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Oct 22 2012


Dear Mayor Drew Laughlin and Hilton Head Town Council Members,

Let me begin my letter on a point on which we have agreement, specifically the need for Hilton Head Island to have more funds for marketing our beautiful home to potential tourists. Mr. Mayor, you recently stated that Myrtle Beach outspends Hilton Head twelve to one. I find this fact very troubling and I totally agree that we need to spend more dollars marketing Hilton Head Island as a destination.

There are at least two solutions to this problem. First, we could better utilize the funds we currently receive and ensure that those to which we entrust these funds are not misusing them. Second, we could as you recommend, attempt to increase the tax on lodging above the current rate of three percent (3%), which also happens to be the maximum rate presently allowed by the State of South Carolina.

While there are a couple of other incidental beneficiaries of Hilton Head Island lodging tax dollars, in reality virtually all of the collected lodging tax dollars are given to the Hilton Head Island and Bluffton Chamber of Commerce (the “Chamber”). Additionally the Chamber receives various other grants from nearby towns, counties, and the State of South Carolina. From financial reports I have reviewed, the Chamber has received the following grants and subsidies from the towns of Hilton Head, Bluffton and Hardeeville, Beaufort County and the State of South Carolina and other sources from 2007 – 2011.

2007 - $3.0 million

2008 - $4.9 million

2009 - $4.3 million

2010 - $3.7 million

2011 - $2.7 million

It appears as though these amounts of funding from grants and lodging taxes should yield a marketing budget of much greater than $1.5 million per year. The question that begs to be asked is what overhead expenses are associated with these funds? It would be common for a non-profit organization to have operating expenses of up to 15% of its receipts. If in 2011, the budget for marketing Hilton Head Island was only $1.5 million, then one would deduce that operating costs are forty-four percent (44%) of the grants and lodging tax dollars. That seems quite excessive.

As one peels back more layers of the onion one would discover the following about the Chamber:

  • It has over 25 employees (not including the CEO) at an average annual compensation of $71,110
  • Annual compensation per employee (not including CEO) has increased 38% from 2007
  • Total annual compensation for Bill Miles (CEO) is approximately $400 thousand. We will only know exactly with full transparency which, to date, I as a member have been refused by two lawyers in Charleston hired by our Chamber. One has to ask WHY?
  • Bill Miles’ compensation equates to 27% of what is spent on marketing Hilton Head Island
  • Total administrative expenses of the Chamber are running at about $2.5 million per year

Since you are using Myrtle Beach as a comparable for Hilton Head Island, how do the above metrics compare to those of the Myrtle Beach Area Convention and Visitors Bureau (adjusted of course for relative size variances of total rooms/room nights or other normalizing factors). How many employees? Average annual compensation per employee? Level of pay to executive officer? Annual increases in compensation to employees? Total annual administrative expenses?

It appears as though Myrtle Beach operates singularly as a convention and visitors bureau rather than both a chamber of commerce and a convention and visitors bureau, as our Chamber operates. It would provide much greater transparency if our Chamber were to separate its convention and visitor bureau functions from its chamber of commerce functions. In this way, you and the public at large could more clearly see the costs directly associated with marketing Hilton Head Island for tourism rather than having this obfuscated through the various operations of the Chamber and the commingling of revenues and expenses thereof. strongly opposes any future lodging tax funds being provided to the Chamber until it separates its functions and creates a stand-alone single purpose convention and visitors bureau and presents a responsible operating plan that is scrutinized and approved by you. Such approval should also be dependent upon evidence that the Chamber has consistently abided by its own by-laws and especially that by-laws currently in effect for the Chamber must require regular elections of Chamber members to elect its board members (not appointments by the board) and such board positions must carry reasonable term limits. It appears as though board positions are currently appointed positions, thus usurping power from its many members and vesting too much power in the board.

The Chamber’s Designated Marketing Organization (DMO) status should be eliminated until such time as the aforementioned requirements have been completed. In my opinion, it would be inappropriate for the Town of Hilton Head to request state lawmaker’s to increase the rate of the lodging tax until the town has thoroughly reviewed the efficiency of use of current lodging taxes and then only after the Chamber completes its separation of convention and visitors bureau functions in a manner acceptable to the town. Furthermore, even once these changes are made, there should be no long-term commitment made by the Town of Hilton Head to any DMO. Instead, other entities should be permitted to compete for the DMO role and the town should actively pursue and interview competing DMO candidates.

Ladies and gentlemen, thank you for your continued efforts to ensure a bright future for residents, visitors and businesses of Hilton Head Island. Please let me know if there is anything I can do to assist in this objective. I believe it would serve the community best for you to respond to this letter in a similar open letter format in order that community stakeholders could have the opportunity to see your response and further understand your position on this matter.

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You've Raised Very Serious Questions

I feel that you have raised some very serious questions about how our Chamber is being run and where the money is being spent to market our island and the businesses that support our Chamber.

Additionally, your questions raise the possibility that the Chamber board is a "hand-picked" board that continues to perpetuate the abuses alleged in your complaints. As such, an independent committee, made up of chamber members, needs to be chosen and convened to address your concerns immediately.

Those are my thoughts and you may advertise them as such.....

Kim D.