ASHEVILLE — Two city appointees to the board controlling the local hotel room tax faced pointed questions from City Council members this week, including whether they would try to give the city direct access to some of the $14 million tax fund, most of which now goes to tourism marketing.
The questions came Tuesday during a public interview process of two applicants to the Buncombe County Tourism Development Authority. The council voted 6-0 to appoint Himanshu Karvir, general manager of the Holiday Inn Asheville — Biltmore West, and 5-1 to appoint John Luckett, general manager of the Grand Bohemian Hotel Asheville.
Councilman Gordon Smith was the lone no vote. Mayor Esther Manheimer recused herself because a fellow attorney at her employer, Van Winkle Law Firm, represents the authority. Grove Park Inn Managing Director Gary Froeba and Dennis Hulsing, owner of Hulsing Hotels, Crowne Plaza Resort and Four Points Downtown Asheville, also applied but were not able to attend the interviews, Vice Mayor Marc Hunt said.
Before the votes council members pressed the applicants on whether they would advocate a change in the state legislation that now mandates the lodging tax revenue be used primarily for boosting hotel business. Tourism marketing gets 75 percent of the money, while 25 percent goes toward projects that also by state law must increase hotel room nights. Projects have included renovations to what is now the U.S. Cellular Center; grants to businesses, such as a zipline company and an indoor rock climbing business; and the John B. Lewis Soccer Complex.
Councilman Chris Pelly said Asheville is struggling to keep up roads and other infrastructure that get used by tourists and asked how appointees envisioned helping Asheville do that. Councilwoman Gwen Wisler noted the General Assembly’s recent increase of the room occupancy tax from 4 percent to 6 percent. That was done at the urging of local hoteliers who said the hike was needed to expand tourism marketing.
“Do you ever envision a time…that the TDA would ever consider going back to the General Assembly and saying, ‘OK, leave it 6 percent, but let’s swap it around so there’s more money for infrastructure?” Wisler said.
Luckett said he would “certainly work in coordination with the TDA…in doing what’s best for the community and tourism overall,” but then he added, “that’s a hard question to answer.”
Karvir said he could envision at some point transferring money from marketing to the projects fund.
Both Luckett and Karvir defended the use of the tax money to increase tourism. They said the tax increase, which hotel guests pay on top of a 7 percent sales tax, is needed because more hotels are being built. More hotels mean more competition and that will lower room rates, they said. To counter that, the additional tourism marketing will bring more hotel guests and help bring room prices back up, they said.
Karvir, whose family’s hotel is far west of downtown, said just because downtown hotels are bursting doesn’t mean hotels outside downtown are full.
“I’ve been at that Holiday Inn since 2003. We saw the Great Recession come by and then Interstate 40 was closed from a rock slide…really the marketing efforts of the TDA and (Convention and Visitor’s Bureau) really got us through those tough times,” he said.
Councilman Cecil Bothwell, though, criticized the tax increase, saying it was designed to fix a problem created by the hoteliers and developers.
“To me, the argument that we need to keep rates up to help hotels do well is empty because if developers are building too many hotels, it is not our fault,” Bothwell said.
He asked if the applicants would be willing to give preference to the city when it applied for grant money from the project fund. That is the only way city taxpayers get help, he said, since project money could free up city revenue for other needs.
Luckett didn’t answer directly but said that increasing tourism would lead to more tax revenue. That would mean more money for projects, he said. The city would also have less competition in the grant process since the recent state law changes included a provision blocking project money going to businesses.
“With the change on removing for-profit organizations, that only increases the city’s chances. In addition with the hotel tax increase from 4 to 6 percent, that bucket of money…is naturally going to increase,” he said.
Karvir said he would push for local governments to get money first if they had projects that qualified.
“I would make sure that as long as the criteria is met — that we are looking at increasing room nights — that funding is provided to the city and the county or any other municipality coming forward,” he said.
This past spring council members and hoteliers clashed over the increase in the room tax. City officials had been asking for some of the room tax to go toward affordable housing and said hoteliers didn’t tell them they were talking with legislators about more money for tourism. Smith praised Karvir for reaching out to council members during that time and trying to bring the warring parties together.
Before making the two appointments, the council announced it would require applicants to go through public interviews, a rarity among city volunteer boards.
But the councilman asked Luckett pointedly if increasing tourism marketing wouldn’t just bring about more hotel construction and hoteliers would again find themselves with more competition.
“It sounds like the logic is now that we’re going to market to fill these rooms. Eventually, they will fill, and we will be here again,” Smith said.
When is too many? When do we say that we have more than we can handle?”
Luckett said, “I’m not sure that’s for me to answer.” To which Smith responded, “It’s a question I have for you though.”
The Grand Bohemian manager responded that the local tourism industry will not always be on a high note and marketing will likely continue to be needed.
“I guess if every hotel is filled up at 100 percent occupancy, then that would be enough,” he said.
Striking more conciliatory notes were Vice Mayor Marc Hunt and Councilman Jan Davis. Hunt said from the city’s end, it could have done better communicating with its appointees.
“I would like to look forward to better coordination over time, so we are less apart,” Hunt said.
Davis said he regretted that appointees had to go through the interview process. He said council members were “ruffled” at how the tax increase happened, “but it’s there folks.”
“Personally my statement to you guys is this has every opportunity to be a great partnership. If we come in acting as if this is an us-versus-them thing, that may not happen.”
The appointees will take seats on the newly expanded nine-member authority. By state law, a majority of authority members must be hoteliers or be associated with other businesses such as bed and breakfasts that pay the room tax. A total of four authority members are city appointees.The county Board of Commissioners also appoints four members and the Asheville Area Chamber of Commerce appoints one.
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