Group May Push to Increase San Diego’s Hotel Tax
BY CONNIE LEWIS
Two lodging-industry groups are eyeing an increase in the hotel room tax, which helps to fund city services and market San Diego as a tourist destination.
Discussions between two advocacy groups , the San Diego Hotel-Motel Association, and the Lodging Industry Association , on increasing the 10.5 percent transient occupancy tax, as it’s formally known, have been private.
But Pam Richardson, vice president of the Hotel-Motel Association and general manager of the Hilton San Diego Airport/Harbor Island, said proposals to raise the tax are under review.
“We’ve not gone through them yet, so I can’t really say anything, ” Richardson said. “But what I can tell you is that I’d be surprised to see any kind of proposal that did not include a provision to protect tourism marketing funding.”
Mike McDowell, executive vice president of the lodging industry group, declined to comment.
By law, any increase in the tax would have to be approved by voters in citywide election.
Reint Reinders, chief executive officer of the San Diego Convention & Visitors Bureau, which faces a $1.4 million cut in funding from the city, said he would support a move to increase the room tax if it guaranteed a percentage of funding for ConVis.
ConVis’ budget for fiscal 2003 is $16.2 million, including money it gets from the county, the San Diego Unified Port District and private sources. If the city’s cuts become effective, its budget will be about $14.8 million for fiscal 2004, which starts July 1.
“I can’t comment on any specifics of proposals that are being crafted,” Reinders said. “But suffice to say, after listening for hours to council testimony that basically pits us (ConVis) against city services I would say it is time that tourism marketing funding becomes something we can count on for the long haul.”
Reinders was referring to a June 2 City Council meeting when members tentatively approved a proposal by City Manager Michael Uberuaga to cut room-tax recipients’ funding 10 percent.
Aside from ConVis, arts and cultural organizations and special events face funding cuts.
To shore up a projected decrease in revenue, Uberuaga proposed slashing $30 million from the general fund budget to reach $739.8 million.
The money from the cuts to room-tax recipients will be used to help pay for city services including fire and police, parks and recreation, said Lisa Irvine, the city’s financial management director.
Some hoteliers, including Doug Manchester, who developed the Manchester Hyatt Grand Hotel Downtown, oppose an increase in the hotel room tax.
“Any time you raise the TOT (transient occupancy tax), you lose occupancy and then you lose TOT revenue,” Manchester said. “It won’t make up for inefficiency at City Hall.”
Bob Rauch, director of the Center for Hospitality and Tourism Research at San Diego State University and a board member of the Hotel-Motel Association said he also opposes an increase in the tax.
“I’ve never been one who subscribes to the idea of raising the TOT as a solution to any problem,” Rauch said. “Studies have indicated that any increase in the TOT would most definitely have a negative impact on revenues.”
While the average tourist might not be discouraged by an increase, Rauch said conventioneers, who book large blocks of rooms, would be.