Selling Charleston 

Driving tourism in the midst of a battle over marketing dollars

Skip Hoagland's golden years have been those of spit and vinegar. At an age where most of his peers spend their days working their way down a fairway, the 70-year-old instead dedicates his energy to throwing stones at a system he despises.

In recent years, Hoagland has found himself escorted from a Bluffton Town Council meeting by police. The retired businessman claimed a legal victory against the Hilton Head-Bluffton Chamber of Commerce in 2016 after a Beaufort County judge ruled that the chamber should publicly account for its spending of accommodations tax funds. That ruling was appealed and a final verdict is now pending in the state Supreme Court. Next, Hoagland says he's prepared to take legal action against the Charleston Area Convention and Visitors Bureau over another complaint related to financial records requests.

In the meantime, Hoagland continues to broadcast his distrust of the chamber and other destination marketing organizations (DMOs) across the state. His grievances usually take the form of lengthy emails that Hoagland composes on his iPhone. Often looping in dozens of city representatives, law enforcement officials, journalists, and anyone else in his address book who may take an interest, each message is punctuated with a request for recipients to "excuse all typos and misspellings." But what Hoagland will not excuse are his claims of fraud, mismanagement, and outright theft that he hurls at those tasked with promoting the tourism industry.

click to enlarge Hoagland - PROVIDED
  • Provided
  • Hoagland

Having amassed a fortune in the early days of the internet by snatching up such domain names such as Atlanta.com, Cuba.com, and, yes, Charleston.com, Hoagland came to see DMOs as direct competition. Regardless of what happens, Hoagland sees no reason to hold his tongue. At least not until every chamber of commerce and convention and visitors bureau in the state complies with his standard of full transparency.

"I'm like the scariest guy in South Carolina because nobody will talk like I talk," Hoagland claims. "Everybody thinks it, but nobody will say what they think. Only I'll do that because I'm kind of a bulletproof guy. I'm a guy who's 70 years old. I'm not looking for a job. I don't have kids in school. I'm one of these guys who's not scared of anything. I'm not even scared of being sued because I can afford to fight. I've got two slander lawsuits against me right now, one by a Town of Hilton Head councilperson and the mayor of Bluffton have both sued me. My insurance company is paying for the defense in both of those cases. And I fully expect more slander lawsuits to come."

So what drives a man like Hoagland to dedicate himself to waging war against these organizations tasked by towns and cities across the state to bring tourists to South Carolina? And what role do these groups play in driving the tourism economy that sustains the coast? As with any matter that mixes business, pleasure, and more than its fair share of vitriol, there is a lot to unpack. And it all starts when you check into your hotel.

The Path of a Dollar

click to enlarge SCOTT SUCHY PHOTOILLUSTRATION
  • Scott Suchy photoillustration

Anyone who's checked into a room in Charleston, cranked the A/C, and hung a "Do Not Disturb" sign on the door has paid their share in state accommodations tax. How this money is allocated is then decided by state law. After each municipality gets their cut — with some less popular tourist destinations receiving a few extra dollars from other cities — annual accommodations tax money is then carved up according to a clearly defined formula.

For instance, the City of Charleston received over $5.4 million in accommodations tax revenue in the 2015 fiscal year. The first $25,000 went to the city's general fund. From the remaining balance, 5 percent is also allocated to the general fund, while 30 percent must be used for the advertising and promotion of tourism in the city by a designated organization. For Charleston, this means that more than $1.62 million automatically went to the Charleston Area Convention and Visitors Bureau (CACVB), the city's DMO of choice. In addition to the City of Charleston, the CACVB also receives contributions from Charleston County, Isle of Palms, Kiawah Island, Mt. Pleasant, North Charleston, Seabrook Island, Folly Beach, and Sullivan's Island.

With the CACVB receiving its cut, that leaves 65 percent of accommodations tax revenue that's up for grabs for any local nonprofit that can claim to play a role in bringing more tourists to the area. But who ultimately receives these funds is largely up to the city's Accommodations Tax Advisory Committee, a seven-member group that meets once a year to review funding applications and offers their recommendations to the city's Ways and Means Committee and then City Council.

