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KEVIN LEININGER: With more hotels on the way, boosting the room tax would help make sure they are used

The $20 million, 136-room Hampton Inn is set to open soon on Jefferson Boulevard. If Allen County Council agrees, the room tax guests pay will soon be going up. (News-Sentinel.com photo by Kevin Leininger)
Construction will start soon on the $27 million, 125-room Provenance Hotel at Harrison and Main streets. (News-Sentinel.com photo by Kevin Leininger)
Dan O'Connell
Kyle Kerley (Courtesy photo)
Tom Harris
Kevin Leininger

If you could entice hundreds of thousands of people and millions of dollars to Fort Wayne every year — at the visitors’ expense, no less — what would you say?

Supporters of a proposed 1 percent increase in Allen County’s hotel tax are mounting a campaign to persuade County Council members to say “yes” when they consider the proposal next week. There are good arguments to be made either way, but they should do just that.

With the 136-room Hampton Inn set to open downtown in a matter of weeks, work ready to start on the nearby Provenance Hotel and several other hotels in various stages of construction or planning, it could be argued the increased volume will generate more money even if the tax rate remains at 7 percent. Visit Fort Wayne, the city’s chief promotional agency, currently gets 2 percent of the tax, with the Grand Wayne Convention Center getting the other 5 percent.

The tax generated about $5.5 million last year, but Councilman Kyle Kerley said that with more than 1,000 additional rooms coming, Visit Fort Wayne’s cut should increase by more than $300,000 a year even if the tax does not increase. “That’s half of what they’re asking for,” he said, and one reason he plans to vote “no.” He expects at least two other council members to do the same.

But the coming wave of additional rooms and the larger conventions they can support is precisely the reason Fort Wayne can’t assume those new rooms will be filled. Fort Wayne isn’t Hollywood. Even we build it, they will not necessarily come.

That’s because, compared to some of its competitors, Visit Fort Wayne’s $2.2 million budget is relatively paltry. Indianapolis is a major convention destination and a larger city, so perhaps its $9 million annual expenditure is appropriate. But Grand Rapids, Mich., spends nearly $9.6 million; and Des Moines, Iowa, nearly $5 million. Even Dayton, Ohio, and Sioux Falls, S.D., spend considerably more than Fort Wayne.

Kerley said some of those numbers are misleading because other cities have more hotel rooms (hence more innkeeper tax revenue) than Fort Wayne does. Not even the $700,000 a year Visit Fort Wayne would receive from the extra 1 percent would achieve parity with most of those cities, but Visit Fort Wayne Executive Director Dan O’Connell believes the added marketing budget would attract 1 million more visitors over five years.

“We’ve been pursuing this (in the state Legislature) for years,” O’Connell said, noting the Grad Wayne Center and existing and planned hotels equip Fort Wayne to compete for national conventions of up to 1,000 participants. New athletic facilities and downtown development also make Fort Wayne more appealing, and O’Connell said people who come to Fort Wayne enjoy the visit and often plan to return. The key is getting them here the first time.

Demand for hotel rooms in Fort Wayne has been strong, recently surpassing an average daily rate of $100 for the first time. With a current occupancy rate of about 68 percent, O’Connell is unconcerned about pricing Fort Wayne out of the convention business. Neither are Greater Fort Wayne Inc. and, significantly, the area hotel association, both of which support the increase.

In fact, with 5.9 million visitors annually, tourism in Allen County is growing by 7.5 percent a year — much more than in most other Hoosier cities. Nearly 77 percent of tourism spending comes from people living outside Indiana, and 80 percent of hotel room sales are to non-Hoosiers. The added 1 percent tax would increase the nightly cost of a room by about 75 cents and would still leave Allen County’s tax significantly lower than in Indianapolis, where visitors pay a 10 percent hotel surcharge.

True, the Legislature also gave Clark and Floyd counties permission to increase their tax from 4 percent to six percent. But do we really want to compare Fort Wayne to Jeffersonville or New Albany?

“I’ve struggled with this; I don’t want to see taxes go up. But I’m leaning for it because it will provide more money for promoting Fort Wayne mostly from people outside the community,” Council President Tom Harris said. “It’s a unique tax, or a user fee.”

Six of County Council’s seven members are Republicans, and it’s generally a fiscally conservative bunch. Joel Benz said he, too, plans to vote no because council will have no oversight over Visit Fort Wayne’s use of the increase should it pass.

O’Connell knows how to sell Fort Wayne, but his task next week could be more challenging. “They’re not inclined to raise taxes,” he said. “They’ve asked us to show a return on the investment.”

The city’s tourism numbers indicates they already have.

Council’s meeting will begin at 8:30 a.m. July 18 in Room 030 of Citizens’ Square, 200 E. Berry St., and its vote will be preceded by a public hearing on the proposed increase.

This column is the commentary of the writer and does not necessarily reflect the views or opinions of The News-Sentinel. Email Kevin Leininger at kleininger@news-sentinel.com or call him at 461-8355.

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