Struggling hotel owners made a futile, last-ditch effort to stave off a 5 percent jump in Payson’s bed tax last week.
Hotel managers said they’re just holding on in the face of the worst tourist slump in years —and the bump in the room tax can’t help.
The town council sympathized with the objections, but voted unanimously to impose the increase, which will cost the average guest about $1.60 extra per night. The town hopes to raise $85,000 from the increased bed tax, which will go to the town’s tourism department replacing general fund money the town currently spends on promotions and staging special events.
Pauline Muggi, representing the Rim Country Inn that’s on the brink of morphing into a Comfort Inn, said customers already storm the lobby in the morning, when they see the size of the state and local taxes tacked onto their bills.
She said after a decade in the hotel business, she’s never seen such low occupancy rates — just under 50 percent in Gila County, which has the lowest occupancy rates in the state according to the Arizona Department of Tourism.
“The last two years are the worst I’ve ever seen in the hospitality industry,” said Muggi.
She said people who used to come up on Friday and stay the weekend, now make their visit a day trip or come up on Saturday morning and just spend one night in a hotel.
“You’re over-projecting what this will bring in,” she said.
Payson Mayor Kenny Evans said he doubts paying an extra $1.20 or so will deter many visitors.
However, Muggi countered that if a proposed 1 cent sales tax boost, the town’s 5 percent boost and existing taxes are combined — hotel guest will end up paying nearly 15 percent in taxes. Muggi said occupancy rates in Gila County have already fallen to 40 percent, about 20 percent behind the state average.
Vice Mayor Mike Vogel said local hotels would be suffering even more if the town didn’t have the money to stage special events and promote them in the Valley. As one example, later in that same meeting the town council approved plans to stage a $20,000 July 4 fireworks show, in partnership with the Northern Gila County Sanitation District.
He said that when he stays in a hotel, he never notices the size of the room tax.
“A lot of people do,” said Muggi. “Or they come down in the morning, mad because the tax is so high.”
Synthia Creasy, representing the Best Western, said the town should at least provide some “accountability” to prove the money spent on the bed tax really does bring additional visitors to town.
“I love Payson,” she said, “I want people to come here.”
“I’ve had three different groups that I’ve brought to town to stay in your hotel, and they love it,” said Evans.
“Shhhh,” said Creasy, with a gesture to the two rows occupied by worried hotel managers, “competitors.”
Tourism and Recreation Director Cameron Davis appealed to the hotel managers to work more closely with the town to provide information on occupancy rates and visitor surveys.
He said the town will use the money to pay for advertising, fliers, brochures and promotional activities, plus the cost of staging things like the recent Civil War re-enactment, classic car show and other events designed to lure visitors from the Valley to Payson.
He said the town has issued more than 100 press releases, done segments on 12 television stations and spurred regional and national publicity.
But Muggi said such promotions often don’t directly help the hotels.
“People come into town and then leave and we don’t see a night in the hotel,” said Muggi.
She cited the car show as an example, since it had shrunk to a one-day event instead of a two-day event that used to generate a lot more room nights for local hotels.
“People don’t want to pay more. So the hotels take a double hit: Lower occupancy rates and lower prices. So how do you track the success of your promotions?”
“We can track every click on the Web site,” said Davis. “We get more than 125,000 unique visitors.”
He said the town has no way to determine whether putting out information prompts someone to actually rent a room.
“We need to receive reports from you,” he said.
“With the help of your association,” said Evans, “we could set up some sort of tracking system.”
Another hotel manager said, “other people benefit from the money you’re asking our customers to provide — like the casino. Our customers are subsidizing other customers in the area.”
The Mazatzal Casino is operated by the tribe and pays no state sales or bed tax. However, the casino also advertises heavily and sponsors or contributes to many local events that draw tourists, most of which don’t stay at the casino.
In the end, the council listened sympathetically, vowed to communicate better — and then approved the increase in the bed tax.