City Council took preliminary steps last week to extend and increase fees paid by hotel guests to fund ongoing tourism and marketing efforts.
Local hotels pay a self-imposed assessment that contributes to the operations at Santa Monica Travel and Tourism, a nonprofit agency that promotes Santa Monica as a travel destination worldwide. The assessment is due to expire next year and Council’s Aug. 23 meeting included the first step in extending the fees.
Extending and increasing the amount of the Santa Monica Tourism Marketing District is estimated to average approximately $4.45 million annually during its 9.5-year operation.
The fees are paid by hotels and motels citywide and depend on daily average room rates. About 70 percent of the city’s lodging businesses petitioned to have the District extended with the majority of opposition coming from businesses that offer lower-cost accommodation.
Daniel Gregory, operator of the Ocean Lodge, said the objections were twofold: the length of the assessment was too long and the structure of the increase was disproportionately impactful on less expensive hotels. As proposed, the new assessment would synch with the SMTT budget year and last for 9.5 years. Hotels with average daily rates of $100-200 would pay a fee of $3.25 per night, hotels charging $200-300 would pay $4.25 per night and more expensive hotels would pay $5.25 per night. Assessments would be subject to an annual increase of no more than 25 cents per year.
Gregory said if you convert the fees to a percentage, the most affordable hotels would be charging guests a fee of 3 percent on their bill while the most expensive would be charging less than 1 percent.
“Guests who can afford it the least, pay the most,” he said.
Other affordable lodging operators expressed similar concerns and said the fees were particularly burdensome as they are already struggling to absorb the impact of an increased minimum wage.
“We are an affordable housing motel since 1972 and we want to keep it that way,” said Chris Mets of the Seashore Motel. “It is hard on us to keep our motel going to pay our employees. We haven’t even raised are own rates, we’re raising the rates for other people to make money off us and that’s very very tough on us.”
Staff, hotel representatives and SMTT were all willing to continue negotiation on a rate increase that worked for all businesses. The action Tuesday night verified that local hotels had agreed to increase the assessment but it did not set the amount of that assessment.
Gregory said ongoing discussions could adjust the threshold for paying an assessment in a way that would exempt more low-cost businesses and praised SMTT for their willingness to adjust the formula.
“We are very pleased and impressed with our TMD, with our CVB, our SMTT that does a great job,” said Gregory. “We need to find a way to unify and bring everybody in in a fair and equitable way.”
Councilwoman Gleam Davis said adjusting the final proposal to ease the burden on low-cost options is part of council’s ongoing responsibility to maintain an affordable city.
“We all are aware that Santa Monica is very expensive and out of reach for many people and I think having affordable lodging alternatives is key to maintaining the diversity and for the lack of a better term, the kind of community that we as Santa Monica want to be,” she said. “So I just want to emphasis that this is one of those situations where we put these small businesses under a lot of stress with the living wage and things like that and as I said when we did that, looking for alterative ways to help them out and this is one of the key ways we can do it.”
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