'Occupancy is falling off a cliff': As hotels struggle, proposed tax to help promote Lehigh Valley tourism is debated

ALLENTOWN, Pa. — There's a debate going on about creating a Tourism Improvement District in Lehigh County to tax tourists to help struggling hotels.

But the dispute isn't so much about its potential effectiveness in helping businesses that accommodate tourists as it is about its legality.

Discover Lehigh Valley Chief Executive Officer Alex Michaels during a meeting Wednesday urged — and occasionally pleaded with — county commissioners to approve such a district.

The head of the Lehigh Valley tourism entity asked that the county establish a TID, a mechanism that would provide additional funding through special fees levied by hotels in the district boundaries.

That assessment tax would be passed on to hotel customers, who usually are non-residents.

The funds would be used for marketing programs to raise awareness of the destination, sponsorship of special events that attract overnight visitors and sales programs to bring in large-group business to the region.

“The reason we’re behind this is we’re continuing to lose business for a lack of resources we have here,” Michaels said after the meeting.

“We’re looking to put more heads in beds in the hotels with this legislation in the county.

“The commissioners have apprehension, that it has to run through the state. But our research shows [the county] can do it, from the work we’ve done with the county solicitor.

"We feel there’s a path to do it here.”

'The crux of it here'

While sympathetic to Michaels’ concerns and pleas, commissioners were generally united in their worry that approving a TID may be in violation of state law, which has not yet approved TIDs to be run by a county.

Pennsylvania is considering legislation to allow counties to establish TIDs in designated areas.

Currently, only municipalities are authorized to form TIDs in Pennsylvania. In the commonwealth, only one municipality in Philadelphia and two in Berks County have TIDs.

“I have concerns over the legality of it — putting a tax improvement district in place,” Commissioner Antonio Pineda said.

“Other than the municipalities in Philadelphia and Berks County, there are no counties doing this. From my understanding, that's the crux of it here.”

'Not going to just get better'

Five hotels are under construction in the Lehigh Valley, Michaels told commissioners. Without a TID, they, like current hotels, will struggle to survive.

“We have hotels now sitting with under 50 percent occupancy,” he said. “We can sit here and wait and wait. But this problem is not going to just get better.

“We’re snowballing into a really bad thing. If we don’t act to solve this, we’ll be here every year begging you to do this.”

Said Commissioner Jon Irons: “We just have questions whether we can do this without state intervention.”

Catharine Roseberry, senior legal counsel for Lehigh County, said the basic concept of TIDs ideally would be if it was OK’d by the state.

In the meantime, hoteliers said they are feeling the financial crunch.

“The reality is, I’m laying off housekeepers because our occupancy is falling off a cliff,” said Anthony Castelluccio, general manager of The Delta by Marriott in Allentown.

“If there’s a loophole, you’ve got to find it.”