I represent about 150 hotel employees at Scotts Valley hotels as president of the Santa Cruz County Hotel and Lodging Association. They are outstanding ambassadors for our small town, many of whom have dedicated their careers to hospitality.
Their livelihoods now face an uncertain future because of a tax measure that moved forward without the level of dialogue, analysis or transparency our community should expect.
Measure G asks Scotts Valley voters to raise the hotel tax to 13% from 11%. That may be described as a two percentage point increase, but it is an 18.2% increase in the tax rate itself and would give Scotts Valley the highest hotel tax rate in Santa Cruz County.
That matters. What also matters is how we got here.
City leaders have said this increase is affordable for Scotts Valley hotels, will be paid for by out-of-town visitors and will not meaningfully affect tourism or hotel bookings. That is not a conclusion supported by data, forethought or serious discussion with our hotels. In fact, the standard commissioning of an independent economic study was not done.
Instead, the city relied on an informal rate survey conducted in-house. That is not the same as a professional analysis of how a higher tax could affect hotel demand, employment, group business, visitor spending or Scotts Valley’s competitive position.
The public narrative around hotel outreach is equally troubling.
Local hotels communicated that they could support an increase to 12% but opposed going to 13%. The SCCHLA Board of Directors sought dialogue with city leadership more than a year ago. We were not saying no to helping the city. We were saying 12% was a reasonable path. We were saying 13% raised real concerns. We were asking for a conversation. Those are very different things.
The City describes Measure G as a 2% increase. It is not a 2% increase in the tax burden. An increase to 13% from 11% is an 18.2% hike in the tax rate itself. That is not semantics. That is math. It would make Scotts Valley the highest-taxed hotel jurisdiction in Santa Cruz County.
There is also a broader economic impact that should not be ignored.
Hotel guests already pay an 11% hotel tax, along with a separate tourism marketing assessment that local hotels impose on themselves to help fund destination marketing. Every additional dollar a visitor spends on taxes is one less dollar available to spend at a Scotts Valley restaurant, coffee shop, retailer or local attraction.
And when a price-sensitive traveler, group or business decides to stay somewhere else, the consequences do not stop at the hotel front desk. Fewer occupied rooms mean fewer housekeeping hours, fewer shifts, less restaurant spending, less shopping and less economic activity in our community.
That is why this debate cannot simply be reduced to the idea that “visitors will pay for it.” Our employees pay for it when demand softens. Our small businesses pay for it when visitor spending declines. And Scotts Valley pays for it when we make ourselves less competitive than every neighboring jurisdiction.
Before approving the highest hotel tax in Santa Cruz County, voters deserve to know that the hotel industry raised concerns, proposed alternatives and asked for meaningful dialogue. I urge Scotts Valley voters to look carefully at the facts, look carefully at the process and decide whether Measure G, as proposed, is truly in the best interest of our community.
Bijal Patel is President of the Santa Cruz County Hotel and Lodging Association and CEO of Coast Redwood Hospitality.