For the 2015 fiscal year mentioned previously, applicants included the Charleston Wine + Food Festival, who received $150,000 for out-of-state marketing, The Southeastern Wildlife Exposition who received $160,000, the Spoleto Festival USA ($280,000), and the Cooper River Bridge Run, who requested $80,000 but had to settle for $20,000. During that same round of funding, the CACVB was able to successfully apply for an additional $60,000 on top of the default $1,625,225 the organization had already received. CACVB affiliate organizations — the Charleston Area Sports Commission, Charleston Golf Inc. — would go on to receive another $40,000 in total.

click to enlarge CVB Chief Executive Officer Helen Hill - PROVIDED
  • Provided
  • CVB Chief Executive Officer Helen Hill

Regarding these CACVB affiliates, which also include the Charleston Area Hospitality Organization, Coastal Tourism Inc., the Charleston Heritage Foundation, and the Greater Charleston Restaurant Association, CVB Chief Executive Officer Helen Hill explains that "The CACVB has several affiliate organizations that help support the mission of marketing the destination. There is some sharing of employees and space because it is more cost effective. Each organization files its own tax return and has its own board of directors, bylaws, tax ID, and financial accounts."

According to tax filings for the fiscal year ending June 2016, the CACVB claimed more than $400,000 in shared paid employees, reimbursements, and gifts, grants, and contributions with Coastal Tourism Inc. and a total of $308,624 with Charleston Golf Inc.

Of course, not every nonprofit applying for accommodations tax funding makes the cut. Groups who were ultimately turned down for funding that year include the Actor's Theatre of S.C., the American College of Building Arts, the American Red Cross, the Charleston Artist Guild, Midtown Productions, and Threshold Repertory Theatre.

Serving on the most recent iteration of the Accommodations Tax Advisory Committee in 2017, local pizza restaurateur Ben D'Allesandro was able to elaborate more on his experience on the committee.

"We as a committee, we're just making recommendations. The end call is done by City Council, so they can override anything we suggest," he says. "The city staff, they do an amazing job suggesting how the money is allocated to the different nonprofits. They do a lot of the nitty gritty. I guess the term they are always throwing around is 'heads in beds,' and they try to associate the money with who's bringing in the most hotel guests."

D'Allesandro recalls meeting twice during his tenure on the committee in 2017. This included a lengthy orientation meeting for the newer members and a final three-hour meeting in November to cast their votes on which funding applications will be recommended to City Council.

"They called the meeting. There were about 50 grants, and we just went through each one, one by one. The city had their recommendation, and us as a committee discussed each one. If we felt like one should get more money or less money than was recommended, then we discussed it, put it down, and at the end we all motioned on it and voted on it," he explains.

D'Allesandro says he signed up to join the committee because he wanted to do his part as a member of the community to make sure the funding process was being carried out appropriately. Looking back, he wouldn't mind being called back for another round on the committee.

"I thought it was a very fair process. You have to be a nonprofit. You have to apply for the grant money, and you have to have your application in by a certain date," he says. "I think almost everybody got some sort of money. I think it's a very fair process."

Heads in Beds

click to enlarge SCOTT SUCHY PHOTOILLUSTRATION
  • Scott Suchy photoillustration

Spend even the briefest amount of time tracking how Charleston allocates accommodations taxes and you're bound to come across the name Mike Seekings. As a member of the CACVB Board of Governors, former chair of the Accommodations Tax Advisory Committee, and member of City Council, Seekings has maintained a watch on tourism spending that few others can claim. As a representative of one of the local municipalities that help fund the CACVB, Seekings has served on the nonprofit's board for the past nine years. Other current members consist of a who's who of the local hospitality industry, including Bill Hall of Halls Chophouse, Frank Fredericks of Wild Dunes Resort, Jimmy Hagood of Food for the Southern Soul, Michael Tall of Charleston Hotels Inc., Steve Palmer of Indigo Road, and Jonathan Weitz of the Avocet Hospitality Group.

According to Seekings, the board's main objective is to serve as the managing group for the CACVB's chief executive officer Helen Hill and ensure that the organization runs in a manner that is consistent with state statute and accepted business practices. Chief among this responsibility is reviewing and approving the CACVB's annual budget.

