Bed Tax is 25 Years Old

Posted by on Jul 29, 2012 in Media, News & Archives | No Comments

From the July 29, 2012 edition of the Billings Gazette
by Lorna Thackeray

Before the year is out, tourism experts say, 10.5 million out-of-state visitors will journey to or through Montana, dropping somewhere in the neighborhood of $3 billion.

About 2 million of those visitors will hit Billings and about half of them will spend a night here, according to a study cited by Alex Tyson of the Billings Chamber of Commerce Convention and Visitors Bureau. They bring $250 million directly into the local economy.

For Yellowstone County as a whole, the take was about $369 million in 2010 and it has likely grown in the last year and a half. For the Southeast Montana Tourism Region, which includes Billings and the rest of southeast Montana, revenues from tourism last year added up to $653.8 million.

Most in the tourism business attribute those impressive numbers to one thing — the 4 percent of the state’s 7 percent bed tax that goes to tourism promotion.

The lodging tax is 25 years old this year, and it’s been quite a ride.

“It’s just a huge thing,” Tyson said. “It’s changed the way we did business as a tourism industry. We have become a ‘bucket list’ destination.”

“What it did was put Montana in the game,” said Mary Paoli, public relations manager for the industry advocacy group Voices of Montana Tourism. “It gave Montana cachet as a tourism destination.”

Sarah Lawlor of the Montana Office of Tourism said that it has provided the industry the stable funding it needed to put Montana on travelers’ minds.

“We know we’re going to have this money, that it’s not going to be a one-shot deal,” she said. “You can’t have an impact with a one-shot deal.”

A study commissioned by her office determined that every dollar spent on tourism promotion in Montana returned $157 in visitor spending.

Back in 1987, when the Montana Legislature was debating the controversial legislation creating the tax, Montana’s promotions budget was $1 million a year — about one-quarter of what other states in the region, including Wyoming and Colorado, were spending. The number of nonresident visitors in 1986 was estimated at just 2.9 million.

State Rep. Cal Winslow, R-Billings, sponsor of the bill, noted at the time that Montana, which ranked 49th among the states in marketing dollars, didn’t even register as a potential tourist destination.

“People don’t have a negative opinion of Montana, they have no opinion,” he said. “If we don’t compete, we lose. The states around us take it away.”

The legislation had been backed by many in the lodging industry, though there were dissenting voices who called it a selective sales tax that would put the burden on hotel and motel owners. Many legislators who didn’t oppose the tax wanted the proceeds used for things other than tourism promotion, including the general fund.

When the bed tax was approved at the end of the 1987 session, the tax was set at 4 percent, most of it dedicated to promoting Montana. Another Legislature increased the tax to 7 percent, with 3 percent going to the general fund.

Read the full article on the Billings Gazette website.