The Sunday News article “Hotel tax debate rages; payments not open to public” is a compromise between journalistic standards and serving the financial interests of Penn Square Partners, of which a subsidiary of the newspapers is half owner.
The paragraph that most blatantly violates journalistic standards reads as follows: “Some tourism officials worry that getting a definitive handle on the center’s finances may be difficult, as hotel tax delinquencies are on the rise, and there’s a big discrepancy between what a leading hotel industry analyst suggests the county should have collected in tax revenue and what the county did collect.”
Who is the anonymous “leading hotel industry analyst”, when and where was the statement made? Including such a comment as coming from an expert without attribution is outlandish.
The only feasibility study for the project was made by PKF Consultants at the request of the then County Commissioners in May, 2006, and was ignored and vilified by the project sponsors. The PKF study accurately predicted the deficits now being experienced.
Further comments on the article:
1) Why did the it open with three paragraphs setting forth the views of Nevin Cooley, President of High companies and of Penn Square Partners, the person and organizations who led the efforts to bring about the dubious project? This was unworthy.
2) ‘”’This increase represents $1 a night’ for the average hotel room in Lancaster County, Cooley said. ‘I don’t think anyone is changing travel plans on the basis of $1.’” The hotel room sales tax has already added about $5 to the cost of the room, so the reasoning is why not another dollar? Why not still another…and another… and another? Cooley apparently has suspended a basic concepts of Economics, that the higher the price, the lower the demand.
3) “By one estimate, the county’s hotel industry is strong. Smith Travel Research, which analyzes the hotel industry and provides market share analysis for major hotel chains and brands in North America and the Caribbean, estimated that in 2011, 1.42 million room nights were sold in the county — a record. Still, hotel tax revenue was flat, rising a minuscule 0.7 percent from 2010 to 2011. The convention center authority budgeted an increase of 5.5 percent.”
There are two reasons: First, the flat revenue is spread over more hotel units. Secondly, almost all of the 5% hotel room sales tax is offset but prices being kept constant or lowered almost an equivalent amount of the hotel room sales tax in order to remain competitive with other areas. All other things being equal, raising Lancaster hotel room cost by 5% (for the tax) either will lead to less business or must be largely absorbed by lower prices by the hoteliers. Flat revenues suggests the tax has been absorbed largely by the owners in disregard to the rate of inflation.
4) “In 2009, the room tax and excise tax brought in $5.4 million. Of that, just under $280,000 came from delinquent accounts — hotels that had not paid taxes on time. Last year, the two taxes generated $5.98 million — of which, $802,053 came from delinquent accounts.”
This is an indication of the worsening financial health of the local hotel industry and explains the drop in investment in renovations that in itself is resulting in discretionary travelers going elsewhere. Lost business is not just bad for the hoteliers but for the entire local tourist industry.
5) “’I can understand the hotels not wanting rivals to get a look at their figures,’ said Marv Adams, editor of the Sunday News. ‘But how can the county commissioners make a decision on the hotel tax if those figures aren’t public? The facts crucial to this debate would seem to be in those room-tax figures.’”
A fair question. Lancaster City taxpayers are entitled to know how the hotel the city owns through RACL is doing since they have guaranteed payment of its debt and have contributed millions of dollars to the project over the years due to the Marriott Hotel’s disgraceful exemption from real estate taxes, in forgiveness of fees, and through providing special services.
6) “Fry, chairman of the convention center board, responded to Gleiberman’s statement by sending a letter to the county commissioners the next day, disputing Gleiberman’s claim ‘that he is somehow excluded from conversations regarding the business of the authority’ and expressing outrage that Gleiberman would denigrate Molloy.”
Since when is setting forth factual information “denigrating”? There is no indication that Gleiberman lacks respect for Molloy. It is Molloy’s job to try to get the hotel room sales tax increased because defunding the tourist bureau would further negatively impact convention center revenues. But there is no reason for Gleiberman and other hoteliers to remain silent.
7) “The Lancaster County Convention Center is an outstanding venue, exceeding expectations in almost every operational category,” Fry wrote. “The deficiency of the community funding for the project is a condition that is not uncommon across the country, given the difficult financial times.”
Those conditions were ”not uncommon across the country” prior to the economic down turn but the sponsors and advocates studiously ignored the facts when presented by outside experts and local authorities. Worse yet, they misled the public and arguably the state into believing that a true feasibility study had been conducted for the project. Fry wasn’t on the board when the project was approved. It is his responsibility and burden to help bail it out.
In short, the chickens have come home to roost.
And, in short, the taxpaying public will never be told through through LNP. SOMEHOW, we need an outside independent investigation/report. LNP lost all credibility when it got into bed with PSP.
The City deserves NOTHING in the way of disclosure on the hotel and its finances.
Why? The hotel is PRIVATE. It shouldn’t be but they, and RACL, allowed themselves to be manipulated by PSP and as a result, the hotel, paid for with 80+% public money, is PRIVATE and therefore owes nothing to the public.
They made their bed….
From the article:
Cooley said, “As a private business, the Lancaster Marriott at Penn Square does not disclose performance-related information.”
But this is no ordinary “private business”. This hotel operates in a building owned by taxpayers, who have already paid more than $45 million toward its $76+ million construction cost. And the “Lancaster Marriott at Penn Square” gets to keep ALL revenue from the third and fourth floor meeting rooms of the taxpayer-owned convention center, including the large ballroom on the third floor.
This “private business” could not operate without massive taxpayer subsidies, the single largest case of corporate welfare in Lancaster County history.
And yet we continue to hear how things have changed for the better at our local fish-wrapper….. old habits die hard I guess. I wonder if there is such a thing as rehab for newspapers………..
I want to commend you on your analysis of today’s Sunday News article. As I was developing my own thoughts and response, I read yours and you covered it spot on. Well done!
I do wish to expand on the “deception du jour” that LNP will use to detract all of our attention from the real issues and that is the discrepancy between Smith Travel Research (STR) and Lancaster County. At issue, why are STR’s number always higher (by as much as 15%) than the County figures…WHO CARES?
The tax receipts, which are carefully audited annually by the County Treasurer, are accurate. Please accept that from someone who is the recipient of these audits. As to why the unaudited, incomplete, and voluntary data from STR is off is anyone’s guess.
This is nothing more than a red herring but it is consistent with the reporting from LNP since day one. They are willing to cover just enough of the other side to stir controversy to create interest in their “reporting”. They don’t ask the tough questions or offer up all sides of the issue.
If Marv is looking for an exercise in full disclosure, I suggest that he compiles a full accounting of every dollar that PSP, High and each and every subsidiary of High has received since day one of this project and then give Nevin Cooley the opening three paragraphs of its next article to be the standard bearer for a hotel tax increase.
We can debate this one until the cows come home but I would prefer to focus on some of the real issues at hand:
~How can anyone claim a tax increase would have “no effect” when the 12-year track record on countywide occupancy since the implementation of the tax proves exactly the opposite?
~How can anyone boast a positive impact on rooms sold from CC overflow when the pittance that they report is dwarfed almost 2-to-1 by the vopumer the hotel takes from the marketplace?
~How can anyone say we are “doing great” at the center, which is supposed to be generating NEW (incremental) hotel sales while tax receipts to the County are totally flat (with more, not less delinquencies included)?