On Thursday, Nashville’s hotel rooms take another step toward becoming more expensive each night.
Metro Council will consider a 50-cent bump in the hotel motel tax to create special-event fund to finance new events that recruit more tourist activity and prop up the Music City Bowl with a consistent revenue stream. A six-member board would govern the fund’s spending.
Mayor Karl Dean supports the increase as does the Nashville Convention & Visitors Bureau and the Greater Nashville Hotel & Lodging Association.
It was no easy task getting the hospitality industry to agree. The process started almost a year ago and was heavily debated before the lodging association approved it. And there’s still grumbling amid the ranks about the increase, especially as the hotel industry feels the pinch of higher fuel prices and a sluggish economy.
The high-end hotels aren’t feeling it quite as much just yet. Most of the pain is on the lower end of the hotel market. But the higher-end facilities won’t be immune forever, particularly if fuel costs persist and corporate America really yanks the financial reins tighter.
Nashville recently increased the hotel tax — along with instituting other tourist-related taxes — to pay for a new downtown convention center.
According to the National Business Travel Association, Nashville ranks as the third highest in travel related expenses. American Hotel & Lodging’s June report on the hotel industry’s impact shows Nashville having the second highest total tax rate in the country. Chattanooga and Knoxville are just behind.
Some hoteliers are concerned that Nashville is beginning to price itself out of the market. Another issue is that if the cost to build a new convention center turns out to be higher than original estimates, there’s little room left to tap tourists for more hotel tax revenue.
Supporters, however, say there wasn’t any pushback from the convention market when $2 was being considered so they thought they had room for a little more.
Even Gaylord Entertainment bought into the idea of the fund.
Supporters note that the fund could be unwound if the convention center funding became an issue. That would take precedence because it’s viewed as a bigger producer of business for the city than any event the new fund could bring.
Creating the fund prompts the question, “Doesn’t the CVB do this anyway?”
Apparently, there isn’t a budget for taking a new idea from start to finish or effectively stealing a sporting event or music festival from another city. The fund would provide seed capital of sorts that perhaps is coupled with dollars from the Nashville’s corporate community.
But probably the best function for the board, at least to critics of the Nashville Sports Council and the Bowl management, is public accountability for the bowl game. One hospitality industry official said the bowl wouldn’t operate like a country club anymore.
The bowl’s finances have never been made public in its 10-year existence. There’s been considerable talk in back channels about the bowl’s profitability and lack of significant corporate sponsorship dollars.
In addition, someone from the fund’s board would have a spot on the bowl’s executive committee and there would be a public strategic planning process. So the bowl would have to give up something in return for a dedicated revenue stream.
Council members, however, have yet to see the agreement with the bowl organization.
If bowl officials don’t take the money, that either means profitability isn’t an issue or they just don’t want the public scrutiny.
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