AUSTIN (KXAN) — In the “Live Music Capital of the World,” critics are concerned that employees of the largely taxpayer funded Austin Convention Center and Visitors Bureau seem to party like rock stars.
ACVB, officially called Visit Austin, shelled out nearly a half million tax dollars on entertainment, alcohol and gifts in the past two years, according to a KXAN line-by-line analysis of the organization’s American Express credit card statements and receipts. The spending includes bar tabs exceeding $5,000, concert tickets and catered parties across the country, gifts of jewelry and even $5,000 in prepaid credit gift cards.
Critics are now questioning how exactly Austin residents benefit from such big spending and whether the nonprofit is transparent enough. Visit Austin, which is currently pushing for a $600 million expansion to the city’s convention center, says wining, dining and showcasing the capital city pay off big when convention attendees drop millions of dollars into the local economy each year.
Julie Hart, chief financial officer of Visit Austin, said the charges KXAN uncovered on the American Express card receipts are paid with hotel occupancy tax, which is a tax on hotel bills. The organization received more than $14 million in those tax dollars last year to market the city and lure conventions to the city.
“Our goal is to be very transparent,” Hart said. “We have 10 straight years of audits that are flawless,” and “we voluntarily put ourselves through a very rigorous accreditation process.”
Hart said the amount of money brought to town by conventions far exceeds the nonprofit’s operating costs, but critics say the organaization is overspending.
“We started seeing, you know, things that were rather offensive. Incredible travel spending, spending on parties, and alcohol, and entertainment, and then just literally giving away money as gifts.”
“We started looking at [the receipts], we started seeing, you know, things that were rather offensive,” said Bill Bunch, environmental activist and director of the Save Our Springs Alliance. “Incredible travel spending, spending on parties, and alcohol, and entertainment, and then just literally giving away money as gifts to, allegedly, people that might bring business to Austin.”
On one March night last year, Visit Austin bought over 500 alcoholic drinks at Antone’s night club for $6,317. Last November the nonprofit picked up a bar tab at Pepita Cantina in Arlington, Virginia, that included $3,400 for beverages.
Hart said the alcohol purchases were made with hotel tax dollars and that there is a reason behind every purchase. At the Antone’s party, Visit Austin employees entertained over 100 clients and ultimately secured “100,000” room nights from networking at that event, she said.
Hart defended Visit Austin’s overall use of hotel occupancy taxes, saying the organization abides by state statute, posts monthly business reports online and the undergoes a yearly independent audit.
“Our clients absolutely expect some sort of interesting event,” Hart said. “They get pitched a lot because it is a very competitive business, and sometimes a dinner doesn’t do it.”
KXAN discovered numerous other instances of Visit Austin employees entertaining clients and running up restaurant and bar tabs of hundreds and sometimes thousands of dollars. In one visit to Flemings Steakhouse in November of 2016, a Visit Austin employee bought two bottles of white wine exceeding $100 each. Another trip to Flemings last January cost the nonprofit $6,565 including a $976 tip.
Visit Austin purchased more than $8,800 of Cooper’s Bar-B-Que in the past two years alone, credit card records show.
On June 8, 2016, Visit Austin threw a farewell party for its outgoing CEO at ACL-Live. The party cost over $16,700 including $3,900 for alcohol. Three weeks later, Visit Austin marked the arrival of its new director, Tom Noonan, with another party at the Palmer Event Center costing nearly $8,000.
Those two parties were paid with hotel occupancy taxes. However “out of an abundance of caution,” Visit Austin reimbursed the cost with money from its private enterprise coffer, Hart said.
KXAN found another similar instance in which Visit Austin paid $888 for an employee “retirement happy hour” at Uncle Julio’s in downtown Austin on June 28, 2016, according to a receipt. The charge appears to have been made with tax dollars. Visit Austin said the employee was a 20-year veteran of the organization, the party was “modest,” and the event included hotel partners who help bring business to the city.
But Visit Austin isn’t just entertaining here in Austin. The nonprofit has spent hundreds of thousands of tax dollars in cities across the country, and abroad, to take flights and entertain clients.
City Council Member Ellen Troxclair, who has been scrutinizing how Visit Austin uses the hotel occupancy tax, told KXAN some of the alcohol expenditures give her “pause,” and she wasn’t clear on why the organization bought certain gift items and tickets to out-of-town concerts.
City Council approves Visit Austin’s budget, as well as the Convention Center budget. Both are majority taxpayer funded. Hotel occupancy taxes have nearly doubled since 2014, from $50 million to $100 million, so oversight of how that money is used has increased as well, she said.
Overall, Visit Austin spent over $18,000 on 75 tickets to Lady Gaga concerts in San Francisco, Boston and Flushing, New York. The nonprofit also charged more than $15,000 for tickets to performances by the Dixie Chicks in Canada, Adele in Chicago, Beyonce in Tampa Bay, Elton John in Las Vegas, and Paul McCartney in Washington DC.
