REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Travis Hopkins, City Manager
VIA: Jennifer Villasenor, Director of Community Development
PREPARED BY: Kriss Casanova, Economic Development Manager
Subject:
title
Approval of Huntington Beach Tourism Business Improvement District (HBTBID) Annual Report for Fiscal Year (FY) 2026-27
body
Statement of Issue:
The Huntington Beach Tourism Business Improvement District (HBTBID) was created by the City Council in 2014 under the California Property and Business Improvement District Law of 1994, building on the City’s previous Hotel/Motel Business Improvement District established in 2002. The HBTBID is managed by Visit Huntington Beach (VHB), the City's official destination marketing organization and a nonprofit 501(c)(6). State law requires VHB to prepare and submit an Annual Report to the City Council for approval every year. This report describes the programs, improvements, and budget for the upcoming year. Approval of the annual report is requested by the City Council to ensure compliance with State law.
Financial Impact:
There is no direct financial impact to the City associated with the recommended action.
Recommended Action:
recommendation
Approve the HBTBID Annual Report for Fiscal Year 2026-27.
end
Alternative Action(s):
Do not approve recommended action and direct staff accordingly.
Analysis:
Huntington Beach TBID Overview
The HBTBID is a special business district that funds improvements and services to strengthen Huntington Beach's visitor economy. It is funded by a special assessment paid by hotels and short-term rentals on overnight stays of less than 30 days. The purpose of the HBTBID is to attract more overnight visitors, which:
• Increases spending at local restaurants, shops, and attractions.
• Grows the City's tax revenues, including the Transient Occupancy Tax (TOT).
• Supports local businesses and jobs.
Funds are used exclusively to promote overnight stays through destination marketing, public relations, group sales, and investments that enhance the visitor experience. The district currently includes:
• 21 hotels and motels; and
• Approximately 200 short-term rentals (STRs) throughout the City, including Sunset Beach.
Guests staying fewer than 30 days pay a 6% assessment on gross room revenue, in addition to the City's 10% Transient Occupancy Tax (TOT). The assessment rate and methodology are set forth in the HBTBID Management District Plan (MDP), which was last updated and approved by the City Council in June 2024. The 2024 MDP increased the assessment rate from 4% to 6% and dedicated 10% of assessment revenues to the Tourism Enhancement Program (TEP) for visitor-serving projects. The current HBTBID authorization runs through June 30, 2028.
FY 2025-26 Highlights
VHB continued to strengthen Huntington Beach’s position as a leading visitor destination through destination marketing, group sales, public relations, and visitor-serving investments. In FY 2025-26, VHB achieved the following results in these areas, including:
• Public Relations: Generated 218 destination stories and approximately 2.5 billion media impressions, with an estimated $20 million in advertising value. Huntington Beach was also named a Best Beach Town in Good Housekeeping’s 2026 Travel Awards.
• Marketing: The Expedia partnership supported increased visitation and room-night generation during the soft season. SurfCityUSA.com continued to grow, with expanded website traffic, social media reach, and engagement.
• Group Sales: Exceeded the annual group room-night goal and achieved record group bookings, while expanding sales efforts in key domestic markets and increasing exposure among meeting planners.
• Tourism Enhancement Program: Advanced visitor-serving improvements, including gateway signage, Pier and PCH lighting, beach restroom services, Downtown Ambassador support, Main Street seat wall improvements, Bike Valet, and support for the Huntington Beach International Surfing Museum. Spearheaded KultureCity’s Sensory Inclusive® Certification, with more than 1,500 City and visitor-facing employees certified.
FY 2026-27 Work Plan
In FY 2026-27, VHB will focus on strengthening destination marketing, increasing visitor demand, expanding industry partnerships, and improving organizational effectiveness. Key initiatives include:
• Brand & Marketing: Conduct a Surf City USA® and Huntington Beach brand study and expand domestic and international marketing efforts.
• International & Public Relations: Expand global reach through Brand USA, reengage the Australian market, increase Canadian PR efforts, and expand media and content partnerships.
• Visitor Experience & Accessibility: Explore a California Welcome Center and expand accessible travel programs and resources.
• Group Sales & Demand Generation: Expand incentives and familiarization tours for meeting planners to increase group bookings and room nights during need periods.
• Events & Programming: Develop multi-day events and programming to increase visitation during need periods and capitalize on major regional events.
• Industry Partnerships: Expand cooperative marketing, trade representation, business referrals, and exposure for local tourism partners.
• Tourism Enhancement Program: Expand upon existing visitor-serving projects, including wayfinding, Pier signage, beach and accessibility improvements, Downtown initiatives, Bike Valet, and Surfing Museum support.
Budget Summary
VHB bases its revenue projections for FY 2026-27 on factors such as prior-year revenues, group meeting bookings, weather conditions, hotel partner forecasts, and increased demand for short-term rentals.
Assessment revenue is projected at $10,321,773, which is $33,100 lower than the prior year’s
estimate. This reflects a more conservative approach based on recent performance and broader
industry trends.
VHB also projects $127,600 in other revenues, including retail, ticket sales, digital advertising,
and investment income, along with $1,452,675 in carryover funds from the prior fiscal year. Total projected income is $11,902,048.
Planned expenses total $10,355,094 and are allocated among the spending categories and percentages established in the HBTBID Management District Plan, which governs the allowable use of assessment revenues. The majority of expenditures are allocated to core TBID assessment programs.
Additional rollover and reserve funds are planned to support specific program expenditures beyond the assessment-funded allocations. Actual Sales and Marketing expenses are projected at $8.7 million, reflecting the planned use of rollover and reserve TBID funds. Actual Tourism Enhancement Program (TEP) expenses are projected at $1.85 million, reflecting the planned use of rollover TEP funds. The total operating budget is $13,163,427, with the VHB Board approving the use of reserves to cover the $1.26 million difference.
|
INCOME |
|
Estimated TBID Assessments |
$10,321,773 |
|
Retail, Web Ad, Walking Tour Sales, Interest |
$127,600 |
|
Estimated Carryover from Previous Fiscal Year |
$1,452,675 |
|
|
$11,902,048 |
|
EXPENSES |
|
Sales and Marketing (65%) |
$6,709,152 |
|
Administration (24%) |
$2,467,852 |
|
Tourism Enhancement Programs (10%) |
$1,032,177 |
|
City Collection Costs (1%) |
$97,413 |
|
Contingency/Renewal |
$37,000 |
|
Non-TBID Expenses |
$11,500 |
|
|
$10,355,094 |
No changes to the HBTBID boundaries are proposed for FY 2026-27. The FY 2026-27 budget was approved by the VHB Board of Directors on June 24, 2026.
Council approval of the Annual Report will:
• Fulfill the City’s obligations under applicable state law.
• Allow VHB to continue implementing tourism strategies designed to generate overnight stays, increase visitor spending, and support local businesses.
• Support Huntington Beach's continued position as a premier visitor destination.
Environmental Status:
Pursuant to CEQA Guidelines Section 15378(b)(5), administrative activities of governments that will not result in direct or indirect physical changes in the environment do not constitute a project.
Strategic Plan Goal:
Goal 1 - Economic Development, Strategy A - Develop an updated economic development strategy to ensure business retention, local investments and job growth.
For details, visit www.huntingtonbeachca.gov/strategicplan.
Attachment(s):
1. VHB FY 2026-27 Annual Report
2. PowerPoint Presentation