Addendum: On Nov. 2, San Francisco residents voted no to Proposition J, the proposed bill that would have hiked the city’s hotel taxes up to 17.5 percent.
“The people of San Francisco have spoken. By rejecting this measure, San Francisco has avoided cancellations of upcoming conventions and millions of dollars of lost business for years to come,” stated Joe D’Alessandro, president and CEO of the San Francisco Convention & Visitors Bureau.
“We are grateful to the voters of this city for understanding the important role that tourism plays in the economic health of San Francisco,” he continued. “By rejecting Prop J, they have protected more than 2,000 jobs.”
On Nov. 2, San Francisco voters will decide whether to increase the city’s hotel tax from 14 percent to 16 percent. If passed, Proposition J, along with the Tourism Improvement District fees, would raise the transient occupancy tax to as much as 17.5 percent.
That seemingly small difference, when factored into the bigger picture of meeting budgets, may be enough to keep the city off of many planners’ itineraries. In fact, according to officials at the San Francisco Convention & Visitors Bureau (SFCVB), the city stands to lose as much as $150 million-plus in business if the new bill passes.
Joe D’Alessandro, president and CEO of the SFCVB, stated that a number of loyal clients are “already on the borderline of not returning to San Francisco” due to increased costs, taxes and other issues.
“The cost of doing business in the city is driving away our exhibitors along with our convention attendees,” stated a longtime SFCVB client who has met in the city for decades. He says Proposition J could be the deciding factor for his group to no longer meet in San Francisco.
“These sentiments are shared by a number of our top meeting planners,” D’Alessandro stated. “There is tremendous loyalty to our destination by these clients and many of them have met here for more than four decades, but ‘business is business.’ And an increase in hotel tax is a significant factor in the selection process for every meeting planner no matter how attractive the destination.”
As one planner wrote in, “having the dubious honor of … the highest visitor taxes in the country, doesn’t bode well for future convention attendance and the considerable ancillary spend of conventioneers in the city — on restaurants, transportation, exhibitor services, parking, retail and entertainment.”
However, San Francisco is not the only city pushing to increase its hotel taxes. Other towns that have been affected by the recession’s impact on the hospitality and lodging market view higher visitor taxes as one of the few feasible ways to increase revenues. San Francisco suburb Pacifica has its own Measure R that would raise taxes from 10 to 12 percent; DeSoto County, Fla., has a hotel tax increase measure on their November ballot; the Great Lakes Bay Regional Convention & Visitor Bureaus in Michigan are working with state legislators to increase their occupancy charge from 2 to 5 percent; and if all goes according to plan, Birmingham will soon have the highest tax in the Southeast at 17.5 percent.
As reported in a 2009 National Business Travel Association study, the average state, county and city lodging tax was 13.73 percent, with tax rates ranging from 10 percent in Burbank, Calif., to nearly 18 percent in New York City. Conclusive figures for 2010 have yet to be reported.