Colorado Just Sent an Important Message to the Meetings Industry

Colorado’s recent legislation recognizing Destination Management Companies as professional service providers represents more than a tax clarification. It reflects the growing recognition of the important role DMCs play in driving tourism, economic activity, and destination competitiveness.

Colorado has taken an important step for the Destination Management industry and the broader meetings, events, and tourism economy.

With the passage of Senate Bill 26-128, Colorado clarified that Destination Management Companies (DMCs) are providers of professional services and should not be treated as resellers for sales tax purposes.

But the legislation represents something larger than a tax clarification.
It reflects a broader distinction: DMCs play a direct role in driving tourism and economic activity into destinations.

When that business comes into a destination, the impact extends far beyond the DMC itself. Hotels fill rooms. Restaurants seat diners. Transportation companies move attendees. Venues host events. Attractions, entertainers, production companies, florists, photographers, staffing firms, and countless local businesses benefit from the influx of visitor spending.

Colorado’s legislation recognizes the importance of protecting that ecosystem.

DMCs Are Professional Service Providers — Not Resellers

As defined by the Association of Destination Management Executives International (ADMEI), a Destination Management Company (DMC) is a professional services company located in its destination that specializes in local expertise and resources. The DMC is a strategic partner that provides creative local experiences in event management, tours/activities, transportation, entertainment, and program logistics.

DMCs are hired for their expertise, creativity, operational execution, local relationships, and destination knowledge, not because clients are looking to purchase taxable goods through a retailer.

Colorado’s fiscal note made the intent of the legislation especially clear, stating that the bill:

"…clarifies when and by whom the sales tax is required to be paid—by DMCs when they purchase taxable goods or services on behalf of their client, and not by the client purchasing DMC services.”

In other words, the legislation does not eliminate sales tax obligations. DMCs already pay applicable sales tax on taxable goods and services purchased from local vendors. The bill simply recognizes that the DMC’s professional services should not be taxed again because of how programs are packaged or invoiced.

Colorado’s fiscal analysis further noted that the legislation is expected to have essentially no fiscal impact to the state.

DMCs Help Drive Business into Destinations

Colorado’s legislative discussions, led by Nicole Marsh, CMP, DMCP, Founder & COO of Imprint Events Group, focused not only on clarifying that DMCs are professional service providers rather than resellers, but also on the important economic role DMCs play within destinations.

DMCs are not simply coordinating events already happening in a destination. They actively compete for meetings, conventions, and incentive programs that bring new visitor spending into the state.

Unlike many other sectors of tourism, DMCs market and sell destinations directly to buyers using their own business resources rather than public tourism funding. Every proposal, site inspection, and client presentation is part of the effort to win business away from competing destinations.

That distinction matters. If one destination appears more expensive because of how DMC services are taxed, meetings and events business can, and often will, move elsewhere.

The Economic Impact Reaches Far Beyond the DMC

As Marsh noted during testimony supporting the legislation, destination management services typically represent only about 10% of a client’s total event spend, while the remaining dollars flow directly into the local economy through hotels, restaurants, transportation providers, attractions, venues, and other local businesses.

Colorado Event Alliance provided supporting materials noting that:

• Colorado DMCs generate approximately $50 million in annual revenue;
• DMCs pay more than $1.2 million in state sales tax on purchased goods and services; and
• A typical $1 million DMC-managed program can generate roughly $10 million in total local economic impact.

That reality underscores why destination competitiveness matters. When destinations lose meetings and events because of a perceived tax disadvantage, the downstream loss to the local economy can far outweigh any tax revenue tied to a DMC’s service margin.

A Lesson Texas Helped Teach the Industry

Colorado was not the first state to address this issue.

Years earlier, Texas DMC leaders worked through many of the same challenges while advocating for legislation that recognized DMCs as professional service providers rather than resellers.

That effort was championed by Laurie Sprouse, DMCP, CMP, CITE, President of Ultimate Ventures and a longtime leader in the Destination Management industry.

During a recent conversation about the Colorado legislation, Sprouse recalled explaining to Texas legislators that DMCs actively compete for meetings and conventions business, market their destinations to buyers, and generate tourism revenue without relying on public destination marketing funding.

After hearing the broader economic impact, one legislator summed it up best:

“You guys are kind of the golden goose that needs to be protected.”

That recognition helped shape Texas’ eventual legislation — and the same principle remains true today.

Colorado now joins states like Texas and Arizona that have recognized the importance of protecting destination competitiveness and clarifying the unique role DMCs play within the meetings and events ecosystem.

A Win for Colorado — and a Blueprint for Other States

Colorado’s passage of SB26-128 is an important win not only for Colorado DMCs, but for the broader Destination Management profession.

It reinforces several important principles:

• DMCs are professional service providers;
• DMCs are not retailers or resellers;
• Sales tax should not be duplicated on already-taxed purchases; and
• DMCs play a direct role in generating tourism and economic activity for destinations.

As more states evaluate how Destination Management services are treated, Colorado’s legislation may serve as a model for protecting destination competitiveness and supporting the broader tourism economy.

When states recognize the true role DMCs play in attracting meetings, events, and tourism business, the benefits extend throughout the local economy, from hospitality partners and venues to restaurants, transportation providers, small businesses, and tax revenue.

Colorado got this right.