THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Tuesday, August 22, 1995 TAG: 9508220282
SECTION: LOCAL PAGE: B3 EDITION: FINAL
SOURCE: BY BILL REED, STAFF WRITER
DATELINE: VIRGINIA BEACH LENGTH: Medium: 81 lines
A plan to add a $1 tax per night on hotel and motel bills comes before the City Council today, but many resort innkeepers reject the idea even though it would fund an expanded advertising campaign.
As envisioned by the city's tourism office and leaders of the local hotel and motel association, funds from the tax would be pooled and spent directly to put more fire power into the city's annual promotions.
The plan was conceived by both parties to raise more money to compete with East Coast industry rivals such as Ocean City, Md., and Myrtle Beach, S.C.
A proposal to increase the city's lodging tax has appeared twice before on the City Council's agenda but was yanked at the last minute by Councilman Linwood O. Branch, a hotelier himself, to shore up support in the ranks of resort innkeepers.
These efforts apparently have met with spotty results.
``From a personal standpoint, I think it's a mistake,'' said Robert H. Vakos, owner of the Colonial Inn on Atlantic Avenue at 29th Street. ``We're going to tax ourselves right out of business. I have grave concerns about it.''
Added Sidney Jacobson, co-owner of the Friendship Inn at 28th Street on the Oceanfront: ``In my opinion we have to have something to advertise before we spend this money. We need something for people to do at night down here besides getting drunk.''
Throwing more money at marketing doesn't necessarily translate into more tourists, he said.
James H. Capps, owner of the Breakers Resort Inn at 16th Street on the Oceanfront, is opposed as well. ``A number of people down here feel very strongly our taxes are high enough,'' he said.
``We need to throw in the issue of the Pavilion (convention center) expansion. Where's that money going to come from? I think we've been to the well once too often.''
Somewhat on the fence was Mike Andrassy, owner of the Sea Vacationer Motel at 34th Street on the Oceanfront.
``We've got a dilemma on our hands and it's not the easiest decision in the world to make,'' he said.
While the general membership of the Virginia Beach Hotel and Motel Association voted in June to endorse the tax, the organization represents only about 98 inns out of 155 operating in the city. And, not all members agree on the extra levy, Vakos said.
Hotels now add 10 percent to their daily room bills, while restaurants tack on a 9 percent meal tax. The city's take on a hotel bill is 5.5 percent, while the state gets 4.5 percent. Of the city's 5.5 percent, a half-percent goes to a resort improvement fund known as TGIF (Tourism Growth Investment Fund) and another half-percent goes for Oceanfront events. A half-percent tax on each restaurant meal goes to TGIF, but restaurants aren't being solicited for the expanded advertising.
Capps said restaurants should be contributing since local eateries would benefit from any increase in tourism.
Councilman Branch and Henry Richardson, hotel association president, said Monday they have the support of their peers and can get the lodging tax adopted by the council today.
``The only new money we're going to get for advertising is the $1 for lodging tax,'' said Branch. ``Hopefully, we have a growth formula, so five or 10 years down the line the advertising budget has a chance to keep growing as hotel revenues keep growing.''
Richardson says the $1 lodging tax would produce more than $2.4 million in additional advertising dollars for the city to ballyhoo local attractions in expanded markets, including overseas.
The advertising kitty would operate in much the same way that the existing TGIF pool does.
TGIF revenue is dedicated to special tourism construction projects such as the 20,000-seat amphitheater now under way and the $35 million addition to the Virginia Marine Science Museum.
James B. Ricketts, head of the city's Convention and Visitor Development office, lobbied for the additional hotel levy. The current annual advertising budget is too anemic to compete with the big boys of East Coast tourism, he says.
Last year, Ricketts' department spent $2.7 million on advertising.
KEYWORDS: TOURISM LODGING TAX ADVERTISING by CNB