Hotel tax increase would put Baton Rouge in line with other destination cities
While the proposed 2% occupancy tax increase local tourism leaders are pushing would raise Baton Rouge’s hotel tax to 16%—which, to the layperson, may sound exorbitant—tourism officials from destination cities like New Orleans and Nashville say it’s competitive and in line with what other markets are tacking on to their visitors’ hotel bills.
In New Orleans, where the base hotel tax rate is 14%, visitors actually end up paying nearly 17.5% in taxes when various fees and assessments are added in, says Stephen Perry, president and CEO of the New Orleans Convention and Visitors Bureau. Visitors to Nashville pay a tax rate of more than 17% and nearly 20% in Atlanta, Perry adds.
“If you’re at 16%, you’re in the middle of the pack and you’re competitive as a mid-sized destination,” he says. “You’re not doing anything to price yourself out of the market.”
But Baton Rouge isn’t a destination market like New Orleans or Nashville, which not only host major international events and conventions but are also world-class tourist destinations.
So does it make sense for Baton Rouge, which attracted some 4.3 million visitors in 2016, to impose a 16% room tax?
Yes, say Butch Spyridon, president of the Nashville Convention and Visitors Corp., who headed Baton Rouge’s CVB in the early 2000s—provided the money is well spent on incentives and a marketing plan with deliverables that can be measured.
“If everyone is on the same page and there is a plan and a vision to move the city forward from a visitor-spending standpoint, then it could make some sense to increase the tax,” Spyridon says. “I support giving marketing organizations the necessary funds to do the job if the plan is there and the measurements are there to make sure there is an ROI.”
Visit Baton Rouge CEO Paul Arrigo, who joined River Center General Manager Michael Day in touting the tax increase at Tuesday’s Downtown Development District meeting, says VBR does have a plan for the money but it’s not one that can necessarily be laid out for voters before the November election.
That’s largely because the 1% of the tax increase, or about $1.3 million a year, that will go to VBR—the River Center will get the other $1.3 million for improvements to the facility—will be used on a variety of marketing needs that will change from year to year, Arrigo says.
“Our initial plan is to do some advertising for leisure, group and individual tourism and in trade magazines to help us pursue conventions and conferences,” Arrigo says. “We also have a list of organizations that we want to go after and have had some contact with that require bid fees that are associated with them. There are several other sporting events that require bid fees.”
VBR officials provided a document to Daily Report with a rough breakdown of how the money would be spent. Among the items on the list: increasing the fund for required incentives and bid fees for hosting future meetings and conventions; creating a fund for required incentives and bid fees for sporting events; increasing the leisure tourism marketing budget; promoting festivals; investing in large-scale visitor driven events; investing in marketing research; launching an annual community outreach campaign to encourage friends and family members of local residents to visit; and, better brand and market Baton Rouge.
Arrigo notes that cities comparable to Baton Rouge as a potential visitor destination also have similar hotel occupancy tax rates. Knoxville, Tennessee, and Omaha, Nebraska, are both 17%. Shreveport has a tax rate of 15.6%.
It’s well established in the tourism and hospitality industry that visitors pay a hefty hotel tax wherever they go, Perry says. The key is to make sure the money is dedicated back to the industry and is spent on campaigns, ads, incentives and infrastructure improvements that will make a measurable difference attracting visitors to the market.
“Your money has to go either to infrastructure enhancements like a convention center or an assembly center, or direct marketing and branding.”