Thanks to a newly passed state law, the Metro Council will have the authority to raise the city’s hotel tax 50 cents per room to create a tourism development fund designed to attract and keep major events.
This year, the state Legislature approved and Gov. Phil Bredesen signed into law a bill that permits Metro to increase its hotel privilege tax from $2 to $2.50 per occupied room.
The estimated $2.5 million to $3.5 million raised from that 50-cent increase will go into a Music City “Event and Marketing Fund,” which will be used for promoting tourism.
Walt Baker, the chief executive officer of the Greater Nashville Hotel & Lodging Association, said the new fund must go toward major events that have at least a $5 million economic impact on the city, such as the upcoming CMA Fest.
“It’s set up so it has to have a significant amount of economic impact so that every Tom, Dick and Harry that wants to get a nickel or dime out of it — it’s not going to die the death of a thousand cuts,” Baker said.
A six-person board will govern distribution of the funds, which has to be approved by the city’s finance director, Richard Riebeling.
The board will have flexibility in how it chooses to appropriate the dollars, Baker said, with essentially a two-fold purpose of providing support for existing events to defray Metro expenses but primarily to attract new events to town.
“It would be for an event that would be on a large scale, like the Country Music Marathon,” said Rep. Janis Sontany (D-Nashville), the House sponsor of the legislation. “Those are going to have to have a lot of extra infrastructure, like extra police.”
Mayor Karl Dean will make the appointments, with one member required to be from the Greater Nashville Hotel & Lodging Association, one from the hospitality industry, one from Gaylord Hotels and two members of the public. Dean can pick whomever he wants for the chairperson.
Authorizing the 50-cent hotel tax increase comes one year after the General Assembly allowed, and then the Metro Council imposed, a $2 hotel occupancy tax to pay for a new downtown convention center.
Baker, of the hotel association, said the hotel tax could be hiked more after surveying local hotels and their rates.
“We really weren’t getting much push back at all if any on $2 room fees so we felt like we had a little bit of give in that,” Baker said. “And the hoteliers basically felt that putting 50 cents into this program per occupied room is a fairly small price to pay for the amount of economic impact that this thing could have over time.”
Administratively, the Event and Marketing Fund will be attached to the Nashville Convention and Visitors Bureau.