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Lightfoot puts quick kibosh on hotel tax hike for artists

Mayor-elect Lori Lightfoot is interviewed by reporter Fran Spielman Friday, March 5, 2019. | Rich Hein/Sun-Times

Mayor-elect Lori Lightfoot on Friday put the quick kibosh on her plan to raise the city’s hotel tax to provide more grants for local artists amid warnings that she risks killing the golden goose that is Chicago’s 55-million-a-year-visitor-strong tourism industry.

“I misspoke when I talked about that earlier….What I meant to say is this: I want to make sure that we’re dedicating a portion of that tax for the arts. That’s what I mean to say. And I misspoke,” Lightfoot told the Chicago Sun-Times.

Does that mean she does not plan to increase the 17.5 percent tax on Chicago hotel rooms?

“It’s a very significant tax. Increasing it is not gonna help our entertainment and hospitality industries,” she said.

“I want to make sure that we are careful about that and we’re doing everything we can to support it. Tourism is huge for our city. It’s gotta continue to be huge. And I don’t want to do anything that impedes that.”

On Feb. 20, Lightfoot was singing a different tune.

After unveiling an ambitious arts and education agenda, she proposed yet another increase in the Chicago hotel tax to boost the $1.7 million now devoted annually for grants supporting Chicago artists. Lightfoot called that amount “pocket change.”

“There should be no reason why artists are leaving Chicago to go to New York or L.A. or some other place that’s more friendly and more livable for them…,” Lightfoot said then.

“I believe that one of the things we should do is have a modest increase in the hotel tax so we can expand the amount of monies that are actually available for grant-making for our artists.”

At the time, Lightfoot said she hadn’t settled on a specific percentage. She would only characterize the increase as “modest” and “small” and said she has no intention of “proposing something out of sight.” But it has to be enough to “actually yield dividends,” she said.

“Even a small percentage [increase] — 1 or 2 percent — would go a long way in providing us with a steady stream of income where we could significantly expand our reach in grant making to artists.”

Lightfoot’s about face is certain to be music to the ears of Michael Jacobson, president of the Illinois Hotel & Lodging Association.

Earlier this week, Jacobson urged the mayor-elect to reconsider, noting that the total tax on a Chicago hotel room is already the highest of any of Chicago’s leading competitors for conventions and tourism.

Atlanta and New York City tax hotel rooms at a rate of 15 percent. In Orlando, the tax is 12.5 percent. In Las Vegas, it’s 13.35 percent. Hotel rooms in Hollywood, Ca. are taxed at a rate of 15.5 percent.

“When meeting or convention planners are looking at which market to put a major meeting with hundreds of thousands of people, the tax rate matters because it adds up quickly when you stay for several nights and multiply that by thousands of attendees,” Jacobson said.

“Every time you see a raise, that does scare away, particularly business travel…They’ll start second guessing coming to Chicago. Our hotel industry has experienced record growth in recent years. Anything that would be a detriment to that or slow down that progress would be a shame and would really hurt our economy.”

Jacobson communicated those objections to Lightfoot’s staff. He noted that eight new hotels opened in downtown Chicago last year with seven more opening this year. He warned that another hotel tax hike could stop those investments dead in their tracks.

That apparently set the stage for Friday’s about-face.

“It sounds easy to just throw a tax on the visitors, but visitors…are sensitive to that. We’re not the pot of money that everybody thinks we are,” Jacobson said.

During Mayor Rahm Emanuel’s tenure, the number of tourists visiting Chicago grew by 40 percent—from 39 million to 55 million-a-year.

Jacobson urged Lightfoot to “continue Rahm’s legacy of being a true champion for tourism” by going on foreign trade missions and using her newfound “celebrity status” to promote Chicago.