CLEVELAND, Ohio- The impact of COVID-19 and stay at home orders has hurt the hotel and tourism industry. The tax revenue that comes from the industry supports many organizations that help define local communities.
- Destination Cleveland, the Rock & Roll Hall of Fame, and The Global Center for Health Innovation are beneficiaries of Cuyahoga County’s bed tax.
- Cuyahoga County’s bed tax is a 6.5% tax on hotel stays.
- Destination Cleveland has had to lay off 60% of its workforce and move the rest to shorter work weeks, after seeing a massive drop in funding.
“It’s tough. It’s tough certainly from a human standpoint, we have a staff that’s very close, we all work on something that we’re very passionate about together,” said David Gilbert, President, and CEO of Destination Cleveland, which is the convention and visitors bureau. His job is to promote the very best that the city has to offer.
“Right now, it’s almost 100% and will be for probably several months. Thankfully, you know, the organization had some good reserves,” said Gilbert. “Right now, nobody really knows exactly when this industry is going to be ramping back up.”
Destination Cleveland says over 90% of its about $19 million annual budget comes from the bed tax, which Cuyahoga County Executive Armond Budish says is starting to take a hit, as is sales tax revenue with people not traveling here for now.
“Right now, just about all the taxes are way off. The county’s biggest tax is the sales tax. Look around. Look down the street, everything’s closed.
Our sales tax is going to cost us, the last sales tax may cost us $50 million or more this year alone,” said Budish.
The problem isn’t exclusive to Cuyahoga County. It’s statewide.
“The properties that really make their, you know, their bread and butter off of meetings and events and conventions and business travelers, those are the ones where we have seen occupancy drop to virtually zero in many cases,” said Joe Savarise, executive director of the Ohio Hotel & Lodging Association.
While Cuyahoga County says it has to make up the shortfall, in the midst of sales tax shortfalls, Hamilton County has delayed voting on payments for $1.7 million in spending for Paul Brown Stadium and Great American Ballpark in Cincinnati.
Franklin County pays $2.5 million a year for the new Columbus Crew Stadium out of the general fund, and a spokesperson says the county still expects to make this year’s payment.
Cuyahoga County doesn’t yet have an estimate of the monetary shortfall from the bed tax, but Gilbert does believe major cities like Cleveland are in a good position to rebound when the economy opens back up.
“People are going to start traveling again, but what they’re more likely to do is travel to closer drive destinations, which is really the bread and butter of cities like Cleveland. Travel and tourism has been a major growth industry, but we still are largely a drive destination.”
With a prediction of a modest economic ramp up, Gilbert expects Destination Cleveland to make less than half of it’s annual budget for 2020.