13 WTHRHotel tax hike would leave Indianapolis low cost

Hotel tax hike would leave Indianapolis low cost

Marion County - Indianapolis has such low hotel room prices that some in the tourism industry say a proposal raising the city's hotel taxes to among the highest in the nation may not harm its low-cost reputation.

Convention and event planners look at all expenses when deciding which locations to pick, including hotel rates and the cost of getting around the area, said Dave Sibley, chief executive of Merrillville-based White Lodging, which runs three downtown Indianapolis hotels and is co-developing a 1,600-room hotel complex near the Indiana Convention Center.

"It's not just going to be the tax rate (meeting planners) look at," Sibley told The Indianapolis Star. "When you add the tax on top of it, our room rates are still going to be lower."

But others in the hospitality industry oppose raising the tax from 9 percent to 10 percent as part of a proposal to help fund the struggling agency that runs the city's major sports stadiums. With the state sales tax of 7 percent, the total room tax would jump to 17 percent, putting Indianapolis hotel rooms among the highest taxed in the nation.

"Any time you are at the highest point in the country, your competition's going to try to use it against us," said Phil Ray, general manager of the downtown Omni Severin Hotel and president of the Greater Indianapolis Hotel Lodging Association. "There's a potential it could work against us."

A proposal in the Legislature would have the additional hotel tax revenue go to the Indianapolis Capital Improvement Board, which faces a projected $47 million shortfall next year in operating the Indiana Convention Center in addition to Lucas Oil Stadium and Conseco Fieldhouse.

The funding plan would also raise alcohol taxes statewide and allow other local taxes to be increased to help fill the budget gap.

Indianapolis' average daily hotel room rate is $82, according to STR Global and HotelNewsNow.com. That's lower than most major Midwestern cities, including Columbus, Ohio ($84), Louisville, Ky. ($90), Nashville, Tenn. ($93), and Chicago ($102), although St. Louis is lower with a rate of $80.

If the Indianapolis increase is imposed, the tax paid on an $82 room would grow by 82 cents to $13.94. The increase in the room tax would raise an estimated $4 million a year for the Capital Improvement Board.

Alexander deHilster, a principal of the Chicago event planning company ADH Events, said a tax rate of 17 percent was high. But he said planners also look at prices for expenses such as audio-visual equipment, bringing in speakers and gratuities.

"Just because it's 17 percent doesn't mean you're out of the running," he said.

Jeffrey Brown, the chief executive of Schahet Hotels, which runs several suburban Indianapolis hotels, said all hotels in Marion County shouldn't pay the same rate.

Downtown facilities get more business because of conventions and sports events, he said, while outlying hotels have to compete against those in neighboring counties with lower hotel tax rates, such as the 5 percent rate in Hamilton County.

(Copyright 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.)