the April 2009 Issue in PDF Format - Trade Show Executive

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Trend Watch With Economy Down, Hotel Taxes Could Go Up By Hil Anderson, senior editor Las Vegas, NV – While the end of the recession is nowhere in sight, an economy-driven round of hotel tax increases around the U.S. could have an impact on the trade show industry that will linger well after the recovery gets underway. The Nevada Legislature took relatively little time to pass a 3% increase in the state room tax in March. The boost will bring in an estimated $200 million per year from hotels in Las Vegas and Reno. According to the Las Vegas Convention and Visitors Authority, the average room rate before taxes was $104.89 in January. The tax increase, which took effect March 15, raised the average taxincluded cost of a room from $114.33 per night to $117.47 per night. At the same time, a $300 per night suite jumped from $327 per night to $336 per night. At least one-third of the new revenue will go toward Nevada public schools, which is a worthy cause many find difficult to oppose. However, the vote came the same week the $980 million expansion of the Las Vegas Convention Center was postponed for at least a year because of the tourism slump and decline in the same hotel tax revenues. With a tourism-savvy state such as Nevada voting to bump up room taxes, the situation has trade show organizers worried that other major destination cities will give in to the same temptation to make up their budget shortfalls by drawing on the exhibition market. “While Chicago has not raised its bed tax, three other major trade show cities – Las Vegas, New York and Orlando – have in one way or another altered their bed tax. I think they are setting a trend for the smaller cities,” said Ken McAvoy, senior vice president of Reed Exhibitions. McAvoy told Trade Show Executive that with responsibility for 40 trade shows on his desk, he has a keen idea of the slim margin for error the industry is working under these days and the effect that tacking even just a few dollars onto a hotel bill can have on the attendee pool. “It may be just an extra dollar, but it is an extra dollar for the people who have to pay it,” McAvoy said. “As things tighten up, people start reducing their travel and entertainment budgets.” Ken McAvoy Taxes Are Forever While the cyclical tendencies of economies and business mean that the global slump will eventually reverse itself, it is less likely that the political leadership of a city will give up a revenue stream that the voters don’t provide. That means a tax hike passed out of urgency in a crisis could be set in stone and a fact of life for show organizers who committed to events years in advance. “We all know it is the non-voters who get hurt,” McAvoy said. The focus on local politics was evident in Carson City when the Nevada tax increase was debated by the state Senate. Media reports from the capital said the objections to the increase did not revolve around the impact on tourism but rather how the spoils would be divided up among Nevada’s counties. Keeping Revenues In-House Maura Gast, chair for Destination Marketing Association International (DMAI) and executive director of the Irving Convention and Visitors Bureau in Texas, said CVBs and the exhibition industry had to continually press their respective city leaders on the fact that a robust tourism base is something to be protected. “Otherwise, they are going to have to provide the same level of services to their constituents, but will have to raise their taxes to do it,” she said. On the Flip Side, Increased Taxes Can Be a Benefit Room taxes are a fact of life in any significant convention city, and when used to promote tourism, they can actually benefit the exhibition industry. The tax provides dependable funding for capital improvements to convention centers Executive Summary • Nevada boosts hotel tax from 9% to 12% • Organizers eye intentions of other cities • Tax hikes could impact event travel decisions • Politicians find it easier to tax visitors • On the plus side, taxes benefit CVBs, convention districts and the surrounding areas as well as the operating expenses of the convention and visitors bureaus that are the liaisons between the city and show organizers. In New York City, for example, a flat $1.50 tacked onto the daily room rate on every hotel bill is earmarked for the Jacob K. Javits Convention Center. Oakland, CA residents will vote in June on a 3% hotel tax hike to pay for the local CVB and cultural festivals and attractions. And across the bay in San Francisco, a 1.0% to 1.5% room tax increase was enacted to be used for tourism marketing and for improvements within a designated Tourism Improvement District around the Moscone Convention Center. McAvoy said the tourism district concept was an attractive one because it places stronger controls on how the room tax revenue is spent. “We don’t have an issue with taxes that remain in the custody of the CVB if it is using them for the purposes they were intended for,” he said. Regardless of how it is packaged, an increase in the hotel tax is still an increase in the hotel tax, he noted. And when added to the current costs of attending a show as well as odds and ends such as future inflation, pending wage hikes for various unions and higher travel costs, those few dollars can add up and potentially convince an association or independent show organizer to look elsewhere. Reach Ken McAvoy at (203) 840-5681 or kmcavoy@reedexpo.com; Maura Gast at (972) 252-7476 or mgast@irvingtexas.com 24 April 2009 Trade Show Executive www.TradeShowExecutive.com
Room Taxes Range from 7% to 17%, According to New TSE Survey By Hil Anderson, senior editor Carlsbad, CA - The taxes tacked on to hotel bills are a fact of life in every major trade show city and impact the travel costs of attendees and exhibitors. To assist show organizers in their site selection decisions, Trade Show Executive has launched its First Annual Report on Taxes in the Exposition Industry. This listing of 2009 hotel room taxes in the major trade show cities was obtained from convention and visitors bureaus across the nation. The application of sales tax to the room rate varies from city to city, and some communities charge additional assessments to hotel bills. For example, in New York City, there is a fee of $1.50 per room, per night for the expansion of the Jacob K. Javits Convention Center. Clarifying all taxes and fees prior to booking is always recommended. Arizona Phoenix 12.27% California Anaheim 15.46% California Los Angeles 14.0% plus $0.11 tourism fee per night California Sacramento 13.5% plus $0.15 tourism fee per night California San Diego 12.5% plus $0.21 tourism fee per night California San Francisco 15.5% plus $0.13 tourism fee per night California San Jose 10.7% plus $2.00 city tax fee per night California Santa Clara 9.5% plus $0.14 state tax fee per night and $1.00 tourism fee per night Colorado Denver 14.85% Connecticut Hartford 12.0% District of Columbia Washington 14.5% Florida Fort Lauderdale 11.0% Florida Jacksonville 13.0% Florida Miami Beach/Miami 13.0% Florida Orlando 12.5% Florida Tampa 12.0% Georgia Atlanta 15.0% Hawaii Honolulu 11.96% Illinois Chicago 15.39% Illinois Rosemont 13.0% Illinois Schaumburg 14.0% Indiana Indianapolis 16.0% Iowa Des Moines 7.0% First Annual Report on Taxes in the Exposition Industry State City oCCupancy Tax (“effective rate”) Continued on page 26 www.TradeShowExecutive.com Trade Show Executive April 2009 25
Page 1 and 2: News, Views and Tools for Trade Sho
Page 3 and 4: THE LAS VEGAS CONVENTION AND VISITO
Page 5 and 6: PLANNING YOUR NEXT EVENT? TAKE ADVA
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Page 9 and 10: Contact www.TradeShowExecutive.com
Page 11 and 12: meeting in HOUSTON is a walk in the
Page 13 and 14: STEP IN. STEP OUT. STEP IT UP. STEP
Page 15 and 16: Is your best choice for Internation
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