Wednesday, February 29, 2012CANFIELD, Ohio – The 2% hike in the bed tax Mahoning County commissioners are expected to pass this morning would cost the county revenues, not increase them, three hoteliers said Tuesday.
Passage of the tax, to take effect April 1 and run three years, would also make it the highest bed tax in Ohio at 14.75%, they said, and higher than the bed taxes in Columbus and New York City. Columbus charges 12.75%, New York City 14.54%, they said.
Mike Naffah, David Kovass and Mike Moliterno met with the press at the Hampton Inn & Suites here to state why commissioners raising the bed tax to 5% from 3% is not just a bad idea but possibly illegal as well.
Naffah, Kovass and Moliterno spoke for the Mahoning County Lodging Association, composed of owners and managers of hotels and motels here. Naffah is also owner of the Hampton Inn here, Kovass owner of the Hampton Inn in Austintown and Moliterno is general manager of the Holiday Inn-Boardman.
They estimate the hotel and motel rooms in Mahoning County number 2,000.
The additional 2% would go to the Western Reserve Port Authority to fund its economic development efforts. Last year, two-thirds of the 3% bed tax in place since 1986 resulted in $560,000 for the port authority, Naffah said, and is projected to provide at least double that amount when the additional 2% takes effect.
The commissioners’ agenda says their expected action today would “increase the current lodging and excise tax from 3% to 5% for a three-year period.”
One percent remains earmarked for the county Visitors & Convention Bureau.
The overall room tax consists of a sales tax (state and county) of 6.75% and a 3% bed tax charged by Austintown, Beaver, Boardman and Canfield townships.
Boardman Township Trustee Tom Costello and Canfield Township Trustee Marie Izzo Cartwright were present for the press event. Boardman would be most affected because it has the largest number of hotel/motel rooms in the county, Costello noted, while Canfield has just two, including the Hampton Inn, Cartwright said.
On a $100 per night room, that would raise the total tax in their townships to $14.75 from $12.75, on a $150 room to just over $22 from just over $19.
“The commissioners are naïve to think the traveler will not notice,” Kovass said. While business travelers on expense accounts might shrug and absorb the increase, the business travelers on per diem and tourists would not.
In the age of the Internet and the many travel sites, he elaborated, “travelers are more cost-conscious” and can easily stop in western Pennsylvania or drive past Mahoning County where overall rates are cheaper.
The bed tax on the inns near the Outlets at Grove City in Mercer County, Pa., is 9%, Naffah said. The hotels in West Middlesex, two miles from the state line, also charge 9%, Kovass said, and he’s losing business to them.
Tourism in Mahoning County is a $125 million a year industry, Naffah said. This includes wages paid hospitality workers who directly serve tourists and visiting businessmen. Also in the hospitality number are maintenance workers, restaurant employees and service station attendants.
Some 90% of the hotel occupancy is business-related during the week, Moliterno estimated, with tourists and visitors here comprising most of the occupants on weekends.
The Mahoning Valley plays host to baseball, softball, golf and wrestling tournaments, Kovass said, as well as auto enthusiasts, senior citizens and tour buses that stop here en route to the East Coast and Midwestern cities. “Travel groups are more sophisticated [about prices] than small groups of individuals,” Kovass said.
The groups booked at his Hampton Inn in Austintown have contracted at prices he negotiated, he said, and he expects them to abrogate their contracts rather than pay the higher prices. His profit margins are so tight he can’t afford to eat the $2 per guest to keep their business.
With rising gas prices, the hoteliers fear less travel this spring and summer as well as guests balking at higher prices for lodging.
With fewer guests, there will be less need for housekeepers, fewer travelers filling their gas tanks at nearly service stations, fewer sales in retail shops and fewer meals served in nearby restaurants, the hotelier suggest – which means less revenue from sales taxes.
“Every time a room isn’t rented,” Moliterno said, “that’s a half-hour less a housekeeper is working.”
When Lucas County in northwestern Ohio raised its bed tax 2%, the hike “closed almost 800 rooms,” Naffah said. “The county next door built 500 more rooms.”
Kovass questioned the legality of Mahoning County commissioners directing bed tax revenues to the Western Reserve Port Authority for economic development. When former state Rep. John Boccieri (D-New Middletown) sponsored legislation allowing bed tax revenues be directed to the port authority, his bill specified what the funds could be spent on, such as “military use” in support of the 910th Air Force Reserve at the Youngstown-Warren Regional Airport.
Economic development wasn’t among them, Kovass stated, and because it wasn’t specifically listed, he contends bed tax revenues can’t be used for that purpose. He is exploring whether to file a lawsuit against the commissioner should they adopt the resolution as expected.
Anthony Traficanti is firmly against the hike, the hoteliers said, with John A. McNally IV and Carol Rimedio-Righetti expected to vote yes. A year ago Rimedio-Righetti was opposed, they said.
Phone calls to McNally and Rimedio-Righetti were not returned. McNally was not in the commissioners’ offices yesterday, a receptionist told a reporter who stopped in, but Rimedio-Righetti had been in and out.
The executive director of the port authority, Rose DeLeon, returned to work yesterday after being absent because of illness. She was not up to speed on the issue, she said, and declined comment on how the funds would help her entity with its economic develop efforts or how much in revenue the 2% might bring in.
Copyright 2012 The Business Journal, Youngstown, Ohio.