[NFBMO] How Springfield's hospitality industry feels about increased tax, convention center plans

[Horchem Gary]

From today’s Springfield News Leader:

How Springfield's hospitality industry feels about increased tax, convention center plans

Springfield's special election Nov. 4 is steadily approaching, with some already voting absentee. The only question on the ballot asks voters to consider an increase to the city's lodging tax in order to fund the construction of a 125,000-square-foot event center estimated to cost $175 million.

The city's current 5% hotel/motel tax, which also applies to short-term rentals, is proposed to increase by 3 percentage points in order to provide a funding mechanism to pay off the financing of the convention center over the course of 30 years. This would bring the total tax visitors pay for a hotel room from roughly 13% to just over 16%. That does not include any additional taxes charged for hotels within a special taxing district, like downtown.

The Springfield Hotel Lodging Association (SHLA) Board of Directors has not taken an official stance on the ballot measure due to the differing views of its members. While some agree with the city and consultant findings, others are wary the scale is too large and will only increase prices for hotels that won't see a benefit.

Local hospitality industry split

Greg Walker with Walker Hospitality Group has operated the La Quinta Inn on Campbell Avenue for 25 years, been in the hospitality business for 35 years total, and serves as the treasurer on the SHLA board. He said while Springfield hotel room stays rebounded after the COVID-19 pandemic, occupancy has dipped again and remained stagnant in recent years.

The convention center, per the Hunden report, has been presented as the answer to attract more tourism and improve hotel night stays, with the argument that the large, new amenity boost hotel rates in the larger city area. But Walker is skeptical. As someone who operates a south Springfield hotel, the potential increase to the lodging tax is worrying — the price to stay at his hotel will rise, which he said puts it at risk of losing guests.

"You know, a guest is only gonna pay so much for a room. At some point they're gonna say, 'that's too much, I'm not gonna stay there, I'll go somewhere else,'" he said. "Or they're gonna go to a different city that feels like the value that they're paying is worth what they're paying."

According to the city's analysis, the increased 16.1% total tax charged on hotel rooms would put Springfield in the middle of the pack among competing cities, up from its current place as the third lowest. Kansas City charges 16.48% plus $3 per room night while St. Louis's hotel tax sits at about 17.9%. Walker also argued that as a for-profit business, money sent to taxes means loss in profits to the owner.

"I don't know why the city feels like it's theirs to take for a convention center that's going to be funded by hotels that may not necessarily be getting any new business out of it," he said.

He specified that he is not against a convention center and is sure improvements are needed, but he said there could be more economical and feasible ways to improve the situation. In his eyes, what's proposed is too large and without enough evidence that Springfield can actually attract that volume of guests, especially when the report notes a 400-room adjacent hotel is needed, as well.

"I don't believe that the city is going to be able to attract that many more groups that are gonna fill up those room nights and then trickle down to everybody else's," Walker said. "I'm just not sure Springfield's in that market. I'm not sure if we have enough business today that would want to come to Springfield, Missouri, that could fill that convention center up ... I wonder if we could have something that the city can be proud of, but not something that's gonna be sitting empty that the city's gonna have to maintain."

In an emailed statement, Lonnie Funk, president of Rolling Oaks Hospitality, Inc. (ROHI), the management company behind Holiday Inn Express & Suites Springfield-Medical District, shared Walker's concerns. He said the increased tax could put Springfield at a disadvantage and also was wary action on the project was premature.

"With more than 50 years in full- and select-service hotel and convention center development and operations nationwide, ROHI does not believe the proposed convention center site aligns with the preferences of national, regional, and state meeting planners and their attendees," the statement read. "Separately, Rolling Oaks Hospitality, Inc. recommends the City continue evaluating this issue from the consumer’s perspective and review models from successful markets. We believe a more thorough analysis is warranted."

Walker also raised concerns about the city's hurry to move forward with convention center plans, largely due to the possibility of state funding that is assured.

Tim Rosenbury, the city's director of Quality of Place Initiatives, said while the city may look like it's in a rush, there is still thought going into every step. He said the city is also relying on high-quality, experienced and well-resourced experts to move the project along and ensure the plan is pursued in a responsible and effective way. City Manager David Cameron emphasized that city staff are assembling "the best team possible" to pursue the plan on an accelerated timeline rather than having to handle such a large project internally.

The city is also not new to large-scale projects like this, city chief spokesperson Cora Scott said.

"I think Springfield is becoming known as a city that does large projects now," she said, which helps bring in more, and higher quality, responses to requests for proposals.”

Not all within the local hotel scene share the concerns presented by Walker and Funk. Tim O'Reilly, CEO of O'Reilly Hospitality Management, said in an email he sees the proposed convention center as a great benefit to the local economy.

"The higher lodging tax merely brings us in line with most other cities in the state that are close to our size or bigger, and thus I think it will have no effect on travel and occupancy in Springfield," he said.

Representatives from University Plaza, a hotel likely to see the greatest impacts, did not wish to comment.

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