Tax revenue from hotel rooms falls 20 percent

Posted on May 19, 2010 by Sonoma Valley Sun

Revenues from the Transient Occupancy Tax collected by Sonoma hoteliers in 2009 decreased about 20 percent from the previous year, according to the Sonoma County Economic Development Board.

The $1,990,729 fell far below the comparable figures for 2008, when $2,547,692, an all-time high, was collected.
The 2009 revenue number, stung by a particularly poor first quarter, is the lowest since 2004.

The decline was anticipated by the city so there will be no adverse impact on the city budget this year, said Carol Givannato, assistant city manager. “It’s about where we thought it would be,” she said of the tax numbers. “The forecast was for a 20 percent reduction. From our figures, it appears to be at about 16 percent.”

Some economic progress was shown late last year as increased tourism brought the fourth quarter to within 5 percent of the 2009 figure.
“There are indications that things are starting to improve,” Giovannato said.

The third quarter, the summer months of July through September, was once again the year’s busiest period. At $678,000, however, the figure was 20 percent lower than the year before.

The Transient Occupancy Tax for Sonoma is 10 percent of a guest’s hotel bill; likewise Petaluma, Cloverdale and Sebastopol. Santa Rosa, and all unincorporated areas, imposes a 9 percent tax. The fee is 12 percent in Rohnert Park, Healdsburg and Windsor. San Francisco charges 14 percent.

In Sonoma, the money goes directly into the general fund where it accounts for nearly 20 percent of city revenue.
The next fiscal year begins June 1 and budget planning is underway. The forecasted transient occupancy tax revenue is “a flat line,” Giovannto said. City staff, working with the visitors bureau and other sources, predict room tax revenues will remain at 2009 levels through next year.

“It’s conservative estimate,” she said. “We’ll look at it again mid-year,” she said.

Sonoma performed about as well as regional counterparts. The totals for Healdsburg, Rohnert Park and Santa Rosa declined from 17 to 22 percent. The lone success story was Windsor, which improved about 25 percent to a record high of $1.39 million.