As a lodging (Gold Strike Inn) small business owner in Cripple Creek, I take issue with some of the recent comments contained in the Mountain Jackpot from City Council candidates Meghan Rozell and Melissa Trenary in support of the City’s proposed lodging tax.
The business environment for small Inns /hotels (6-8 rooms or less) in Cripple Creek is extremely difficult and challenging. The Casino hotels have a much higher occupancy rate than ours due to their proximity to Bennett Avenue and / or their gambling venues. We are located six blocks away from Bennett Avenue. Convenience, proximity and casino marketing trump amenities when it comes to gamblers who generally desire to be as close to the restaurants and gambling as possible. The closer a business is to Bennett Avenue, the better its chances for success. Even one block away from Bennett Avenue can be a recipe for eventual failure as was the case with the Wild Horse Casino located on Myers Avenue.
When Bronco Billy’s hotel expanded into the Gold Rush area and increased from 10 to 24 rooms, the number of referred customers the Casino sent our way went from an average of 15-20 / month to 2-3 / month. This deterioration in business referrals is only going to get worse in the next few years as the Casinos (Century and Bronco Billy’s) execute plans to add even more rooms.
If we had to survive on the profits generated by our Inn we would fail. This was the case with our location predecessor (the Doll House) and several of the establishments listed below. The summer and autumn months are generally profitable for small B&Bs /Inns, but the remainder of the year – especially during the Winter and Spring – are extremely slow. In our case the receipts are only sufficient to cover basic non-personnel operating costs.
In the last few years, the difficult small B&B / hotel business environment in Cripple Creek led to the demise of many small B&Bs / hotels (all located at least a few blocks or more away from Bennett Avenue):
Although not intended, the city’s proposed lodging tax could lead to the demise of the few remaining small B&B’s / hotels. Following is why I believe the proposal is a very bad idea:
1. The lodging tax is unfair to non-casino small B&B /hotel operators because it exempts Casinos from paying the tax on comp rooms. On any given day, the Casinos comp anywhere between 20-60% of their hotel rooms. They get a big break by being exempt from paying the tax on up to 60% of their rooms, but small B&B / hotel operators must collect and pay the tax on 100% of their rooms. This is unfair extra burden on small B&Bs/hotels.
2. Ms. Trenary states that the proposed lodging tax is a “win win situation for EVERYONE in our community.” This statement is false. At least for my business, it will be a job killer. In order to remain competitive with the casino hotels that have a much higher occupancy rate due to their proximity to gaming on Bennett Avenue, I will adjust my rates downward so that guests pay about what they were paying before the tax was enacted. Consequently, the employment of four local residents that have worked for us during this year will be terminated. Retaining employees while covering other expenses with decreased net operating revenue will become a luxury we can no longer afford.
3. A substantial number of our guests either 1) work for Newmont Mining (CC&V Gold Mine) or 2) live in the local area and stay with us to celebrate an anniversary, birthday, etc. These predominately non-gambling guests stay at the Gold Strike Inn because of the amenities they can’t get elsewhere in town such as fireplaces, Jacuzzi tubs, complementary DVRs with all the pay movie stations, use of the mansion kitchen, etc. The mine is already heavily taxed and now the city intends to tax it further when employees have to find temporary lodging in Cripple Creek. As for local residents, they will have to pay the tax too when booking local lodging..
4. The lodging tax represents almost a 100% increase in taxes collected from overnight paying guests. They already pay a 6.2% tax on rooms that is distributed between the city of Cripple Creek, Teller County and the state of Colorado. Adding a 6% lodging tax on top of the 6.2% already collected is increasing the tax burden on guests by almost 100%. That may not seem like much to the politicians, but to everyday visitors on a fixed income it can be enough of a burden to make the difference between staying overnight and returning home for the evening. Also, more money spent on lodging can reduce the amount of money going into gambling, restaurants and other small businesses trying to carve out a profit.
5. Ms. Rozell argues that establishing a lodging tax is a “widespread practice in most cities, consumers expect it, and it is time we get up with the times.” Using the reasoning that we should do it because everyone else is doing it does not make it right; especially in Cripple Creek where there are other rather large sources of tax revenue not available to most cities; i.e., the CC&V Gold Mine and the Casinos.
6. Both Ms. Rozell and Ms. Trenary state that the increased tax revenue will be spent on “economic and community development, tourism and marketing.” Those are rather broad areas with no details offered or provided as to what specific projects might be enacted and funded. There appears to be no detailed plan – at least not one provided to the electorate. With a little finesse, just about any need can be justified under the broad umbrella of economic and community development so be prepared for diversion of funds whenever or wherever needed.
Ms. Trenary’s assertion that the lodging tax failed to pass last year because voters were misinformed or not educated regarding the workings of Government is just not true. The voters recognized the negative aspects of the tax proposal and chose not to support it on its merits. As a taxpayer, I expect my Government to live within its means and not insult me by assuming I don’t understand a proposal. Asking for support of the same tax already rejected within one year of that rejection is a simple maneuver to keep asking for something in the hopes of wearing down the electorate until the city Government gets its way.
Please don’t misinterpret my criticism on this one issue to mean I am completely unhappy with the current city Government. On the contrary, I think the City Council, Mayor and employees of Cripple Creek have done an excellent job managing the city and its bureaucracy. It’s just in this one case I think our leaders are getting it totally wrong!
If the lodging tax is enacted, we will likely cease operating as an Inn / B&B. There is a shortage of available housing in Cripple Creek and maybe we will reinvent ourselves as a long-term rental. If this occurs, in addition to receiving no lodging tax from us, the City would also forego its share of the 6.2% sales tax we currently pay for overnight guests. At least in our case the City will collect fewer taxes than what it is currently getting. That’s counter to its objective.
Owner and General Manager, Gold Strike Inn