Despite bump in tourism dollars, Duluth sees room for growth

Duluth thanks everyone for the love last year.

The city collected more in tourism-related taxes than leaders had conservatively projected — 7.2 percent more in hotel/motel tax revenue and 4 percent more in food and beverage tax. Overall, tourism tax revenue was up 4.7 percent from the year before.

"What's incredible is we continue to broaden our reach," said Mayor Emily Larson, who noted that while Duluth has long been a favorite destination for people in the region, it is now drawing outdoor adventurers from farther away. "I think we're actually becoming more of a desired destination for people."

Tourism leaders have been showcasing the city's natural amenities — Lake Superior, the St. Louis River corridor, a steep rock bed that hosts climbing and mountain biking and hiking trails.

The total tourism taxes collected — $12.1 million last year — all go back into the tourism industry, though not just for marketing. Part of it can go toward events and amenities such as the Duluth Entertainment Convention Center and Spirit Mountain ski hill. Larson implemented a new system in which most organizations have to apply for a portion of the tax money, then show results. The organizations are required to have a "community day" where city residents get free or reduced-price access.

Larson said the money collected above projections last year — about $650,000 — will sit in a fund that can be tapped with City Council approval.

"We generally have a few organizations for which something unexpected happens," she said. That might include everything from special festivals to emergency upgrades, she said. "It leaves us the opportunity to make those investments."

Anna Tanski, president of Visit Duluth, the nonprofit that contracts with the city to market tourism, said leaders in her office are pleased about the growth, but said there is room for more.

The city saw about a 10 percent increase in hotel rooms over the past 18 to 24 months, Tanski said, and more will be opening. Meanwhile, occupancy has been flat, she said.

"We're certainly celebrating the fact that the collections were healthy, but it doesn't paint a complete picture," she said. Her organization would like an increase in marketing funding to help fuel that growth, she said.

"We're optimistic that we will be able to grow this industry well into the future."

Pam Louwagie • 612-673-7102 Twitter: @pamlouwagie