During a May 18 council meeting, Lakeway officials discussed strategies for allocating funds from a nearly $6 million pool within the city’s budget: the hotel occupancy tax fund.
Amid the COVID-19 pandemic, council is considering potentially dipping into hotel tax funds to aid in the economic recovery of local businesses.
Gov. Greg Abbott has not relaxed any of the requirements for the use of hotel tax funds, the first being that funds must be used for hotels, often referred to as putting heads in beds, according to Mayor Sandy Cox.
“I know that there have been requests made for that provision to be tabled for a small amount of time so that different communities can rebuild and get to the point where they can bring tourism back,” Cox said.
Working under the current requirements, Lakeway city officials are developing a strategy to help bring financial recovery at a faster rate.
Cox has been in communication with the Texas Hotel and Lodging Association as well Abbott’s office with regards to hotel tax funds, suggesting a potential marketing campaign to drive tourism.
Small businesses often struggle to obtain marketing dollars, according to Cox.
“I wonder if we could have a firm help us put together a marketing campaign that could help our restaurants and hotels,” Cox. “That would be extra marketing dollars to the entire city limits.”
Though the possibility of holding a summer event is still questionable, Cox also presented the idea of hosting a fall festival to showcase local businesses.
“I would hope by the time we get to the fall that we could be in a better place to encourage people to come into Lakeway,” Cox said, noting this would likely occur in a controlled manner.
Mayor Pro Tem Laurie Higginbotham mentioned a third option of providing a straight rebate back to local hotels.
According to city information, Lakeway collects 7% in hotel tax funds on a quarterly basis from area hotels, motels and any short-term rental properties.
“I’m concerned that because we don’t know what the fall is going to look like that people may not come to events or they may not feel like traveling,” Higginbotham said.
The rebate could potentially be calculated based on a full year’s worth of historical data, considering the percentage each hotel contributed to the fund.
Within the discussions questions arose regarding requirements placed on how hotels could utilize those funds.
According to City Attorney Cobby Caputo, hotels would likely be required to use hotel tax funds for marketing efforts but not employee pay or mortgage payments. However, a rebate would enable hotels to shift funds within their budgets to stay afloat.
City officials will obtain further clarification and draft a proposal for review at a later date.
