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Columbia hotel owners question need for lodging tax rate increase

Thursday, January 19, 2012 | 7:17 p.m. CST; updated 9:43 p.m. CST, Thursday, January 19, 2012

COLUMBIA — Although the City Council is moving forward with plans to seek a lodging tax increase from voters, some Columbia hotel owners are wary about the impact a larger bill under visitors’ doors could have.

Mike Kelly, a member of Columbia’s Hospitality Association and general manager of the Stoney Creek Inn, said at the council’s meeting Tuesday night that the negative relationship between higher tax rates and occupancy is clear.

“There is a direct correlation to occupancy as you raise those taxes,” Kelly said.

The council voted unanimously to seek state legislation that would allow it to increase hotel rates from 4 percent to 7 percent. If approved, the measure would go to Columbia voters. Mayor Bob McDavid would like to see a ballot measure that would earmark this revenue for terminal additions at Columbia Regional Airport.

A one-bed reservation at Stoney Creek Inn for Saturday costs $133 based on the current 4-percent rate. Taxed at a 7-percent rate, the same room would cost $136. At Columbia's Super 8 East hotel, near Exit 131 off Interstate 70, Saturday rates would be $75 instead of $73.

Jevon Jerke, president of the hospitality association and owner-manager of Columbia’s two Super 8 hotels, said that any change to the rate has an impact on business in a market that is increasingly rate sensitive.

“When you raise the rate, even just a few dollars, it really changes how you’re perceived out there,” Jerke said.

Jerke said that visitors passing through Columbia on I-70 comprise a majority of Columbia’s hotel and motel occupants and that those customers are now using their cellphones and Internet access to compare rates. While billboards advertise rates to drivers, they often don’t include the tax charged for a night’s stay, which can cause frustration.

“They see the billboards, and they say, ‘That is what I want to pay,’” Jerke said.

Although visitors expect to be taxed for room rentals, Jerke said, they expect that rate to be reasonable and in line with other competing hotels. Jerke compared the expectations to that of a shopper looking at shelf prices at a store.

“You expect to pay a tax, but you don’t expect to pay that much of a tax,” Jerke said.

Jerke said visitors rent rooms for multiple nights for events in town, such as the Show-Me State Games or championships sponsored by the Missouri State High School Activities Association, are especially price-sensitive customers.

While high schools are exempt from certain state taxes, they are required to pay a municipal lodging tax, Jerke said. He added that a tax increase could drive competitors to stay in surrounding cities or for sponsoring groups to move those competitions elsewhere.

Kelly called for the council to wait for the recommendations of a special Columbia Chamber of Commerce committee tasked with finding strategies for improving the airport’s visibility before proposing any lodging tax increase to voters.

“I highly encourage you, before you approach it from a tax implication, that you let the chamber do its job,” Kelly said.

Kelly said any increase in the tax at this time could jeopardize a fragile growth in occupancy that the industry has seen after experiencing reduced occupancy during the recession.

“We’re coming out of a slow growth,” Kelly said. “Let’s continue that growth so that we can continue the 4 percent that we currently get.”


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Comments

Mitchell Moore January 20, 2012 | 9:30 a.m.

You cannot drum up business by funding festivals and activities (and often getting the city taxpayers to pay half) and not expect a higher tax if you want to do more of the same. In fact, the city taxpayers should not be paying for these activities and the revenues from a higher tax should go to pay for those.

OTOH, would it not be nice for motel and hotel owners and the city to spread the word about how much lower are taxes are then St. Louis and Kansas City (and New York City if you really want to seem reasonable)?

City taxpayers should not pay for these festivals and such. The folks that can fight over who pays for it should be the motel and hotel association (which the tourism bureau folks have controlled) and the business district, IMHO.

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