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Hotel owners tell councilors tax hike would drive business from city

Date: 2/1/2011

Feb. 2, 2011

By G. Michael Dobbs

Managing Editor

SPRINGFIELD — The message to City Councilor Michael Fenton chairing a meeting of the finance committee from representatives of the city's tourism and hospitality industry was loud and clear: an increase in the local option hotel and motel tax would cripple the city's ability to compete with other communities.

Fenton, along with City Councilor Kateri Walsh, heard from hotel owners Paul Picknelly and Shardool Parmar, Mary Kay Wydra, president of the Greater Springfield Convention and Visitors Bureau, Greg Chiecko of the Eastern States Exposition and Cindy Anzalotti, president of CityStage, among others at the meeting on Jan. 28.

In light of a $43 million budget gap for the coming fiscal year, which is made more serious by projected cuts to state aid, Fenton said a 2 percent increase in the local option hotel/motel tax would bring in $412,000 in additional revenues over a year at the current room occupancy rate.

Fenton said the argument might be either to lay off city employees or institute measures such as this tax increase.

Fenton noted that many other communities are at the 6 percent level allowed by state law. Those include Worcester and Boston, he said.

The difference, pointed out by Picknelly in a letter to Fenton released at the meeting, is that Springfield has a 2.75 percent convention center financing tax in addition to a 5.7 percent state hotel tax and the current 4 percent city tax on rooms. If the city increases the city tax 2 percent, Springfield will have the highest tax rate in the region with a total of 12.45 percent.

With the exception of Northampton, Picknelly noted, all other communities in the greater Springfield area have a rate of 9.7 percent.

Parmar, who owns the City Place Inns and Suites, formerly the Holiday Inn, said the increase would affect his staff as visitors are on tight budgets and look at all costs before they book a room.

He said that after a "very flat last three to four years," the industry is starting to recover locally.

"Hotel owners have taken the hit for keeping the doors open," he said.

Parmar, whose families own a number of hotels, said with the city's high property tax rate, it is difficult to do business in Springfield already.

Fenton said that hotel owners could simply pass the additional tax on to consumers and it wouldn't be a "financial burden." Picknelly disagreed with that statement and said if Fenton stood with him at the front desk at one of his hotels listening to customers, he would learn people pay attention to the tax on their bill.

Wydra noted an increase would put the city at a higher room rate than Providence, R.I, or Hartford, Conn., two cities with whom Springfield competes for convention business.

Visitors to the region could easily go to West Springfield to stay, where that city elected not to increase its hotel tax, she added.

Matt Hollander, general manager of the MassMutual Center, agreed with Wydra and said, "Any increase in taxes would put us at a disadvantage. We come against Hartford and Providence on almost everything we bid."

Chiecko noted that supposedly a portion of the 4 percent local hotel tax was to be used for tourism promotion efforts, but never has. He noted that Salem has a 5 percent rate, but actually uses 1 percent of the collected taxes to bring visitors to that city.

Fenton said Springfield should consider that model.

Chiecko added, "This industry is over-taxed ... a 2 percent increase makes a difference."

Anzalotti explained that when traveling shows come to Symphony Hall and CityStage, her office books rooms in Springfield. She must get the best deal, even if that means putting the cast and crew of a show in a hotel in another community. These performers spend money in downtown at restaurants and other businesses and their absence would "cascade" to other businesses.

Fenton said he would not bring legislation to the City Council meeting on Feb. 7 to consider this tax increase, but wants to do more research and consider the city's entire budget picture.



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