A deal is almost done that could change the way the city’s hotel tax is collected through the COVID-19 pandemic, according to local officials.
But first it must receive approval from the Huntsville City Council.
The hotel occupancy tax amounts to about $850,000 or about 1.16% of the city’s annual revenue. Under state law, the tax must be spent on marketing the city as a destination to travelers, arts and cultural activities, historical restoration, operation of the city’s visitor centers, the construction of civic centers and sporting events.
But some local hoteliers are now asking the city to delay the reporting requirements. The delay would not alleviate the hotels from paying taxes, but would eliminate any penalties and interest payments during the pandemic.
“The situation is worsening by the day,” said Matt Patel, the owner of Red Roof Plus in Huntsville, in a letter to the city and Rep. Ernest Bailes. “There have been several economic disruptions that have impacted the hospitality industry including the cancelation of public events leading to a shutdown of major tourist destinations and global travel restrictions.
“My customer base mainly consists of public events the city hosts and since restrictions were imposed, my occupancy has declined to less than 40% compared to the last five years of 75%. The loss in demand has created a liquidity crisis in the Huntsville / Walker County area. Due to the enforcement of social distancing in place, we expect the vast majority of Huntsville hotels to close in the coming days and weeks.”
Huntsville hotels employ over 200 workers, but with extended shutdowns, their futures could be uncertain.
The city’s plan, which is pending city council approval, would defer all occupancy tax payments 90 days in hopes that it would alleviate cash-flow problems for hoteliers.
“While we prepare for downturns and unexpected circumstances each year, no business can ever be prepared for a national economic catastrophe like this,” Patel added. The hardest-hit people during this time are our employees and America’s small businesses. Employees’ hours are limited and jobs have unfortunately already been lost. We literally cannot pay our employees and we cannot meet our mortgages. I am terrified that within weeks, I will be forced to close my hotel.”