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Hotel operators want to see more bed tax revenue spent on promotion

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While the boom in Jefferson County occupancy tax revenue is seen as good, some hotel owners and operators think local government should spend even more of that money on tourism promotion rather than save it for a rainy day.

Ronald G. Thomson, owner-operator of Captain Thomson Resort, the Alex Bay Lodge and Uncle Sam Boat Tours, Alexandria Bay, said it doesn’t make sense to sit on the revenue because the goal of promotion and advertising is to spend a dollar to bring in 10.

“When times are tough, that’s the time to spend even more,” Mr. Thomson said. “What you’re looking at is not a shortfall but an excess of funds — that’s a nice problem to have.”

Mr. Thomson, who is also the town of Alexandria Occupancy Tax Committee chairman, as well as a member of the 1000 Islands International Tourism Council, said tourism is the biggest industry in the county, though it’s sometimes hard to quantify. The amount of revenue the occupancy tax brings in is an easy way to see the net economic benefit to the region.

According to the 2013 Jefferson County budget, the county’s share of the occupancy tax in 2011 was $426,615. After providing $300,000 to the tourism council, the county’s designated tourism promotion agency, and $4,300 to the Disabled Persons Action Organization, more than $122,000 remained in the account.

The money is collected from hotel patrons, whose room bill is taxed at 3 percent in addition to any other tax. The money, by law, must be spent promoting tourism in the region.

“With a highway department, you can make an argument for having a reserve capital fund, but not with tourism promotion,” Mr. Thomson said.

Legislator Scott A. Gray, R-Watertown and chairman of the Board of Legislators’ Finance and Rules Committee, pointed out legislators want to keep a reserve fund to cover a bad weather year or spend on special promotions.

“We generally don’t spend that down to zero. We can’t just wipe all that money out,” he said.

In years past, the county has sometimes had to draw from the general fund to cover the tourism council. But with the increase of hotel construction over the last five years, especially in the Watertown and Fort Drum areas, and the concurrent increase in bed tax revenue, paying for marketing and advertising hasn’t been a problem.

Can the boom continue without a more sustainable mechanism of tourism promotion?

Jeri L. McInnis, general manager of the Best Western Carriage House Inn on Washington Street, said area hotels are “going into the flat season.” With the addition of so many new hotels, there is more supply and not enough demand. The money from the occupancy tax needs to be spent to stoke demand, she said.

The hotel, like others in the area, dedicates some of its own money to advertising, specifically targeting Canadians by creating travel packages that entice them to take advantage of the area’s shopping opportunities. Ms. McInnis would like to see the area’s other notable features highlighted, including Sackets Harbor and the Black River. During the winter, the hotel gets some additional business from snowmobilers, but with the recent relatively snowless winters, that is not a reliable market segment.

Earlier this year, Ms. McInnis and other hotel operators met with tourism council representatives to find ideas to make a pitch for money to the Watertown City Council. At that time, the city expected about $200,000 in occupancy tax revenue. The hotel operators and tourism council asked that half of that, $100,000, be used for marketing. The city countered by offering only $35,000 to $40,000. According to Ms. McInnis, most of the occupancy tax money had already been earmarked for capital projects, including repairs to the zoo’s aviary.

City Council members said they were interested in the tourism council’s proposal and in finding other sources of funding to meet the desired $100,000. According to an email message received by Ms. McInnis, city officials posed the question, “Will the county increase their funding to support marketing?”

According to Mr. Thomson, the city used to have its own occupancy tax advisory committee similar to the one in the town of Alexandria. The city decided to dissolve that committee several years ago, Mr. Thomson said.

Ms. McInnis supports the idea of reforming the committee, especially if it includes hospitality industry representatives.

The committee should include such professionals, according to Mr. Thomson.

“They’ve already proven their commitment by the millions they’ve spent,” he said.

Another hotel operator who shares that sentiment is Charles Palmatier, general manager of the Ramada Inn on Arsenal Street.

“I would like to see, as in other towns, a committee, or a think tank, to at least put the ideas out there and let the legislators make the decisions,” he said.

According to Mr. Palmatier, the city needs a convention center to stabilize the hospitality industry’s business cycle.

“That is going to need to be addressed to support the tourism machine that has been created in the Watertown area for continued growth,” he said.

While the additional occupancy tax revenue is a long way from being close to the amount it would take to build a convention center, Mr. Palmatier could see putting the money toward the creation of a Convention Visitors Bureau. The bureau could work with the Chamber of Commerce to start the process of attracting a convention center to the area.

Plans for a convention center have been floated in the past. In 2008, Jefferson County legislators heard a proposal for a $12.6 million project along Interstate 81, which included a recommendation to increase the bed tax to 4 percent to subsidize the center’s construction. The proposal was met with resistance and never came to fruition.

According to Mr. Palmatier, the growth in the area over the last few years is nice to see, but plans must be laid for the future.

The county has estimated its portion of the occupancy tax revenue next year will be $420,000. According to the county’s approved 2013 budget, the tourism council asked for $370,000 for advertising and marketing expenses. The county budget officer recommended and the Board of Legislators approved $331,500 for the council and $4,300 for the Disabled Persons Action Organization. If the county receives the amount of revenue it expects, more than $80,000 will be left at the year’s end. Since 2009, the fund has averaged an excess of more than $110,000.

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