Lodging tax ordinance sparks debate

Stillwater-city-logoStillwater hotels and bed and breakfasts will continue to collect and pay a 3 percent lodging tax for the next three years, despite objections from some lodging owners.
The Stillwater City Council approved a three-year extension of the tax Jan. 21. The ordinance calls for collection of the tax through Jan. 31, 2017.
The decision comes after individuals spoke against the lodging tax, claiming it could negatively affect the city’s visitors.
Tom Lynum of the Sauntry Mansion came before the council on Jan. 7, when the first reading of the ordinance occurred. At that meeting Lynum told the council that when the tax was last approved, many lodging business owners claimed it was unfair, increasing their prices by 3 percent. He also reminded the council of the promises that were included in the imposition of the tax, including metrics to determine if the tax is accomplishing its goals, as well as an audit of the Convention and Visitor’s Bureau.
As in many cities, lodging taxes are used by the CVB to do marketing for the city. The Stillwater Convention and Visitors Bureau gave its annual report to the council Jan. 21, and also turned in the audit that was required by the city.
City Administrator Larry Hansen said he was pleased with the audit, that it was a clean audit and that it encouraged the CVB to continue its good work.
“We’re just finishing our best quarter of all time, and we’re collecting figures right now,” said outgoing CVB president Tiki Oswald. “The statewide average increase for visitors this year is at 3.9 percent. Ours is almost double that for lodging in Stillwater.”
Barb Trueman, who is in charge of marketing for the CVB, reported that the traffic at the bureau’s website, discover
stillwater.com, has increased by 39 percent in the past year with unique visitors increasing by 40 percent. She acknowledged, however, that the CVB currently doesn’t have a way to track how many of those site visitors came to Stillwater. But she indicated that the lodging increase was a good indication that the marketing strategy was working.
The CVB representatives also mentioned the grants the organization has given to fund events in the Stillwater area that were beneficial to the community.
Right now the CVB doesn’t have a direct way to track “heads in beds” to know the actual number of visitors coming to the city. Instead, it relies on lodging tax data. The city provides the CVB a “blurred chart” that breaks down lodging tax revenue according to the size of establishments (hotels versus bed and breakfasts, for example) but keeps individual business data anonymous.
During the course of the discussion on the lodging tax, Lynum acknowledged the impact of a well-managed website and asked council to consider lowering the lodging tax from 3 percent to 1 percent for small lodging businesses, like B&Bs, in the area. He said if that happened, he felt the CVB would be able to continue to maintain the website and break even. He followed this statement with a presentation of B&B ratings of Stillwater on tripadvisor.com that were all very positive.
“We’re the voice of the taxpayer,” Lynum said. “And money spent by any entity needs to have two questions asked: ‘Is there an applied metric that can determine if what we’re doing is improving things?’ and ‘If it was our own money, would we decide to spend it?’ which is why I’m asking for a lower lodging tax for smaller property owners. Not-for-profits that I’ve worked with have always had to determine their budget and then cut programs accordingly if the budget isn’t what they expected.”
He cited the fact that B&B’s usually have limited capacity and stable rates throughout the year to justify this suggestion.
Erin Drews of the Ann Bean Mansion said that taxes, including sales taxes, usually end up totalling 10 percent of the bill, and she said that she’s had people tell her that it impacts their decision to stay at her place.
“It’s the difference between the $10 and the $9.99,” Drews said. “People seem to stop and really look at that when it’s higher. People notice that, and it leaves a bad taste in everyone’s mouth.”
Citing the fact that a tax reduction would be a disadvantage for other property owners, Councilmember Ted Kozlowski asked what the negative effect of the tax has been on Lynum and Drew’s businesses, adding that if the lodging tax were applied on a $300 room, for example, that would be a total of about $30 for a couple nights’ stay.
Referring to the tripadvisor.com presentation Councilmember Mike Polehna chimed in as well.
“I’m by no means a world traveller, but if I have a meeting in San Antonio and there’s a 9-12 percent lodging tax I’m still going to go to San Antonio,” Polehna said. “I don’t care about the lodging tax. People don’t look at that until they get there. If I’m looking at the ratings you’re getting online, which are all great by the way, I’ll go, because other people had recommended it, not because of the cost of lodging tax.”
“You had mentioned democracy in this at our last meeting Tom (Lynum),” Councilmember Doug Menikheim said. “I’m unpersuaded by what you’ve said. If your position was supported by the majority, it might change my mind. But we’re listening to two or three people, a small number of people, that are against this tax, and we have to watch over this whole city.”
The council unanimously approved the ordinance.

Contact Avery Cropp at avery.cropp@ecm-inc.com

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