August 12, 2009 - The areas with the most expensive hotels and resorts in Monterey County are taking the biggest hit in declining hotel tax revenue for local governments.

The county's revenue, about 90 percent of which comes from Pebble Beach, Carmel Valley and Big Sur, declined 11.6 percent to $14,534,000 for the fiscal year that ended June 30, said county Treasurer Lou Solton.

The county, which collects revenue for unincorporated areas, takes in more transient occupancy taxes than any of the cities. The tax is about 10 percent is most areas.

The unincorporated area revenue was down 26 percent for the January-to-March quarter and 17 percent in the second quarter of 2009. The drop comes at a time when hotels have been dropping their rates to attract customers.

In the city of Monterey, which normally collects just a little less than the county, revenue dropped 7 percent. The fiscal year that just ended includes revenue from the Intercontinental The Clement, the upscale Cannery Row hotel that opened in May 2008.

Bob McKenzie, government affairs director for the Monterey County Hospitality Association, said hoteliers are "cautiously optimistic" that things are getting better.

"Not drastically better, but somewhat better," he said.

Complaints in the national news that some failing companies have been holding lavish conventions might have scared off others from having such events, McKenzie said. Hotel operators are working to rebuild that business, he said, but it is a process that can take several years.

In a small city with a lot of hotels, the decline in hotel tax is significant.

"It's 19 percent of the general fund," said Jim Becklenberg, Pacific Grove's director of management and budget.

Pacific Grove hotel tax revenue dropped 14 percent in fiscal year 2008-09 from the previous year, less of a drop than the city was anticipating. Pacific Grove has "a relatively small reserve," Becklenberg said.

In Seaside, the drop hasn't been as steep as in Monterey. The city's hotels do not charge as much as other areas on the Peninsula, said Daphne Hodson, deputy city manager.

For county government, the hotel tax is not a big part of the budget. But "every million-dollar loss is significant," said Solton.

It's a "nice coincidence," Solton said, that the U.S. Open is coming to Pebble Beach in June. That single event, he said, should mean a significant boost in hotel revenues, and the money would be included in the current fiscal year.

Lane Wallace can be reached at 646-4478 or [email protected]. ------

Hotel occupancy tax revenue in Monterey County For fiscal years ending June 30
 
City/area  2007-08  2008-09  2009-10  budget

Unincorporated $16,441,176 $14,533,942 $15,200,000
Monterey $15,868,881 $14,745,938 $14,727,640
Carmel $4,395,329 $3,787,083 $3,978,000
Pacific Grove $3,282,568 $2,821,307 $2,539,176
Seaside $2,300,000 $2,100,000 $2,000,000
Salinas $1,571,785 $1,584,395 $1,600,000
Marina $1,525,100 $1,368,300 $1,400,000

Source: City and county finance departments

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