Can you tell me how much one percent costs?
Ok, put away your calculator and let me explain!. . .
On Monday of this week, the City Council of Indianapolis approved a one percent increase in hotel taxes. This now moves the current hotel tax of 9% to 10% making it one of the nation's highest. Knoxville, Tennessee's hotel tax is at 17%, so we have a way's to go to be considered "THE HIGHEST!" But, newspaper articles and internet chatterers are doing the math in an effort to argue their case on the impact this increase will have on our city's ability to attract business.
The increase was approved to help our struggling Capital Improvement Board (CIB). The city is expecting a $21 million boost in revenues. Although, this won't cure all of our problems, it will serve as a big help. In all that I've read and heard from industry folks, no one has really addressed the impact this will have on customer service. What I mean is that, I've been through a tax increase while at a hotel and have seen guest's react negatively. Any size increase can cost a property a lot - their reputation especially, based on how the change is approached. Keep in mind, we are talking about a travelers money! Regardless of how minimal the increase may be, a traveler on a budget may have an issue.
Here's where I've seen trouble arise. . .a traveler has booked a package for which we (the hotel) have required that they pre-pay for, securing their room and package amenities. Then, they arrive at the hotel property and notice an additional charge to their folio. This additional charge in some cases may be as small as $.38. However, some guest's see this as fraud. I'm getting to a point here! My point is this - don't let this one percent increase cost you anything! Rather, be prepared.
The tax increase goes into effect in September. So, manager's inform your staff and equip them with a firm understanding. Then, make a plan. Will you contact guests prior to their arrival to inform them of the increase? Will you prepare a note to distribute at check-in letting them know about the increase? I know a Director of Sales at a hotel that added a line to all confirmation letters explaining that future tax increases are possible. Will your reservationists explain the increase when guests call to reconfirm their room? If you're part of a chain, have you updated your property information with corporate? Surely, don't forget to update your website!
So, how much does one percent cost? Nothing - if you have a plan in place! Don't allow something designed to benefit the city, cost you and your hotel. Be prepared.
Jokima Hiller, MBA, Hospitality & Restaurant
Management Program Coordinator
Faculty Advisor, Travel & Tour Club
The Chef's Academy on the Web
The Chef's Academy on Facebook
The Chef's Academy on Myspace
“We Change Lives, One Student at a Time!"