Hotels Brace For Higher Tax Burden


POSTED: Wednesday, December 12, 2012 - 6:58pm

UPDATED: Thursday, December 13, 2012 - 7:54pm

El Paso Guests to Pay Highest Room Taxes in Texas

As early as January 2, El Paso City Council will enact the so-called "HOT" tax, the two percent increase in hotel room occupancy rates, with the money earmarked to pay for as much as 50-million dollars of construction for a new downtown baseball stadium.

Voters approved the measure n November, when it appeared as Proposition 3 on the city ballot.

It might be at least a month away, but the new, higher taxes that hotel guests will pay in El Paso are causing hotels to create new strategies to attract visitors and to keep their regular customers.

At Hyatt Place on I-10, Danny Padilla is the general manager and president of the El Paso Hotel-Motel Association.

"We may have to negotiate our rates down to adjust for that two percent in the event that the guest or the account says, 'We came in looking at a 100 dollar rate, now it's 102 dollar rate, so what can you do as a hotel to get back to the rate we agreed on?',  so that might make us go down with the rate to compensate for that increase"

With another two percent surcharge on the way, El Paso hotel rooms will draw the highest taxes in Texas, 17.5 percent. That's a challenge as the Sun City tries to compete with Houston, Dallas, and Austin for large groups and conventions, which shop very carefully when booking large blocks of rooms.

Padilla explains, "They're looking at volume when they come in, so you're looking at not one room but thousands of rooms, and you multiply that by the two percent, and you're talking about thousands of dollars.  In some cases that will make the difference."

Adding even more conflict are the strict terms and harsh language the city's attached to the new hot tax:  A violation for each day a hotel is late paying room taxes....heavy fines with interest...the option to prosecute late payers, even the threat of closing a hotel until taxes are up to date.

City Council invites public comment on the new "HOT" tax at its regular meeting next Tuesday.

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