Revenue From Hotel Bed Tax Falls Short : Culver City May Cut Funds for Visitors Bureau

The Culver City Council is considering cutting its annual appropriation to the city’s Convention and Visitors Bureau because some council members say they are disappointed by the return on the investment.

The bureau, which received $250,000 from the city this fiscal year, has succeeded in drawing more conventions to Culver City. But since it was established in 1983, the bureau has failed to increase city revenues from hotel bed taxes.

“There was no timetable, but we were all led to believe that it would not take as long as it has to generate the level of revenues we were talking about,” City Councilman Paul Jacobs said.

Last year, the city collected $859,000 in hotel bed taxes, a tiny increase over the year before and far short of the $1.3 million projected by a 1982 feasibility study for the bureau. The bed tax, officially called the “transient occupancy tax,” works like a sales tax on hotel rooms and constitutes about 3% of the city’s general fund revenue, said Susan Sherman, senior administrative assistant with the city.

Despite increases from 7.5% in 1982 to 9% last year, hotel bed tax revenues have remained in the $800,000 range each year.

Mayor Richard Brundo said the city allocation for the bureau may be reduced next year and that future funding levels will be tied to revenues from the bed tax and indirect taxes on hotel guests who spend money in restaurants, stores and other businesses.

Brundo said that deciding whether the bureau has benefited the city financially is difficult because it is impossible to tell exactly how much revenue the bureau generates.

City Councilman Paul Netzel agreed, saying indirect revenues have to be considered.

“If indirect revenues were factored in, it would probably indicate that even last year the bureau came out ahead,” Netzel said.

The council has directed its staff to work with the bureau and the hotels to come up with a formula to determine the amount of indirect revenue the city receives from visitors attracted by the bureau.

Last year, 111 groups with 19,600 delegates had conventions in Culver City, up from 41 groups and 6,170 convention-goers in 1984, according to Kay Briski, executive director of the bureau.

Briski said tax revenues did not increase because renovation work last year at the Ramada hotel and Howard Johnson’s discouraged tourists and business people from staying there, and forced the hotels to book long-term contracts with airline crews. Occupancies over 30 days are exempt from the hotel bed tax.

At a recent City Council meeting, a few residents spoke out against city funding of the bureau.

“You are analyzing an enterprise that you have no business being in,” said Jim Boulgarides, a business management professor and council candidate. He argued that since hotels are the prime beneficiaries of the bureau, they should pay for it.

“You are subsidizing one part of the business community at the expense of the taxpayers of the city,” he said.

Netzel, however, said the city’s three hotels are paying for the bureau through the hotel bed tax, which would not exist if it were not for the hotels.

“Without the bureau, given the competition (from hotels) in the airport area, we have reason to believe the Culver City hotels would die,” he said.

Brundo said the bureau also serves an important function in promoting the city.

“As for whether it’s worth the money, I believe public relations for our community is very important and it is worth it,” he said.