HomeMy WebLinkAbout03/05/1991, 1 - INCREASE IN TRANSIENT OCCUPANCY TAX RATE (2) R E U t'I 1!E D SNEMNN_ _ A pA
(��CaD�}V®1� OATE�_ITEM
FEB 2 71991 Lodge
February 27, T CLERK •
i c 1 Jaz►Lynch Dawoes Axion Q FYI
8AN 1U�5 OBISPO,CA D °J�® O
❑lean Monterey Sb a Sao Luis o ,Calilomia 9340
805/SH-8600Pm%
0 Fw DIRFIRE E
1:1 FW DnL
Honorable Mayor and Members of the City Council PRIG. ❑ pp(�Q{
City of San Luis Obispo GMT.TFA.M ❑ RECDIP.
P.O. Box 8100 ❑ C DF1LE ❑ 1J17LDiR
San Luis Obispo, Ca 93403-8100 � —
Dear Mayor and Councilmembers:
The San Luis Obispo Hotel/Motel Association would like to
..express concern over the proposed bed tax increase from 6% to
9%. This is a 50% - increase at a time when many hoteliers are
finding the traveling public, travel agents and tour
operators extremely price sensitive due to the recession and
the Persian Gulf war. Although we understand the City' s need
for additional revenue, we are concerned about a tax increase
during a recessionary period.
Please consider these facts:
# According to the San Luis Obispo City Finance
Department, the bed tax collected from August, 1990
to December, 1990 is down 4% from the same period
in 1989_
# Tour operators who rely on travelers from Europe and
Asia during the off season say business has plunged
30% - 40%. This means many motorcoach tours expected
to stop over in San Luis Obispo have been cancelled.
# The San Francisco Visitors and Conference Bureau is
reporting a drop of 10% to 25% in tourism to the Bay
area due to the recession and the Persian Gulf War.
Given these statistics, do we really want to do anything at
this time that would discourage visitors or possibly place a
negative impact on the industry that provides so much to the
economic life of San Luis Obispo?
If the City ' s need for additional revenue results in a higher
bed tax, we feel this increase should be implemented in a way
that would be financially palatable to most hoteliers.
The Hotel/Motel Association agrees with the San Luis Obispo
County Visitors and Conference Bureau and the San Luis Obispo
Chamber of Commerce on the following:
# Any increase should be phased in over the next three
years rather than a 50% jump at once. This would give
hoteliers with motorcoach and group business time to
negotiate for a higher rate in the 1992 tour season.
Page 2
* Delay the increase until October 1, 1991. Contract
business, such as motorcoach tours, is negotiated 1 -2
years in advance. Delaying the increase until fall
would elev.iate the hotels having to absorb any
increase during the peak summer season .
�* Combine an increase in the bed tax with a solid
commitment to ongoing tourism promotion through
guaranteed funding to the San Luis Obispo County
Visitors and Conference Bureau and the San Luis Obispo
Chamber of Commerce. The Hotel/Motel Association
would like to see a five year contract with these
entities in order to provide adequate funding levels
for the future promotion of tourism.
Enclosed are letters from two tour operators who are
concerned about the bed tax increase. These letters will
provide additional support to our request to phase in any
increase over the next three years.
We would also like to point out the additional cost paid by
the hotels when collecting the bed tax from a guest paying by
credit card. In 1990, approximately $34,500 .in credit card
transaction fees was paid by the local hoteliers to Visa,
Mastercard, and American Express. Should the bed tax increase
to 9%, those transaction fees would become approximately
$52,900. As you can see, this is not a free tax collected by
the hoteliers for the City.
San Luis Obispo competes with many cities in California that
spend significantly higher dollars on tourism promotion. We
must remain aggressive in our advertising campaigns or these
much needed revenue dollars will be spent in other
communities. By your ongoing commitment to the Chamber of
Commerce and the Visitors and Conference Bureau, you will be
helping the tourism industry in San Luis Obispo which in turn
benefits the entire community.
I would be happy to meet with each of you prior to the City
Council meeting on Tuesday, March 5, 1991 to further discuss
this matter. Thank you for your time.
Sincerely ,
Jan L. Lynch
President
GLOBUS Golden Holiday Tours
GATEWAX150 South Los Robles Avenue, Pasadena, California 91101
cosmos
11,818) 449-0936 • Fax. (818)449-8856.
