Fearing the 'pinch' of proposed lodging tax

A 3 percent occupation tax is a step closer to becoming a reality, leaving Beatrice hotel and motel owners concerned they will feel the pinch.

The Beatrice City Council approved 6-0, with councilman Gary Lytle absent, to read by two times the ordinance establishing a 3 percent occupation tax Monday night. The ordinance must be read three times before it is enacted.

The council proposed the 3 percent occupation tax to fund city capital improvement projects, such as the Beatrice trail system or the Carnegie Library, Beatrice Mayor Dennis Schuster explained Monday night. The fund is projected to bring in an additional $60,000 for the city.

The city enacted a 2.5 percent occupation tax in 2007 to help pay for a proposed joint city and county visitors center, but the tax was repealed after Gage County dropped out of the project.

The proposed tax drew opposition from local hotel and motel owners Monday night.

“I oppose and the Holiday Inn Express opposes the institution of this occupancy tax,” George Lemke, Holiday Inn Express Hotels and Suites owner, said. “Currently we pay 12 percent in total tax.

“The addition of a 3 percent occupancy tax would raise the total tax to 15 percent, which I believe will match the tax that exists in Omaha and probably exceeds the tax in Lincoln,” Lemke said.

Currently, 65 to 75 percent of the Holiday Inn’s occupancy is a direct result of business activity within Beatrice, Lemke said. Therefore, he said, it would affect local businesses.

The tax would also become a factor whether visitors will stay in Beatrice or stay in Lincoln, where there are more attractions, restaurants and other amenities, Lemke said. He and other hotel owners have already said the economy has taken a hit on their business as occupancy is down about 10 percent from last year.

KJ Patel, Victorian Inn and Traveler’s Lodge owner, also expressed her opposition to the additional 3 percent tax.

A majority of her customers are “blue collar” workers, and they were upset when they heard it may be costing them more, she said.

“Once they’re feeling the pinch, I’m sure they’ll start looking elsewhere,” Patel said.

Councilman Ted Fairbanks questioned whether or not a 3 percent additional tax would lead to people staying in Lincoln, where the room rates are already higher. He said he believed people wouldn’t do that, especially if they had purpose for staying in Beatrice and gas is $4 a gallon.

Michelle Mayfield, the chairwoman of the Gage County Visitors Bureau Advisory Board and an employee of the Holiday Inn and Express, said people already opt to stay in Lincoln and drive down to Beatrice.

Mayfield also questioned what projects the city was planning to fund with the money collected from the tax. Many of the hotel owners and employees want to know what the tax is going to be used for and if it will be something that will benefit their business and help them increase their occupancy, she said.

Councilman Alan Fetty said he pays 13 to 19 percent in taxes on lodging when he travels. He doesn’t know what those taxes are being used for in those communities.

When the sales tax was first enacted several years ago, there were also a lot of concerns about the effect it would have on businesses, Fetty added. But they found that sales tax revenue increased dramatically.

“Just to create a tax just so we have some spending money is wrong,” Councilman Dwight Parde said.

Parde went on to say the city needs to identify established community improvement projects that would draw people to Beatrice before they enact a tax, not just collect money and then pick a project.

Councilman Phil Cook, who served on the occupation tax committee, noted that the ordinance includes an 18-month sunset clause that provides that the hotel and motel industry would be monitored to determine what effect the tax had on the industry.

Members of the city council also encouraged the local hotels and motels to come forward with projects they felt would be beneficial to the community and their businesses.