Santa Monica : Council OKs 12% Hotel Tax

The City Council has approved a 2% increase in the city’s hotel occupancy tax, which is expected to generate an additional $897,000 per year when it takes effect Oct. 1.

The council gave final approval for the hike in a 6-1 vote Tuesday. It is designed to take advantage of a hotel construction boom that will increase the number of rooms in Santa Monica by 80%, to 1,800, by next year. Councilman Herb Katz voted against the measure, objecting to the city encouraging tourism and hotel growth and then heavily taxing the industry.

Local hoteliers and the city’s Convention and Visitors Bureau have complained that the boost was unnecessary, that hoteliers were carrying an unfair burden of the cost for growth and that they were not adequately consulted by the city. But none were on hand for Tuesday’s meeting or a previous public hearing.

City Manager John Jalili said a city consultant predicted that the measure, which raises the tax on nightly room rentals from 10% to 12%, will have negligible impact on business and is equivalent to rates in surrounding municipalities. The money generated will go into the city’s general budget.

Since 1981, annual income from the hotel tax has nearly quadrupled to $4.5 million through rising occupancy alone, without an increase in taxes.