"It's kind of crazy because the [Accommodations Tax Advisory] Committee that goes to Ways and Means, that's approving the expenditures of the state accommodations tax. The state accommodations tax by the time it gets to the A-Tax Committee has already been carved up," says Seekings, alluding to the overlap between the various boards and government committees on which he serves and oversees the direction of accommodations tax money. "Part has gone to the city. Part has gone to the CVB. Then you've got the CVB doing its job, which I sit on that board. That money goes by formula. Some people might say there's a conflict there. There's no conflict at all because it's all carved up by the time it gets there."

According to Charleston Chief Financial Officer Amy Wharton, the city allocated more than $2.1 million to the CACVB in 2017, in addition to $36,307 in hospitality funds for security during Second Sunday events. Wharton states that the CACVB does not provide the city with an annual budget or quarterly spending reports, but does submit an annual audit.

At just over a dozen pages, a copy of said audit provided by the city gives a brief glimpse at the CACVB's financial standing as of June 2017. As of that date, the CACVB claimed over $5.6 million in total assets and more than $13.3 million in total revenue.

Among the CACVB's primary revenue sources are public funds such as $6.95 million in accommodations tax funding and $346,833 in regional funding from the South Carolina Department of Parks, Recreation, and Tourism. Private funds also account for a sizable chunk of the CACVB's annual revenue. Publication, advertising, and program earnings brought in an additional $3.26 million, while the CACVB's membership base contributed $451,231.

According to Hill, the CACVB generates revenue from numerous sources including ad sales in multiple publications and trade show co-ops attended throughout the year. Publications include the Visitor's Guide, Wedding Guide, Destination Planning Guide, and each publication has a companion website. Revenues associated with services through four area visitor centers are also included.

Currently the CACVB's membership base includes more than 600 tourism-related businesses, Hill says. Membership dues are collected annually and are tiered, with differing benefits at different levels. Examples of member benefits include: listings on ExploreCharleston.com, sales and media leads/referrals, the opportunity to participate in various co-op opportunities, a bi-monthly membership meeting, and numerous educational seminars.

Of particular interest for anyone who's noticed an additional $2 charge on their hotel bill is the CACVB's lodging cooperative, which earned the nonprofit more than $2.2 million last year, according to the 2017 audit. According to Hill, the program currently consists of 85 hotels which contribute either $1 or $2 per room per night from guests.

Asked if private revenue (membership dues, ad sales, etc.) and public funds such as accommodations taxes are placed into the same spending pool and co-mingled, Hill replied that private and public funding is kept separate in the CACVB's annual budgeting process, which is used to guide spending across the upcoming year. In the annual audit, revenue sources are broken down into accommodations tax support, government grants, membership fees, ad sales — each with a specific figure counted to the last dollar.

But in the 2017 audit provided to the city of Charleston, there are no specifics given of exactly how the $13.3 million in total revenue and financial support — or the $11.8 million received the year before — was used. Total expenses in the 2017 audit simply stand as one towering number: $16.6 million.

In terms of staffing costs, Hill says that the CACVB uses information compiled by Destinations International for comparably sized CVBs. According to tax filings for the fiscal year ending June 2017, Hill is the second-highest paid employee at the CACVB, earning $231,098 in salary and benefits. Taking the No. 1 spot as top-earner is director of investor relations Andy Rankin, who earned $329,768 in salary and benefits that same year.

Those same annual tax filings also offer a glimpse at the CACVB's highest paid independent contractors. Between the 2012 and 2016 fiscal years, the CACVB has gone from just five contractors each receiving more than $100,000 to 35 contractors. The highest paid groups for the past three years were Time Inc., receiving a total of $3.59 million for advertisement, and Conde Nast, which was paid a total of just over $3.1 million total.

According to Hill, CACVB has an in-house marketing department, which eliminates the use of external ad agencies. The CACVB Board approves expenditures through the nonprofit's annual budget. For the 2016-2017 fiscal year, the CACVB reported expenses included $9.5 million for advertising and promotion, $28,504 for travel expenses, and $156,996 for conferences, conventions, and meetings.

