Hoteliers react to possible tax hike

Published 12:00 am Wednesday, October 16, 2002

The hoteliers who have heard the details about a proposed lodging tax increase are excited.

Those who have not are reluctant to increase the price of a room.

Last week the Austin Convention and Visitor's Bureau proposed a 1 percent lodging tax increase to the city finance and personnel committee, which would raise the city's share from 3 percent to 4 percent.

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Currently, those staying at Austin hotels pay a 9.5 percent lodging tax on their rooms, with 6.5 percent coming from the state and 3 percent from the city.

The CVB receives 98 percent of the revenues from that tax while the city receives the other 2 percent.

This increase would mean $37,000 a year more for the CVB, allowing them to create more promotions to attract visitors to town.

The state would need to approve any increase in the tax. CVB director Holly LaVallie is seeking city and county support to make her case at the legislature stronger.

The tax increase has been unanimously approved by the CVB board, which has representation from Days Inn, Holiday Inn and AmericInn.

The CVB has not proposed the plan to other hotels in town.

Kristi Miners, general manager of AmericInn, said initially she was hesitant about the increase, but thinks it will be beneficial in the long run.

"They're (the CVB) doing a lot of work for us," Miners said, adding that the CVB will be able to attract more people to town with the extra money.

"Austin is the place to visit," she said.

Andy Thilges, who has managed the Holiday Inn and Days Inn for three years, also is optimistic about the increase.

"I think it will benefit all hotels. The increased marketing will bring more people to town," he said.

Thilges said the increase in cost would not be great.

For example, a $79 room costs $86.50 with the current tax. Raising it 1 percent would increase the room's cost 79 cents.

"When it's such a minimal increase, I don't think you're going to see resistance," Thilges said.

But Mike Lee, co-owner of the Austin Motel, said customers complain about the current lodging tax being too high.

"We already got people kicking about 9.5 percent now," Lee said. "They can go anywhere else in the world. That would hurt the business."

Bangalor Raspuri, owner of the Downtown Motel, also said the increase would affect customer's decisions.

"They don't have enough money to spend plus on top of it, taxes," he said.

Raspuri said he thinks tourism is not increasing in the area.

LaVallie said, however, that the SPAM museum is the third-largest attraction the in state. It has brought 81,000 visitors to Austin so far. The CVB also has booked 150 group tours this year.

"There's no other community the size of ours that is even near those numbers," LaVallie said. "Tourism is growing, flying."

LaVallie said the CVB operates on a small budget and employs three full-time people, which takes a large portion of the budget. An increase in their funding would help them promote the city more for tourism and conventions, she said.

The CVB produced 15,000 visitor's guides and are "going through them like water," she said.

If the CVB gets the city's backing, it plans to set up meetings with each hotel in town to inform them of the benefits of the increase, LaVallie said.

Cari Quam can be reached at 434-2235 or by e-mail at cari.quam@austindailyherald.com