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Wednesday, 07 December 2011 13:42

In a business where profit margins are small, hotel owners fear larger tax will drive tourists elsewhere

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Running a small hotel in Western North Carolina isn’t the easiest way to make a living, particularly not in these penny-pinching times when prospective customers want a full range of amenities and a rock-bottom room price.

“It is hard for small businesses like this,” said Sneha Amin, who owns and manages the 22-unit Economy Inn in downtown Sylva. “People are not wanting to spend anything, because they don’t have anything.”

A plan is in the works to increase the tax on overnight lodging in Jackson County from 3 percent to 6 percent, as high as state law allows. The prospect has left Amin and other hotel owners in the area — large and small — on edge, worried that such an increase could further drive away the ever-dwindling number of visitors they depend on for survival.

But proponents say the room tax is needed to offset a decline in tourism revenue in Jackson County.  The increase will mean more money to market Jackson County as a destination, which in turn should increase tourism. That’s something supporters say Jackson County sorely needs as overnight stays are still off by 12 percent in Jackson compared to 2006.

Alleghany County, which is increasing its room tax from 3 to 6 percent this year as well, has experienced similar ups and downs, according to Alleghany County Manager Don Adams. Like Jackson, Alleghany hopes the extra money from the tax increase — which means more money at its disposal for tourism marketing — will turn the tide.

Most of the protests in Jackson County have come from the Cashiers and Glenville area, where posh inns, golf course resorts and B&Bs cater to a well-heeled, but increasingly frugal, crowd.

But the fear of hardship to come via any increase is the same in Sylva. A block or so from the Amin’s hotel at the Blue Ridge Inn, far from the Cashiers area, Pete Patel is equally worried. Patel and his wife have owned and operated the 33-unit hotel for eight years.

“The summer was OK, but the winter is going to be tough,” Patel said, adding that he hopes commissioners won’t move forward with plans to hike the tax.

Those fears might be overstated.

Linda Harbuck, longtime executive director of the Franklin Area Chamber of Commerce, said she hasn’t noticed any particular decline in Franklin’s hotel stays since that town went from a 3 to 6 percent room tax. While Macon County’s base room tax rate is only 3 percent, the town of Franklin tacked on an additional 3 percent in the town limits.

“They seem to do all right,” Harbuck said.

The story is the same in Henderson County, which a year-and-a-half ago raised its room tax from 4 to 5 percent. Karen Baker, spokesperson for the Henderson County Chamber of Commerce, said that the tourism group has not seen a visible decrease in room stays since the increase.

“There are always two sides whenever there is an increase in a tax, but it hasn’t seemed to hurt occupancy,” Baker said.

Hotel owners in Jackson County beg to differ.

Raise the room tax, and it might drive tourists away and cost the county jobs, Amin and the other hotel owners said. Amin said she’s finding it difficult enough to earn the required $8,000 or more each month needed to pay the hotel’s bills.

Larger hotels are also feeling the dour economy’s tight squeeze.

“We hope that our county commissioners will hear our concerns and ease our fears,” said Megan Orr, director of sales for Best Western Plus River Escape Inn & Suites in Dillsboro. “Prospective customers make informed choices and will see and feel the difference of our higher taxes compared to our neighbors.”

 

How Jackson’s room tax stacks up

Two-thirds of the state has a higher room tax rate than Jackson County. With a tax of only 3 percent, Jackson is one of only 33 counties with a rate that low.

Jackson County leaders are debating whether to take the room tax rate to 6 percent — a rate share by roughly 30 other counties. Here’s some of the other rates in Western North Carolina:

• 3 percent: Jackson, Swain, Macon, Clay, Graham, Mitchell, Yancey

• 4 percent: Haywood, Buncombe, Transylvania, Cherokee

• 5 percent: Henderson, Madison, McDowell

• 6 percent: Town of Franklin, Watauga

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