A chance for public comment on the long-debated hotel occupancy tax proposed for Lakeway brought a full crowd to a February City Council meeting.

On Feb. 21, nearly a dozen people spoke before City Council on the proposed tax that would be levied on guests of hotels, motels, and bed and breakfasts within Lakeway city limits. The Lakeway City Council has the authority to set the tax between 2 percent and 7 percent without a public vote.

The public comments were generally split between local hotel operators who said a HOT tax would put their business at a disadvantage against hotels without a HOT tax and local business leaders who said the money generated from a HOT tax could help bring more tourists to the area.

A HOT tax in Lakeway, which would be in addition to the 6 percent tax levied on hotels by the State of Texas, has been debated by city leadership for five years. The Feb. 21 council meeting was the first chance for public comment on the HOT tax at a City Council meeting.

"There is a lot to be considered, and there's still a lot of homework to be done on it," Councilwoman Dee Ann Burns-Farrell said after the public comments.

Lakeway Resort and Spa Manager Troy Mathews said a HOT tax could have a negative impact on the resort's corporate and group clientele, which makes up more than half of the resort's business. He said a HOT tax could cause the resort to either lose out on the competitive group business market or force the resort to absorb the additional tax to compete with nearby hotels.

"If this tax wasn't going to so profoundly have a negative impact on our business, we'd obviously not be as opposed," he said.

But Laura Mitchell, Lake Travis Chamber of Commerce president, said the money generated by a HOT tax could help draw people to the area during a time when many potential tourists are deterred by the low lake level.

A 2011 study found that visitor trends dipped significantly when Lake Travis is below 660 feet above sea level, she said. Lake Travis, as of Feb. 27, was at 631 feet above sea level.

"Unfortunately, there is no current mechanism to inform potential visitors that Lakeway and Lake Travis are and will always be open for business," she said. "The use of the hotel occupancy tax may be used to reach those potential visitors to draw them into Lakeway."

Lakeway Aquatic Therapy owner Barker Keith added that money generated from a HOT tax could let the city control the messaging of its brand.

"While I recognize the potential pain the hotel occupancy tax might give a few vendors here in the form of the hotels, I also look at the other 450 businesses in this community that could benefit from this," he said.

Distributing the money

If City Council approves a HOT tax, a commission consisting of involved stakeholders would manage where the money generated by the tax is spent. The money is required to go to specific areas that promote and enhance tourism or the convention and hotel industry.

Steve Dewire, general manager of the Hyatt Regency Lost Pines Resort and Spa in Bastrop, stressed that having a well-balanced committee of involved stakeholders is crucial to having a HOT tax work. Bastrop approved a HOT tax in 2010 that sent some of the money generated by the tax back to the Hyatt.

Mathews said the Lakeway Resort and Spa would be open to potential ways to reach a compromise on a HOT tax, and several council members suggested looking at ways in which group and corporate business clientele could be exempt from the tax.