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Tulsa Hoteliers Anxious to Learn Details About a Possible Increase
 to the Hotel-motel Tax; Competitive Market Comparisons
By P.J. Lassek, Tulsa World, Okla.McClatchy-Tribune Regional News

Feb. 3, 2008 - Several say any hotel-motel tax hike being considered for a downtown ballpark should provide funds to promote the city.

The local hotel industry is anxious to learn more details about a possible increase to the hotel-motel tax that Mayor Kathy Taylor might seek to help fund a new downtown baseball stadium.

Although Taylor has talked to members of the hotel industry about a possible 2 to 3 percent tax increase, those officials say it is too early to come out in support or opposition.

Increasing the tax is subject to voter approval.

Taylor announced in January that the city has signed a four-month exclusive agreement to negotiate with the Tulsa Drillers on building a downtown, city-owned ballpark, expected to cost no more than $70 million.

While the city would own the stadium, it would be the Drillers' home and have a maximum seating capacity of 10,000.

The stadium would be in the East Village area east of Elgin Avenue between Fourth and Sixth streets.

In addition to private dollars, Taylor said she is exploring several public funding options, including an increase to the hotel-motel tax for a defined term.

"Until it is more clear what is being proposed, we're not ready to give our opinion on it," said John Klukan, vice president of the Tulsa Hotel Lodging Association.

However, several industry officials say that whatever the proposal is, they would like to have it include more funding for the Convention and Visitors Bureau, which specifically promotes the city in an effort to fill hotel rooms.

"Typically when the hotel-motel tax is increased, those funds are used to promote the city . . . provide reasons for folks to come in from out of town. That is the primary purpose for a bed tax," Klukan said.

Patti Colley, vice president of the Oklahoma Hotel Lodging Association, said the industry always has mixed emotions when a city contemplates increasing its hotel-motel tax.

"In any scenario, there are people that look at the big picture and what it would do for the city. On the other side, there is always an argument as to why it should be a lodging tax and not a car rental tax," she said.

Colley said the tax usually is used to fund facilities or promotion efforts that enhance the hotel industry.

The most current study of the Room Taxes and Economic Impact of the Lodging Industry completed in 2003 indicates that the negative impact of increasing room taxes can be mitigated and even beneficial if the funds are used for promotion.

The national study states that using funds for nontravel advertisement does not benefit tourism and acts only as a travel deterrent by increasing a guest's cost without attracting more guests.

Suzann Stewart, senior vice president of the Tulsa Convention and Visitors Bureau, said the baseball stadium by itself is not going to fill hotel rooms, "and everyone understands that, and that's not the intent."

But, Stewart said, a ballpark could "create this dynamic between the east end of downtown and the BOK Center. The buildup between the two will be incredible."

Jon Davison, chairman of the bureau's executive committee, said he thinks having a ballpark downtown is a good idea and in time will generate traffic that helps the hotel industry.

But both Stewart and Davison said that any change to the hotel tax has to have marketing dollars included.

"Room tax is generated by people who stay in hotel rooms. If nobody is staying in rooms, no tax is being generated," Stewart said.

"The only way people are going to stay in a hotel room in Tulsa is if they know there is something to do here, and the only way they can find that out is if we tell them,"she said.

The Convention and Visitors Bureau does not have sufficient funding to stay at a competitive level in getting that message out, Davison said.

Klukan said he thinks the bureau lacks about $2 million in annual funding for promotion.

Davison said the city needs to be cautious when increasing the tax and how it will place Tulsa in its competitive markets, "because that is a sensitive area," he said.

On a larger scale, Davison pointed out that while the city's tax may grow to be higher than some markets, Tulsa's room rates are lower, so the overall cost in Tulsa may still be less.



Comparing hotel and motel tax rates in other cities in the Tulsa region

(All cities except Dallas and Austin have city, county and state sales tax added on top of hotel-motel tax for total cost of a room.)


Hotel-motel tax 15% (9% city and 6% state) 7 % -- goes to tourism sales, marketing and convention center debt

2 % -- tax will retire when city's portion of debt is paid on American Airline Center

2007 total room tax collection $48.3 million --No additional city, county, or state sales tax is added to total cost of room.


Restaurant, concessionaire and lodging tax total is 2 %

2% -- goes for advertisement and promotion of city 2007 tax collection totals $9.7 million


Hotel-motel tax 5% 2.98 % -- goes to the pay debt on convention center and, Performing Arts Center services.

1.92 % -- going mostly to Convention and Visitors Bureau, the remainder goes to Tulsa Global Alliance and Mayor's Office of Economic Development.

0.1 % -- to the city's general fund

2007 tax collection totals $6.27 million.


Lodger's Tax 10.75 % City's portion 10.75%

3.25 % -- general fund

3 % -- bond debt on convention center construction

2.75 % -- Convention and Visitor's Bureau

1.75 % -- to retire when bond debt is paid for convention center expansion

2007 tax collection totals $49.8 million


Hotel-motel tax 6.7% (1.7% city and 5% county) 1.7 % -- to mostly fund debt on convention center expansion and to promote visitors and tourism.

2007 tax collection totals $4.2 million


Hotel-motel tax 15% (9 % city and 6% state) 4.5 % -- goes to convention center operation and debt service

2 % -- convention center expansion bypass for creeks

1.45 % -- tourism and promotion

1.05% -- cultural arts fund -- for arts programs, theater, ballet , writers, music, museum

2007 tax collection totals $30.5 million --No additional city, county, or state sales tax is added to total cost of room.


Hotel-motel Tax 7.5 % 3.75 % -- operating and capital expenses

3 % -- to Convention and Visitors Bureau for promotion.

0.75 % -- to promote neighborhood cultural, ethnic, historic, education and recreational activities.

2007 tax collection totals $17.8 million


Hotel-motel tax 5.5 % 2% -- goes to convention and tourism development

3 % -- goes to OKC fairgrounds improvements

0.5% -- goes to promote and sponsor events

2007 tax collection totals $9.5 million


P.J. Lassek 581-8382


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