According to a June 4 letter to Mobile County Commissioner Connie Hudson, the Mobile Area Lodging Association (MALA) hopes to reduce a 2 percent county tax on hotel room nights in effect since 2001. The letter from MALA President Kent Blackinton requested a half-cent reduction in the tax as part of a “new and exciting strategic plan” to keep the Mobile marketplace competitive.
“In turn, the hotel community will implement a fee inside a newly formed tourism improvement district. These fees can be easily measured and increase the ability to market the Mobile County destination across all segments of the hotel business,” Blackinton wrote. “This is all in an effort to keep our overall tax rate close to the already-inflated hotel tax rate of 14 percent.”
That 14 percent comprises a 4 percent state tax on lodging, the county’s 2 percent tax and an 8 percent municipal lodging tax assessed by the city of Mobile. All in all, Mobile’s 14 percent lodging tax is already higher than that of New Orleans (13 percent), Las Vegas (11.5 percent) and Honolulu (13.7 percent).
At the July 27 meeting of the Mobile County Commission, Margo Gilbert of MALA urged commissioners to accept the half-cent reduction, explaining that particular 2 percent increase was proposed by MALA itself in 2001 to establish a marketing and tourism fund.
That fund has been a point of contention over the years between some of the hoteliers and the County Commission. Last year Lagniappe spoke with a few who believe the funding isn’t currently being used as it was originally intended and instead is helping fund specific events and organizations rather than promoting general tourism and conventions.
The current allocation of the county’s lodging tax income includes expeditures for 15 separate events and organizations like the Mobile Sports Authority, the Gulf Coast Exploreum, the Gulfquest National Maritime Museum, the GoDaddy.com Bowl and others.
The marketing fund brought in approximately $2.3 million in 2014, which was an average year.
A portion of those funds are still received annually through a contract between the county and the Mobile Bay Convention and Visitors Bureau (MBCVB), but some of it — around $500,000 — goes into the county’s general fund.
While discussing the lodging association’s recent request on Monday, District 1 Commissioner Merceria Ludgood said it had been a recurring issue since she took office in 2007.
“As long as I’ve been on the commission, we keep getting some level of dissatisfaction with how we’re handling this,” Ludgood said. “If we could find a way to not have this back and forth every year, that would be a good result for me, but not if it’s going to negatively affect us.”
Ludgood said the funding is still going toward its original intent of tourism marketing, but added there “could be issue” because MALA “might choose to allocate a different amount” than the county with regard to specific events.
During the discussion, Ludgood asked the financial director to review what the requested half-cent reduction in the lodging tax would cost the county, but before she could get a response, Hudson said it would be fairly close to the $500,000 that has found its way into the general fund in recent years.
“What we’d be taking out goes into our general fund,” Hudson said. “Now, we do have some overage right now, but that comes and goes depending on what the revenue picture looks like on the lodging tax. I think it would be difficult to do what they’re proposing without it having an impact on our ability to do what we’re needing to do with those lodging tax dollars.”
Hudson said if the county wasn’t paying for “legacy events” as well as the others, it would likely fall on the MALA to help subsidize the cost of those events, which she claimed undeniably benefit area hotels.
However, Hudson didn’t speak against the reduction specifically, but did question whether the lodging association had also requested a reduction from the city of Mobile or the state of Alabama.
Gilbert said the county was approached specifically because its 2 percent lodging tax was self-imposed at the request of the lodging association for a specific purpose. Hudson said she was familiar with how the tax originated, but said it wasn’t fair to ask the county — whose tax is only 2 percent — to bear the full weight of a tax reduction.
“I think I would like to see more buy-in from the city on this,” Hudson said. “I’d like to see at least a prorated share of that coming from the city. I don’t think it should be the county’s sole responsibility to come up with that.”
During the same meeting, Danny Corte, executive director of the Mobile Sports Authority (MSA), took the opportunity to discuss his organization’s contribution to the local economy.
In the past fiscal year, Corte claimed the MSA brought 25 events to the Mobile area with an estimated $18 million impact on the local economy. He attributes the success of the organization to the support Mobile County provides through its lodging taxes.
The discussion over how to fund and market tourism in Mobile isn’t anything new, and as Ludgood said, it has a documented history going back to at least 2007. It’s also not the first time in recent history the lodging tax and the county’s plan for tourism has been reconsidered.
In December, Hudson met with members of MALA to float the idea of an additional 2 percent lodging-tax increase to help fund the construction of a proposed $20.7 million soccer complex near the intersection of interstates 10 and 65.
That proposal was met with a unanimous “no,” as every member of MALA voted against it because it would bring the overall lodging tax rate to 16 percent.