In an effort to raise nearly $500,000 annually, Culver City officials are seeking to raise the hotel tax from 12 percent to 14 percent, according to the Los Angeles Wave. If approved by voters, the proposed tax would be phased in, with the rate raising one percent over each of the next two years.
Revenue from the tax increase would be used to support city operations and services, including infrastructure improvement, according to the paper.
Though the increase, which the City Council is considering for November ballot placement, is expected to close the city's projected $2 million budget shortfall, some hotel owners argue that it will hinder business.
“We will be less attractive to those market segments and actually lose occupancies and demand which will in turn reduce the city's tax revenues instead of the increase that is hoped,” Antonio Reis, director at the Courtyard by Marriott in Culver City said.
Because surrounding neighborhoods such as Los Angeles and Santa Monica had have higher hotel taxes for years, Culver City hotel owners are worried that the new increase will put them at a disadvantage.
“It is a selling point that we have been using for years,” Bill Reider general manager at the Radisson Hotel Los Angeles Westside said, “and when we lose that I'm afraid that we are going to lose a considerable amount of group business in the city and possibly a considerable amount of corporate business from our local negotiated rates.”
The measure is expected to be placed on the Nov. 2 ballot. If approved, the new tax rate increase could be effective as early as Jan 1, 2011.