Delaware County Board plans to raise hotel tax to 5%

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The Delaware County Board is considering a 2% increase in the hotel tax, and tourism officials hope the funds will help inject much-needed promotion into the industry.

At today’s council meeting, council will have a first reading of an ordinance that would increase the hotel tax to 5%. No votes would be taken and a public hearing will take place when council holds a second reading, when members usually vote on the measure.

“This tax increase, while it relates to the hotels themselves, must also, by law, be used to promote events and opportunities to fill those beds,” Councilor Christine Reuther said. “All it’s doing is putting them on a level playing field from a fiscal standpoint with our neighboring counties and what it’s doing is putting more money into an organization whose legal obligation is to promote tourism and overnight stays in these hotels.”

Jonathan Lichtenstein, assistant Delaware County attorney, said the hotel operator and the booking agent that makes the reservation, such as hotels.com or booking.com, are owed the tax.

If passed, it will not come into effect until January 1, 2023.

“The increase is $2.50 per room per night,” Delaware County Executive Director Howard Lazarus said. “I don’t think that would deter hotels.”

He added that the average cost of a hotel room in Delaware County is $100 to $110 a night.

Steve Byrne, executive director of Visit Delco PA, said Delco has the lowest hotel tax at 3% of surrounding counties.

County Councilwoman Elaine Schaefer added, “The vast, vast majority in Pennsylvania is at 5% or more. We are significantly disadvantaged at 3% compared to all of our neighbors…We are significantly disadvantaged when it comes to spending to bring tourist dollars into our county.

Only Montgomery County is at 4% and Philadelphia at around 8%, she said.

In addition, Schaefer said the previous councils had drafted an agreement in which 1% of this tax reimburses the obligations of the stadium.

“So we don’t have access to that money,” she said. “It’s a big tourism asset in our county, but it actually means we only have 2%.”

Byrne agreed on how this tax increase could help the industry.

“From a marketing or promotional standpoint, this will put us on a level playing field,” he said, noting that neighboring Delaware has an 8% hotel tax.

Here in Delco, there are 4,200 rooms in 41 hotels or inns, Byrne said, and in pre-pandemic years, an annual occupancy of 68 to 69 percent was considered a good year.

“Things are slowly coming back,” he said. However, he added, “Right now we’re running out of businesses, business travellers.”

Schaefer said a county economic development study found serious leaks in retail spending.

“Residents of Delaware County are coming out of our county to spend money and that’s $2.8 billion a year,” she said. ” It’s shocking. So we have to work hard to recover those expenses in the county.

Council Chair Dr Monica Taylor expressed concern about one of the hardest hit industries.

“I’m a little worried that we’re raising a tax on our hotels… just thinking about the impact COVID has had on this industry,” she said.

Lazarus said occupancy rates and average daily room rates have nearly recovered.

“They’re not quite at pre-pandemic rates, but their weekend bookings are doing well,” he added.

Schaefer said the experience of hotels during the pandemic is precisely why this measure is needed.

“In my mind, that’s an even bigger reason to invest in this effort and to have more money to spend on helping, supporting and bringing the tourism industry and the hospitality industry itself,” she said.

Byrne agreed.

“It’s the good thing about it – to promote better,” he said, adding that Delaware County is full of hidden gems, from art to sites of historical significance to gardens. “I think it’s going to be put to good use.”

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