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Council should look critically at proposed hotel fee

June 17, 2018 GMT

Mayor Ron Nirenberg and City Council need to think long and hard about why the city privatized its tourism department — and whether the promise of greater private fundraising has been kept.

The mayor and council also need to consider how much is too much when it comes to charging visitors. The proposed 1.25 percent lodging fee for large hotels would be in addition to San Antonio’s 16.75 percent hotel occupancy tax. That’s a steep price for visitors to pay to enjoy our city, even if it leads to more robust marketing.

That alone is reason enough to be skeptical of the proposal from the San Antonio Hotel and Lodging Association and Visit San Antonio, the private nonprofit that receives millions in public funding. It was known as the Convention and Visitors Bureau when it was part of the city.

If enacted, the proposal would create a tourism public improvement district that would blanket the city. Hotels and other forms of lodging with more than 100 rooms would tack on the 1.25 percent fee to raise millions in marketing dollars for Visit San Antonio. Sixty percent of San Antonio’s hoteliers would have to approve the PID’s creation.

In an interview, Liza Barratachea, president and CEO of the San Antonio Hotel & Lodging Association, said this is a common practice in other cities. The fee, she said, is something “hotel owners would have to agree to.” And she described it as good for business. Better marketing would lead to more visitors, which would lead to greater hotel occupancy tax revenue.

“We think this is going to, again, raise all ships,” she said.

Maybe so. It’s troublesome, however, that this fee was not a prevalent part of the discussion around privatizing the Convention and Visitors Bureau — a move we opposed for a variety of reasons.

The conversation around that effort was largely about how making the CVB private would open the door to private fundraising.

“The city will still remain the largest contributor,” Dan Decker, who was president of SeaWorld San Antonio at the time, told a city task force in 2015. But going private “frees up the CVB, like in other towns, to go and find other revenue sources.”

The thinking was those other revenue sources would be private sponsorships and member dues — hopefully to the tune of $10 million.

“The pitch that I heard also was that it would make it easier for the CVB to raise funds in the private sector,” Nirenberg said in 2016 when he was a member of council.

Former District 9 City Councilman Joe Krier, who championed turning the CVB into a nonprofit, told us if the fee had been discussed at that time, “I might not have voted for” privatizing the CVB.

Like others, he was under the impression this was about raising private funds, not fees.

Visit San Antonio, which was constituted in 2016, has started a membership program, but that’s only expected to add $1 million to its budget of about $25.5 million, according to Express-News reporter Joshua Fechter.

Casandra Matej, president and CEO of Visit San Antonio, has said the increased fee would push that budget closer to $33 million. Officials have described this as a way to keep up with the likes of Houston, Dallas and Chicago.

But those are all significantly bigger metro areas.

The fee would push San Antonio’s hotel costs well ahead of other major Texas cities. Dallas hotel users pay a 13 percent occupancy tax as well as a 2 percent public improvement district fee. Austin hotel users pay 15 percent in city and state taxes. Houston hotel guests pay 17 percent in occupancy taxes.

Barratachea said this was always part of the discussion — but the comments from Krier and others belie that point. If a major goal of spinning off from the city was to raise private funds for Visit San Antonio, this isn’t what was understood. In fact, the vote to create Visit San Antonio might have been different if a new fee had been part of the discussion.

That makes this a promise unkept and an additional burden on visitors.

A better way would be for the private sector to raise additional marketing funds for the private nonprofit that was created to support the tourism industry.

But maybe that was never the goal.