Cottonwood hotel owners: 'we quit'

Bed tax increase causes local businesses to turn their shoulder on the Chamber

Cottonwood hotel owners have responded to the City Council's decision to raise the bed tax by resigning their memberships from the Chamber of Commerce.

According to a letter to the editor signed by all Cottonwood motel and hotel owners, "Since neither our Chamber nor the City Council have our best interest in mind and have voted to tax us 3 percent without specifying a percentage to go to tourism promotion, all the hotels and motels in Cottonwood are resigning from membership in the Cottonwood Chamber of Commerce."

Chamber President Margie Beach is discouraged to see them go.

"It's distressing and disappointing," she said. "Having them resign over this is a blow. It's not something we won't recover from, but for me personally, it's very distressing."

She did add that, in her opinion, the hotel owners are hurting themselves more than they are hurting the Chamber. She said the chamber markets the hotels via brochures, Web sites and other means.

However, marketing is precisely the reason the hotel owners have decided to resign.

"We need to focus on getting people here and the Chamber is not doing that -- absolutely not," said Barbara Vogl with Best Western Cottonwood Inn. "We would not oppose [the 1 percent increase in the bed tax] if we could see the money going to tourism promotion."

Late last month, the City Council voted unanimously to raise the bed tax (an additional sales tax added to transient lodging) from 2 percent to 3 percent. Hotel owners expressed sharp opposition to it because the money raised is to be used to fund the expansion or possible rebuilding of the tourism center. Hotel owners feel they should not be the only ones responsible for generating the revenue to build a new building. If they are going to have to pass the tax on to their customers, they want to see exactly how it will bring in more tourists. And that, they claim, has not been specified.

However, Beach said raising the bed tax would bring in more tourists because the additional revenue would be used to provide a "larger and nicer visitor center" and would provide for better technology to further market the area, including computer terminals for tourists to research things to do in Cottonwood.

Hotel owners remain unconvinced.

They also believe there are other ways to raise money for the new visitor center -- such as raising chamber membership dues.

The Chamber's membership committee is studying a dues increase and Beach said dues will increase in 2007. But that increase will only bring in approximately $10,000 to $12,000. Beach said the Chamber needs about an $80,000 to $100,000 increase in yearly revenue to do everything the board wants.

This year's total income for the Chamber is $215,000.

The Chamber board will try to raise more money by adding fundraising activities and through the sale of books and other items at the visitor center.

The Chamber is anticipating a $3,300 to $3,500 monthly debt service for a 30-year loan to build a new 2,500 square-foot visitor center.

The 1-percent bed tax increase in expected to bring in about $35,000 per year. And that money, Beach said, is coming out of tourists' pockets, not the hotel owners' pockets.

Hotel owners disagree.

"We have to tax more," Vogl said. "Right now, our tax is 10.525. If someone calls for an $85 room and uses their AAA discount, they get 15 percent off. Once we add in the tax, it's right back up there at $85 and people say, 'why is your tax so high?'"

Hotel owners argue that adding another 1 percent limits their ability to raise rates. Vogl has already had to raise rates this year to deal with the increase in the hotel's water bill due to increased municipal water rates.

Again, the hotel owners claim they would not be against the increase if they were convinced it was going to tourism promotion.

In the letter to the editor, the owners listed municipalities including Sedona, Flagstaff and Camp Verde that have a 3-percent bed tax that directly promotes tourism.

"These communities understand what we were not able to convey in our opposition. Tourism is crucial to a community. Bed tax was originally instituted as a way of funding tourism. Hotel and motel owners across our country understand that is the intended use; they also understand tourism is much larger than lodging."

On Tuesday, the council read the first reading of the ordinance that would raise the bed tax. According to the City, a second and final reading is scheduled for Dec. 19. If read, the ordinance would become operative Jan. 19, 2007, and the new tax rate will become effective Jan. 1, 2008.

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