Meetings & Conventions: Newsline
CVBS, CONVENTION CENTER
As Hotel Taxes Drop, Cities Hunt for Cash
Bucking the trend:
The Moscone Center expansion continues.
Following a sharp
drop in hotel occupancy tax revenue, cities are facing budget gaps,
putting freezes on salaries and trimming staff. Losses in tax
revenue through November totaled in the millions for some cities,
including San Antonio, Texas, which saw a 33 percent drop over
2000, and Monterey, Calif., which reported a hefty $1 million loss
for the second half of 2001.
The Charlotte (N.C.) Convention and Visitors Bureau cut about 20
percent of its budget in January, including 10 positions, due to
shortfalls in hotel tax dollars.
“It’s safe to assume that recipients of the hotel tax will be
affected by the drop in occupancy tax revenue,” said John Marks,
president and CEO of the San Francisco Convention and Visitors
Bureau, whose staff was cut by six people late last fall.
According to Marks, the city’s projected 15 to 18 percent drop
in occupancy revenue this year has not affected the Moscone
Convention Center expansion project, set to be completed this
But dwindling tax revenue is further stalling the expansion of
the Westin Convention Center Pittsburgh hotel. The project was
redesigned and will require an additional infusion of $10 million,
for a total of $28 million in public subsidies.
That money would likely come from state tax funds, said Bob
Imperata, executive vice president of the Greater Pittsburgh
Convention and Visitors Bureau. But now is not a good time to be
asking for cash. “You can’t go to the state and say, ‘Give us more
money,’ when they have to go into the rainy day fund to pay the
bills,” he added.
Putting further strain on city budgets are lower room rates. The
less travelers pay for rooms, the less money cities tally in hotel
tax revenue, said analysts.
The end result could be tax hikes. “We’re going to see a lot of
temporary tax increases,” predicted Rolph Shellenberger, a senior
analyst with Rochester, Wis.-based travel consulting firm
Palm Springs, Calif., raised its occupancy tax by 1 percent to
12.5 percent for convention hotels and 11.5 percent for all others
to help raise funds. This follows a drop of about $300,000 in
occupancy tax revenue between 2000 and 2001.
• BRIAN ORSAK
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