Hotel Tax Merits Approval

July 3, 2007
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The travel and tourism industry can become even more important than it already is to the fortunes of Michigan's transitioning economy, and it's worth putting some good money on the line in anticipation that it will.

Legislation has made its way through the Legislature that, upon the signature of the governor, could help increase tourism and infuse the economy of both Kent and Ingham counties, in particular. The bill, which moved forward through the efforts of State Rep. Michael G. Sak, D-Grand Rapids, allows the local tourism bureaus to assess up to a 2-percent levy on local hotel rooms. Those funds could only be used to support marketing and promotional programs, an expenditure that will not require the full 2-percent levy from the start.

The measure will give the Convention and Visitors Bureau here an opportunity to collect an additional $2 million annually in lodging taxes, but CVB President Steve Wilson acknowledged he can work with just half of that amount in combination with other new sources of revenue, such as the Convention and Arena Authority, enabling the bureau to raise its annual marketing budget from $3 million to $5 million.

Quick nods of approval for this strategy are expected from the CVB board and the hotel advisory group. The third piece of the approval process is crucial.

Convincing hotel operators to raise their guests' bill by 1 percent to help fund the new plan must be a consensus that Wilson is able to obtain despite the tepid support of some suburban hotel operators who have yet to see the value to their operations of the $2 million in annual lodging taxes that is already collected. The skeptical hotel operators among the group should take comfort in knowing they are taking more than another blind leap of faith in approving the measure. There is a new, promising piece of the promotion puzzle that deserves a chance to prove itself.

As we've opined here before, Kent County Lodging Association members need to recognize the value of the work that will be put in place on their behalf by the newly established West Michigan Sports Commission, which will have as its focal point the mission to attract more business to the suburban hotels. The CVB will allocate $150,000 of the required new $1 million each year to fund the fledgling commission and will give at least that amount of in-kind donations to it annually. The commission's office will be within the CVB operation, and the bureau will design and maintain the WMSC Web site.

The Sports Commission will be in position to recognize opportunities for the area to recruit and host activities and events that bring in significant numbers of overnight visitors, many of whom will be taking part in settings located outside of the downtown area and in close proximity to hotels dotted throughout the county. Events such as the recent major volleyball competition and the USA Hockey's Junior B national championship tournament held in March attract a built-in customer base for hotel operations throughout the vicinity.

Combined with the CVB's suburban marketing effort that highlights attractions such as the FrederikMeijerGardens & SculpturePark and links those with nearby hotels, the "pull" of the Sports Commission should help fill a significant number of lodging vacancies for some time to come.

A caveat of the legislation allows the tax plan to "sunset" itself upon a successful vote by the majority of hotel operators who may find themselves dissatisfied with the tax's payoff a few years down the road.

We anticipate that will be an unnecessary vote.    

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