Where is your evidence for the sweeping generalization that “In general the Lancaster hotels have grown worn and shabby over the half decade of hotel room sales tax. This has discouraged discretioniary visits and affected the entire tourist industry and the overall local economy.”?
EDITOR: Fair question.
1) Comments from leading local hoteliers.
2) Hotels need to apply an average of 5% of revenue each year towards renovations in order to retain their market position. It is clear from the county report of hotel sales tax revenue that, despite the addition of the Mariott and other hotels, total revenue has remained the same if not declined. Operating expenses, taxes and debt service have to be met. Renovations are funded from what is left over. Result: Less funds if any left over after meeting expenses, less if any funds for renovation and possible earnings.
3) Contrary to the deceptive assertions that the room sales tax is passed on to customers, in fact most is absorbed by the hotelier through reduction in room rates in order to remain competitive. The Watchdog’s hotel had experienced this in Luzerne County when a room sales tax was adopted to fund an arena. The reduction in earnings the following year approximated the total amount of the room sales tax! The hotel never returned to its prior level of profitability.
4) If business could raise their prices by 5% (which is the impact of the hotel room sales tax), they would do so! They don’t because the can’t without reducing revenues and earnings. This is Economics 1 A.
5) Worn properties lose customers. This creates a vicious cycle of less tourist trade and less renovation.
6) The hotel room sales tax is a classic example of killing the goose that laid the golden egg!
But the editor has written previously that he finds it perfectly acceptable for the government to raise taxes and impose fees in other areas. Or would that just be in any other arena that the editor doesn’t have a business interest?