.bodytext {float: left; } .floatimg-left-hort { float:left; margin-top:10px; margin-right: 10px; width:300px; clear:left;} .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 10px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 10px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 10px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} The city of Des Moines allocates more revenue from the hotel/motel tax to tourism efforts than the state requires, but recipients and hotel owners question the uses of the funds.

“(The revenue) should be spent to create more business, solicitation, collateral pieces and advertising. … That’s what the tax was originally set up to do,” said Bob Conley, owner of three Greater Des Moines hotels: the Holiday Inn Des Moines Downtown-Mercy Campus, Holiday Inn Express at Drake and the Walnut Creek Inn.

Greg Edwards, president and CEO of the Greater Des Moines Convention and Visitors Bureau, said that he “would like to see the state take a stronger stance on how the money is used because it is brought in by visitors.”

Business and leisure visitors to Des Moines are taxed not once, but twice, upon checking out of their hotels. Tacked onto the bill are the state-imposed 5 percent excise tax and the hotel/motel tax levied by individual cities and counties.

“When you come and stay in a hotel in Des Moines, you are paying a total tax of 12 percent,” Conley said.

Des Moines residents voted in 1979 to impose a 5 percent hotel/motel tax; in 1985 another vote raised the amount to 7 percent, with the extra two percentage points allotted to the Convention and Visitors Bureau. Revenue from Des Moines’ hotel/motel tax is distributed to local organizations through agreements and the city budget. The city began allocating an additional two-sevenths of the revenue to Bravo Greater Des Moines in 2006 through a 28E agreement. Along with Des Moines, other cities in Central Iowa implement a hotel/motel tax and contribute to the CVB and Bravo.

Throughout Iowa, 124 cities and counties and 13 unincorporated areas collect a hotel/motel tax ranging from 1 percent to 7 percent, according to the Iowa Department of Revenue as of July 1, 2007.

The state mandates that at least 50 percent of the revenues collected from the hotel/motel tax be used to maintain recreation and cultural facilities, or to promote tourism and convention business in the area.

Though the tax revenue collected in Des Moines is intended to stimulate amenities valuable to tourists and promote the area, not all parties involved agree that they are helped by the hotel/motel tax.

The collectors

Hotels and motels are affected by the responsibility of collecting the tax.

“We are one of the few industries made to be tax collectors,” Conley said.

As taxes bump up the total cost of a stay, Conley said hotels lose some of the money they would have used to improve the property and pay employees because room rates must remain low in order to stay competitive.

Conley added that guests have budgets. When they are paying 12 percent in taxes, Conley said, eventually they will not be able to afford a hotel room.

“People only have so much to spend and it is being taken up by taxes,” Conley said.

With business travelers a significant part of hotels’ clientele, high taxes also can affect the company funding the traveling, and therefore the hotels.

“People don’t come to Des Moines because we are convenient; we are tough to get to,” Conley said. “Ninety percent (of travelers) are here for business. Traveling costs are passed on and become an expense to the businesses.”

Despite the added complications to business, Conley does appreciate the organizations aided through the revenue generated by the hotel/motel tax.

“We want to have things that make Des Moines pleasing for visitors and residents,” Conley said. “The Art Center and parks are free; activities like that make the city more palatable, more friendly and more fun.”

The recipients

Local organizations, cultural venues and tourist attractions are promoted and supported in part by the hotel/motel tax revenue collected by the hotels and allocated through the city’s agreements with the CVB and Bravo.

Receiving two-sevenths of Greater Des Moines hotel/motel tax revenue allows the CVB to fund sales and marketing efforts and promote Central Iowa.

“A major part of the budget is applied to increase the number of leisure travelers,” Edwards said. “Corporate travel is the bread and butter here. Our primary obligation is to fill in the weekends and holidays so we are more consistent.”

The CVB competes with other Midwestern cities to attract conventions and trade shows, advertises in surrounding markets and produces promotional material to help draw visitors to Central Iowa. Out of nine geographically similar cities included in competitive analysis compiled by the CVB, the Des Moines CVB receives the lowest percentage of revenue from the hotel/motel tax (see chart below).

“The more money received, the more sales and marketing you can do,” Edwards said. “It is difficult to compete with the other communities when they have more funding; their efforts are larger. That is what we want to do with the budget.”

Janet Ziegler, vice president of finance/administration for the Kansas City Convention and Visitors Association, said 34.67 percent of the Kansas City equivalent of the hotel/motel tax goes to her organizations for marketing uses. The convention center receives 55.33 percent for debt and operations and 10 percent is allocated to a neighborhood tourist development fund. By statute, Ziegler said, the tax revenue goes to advertising and promotion for conventions and tourism in the city.

The CVB works to attract visitors and Bravo helps support the organizations that provide cultural opportunities for those visitors during their stays in Greater Des Moines.

Bravo is a vehicle to get funding to cultural institutions, said Leisha Barcus, director of strategic initiatives for Bravo.

Bravo is responsible for granting the allocated funds from the hotel/motel tax revenue (from Des Moines, Polk County and other cities involved in the agreement) to cultural organizations, such as the Blank Park Zoo, the Des Moines Botanical Center and the Des Moines Art Center.

“Arts and culture enhance the quality of life,” Barcus said. “…People choose places that have arts and culture amenities. It makes (Greater Des Moines) world-class if we have these experiences.”

After allocating four-sevenths of the hotel/motel tax revenue to the CVB and Bravo, the city of Des Moines is left with the remaining three-sevenths.

“Because four-sevenths is allocated to other organizations by agreements, there is not much discretion where the rest of the money is allocated,” said Rick Clark, Des Moines’ city manager. “There is not a lot of latitude. That portion of the revenue is allocated to the general fund and is essential revenue for the city.”

Des Moines’ share of the hotel/motel tax is applied to debt service and the general fund (see chart below). The general fund pays for amenities and services such as city activities, parks and recreation, libraries and the police department.

Despite allocating a smaller amount of the hotel/motel tax revenue to organizations directly related to tourism compared with competing Midwestern cities, Clark said, “In our case, we actually spend more than the law requires on activities that relate to entertainment and community promotion.”

Clark added that the services supported by general fund contribute to the quality of life in Des Moines; maintaining services like the library, parks and police and fire departments help make the area attractive to visitors.

Though the CVB and Bravo receive sufficient funding according to the state’s regulation, both could benefit from increased financial support.

Funding from the hotel/motel tax “is not adequate,” Barcus said. “We need to find ways to grow the amount of money that is provided to these organizations, both publicly and privately. Imagine what these organizations could do if they did not have to worry about funding.”

2006 Competitive Analysis from CVB

City of Des Moines uses of hotel/motel tax revenue fiscal year 1980 to fiscal year 2008