191559

The City of Portland ordains:

Section 1. The Council finds:

1. On June 20, 2012, City Council passed Ordinance 185443 which established a Portland Tourism Improvement District (TID) to increase the investment in marketing and promotion of Portland as a premiere travel destination and to remain competitive and not lose market share with other US cities.

2. The Tourism Improvement District provides that any person engaged in hotel management activities is assessed a two percent (2%) license fee base rate. In 2021, through Ordinance 190318, City Council added a one percent (1%) Tourism and Hospitality Recovery Surcharge subject to a sunset review in 2026. Both rates are based on the taxable room rents reported to the Revenue Division.

3. Travel Portland, an Oregon non-profit corporation, is the comprehensive destination marketing organization operating in Portland selected as the TID Management Corporation. Travel Portland’s TID Board includes representatives of the tourism and hospitality industry and provides strategic direction and oversight of the use of TID funds.

4. In the years between the TID inception and the onset of the global pandemic caused by COVID-19, through strategic investment of TID funds Travel Portland implemented many successful programs to grow the travel and tourism industry in the region, including a convention sales program for the Oregon Convention Center that generated 108 citywide conventions with an estimated economic impact to the City of $298 million. Overall, between 2012 and 2019, the total number of room nights per year increased 19.7%, visitor spending in the region grew by 38.2%, jobs in the tourism and hospitality industries increased by 25.6%, and Transient Lodging Tax collections going into the City’s General Fund increased by 73%.

5. The immediate impacts of the COVID-19 pandemic to the tourism and hospitality industry were catastrophic; thousands of jobs in the sector were temporarily or permanently lost, hotel demand, as measured by rooms sold, decreased by 59.4% in 2020 compared to 2019, and hotel occupancy dropped from 74.8% in 2019 to 34.2% in 2020. In addition, more than thirty conventions cancelled or postponed.

6. The legislation establishing the TID in City Code Chapter 6.05 required the TID be subject to sunset review beginning in 2021 and every 10 years thereafter to determine if the 2% license assessment should be terminated. In early 2021, Travel Portland, through its Board, and the tourism industry, through Travel Portland’s TID Board, concluded 1) the TID, prior to the impacts of the pandemic had clearly and successfully met its intended goals, 2) the two percent (2%) license fee should be continued, and 3) the ongoing sunset review of the two percent (2%) license fee should be terminated.

7. At the same time, Travel Portland and its industry partners, proposed that the many challenges to recovery from the historic pandemic and protest events that occurred in Portland would require that the tourism and hospitality industry in Portland be nimble and proactive in promoting the destination to leisure travelers, business travelers and convention planners and that the success of these efforts would rely largely on adequate funding. At the time, the return to pre-pandemic levels of overnight stays was predicted to take several years which meant the funding sources for tourism and hospitality promotion would remain lower as well.

8. In early 2021, TID revenues were estimated to remain significantly below pre-pandemic levels but there was reason to be hopeful that travel activities would begin to resume.  To support the expected recovery, Travel Portland proposed, and City Council approved, a new one percent (1%) Tourism and Hospitality Recovery Surcharge, funding that would support promotional programs and efforts critically important to the recovery of jobs, business activity, and transient lodging tax revenues.

9. Because the intent in adding a Tourism and Hospitality Recovery Surcharge was to aid in post-pandemic recovery and that recovery was expected to take several years, a requirement to undertake sunset review of this surcharge during calendar year 2026 and every five (5) years thereafter was included in the legislation.

10. Recent data on the recovery of the travel and tourism industry shows Portland is lagging well behind initial recovery rate forecasts and is also well behind the recovery occurring in many comparable cities.  Data on hotels stays during August 2023, particularly in the downtown area, show a year over year reduction on all metrics and committed bookings for conventions in the coming years are also well below levels needed to reverse this trend. 

11. Travel Portland’s data from convention planners indicates the principal reasons meeting attendees as unwilling to come to Portland are related to personal safety concerns stemming from problems of visible street camping, drug use and reports of gun violence.  These long-term challenges are being addressed by the City of Portland, Multnomah County, and Metro but are expected to take many years to resolve and Portland’s reputation as a safe place to visit will take even longer to return.

12. Travel Portland, through its Board, and the tourism industry, through Travel Portland’s TID Board, have concluded that current funding levels are vital to the recovery of travel and tourism in Portland and the Tourism and Hospitality Recovery Surcharge should be permanently added to the two percent (2%) base rate for a total three percent (3%) rate and the sunset review requirement should be removed.

13. Eliminating the requirement for future sunset review and establishing the TID fee rate at 3% will provide crucial stability to the funding needed for recovery of the travel, tourism, and lodging industry in Portland by supporting Travel Portland’s longer term strategic investments in various initiatives such as sales promotions and marketing programs that position Portland as a safe, attractive destination for meetings, conventions, and leisure travel.  These funds will also support continuation of Travel Portland’s successful partnership with Sport Oregon, which attracts major sporting events that drive out-of-town visitation as well as providing stable, long-term funding for the Portland Film and Events Office, which supports events and film productions that yield room nights.

NOW, THEREFORE, the Council directs:

1. City Code Chapter 6.05 Tourism Improvement District is amended as shown in Exhibit A effective July 1, 2024.