The Convention Center Project here in Lancaster has NOT hobbled our tourist industry. Demand and occupancy are running at levels among the highest in the history of the County, and Average Daily Rate, after following the national trends, is rebounding nicely. And, there is no “likely” sales tax. A number of revenue sources were put forward as ideas by the LCCCA consultants, and a sales tax was one among the many. Brief discussion at the consultant’s public presentation around the sales tax idea suggested a tax of specific duration to fund specific county projects, to be retired at the end, like in other US cities. But then, you haven’t actually read the consultant’s report, nor did you attend the meeting. Your reporting is merely hear say.
EDITOR: Kevin Fry is the chair of the LCCCA. We were out of the country at the time of the meeting. Also, we were not invited to attend. We do plan to study the report at an early opportunity assuming it is available. We relied on information from the local newspapers.
By seizing 5% of the potential revenue of county hotels, the Room Rental Sales Tax has deprived them of funds for renovation and earnings. Any student of economics understands that the sales tax is largely absorbed by the hoteliers, not the visitors. If raising prices 5% was profitable, the hoteliers would have already done so!
Almost all of the hotels are burdeded with the cost of the Convention Center while deriving no extra business. In fact, much of the business that at one time was served by hotels on Rt. 30 East has simply been relocated downtown, further “hobbling” the industry.
We applaud Fry and other LCCCA board members who are selflessly working to minimize the damage done by those who recklessly enriched themselves at the tax payers expense.
The CSL (LCCCA Consultant’s) report will be finalized on Monday, May 14 and posted in its entirety on the LCCCA website.
EDITOR: Due to a glitch, we only discovered this day certain comments from months ago. We are publishing them with our apologies. We are red faced!
May 16, 2012
KEVIN FRY: HALF-RIGHT AT BEST
Kevin Fry is in a tough position, and I do not envy him. He has been literally thrown into the frying pan…no pun intended. He inherited a mess, he did not create one. That was the work of his predecessors: Jim Pickard and Ted Darcus. Under their “leadership”, with the “counsel” of John Esbenshade, the LCCCA was set on its current course towards default and failure. A course that I might add can merely be slowed, but not changed, by an increase of the hotel tax to its statutory limit.
Regardless of those facts, Kevin Fry and Kevin Molloy are determined to see the hotel tax rise and they are in the midst of full-on propaganda blitz to make that happen. That campaign is furthered by the fact that LNP is a 50% shareholder in the entity that the LCCCA finds itself committed to in an unholy partnership.
Kevin Fry’s recent letter to NewsLanc is nothing more than the latest piece of that campaign, and I feel encumbered to speak to some of his claims, specifically:”(hotel) demand and occupancy are running at levels among the highest in history”.
Now let’s give Kevin credit where credit is due, he is half right. Demand (total rooms sold) in 2011, as reported by Smith Travel Research*, was at the highest level since 1990 at 1,428,719 room sold. In the 12 years since the inception of the room tax, 3 of which the CC was open, room demand has increased a total of 84,007 rooms or 6.25% over a 12 year period…roughly 1/2 of 1% per year. Certainly nothing to do cartwheels over and no great endorsement that the taxes or center have helped push demand. Now I know the “worst recession in decades” argument is coming, but in the same 12 year period, extremely strong economic times also occurred. All that said, for demand, Kevin’s statement is accurate.
Now to the gross exaggeration. In 2011, STR reported Countywide occupancy of 54.2%. While that is an increase over 2010 at 51.8%, it is lower than the level in 17 of those 21 years and significantly lower than its peak in 1991 at 65.5%.
I am happy to say that things are looking marginally better in the local hotel industry but that is in spite of the convention center not because of it. Kevin Molly’s claim that the center generated 18,000 room nights last year means that our $180+ million CC contributed a mere 1 1/4% of the total rooms sold. At that rate of return, we would need a $1 billion CC to move the needle in excess of 5%. Furthermore, the vast majority of the growth in 2011 was in the corporate sector and not in the leisure sector. What does that mean…since almost no marketing dollars generated by the taxes are focused on this segment, the bulk of the increase in demand was generated individually by the hotel properties and not by the taxes that burden them.
One last thought to EVERYONE in Lancaster County and this is a repeat of something I said in 2005. On March 30 of that year, a public meeting was organized by then County Commissioners Dick Shellenberger and Molly Henderson. When I rose to speak at that meeting I did not address the Commissioners, PSP, or anyone involved in the CC project, I spoke to people in that room who are residents of Lancaster County and my message was simple. CAUTION, even when the bed tax is raised to its statutory limit, there will still not be enough money to pay for this project. I repeat that statement now and forewarn all in Lancaster County who were promised a free boondoggle…they lied to you too!
_________________________________________
*I must add that I do not feel that the STR report is worth the paper it is printed on and that is proven in the fact that the audited tax collections by the County show a much lower revenue picture within the industry. I do assume that STR is consistently off so for year over year comparisons it provides a good relative picture, Furthermore, I wish to remind everyone with conveniently short memories, that the original County bond guarantee for teh CC was based on STR figures and projections. In 2003, when the guarantee was passed, STR had overstated County hotel revenues in excess of $15 million. What this means is that the entire basis of the funding package is based upon overstated figures and we are essentially handicapped right out of the starting gate. Sounds like a recipe for success to me.