The Hoteliers’ New Kitty

Thursday, Dec. 6, 2007 | Seven months ago, I asked Mayor Jerry Sanders about the proposed tourism marketing district that hoteliers had been pushing for several years.

The concept was simple: San Diego’s tourism poobahs wanted to pretend that the city’s large hotels were a sort of virtual neighborhood. Any neighborhood, or “district,” in town can set up its own maintenance district. In the district, the stakeholders and residents can vote to levy an extra tax on top of what the city, county and state already take. This is how they get the uniformed litter patrol in Little Italy, for example.

But the big hotels in town don’t want to levy any fee on themselves to pay for trash pickup on their premises. They want to generate funds to pay to market their rooms to the world. They want to pay as many people as possible to work in New York and other places and get groups like the Association of Gophers Who Sculpt Ice to have their annual conferences in San Diego and stay at a city hotel.

Visitors to San Diego who stay in hotels pay a daily room tax, and the hoteliers have always been a bit bitter about a historical evolution of what that tax funds.

The money should, rightly, be used to pay for things like police and fire. After all, tourists need those services as much as we do. But the hoteliers always push to have it pay to market San Diego and therefore generate more visitors and therefore generate more tax revenues from their hotel room stays.

Now, San Diego has tried twice in the last few years to raise this hotel-room tax. Both times, the increase failed.

The first of those attempts would have set aside millions for the marketing of tourism in San Diego and it would have doled out millions more to interest groups all around town. The second of those attempts would have merely sent the money to the city’s general fund, allowing public officials to spend it however they pleased. Hoteliers bitterly opposed the latter version.

So they came up with this new plan and they’ve been working on it ever since.

In addition to the 10.5 percent tax visitors pay on their hotel room bill for every night they stay in San Diego, the hoteliers wanted to tack on 2 percent and use the money exclusively for their own marketing efforts.

Now, San Diego already foots the bill to pay for marketing efforts. The city pays the San Diego Convention and Visitor’s Bureau millions every year to cover most of that group’s costs as it tries to book conventions and “sell” San Diego.

In May, I asked the mayor what he thought about all this.

Would you be willing to cut all of the funding for ConVis and other promotional efforts out of the city’s budget if the hoteliers gain approval for their self-levy plan?

He said no. “We’ve got to be spending a certain amount in addition to what the TMD (tourism marketing district) will spend to market ourselves more effectively.”

Turns out the City Council approved the tourism maintenance district Monday but did the right thing and ensured that the city would not spend a dime on ConVis or other marketing efforts any longer. And the mayor agreed. Now that the hoteliers have all this money for marketing, they can pay for ConVis.

So what was the mayor thinking, I wondered, when he said the city should still keep supplementing tourist promotion?

Fred Sainz, his spokesman, said he asked the mayor and Sanders said that he must have misunderstood my question.

Someday, the guy is just going to have to be comfortable admitting that he changed his mind — because that was a good thing to change your mind about.

The city of San Diego will be able to shed about $10 million from its budget.

What’s funny about this, of course, is that we could have cut that before. Sanders and the City Council could have cut ConVis and the other so-called promotional efforts from the budget years ago.

But the hoteliers will be able to raise an estimated $30 million from the boost and they’ve only accepted $10 million of the city’s obligations.

So we have to ask if this is OK.

It’s kind of weird. In Little Italy, for example, businesses and residents have to pay into their maintenance district. The businesses can ostensibly raise their prices a bit to pay the fee, but their competitors don’t have to. This is not the case with the hoteliers. They don’t have to just pay a fee into the new marketing district. It doesn’t come out of their revenues. They get to charge visitors a fee for it. And this doesn’t hurt them competitively because every other major hotel will be doing the same thing.

In fact, they all could have combined funds in some kind of promotional entity before. But they wouldn’t have done it because there would have been no way legally for them to uniformly, across-the-board, raise their prices to pay for it. That would be price-fixing.

This formation of the tourism marketing district essentially allows that to occur.

And it’s not such a bad thing if the city takes advantage of it. For years, dozens of organizations have applied for and received tens of millions of dollars from the city. The money comes from the hotel-room tax. Money paid out to things like the opera and the museums is always justified by saying that the money comes from hotel room taxes and since these entities attract visitors, they justifiably deserve it.

But now that the hoteliers have set up their own quasi-government slush fund with the mission to promote San Diego, perhaps they should receive the applications for funds from places like the La Jolla Festival of the Arts and Food Faire, which received $21,000 this year from the city of San Diego. Or maybe the La Jolla Playhouse could ask the hoteliers for money next year, instead of the city which handed out $382,303 to the organization.

As it stands, the hoteliers plan only to pay for a select group of entities that the city has been funding for years. Groups like the San Diego International Sports Council and the Holiday Bowl Committee will receive funds from the new tourism maintenance district.

The City Council, in its infinite wisdom, didn’t demand that the hoteliers and their guests take on some of these other groups.

But they could, of course, cut these groups off and give them the hoteliers’ address when they come pleading for funds.

After all, the hoteliers are going to have $20 million to spend. The city has been convinced for years that these organizations had to be supported in order to attract visitors. Why wouldn’t the hoteliers follow suit if they’re trying to attract visitors?

Please contact Scott Lewis (scott.lewis@voiceofsandiego.org) directly with your thoughts, ideas, personal stories or tips. Or send a letter to the editor.