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Harford seeking 6 percent hotel tax

Harford County tourism could get a boost this summer if the Maryland General Assembly approves a tax on the county’s hotel rooms, which would provide revenue for the county’s tourism marketing campaigns.

The 6 percent tax would be levied on the rates hotels charge patrons to book a room, so the expense would fall primarily on visitors to the area, not residents or the hotel operators themselves. New taxes aren’t often well-received by the business community, but the bill — which is awaiting action in the House of Delegates — enjoys broad support, according to economic development officials and hotel industry representatives.

Businesses warmed to the idea after legislators tacked on an amendment that would require at least half of the projected $3.1 million per year in new revenue to be used by the tourism office in the Harford County Office of Economic Development for the region’s official promotions. The rest would be used for other “tourism-related activities” within the county.

“No question about it, [that requirement] was in large part why the hotel association agreed to support the bill,” said David Reel, president and CEO of the Maryland Hotel & Lodging Association. “There is a direct return on investment from spending those tax dollars on promoting tourism.”

The tax is attached to lodging transactions simply because hotels are the gatekeepers of the tourism industry, officials said, but it’s intended to stimulate the broader economy by funding countywide marketing campaigns.

Reel, who also heads the Maryland Tourism Council, said both of his organizations endorse the tax because member businesses are confident that a more robust revenue stream will enhance local officials’ ability to compete for tourist dollars.

Harford is the only jurisdiction in the state without an occupancy tax on hotel rooms. James C. Richardson, executive director of the Office of Economic Development, said he thinks forgoing that extra revenue has been holding the county back from its economic growth potential.

Richardson said his office’s tourism budget is “very low,” but new tax revenue would allow officials to bid on high-profile events they want to bring to Harford.

“We’d like to compete more aggressively to bring events to more venues, but there are sometimes fees you have to pay in order to bid on projects,” he said. “And we don’t have the money.”

Richardson said he’d like to see more lacrosse, field hockey and soccer tournaments take place at Cedar Lane Regional Park in Bel Air, as well as baseball tournaments at Ripken Stadium in Aberdeen.

“We see [the tax] as an opportunity to raise the business activity in Harford County through a coordinated marketing effort that will bring more people through our borders by letting them know what’s available here,” he said. “And that has a spinoff benefit, because sporting events become a mini-vacation for people. They’ll stay and visit other places while they’re here. …And not everyone will stay in Harford County; some could stay in Baltimore.”

Reel said several groups testified in favor of the bill at a March 14 hearing of the Ways and Means Committee and that no one testified against it. But, he added, there’s no guarantee the measure will become law. On Monday, after approving a handful of amendments, Ways and Means pushed the bill out to the House floor, but it was sent back to committee. Reel said he’s not sure why it was recommitted, and that he can’t predict when — or if — the bill will move again.

If enacted, the lodging tax would take effect in June.

Recent efforts by other jurisdictions to raise the occupancy tax rate have been unsuccessful amid concerns that the increased cost would make hotel rooms too expensive, driving away potential customers. In some counties, a smaller portion of occupancy tax revenue is dedicated to promoting or operating the tourism industry, which likely explains the resistance of hoteliers who aren’t convinced they would benefit from increased income, officials said.

Harford’s proposed 6 percent tax isn’t as steep as rates elsewhere in Maryland. Baltimore has the highest rate, at 9.5 percent, while Baltimore County’s is 8 percent. The most common rate, however, is 5 percent; several are even lower. If Harford implemented a 6 percent tax, 14 counties would have lower rates.

Cecil County, Harford’s neighbor to the east, is tied with Frederick County for the lowest lodging tax in the state, at 3 percent. Earlier this month, a Cecil delegate proposed a rate increase of 2 percentage points, but the bill died in committee.

Still, Reel said, the modest tax burden shouldn’t concern Harford hoteliers. The average nightly room rate for hotels, motels and inns in Harford is $82, according to a fiscal analysis submitted with the legislation, so patrons would pay an extra $4.92 per night on average.

“I don’t think any traveler is currently going to Harford County to avoid the tax, and I don’t think anyone would keep driving through Harford County in order to bypass the tax,” Reel said. “… If you can afford a room to begin with, you’re not going to quiver over a 6 percent tax.”

Richardson agreed the tax wouldn’t impede hotel sales, and said he’s not sure why Harford never implemented one. It just never seemed like the right move, he said — until recently.

“Our tourism business has grown,” Richardson said. “We created the Tourism Advisory Board about four years ago, and there’s been a great deal of movement on their part about how we can expand tourism opportunities. And I think the county has changed. With the growth that we’ve seen, more venues have opened up, and more people now believe there’s a good case to be made for ramping up the marketing that we, as a county, should be doing.”

Harford’s tourism industry — as measured by certain sales and amusement taxes — generated about $10.9 million last year, up 5 percent from 2011, according to the state comptroller’s office. Those numbers partially fuel officials’ zeal for wanting to add an occupancy tax, Richardson said.

“That increase [in tax revenue] was because more people are coming and patronizing our tourist attractions,” Richardson said. “And a fair portion of that is a result of the marketing we have been doing, which begs the question: If we do more marketing, can we increase those numbers even more?”