Cook County Board President Toni Preckwinkle will nix her 3 percent amusement tax proposal and instead push for a 1 percent hotel tax, Cook County Commissioner Larry Suffredin said Thursday.
A 1 percent hike would spike Chicago’s hotel tax to 17.4 percent. And although not yet formally proposed, some hotel representatives are concerned a hike would affect the city’s ability to land conventions.
Suffredin said Finance Committee Chairman John Daley, D-Chicago, invited him to a meeting with Preckwinkle on Thursday morning at which she discussed the 1 percent hotel tax, Suffredin said. He called it a “change in direction.”
“She indicated that she did not have the votes for the amusement tax and that she’d still like to go over recommending the reseller portion of that and that she had thought about the sugar tax and she did not have the votes for that,” Suffredin said.
He said Preckwinkle still backs a tax for reselling tickets on sites such as StubHub.
Suffredin said Preckwinkle thinks she has the votes for a hotel tax. He requested the language on a hotel tax proposal but had not yet received it by Thursday afternoon.
Preckwinkle’s office did not comment on the hotel tax and instead re-issued a lengthy statement issued on Tuesday which said she’s exploring all “revenue approaches.”
Suffredin said he’s concerned about the hotel tax’s effect on both hotel workers and on the city’s convention industry.
“The problem is that people believe that the hotel tax is a tax on people who don’t live in Cook County. But in fact it has an impact on people who live in Cook County and have jobs in the hotel industry,” Suffredin said. “We need to be thinking more regionally and more in terms of economic development. And that’s what concerns me.”
The commissioner from Evanston said he would prefer a tax imposed on AirBnb, a website that allows people to rent out their homes and apartments, much like a hotel booking.
Preckwinkle announced in October that she intended to push the county’s 3 percent amusement tax to include golf, bowling, cable television and secondary sales of sports tickets. That came after the penny-on-the-dollar sales tax increase passed by the County Board this summer that will hit Cook County residents on Jan. 1.
If Preckwinkle succeeds in raising the hotel tax by another one percentage point, the tax on a downtown hotel room will rise to a whopping, 17.4 percent. That’s compared to 12 percent for Las Vegas and 12.5 percent for Orlando, Chicago’s two biggest rivals for convention business.
“It’s just going to make it that much harder for us to compete with Orlando and Las Vegas for big conventions,” said Marc Gordon, president and CEO of the Illinois Hotel and Lodging Association.
Gordon noted that the tourism industry employs 135,000 people and lures 52 million visitors into Chicago each year, pumping $14 billion into the local economy.
“If we become less competitive and lose conventions, then it’s going to affect the revenue, the jobs and the taxes our industry is generating. A lot people who live in Cook County and work in our hotels will be hurt,” he said.
Compounding the problem is the fact that Preckwinkle’s proposal comes at a time when the state budget stalemate has triggered severe cutbacks at the tourism agency now known as Choose Chicago, Gordon said.
“We don’t have the money to do marketing and sales. And there’s all this new hotel supply. We’re looking at a very tough year in 2016. The party may be over,” Gordon said.
“Maybe we haven’t crashed yet. But, the sales tax will be 11.5 percent downtown now. The hotel tax will be 17.4 percent. The parking tax is already 28 percent. I don’t want us to fail just to say see, ‘We told you so.’ But, there’s a point where people say, ‘That’s ridiculous.’”
Downtown Ald. Brendan Reilly (42nd) agreed that raising the hotel tax would be a “mistake” that could kill the Golden Goose.
“If Cook County increases the hotel tax by 1 percent, they will be responsible for making Chicago’s hotels the most heavily taxed in the nation. Chicago’s hotel and lodging industry is critical to our city’s economic strength. Our hotels employ tens of thousands of people. Hotel guests spend hundreds of millions of dollars a year in Chicago, not only on lodging, but at our local restaurants, cultural institutions and retailers,” Reilly wrote in an email.
“Chicago’s tourism industry is finally competing at a high level against our two closest rivals for convention and tourism business. . . . Imposing yet another tax increase . . . would negatively impact the important gains we’ve made in recent years. Hotel and convention business is hyper-competitive at the national level. Another hotel tax increase would put Chicago at a significant disadvantage.”
Mayor Rahm Emanuel noted that he heard similar sky-is-falling concerns when he raised Chicago’s hotel tax in his first city budget.
It didn’t happen. The hotel industry is booming with thousands of new rooms coming on line and even more projects in the works, he said.
“With a new presidential library coming to the city of Chicago, a new [Lucas] Museum coming to the city of Chicago, the redevelopment of Navy Pier, which is the biggest tourist and visitor area of any site in the entire Midwest, we have a lot of things to be optimistic about,” the mayor said.
“I’m not going to comment on something I haven’t seen. But, I can tell you there’s a lot of strength in Chicago’s tourism and convention business. I can see it in the confidence the hotel industry has in the city of Chicago. You were just at a groundbreaking of a new hotel [near Midway Airport] just two days ago.”
Emanuel is hardly in a position to criticize Preckwinkle for raising taxes. He just pushed through a record, $588 million property tax increase for police and fire pensions and school construction and a first-ever garbage collection fee of $9.50-a-month-per-household.
Nevertheless, 2016 shapes up to be a particularly difficult year for hotels. It will be short on conventions because it was supposed to be the year that Chicago played host to the 2016 Summer Olympic Games.