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Wednesday, 28 May 2014 13:43

Cracking the room-tax nut

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Critics of tourism-related economic development in Haywood County have joined forces with a conservative think tank from Raleigh to question the underlying premise of county travel and tourism agencies — namely, should they exist?

“Is that legitimate? Is that a core function of government?” posed Becki Gray, an analyst with the John Locke Foundation, a conservative think tank based in Raleigh.

A loose-knit group of Maggie Valley lodging owners and conservative activists hosted a lunch forum last week in conjunction with representatives from the John Locke Foundation to crack the room-tax nut. The room tax is tacked on to overnight lodging bills paid by tourists. The money raised by the room tax — about $1 million in Haywood —  goes toward tourism marketing and initiatives that are supposed to lure even more tourists.

Gray said the room tax, like any tax, is “the government taking money out of your pocket.”

But tourism economists disagree with that assessment.

“When government spends this tax, it is not taxing and spending. It is generating more business and more jobs in the community,” said Steve Morse, a professor of tourism and hospitality at Western Carolina University. “If you look at taxes as an investment, and you have an aggressive savvy tourism group in Haywood County, that investment in taxes will generate tenfold more in money if it is spent right.”

The forum last week followed the release of a John Locke Foundation position paper on Haywood County’s occupancy tax. It was billed as a study but read more like an indictment of the room tax as a means of funding tourism promotion.

“Taxation is justified only to raise money for necessary purposes of government,” Sara Curry, an analyst with the John Locke Foundation, wrote in her report. “Tourism promotion does not meet that standard. It focuses on helping one sector of the local economy. This function can be served best by the private sector.”

The forum was sparsely attended, with only a handful from the tourism industry and most from the conservative activist arm of the local Republican Party.

Philosophical division emerged among the two camps of critics during the lunch forum. The small handful of lodging owners in attendance weren’t willing to jump on the John Locke no-tax-is-good bandwagon completely. Sure, they disagree with the room tax increase, and they regularly criticize the marketing decisions and campaigns carried out by the Haywood tourism authority — but they weren’t ready to kick the idea of a room tax to the curb.

Karen Hession, a Maggie Valley lodging owner, said she wants more evidence and accountability for how room tax dollars are spent — and specifically whether the tourism marketing has ever landed a tourist on her doorstep.

A few present complained about the lack of data.

“How can you tell if the tax is doing any good? How do you measure it?” asked Lynda Bennett, an advocate for conservative policies in Haywood County. 

It’s an age-old criticism of any tourism agency. How can they prove that a particular carload of tourists saw a particular ad that flipped the right switch in their brain to inspire a trip to Haywood County, and ultimately land then in the lobby of a particular motel?

“That cause and effect argument, trying to connect the dots, are tough,” said Morse.

 

A money pit, or a safe bet?

The room tax in Haywood County — and any county for that matter — funds visitors centers, travel web sites, travel videos, travel magazines, brochures and a host of magazine, web, TV and radio marketing, courting everyone from families to golfers to motorcycle riders to film makers. 

The tourism landscape is a competitive one, and a destination can quickly drown in the background noise without an aggressive strategy — and without money to fund it, said Berkeley Young, a consultant and analyst with Young Strategies.

Haywood is in a “very competitive arena” when it comes to destination marketing, said Young, who has studied the economics of tourism in Western North Carolina.

“Most every county in the region has a tourism authority promoting each county as a destination. Haywood County must be an aggressive marketer to compete or you will lose market share as the counties surrounding you increase their share of tourists,” said Young.

The “reap what you sow” concept of collective tourism marketing has been widely embraced in the political and economic arena.

“The hoteliers are behind increases in occupancy tax if they know that money will be spent in a fashion to increase the demand in their hotels,” Morse said.

Gray pointed to the standard John Locke Foundation talking points about government getting out of the way and letting the private sector prevail. Stop taxing the tourism industry, and let it do its own marketing.

“I get more from my personal marketing,” said Philip Wight, a Maggie Valley lodging owner and Republican county commissioner candidate. “I give credit to the marketing that is done by private enterprise.”

Another lodging owner in the room disagreed, however.

“When you have a small business you can go to an ad agency or newspaper and try to put in an ad, but if you combine with other people, you get a better deal,” said Mike Nelson, a Maggie lodging owner.

Hession countered the private Maggie Valley Lodging Association is a better avenue than the county tourism authority to promote their individual motels. But even the Maggie lodging association taps the funding pot of the tourism authority in order to pay for their own individual marketing initiatives.

This year, Maggie’s association got $17,000 in grants from the tourism authority — money that was collected through the countywide room tax — and used it to market selected Maggie Valley accommodations.

Ken Stahl, a long-time member of the Haywood Tourism Authority and former hotel owner, doubts the private sector would step up to the plate in sizeable numbers or in a coordinated fashion.

“If you want to leave this to private business, you are going to get so much overlap and so much fragmentation,” Stahl said. “The guy on one side of the street does an ad in such and such magazine and the guy across the street does an ad in the same magazine.”

The lunch forum last week is a continuation of a year-long debate over a proposed increase to the Haywood room tax from 4 to 6 percent. N.C. Rep. Michele Presnell, R-Burnsville, asked the John Locke Foundation to do a report on the proposed lodging tax increase. Presnell opposes the tax increase and blocked it from passing in the General Assembly last year.

The majority of tourism and civic leaders support the increase as a way to advance tourism, an important economic driver in the region.

But critics lobbying against it have stymied the passage of the increase, although it is unclear how many are simply anti-tax critics of big government and how many have a stake in the tourism industry.

For example, one conservative activist at the lunch didn’t even support the use of tax dollars — tourism of otherwise — to underwrite community fireworks on Fourth of July.

“It is not the job of government to set off fireworks,” said Eddie Cabe, a conservative activist with the Haywood Republican Party, who was sporting an American flag ball cap and patriotic T-shirt.

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