In an Oct. 26 Metro story about a hotel tax increase to fund city schools, Ed Lazere, executive director of the D.C. Fiscal Policy Institute, was quoted as saying that he had researched hotel tax increases in other major cities and had found no clear evidence that they chased off business. The facts are otherwise.
Hotel tax increases in New York City, for example, were an economic catastrophe. In the 1990s New York City raised its hotel tax and became the city with the highest room tax among major convention destinations. It subsequently was boycotted by meeting planners and associations.
New York lost conventions and, consequently, millions of dollars, not only in hotel tax revenue but in food, beverage, transportation, entertainment and retail taxes. To regain its competitive edge, New York has reduced its hotel tax three times in the past decade. This reduction has allowed it to recapture the tourism and convention market and even increase its hotel tax collections.
Washington competes with 20 other top U.S. cities for convention business. If hotel taxes are raised, as proposed by D.C. Council member Kathy Patterson (D-Ward 3), Washington will have the highest hotel tax among its competitor cities. What on paper may seem to be a small amount has massive ramifications for the decisions of meeting planners.
Losing just one piece of business, such as the convention of the American Academy of Orthopedic Surgeons, could cost the District $40 million in direct spending. Hospitality workers also would be idled.
The District cannot afford to ignore competition in its immediate area, either. Outside Washington, but still within the area, are 62,000 hotel rooms, all operated at lower costs and offering lower rates than their D.C. counterparts. Suburban hotels and motels also have lower tax rates than D.C. hotels.
For every 16 room-nights pushed to the suburbs or lost to a competing city, at least one person in the D.C. hospitality industry may not work for a day. Housekeepers, bellhops, engineers, chefs and waiters are all part of the equation, and this job loss multiplies as it cascades through the city's economy.
Risking the health of an industry that provides jobs for so many District families is not good public policy. Dealing with our dilapidated school facilities should be the District's top priority, but raising hotel taxes is not the way to do it.
-- William A. Hanbury
is president and chief executive of the Washington, D.C.,
Convention and Tourism Corp.