February 7th, 1991
Ms. Jan Lynch
Cuesta Canyon Lodge
1800, Monterey St
San Luis Obispo
CA 93401
Dear Jan,
This letter is in response to the news that San Luis .Obispo is considering
raising the bed tax from 6% to 97. Frankly, I am appalled at the suggestion.
As a tour operator it is going to be a difficlut enough year as it is, trying
to combat the negative impact of a recession combined with the war. At such a
crucial time we expect support from the very people whose businesses we have
supported over the last several years.
We bring approximately 150 tours a year into the San Luis Obispo area, representing
4,000 room nights and a dollar volume of $175,000.00 — this represents room and tax
only, not counting the supplementary business brought to all 1pcal suppliers in
terms of food, beverage, souvenirs etc. If this tax is to go ahead, we may have
to consider looking for alternative overnight accommodation in order to stay
within our budget.
Like all tour operators, we plan our budget at least a year in advance in order to
meet brochure deadlines. The hotels realise this and work within this time
structure. Once a room rate is given, this is guaranteed. We hope that the powers
to be governing local taxes also respect our constraints in this area, and realise
the hardship caused with a sudden increase with no prior notice.
We are unable to pass on such an increase to our clients at this stage — to do so
we would lose the goodwill of our repeat clientele which forms the bulk of our
business. The alternative is to absorb the expense ourselves — again, I must
emphasize, at a point in time when we are ill equipped to do so. I urge you to
put our voice forward in the hearing and appeal against any increase. I feel this
is the least we can expect in return for our loyal support of San Luis Obispo.
Sincerely,
Kate Robinson'
Manager North America Operations
KR/em
Saga
Holidays
February 14, 1991
To Whom it May Concern:
Saga International Holidays has been contracted with the Cuesta Canyon Lodge in San Luis Obispo
for two seasons. We are contracted for 600 room nights for the 1991 tour season with an
approximate room revenue of $27,000.00 to the Lodge. We feel that an increase of room tax from
the current 6% to the proposed 9% would be a large enough increase to seriously jeopardize our
commitment to the Lodge and the town of San Luis Obispo to bring our passengers and their travel
dollars. Not only would the Cuesta Canyon Lodge suffer, but the town would suffer as well. We
strongly recommend that such a large jump in the tax rate be reconsidered so that we, and other
travel operators, don't have to reconsider coming to San Luis Obispo in the future.
Thank you.
Sincerely,
Com-
Susan Gettum
Administrative Supervisor
Product Development
Saga International Holidays,Ltd.,120 Boylston Street,Boston,Massachusetts 02116
Business Office(617)451-6808,Fax(617)451-6474,Telex 6817570
Reservations(800)343-0273, Fax(617)423-4262
MEETING AGEIIIQA
DATE - / MI i`_
San Luis Obispo Chamber of Commerce
1039 Chorro Street • San Luis Obispo, California 93401
(805) 543-1323 9 FP.X (805) 543-1255
David E. Garth. Executive Manager
RECEIVE ®
CMNBTO:
February 22, 1991 FEB 2 7 1991 ❑e=OD
lT ®Ac n 12�ad . Dt
CITY CLPRK QDUL
SAN LUIS OBISPO.CA e0 pMW
❑
Honorable Mayor and Members of the City Council �ZWORtc. ❑ RteflvDut CX .
City of San Luis Obispo ❑ Mcur.TEAM ❑ Rec DO.
❑ CRFADFlLE ���
P.O. Box 8100
San Luis Obispo, CA 93406-8100
Dear Mayor and Councilmembers:
Last year, we wrote to you about our concerns related to raising the City's Transient
Occupancy Tax. Although most of the factors that we enumerated in our letter are still
present and have intensified, we acknowledge the City's financial condition, and we
have been working on finding a mutually acceptable solution to the TOT dilemma.
Here are the essential points we feel are necessary to protect both the City and the
vitality of the tourism industry:
• We reluctantly can accept the TOT being raised to 9%, but only if the increase
is phased in at 1% per year for three years. This gradual increase would let the
market adjust to the new rates, and make the increase less damaging.
• The tax increase must not take effect until after October 1, 1991. Many
properties depend on tour and contract business; they have existing contracts with
tour operators and others which preclude the property from raising prices until
after the 1991 tourist season.
