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County Enacts Hotel Tax Increase

by on February 06, 2019 11:00 AM

Centre County commissioners on Tuesday approved a hotel occupancy tax increase that they expect ultimately will have a significant benefit for tourism and the local economy.

Act 1 of 2019 increases the tax from 2.5 percent to to 5 percent, the maximum allowable under Pennsylvania law. The hike goes into effect April 1. Centre County's current hotel tax rate is the second-lowest in the state and has been at 2.5 percent since 2002. The county also had the lowest overall hotel tax rate among Big Ten communities at 8.5 percent — 6 percent state tax and 2.5 percent local occupancy tax — and with the increase will be second lowest.

The commissioners began considering the increase late last year and have held multiple discussions, including presentations from Central Pennsylvania Convention and Visitors Bureau Executive Director Fritz Smith.

CPCVB receives hotel tax revenues for its operations in promoting tourism locally and to provide grants to nonprofits for events and initiatives to drive tourism.

Smith said that with the increase, CPCVB would be able to ramp up its promotional and advertising efforts and increase its grant program, which assists dozens of nonprofits, to help more organizations, festivals and events expand their marketing and reach larger audiences. 

On Tuesday, Commissioner Steve Dershem listed more than 40 nonprofits, "from Aaronsburg to Philipsburg to the Mountaintop and a lot of places in between," that have benefited from the grant program. He said while most of the hotel rooms in the county are located in the Centre Region, the benefits of the tax extend well beyond.

"This has high value to our area to attract visitors and also increase quality of life for residents of our community," Dershem said.

Fritz previously said the tax increase is projected to create $137 million in new visitor spending annually, result in 320 new jobs in hospitality and other sectors related to tourism, and help local hotels catch up to state and national averages for occupancy rates.

Commissioner Mark Higgins said that local businesses, including hoteliers, have generally been supportive of the increase.

"The overwhelming majority of hotel operators in Centre County, by number of rooms, have been very active in contacting us about increasing the rate so we can bring more tourists to Centre County when they’re not busy, which is most of the time," Higgins said.

Along with the rate increase, the ordinance now applies the fee to online booking agents such as Airbnb. A new Pennsylvania law that went into effect in January also required booking agents to begin paying the state tax.

"We should begin to see them registering and pay that fee," Commissioner Michael Pipe said. "If not we would have continuing discussions about how we bring them into compliance."

One resident spoke out against the rate increase. Joe Soloski, of Halfmoon Township, called it a "tax grab" and said it would make the area less appealing for events such as conventions.

"If I wanted to solicit competitive bid from the Ramada, from the Penn Stater to bring a convention in for my group, you just cranked up my cost another two and a half percent," he said. "That’s not particularly good for the economy. There are other places I can hold my event."

Pipe said more than 40 other counties have raised the tax to 5 percent and in the commissioners' research they found it has had a net positive effect.

Higgins also said that some of the most popular locations for conventions around Pennsylvania and the country have much higher hotel tax rates.

"It would appear that most if not all conventions look at many other factors for location besides the local hotel tax," he said.

Pipe added that more money for the nonprofit grant program means those organizations can focus more on the services they are providing.

"For a lot of these organizations that put on these events, they essentially spend all year fundraising, going out soliciting donations from folks in the community," Pipe said. "What this allows them to do is spend more time on the services they provide, rather than fundraising. What this would enable them to do is expand their events, bring more folks in."

Smith previously said that in addition to increasing the grant program, the tax revenue would be used toward opening a satellite visitors center in Philipsburg; increasing tourism advertising, marketing and sales and improve the CPCVB website with more, and more engaging, content; and obtaining better research for actionable insights on marketing efforts, since most of CPCVB's current data comes from the state and is not always timely.



Geoff Rushton is managing editor for StateCollege.com. Contact him at [email protected] or find him on Twitter at @geoffrushton.
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