Hoteliers: Hotel Occupancy Tax eating into profit margin
POSTED: Tuesday, August 5, 2014 - 5:34pm
UPDATED: Wednesday, August 6, 2014 - 4:26pm
El Paso, TX (KTSM) — It's been almost two years since El Paso leaders decided to raise the city's hotel occupancy tax by two percent to help pay for the new baseball stadium downtown. Some hotel owners feared the tax hike would deter large groups from visiting the city.
Some business owners argue that the hot tax is eating into their profit margin.
Business has been steady for the Days Inn off I-10 East and Yarbrough. "To date, we haven't seen any significant impact in the increase in the hotel tax,” Joe Frandina, the Managing Partner for the Holiday Inn Express and Days Inn Express explains.
He also states that doesn't mean there hasn't been an impact, "It could be a detriment to winning bids on group business,” Frandina says.
The 17.5-percent hotel occupancy tax is the highest rate in Texas. 2-percent was tacked on in 2013 when city leaders where trying to come up with ways to pay for the ballpark. "We were certainly against it and we're certainly not happy with it.”
Frandina says large groups are reluctant to hold conventions here because of the tax rate. He said he's had to offer lower room rates for potential bids -- to try and offset the tax hike. "They ask us to lower their rate to accommodate their budget because they also are also required to pay the taxes on the rate.”
But some argue the hot tax is a best way to pay for Sun City amenities so residents don't have to. "Putting it on visitors paying for their hotel rooms that visit the community because that's exactly what all of us do every time we travel,” Richard Dayoub, the President of the Chamber of Commerce explains.
According to the Texas's Comptroller's Office, hotel revenues were up $1.3 million in May of this year compared to last.
And some say that's a positive sign -- visitors will continue to come no matter the tax rate. “People have to come here for, to do their business and therefore, their companies will pay the tax, almost whatever it is,” Frandina says.
The hot tax doesn't just go toward the ballpark. It's also used to pay for various city and county ammenties.
And some say, it has not prevented Downtown’s future growth with two new hotels building in the area.