Buena Park : Hotel Occupancy Tax Is Increased to 12%

Despite opposition from Buena Park hotel owners, the City Council has increased the hotel bed tax from 10% to 12% to help offset a city budget deficit.

Hotel managers told the council Tuesday that the tax hike will cause businesses to move to neighboring cities where the tax rate is lower, and that it will take away their competitive edge in the lodging industry.

“I’m devastated to say the least, because I think we will lose a considerable amount of business,” said Javed A. Nawaz, general manager of the Buena Park Hotel and Convention Center.

The council voted 3-2 to raise the tax.

The council majority also voted to postpone implementing the new tax until Oct. 1, after the peak summer season. But in waiting until October, the city could lose between $76,000 and $100,000 in revenue from the hike, city officials said. The 2% rate increase is expected to generate $460,000 in new revenue.

The tax will help ease a portion of the city’s $2-million budget deficit. The city hasn’t raised the hotel bed tax since October, 1989, when the tax rose from 8% to 10%.

Hotel operators said postponing the tax increase will give them time to notify customers, including major tour wholesalers, about the new rate and lessen the blow on summertime tourist business.

Councilwoman Rhonda J. McCune said she voted against the measure because the local lodging industry is already suffering from low occupancy rates--and that the city could end up losing revenue instead of raising more money.

“It’s a bad time to increase the tax--we could end up hurting ourselves,” McCune said. “At this time, I’m not going to support the increase.”

Mayor Arthur C. Brown also voted against raising the tax.

Council members favoring the increase said they sympathized with hotel operators’ concerns, but they were not convinced that the tax hike would adversely affect local business. The council majority also called for reviews in six months and in one year to determine whether the increase is hurting hotels and motels.

Lloyd M. Francis, assistant general manager of the Holiday Inn Buena Park, said he’s pleased that the tax increase will be reviewed.

“It will be fairly easy to determine that it will have a negative impact,” Francis said. “The sad truth will be they won’t see the revenues they had hoped for through the increase.”