April 19--Hotel industry representatives in Newport News are objecting to a potential new $1 room fee and 0.5 percent increase in the lodging tax that's part of City Manager Neil Morgan's budget proposal.

For a $100 room, guests staying in Newport News hotels would pay an extra $1.50 in surcharges, starting in July, if City Council agrees to the hikes.

Hampton is also considering a $1 room fee, which means if approved the neighboring municipalities would charge exactly the same taxes and fees for hotel stays. Newport News' lodging tax would rise from 7.5 to 8 percent, while Hampton's lodging tax is currently at 8 percent. The $1 room fee in Hampton would also take effect in July, if approved.

Both Newport News and Hampton would earmark the money generated in similar ways -- cultural attractions in Newport News, and cultural, athletic and visitor attractions in Hampton. Morgan said he worked with Hampton City Manager Mary Bunting to synchronize the proposals.

While $1.50 per room may not sound like much, hotel industry representatives said that in a down economy, the extra charges will make Newport News less competitive with nearby hotels, especially in the Williamsburg area. York County, James City County and Williamsburg charge a $2 room fee for hotel stays, plus a 5 percent lodging tax.

The Newport News Hospitality Association has come out against Morgan's proposal.

Maureen Coon, hospitality association president, said the additional taxes could have a negative ripple effect on the local economy.

"Our industry is taxed to the max," Coon said. "And the hotel industry is not healthy in Newport News right now."

Coon said military hotel stays are down due to cutbacks, and Newport News is having a difficult time because hotel properties were overbuilt prior to the recession.

Elizabeth Parker, director of sales for LTD Hospitality, the parent company of the Residence Inn and Courtyard Marriott in Newport News, said the new taxes and fees will make it difficult to compete. Newport News typically receives "spillover" traffic from tourists looking for rooms near the Williamsburg-area tourist attractions, Parker said, and city hotels are already at a disadvantage because the hotels are farther away from Jamestown, Yorktown and Colonial Williamsburg.

"We're already paying more than $900,000 in taxes between these two buildings," said Parker, referring to property and other taxes. She said business is down more than 10 percent so far this year. "When does it stop?"

She also said that since most of their business comes from local companies, it amounts to another tax on local businesses that are paying for hotel rooms for business travelers, such as the shipyard.

Morgan said the tax was inspired by the plight of the Virginia Living Museum, and that for the first year, $400,000 of the $650,000 would help pay for operations at the financially struggling VLM. Coon and Parker said they support the VLM, and hope the city can find another way to fund the attraction.

Morgan said hotels were spared tax increases during the past three years while the city has had to deal with difficult budgets due to the weak economy.

"I've tried to apply the 'spread it out' principle," Morgan said. "In the past, we've increased cigarette taxes and meals taxes. The lodging tax increase and room fee don't seem like extreme measures to me."

Hampton spokeswoman Robin McCormick wrote in an email to the Daily Press that the hotel room fee "is a way of providing funds to support the city's tourism base."

"The idea is to ensure that we continue to attract overnight visitors to Hampton, and strengthening our cultural, athletic and visitor attractions are key to that," McCormick said.

Joyce Blair, owner of the Magnolia House Inn in Hampton, said she has mixed feelings about the proposal.

"Our guests already pay 13 percent for lodging and sales taxes," said Blair, referring to 5 percent sales tax combined with 8 percent lodging tax. The sales tax will also increase this year, to 6 percent, as part of the state's new transportation funding proposal.

But Blair said she doesn't believe the $1 fee will be much of a factor when potential guests decide where to stay.

"I don't think it's going to stop anyone from staying here," Blair said. "Most of our guests come from out-of-town and they're used to dealing with all kinds of different fees."

There doesn't yet appear to be any organized opposition to the Hampton room fee proposal, but the city's budget was unveiled this week, while the Newport News budget has been out for a few weeks.

Parker said in Newport News perhaps a committee could be formed to discuss proposals, and maybe a compromise could be forged.

Newport News Councilman Bert Bateman said he's open to looking at compromises, such as leaving the lodging tax at 7.5 percent but still instituting the $1 room fee.

"My sense is that there's a compromise in there somewhere," Bateman said. But Bateman said any compromise should maintain the $400,000 promised to the VLM.

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