Despite several impassioned pleas from local hoteliers and a former Farragut alderman, the Town’s Board of Mayor and Aldermen voted 4-1 on first reading to approve a 3 percent hotel/motel occupancy tax during its regular meeting Jan. 9.
It was the third time since 2013 the issue had come before the Board on first reading, and Thursday’s vote followed several months of internal and external discussion, information gathering and planning. If approved on its scheduled second reading Thursday, Jan 23, the tax will become effective March 1, with all funding raised specifically earmarked for Town tourism development.
Three hoteliers opposed the tax, but one spoke in support.
Darren Tallent, general manager for Hampton Inn & Suites, said, “We as hoteliers continue to be a bit disappointed, because we have yet to see a clear mission or plan to developed to put ‘heads in beds.’
Tallent also noted the recent “largest hotel growth in Knoxville since 2012.
“Currently we have a competitive advantage … but you put the tax in, I feel we will have to lower our rates to compete,” he added. “Three percent might not seem like a huge difference, but it is to us and to our several thousand group and corporate accounts we have annually.”
Tallent also questioned the March 1 effect date for the proposed tax. “It doesn’t give us much time to prepare for this,” he said.
Scott Pejsa, regional vice president of operations for McKibbon Hospitality, which operates Hampton Inn and Suites, also spoke out against the proposed tax, and cited one recent negotiated contact only netted the hotel a profit of $2.12 per room night.
“If you add that three percent tax, that [profit] goes away,” Pejsa said.
“I really want for everyone to really think about this,” Pejsa continued. “I will say, over last seven years, you guys have allowed us to be heard, but in my honest opinion I don’t think we’ve been listened to.
During discussion, Alderman Louise Povlin, who opposed the three percent tax from the beginning, proposing instead starting at two percent, said, “I agree with your point of view. We have no plan for what we are envisioning here. We have nothing to establish a three percent tax.
“Speak for yourself — I have done my research on this,” interjected Alderman Scott Meyer.
Amit Patel, owner of Comfort Suites, said he believes hoteliers “have not been getting straight answers” regarding the need for the tax.
Meyer asked if Patel would participate in helping make a tourism plan. Patel responded he would.
“I think that would be great progress,” Patel said
“We’ve gone through this before,” Alderman Ron Pinchok said. “You wanted to be involved but then don’t show up for the meetings. We’ve been trying for two years to get you all involved.”
“It is your responsibility to come up with a plan that is straight forward and clear cut,” replied Patel. “That’s what we don’t have.”
Alderman Drew Burnette said a plan had been discussed at a Tourism workshop held in December.
“We had all that at the last meeting. We can’t keep getting to within five yards of the finish line and punt back 20 yards,” Burnette added.
Trent Walker, of Fairfield Inn and Suites spoke in favor of the proposed tax, but asked if it could be considered at 2 percent.
“It would allow the hotels to keep a small competitive advantage,” Walker said.
Bob Markli, former Town alderman well known for his opposition to the tax, also spoke during the meeting.
He suggested if the matter was an important one, “let’s make it a budget item” instead of a tax. Marlki also suggested the issue could be placed on the ballot for a residential vote.
The Board discussed the issue, with Burnette reiterating the basic plan put forth in December “gives us the foundation on which to build” the Town’s tourism program.
Ultimately, Mayor Ron Williams, Meyer, Burnette and Pinchok voted to approve the ordinance on first reading.
Povlin voting against, as she reiterated her support for a 2 percent rather than a 3 percent tax.