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KENNEDY: Let's find ways to sustain visitor business

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Melina KennedyOur city’s economic prosperity has been bolstered for many years by our strong convention and visitor business. We need to do what we can as a city to propel this important driver of our economy. Thousands of visitors each year patronize our restaurants, use our hotels, and shop in our stores.

More recently, our city has seen great challenges financially and—just like in business—in government, fiscal challenges warrant creative and aggressive solutions. Earlier this summer, the city made the decision to direct property taxes for the first time to support the operations of the Indianapolis Convention and Visitors Association. While supporting the ICVA is essential, sources of revenue other than property taxes should be seriously explored, as property taxes are more appropriate for other essential city services and the source of property taxes in the case at hand may not be sustainable for the long term.

Other cities have found creative and aggressive ways to augment funding for their convention and visitor business. Recently, the city of New York sought to close a tax loophole that online travel agencies enjoy at the expense of that city as well as ours.

This loophole comes about when online travel agencies collect hotel taxes from customers based on the room rate quoted to the customer, even when the online travel agency actually negotiates a lower rate with the hotel. While the customer would pay the full tax based on the published room rate, the online agency would pay the hotelier the tax based on the actual room rate negotiated (which is lower) and then retain the remainder of the tax paid by the customer.

In New York City, to address this issue, the city enacted a law that requires online travel agencies to pay the tax on the amount they actually collect and forces them to provide a breakdown of hotel taxes on the bill to customers, therefore providing greater transparency. New York City estimates that this law generated $14 million in additional hotel tax revenue for fiscal 2011. When online travel agencies sought to challenge this law, just last month, the New York State Supreme Court dismissed the lawsuit, resulting in a victory for the city.

Other cities have also recognized this issue and taken action. Recently, a Superior Court in Atlanta ruled that online agencies were cheating the city out of hotel taxes and ruled that the taxes be calculated based on the total room rate paid by the customer rather than what the online agency paid the hotel. Once again, this is estimated to result in millions of dollars the city would not otherwise collect.

Indianapolis should seriously consider a similar move as we consider how best to sustain our important convention and visitor business. As the city has struggled to find revenue sources to sustain our convention and business operations, and as the city has cut important funding for arts and other amenities that have been supported by similar funding, the city needs to explore creative solutions as other cities have done.•

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Kennedy is an attorney and former Indianapolis deputy mayor for economic development.

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  • Doing the right thing is good for business.
    I agree that there needs to be a shift in the distribution of hospitality taxes. That being said, I am really talking about a shift to suppliment compensation of the working people who sustain our important convention and visitor business. There is a union trying to convince our good people that they need to pay union dues to get the pay they deserve.
    The service personnel in our great, affordable, hospitable city help sell Indy as a convention destination. We are competing for businnes with the likes of San Antonio and Orlando. How? We offer hassle free, less expesive conventions with five star service. I think it is unconscionable to not increase wages, these people have earned it.
    We can't afford to have a union drive up wages that will drive up room rates. The result ends in convention decline, compromised services, lower occupancy, higher unemployment and possibly a collaspe of the downtown economy. BUT, we can't afford to continue expecting our five star service men and women to work for three star wages! It is time to rethink where to apply the tax money the city receives for the conventions. I would like a discussion on applying a percentage of the covention tax revenue to the employees. It would could be divided in shares making everyone a stakeholder. This would prevent unionization or "ruinization" and give the hard working service personnel a cut of the pie, thus keeping our rates affordable and our service impeccable. Doing the right thing is good for business.

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  1. So much for Eric Holder's conversation about race. If white people have got something to say, they get sued over it. Bottom line: white people have un-freer speech than others as a consequence of the misnamed "Civil rights laws."

  2. I agree, having seen three shows, that I was less than wowed. Disappointing!!

  3. Start drilling, start fracking, and start using our own energy. Other states have enriched their citizens and nearly elminated unemployment by using these resources that are on private land. If you are against the 'low prices' of discount stores, the best way to allow shoppers more choice is to empower them with better earnings. NOT through manipulated gov mandated min wage hikes, but better jobs and higher competitive pay. This would be direct result of using our own energy resources, yet Obama knows that Americans who arent dependent of gov welfare are much less likely to vote Dem, so he looks for ways to ensure America's decline and keep its citizens dependent of gov.

  4. Say It Loud, I'm Black and Ashamed: It's too bad that with certain "black" entertainment events, it seems violence and thuggery follows and the collateral damage that it leaves behinds continues to be a strain on the city in terms of people getting hurt, killed or becoming victims of crimes and/or stretching city resources. I remember shopping in the Meadows area years ago until violence and crime ended make most of the business pack you and leave as did with Lafayette Square and Washington Square. Over the past 10 to 12 years, I remember going to the Indiana Black Expo Soul Picnic in Washington Park. Violence, gang fights and homicides ended that. My great grandmother still bears the scares on her leg from when she was trampled by a group of thugs running from gun fire from a rival gang. With hundreds of police offices downtown still multiple shootings, people getting shot downtown during Black Expo. A number of people getting shots or murdered at black clubs around the city like Club Six on the west side, The Industry downtown, Jamal Tinsley's shot out in front of the Conrad, multiple fights and shootings at the skating rinks, shootings at Circle Center Mall and shooting and robberies and car jackings at Lafayette Mall. Shootings and gang violence and the State Fair. I can go on and on and on. Now Broad Ripple. (Shaking head side to side) Say It Loud, I'm Black and I'm Ashamed.

  5. Ballard Administration. Too funny. This is the least fiscally responsive administration I have ever seen. One thing this article failed to mention, is that the Hoosier State line delivers rail cars to the Amtrak Beech Grove maintenance facility for refurbishment. That's an economic development issue. And the jobs there are high-paying. That alone is worth the City's investment.

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