Hilton St Louis Airport

"What's Happening" in the River Bend

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The Tax Man Cometh: How HIGHER Tax Rates Affect Hotel Performance ...

In fall 2010, three municipalities in St. Louis and St. Charles counties proposed measures on the November ballot to increase hotel taxes, and all were defeated. In an official statement, Vicki Boyer, executive director of the St. Louis Area Hotel Association, wrote: “The St. Louis Area Hotel Association opposes unwarranted taxation. Hotels are always interested in working with cities on projects and initiatives they believe beneficial to the city and its residents, but in last year’s case where Clayton, Richmond Heights and St. Peters proposed measures to increase hotel taxes, there was no discussion or outreach by the cities before their hotel tax proposal received city government approval. The St. Louis Area Hotel Association will continue to monitor this type of legislative activity, and regulatory measures at the local and state level.”

Tom Lyons is vice president of sales and marketing for Lodging Hospitality Management (LHM), which has 15 hotels in the St. Louis area, including the Hilton St. Louis at the Ballpark, Hilton St. Louis Airport, Sheraton Westport Plaza, Sheraton Westport Lakeside Chalet, the Seven Gables Inn and the Cheshire Inn, which is scheduled to reopen in July 2011. Lyons said his team worked on defending Richmond Heights’ existing tax rate last year, and the outcome of the election influenced the company’s decision to purchase the Cheshire Inn.

Lyons said he gets a lot of questions from meeting planners, especially those from other cities, asking why rates in certain municipalities are higher. “If the tax rates continue to go up, we’re at a competitive disadvantage because meeting planners do look at that,” he said.

Tim Drury, president of Drury Development Corp., which owns some Drury Hotels, said his company had an issue with a hotel in St. Peters. “We had several cancellations from sports teams and other customers when they found out the tax was more than 17 percent,” he said. “Customers will notice the tax rate, and if it is higher than other hotels in the market you will lose business.”

Joe Franey, an accountant with Franey and Associates in St. Louis, has been representing clients in matters regarding state and local taxes for more than 20 years. “It [the tax increase] does filter through the whole economy in a region if the tax burden is higher in a municipality as little as 10 miles down the road,” he said.

Property Taxes

In addition to hotel tax rates, property taxes also can have an impact on the hotel industry.

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