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VOL. 127 | NO. 97 | Thursday, May 17, 2012

Bed Tax Hike Talks Turn To High Airfares

By Bill Dries

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This week’s discussion by the Memphis City Council about raising the hotel-motel bed tax sprouted wings and was bound early on for the much larger and emotional topic of high airfares at Memphis International Airport.


The council voted down the proposed 2.7 percent tax increase proposed by council member Edmund Ford Jr., which he said amounted to an additional 75 cents a night on an average daily room rate in Memphis of $74.

“Seventy-five cents on a room average,” Ford said, holding up three quarters. “I don’t think you can compare it to an air fare that is $400 or $500 more in Memphis.”

Doug Brown, general manager of The Peabody put it at $6 extra for an average four-day convention stay in a $200 a day room there.

And he and other tourism industry leaders said that combined with high airfares into the city could be enough to discourage convention and meeting planners already looking at places like Nashville, whose new convention center is about to open.

Ford originally proposed the 2.7 percent increase in the tax to finance the operation of city museums. But he said Tuesday the additional revenue could be used to fund a $2 million deficit in Memphis Convention Center operations the council learned about Tuesday in committee sessions.

Tourism industry leaders say the opening of Bass Pro Shops at The Pyramid next year with motel rooms included should produce enough revenue to handle the red ink at the convention center.

Ford said the timing of the deficit discussion and his proposal were “completely coincidental.” Council action on the ordinance was delayed after the measure passed in February on the second of three readings.

The bed tax revenue now goes to fund debt on the Memphis Cook Convention Center.

“I think the slippery slope for us as a community is we have a 40-year old convention center,” said Memphis Convention and Visitors Bureau President Kevin Kane. “It is a convention center that is in some ways functionally challenged, if not headed toward functional obsolescence. Eventually as a body this city council is going to have to deal with how are we going to come up with the revenue to improve or to replace the Memphis Cook Convention Center.”

Ford argued the revenue should come from tourists. The bed tax hike is one of several proposals Ford has floated along those lines including one still pending that would require auto inspection fees and accompanying stickers for all cars using Memphis streets – city residents and non-city resident driver.

“I do understand how we do not want to turn the tourists away,” Ford told Kane. “But I look at three quarters here. On average we are asking tourists to pay this much more a day so that our convention center will not be in debit in its 41st year.”

Council member Harold Collins was among the majority on the council who feared the increase would be a tipping point for tourists.

“We have to be able to provide these tourists a meaningful savings opportunity to continue to visit our city. … At the end of the day those people who come to Memphis deserve to have a fair and equitable stay,” he said. “Raising the tax on these tourists will cause them to think twice about coming here.”

But council member Shea Flinn returned to the problems at Memphis International, saying airfares may be causing them to do that already before they even take a look at the bed tax on a hotel stay.

“It seems to me that this is the much smaller leak in our tourism boat than the airfare charges. … That’s the tail wagging the dog when you get to the air fare,” Flinn said. “I’m having a tough time seeing how we’re concerned about a 1 percent tax (hike) on rooms when we’ve got a 300 percent tax on airfares.”

MORTGAGES 54 374 1,120
BUILDING PERMITS 177 767 2,425