BELLEFONTE — Centre County is moving forward with the first ordinance of 2019 and is looking to increase the hotel occupancy tax from 2.5 percent to 5 percent, which is the maximum allowed by the state.
The county has been discussing the increase since late last year and plans to post the ordinance for public hearing in the coming weeks, but it needs to iron out some of the details to “make sure the playing field is even,” according to Commissioner Steven Dershem.
Of concern is how the hotel occupancy tax could include short-term rental booking services such as Airbnb — most aren’t currently subject to the fee — and campgrounds at state parks.
“For one hotel being charged this impact and someone else not, there needs to be some accounting to this,” said Dershem at the Jan. 7 commissioners meeting. The idea is to require a registration for booking agencies in order to be able to collect the taxes.
Chairman Michael Pipe said that if an AirBnb, or any company, would not pay the fee, there would be a penalty. But the question comes on how to enforce the fee.
Pennsylvania Act 109 of 2018 determined that outside booking agents’ accommodation fees should be taxed the same as hotels, but the county is still looking to the state to determine how those taxes should be levied.
The current language in the bill would not include public campgrounds, such as in state parks, in the fee, while private campgrounds would be charged the fee. The commissioners agreed to look further into this part of the ordinance.
The money generated from the increased tax will go toward generating more tourism in the area by the Central Pennsylvania Convention and Visitors Bureau. CPCVB Executive Director Fritz Smith noted that Centre County has the second-lowest hotel tax in the state.
CPCVB uses the 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 increased tax revenue, the bureau would increase its marketing and promotion and provide more money to nonprofits for events and activities that would bring in visitors, especially during what are currently off-peak times.
“I just want to reiterate that this tax, when imposed, would be for people traveling from outside of the region and is not something that Centre County residents would expect to pay, unless they are staying over on a Friday night to have a stay-cation, as they say,” said Smith. “We are very confident that these dollars, if we are fortunate to have you vote positively, that this will create jobs and economic impact for Centre County.”
Pipe said that in the most recent years, the $80 million-$87 million that was spent on hotel stays in the county generated about $2 million with the 2.5 percent tax.
Pipe said surrounding counties have seen an increase in tourism spending after they increased the tax.
“In the four counties, Blair, Cambria, Juniata and Mifflin, that also comprise the Alleghenies tourism region … those four counties in 2016, increased the fee from three percent to five percent. They actually saw an average of $4 million in increased spending in each of their counties and in addition, a total of $20 million, roughly. So the nice thing that we are seeing is that the increase does occur. They are not seeing a decrease in travelers’ spending. They are actually seeing an increase. If we have more dollars out there attracting people to come here, that spending will occur.”
This would add more service jobs and tourism dollars to the county, said Commissioner Mark Higgins.
He said the efforts ultimately would lead to more hotel bookings to bring the area up to the state and national averages for hotel occupancy, and more visitor spending.
Higgins said among counties that are home to Big Ten schools, Centre County has the lowest overall hotel tax rate at 8.5 percent — a 6 percent state tax and 2.5 percent local tax. If the county rate went to the full 5 percent, the overall hotel tax of 11 percent would still be second-lowest in the Big Ten. By comparison, Columbus, Ohio, home to Ohio State, has an 18.5 percent hotel tax.
