|By Karen Robinson-Jacobs, The Dallas Morning News|
Knight Ridder/Tribune Business News
May 7, 2004 - Fearing the negative impact of having the nation's highest hotel occupancy tax, Dallas' hotel association has voted to oppose a proposal to use a boost in the hotel tax to help fund a new stadium for the Dallas Cowboys, the group said Thursday.
"We're not opposed to the stadium," said Frank Naboulsi, chairman of the Hotel Association of Greater Dallas. "We just don't want to pay for it."
Cowboys owner "Jerry Jones has the means to pay for his own stadium," said Mr. Naboulsi, general manager of the Fairmont Hotel in Dallas, a major convention venue.
Late last month, the Cowboys submitted a proposal to Dallas County under which the county would pay $425 million toward the cost of building a new $650 million, retractable-dome stadium for the team in Fair Park.
The county's share of the pot would come from a 3 percentage-point boost countywide in the tax on hotel rooms and a 6 percentage-point boost on rental car taxes. If approved, that would take the hotel tax rate in Dallas -- which is struggling to reverse a drop in convention business -- to 18 percent, the highest in the country.
Cowboys officials say the type of stadium under discussion would draw high-profile events, attracting visitors to the area who would stay in local hotels.
"We believe that the venue has the ability to drive business to the metroplex," said Brett Daniels, a Cowboys spokesman. He cited potential mega-events such as a Super Bowl, an NCAA Final Four, political conventions and major religious events.
But the hotel owners and others in the tourism and travel industry fear that if the rate hike goes through, they would drown in a sea of unused rooms.
"You're talking about a hotel community that's desperately struggling to bring new convention business into Dallas," said Steven Hacker, the Dallas-based president of the International Association for Exhibition Management.
"The worst possible thing you could think of, short of SARS, would be to slap an additional 3 percent on those hotels at this time. It's the best kamikaze plan that I can imagine, and there wouldn't be any survivors."
Mr. Hacker and others noted that hotels get a major chunk of business not from the big event but by impressing meeting planners who can fill up or empty large blocks of hotel rooms with a single decision. And meeting planners are easily swayed by cost differences.
In the late 1980s through the mid-1990s, when New York had a 20.5 percent hotel tax, hotel occupancy dropped by more than 10 percentage points, into the low 80 percent range, Mr. Hacker said.
And in central Dallas, the picture is even bleaker.
So far this year, hotel occupancy in central Dallas -- the area in and around downtown -- has been from 50 to 60 percent, said Sandi Bailey, executive vice president of the hotel association. The group represents owners of some 50,000 hotel rooms, mostly in Dallas County.
For 2003, the average was 49 percent downtown, she said.
By comparison, the rate in Fort Worth in 2003 was 64 percent. It was 56 percent in Plano and 62 percent in the area that includes Irving, home of the Cowboys' current stadium, according to figures from the PKF Hotel Industry Report.
Some economists question the ability of a large sports venue -- even one that hosts an occasional big event -- to continuously boost numbers like that.
"You have to remember that ... the overwhelming number of people who come for the Cowboys' games will be local," said Michael Davis, a professor of economics and finance at Southern Methodist University.
And he noted that recent economic studies of big events such as the Olympics in Atlanta failed to find a big economic long-term boost to the community that would be commensurate with the amount of taxes paid.
Mr. Daniels stressed that negotiations with the county are continuing about how to best approach stadium financing.
"At this point, nothing has been established on where the funding will come from," Mr. Daniels said. "We think the county and the club will negotiate something that's in everyone's best interest."
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(c) 2004, The Dallas Morning News. Distributed by Knight Ridder/Tribune Business News.