‘Planners don’t understand [occupancy taxes], because they are just looking at their budget and their bottom line, and they always complain.’
CMP, CASE, eastern regional director of sales for Visit Spo- kane. “Those fees actually become a fund available to help pay for things that planners find challenging in a particular city. It’s a real benefit.” That may be true, but for planners these assessments add up to “a significant amount,” said Stuart Ruff, CMP, CGMP, senior planner of meetings, conventions, and events strategy for the New York City–based International Trademark Asso- ciation (INTA). INTA holds four international and four large domestic conferences annually, ranging from 250 to more than 9,000 attendees. “Personally, sometimes I do wonder what these taxes are and where the money is going,” Ruff said. “I’ll pay more attention if the amount is really high. But I can’t really do anything about it. We probably wouldn’t walk away from a property over it.”
WHAT THEY MEAN BY SPECIAL ASSESSMENT Over the past three years, cities including Boston, New York, Las Vegas, Baltimore, San Jose, Calif., and Atlanta have increased room taxes with special assessments. The last major study on the issue, conducted by the American Hotel & Lodging Association in 2008, showed that room taxes gener- ate $14 billion annually, with an average tax of 12.62 percent. In a 2011 survey by the U.S. Travel Association, 68 percent of travelers complained hotel taxes were “very high” or “high.” In San Diego, for example, hoteliers on April 24 approved
a proposal for a tiered assessment of 1 to 3 percent of a hotel’s room rate (depending on the property’s proximity to downtown) to fund a $550-million expansion of the conven- tion center. The tax will be added to an existing 10.5-percent transient occupancy tax and a 2-percent Tourism Marketing District (TMD) tax. With all those taxes added in, an adver- tised room rate of, say, $239 would total $275. The 2-percent TMD tax was the city’s first special assess- ment on hotel rooms, levied in 2008 when, “frankly, the city stopped funding tourism,” said Joe Terzi, president and CEO of the San Diego Convention & Visitors Bureau. The suc- cess of the TMD tax was the basis for the convention-center special assessment. “Those funds go directly to pay for the
64 PCMA CONVENE AUGUST 2012
bonding of the projected costs of the convention center expansion,” Terzi said. “It’s a significant expansion.” Indeed, when the expansion is completed, the center will
have the largest exhibit hall on the West Coast, with a little less than 800,000 square feet of contiguous exhibit space, as well as an additional 80,000-square-foot ballroom and another 100,000 square feet of meeting space. Revenues from the new tax would cover about three-quarters of the bonds needed for the project, Terzi said, with the city and port of San Diego covering the rest. “We’ll be graduating from what I think of as mid-tier size to the upper tier and able to accommodate some of the premium, larger conventions that we’re either shut out of or lose because we don’t have enough space,” Terzi said. “It’s a major enhancement to the existing building.” Hotels in Sacramento, Calif., recently approved an increase in the city’s TMD tax — from a flat $1.50 fee to a rate
Test Time Here’s how to earn your CEU hour. Once you finish
reading this CMP Series article, read the following material:
› A composite profile of a destination marketing organization from Destination Marketing Association International (DMAI), at convn.org/ DMAI-profile. › “Between a Block and a Hard Place,” a feature article about the convention-center pricing model from the May 2011 issue of Convene, at convn.org/ room-blocks.
To earn one hour of CEU credit, visit pcma.org/ convenecmp to answer questions about the information contained in this CMP Series article and the additional material.
The Certified Meeting Professional (CMP) is a registered trademark of the Convention Industry Council.