Thursday, June 9, 2016

Fighting Lodging Tax Creep

In virtually every corner of the state, local and county governments seem to have their eyes fixed on lodging taxes and opportunities to raise them. The recent successes of the lodging industry are being widely reported as more tourists find themselves drawn to Oregon’s wide ranging spectacles. And we of course welcome them with open arms as growth and sales continue to increase.

However, the success we currently enjoy cannot continue in perpetuity. We have been incredibly fortunate in the prolonged status of the current economic recovery and we realize the next recession is not a matter of if but a matter of when.

This distinction seems to be lost on our local and regional representatives who sometimes view the lodging sector as an easy target for their general fund woes. Why not add an extra percent to the local lodging tax to solve our ‘XYZ’ revenue shortfall? Can’t they just pass the tax on to their guests?

If only it were that simple. As “lodging tax creep” continues throughout the state, we’re finding the need for a renewed commitment to support our local and regional stakeholders who are fighting the urge of local governments to tack on more tax burden on the administrative shoulders of our industry.

For one, we’re already making it very clear that we will be strongly opposed to lodging tax increases moving forward unless there is local support from the lodging community. To that end, we are encouraging local governments to reach out to their local lodging stakeholders as a crucial first step if they feel they have a case for why a local lodging tax rate should be adjusted.

Cost drivers within government are strapping city managers and city councils who are determined to balance their budgets. These significant rises in expenses continue to be driven by pension and healthcare obligations that require more revenue as retirees live longer lives and as healthcare premiums continue to rise.
We fully understand these challenges and openly welcome conversations with local governments that feel the lodging tax is somehow a piece of the answer to these challenges.

Oregon Restaurant & Lodging Association created a “Tourism Best Practices” handout as part of our renewed effort to carefully track lodging tax creep across Oregon. This document is one tool that can be used by lodging operators to help explain the important symbiotic relationship our industry shares with local government partners.

Our success is their success until lodging tax creep gets out of control. I believe we are on the brink of crossing that unsustainable threshold and as a result, we need to be more aggressive in protecting local governments from biting the hand that they rely upon for sustained tourism promotion as well as partial general fund support.

If you are aware of lodging tax creep in your community, please contact us at | Jason Brandt, President & CEO