Hotel tax collections on their way up

As vacation season starts heating up, Burlingame and Millbrae officials say hotel tax revenue is rising with the mercury.

Cities, particularly those with hotels closest to San Francisco International Airport, took a big blow to their much-needed hotel tax revenue, or transient occupancy tax, after Sept. 11, 2001, when travel declined sharply. Officials are now happily reporting that revenue has steadily increased to close to its previous levels in the past four and a half years.

Burlingame hotel tax receipts will have officially increased for a third straight year come the end of June, said Finance Director Jesus Nava. Millbrae’s tax is also hanging tough, City Manager Ralph Jaeck said, as figures bottoming out at around $2 million continue climbing back up to a normal $3 million or 4 million annually.

Still, officials with both cities say they don’t want to be caught in the same position again the next time disaster strikes.

Nava, who is set to present a preliminary budget for fiscal year 2006-07 to the City Council on Monday, said he’s advising officials to remain “cautiously optimistic”about the increase in revenue so the city doesn’t depend too heavily on a variable figure.

He is encouraging officials to build up its reserves, saying he is pleased with Burlingame’s current near-$9 million cache. Meanwhile, Millbrae City Manager Ralph Jaeck, who is also hoping to decrease his city’s dependence on the hotel tax for day-to-day operational funds, said the city is putting a new rule into effect that puts any extra hotel tax into capital improvement projects.

“You never know what’s going to happen,” Nava said, noting that 25 percent of the General Fund budget in his city comes from hotel tax revenue.

Nava said he hoped to see the city focus on raising sales tax revenues, over which it has more control, in the future, because hotel taxes can bottom out so quickly in a recession. Sales tax revenues have not improved as steadily as hotel taxes in the last few years in Burlingame, he said.

The increase appears to be countywide, according to Anne LeClair, president and CEO of the San Mateo County Convention and Visitors Bureau. Hotels countywide had 34 straight months of growth in occupancy, according to figures compiled in March.

“For the most part, it’s not bobbing up and down, it’s going straight up,” LeClair said.

Unfortunately, LeClair said, coastside inns and hotels are not reaping the benefits of increased tourism now that Devil’s Slide on Highway 1 — one of only two arteries into the coast — is closed for repairs. The visitor’s bureau is trying to increase business to these spots with radio commercials, LeClair said.

tramroop@examiner.com

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