Durango plans to put a 3% lodgers tax increase on the ballot in April, which advocates say could spur the winter economy.
Durango’s lodgers tax, paid by people staying in hotels and motels, is one of the lowest in the state. Visit Durango and other tourism industry stakeholders have considered increasing the tax for at least a decade. If approved by voters, the groups argue the funding increase could boost the slow, shoulder-season economy.
“It seems everyone is in agreement that the lodgers tax does need to increase, and it’s actually long overdue,” said Rachel Brown with Visit Durango.
Currently, the lodgers tax is 2% in Durango. After other taxes, lodgers collect a total of 10.4% in taxes on stays at hotels, motels, campgrounds and vacation rentals within city limits.
The city collects about $1 million in lodgers tax revenue on average. Because of the coronavirus pandemic, the city collected about $410,000 between January and August, a 39% decrease compared with the same time period in 2019.
Funding from the tax supports Visit Durango, the downtown trolley and special events like Snowdown, Taste of Durango and the Iron Horse Bicycle Classic.
Some details about the proposed tax increase are in flux.
During a City Council study session Tuesday, Brown presented one option in which Visit Durango would receive a 2.5% chunk of the 3% increase and the Durango Creative Economy Commission would receive the remaining 0.5% chunk. The CEC, working with the Durango Creative District, requested a third, or 1% chunk, of the tax increase.
The tax could also fund transportation, bump-outs along Main Avenue or a convention center.
City councilors did not make a decision about the tax during the session, but agreed to discuss it further at a later date. The city aims to have a decision made by early 2021.
With an increased budget, Visit Durango would aim to increase lodging by 40% during the off-peak months, Brown said.
“I think as long as we can have a healthy curve, spread out, we can avoid any potential overtourism risk,” she said.
With a 3% lodgers tax increase, Durango would collect 13.4% in taxes from lodging businesses. That’s a high rate compared with other Colorado communities. It could also get expensive for visitors and drive away tour groups, which spend $19,000 a day in Durango on average, said Carrie Whitley, with the Durango & Silverton Narrow Gauge Railroad.
“We have lost business to surrounding towns,” she said. “As you think this through, I just want you to take that into consideration.”