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New hotel fee sought to promote L.A. tourism

The 1.5% assessment, supported by hoteliers, would raise an estimated $10 million to $11 million a year.

August 05, 2010|By Hugo Martín, Los Angeles Times

Hotel owners in Los Angeles are pushing a plan to add a new fee to hotel bills that would generate more money to promote the city as a worldwide tourist destination.

While the city already spends $11.4 million a year to attract tourists, proponents of the new fee say Los Angeles spends far less to promote itself than other top tourism towns such as Las Vegas, San Diego and Orlando, Fla.

"We've been noncompetitive in the convention business and tourism business for years," said Bruce Gorelick, manager of the Renaissance Hollywood Hotel & Spa and a supporter of the plan. "We've explored this for quite a while and the recession just makes it more urgent."

The city already levies a 14% transient occupancy tax, or bed tax, on hotel guests. The new proposed fee of an additional 1.5% would be levied only on guests at the 192 hotels in Los Angeles with more than 50 guest rooms. It would generate an estimated $10 million to $11 million annually. The charge must be approved by the Los Angeles City Council and the hotel owners. The proposal is scheduled for a vote of a City Council committee later this month.

Bert Seneca, general manager of the Beverly Garland Holiday Inn in North Hollywood, said the extra marketing money would help Los Angeles compete against other cities in drawing tourists.

"Los Angeles is being outspent in marketing by a number of cities," he said.

The annual advertising budget for Las Vegas is about $71 million, while the city of Orlando spends about $31 million and the San Diego Convention and Visitors Bureau spends about $24 million to reach out to tourists.

A specific marketing campaign using money generated by the new assessment has yet to be drafted, but hotel officials said a committee of marketing and tourism experts — headed by Universal Studios Hollywood President Larry Kurzweil — has been formed to devise a plan.

The city of San Diego created a tourism marketing district in 2007 that generated $27 million last year and helped fund a 2009 national marketing campaign with the slogan "Happy Happens."

Seneca said the extra assessment should fund a similar campaign for Los Angeles. Since 2008, the Los Angeles Convention and Visitors Bureau has promoted the city through a campaign tied to the slogan "That's so LA."

"We need to be able to strengthen the Los Angeles brand," he said. "We need something that is going to be able to spin Los Angeles in a good light."

While individual businesses such as Universal Studios Hollywood and the city's large hotels spend heavily to promote themselves, the backers of the proposed L.A. marketing district say a well-funded united campaign is needed for the whole city.

"Individually, there is no way we can make the impact that we can make as a united front," Gorelick said.

Councilwoman Janice Hahn said several hotel owners approached her with the idea last year and she agreed to spearhead it in City Hall. "Tourism is our No. 1 industry, and we really depend on it," she said. "If it's that important to us, we should be spending more to promote Los Angeles."

Under the proposal, the City Council must approve the creation of a citywide tourism marketing district. Hotels with 50 rooms or more would then vote to adopt a 1.5% fee added to the daily hotel room rate.

The 1.5% assessment would be added only to the room rate, not to the cost of meals or other services offered at the hotels.

Hotel and tourism leaders say creating a tourism district would be an easier way to raise money than increasing the bed tax, which would require approval of city voters.

The money raised by the assessment would be collected by a nonprofit group called the Los Angeles Tourism Marketing District Management Corp., which would handle the funds.

A committee of the council is expected to vote on the proposal in two weeks, followed by a vote of the city's 192 large hotels in late August or early September. Tourism leaders hope to begin collecting the fee as early as this fall.

Gorelick said he was confident the plan would be adopted by the hotels because the vote would be weighted to give the largest hotels more influence in the outcome.

Most of the city's largest hotels have already joined a steering committee to support the new tax, he said. "I have no concern that it won't pass."

hugo.martin@latimes.com

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