BATON ROUGE (The Center Square) – The Louisiana Office of Tourism should do more to measure the effectiveness of advertising deals and improve transparency about how tourism funds are being spent, according to the Louisiana Legislative Auditor.
Auditor Mike Waguespack issued an audit report for LOT last week that analyzed the agency’s finances and operations and made several recommendations for improvement.
“The office is housed within the Office of Culture, Recreation and Tourism (CRT) and is responsible for managing an average of $28.1 million in tourism funds annually,” said Krista Baker-Hernandez, Performance Audit Services Manager. “We conducted this audit because tourism is an important part of Louisiana’s economy.”
The report shows that LOT spent an average of $9.5 million per year on endorsement deals between 2016 and 2021, but could better track spending effectiveness.
“While LOT regularly collects general Louisiana tourism statistics and receives industry metrics related to advertising campaigns from its contractor, LOT could better evaluate certain advertising campaigns by engaging an independent vendor to evaluate their effectiveness,” the auditors wrote.
Between 2016 and 2021, LOT spent $12.6 million on sponsorships and $3.7 million on two primary tourism grants, but exactly where the money went and how it was awarded is not publicly disclosed.
The LLA recommends that LOT publicly report on its website which entities receive grants and grants and develop a more structured process for allocating the funds. The LLA also proposes that LOT improve internal controls over the documentation, policies, procedures and records of grants and sponsorships.
LOT data shows that 181 grants totaling $2.9 million were awarded through the cooperative marketing grant, while 185 grants totaling $765,670 were from a competitive grant program between 2016 and 2021.
Sponsorships ranged from 19 totaling $427,500 in fiscal 2021, when two dozen sponsorships were canceled due to COVID-19, to more than $3 million for 24 sponsorships in fiscal 2017. LOT awarded between 2016 and A total of 164 sponsorships in 2021.
“Sponsorships range from large events like $500,000 for the Essence Fest to smaller events like $1,000 for the Motorcycle Mardi Gras Madness Rally. Developing a consistent process with criteria for evaluating or reviewing sponsorship requests would increase transparency for sponsorships,” the reviewers wrote. “Although sponsorships are not considered grants, implementing a process for evaluating sponsorship requests could help LOT ensure that events that have the greatest potential to increase tourism are funded.”
Deputy Secretary of Tourism Doug Bourgeois responded to the LLA report on November 30 with a letter to Waguespack highlighting the impact of COVID-19 on tourism and explaining how LOT will implement the LLA’s recommendations.
“In 2019, Louisiana welcomed a total of 53.2 million visitors who generated $18.9 billion in tourism spending and $1.92 billion in state and local tax revenues. Those record-breaking numbers also contributed to 242,200 hospitality jobs, keeping the hospitality industry the state’s fourth-largest employer,” he wrote. “With the onset of the COVID-19 pandemic, these milestones were severely impacted as attendance fell by over 40%; Expenditure and tax revenue down 30% and 32% respectively; and jobs down nearly 20%.”
Bourgeois pledged to consider including independent verification of advertising campaigns and posting grant and award recipients on LOT’s website.
Bourgeois also pledged to form a team to develop sponsorship funding and eligibility criteria “while remaining flexible to accommodate the different types of events that may be eligible for sponsorship.” LOT also plans to revive a Competitive Grant Program evaluation committee that was sidelined during the pandemic.
In addition, “LOT will gather team members to gather up-to-date, informal guidelines for the documentation and monitoring of grants and sponsorships and then develop and implement a formal policy,” Bourgeois wrote.