Striking a Balance

The CACVB ran a two-page spread in the May issue of Condé Nast's 'Bon Appétit' magazine - FILE
  • File
  • The CACVB ran a two-page spread in the May issue of Condé Nast's 'Bon Appétit' magazine

Councilman Seekings is quick to applaud Hill and the work done by the CACVB to promote tourism in the area. An easily overlooked obstacle faced by the CACVB is how to maintain a healthy flow of visitors following an unexpected tragedy or natural disaster. This is best explained in a 2003 article from the Journal of Vacation Marketing titled "How Charleston Got Her Groove Back: A Convention and Visitors Bureau's Response to 9/11." Co-authored by College of Charleston hospitality and tourism professor Stephen Litvin and Laurie Alderson of the CACVB, the report details the strategies put in place to revive tourism in Charleston following the 2001 terrorist attacks on the World Trade Center.

click to enlarge Seekings - FILE
  • File
  • Seekings

The drop in visitor arrivals in Charleston was slightly worse than the national average of 14.8 percent after 9/11. With many would-be travelers unwilling to set foot in an airport in the weeks following the attack, the CACVB reallocated funds from international marketing and placed a greater focus on advertisements aimed to attract those within Charleston's "drive market." Two weeks following the 9/11 attacks, a new ad campaign was launched with the tagline "A short drive down the road. A million miles away." The goal was to convince wary travelers that a road trip to Charleston was an attractive option. According to the report, this rapid response was able to help pull the city's tourism industry out of what looked to be a years-long slump.

"The CACVB has a crisis communications plan that provides a framework for tourism officials in the event of an incident that could adversely impact the industry," says Hill, who cites the snowstorms that struck the East Coast earlier this year as a situation that can dramatically affect tourism. "The plan covers events such as fire, flood, tornado, hurricane, civil unrest, acts of terrorism, and public health issues. Every situation is unique, but we have procedures to assess each type of incident and to guide development of more comprehensive situation-specific plans, as necessary."

But from his front-row seat on City Council and the CACVB board, Seekings has noticed a shift in the responsibilities of selling Charleston to tourists. As the city continues to grow rapidly, and its tourism industry along with it, the question of balance has come front and center.

"We're a tourist-based economy, so unless someone's got a better idea we're going to remain so for a long time. That being said, it is incumbent on all of us who are leaders in this community to keep a balance. I call it the 72-72 balance," says Seekings. "The average tourist is here for 72 hours, one of the best places in the universe to come. What about people here for 72 years and beyond? People who live here and invest their lives here, we have to make sure we're just as good of a place for them."

Destination Marketing Blues

click to enlarge SCOTT SUCHY PHOTOILLUSTRATION
  • Scott Suchy photoillustration

In recent years, destination marketing organizations in South Carolina have fallen under increased scrutiny. This is in large part due to Skip Hoagland's crusade to push complete transparency on every chamber of commerce and visitors bureau in the state. Currently up for appeal in the South Carolina Supreme Court, Hoagland's case against the Hilton Head-Bluffton Chamber of Commerce offers the possibility of doing just that.

Hoagland initially claimed victory in a lower court when a judge ruled that as a private nonprofit that receives accommodations tax revenue, the chamber would have to fork over any documents subject to request under the Freedom of Information Act (FOIA). The chamber appealed, drawing advocates on both sides of the issue.

Siding with Hoagland and the initial ruling was Jay Bender, longtime First Amendment attorney arguing on behalf of the South Carolina Press Association, of which the City Paper is a member. In a legal brief filed in October 2017, Bender argued that the tax funds and grants from the South Carolina Department of Parks, Recreation, and Tourism received by the chamber qualify as public funds, and the expenditure of these funds cause the chamber to "fit squarely within the definition of 'public body.'"

Bender concludes, "As a 'public body,' the appellant is subject to access requirements of the FOIA, whether it likes the person making the request for access or not."

On the other side of the aisle, attorneys for the Myrtle Beach Area Chamber of Commerce decided to file their own brief in support of their fellow chamber of commerce's right to keep a lid on their specific spending habits. While the Myrtle Beach chamber was quick to point out that they voluntarily provide free online access to all aspects of their work as a DMO, including quarterly lists of expenditures, the organization's attorneys argued that the circuit court had ruled incorrectly in Hoagland's case. Ironically, the Myrtle Beach Chamber now finds itself facing a lawsuit from a former motel owner alleging money laundering and crooked spending. Of course, this newest lawsuit was music to Hoagland's ears, the latest chapter in what he sees as the comeuppance for the DMOs he's long warred with.

