Georgia’s hotel industry fights new $5 fees

Georgia hospitality heavyweights have launched a behind-the-scenes campaign to soften the sting of a new nightly $5 fee tacked on to hotel and motel stays that will fund transportation improvements.

They are already lobbying Gov. Nathan Deal and legislative leaders to scale back the fee next year, and industry executives pledge to turbocharge their political campaign donations. And, in the meantime, they are exploring litigation that could prevent the rate increase from taking effect in July.

The hoteliers are playing catch-up after they were blindsided by the fee. House and Senate leaders struck a late deal to attach it to a broader transportation package that would funnel more than $900 million each year into road and bridge repairs.

They have their work cut out for them. Deal has vowed to sign the measure into law by early May, and he has said he has little appetite for substantial changes to the legislation. “This was the one bite at the apple,” he said in a recent interview.

But that hasn’t stopped the industry from waging a new campaign. Several industry leaders declined to comment, but documents obtained by The Atlanta Journal-Constitution through an Open Records Act request reveal details of their strategy aimed at persuading legislators to revisit the hard-fought tax increase.

“They cast their votes hastily based on incomplete and inaccurate information and without regard to the burden they have placed on our industry,” the Georgia Hotel and Lodging Association said in an April dispatch to members. “Now, GHLA is launching an industry-wide fight to have this onerous bill modified.”

Ice cream and arm-twisting

The new approach aims to blend soft-touch negotiating — ice cream treats and friendly sit-downs with lawmakers — with ominous warnings that fewer hotel visits could devastate Georgia’s tourism sector and the estimated 240,000 jobs it helps sustain.

The new fees are expected to raise at least $150 million each year, though that could rise or fall sharply depending on hotel occupancy rates. That would mean the hospitality industry would bear roughly 20 percent of the cost of the transportation bill, which would also lift the gas tax for the average driver by about 6 cents a gallon and eliminate lucrative tax breaks for Delta Air Lines and electric vehicle owners.

The increases come on top of nine pending pieces of legislation that would authorize an increase in a city’s or county’s hotel/motel tax for local projects.

State leaders see the fees as a way to shift the burden of the tax increase to out-of-staters, and it was selected in the final days of the legislative session over a separate proposal to hike rental car fees that met stiff opposition.

Deal said in an interview that the industry should be able to stomach the new fees, and he said that “people wouldn’t come to their places of business if they didn’t have a good way to get there.”

His office, meanwhile, worked internally to try to blunt criticism. Chris Riley, the governor’s chief of staff, wrote an email to two top aides urging them not to refer to the new charges as a bed tax.

“Can we say hotel motel fee? Sounds like we r running a brothel.”

‘We can no longer be a minor player’

Already, tourism officials are distributing a study from PKF Hospitality Research that found that the new fees could deter some visitors. And the association said it has consulted legal counsel about challenging the bill’s legality or securing an injunction to delay its implementation.

Industry officials have also had face-to-face discussions with Deal’s administration. A lobbyist for the Georgia Convention and Visitors Bureaus warned Lynne Riley, the state’s tax commissioner, that some conferences could cancel long-booked trips if they are forced to pay the additional fees.

At an April 14 meeting, four industry executives presented Bart Gobeil, the state’s chief operating officer, with a survey that showed many Georgia attractions rely on mostly in-state visitors who would be hit by the new fees. They also brought along treats from Leopold’s Ice Cream, a Savannah creamery.

Others have taken a more hard-edged approach. Peggy Holcomb, the head of Oconee County’s tourism department, sent Deal a letter warning that the new fees would harm business recruitment, discourage future hotel development and result in sharply higher costs for in-state government travel.

“I’m not sure why or how this happened,” she said in an interview. “We were all taken by surprise. We were blindsided. And we hope they revisit it.”

The most lasting impact of the industry’s response, though, may yet show up in campaign piggy banks. Hotel executives and the industry’s political action committee raised at least $34,000 for the past campaign cycle, but that’s just a tiny fraction of the hefty sums ponied up by trial lawyers, road contractors and other influential interests.

That seems likely to change.

“We can no longer be a minor player in this arena,” the association told members. “We are counting on your financial support of this important initiative.”