Economist Reflects On Increased OKC Hotel Sales Tax

Oklahoma City voters approved an increase to the city's hotel sales tax on Tuesday. The new rate, a jump from 5.5% to 9.25%, reflects the first increase in 20 years.

During the campaign, city leaders cited a need to adopt a rate comparable to similarly sized cities. They argued the tax revenue generated by an increase in the hotel sales tax would supply needed funding for tourism-related improvements and investments in Oklahoma City.

A majority of the nearly $12 million expected from the increase will be spent on tourism promotion. Other allocations will be made for event sponsorships and improvements to the fairgrounds and convention center. Funds cannot be used for operational expenses.

Opponents to the vote, which tallied 33.6% by the end of election day, did not run any firmly organized campaign against the initiative. But critics alleged an increase could instead keep business from the city and would unfairly place a burden on the homeless population. However, UCO economics professor Dr. Travis Roach believes a negative outcome is not likely.

“I hardly doubt the hotel tax rate is what's going to either make or break a decision between two cities,” Roach said. “If it is, then that's a conference that's very picky and choosy about where they're going. If I think of myself as a consumer, I don't look to see what the hotel tax rate is before I travel.”

Roach acknowledged there are city residents who rely on hotel rooms. He also pointed to Oklahoma's severe weather as a common issue that drives locals to hotels during periods of weather-induced power outages, or worse.

“I ended up voting yes on this measure because I do think it's important to have more city funds that are devoted toward city needs, like up keeping the fairgrounds,” Roach said. “That said, by law, this can only be used for our convention center or the fairgrounds, and it can't be used for general revenue funds of all those needs that we also face, like paving roads or having adequate services for our seniors.”

The Greater Oklahoma City Chamber celebrated the successful initiative as the dawn of a new era for tourism expansion.

“Whether you voted for this or not, you'll reap the benefits,” said Christy Gillenwater, President of the chamber. “Our visitors help cover needed and necessary city services. And that's phenomenal. We're grateful to those who supported it for sure. But just know that everyone in the community will benefit from this increased investment.”

The new rate will take effect on Oct. 1.