The proposed bed tax has become a major talking point not only within the hospitality and tourism industry but also within this year’s mayoral race.
Supporters say the bed tax will create an estimated $5 million in new revenues for the cash-starved Buffalo coffers. Acting Mayor Chris Scanlon is pushing for support from the State Legislature.
“We did not do this on a whim. We had conversations and engaged multiple hotel owners and operators in downtown, as well as tourism industry leaders,” Scanlon said.
Critics contend it will only hurt efforts to bring in more tourists, especially large-scale meetings, where hotel room rates can be a key swing factor in whether Buffalo can land a convention or meeting, or see that potential booking go to another city.
Between the existing Erie County bed tax, along with state and local taxes, there is already a 13.75 percent surcharge on most hotel rooms. For those in the City of Buffalo, that would balloon taxes for hotels to 16.75 percent - the third highest in the country, according to HVS Global Hospitality Services.
By comparison, the national all-inclusive hotel room tax rate is 6.34 percent.
Coupled with a 47-year-old convention center, limited downtown hotel options, and the perception of harsh weather, could potentially undermine efforts by Visit Buffalo Niagara to book conventions and meetings.
That’s why hoteliers are concerned, including Dan Hamister, owner of the 124-room Hilton Garden Inn in downtown Buffalo.
“It would not only make us one of the top three most expensive locations in the country, but when it comes to taxes that are 16%, 18%, it'll have a huge impact on demand, as it'll end up becoming a fairly widely marketed statistic,” Hamister said.
The 3 percent Buffalo needs can be approved by state lawmakers. Previous attempts, including one proposed last year by former Mayor Byron Brown, were not approved by the state legislature. Assembly Majority Leader Crystal Peoples-Stokes supports the proposal, while State Senator and mayoral candidate Sean Ryan opposes the plan.
Developer Douglas Jemal, whose local holdings include the Richardson, Hyatt Regency Buffalo, and Mansion on Delaware hotel properties, said he is fearful the extra 3 percent bed tax would hurt an already fragile local tourism business model.
“I don't think we should tax. I think we should encourage businesses not to tax. It's going to hurt in the long run. I think we're overtaxed in Western New York, as it already is in the Buffalo metropolitan area already is, and I think that less tax. Let's figure out a way to get more business rather than more taxes,” Jemal said.
So far, the bed tax bill does not have a State Senate sponsor.
