretary Stewart said the cabinet is focusing more on the film office and its incentive program, and the Tourism Development Act (TDA), which has been very successful by attracting nearly $1 billion of new investment in Kentucky. While Kentucky was the first state to offer a program like the TDA, other states have now copied it. To bring Kentucky to the forefront, the cabinet intends to do a better job getting the message out to developers that Kentucky is the place to invest, especially now that the economy has improved.
To make maximum use of budgetary funds, Secretary Stewart said the cabinet will do more cross-promoting among agencies through advertising. For example, the Fair Board is working with the Frankfort Convention Center on problem solving and lead sharing. He said the arts and preservation communities should collaborate more with the tourism community to mix constituencies in creative and collaborative ways. Secretary Stewart said the exploration of public/private partnerships has much potential.
Responding to Representative McKee’s question regarding construction of a lodge at Kincaid State Park, Secretary Stewart said previous attempts at finding private sector investment in state parks have not been successful. He said the TDA has a provision allowing the recovery of up to 50 percent initial investment over 20 years through sale tax rebates with an investment on state-owned land versus 25 percent for private land development. The cabinet and the Kentucky Chamber of Commerce are still looking into park development and are open to ideas. He said the cabinet needs to get more aggressive in promoting the TDA.
Michael Mangeot, Commissioner of the Department of Travel and Tourism gave an overview of the department. He explained that the majority of marketing is out-of-state. Kentucky tourism results annually in $1.227 billion in tax revenue including $164 million in local taxes. The Department of Travel and Tourism is the only state agency that is a consumer marketing agency. The website is the single most important marketing vehicle in travel and tourism. Marketing and advertising includes television, radio, print, and digital advertising. The department also oversees the Tourism Marketing Incentive Program, which is funded by the 1 percent statewide lodging tax. $5.5 million is allocated to nine tourism regions for marketing purposes. Each region’s allocation is based on population, number of hotel rooms, and tourism activity money spent. Each region can chose to participate in the Cooperative Marketing Program that allows a region to participate in state-funded advertisement at a reduced cost while the department covers a majority of the advertising costs. He noted that other targeted tourism audiences include adults over 55, special interests, and group travel.
Commissioner Mangeot said that based on visitor profiles a majority of state advertising has shifted from the Midwest to the South and toward higher income families. Marketing has increased for adventure tourism and outdoor activities. There are 17 primary markets. Research suggests Kentucky is not viewed as a vacation destination but rather a getaway, which is defined as a trip of less than three days. The department also works with local convention and visitors bureaus and tourism commissions on in-state marketing. Commissioner Mangeot said the internet is the top resource for travel and tourism information. The tourism website is managed daily due to its importance. It averages approximately 2.5 million visits annually. The website also has an industry portal that provides research information, contact information and incentive information for the local CVB partners.
Referring to the film office, Commissioner Mangeot said Kentucky’s niche is independent film production.
Commissioner Mangeot noted that the department’s annual report has just been released.
Responding to Senator Parrett’s questions, Commissioner Mangeot said it is difficult to quantify the number of out-of-state visitors. He explained that the advertisement requirement for the marketing incentive program is visitors traveling over 50 miles to a destination. A majority of the co-op money goes toward out-of-state advertising.
Representative Clark said he would prefer another bond issue to upgrade all state park facilities. Responding to Representative Clark’s question, Secretary Stewart said any public/private partnership with the parks has to be done carefully and strategically to maintain the integrity of the state park system.
Responding to Co-Chair Kerr’s comments about the success of the bourbon trail, Secretary Stewart said a Moonshine Trail is being coordinated out of Prestonsburg.
Responding to Representative Stone’s question, Commissioner Mangeot said the cabinet has a good relationship with local economic development offices. There is a marketing advisory committee that consists of one representative from each of the nine regions.
Responding to Senator Higdon’s question about film incentives, Commissioner Mangeot said one of the biggest issues expressed by smaller film productions is the threshold for investment in Kentucky which is currently $500,000. A lot of filming in Kentucky does not meet the threshold. Lowering the threshold would have a positive effect. Senator Higdon suggested transferrable tax credits.
Senator Higdon also suggested the development of a state park trail similar to the bourbon trail to give visitors an incentive for visiting all of the parks.
Responding to Representative Mills’ question, Secretary Stewart said a previous report recommended charging admission fees to state parks. It was estimated to raise $1 to $3 million, but the cost of administering and implementing methods to collect fees was difficult to assess. He said other states such as Arkansas tried charging fees and it was a huge mistake that generated a great deal of negative publicity. Commissioner Stewart speculated that if there was a bond issue and the parks were at their top level, then perhaps an admission fee would be plausible. Currently, some parks are in need of repair and are losing business.
Representative Koenig said perhaps parks that are heavily subsidized be cut from the parks system in order to better use tax monies on more lucrative parks.
Responding to Senator Clark’s question about alcohol sales in parks, Secretary Stewart said three resort parks sell alcohol by the drink (Jenny Wiley, General Butler and Lake Barkley) and two golf courses sell beer. Other state resort parks are moving to either hold a local vote or through annexation to sell alcoholic beverages by the drink.
Senator Clark suggested taking a second look at the prohibition of alcohol on boats.
Elaine Wilson, Director of the Office of Adventure Tourism, provided an overview of adventure tourism in the state. All of the trails in Kentucky have been inventoried and are listed on the agency’s website. The office printed a guide featuring outfitter services, trail listings, zip lines, and other adventure tourism businesses. The website has been updated to include the guide, adventure events throughout the state, and a blog featuring articles on first hand experiences. The office also assists with new business development such as zip line companies. Other accomplishments include horse camps at some state parks, horse trail and rail trail development, and more multi-use trails at state parks. There are planned construction projects through an ARC grant to construct trails in Buckhorn Lake and Kingdom Come state parks to connect communities.
Ms. Wilson said the governor asked to see an impact through adventure tourism--increased physical health of Kentuckians and increased economic health of communities. Ms. Wilson reviewed the demographics of adventure tourism. Adventure tourism has an $8.4 billion impact in Kentucky. The office is putting together a master trail plan to connect communities across Kentucky. There is also trail town development along river ways for people traveling Kentucky’s rivers. The office is working with 34 communities statewide that are designated as trail towns. Trail towns are a portal into a trail system, a place to buy products and services, and a trail-friendly town that is willing to provide information and share its culture and history.
Responding to Representative Short’s question, Ms. Wilson said his agency is working with Royalton to develop a trail town upon approval of the county judge. This will encourage growth and development of some campsites and businesses in that area.
There being no further business the meeting adjourned at 1:30 PM.