There is No longer hot issue Hotel tax in county

For most hotel operators, the fear of losing business from the once-controversial Luzerne County room tax did not materialize.

 

Bill Genetti, right, helped lead the 1996 fight against the hotel tax. With him is Patrick Genetti.

PETE G. WILCOX / THE TIMES LEADER

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Since the Luzerne County Hotel Tax went into effect 15 years ago – on July 1, 1996 – more than $25 million has been collected and used to pay off the construction debt of the Mohegan Sun Arena at Casey Plaza and to promote tourism in the county.

At the time, the idea of a 5 percent a night room tax was met with consternation by some hotel owners and a lawsuit to stop it by others. No other county in Northeastern Pennsylvania had levied such a tariff and some hoteliers believed it was not only unjust but illegal.
In the years since the tax was instituted, other counties across the state have done the same, though most are at a lower percentage rate.
“It’s not even an issue any more,” said Merle Mackin, executive director Luzerne County Convention and Visitors Bureau.
In the battle hotel owners waged against the tax, some said visitors would steer clear of local lodging and go to a neighboring county where no such tax applied. Others believed hotel operators might view this county differently and perhaps locate elsewhere.
Courts decided the tax was constitutional and it began appearing on guests’ bills.
A lot has changed in the decade and a half since, mostly proving that the tax was not as dire a deal as some believed, although at least one steadfast opponent maintains the tax hurts business.
At least 10 new hotels, motels or bed and breakfasts have opened in the county, adding 650 rooms for guests. The arena, the driving force behind the controversial tax, is thriving and will celebrate its 12th anniversary in November.
Dozens of businesses, including some hotels, have been built nearby along Highland Park Boulevard, making it one of the larger retail corridors in the county.
And for hoteliers, perhaps most important, other counties in the region and nation have followed suit and implemented similar taxes, thus leveling the playing field.
In this region, Lackawanna County levies a 4 percent tax; the Pocono Mountain counties of Monroe, Carbon, Wayne and Pike, the Endless Mountain counties of Sullivan, Wyoming, Bradford and Susquehanna, and Schuylkill County collect a 3 percent.
“Initially it took some time to get used to the fact there was an additional fee,” Mackin said. But he said he never once heard concrete evidence that visitors went elsewhere to avoid the tax here.

Opposing viewpoint

Bill Genetti, who owns the Best Western Genetti Lodge in Hazle Township, saw it differently at the time.
When a bus tour group is looking to make a stop and they have 40 or 50 people on the bus, he said that’s costing them an extra $100 or $200 a night to stay in Luzerne County. Or they could have driven a few miles to an adjoining county where no such tax existed.
He can’t say for sure that happened, but he believes travelers did that early on when the county was unique in this region to levy the tax.
Genetti was one of the most outspoken opponents of the tax and led the legal efforts against it. His claim at the time, which he still stands by, was that the arena does not bring overnight visitors to southern Luzerne County so why should those hotels be responsible for collecting a hotel tax that supports it.
“Wilkes-Barre hotels I’m sure benefit from (the arena),” Genetti said. But the same can not, and to Genetti’s knowledge, has not, been said in the Hazleton area.
“I think you would have trouble finding a hotelier in the Hazleton area who has gotten one room filled because of the arena,” Genetti said.

W-B area hotels benefit

Hotels in the Wilkes-Barre area have clearly benefited from the arena.
Nadine Howe, general manager at the Best Western East Mountain Inn in Plains Township, said the arena has helped attract visitors and the tax is not an obstacle.
At the time it was approved, Howe was a sales manager at the hotel and said there was some initial anxiety.
“Anytime something’s levied, there’s a concern,” Howe said. “I think the concern was there … but I really don’t think overall it’s factored in.”
She said the recession and high gas prices have done more damage than the hotel tax ever did.
But, she added, “things seem to be getting better.”
April, the most recent monthly figures available on the hotel tax, generated $190,447. That’s the most ever collected in April since the tax was first levied.
The same could be said about the $192,632 collected in March and the $143,797 generated in January.
And calendar year 2010 was the best ever in terms of the hotel tax, with $2.195 million collected, beating the previous high set in 2007 when $2.081 was raised.
The tax is collected by most places where overnight lodging takes place, with exceptions like campsites. Most of the revenue is used to pay off the $22.1 million in bonds that financed the construction of the Mohegan Sun Arena at Casey Plaza and 20 percent of it goes to the Luzerne County Convention and Visitors Bureau for the promotion of events and attractions in the county.
Since 2008, Luzerne County has taken a 2 percent administrative fee off the top.
Mackin said the hotel tax generates between 70 and 80 percent of his office’s budget. Without the tax, tourist promotion activities would be severely strained.
At a time when gas prices are high and day trips are gaining popularity, Luzerne County benefits. Not having the ability to properly promote the region would be devastating to the tourism-related businesses, he said