City reneges on hotel tax deal

May 28, 2010

I write to explain why the Baltimore hotels are adamantly opposed to increasing the lodging tax above 1.5 percent.

A year ago, the Baltimore hoteliers agreed with Visit Baltimore to ask the city administration to support tourism improvement district legislation. This legislation would include an increase in the lodging tax of 1.5 percent to fund the marketing and advertising of Baltimore to convention and meeting planners and to the travelling public.

No hotelier ever wants to increase the lodging tax, but at that time, the hotels were facing the lowest occupancy rates and room rates in the history of the industry in the city. Hotels were laying off employees, and this effort to market the city seemed like a positive action.

When it came time to introduce the legislation, the mayor and the administration reneged on what we thought was a deal, and we learned that the tax was going to be increased and used to help alleviate the city's deficit.

If the lodging tax were increased by 2.5 percent, it would place Baltimore's lodging tax in the top six in the country, higher than Philadelphia, Washington and all of the rest of the cities in the "competitive set" that Visit Baltimore competes with for convention business.

When the hotels suggested the 1.5 percent, they took the "competitive set" into consideration and purposely chose an amount that would keep Baltimore in the middle of the top sixty cities when it comes to room taxes.

Over the past two years, hotels in Baltimore have had to lay off over 600 people, and we believe that if this tax goes into effect at 2.5 percent, there will be even more layoffs. The city continues to support the building of hotels through tax incentives and in fact, the city actually owns the new Hilton, all of which has made the competition for business in a recession even more difficult.

In addition, most of the rest of the taxes being proposed by the administration also impact hotels: parking tax, beverage container tax, energy tax and the telephone tax.

Tourism is one of the top businesses in the city, but it consists primarily of small businesses. The hotels support those small businesses by sending tourists to the restaurants, retail establishments, taxi cabs, banks, insurance providers, laundries, attractions, museums, etc. What happens to the hotels directly affects the entire economy of the city, and we know that meeting and convention planners watch every dollar they spend, so increased hotel taxes do get their attention — negative attention!

We implore the City Council to say no to any tax above the 1.5 percent. That would at least allow the hotels to remain competitive. We are not asking for a free ride, but we are asking that the City Council and the administration not put us and our employees in harm's way.

Mary Jo McCulloch, Annapolis

The writer is president and CEO of the Maryland Hotel & Lodging Association.

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