San Francisco Voters Reject Hotel Tax Hike

UPDATE — Nov. 4, 2010:

On Nov. 2, 2010, San Francisco voters rejected a measure that would have raised the city's hotel tax by two points, to 17.5 percent, making it the highest in the nation. Said San Francisco Convention & Visitors Bureau President and CEO Joe D'Allesandro, "By rejecting this measure, San Francisco has avoided cancellations of upcoming conventions and millions of dollars of lost business for years to come."

A proposal to raise the city's hotel tax from 14 percent to 16 percent — the highest in the nation — could cost San Francisco more than $150 million in lost convention business, the San Francisco Convention & Visitors Bureau (SFCVB) announced last week, having received negative feedback from several of its largest convention customers.

The tax increase — known as Proposition J — will come to a vote on Nov. 2. If voters approve it, according to SFCVB officials, the tax increase, coupled with Tourism Improvement District fees, would raise San Francisco's transient occupancy tax and fee to as much as 17.5 percent.

Citing the high cost of meeting in the Golden Gate City, which meeting organizers say is driving away both exhibitors and attendees, many convention customers have told SFCVB President and CEO Joe D'Alessandro that they are "already on the borderline of not returning to San Francisco."

"These sentiments are shared by a number of our top meeting planners," D'Alessandro said. "There is tremendous loyalty to our destination by these clients and many of them have met here for more than four decades, but 'business is business' and an increase in hotel tax is a significant factor in the selection process for every meeting planner no matter how attractive the destination."

So far, at least three major medical and scientific meetings have contacted D'Alessandro to express their concerns over Proposition J. While supporters say San Francisco — which has not raised its hotel tax for 14 years — needs additional tax revenues in order to close its projected $450 million budget deficit, opponents argue that Proposition J unfairly targets tourism businesses and would result in harmful job losses for San Francisco residents who work in the hospitality industry.

"San Francisco has been one of our most popular destinations, but with rate-conscious attendees, the proposed rate could force us to abandon future plans to hold meetings in San Francisco," the executive director of one professional society wrote in a letter to D'Alessandro.

"Increasing your tax assessment to the highest in the country would cause us to reconsider our future intentions of San Francisco for our citywide convention," wrote another director of a major medical society. "I am confident many other convention organizers would find similar pause in their evaluation of the city given an extreme tax situation."

Concluded a third customer, having the highest visitor taxes in the country "doesn't bode well for future convention attendance and the considerable ancillary spend of conventioneers in the city — on restaurants, transportation, exhibitor services, parking, retail and entertainment."