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Sonoma County TOT rates by city

Santa Rosa: 9%

Cloverdale: 10%

Sebastopol: 10%

Sonoma: 10%

Petaluma: 10%

Rohnert Park: 12%

Healdsburg: 12%

Windsor: 12%


Ever wonder what that double-digit tax is that is added on to your hotel bill when you check out?

In November, Sonoma County elected to raise the hotel tax in unincorporated areas, bringing them more in line with neighboring cities in the North Bay. That left the Business Journal wondering about what makes up the tax, where the money goes and how much hotel tax is too much?

Very simply put, hotel taxes go to pay for things like roads, police and fire departments, and to promote tourism in the area.

The detailed explanation, however, is not for the faint of heart. What constitutes the amount of hotel tax, or transient occupancy tax (TOT), how much you’ll pay, and where that revenue goes, varies by location and lodging establishment.

Local experts in the tourism industry agree that it is a convoluted system, but it works both politically and practically.

“It’s a tax that doesn’t strain municipal coffers or local residents,” said Tim Zahner, chief marketing officer at Sonoma County Tourism.

Complicated case of Sonoma County

The TOT in the unincorporated areas of Sonoma County had been holding at 9 percent since 1992 until the November election when voters overwhelmingly approved Measure L, raising the TOT from 9 percent to 12 percent. Those areas include the rural areas of Petaluma, Cloverdale, Sebastopol and Guerneville.

A quarter of the tax collected helps offset the costs associated with high visitor numbers like fire and police.

Three-quarters of that tax revenue goes towards county tourism promotion.

The passage of Measure L is expected to generate an estimated additional $4 million a year going in to the general fund.

In addition to the TOT rate, however, hotels in Sonoma, like most other places, also tack on another 2 percent business improvement area (BIA) tax that goes specifically towards tourism marketing. Only those lodging establishments with revenue of $350,000 or more per year collect that tax, however.

Why is there a separate tax for marketing?

Historically speaking, taxes collected on hotel stays go into a city’s general fund, with a portion going towards tourism marketing.

However, “in most cases the majority of the TOT revenue in the municipality is earmarked for the general fund and there is not enough for marketing,” said Lowell Johnson, president of the Sonoma County Lodging Association, which promotes and advocates for that industry.

As that funding declined, tourism industry leaders began to point out that some of that money needed to be used to promote the area, and distinguish it from somewhere else.

“Over time the marketing portion decreased. It took time for leaders to realize we need people to come here and spend money, and need a marketing program to differentiate ourselves. People at the government level need to be reminded of that,” Johnson said.

On top of the 9 percent TOT and 2 percent BIA, the city of Santa Rosa also tacks on another 3.5 percent tax, which goes to the Santa Rosa Convention & Visitors Bureau to promote the city, and to the city for economic development to help local businesses.

Napa County TOT

The TOT rate in each of the five incorporated towns within Napa County is 12 percent. No matter if you stay in a large, upscale resort like Solage in Calistoga or an economy inn in American Canyon, guests pay the 12 percent TOT tax plus a 2 percent tourism improvement district (TID) tax, Napa’s version of Sonoma’s BIA.

Sonoma County TOT rates by city

Santa Rosa: 9%

Cloverdale: 10%

Sebastopol: 10%

Sonoma: 10%

Petaluma: 10%

Rohnert Park: 12%

Healdsburg: 12%

Windsor: 12%

Unlike Sonoma County, 75 percent of the TID tax goes to Visit Napa Valley, the county’s tourism marketing engine, and 25 percent stays in the town it was collected in, according to Clay Gregory, president and CEO at Visit Napa Valley.

The TID tax was put in place in 2009 and was renewed in 2015 for another 10 years without raising the rate.

“Because it’s working so well — total TOT for November was up by 13.7 percent over November 2015 — we left it the same as when it initially got approved,” Gregory said “There has been talk of raising the TOT rate, but we’re not in support of that.”

How high is too high?

Nationwide, visitors to Anaheim and Houston pay the highest lodging tax rates in the U.S., at 15 percent, plus 2 percent towards tourism promotion, according to hospitality consulting firm HVS. That’s compared to the TOT tax in San Francisco which is 14 percent, Hawaii’s is 13 percent.

Hotel taxes don’t seem to have influence over people’s travel plans, however.

“It’s our opinion that people just kind of accept it, like anything else that’s taxed. They can negotiate a room rate, but the tax, whatever it is, they don’t have a choice. The vendor is just passing it along,” Johnson said. “For professional travelers and groups, however, that’s where the rubber meets the road.”

While individual travelers “really don’t pay attention” to the tax, for a company booking a group for a number of days, the tax rate “will be scrutinized,” Johnson said. It could mean the difference between booking in Sonoma, for example, or somewhere else.

The city of Anaheim, with one of the highest rates in the nation, doesn’t have to worry about people not coming to visit Disneyland, said Mike Lyster, chief communications officer for the city.

Thanks to aggressive marketing campaigns, and being home to places like Disneyland, Anaheim and Orange County bring in more than 39 million visitors annually, and over 1 million convention delegates.

But how much is too much hotel tax before people stop going to Disneyland?

“There is a limit out there somewhere,” Lyster said. “We’re not out to over tax them, but we know people will come here.”

Cynthia Sweeney covers health care, hospitality, residential real estate, education, employment and business insurance. Reach her at Cynthia.Sweeney@busjrnl.com or call 707-521-4259.