Turnover at South Jersey Tourism Group Spurred by State Funding Shortfall

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Frustrated with unfulfilled commitments for tourism dollars, Visit South Jersey Director Jake Buganski is moving on. He says NJ must reinvest state hotel taxes locally.

By Matt Skoufalos

Buganski in his VSJ office. Credit: Matt Skoufalos.

Buganski in his VSJ office. Credit: Matt Skoufalos.

For the past 10 years, Jake Buganski’s job has been to drive business to South Jersey.

As the executive director of Visit South Jersey, Buganski has supported the regional attractions and local economies of Burlington, Camden, Gloucester, and Salem Counties, helping all four hit the top five of percentage growth in statewide tourism expenditures last year.

At the same time, he played a key role in building the inter-state Vintage Atlantic Wine Region, which draws millions of dollars to the state in travel and hospitality revenues.

But without the dollars necessary to help market it against other, better funded destinations throughout the country, the effort expended will fall short of its potential, he said. Until New Jersey can free itself from a complicated and self-defeating budgeting process that has failed to fully support tourism in the state, Buganski said the problem will persist.

And he isn’t waiting around to see how long it will take to fix it.

Buganski, who won a nationwide candidate search for the presidency of the Corning and the Southern Finger Lakes tourism marketing agency, left South Jersey to start his new position this week. A critical difference between the two regions—and the reason he was job-hunting at all—is the way in which each is funded.

Visit South Jersey logo. Credit: VSJ.

Visit South Jersey logo. Credit: VSJ.

DMOs and the Hotel/Motel Tax

Visit South Jersey is one of 15 nonprofit Destination Marketing Organizations (DMOs) that compete annually for a share of financial aid that is supposed to be guaranteed by a state hotel and motel tax.

Since 2003-04, the tax was designed to provide the New Jersey Division of Travel and Tourism with a minimum level of funding for the arts ($16 million), tourism ($9 million), and history ($4 million). Of any dollars collected beyond that, roughly 23 percent of the excess is supposed to be dedicated to arts funding, 13 percent to tourism, and 4 percent to history.

Although the tax has generated an average of $82 million in annual revenues in the past fiscal decade (and has trended at or around $100 million in the past three years), funding for arts, tourism, and history has remained at the minimum, $29-million level. The balance of those revenues has instead been returned to the state general fund and applied to other purposes—contrary to the intentions of the tax and to the detriment of the state economy on the whole, Buganski said.

“The thought is that if you’re taking money out of the hotel tax to fund tourism, you’re affecting the state’s bottom line,” he said. “The total economic impact would far outweigh the hit to the hotel tax if they would reinvest the money where it belongs.”

If reinvested into regional tourism marketing, those dollars would help contribute to the broader area tax base by supporting economic development, “allowing businesses to stay open and remain vibrant, and for the downtowns to stay relevant and thrive,” Buganski said.

Any tourism campaign anywhere generates a positive return on investment (ROI), no matter how well it’s done,” he said. “We do a good enough job with the little bit that we have that if we were funded properly, we would have a very significant ROI.”

Meanwhile, since the inception of the tax, the number of DMOs in the state has grown from four to 15, which means that more groups are vying for the same limited resources. That competition is undermining the local economic impact of groups like Visit South Jersey, Buganski said.

“We’re all fighting with each other to get a piece of what a lot of other destinations have to work with without having to go through that process,” he said. “In almost every other state, there’s some mechanism for reinvesting; a hotel tax that’s collected in the places it’s generated to promote the tourism industry.”

Vintage Atlantic Wine Region. Credit: Visit South Jersey.

Vintage Atlantic Wine Region. Credit: Visit South Jersey.

Looking past the beaches

In Steuben County, New York, where Buganski’s new position is located, a hotel tax generates about $750,000 to $1 million annually, much of which is reinvested locally; some neighboring counties have budgets three and four times greater, he said.

By comparison, DMOs in New Jersey are limited to applying for a maximum of $200,000 in state aid, and only then with $50,000 in matching funds available.

