Salt Lake County’s hotels say a new room surcharge will help them boost overnight stays in downtown SLC and some suburban cities

Salt Lake County has added nearly 1,000 hotel rooms since the coronavirus pandemic first hit, and a campaign is now afoot to fill more beds nightly with patrons of Utah’s hospitality.

Hotel owners want to use a state law passed in 2022 to create a new three-region convention and tourism district in the county, giving them authority to impose a 2% surcharge on all overnight room stays and raise upward of $7.5 million yearly to significantly ramp up tourism promotion and boost hotel usage.

For guests streaming through Utah’s capital for family visits, business travel, conventions or outdoor adventures, these new convention and tourism assessment areas — located in downtown Salt Lake City and the southern and western portions of the county — would show up as a new charge on their bill at checkout.

With the Salt Lake Valley’s hotel rooms ranging anywhere from $50 to over $300 a night, that could mean an additional ding of between $1 and $6 — but the money would add up.

For boosters at Visit Salt Lake and for hotels, taverns, restaurants, shops and other attractions, the fee could raise millions more to fund new and glitzy national and international advertising, discounts and other ways to lure visitors and pay for upgrades to tourist venues and convention facilities.

The overarching goal, say the district’s backers, would be to lift the county’s hotels from the current total of about 888,000 overnight stays annually to 1.2 million in just a few years. For area residents and businesses, that could mean a major infusion of dollars to a countywide tourism economy that already tops $4.6 billion a year.

“We’re trying to create a public-private partnership,” said Chris McCandless, board chair for Visit Salt Lake, where costs for new media campaigns and other efforts are born by the hospitality sector and not taxpayers.

The fee would be on top of the current 4.25% transient room tax, levied by counties with funds spent toward similar tourism boosting.

A 2021 study found 193 of these improvement districts up and running in tourism destinations across 19 states, and Salt Lake County needs them, McCandless and other supporters said, to remain competitive.

“This is just a tried-and-true business model that puts another tool in our toolbox,” said Chris Erickson, manager at The Grand America Hotel, who noted that Portland, Ore., had nearly doubled its marketing spending in a year with a similar assessment district.

“I’m excited for this,” Erickson recently told leaders in Salt Lake City. “It would be transformational for our industry.”

Competing with Denver, Portland and other destinations

All lodging establishments above 35 rooms in West Valley City, Taylorsville, Kearns, West Jordan, Sandy, South Jordan, Riverton, Draper and in three ZIP codes falling within a mile of the downtown Hyatt Regency Salt Lake City would be subject to the new room fee.

That’s true whether their owners agree or not, although most but not all, it appears, are supportive.

The state law setting up the tourism-improvement district — one of several similar economic development mechanisms created by Utah lawmakers in recent years — allows it to be formed as long as 60% of hotel providers within the area go along. Promoters say about 85% have backed the district and its goals.

There would be three sub-areas in the district under this inception: a downtown zone; one based around the contours of ChamberWest, representing businesses in the western county; and another overlapping the boundaries of the South Valley Chamber.

Notably, the zone would cover only some parts of Salt Lake County, with major exemptions such as the ski resorts in Big and Little Cottonwood canyons and others on the sidelines, while a five-year pilot program plays out. After that, McCandless and others said, more parts of the county might be added.

Seventy-seven hotels — from the valley’s largest such as Grand America, Little America and the new Hyatt Regency convention hotel to a range of smaller Super 8, Holiday Inn, Hampton Inn and other outlets in the western and southern suburbs — are currently on board, and that’s moving it forward.

With a green light from the Salt Lake County Council — which, with the Utah Tax Commission, would help hoteliers amass and administer the fees — supporting hotel owners and tourism boosters are making the rounds to elected leaders in other cities and townships affected, seeking their consent.

Pending a final County Council approval of the district in early May, cash from the new room fee could start rolling into county coffers and then to Visit Salt Lake as soon as July.

Concerns about oversight

The idea has so far received a generally positive reception from elected leaders, although some have concerns. Several city officials have praised the fact that actual costs would be born by hotel guests, not residents, while spreading benefits countywide.

County Council members Dave Alvord and Sheldon Stewart, both Republicans, voted against providing county approval, partly over questions about how the convention and tourism district would be administered.

Under the district’s rules, an executive board made up of hoteliers would oversee its affairs, with Visit Salt Lake as a third-party contractor, and that board would determine how money generated from the new fee would be spent.

“I just wonder if we’ve ever done this before,” Alvord said, “where we let loose this much money without more direct oversight by representatives who are accountable to the people.”

Backers say the funds would be used to benefit all hotels in the district — and the wider county economy — with custom promotions tailored to each part of the county as well as regionally themed ad campaigns — along with new spending on programs, facility improvements and other tourism-boosting ends.

Salt Lake City’s visitor-promotion budget, they say, lags far behind what competing cities spend, with places such as Seattle, Portland and Denver doling out between double and five times more.

As the county’s hospitality sector continues to recover from its pandemic lows amid a surge in recuperative travel, it is also absorbing new hotel rooms downtown and across the valley — including 700 rooms at the newly opened Hyatt Regency. Adding $7.5 million-plus to Visit Salt Lake’s ongoing $12 million yearly budget, they say, is vital to keeping up with rivals.

“There’s more inventory, which puts more pressure on us to fill,” Kaitlin Eskelson, Visit Salt Lake’s president and CEO, said in an interview. “But truthfully, it’s just that Salt Lake is growing, and we need to accommodate that.”