• Any tax increase must be accompanied by a strong commitment from the City to
ongoing tourism promotion. Because tourism businesses depend on a constant
stream of new customers just to stay even, aggressive promotion and advertising
is essential not for growth but for survival. As one of our city's most important
economic sectors, we should be able to count on a reasonable portion of the
TOT revenue being spent as it was originally intended. This commitment should
take the following form-
1. A five year contract with the Chamber for promotional services,
beginning at our current amount plus 10%, with annual with
ACCREDITED
CHAMBER OF COMMERCE
cllT.III N 01 CoMM1NCl
01 11•I sl+11 ti
City of San Luis Obispo--TOT Page 2
CPI+1% inflation adjustments, and annual cancellation provisions.
2. A five year contract with the Visitor's and Conference Bureau with annual
cancellation provisions.
3. A five year spending agreement for advertising, starting at the current level,
with annual inflation adjustments based on a nationally accepted index of
magazine advertising rates. Agency contracts should be one or two years in
length.
The tourism industry is hurting. Several businesses are in bankruptcy and two major
motels are in receivership. Several more are on the edge. We face stiff competition
from other cities who are adding new facilities and attractions and increasing their
promotion. If the proposed TOT increase is to yield additional revenue for the City,
we must keep our tourism industry from declining by using a small part of the increase
in TOT to fund additional promotion.
A substantial part of the City's revenue stream (from both TOT and sale tax) depends
on residents of other cities making a decision to visit San Luis Obispo. We must keep
encouraging them to make the right decision.
Thank you for your consideration.
Sincerely,
David E. Garth
Executive Manager
Y AEE -? 3- #nw
ITS RECEIVE
ic!i . FEB 2"91
San Luis Obispo County -
l 96
Visitors & Conference Bureau st
Adkn Cr FYI
DIX
FWDW-
February 28, 1991
Honorable Mayor and Members of the City Council
City of San Luis Obispo
P.O. Box 8100
San Luis Obispo, CA 93406-8100
Dear Mayor and Councilmembers,
The San Luis Obispo County Visitors & Conference Bureau has
devoted its efforts to strengthening tourism, the economic
lifeblood of this City. Because of our expertise in this field,
we are strongly opposed to the transient occupancy tax rate
increase and to the size of the increase that the city is
proposing.
We understand the City's need to generate additional revenues and
increasing taxes is one way to accomplish this goal. The VCB
wants to ensure that this occurs without negatively impacting a
vital source of these revenues -- the tourism industry. We feel
strongly that there is a solution to this dilemma that will be
acceptable to all parties concerned.
If the TOT rate increases, the VCB recommends the following:
* The TOT increase should be phased in at 1% per year.
This gradual increase would impact to a lesser degree the
segment of the market that will undoubtedly feel the effects
of this tax the most -- group and motorcoach business.
* The tax increase should not take effect until October 1,
1991. This delay will enable businesses to more easily
absorb the cost of existing tour contracts at lower off=peak
rates than at the higher summer rates.
* Any TOT rate increase must be accompanied by a strong
commitment from the City to continuous tourism promotion.
Promotion means survival in the tourism industry, especially in
these economic times. Because tourism is such an important
industry in this City, we should be able to count on a reasonable
1041 Chorro Street, Suite E. San Luis Obispo. California 93401 C805) 541-8000 FAX (805) 543-1255
San Luis Obispo County VCB page 2
portion of the TOT revenue to be spent as it was originally
intended. The long term commitment by the City should include the
following:
I. A five year contract with the San Luis Obispo County
Visitors & Conference Bureau in an amount equal to 3 . 5%
of the TOT revenues each year, with annual review
provisions.
II. A five year contract with the San Luis Obispo Chamber of
Commerce with annual review provisions.
III. A five year spending agreement for advertising, starting
at the current level, with annual review provisions.
The tourism industry has experienced some difficult times in the
recent past and will see even more difficult times in the near
future. These hurdles can be overcome with a strong tourism
promotion campaign. We must promote aggressively or we will lose
our visitors to those destinations North and South of us who
already have significant ongoing promotion campaigns.
San Luis Obispo' s economy depends on visitors to generate a
substantial portion of the revenues required to maintain our
quality services. A strengthened tourism industry means
increased revenues to the City as well as a healthy economic
climate -- a win/win situation for all.
S ncerely,
Jo i E r
' Ex cutive Dir ct