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Officials could legally raise bed tax
Here are the experiences of other cities with lodging-tax increases and hotel-use declines:
In 2007, Lucas County, Ohio, which includes the city of Toledo, raised lodging taxes by 2 percent to 16.75 percent, making that county’s rate one of the highest in the nation. Since then, 731 hotel rooms have closed in the county, and 445 rooms have opened in Perrysburg in neighboring Wood County, where the tax is only 9.5 percent, according to Smith Travel Research.
When New York City increased its hotel tax to 21.25 percent in 1991, meeting planners and businesses looked elsewhere for rooms, and the city was forced to lower the tax to get business to return. In 2007, with the tax rate reduced to 14.54 percent, the city collected $986 million in hotel tax receipts, double the 1991 level, according to the Hotel Association of New York City.
Source: Ohio Hotel and
Lodging Association
YOUNGSTOWN
Mahoning County officials have learned they can legally raise the county’s hotel and motel bed tax, but two of the three county commissioners don’t favor doing so.
In a legal opinion, Ohio Attorney General Mike DeWine has said the county may increase the tax from 3 percent to as much as 5 percent if its commissioners wish to do so.
Mahoning County Convention and Visitors Bureau officials and a state lodging-association executive, however, warned that such an increase could be counterproductive.
“I would not like to see any increases at this time,” said Commissioner Carol Rimedio-Righetti. Although business has begun a slow improvement, and local hotel occupancy appears to be increasing, she said: “Our economy’s not that great.”
Her colleague, Anthony T. Traficanti, was more emphatic: “I am opposed to any increase in taxes as it relates to the hotels in Mahoning County. We have a lot of hotels in this community. They’re already paying a good amount of money, and we’ve been able to fund what we can very well with what we charge right now.”
Traficanti was referring to the bed-tax beneficiaries: the visitors bureau, which promotes tourism here, and the Western Reserve Port Authority, which oversees operations at Youngstown-Warren Regional Airport in Vienna.
If the bed tax is raised, DeWine said the extra money must go to the port authority. Mahoning and Trumbull counties participate in that port authority.
The Mahoning commissioners and Administrator George J. Tablack requested Gains’ opinion on the matter, and Gains requested the AG’s opinion, said John A. McNally IV, chairman of the commissioners.
State law authorizes the extra levy “to pay operating expenses of a port authority that operates a port- authority military-use facility,” DeWine wrote in response to a request for his opinion from Mahoning County Prosecutor Paul J. Gains.
The Youngstown Air Reserve Station, home of the 910th Airlift Wing, is adjacent to the airport and uses the airport’s runways.
In 2010, Mahoning County’s bed tax raised $744,559, of which $255,460 went to the CVB and $489,099 went to the port authority.
McNally said any discussion of a vote by the panel on a bed-tax increase is “completely premature.”
McNally said he wants to discuss the matter with the visitors bureau and the port authority before making any decision.
One bureau member who opposes raising the bed tax is Mike Naffah, owner of the Hampton Inn and Suites in Canfield.
“If they raise that bed tax right now, it would hurt us tremendously,” Naffah said, adding that the hotel industry is suffering worldwide from current economic conditions.
Naffah said one of his guests complained recently about the current 12.75 percent tax at his hotel, saying such a high rate seemed more likely in New York City than in the Mahoning Valley.
The 12.75 percent includes Mahoning County’s current 3 percent bed tax, Canfield Township’s 3 percent bed tax and the 6.75 percent sales tax in Mahoning County.
“If we add another 2 percent, we’re almost at a 15 percent tax,” Naffah said.
If the total lodging tax in Canfield Township goes to 14.75 percent, that township would have one of the highest lodging tax rates in the nation, surpassing those of Boston, Washington, D.C., Pittsburgh and Los Angeles, said Matthew L. MacLaren, executive director of the Ohio Hotel and Lodging Association.
Besides Canfield Township, Mahoning County’s Austintown, Boardman and Beaver townships levy 3 percent hotel and motel bed taxes in addition to the county’s 3 percent, said Phil Moore, county CVB director.
“It would put an undue burden on an already fragile industry,” if the bed tax rises, said Grace Styer, co-owner of Das Dutch Village Inn in Columbiana and chairwoman of the Mahoning’s visitors bureau.
The local lodging industry has worked hard over the past two years to regain group-tour business and is now beginning to do that, she said, citing a Covelli Centre wrestling tournament that filled area hotels last month.
If the bed tax rises, “We’re just going to go right backward,” with the biggest loss being in convention business, she said. Group travel sponsors compare total room costs, including taxes, and shop for the best deal, Styer said.
Moore agreed with Naffah concerning the potential negative impact of a bed-tax increase on the convention and group-tour business, in which a small percentage of tax increase translates to large dollar amounts, but Moore said individuals are less concerned about the tax rate.
In general, “Individuals are customers of convenience,” Moore explained. “If they’re traveling, and this is a convenient place to stop, they’re going to stop,” he said.
“A 2 percent [bed-tax] increase might cause a 5 percent decline in [hotel and motel] volume, and therefore, you might net out with no increase in revenue,” Moore warned.
Five Mahoning County hotels recently have made major investments in upgrades and renovations to become more competitive. A new Holiday Inn Express is nearing completion at Interstate 80 and state Route 46 in Austintown, and two other hotel construction prospects have contacted the visitors bureau, Moore said.
In December, Trumbull County commissioners increased their bed tax from 4 percent to 5 percent to benefit the airport.
That decision came after port-authority board members asked Mahoning and Trumbull officials whether more of their county funds could be contributed to bolster airport finances, said Scott Lynn, port authority board chairman.
When the Trumbull commissioners increased their bed tax, A.J. Patel, owner of the Comfort Inn in downtown Warren, said he thought the increase could have a negative effect because “people are managing every penny now.”