Seattle doubled its hotel tax. Here’s where the money goes

Now that summer 2022 is finally starting in Seattle, tourists are walking the waterfront, cruise ships are arriving, and hotel occupancy rates are back to 60%. To aid this recovery and ensure that more visitors come and stay in the city, the hospitality industry is turning to what may seem like a counter-intuitive approach: a higher tax on hotel rooms.

Crosscut publishes this week a focus on tourism: Open for Visitors.

The Seattle Tourism Improvement Area is an 11-year special taxing authority that requires downtown hotels to charge a fee per room per night. When it was created in 2011, the STIA tax was set at $2 per room per night. In March, the Seattle City Council voted to double it to $4. Visit Seattle, the city’s tourism promotion group, said the doubled tax rate will allow them to bolster their marketing efforts to help the industry recover and compete with better-funded markets like Portland.

“The pandemic has taught us how fragile our industry is,” said John Boesche, senior vice president of tourism for Visit Seattle. “It also reminded us of how competitive he is. Each destination rolls out the welcome mat very aggressively because the visitor market is so coveted because of what they bring to a local destination.

In 2019, at a rate of $2/night, the STIA generated approximately $8 million for Visit Seattle. Since Seattle still has fewer visitors than before the pandemic, the $4 fare is expected to bring in around $9.8 million in 2022.

The vast majority of that money — $6.4 million — is for advertising that promotes Seattle as a leisure destination. Ali Daniels, chief marketing officer for Visit Seattle, said he was targeting more regional travelers in Washington, Oregon, California and British Columbia. This is a change from the pre-pandemic approach, when Visit Seattle marketed the city across the US as well as China, South Korea, Japan, UK, Ireland, Germany, France, Australia and New Zealand.

Another $986,000 of STIA’s revenue pays for five full-time staff and two part-time employees. Other expenses include $500,000 for partnerships with international travel agencies and marketing groups; $375,000 for public relations and press trips; $150,000 for market research; and $75,000 to promote Seattle events such as the Rock ‘n’ Roll Marathon and the Taste Washington wine festival. The rest goes to photography and video for promotional materials, expenses and a reserve fund.

In March, as the city council considered approving the doubling of the STIA rate, council member Dan Strauss drew a line between tourism and the city’s current homelessness crisis, which is particularly concentrated in the downtown area. city ​​where many visitors stay.

“How do you work in partnership with the Regional Authority for the Homeless? Strauss asked Visit Seattle representatives during a March 23 council committee meeting. “For the RHA to succeed, we all have to do a little.

Boesche told Crosscut that the STIA ordinance limits income to expenditures related to recreational tourism, so they cannot use it to pay for homelessness response work. But he argues the tourism industry is helping solve the housing crisis because 37.5% of King County’s lodging tax helps pay for affordable housing and services for homeless youth.

As the hospitality industry recovers, the doubled STIA rate is expected to start generating $18-19 million a year for Visit Seattle, a figure that could bring them closer to other destinations under a special tax authority. similar. Los Angeles generated $15 million in 2021 from its special tourism tax. Portland, one of Seattle’s biggest competitors for tourism, raised $22 million.

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