Most people cringe when they hear the words “tax increase.” Certainly, increasing revenue by raising taxes is often the most difficult and controversial decision a governing body can make, because a tax hike generally has a direct impact on the people that governing body serves.
That’s what makes the hotel tax so unusual. Unlike most taxes, it has very little impact locally, yet it yields great local benefit. Think about it: Do you pay hotel tax in East Peoria if you live in East Peoria? No! People from out of town do. In fact, last year those out-of-town visitors contributed millions of local hotel tax dollars to Peoria, East Peoria, Morton, Pekin and Washington, and local residents reaped the benefits.
Where does that money come from? Each person who visits the Peoria area and stays overnight spends an estimated $150 per day on a hotel, meals, shopping, attractions and gas for the car. Not only does that translate into a direct benefit to each of those individual business owners, it also provides revenue for local governments through taxes: sales, gas, hotel, and in Peoria, restaurant and amusement. This is how tourism provides an exponential return on investment. The more visitors we can entice to the area, the more those visitors pay to improve our quality of life. That is the goal of the Peoria Area Convention and Visitors Bureau.
To achieve that goal requires a national marketing/sales effort, which takes enormous financial resources. In years past, the City of Peoria has taken the lead role in funding the PACVB. That made sense, since Peoria had nearly everything to gain, once upon a time. Today, though, the landscape has changed. East Peoria, Morton, Washington and Pekin all have hotels that benefit when larger events are held at the expanded Peoria Civic Center and EastSide Centre. All of those towns have intrinsic qualities that help entice conventions, groups and sports events to come to the area. Therefore, a regional collaboration of marketing and funding strategies is crucial to the continuing success of our local economy.
It’s a great concept on paper, but how do you ask cities to invest large sums of money (Peoria contributed nearly $1 million of hotel tax funds to the PACVB in 2007) when there is more demand than ever for their resources to be committed elsewhere? What the PACVB has asked all of them to do is raise their local hotel tax one percentage point (Peoria one-half a point) to six percent, with the idea that the extra revenue be invested in tourism marketing/sales. Again, it is money paid mostly by out-of-town visitors, and it has no impact on local city budgets because it is money those cities have never had before.
A hotel tax is not the perfect solution. We understand and empathize with local companies, chiefly Caterpillar, which spend great sums each year to bring corporate trainers, vendors, etc. to town. This will hit their bottom lines to the tune of several thousand dollars. But we humbly submit this as the best way to achieve what everyone wants—a better quality of life—and how to help pay for it. IBI