Monday, April 06, 2009

Hey, It's Only 17%

White Lodging is owned by billionaire Dean White. The company operates three downtown hotels and is developing the new J.W. Marriott convention hotel, which will be connected to the expanded convention center. Taxpayers are forking over more than $60 million to White Lodging to subsidize the construction of their new hotel. Naturally, the company is all on board in its support of the $47 million taxpayer-financed bailout of the Capital Improvement Board. Raising the city's hotel tax another 1%, bringing it to 17%, the highest in the nation, is of little concern to the company's CEO. Dave Sibley, CEO of White Lodging tells the Star's Jeff Swiatek, "It's not just going to be the tax rate (meeting planners) look at." "When you add the tax on top of it, our room rates are still going to be lower than those of competing cities."

Swiatek cites an $82 per night average cost in Indianapolis. I don't know if you've had any experience booking hotel rooms in downtown Indianapolis but good luck in finding a room for $82 a night. Conventions might garner those rates, but business and pleasure visitors pay much higher rates. Swiatek's article mentions that beyond the downtown area, hotels are really put at a disadvantage because of the lower taxes in the suburban counties. Hamilton County, for example, has a hotel tax of 5%. The proposed bailout plan would increase Marion County's hotel tax from 9% to 10%. When you add the sales tax on top of that, you arrive at a 17% tax rate. I find it difficult for anyone to believe that Indianapolis gains in having the highest tax rate in the country for its hotel industry, but if I'm getting tens of millions in public subsidies from the government, I might say something I really don't believe just to keep the people who gave me all of that money happy.

UPDATE: A friendly reader reminded me of this fact to consider in analyzing Indianapolis as a low-rate convention city for hotels. The CIB gives tens of millions of taxpayer dollars to the ICVA to promote conventions in Indianapolis. One of the ways those funds are spent is to lure a convention to Indianapolis by buying down the hotel rate. That's right, your taxpayer dollars are sometimes used to pay a portion of the cost of hotel rooms for some conventions to attain a rate that is acceptable to a convention group.

8 comments:

Wilson46201 said...

Some local TV station reported that Cincinnati has a 17.5% hotel tax rate which is fractionally higher than the proposed Indpls rate. Our city wouldn't have the highest rate but it'd still be pretty steep...

Mike Kole said...

What foolishness. Indy should not be confused with NYC, Vegas, LA, or Hawaii. Indy is a destination that has no geographical point of interest (see: terrain, or oceans), limited cultural interest, and poor weather. Public policy should be geared toward doing everything possible to make staying more affordable, not less.

Our governments are run by dunces.

Unigov said...

White's "approval" of the hotel tax was the HEADLINE this morning.

How did this happen ?

The Star recognized, accurately, what a fiasco this CIB bailout has become.

So it went out and MANUFACTURED an interview in support of it, from a guy who stands to benefit.

Star = PRAVDA !

Jon said...

So it's okay to spend other people's money as long as Whiteco gets their share first?

Downtown Indy said...

Am I the only one who finds a 'tax' over 10% to be rather obscene? God only asks for 10% after all.

Unigov said...

Anthony Shutley (sp?) from IBJ was on WIBC this morninng. They let him talk with little interruption, going on and on about how much of a blessing the conventions and sports are to Indy. How we HAVE to get a deal done to help the COlts and Pacers.

He and Ketzenberger are propagandists for the Indy power elite.

thundermutt said...

I think Caesar gets more than 10% of my paycheck, Downtown.

Advance Indiana said...

I believe you are referring to Anthony Schoettle of the IBJ. I caught part of the interview. He did tout the benefits of the convention business in the interview, but at the same time he has done very fair reporting on the CIB's relationship with the professional sports team owners, perhaps the best of any local reporter.