San Francisco's Hotel Owners Approve Room Revenue Tax Increase; Based on Proximity to Moscone Convention Center the Existing 14% Hotel Room Tax Grows to Either 15% or 15.5% / December 2008

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San Francisco's Hotel Owners Approve Room Revenue Tax Increase

Based on Proximity to Moscone Convention Center the Existing
14% Hotel Room Tax Grows to Either 15% or 15.5%
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December 17, 2008 - San Francisco's hotel owners and operators have approved the Tourism Improvement District (TID) proposed by the San Francisco Convention & Visitors Bureau (SFCVB). San Francisco Mayor Gavin Newsom and Board of Supervisors President Aaron Peskin also supported the TID as an integral part of the city's economic stimulus efforts. The TID was passed yesterday, without opposition, at the final Board of Supervisors meeting for 2008.

The new TID, designed to fund capital improvements, upgrades and expansion analysis for Moscone Convention Center, as well as for the first time ensuring stable and adequate funding for the SFCVB to market San Francisco as the premier destination for conventions and leisure travel, will be an assessment of 1 to 1.5 percent of room revenue for all hotels within San Francisco city limits.

The city's tourist hotels will be divided into two zones, based largely on geographic proximity to Moscone Center and the regional and city transportation infrastructure. The 1.5 percent assessment of gross revenue from tourist hotel rooms in Zone 1 will add $3 to the guest folio based on a room rate of $200. The 1 percent assessment of gross revenue from tourist hotel rooms in Zone 2 will add $2 the guest folio based on a room rate of $200. In Aug. 2008 (the last recorded data available from PKF Consulting), the average daily room rate in San Francisco was $186.51. Currently, visitors pay a 14 percent hotel tax.

"This Tourism Improvement District is an investment in tourism, San Francisco's number one industry and number one employer," said San Francisco Mayor Gavin Newsom. "This TID will not only benefit our local hotels and their employees, but every visitor we welcome into our city. These visitors spent over $8 billion in 2007 and we need to ensure that these same visitors continue to come to San Francisco for both business and pleasure."

"Today, the City and County of San Francisco approved $45 million in funds for Moscone Center improvements. This program will ensure that Moscone is the most state-of-the-art convention center in the nation," said San Francisco Board of Supervisors President Aaron Peskin. "Additionally, assessment revenue raised from the hotels is expected to generate $18 million for marketing San Francisco as a destination and $9 million for improvements and upgrades to Moscone Center in the first year alone. This plan will help create jobs and ensure that our tourism economy continues to grow in the future"
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Tourism Improvement District FAQ?s - Meeting Planners

Q: What is the San Francisco Tourism Improvement District (TID)?
A: The San Francisco Tourism Improvement District, if established, will be a city-mandated assessment of 1% - 1.5% of room revenue for all hotels within San Francisco city limits beginning Jan. 1, 2009. The city?s tourist hotels would be divided into two zones, based largely on geographic proximity to Moscone Center and proximity to the regional and city transportation infrastructure.

A proposed 1.5% assessment of gross revenue from tourist hotel rooms in Zone 1 would add $3 to the guest folio based on a room rate of $200. A proposed 1% assessment of gross revenue from tourist hotel rooms in Zone 2 would add $2 the guest folio based on a room rate of $200.

Q: Why is the TID being established?
A: Among other things, the Tourism Improvement District is designed to ensure stable and adequate funding for the San Francisco Convention & Visitors Bureau (SFCVB), and to fund capital improvements, upgrades and expansion analysis for Moscone Center.

Funding for the SFCVB is critical to providing convention and meeting customers with the services, programs and marketing support they need to hold great meetings in San Francisco and maximize delegate attendance. In addition, the TID assessment and accompanying city funds are expected to generate $80 million during the next five years to restore Moscone Center to a state-of-the-art facility and to explore expansion options.