"The internet struck in 1994, '95, and I bought up a bunch of websites. In fact, I founded one of the largest destination marketing city dot com brand media companies in the world. I went on to amass a multi-multi-million dollar portfolio of names like MyrtleBeach.com, Atlanta.com, Cuba.com, cities all over the world," says Hoagland. "What got me mad was these CVBs at every city in the country who started their website ... they all started getting in the business and all found a way to increase their advertising revenues from their magazines and their membership guides that we all just kind of ignored. They all figured out a way to go ahead and get into this DMO and start selling and up-selling advertising. Before I knew it, these people, these nonprofits had become multi-million dollar media empires."

Hoagland's end goal is mandatory forensic audits for every organization in South Carolina that spends public tax funds. For now, he has to settle with trying to ferret out any potential fiscal malfeasance through open records requests to every chamber of commerce and visitors bureau that catches his attention. And it's through these efforts that Hoagland finds himself contemplating legal action against the Charleston Area Convention and Visitors Bureau, saying that if his FOIA request for financial records isn't met, "We're going to sue them. We're going to definitely sue them."

Hoagland v. CACVB

Last October, Hoagland stood before Charleston City Council to raise his grievances with the CACVB. As was the case with the Hilton Head-Bluffton Chamber of Commerce, Hoagland's complaint stems from a FOIA request for the CACVB's financial records.

In a July 2016 letter responding to a FOIA request from Hoagland and his associates, CACVB attorney and board member David Jennings wrote "As I have noted before, the CACVB does not believe that it is subject to the South Carolina Freedom of Information Act but is willing to respond to you in the interest of transparency." The letter goes on to define the specifics of the deal, with Hoagland receiving two binders containing the requested financial documents in exchange for a payment in the amount of $2,581.

"I sent [Jennings] $2,500. He sent me back a stack of stuff about four inches thick or six inches thick. We went through it with my accountants and forensic auditors. They said, 'Skip, all the ledgers, there's a lot of things missing,'" Hoagland claims. "I call [Jennings] back and say, 'We want more than this. You're missing some of the information you agreed to send me' ... Basically, to make a long story short, he said, 'No, we're not going to comply. We don't feel like we have to comply.'"

As specifically mentioned in a rather lengthy string of emails and replies between Hoagland and Jennings that stretches back to 2014, the documents that Hoagland claims to be missing include the CACVB's general ledgers and documents detailing the organization's travel-and-entertainment expenses. Jennings maintains that the CACVB is not necessarily certain whether or not the nonprofit is subject to the Freedom of Information Act, but cooperates with records requests to the extent that the law requires. It is by this reasoning that Jennings said the CACVB was willing to supply Hoagland with 700 pages of financial records. But the sticking point remains not what Hoagland was provided, but the documents he never received. Jennings argues that the spending details in question would not be subject to FOIA requests under what he refers to as the "economic development" exception, as the release of such information would provide an unfair advantage to the CACVB's competitors in other cities.

"We would love to know where Savannah, New Orleans, Nashville, places like that, specifically spend their money. I assume this is what our competitors would do — they would go to the same periodicals and say, 'Why are you giving Charleston this rate? You oughta give us this rate. Why are you giving them inside-back cover or whatever?'" says Jennings, who ultimately returned the $2,500 that Hoagland paid to fulfill the FOIA request. "That's why our thought is that those things fit into economic development. We're not withholding pertinent information that the public needs, but it's information that our competitors sure would love to have."

As for Hoagland, he's prepared to stay in this fight for the long haul. He continues to dig through whatever records he can find from DMOs across the state. He has no shortage of suspicions regarding abuses of power and alleged fraud among these groups which he believes offer unfair competition to local media outlets looking for their own ad money for promoting local tourism businesses. In the meantime, he'll continue to be not such a nice guy.

"I am a very vocal critic. I'm not nice anymore. I used to be nice. Now I'm harshly criticizing, and that's what's gotten me where I am today because people are starting to listen now," says Hoagland. "I am challenging all of these people, if you've got nothing to hide, volunteer to a forensic audit. There is only one reason why you wouldn't agree to a forensic audit, and that's because you've got something to hide and you're in fear."


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