“These are not Austin musicians,” Bunch said. “They’re not even Austin shows.”
Regarding the Lady Gaga concert, Hart said Visit Austin secured 3,700 room nights and got leads on 30,000 more room nights from that event.
KXAN also found Visit Austin bought more than $5,000 in prepaid American Express and Visa debit cards, which are used essentially as cash, and $10,000 in Kendra Scott gift cards.
“A Lady Gaga concert in San Francisco, and spending $2,000 dollars on Amex gift cards don’t make sense to me,” Troxclair said in an interview with KXAN. “If the argument is that we need to entertain people to showcase Austin and show them what great local restaurants and business that we have, then I can understand that argument. But giving people the equivalent of $2,000 worth of cash, you know, I’m not sure what that is accomplishing.”
Hart said Visit Austin has to spend money to “take Austin on the road” to other cities. The organization wants to give clients the feel of the “Live Music Capital of the World” and will sometimes bring local bands along. But when Visit Austin can’t bring a band, it sometimes takes clients to concerts, such as Lady Gaga, in other cities.
Hart said the American Express and Visa gift cards were used as door prizes at a holiday event and handed to clients visiting Austin so they could sample the offerings at a food trailer park.
Visit Austin has also spent nearly $40,000 on airfare in the past two years to send employees across the country as well as to Canada, Australia, Germany and the Middle East.
In a letter sent to City Council following KXAN’s reporting Tuesday, Visit Austin CEO Tom Noonan said the $500,000 his organization put into meals, entertainment and gifts has generated “217,000 definite total hotel room nights with an overall economic impact of $150 million.”
“All the money invested in sales and marketing by Visit Austin are legitimate and legal uses of Hotel Occupancy Tax dollars. We follow standard practices of our industry,” Noonan said in the letter.
- You can read Noonan’s full three page letter to City Council here.
- You can also read the Austin Hotel & Lodging Association’s letter regarding the spending here.
Denise Eisman, president of the Austin Hotel & Lodging Association, said it is a “traditional and legally appropriate practice” for convention and visitors bureaus, such as Visit Austin, to use hotel occupancy tax for dinners, alcohol and entertainment.
“In fact, it is a traditional practice of every major convention center and visitors bureau in the state and across the country,” she said in a letter sent to KXAN and City Council.
Fighting for transparency
Bunch has been fighting for more access to Visit Austin’s accounting books and payroll. To that end, he sued Visit Austin in May. He is seeking salary information, financial reports for sales and promotion, records showing which conventions chose not to come to Austin and records backing up Visit Austin’s claim that 30 percent of all hotel room nights book in Austin are for people at conventions, according to the lawsuit filed in Travis County District Court.
Last year, Visit Austin took in about $14.4 million in hotel occupancy taxes and more than $2 million in private enterprise and donations, according to budget documents.
Visit Austin claimed Bunch is trying to secure a portion of hotel occupancy taxes to potentially buy land and help preserve Barton Springs.
Bunch says the records he seeks would shed light on how Austin actually benefits from the nonprofit’s work and whether taxpayer money is being spent wisely.
“Right now it’s smoke and mirrors on trying to figure out where is the revenue coming from. What are the real costs of operating the convention center we have, and what kind of commitment are we making if we try to expand it?” Bunch said. Visit Austin doesn’t delineate what it is spending to promote convention related business versus other types of tourism, and that is a fundamental split that should be clear, he added.
Visit Austin is advocating for a two-cent increase to Austin’s hotel tax, which would help buy land for the Convention Center expansion that would cost about $500 million, according to city budget documents. Bunch argues the money could be better spent by individual city departments, which are more open to public inspection.
KXAN found Visit Austin’s spending on entertainment and meals does fall in line with other major Texas cities.
Visit Dallas’ Chief Operating Officer Matt Jones said his organization spends about $1 million per year on meals and entertainment. The expenses are a “key tool for destination marketing organizations to attract visitors,” he said.
Mike Waterman, president of Visit Houston, said Visit Austin’s entertainment, food and drinks expenditures appear to be “absolutely in order relative to typical CVB spending.” And a spokesman for Visit San Antonio said his organization spends approximately $500,000 annually on entertainment, and those expenditures are “critically important.”
According to media reports, numerous other cities across the country also buy alcohol and meals as a part of their sales mission. A recent Las Vegas Review-Journal investigation found that city’s visitor bureau, which is the largest in the nation, spent over $697,000 on alcohol in one year.
City Council is scheduled to vote on Visit Austin’s budget at its Thursday meeting.
KXAN found two nights in November of 2016 when Visit Austin spent big on food, alcohol and parties. You can walk through each purchase in the interactive story map below.