Without additional dollars to compete with other, better funded wine region destinations throughout the country, partnerships like the Vintage Atlantic Wine Region will fail to be self-sustaining, Buganski said.

“All the investments and legislation that we make to improve the wine industry here are going to be for naught if we’ve created the best wine region in the country and we don’t have any money to talk about it,” he said.

“In Loudoun County, Virginia and Texas Hill Country, a wine region pops up, and people know about it because they have money to shout it from the rooftops that it’s there,” Buganski said. “You have tens of millions of dollars promoting these products when they appear.

“We spent the last four years completely revamping the entire DMO as Visit South Jersey, refocusing on the outer coastal plain as the centerpiece for promoting tourism here,” he said. “Craft beverage and culinary destination messaging, our historic main streets; all the pieces are in place. It’s sitting there, and it’s ready to go. To have had such a well-developed, sophisticated destination there, on the cusp at this point, it doesn’t make any sense to do anything other than go after funding that can make us more competitive in other places.”

Instead, Buganski said, New Jersey has continued to rest on its historic reputation as a beach destination while other states like Maryland, Delaware, and Virginia have reinvested in theirs, cutting into its market share.

“That’s been the mentality: people are always going to show up because we’ve got the shore,” he said. “It’s less expensive to travel outside the area at this point. I think there’s going to be a tipping point where all of this leakage that we have in our tourism economy is definitely going to be felt. Our partners in the northern part of the state are promoting agritourism, ecotourism. We have an opportunity to tout our offerings here as New Jersey being more than a place with just beaches.”

Devon Perry. Credit: Matt Skoufalos.

Devon Perry. Credit: Matt Skoufalos.

Seeking new partnerships

In Buganski’s absence, Visit South Jersey has tapped Devon Perry to serve as its interim director.

Perry, who founded the Haddonfield coworking space, Kings Hall, brings a background in marketing from years spent working with the American Red Cross and The United Way.

She had been working with Visit South Jersey for the past year, generating the revenue to fund her position through a grant from the Pascale Sykes Foundation. Perry hopes to leverage partnerships like those to help address some of the financial shortfall in the operating budget of the DMO.

“I love a challenge and I’m up for it,” Perry said. “South Jersey is up for it. That’s the part that gets me up early and keeps me out late. The quality of our wine region, the breweries, the distilleries, the culinary community; our history, our music, our downtowns—how creatively do we continue to tell our story?

“We are ready to tell the world,” she said. “We just need the right partners.”

Because Visit South Jersey is a nonprofit organization, corporate sponsorships of its efforts are tax-deductible, a fact Perry hopes to leverage in sourcing private partners—like Buganski has in Corning—to help “be that marquee in our messaging.

“There are companies that can support the Vintage Atlantic Wine Region the way Corning supports the Finger Lakes, and I want to say to them, ‘Come get it,’” Perry said. “I will make sure that we provide corporate partners with substantial exposure because of the way that South Jersey invests in our downtowns.”

The connection between the wine and farm country of South Jersey and its historic, downtowns already exists, Perry said, whether in the form of a vibrant local farmers market scene, winery and restaurant partnerships, or tasting events like Haddonfield Uncorked or Sippin’ on Station in Haddon Heights.

Auburn Road Winery. Credit: Matt Skoufalos.

Auburn Road Winery. Credit: Matt Skoufalos.

In the past year, Visit South Jersey has enjoyed success with art exhibitions, farm-to-fork events, and craft wine and beer gardens at its location in the historic Hopkins House on the banks of the Cooper River. She anticipates more of the same will follow in 2016.

“I’m up for galvanizing Visit South Jersey with the foundation that Jake and our board has established,” Perry said.

In the meantime, Buganski said, New Jersey DMOs will continue to wait for some legislative relief that will “leverage a real, appropriate funding mechanism for tourism,” and allow them to compete on a national level.

“Fixing the hotel tax is a piece of that,” he said; “revisiting the statute, revising the language to give ourselves what every other state has.”

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