The Chamber looks to increase 'tourist tax' flow into Hailey

Hailey has enjoyed roughly $7 million in revenue from local-option taxes imposed on car rentals, lodging, alcoholic drinks and restaurant meals since 2006.

The Chamber of Hailey & the Wood River Valley could use more funding from the city of Hailey to generate more local-option tax revenue for the city, executive director Mike McKenna said during a year-in-review presentation on Monday.

The organization—a 501©(6)—receives annual funding from the city of Hailey based on available local-option tax funds, in addition to funding from the Idaho Travel Council, sponsorships, membership dues, registration fees, sales and fundraising events.

At the onset of COVID, its local-option tax allotment from Hailey was reduced to around $60,000. That was bumped up to $67,000 in fiscal 2021 and has since been raised to $70,000.

Hailey currently levies a 3% local-option tax—also known as a “tourist tax”—on car rentals, hotel rooms and short-term rentals, a 2% tax on alcohol by the drink and a 1% tax on restaurant food.

The main idea behind the tax, which is available to resort cities under state law, is to reimburse jurisdictions for the financial impact that nonresidents have on emergency services and road repairs, with a secondary goal of sustaining tourism. In addition to supporting Hailey’s police and fire departments, the tax helps fund Hailey Ice, The Senior Connection, Mountain Rides and the Fly Sun Valley Alliance.

“We feel like we’re the best investment the city has with what we do with these [local-option tax] funds. But I’m not here to ask for credit for the Chamber—I’m just here to ask for more support,” McKenna told the Hailey City Council. “We appreciate all the help we can get.”

He shared a few indicators of success this past year, including high turnout at the Fourth of July celebration and the Turkey Trot and over 2,000 visitors at the Hailey Welcome Center. The Chamber also sold $70,000 worth of “Valley Bucks”—a gift-card-type program designed to keep spending more local—and saw growth in its roster of businesses this year, he said.

“We’re stoked to say that we have over 400 members as of today which as far as we know is a record for us,” he said.

McKenna added that The Chamber was also able to bring back the “5 Alarm” chili cookoff in September to benefit volunteer firefighters and will be hosting the city’s second annual Ice Carving Contest at the new town square in February.

“We’re trying to incubate new things and bring back old events that might have died from one reason or another,” he said.

But LOT funding from Hailey isn’t quite proportional to the cost of putting on events, McKenna said.

“We love to do this stuff for you guys, but it is getting more and more challenging,” he said. “We work hard every day and if the LOT is coming up, we feel like we should have more money to do that.”

Last month, Hailey brought in about $24,000 in tax revenue from hotel room sales and rental car sales, up 22% from November 2020.

To build on that growth, McKenna said The Chamber is working with a third-party marketing agency under the tagline “Discover the Wood River Valley” to encourage overnight stays in Hailey, “whether in hotels, Airbnbs or camping.”

“We want to be more than a speed bump here,” he said.

He noted that Hailey’s main target market is visitors traveling by car from Boise, Idaho Falls and other cities from Pocatello to Salt Lake City. Promoting sports travel in the city could dramatically increase spending at shops and restaurants, he told the council, and Hailey is already set up for successful sports tourism with “good facilities, regularly scheduled tournaments” and a long list of entertainment options.

“People who travel for live sports spend more money than any other travelers, and it doesn’t necessarily have to be a pro hockey game—it can be a youth basketball game,” McKenna said. “Becoming a great sports town not only brings revenue in our community, it helps us create better amenities for locals.

“Hailey Ice is the perfect example, being the best ice rink right now in the state of Idaho and with hockey really taking off in the state. There’s no better place to play than here.”

McKenna said that a grant from the Idaho Travel Council—a committee within the state Department of Commerce—could help the city see more hotel and short-term rental bookings. In late July, the ITC increased its annual grant to The Chamber by 40%, from around $94,000 last year to $132,000 this year. That money has gone toward advertising Hailey at kiosks in the Boise Airport and in magazines “all over the northwest,” he said, and has also funded a recent redesign of the Discover the Wood River Valley website.

“A lot of what we’re trying to do here is create more [local-option taxes] so that leaders of our community can do all the things that they want to do,” he said.

McKenna said marketers from the company working with Discover the Wood River Valley to identify new visitor segments have had “very positive responses” when asked about their perceptions of Hailey.

“The interesting thing is that when we asked people about Sun Valley, they unfortunately thought it was expensive and it wasn’t friendly,” McKenna said. “But when we asked them what they thought of Hailey, they said said ‘That’s real Idaho, that’s a friendly place to be.’” 

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