Options for Hotel Owners – Seattle Ranks Among Worst 5 Cities in Travel Taxes
July 23, 2011 – updated 12:14 a.m.
Yes, hotel owners are panic-stricken – hospitality profits are down in Seattle and everywhere else.
But for the second consecutive year, Seattle ranks among the most-expensive for travelers, and hotel owners want to hike room taxes for a tactic that will not work. Not to criticize, they have better options, which I’ll explain later.
Seattle imposes the third-highest car rental, hotel and meal taxes among the 50 largest markets in the nation, according to a 2011 business study by the Global Business Travel Association Foundation.
Taxes include: A general sales tax, and taxes on car rentals, hotels and meals.
Ironically, the Seattle Hotel Association wants to tack on another $2 tax for each room per night for travelers. That’s in addition to the 15.6 percent in sales and room taxes already levied on hotel guests.
Unfortunately, they think the excess funds should be used in an advertising campaign to boost tourism. The Seattle City Council will vote on the issue.
The five highest-taxing cities: 1. Chicago. 2. New York City. 3. Seattle. 4. Boston. 5. Kansas City.
Ironically, Seattle ranks among the three most-expensive but is only the 15th-largest city in America.
The foundation’s director of research, Joe Bates, says there’s a huge difference among the 50 cities – as much as 80 percent. It’s not surprising that such taxes affect the travel plans of business people.
“If you are a travel manager planning a meeting, this is important information to take into consideration,” says Mr. Bates. “And if you are a retail business attempting to lure travelers, this tax rate differential is a competitive advantage or disadvantage.”
Better Options for Seattle Hotel Owners
In my experience as a confidential business-performance consultant, who has also produced hundreds of radio-television commercials, my sense is that an increase in Seattle hotel taxes to fund an advertising campaign is ill-advised. There are good reasons why stay-cations have been prevalent.
Sometimes you can’t buy the market, especially in the tourism sector for a rainy region in a downturn. In addition, Seattle hotel owners have already committed missteps — three of the 14 reasons for the failure of a marketing campaign (How to Win Your Major Marketing Campaign).
Don’t get me wrong, I love Seattle, but hotel owners would be better served using other less-costly strategies for a positive return on investment.
Short-term, in times like these, it’s much better to be creative in strategy with an effective public-relations campaign and strategic partnerships with contests as the anchor element in a promotion.
Consider a Seattle asset: Alaska Airlines. Why do you think Alaska Airlines is loaded with Seattle passengers in February for flights to warm-weathered Mexico and Hawaii? Conversely, Alaska Airlines would love to strategize as a partner in savvy promotions to bring tourists to Seattle in the wintertime.
Long-term, strategies should include sharing the cost with other groups in underwriting image-building initiatives. For example, Washington Filmworks (www.washingtonfilmworks.org) and the Seattle Film Office (www.seattle.gov/filmoffice) to promote filmmaking.
It was a win-win with these two organizations until legislators killed a great tax-incentive program and opportunities for growth (How Washington Fails in Filmmaking for Economic Development). Maybe it happened but I don’t recall the Seattle Hotel Association lobbying the Legislature last session.
Films create emotions, which fill hotel rooms in rainy weather by helping to overcome resistance by winter travelers who’d prefer to visit sun-soaked locales.
So, a two-pronged strategy — a strategic public-relations program and partnering for image-building films — are the solution.
Oh, by the way, filmmaking also creates jobs while enhancing both the city’s and state’s economic image. In terms of public policy – for a region that’s thirsting for jobs and tax revenue – hotel tax increases and eliminating tax incentives are deterrents to economic development.
Consumers, out-of-state corporations and small businesses have budgets, too.
From the Coach’s Corner, are you surprised Washington state also doesn’t even rank among the top 10 pro-business states? That’s according to a 2010 study by Pollina Corporate Real Estate.
Pollina’s 2010 top 10 pro business states:
- Virginia
- Utah
- Wyoming
- South Carolina
- North Carolina
- Nebraska
- Kansas
- South Dakota
- Alabama
- Missouri
Here’s more information.
Over-taxing business travelers and maintaining anti-employer public policies hurt Washington state’s business competitiveness. Job creation and economic health will not be enhanced. The prescription: A heavy dose of economic patriotism.
“The economy is bad. It’s so bad, third graders in China are being forced to take second jobs.”
-Jay Leno
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Columnist Terry Corbell is also a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complementary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?
