More than 40 years ago, the Atlanta hotel industry asked the state of Georgia for permission to tax itself to enhance opportunities for the city’s hospitality and tourism business. A special tax on hotel stays would provide a consistent revenue stream to support proper promotion of Atlanta as a meetings and tourist destination.
This resulted in a remarkable agreement between the city and the Atlanta Convention & Visitors Bureau as the original recipient of the funds. The bureau has long been the city’s designated marketing organization, focused solely on generating conventions, meetings and tourist economic activities.
Later, the formula was adjusted to allow a portion of the tax to be allocated to the Georgia World Congress Center Authority for development of a world-class complex. Facilities on the authority’s campus are considered a “tourism product” since they are heavily used by groups and conventions. They bring significant numbers of people to the city, almost all of whom stay in our hotels and pay the local hotel tax. That tax generates consistent tourism dollars for the city and state.
In 1990, part of the tax was allocated to float bonds to construct the Georgia Dome, another obvious tourism generator that has also been used heavily by the convention and events industry. Once these bonds are paid, the city must renew the 38-year-old tax for it to continue. By renewing this local legislation now, the same percentage received by the Dome would provide the much-discussed partial funding for a new stadium, with no new tax or additional cost to taxpayers. No referendum is needed.
This model has proved so successful, jurisdictions across the state widely emulated it. Georgia now has more than 200 communities with a local hotel tax based on this mutually beneficial model. It is also standard practice around the country.
Today in Atlanta, visitors pay an 8 percent hotel tax that generates approximately $53 million annually. Hotels also collect an 8 percent sales tax: 4 percent for the state of Georgia general sales tax, and 1 percent each for MARTA, a local option sales tax, a water/sewer tax and a special purpose local option education tax. All of these local and state taxes, paid by visitors, significantly reduce the tax burden on the community.
The hospitality industry is one of Atlanta’s largest private-sector employers and one of the largest industries in the state. Much of this success is undoubtedly due to the foresight of hotel and political leaders, both state and city, in the 1970s who came up with a way to build one of the largest convention cities in the United States without asking local taxpayers to do anything other than benefit from its success.
Their vision has paid dividends millions of times over and continues to support many thousands of jobs for Georgians.
Ron Fennel is executive director of the Atlanta Hotel Council.