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Business

Santa Barbara Lodges Third Monthly Rise in Bed Tax Revenue

Pleasant weather, more weekend days help boost income to 15 percent increase from a year ago

More spring-break travelers translated to a double-digit increase in Santa Barbara’s transient-occupancy tax in March, according to City of Santa Barbara officials.

The city gained $947,977 in TOT, or bed tax, in March — a 14.9-percent increase from March 2011.

While Santa Barbara’s bed tax revenue increased for the third consecutive month, there are several things to keep in mind. Bed tax revenue grew only 0.2 percent in March 2011, and there were two more weekend days this March.

“With pleasant spring weather throughout the month, occupancy for hotels and vacation rentals was higher than last March by 5.4 percent on average,” the city reported.

There was an 11.9-percent increase in bed tax in both February and January as the city netted $831,055 and $774,725, respectively.

“The industry has bounced back faster than we thought, with higher occupancy and higher daily room rates,” said Kathy Janega-Dykes, president and CEO of the Santa Barbara Convention & Visitors Bureau and Film Commission.

Santa Barbara is on pace to set a record for hotel tax income, but city officials said sales-tax revenues haven’t reached pre-recession levels, and property taxes are expected to hover around 3-percent growth for the next several years.

During the recession, Santa Barbara lost more than 10 years of its sales tax growth, according to the city.

Carpinteria, Goleta and Santa Barbara County did not have March’s numbers as of Monday.

Carpinteria recorded $52,271 in TOT revenue in February, which is an 8.2-percent increase compared to February 2011. Goleta yielded $177,566 in TOT revenue in February, a 7-percent jump year-to-date. The county netted $573,625 in February, which is a 9.7-percent increase from last year.

The Goleta City Council is considering an increase in the TOT rate to 12 percent from 10 percent. Santa Barbara County and Carpinteria are at a 10 percent rate, too, and are thinking about joining Goleta in a push to 12 percent, which would match the city of Santa Barbara.

Bacara Resort & Spa General Manager Kathleen Cochran does not support the increase now, saying the city should wait until 2014. 

“Am I in favor of it now? No,” Cochran said. “I know there are new hotels coming into Goleta that are trying to build business, I would be in favor if it didn’t start until 2014. I would also want to know what they would do with the money. If it does pass, I would like some of it earmarked to come back to the community in terms of tourism and development of Goleta as a destination area.”

Carpinteria, Goleta and Santa Barbara formed the South Coast Tourism Business Improvement District, or TBID, at the beginning of last year. The regional body placed a small fee on rented rooms that went to the Santa Barbara Convention & Visitors Bureau and Film Commission to market the area to tourists. The TBID began its marketing efforts in July, and so far it has raised $1.48 million, Janega-Dykes said.

TBID funds have been used to implement marketing programs that were unaffordable in the past, including targeting international visitors in Australia and the United Kingdom, persuading domestic travelers to stay longer, and attending one of the largest international travel-industry trade shows, called Pow Wow, she added.

“There is such a strong collaboration with this community,” Janega-Dykes said. “It really pulls together and collectively markets on behalf of the hospitality industry, which has led to the positive results we have seen.”

The TBID self-imposed tax demonstrates the hotels’ commitment to tourism, said Kristen Miller, Goleta Valley Chamber of Commerce president and CEO. But the city will receive all of the TOT revenue this summer as the revenue-neutrality agreement with the county expires, she said.

“We have some built-in incentives coming into the system with revenue neutrality and new hotels being built,” Miller said. “The other is advantage is that Bacara is looking like it’s heading into growth mode, which will bring in more business and revenue. We should let everything settle and come into play before we add an additional tax.”

Noozhawk business writer Alex Kacik can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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