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Bend councilors won't send room tax hike to May ballot

By Kandra Kent
Barney Lerten
Published On: Feb 06 2013 10:55:17 PM CST
Updated On: Feb 06 2013 11:45:50 PM CST

NewsChannel 21's Kandra Kent spoke with industry experts and a city councilor about the possible impact of increasing Bend's room tax rate.

BEND, Ore. -

Bend city councilors decided Wednesday night not to send a proposed 2 percent room tax hike to voters in May because hotel operators appear almost evenly divided on whether the move would help or hurt tourism and the general economy.

The election-deadline schedule dictated that councilors needed to move ahead Wednesday night, if they wanted to send the measure to voters in May, and they decided not to.

However, councilors also expressed a willingness to send a proposal to the November ballot -- if the tourism industry is more unified behind a proposal.

Several hotel operators had proposed a citywide vote on whether to increase Bend's lodging tax from 9 to 11 percent.

In fact, Councilor Mark Capell said he'd talked with Wayne Purcell, managing partner of The Riverhouse Hotel and Convention Center, about one out-of-the-box idea to consider -- a room tax hike only in the summer, when demand is high, but not in winter, when "price is king."

Capell said he floated the idea of a larger, 4 percent increase in the summer and no hike in the shoulder season -- and no one knows if that would draw more consensus as of yet.

Visit Bend President/CEO Doug LaPlaca read a unanimous statement from the tourism organization's board to councilors, saying they believe the room tax high "is in the best interest of city residents, the tourism industry and the broader economy." He also said the organization is not the one proposing the hike, and the city would decide who receives the revenue.

Councilor Mark Capell admonished those who "threatened and bullied" one speaker for expressing an opposing view last week.

"Every time we have a conversation about hotels, it seems to get a little ugly," he said, urging those involved to "dial it down a bit."

Several hotel operators said room tax revenue will drop, and that the value-conscious travelers do notice -- and sometimes get upset -- when they see the 10 percent increase on their bill at present.

Hotel operator Brett Evert said that while there's a wide variety of operators with different clientels, he believed "increasing this rate would be detrimental to the growth of the tourism" and hurt the revenues they provide for marketing and the city. But others representing higher-end hotels like the Oxford and the Pine Ridge Inn weighed in in favor, saying the higher tate still would be below similar tourism destinations.

New Councilor Victor Chudowsky said, "We can talk about November if we make progress on this front, but I don't think it's appropriate to do it now." And colleague Doug Knight wanted firmer, non-anecdotal data on the economic benefits.

Visit Bend and other supporters want additional funding to expand marketing efforts to Seattle and Northern California, and get a new base of tourists that would fly in.

Visit Bend said the increase in the room tax would generate $590,000 for marketing and another $250,000 for the city in the first year.

But supporters said the additional marketing will help businesses well beyond the hotel industry

The proposal appeared to be tabled last week after a local hoteliers meeting showed most in the industry didn't favor the tax increase. But it wasn't, and councilors held a public hearing Wednesday night.

Earlier, Ben Perle, a board member of Visit Bend and the regional vice-president of operations for the Oxford Hotel Group, told NewsChannel 21 he as an individual he thinks it would be good for Bend's economy, so when he was asked by city officials to still present the tax increase and answer some questions, he and other hotel operator gave a presentation at last week's meeting.

"This would be a very good decision on the part of the lodging partners," Perle said. "It would bring economic development as well as some public safety funds."

Victor Chudowsky is one of the council members who heard the pitch at the council's meeting. He said he couldn't support a tax hike until more hotel operators got on board.

Chudowsky said he's spent the last couple weeks corresponding with many operators around Bend.

""The emails are running about 2-to-1 (with) people who are opposed to it." Chudowsky said.

Chudowsky said hotel owners are worried their penny-pinching customers could be scared away from Bend.

And Alana Hughson, president and CEO of Central Oregon Visitors Association, agrees.

She told NewsChannel 21 that research shows that Bend's tourists are concerned with price.

"What we have learned coming out of this recession is that customers are very value-driven," she said.

"Now, getting a hotel is so Internet driven that a couple dollars difference a night makes a big difference for people," Chadowsky said.

Hughson said if Bend's room tax rate hits 11 percent (including a 1 percent state room tax), it will be the same as Portland's -- and, with Portland, would have the highest room tax in the state.

She said people expect those high prices when traveling to large cities, but not for more rural areas like Bend.

And many industry insiders said they didn't want to rush into any decisions -- it's not just about raising taxes on visitors but about keeping Bend's economy strong.

Officials with The Riverhouse Hotel and Convention Center and Seventh Mountain Resort told NewsChannel 21 they want much more discussions and open conversations before anything is decided.

Chris Otto, general manager of the Seventh Mountain Resort Chris, said he doesn't want decisions made with such a divided industry.

"We need to wait until we are unified before we present anything to the council," he said.

"Like it or not, the reality is tourism is the single largest industry (in Bend)," Hughson said.  "So we need to learn how to understand the economic impacts of that industry, because being the largest industry, it's going to have an impact on everyone who lives here, whether they're employed in the tourism industry or not."

Perle said increasing the tax would have a positive impact on Bend. He said it could be the next step in the economy's evolution.

But for many, the timing just isn't right.

"We've been in a difficult time, and we're still in a difficult time, and I would not like to increase the cost to my customers right now," said Wayne Purcell of The Riverhouse Hotel and Convention Center.

So if you work for a local bike shop, own a clothing store or simply dine at a Bend restaurant--you might want to pay attention to this one--this proposal could affect tourism in Bend, and that could affect other local businesses, and you

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