The Greater Philadelphia Hotel Association conditionally supports an increase, Ed Grose, the association's executive director, tells GlobeSt.com. However, he says, local published reports that the association went before City Council on Tuesday were erroneous. The pitch discussed by Nutter and the council came from the Greater Philadelphia Tourism Marketing Corp. and the Philadelphia Convention & Visitors Bureau, both of which would stand to gain from a tax increase.
Grose says the GPHA supports House Bill No. 2167, "which if passed, will increase the Philadelphia room and occupancy tax by 1%. The revenue from the tax increase will be divided evenly between the PCVB and the GPTMC. The PCVB portion will be used to market the soon to be expanded Pennsylvania Convention Center and the GPTMC will brand the Greater Philadelphia region with their portion. The revenue will provide dedicated funding sources to both of our marketing agencies."
He adds, however, that GPHA support for the measure is contingent on three things: that the tax is divided evenly between the PCVB and the GPTMC, that the entire tax increase is used only to sell more hotel room nights in the Greater Philadelphia region and that the room and occupancy tax does not go any higher than 15%.
Half of the current 14% tax is an occupancy tax, 6% goes to the state in the form of a sales tax and the remaining 1% represents a city sales tax. HB 2167 would increase the occupancy tax from 7% to 8%; published reports say the increase would raise an estimated $5 million to $6 million. The measure was referred to the General Assembly's Committee on Finance last Jan. 17; to date it has not come up for a vote.
"GPHA is committed to assisting our marketing organizations to finance the marketing of the expanded Philadelphia Convention Center and branding the region," says Grose. "The return on investment will increase room nights sold in Philadelphia, which will in turn increase the sales tax revenue received by the Commonwealth of Pennsylvania and the City of Philadelphia."
The $700-million convention center expansion, for which bids on the first construction phase were due earlier this week, was one of the catalysts for the 2006 discussion about raising the hotel tax, according to published reports. The discussion, which did not lead to further action, cited the increased costs associated with advertising and marketing, particularly for large-scale, citywide events such as the 2006 commemoration of Benjamin Franklin's 300th birthday.
Established in 1988, the GPHA represents the interests of over 80 hotels throughout the five-county Delaware Valley region. Its members' properties contain more than 30,000 keys; Philadelphia itself has 15,000.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
