New Orleans’ hotel and motel industry is asking the state Legislature to allow it to levy a new sales tax on its guests to have more money to market the city to tourists.
Stephen Perry, the head of the New Orleans Convention and Visitors Bureau, said the tax would generate about $12 million per year and would promote added attractions, including the planned Phase V expansion of the Ernest N. Morial Convention Center and the redevelopment of the World Trade Center site at the foot of Canal Street.
“If we were to spend hundreds of millions of dollars to improve the riverfront and not spend $12 million to market it, that would be a foolish choice,” Perry said in an interview following the public unveiling of the plan supported by the hospitality industry for the World Trade Center site.
Though the new hotel tax would not be dependent on Phase V or the World Trade Center development, Perry sees them as a unified program.
Perry said the sales tax would probably be 1.5 percent per room, with hotels tacking the tax onto a guest’s bill. He estimated that tourists would shoulder 97 percent of the cost.
Guests currently pay a 13 percent sales tax in New Orleans, which puts the city at the low end of the country’s top 25 hotel markets, according to figures from the American Hotel & Lodging Association Information Center. Houston and Anaheim top the list with a 17 percent sales tax rate.
The measure authorizing the hotel and motel industry to assess the tax is Senate Bill 242, sponsored by Sen. Edwin Murray, D-New Orleans. Murray did not return calls on Monday.
State Rep. Walt Leger, D-New Orleans, would sponsor the legislation in the House if it first wins Senate approval.
“It’s very clear that the marketing industry has an impact on attracting visitors to the city,” Leger said. “They are a serious economic driver for the city.”
Leger said he hadn’t heard of any opposition, but Murray just introduced the measure so it’s early in the process.
The bill seems to allow for greater leeway than spending the money directly on marketing the city. It says that the money would go for “destination marketing, sales, public relations and for other matters deemed by the tourism organization to benefit directly or indirectly economic development, the traveler economy and tourism growth as shall be approved by resolution of the board of directors of the tourism organization.”
Of the $12 million it would raise, Perry said that half would go to the Convention and Visitors Bureau, which has an 80-member staff to market Louisiana internationally and New Orleans to convention groups, large companies and travel websites.
He said his organization, which is a private entity, has a $13 million annual budget, compared to $65 million for the organization that does the same work in Orlando.
Perry said the other half of the new tax would go to the New Orleans Tourism and Marketing Corp., which has a staff of five and markets New Orleans through ads mostly to potential visitors close enough to drive to the city.
In a reference to last year’s ill-fated “hospitality zone” proposal, Perry said the tax would be levied only on guests at New Orleans hotels, not at restaurants or retail establishments.
The Greater New Orleans Hotel & Lodging Association endorsed the tax at its last board meeting, said Mavis Early, the group’s executive director.
Under the bill, Early’s group would hold a referendum of its members to determine whether to impose the tax. The number of votes a hotel would get depends on the number of rooms it has. The referendum itself needs at least a two-thirds vote. But Perry said that if only 50 percent of the hotels supported it, he doubted that it would take effect.
Perry hopes tourism officials would use the $12 million to promote new attractions on the riverfront.
As The Lens reported Thursday, the Convention Center’s Phase V would cost $184 million,* with half the money coming from the state’s construction fund and half coming from the Convention Center. The Jindal administration, however, wants to use $100 million in the Convention Center’s coffers to balance its budget for next year. Hospitality industry officials on Monday said they want the money to be spent instead on Phase V.
Most of the $184 million, convention center officials said Monday, would be spent sprucing up a redesigned Convention Center Boulevard, building a conference center at the upriver end of the Convention Center and preparing a now-vacant 50-acre site also at the upriver end for private developers to spend hundreds of millions of dollars on restaurants, retail stores, apartments and a hotel on that site. Of the $184 million, $25 million would be used to demolish the World Trade Center and create park space.
That use of the $25 million is also the plan of the Tricentennial Consortium, which consists of leading hospitality industry officials and Convention Center officials. As The Lens reported Friday, Tricentennial wants to demolish the World Trade Center building and construct an iconic structure along with a public park there.
Though Tricentennial is only one of three entities bidding for the right to redevelop the World Trade Center site, the group consists of many heavy hitters in the city. Mayor Mitch Landrieu described their plan in an interview last week as something that would “turbocharge” the riverfront, the same word the hospitality group used in describing the riverfront changes.
Tricentennial proposes to spend $165 million, beyond the $25 million from Phase V, to build some sort of statue or large public monument, as well as tear down the ferry landing, a move that would connect Woldenberg Park and the Aquarium of the Americas with a redesigned Spanish Plaza.
Allen Eskew, an architect with Tricentennial, said in an interview that the $165 million would come from:
- Private investors
- Private nonprofits
- The government
- Income from visitors to the iconic structure
- Restaurants in Spanish Plaza and a restaurant on the structure
Eskew said the sculpture depicted in the presentation published by The Lens was just a conceptual design that could turn out completely different.
*Correction: An earlier version of this story incorrectly reported the cost as $183 million.