“Plenty of room in inns; Because of recession, more rooms, occupancy rates here could fall under 50 percent for first time in 20 years” opens:
“Out on Route 30 in East Lampeter Township, Rodney Gleiberman is partying like it’s 1999. And he’s not happy about it….”
Later it relates “Gleiberman added, ‘We are going to sell in 2009 roughly the same number of room nights as in 1999; 10 years of collecting the hotel tax and we’re not selling a single room more. You don’t need an MBA to see that we need to change direction.’”
WATCHDOG: Two observations:
The opening line doesn’t seem to relate to anything else in the article. Gleiberman is far from partying. He is lamenting.
Economics teaches us when prices go up, demand diminishes, all other things being equal. Thus when the County imposed a 5% room sales tax which is the same as a price increase, it discouraged tourism and wounded the hotel industry.
If a 5% price increase would not have hurt business, the hoteliers would have done it themselves!
Put another way, normal break even point for hotels on a cash flow basis is 65%. If there is no mortgage, perhaps 55%. The 5% tax on room sales represents one third of the difference between doing okay at 65% and the current hotel occupancy level countywide of slightly under 50%.
A sibling company of NewsLanc operates the Best Western – East Mountain Inn in Wilkes-Barre. Several years prior to Lancaster adopting a 5% room sales tax, Luzerne County enacted the same in order to fund an arena. The next year the East Mountain Inn’s bottom line was down by the full amount of the room sales taxes it had to remit! Contrary to what convention center propagandists would have the public believe, it is the hotel, and not the customer, that de facto ends up paying most of the tax.
It is time the public recognizes the collateral damage to tourism in general and the hotel industry in particular caused by the Convention Center Project boondoggle.
The only hotelier who benefited was project developer and contractor S. Dale High.
Growl!
The Emperor’s clothes are taken to the cleaners in a few lean sentences.