Jul. 4, 2009--Mayor Jim Suttle's decision to cut $500,000 from tourism promotion has upset local hotel operators, who were hoping that a larger marketing budget could help draw more visitors to Omaha.

"The frustrating part is that this city has an opportunity to grow tourism, to grow revenue," said David Yakes of the downtown Doubletree Hotel, who also is vice president of the Metropolitan Hospitality Association. "We're back to square one."

Last week, Suttle stripped the city's contribution to the Omaha Convention and Visitors Bureau as part of his plan to address a budget crunch.

Suttle spokesman Ron Gerard said the mayor was faced with a difficult choice -- make further cuts in city services or end city support for the visitors bureau.

"The city has some serious financial problems right now, and we need to find ways to address them," Gerard said. "We have to weigh the options and find the most fiscally prudent ways to go forward."

He said that if the economy turns around over the next few years, the city's contribution to the visitors bureau likely would be reinstated.

With the cut, the visitors bureau budget will drop to $3 million this year. The agency is funded by Douglas County, the City of Omaha and the hotel-motel tax.

Last year, Omaha hotels worked out a deal with then-Mayor Mike Fahey to boost spending to promote the Big O.

Hotels got behind a funding plan for the new downtown ballpark, including a higher hotel tax, provided that some of the money would go to the visitors bureau. With the higher tax rate, the agency was projected to receive a $600,000 boost as part of the deal.

That funding source is not in jeopardy. Suttle cut the city's annual general-fund contribution to the visitors bureau.

Even so, hotel operators say eliminating general fund support has them feeling like they've lost ground. The hotel operators say they supported the ballpark proposal on the condition that more money be earmarked to promote Omaha.

"This takes us back," said Susan Madsen, general manager of the downtown Embassy Suites. "We've gained so much momentum, so why would they cut funding?"

Dana Markel, executive director of the visitors bureau, said she isn't sure how to make up for the lost funding but said the bureau's marketing efforts to other cities will have to shrink.

Funding for the visitors bureau has traditionally been low compared to many Midwest cities, according to a survey prepared by HVS, a national hospitality consulting firm.

Hotel representatives had hoped to turn that around, especially since cities such as Kansas City, Mo., and states like Colorado and South Dakota are aggressively advertising in the Sunday World-Herald travel pages and other outlets.

The 1.5 percent boost in hotel taxes increased the total tax to 5.5 percent and took effect in August. Of the increase, 1 percent goes to help pay for the new ballpark and .5 percent goes to the visitors bureau.

The city has slashed $14 million from its 2009 budget. City officials also project an $11 million gap in next year's budget.

Suttle has left in place funding for some of Omaha's biggest attractions -- the Henry Doorly Zoo, Joslyn Art Museum and the Durham Museum, for instance.

All three organizations receive keno revenue. The zoo alone gets more than $1.5 million a year.

Gerard said the city could not consider taking keno funds from the zoo or similar organizations to address the budget shortfall. That's because the city has contracts with those groups that dictate funding levels, he said.

The city has no such agreement with the visitors bureau.

Members of the visitors bureau advisory board acknowledged the city's budget problems but said they fear the city will be hurt in the long run if potential tourists don't learn about Omaha.

"Whenever there is a recession and a business is having a tough time, there is always a temptation to cut the marketing budget," said Jeff Beals, a Coldwell Banker executive and member of the board. "But history has shown us that any time marketing is cut, the business is way behind its competitors."

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