At last, a city has wised up to the importance of linking hotel taxes to promotion of the tourism business. Last week, the San Francisco Board of Supervisors approved an additional hotel tax that will fund a Tourism Improvement District within the city. The monies will be used for badly needed upgrades to the city's convention center and to help the San Francisco Convention & Visitors Bureau market the city as a meeting and leisure destination.

The new room tax levy of 1.0 or 1.5 percent (depending on location of a hotel within the city) will be on top of the current 14-percent hotel tax. The new tax, which goes into effect on Jan. 1., is expected to generate $27 million in 2009. In addition, the city is issuing $40 million in bonds for improvements to the Moscone Center.

The city's hotel industry was a strong supporter of the new tax and the creation of the TID. Other cities, such as New York, are also raising hotel taxes but using the funds for municipal operations, not tourism development. In mid-December, New York upped its hotel tax by nearly one percent. These monies, along with an increase in property taxes, will raise $650 million, which will be used to help the city balance its budget. The city of Oakland, CA is also contemplating the establishment of a TID through an increase in hotel taxes. If passed, the tax will go into effect in June and will be used to fund the city's convention and visitors bureau. Without the TID funds, the CVB may be forced to shut down.