Without the establishment of the TID, the SFCVB and Moscone Center face major budget challenges in the near future which will likely lead to reduced services for convention and meeting customers and indefinite postponement of Moscone Center improvements and upgrades.
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Moscone Center Entrance .
Q: What are the boundaries of the proposed TID hotel zones?
A: Zone 1 would include all hotels within San Francisco city limits on and east of Van Ness Avenue and on and north of 16th Street. This includes Union Square, Fisherman's Wharf, Yerba Buena and Civic Center. Zone 2 would include all hotels within San Francisco city limits west of Van Ness Avenue and South of 16th Street.

Q: What is the duration of this proposed TID?
A: The proposed TID would have a duration of 15 years. However, beginning in year 6, the assessment will be reduced to 1.0% of gross revenue from tourist hotels in Zone 1 and 0.75% of gross revenue from tourist hotels in Zone 2.

Q: How does San Francisco's hotel tax and proposed TID assessment compare to taxes and assessments in other U.S. cities?
A: San Francisco's existing 14% hotel tax and its 1% - 1.5% proposed TID assessment (15% - 15.5% total) is comparable to total taxes, assessments and fees in cities like Chicago (15.39%) and Seattle (15.6%), and below cities such as Boston (17.45%), Vancouver (17%), San Antonio (16.75%), and Kansas City (15.73%).

Q: I already have signed contracts with San Francisco hotels for 2009. What does the TID assessment mean for my organization?
A: As hotel contracts can differ, there is no universal answer, although many contracts include language stating that customers are responsible for changes to taxes, assessments, fees and other encumbrances. Please consult with a representative of any hotels you may have contracts or guaranteed rates with to determine how the TID assessment will affect your organization.

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Without the establishment of the TID, the SFCVB and Moscone Center could have faced major budget challenges, which would have led to reduced services for convention and meeting customers and indefinite postponement of Moscone Center improvements and upgrades, and ultimately reduced economic impact for the city.

"Today's approval of a Tourism Improvement District is a landmark for the future of San Francisco and a breakthrough for the travel industry," said Joe D'Alessandro, president and CEO, SFCVB. "For San Francisco to remain competitive, it was crucial that we develop a long-term strategy that would ensure a steady revenue flow necessary to continue to promote San Francisco as one of the world's premier destinations. I applaud San Francisco hotel owners and operators for investing in the future of San Francisco."

On Oct. 7, 2008, petitions for the Tourism Improvement District (TID) were sent to San Francisco hotel general managers asking the City and County of San Francisco to take steps to form a citywide Tourism Improvement District. As of Oct. 20, nearly 90 percent of the petitions were returned supporting the proposed TID. In early November ballots were sent from the Office of Elections to hotel owners and operators who were given 45 days to submit their votes by ballot to the City. The ballots were counted Dec. 16, with 95 percent of the returned weighted vote supporting the TID. The 15-year assessment will begin Jan. 1, 2009.

The San Francisco Convention & Visitors Bureau is a private, not-for-profit organization that markets the City as a leisure, convention and business travel destination. With more than 1,700 members, the SFCVB is one of the largest membership-based tourism promotion agencies in the country. Tourism, San Francisco's largest industry, generates in excess of $8.2 billion annually for the local economy. The SFCVB business offices are located at 201 Third St., Suite 900, San Francisco, CA 94103. The Bureau also operates the Visitor Information Center at Hallidie Plaza, 900 Market St. at the corner of Powell and Market streets. For more information, call 415-974-6900 or visit www.onlyinsanfrancisco.com

San Francisco is served by San Francisco International Airport (SFO), which offers non-stop links with more than 30 international points on 25 international carriers. The Bay Area's largest airport connects non-stop links with more than 65 cities in the U.S. on 20 domestic airlines. For up-to-the-minute departure and arrival information, airport maps and details on shopping, dining, cultural exhibitions, ground transportation and more, visit www.flysfo.com.

Contact:

Angela Jackson
Director of Public Relations
SAN FRANCISCO CONVENTION & VISITORS BUREAU
201 Third Street, Suite 900
San Francisco, CA 94103-3185
T 415.227.2603

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Also See:

The 300,000 sq ft Moscone West Convention Center Expansion is Completed; 89 Pre-Opening Bookings through 2013 / June 2003