Bill raising hotel tax in Lumberton, St. Pauls advances

First Posted: 6/9/2011

RALEIGH — The state House of Representatives voted Tuesday to double the hotel occupancy tax in Lumberton and St. Pauls. The bill still must pass through the Senate before becoming law.

The current tax rate in both towns is 3 percent of the room’s total price. The change would increase the rate to 6 percent, meaning the tax-included cost of a $100 room would go from $103 to $106.

City officials and lawmakers say that the revenue would be used to promote tourism, increasing the number of guests who stay at the hotels. But hotel owners and operators fear the increase will deter people from staying in the area.

“Lumberton has a competitive advantage over our two biggest competitors, Florence and Fayetteville,” said Pramit Patel, owner of the Best Western Inn on Jackson Court. “We don’t have too many other attractions, like restaurants or shopping malls. Right now all that we do have is a lower tax rate.”

Florence, S.C., and Fayetteville currently tax hotel guests at 6 percent.

Officials in both St. Pauls and Lumberton argue that travelers do not look that closely at the tax rate. But according to a study by the U.S. Travel Association, 49 percent of travelers do alter their plans due to high travel taxes.

“The people coming through here don’t have to stay here,” Patel said. “And the people who do stop are usually on a budget and look at that bottom line.”

The tax increase was originally proposed to the Lumberton City Council in March by the Lumberton Tourism Development Authority, which uses the revenue to promote the city and its businesses. St. Pauls followed later.

If enacted, Lumberton, which has about 20 hotels, could generate about $480,000 a year in revenue from the tax, according to City Manager Wayne Horne.

Stuart Turille, town administrator in St. Pauls, said that if the increase were to take effect on July 1, it could double the approximately $19,000 he currently has budgeted for the town’s hotel tax collection in the upcoming fiscal year. The town has a single hotel.

“That represents badly needed revenue that will be used to draw people to our town and increase tourism activities,” Turille said.

St. Pauls Mayor Gordon Westbrook said the money would be used to maintain the intersection at exit 31 on Interstate 95. This includes landscaping and posting additional signage to attract weary travelers.

“They don’t even know there is a town here,” Westbrook said. “We want to draw people off 95 and invite them to stay a while.”

Patel said the Lumberton Tourism Development Authority does not always act in the best interest of the city. For example, Patel said that for the last two years the board had given $1,000 to Fairmont for tourism. Patel also said that the board has stopped target-marketing wealthy travelers who are more likely to stay longer in the city’s hotels and spend money in the community.

Patel said he used to serve as treasurer for the seven-member Tourism Authority Board, which only has two members from the hotel industry.

“There is no big-picture thinking on the part of the LTDA,” Patel said. “And there is no one with a real vested interest on the board speaking on behalf of the hotel industry.”

Nearly a dozen hotel owners and managers attended the Lumberton City Council meeting in March and spoke against the tax increase.

— Staff writer Ali Rockett can be reached at (910) 272-6127 or [email protected]

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