The hotel hustle by Martin Ramsey June 13, 2015

If Ashevillians had any doubt about the impact of the hotel industry, the entitled whining of its representatives over the room tax reveals their oblivious greed

Above: The Hyatt Place hotel under construction on Haywood Street, one of several going up in downtown.

The recent Asheville Citizen-Times column penned by Michael Kryzanek, a former hotel manager and current hotel consultant for PKF Consulting, deserves a closer look. In it he makes a “common sense” and supposedly apolitical appeal for why hoteliers should not direct any occupancy taxes to our local government.

The suggestion that the community in which these companies are raking in profits should be able to direct those funds to real social needs is not unprecedented or all that radical. Currently, the Tourism Development Authority receives all of the funds and directs most of the total to marketing, meaning that this ostensibly public body exists to coordinate the hospitality industry’s advertising for them.

Briefly, at the outset, I will note the tone of the piece which presents hoteliers as “scape-goated,” critics of his position as “bemoaning,” and invites us on a more “thoughtful and truthful” investigation of the situation. Thus we will learn the “entire story.” He also notes that there will always be complainers, so I guess that’s where I come in. I don’t think we’ve gotten to hear the entire story, so let’s examine some of the claims and narratives Kryzanek lays out from a different perspective.

PKF Consulting, Mr. Kryzanek’s employer, is a subsidiary company specializing in hospitality industry research, management consulting, legal services, asset services and much more. PKF is owned in turn by CBRE Hotels, the world’s largest commercial real estate services company with offices in 60 countries. From what I can tell, they make a lot of money brokering the sale and investment in different hotels and chains from around the world. They advise on operators for these hotels, manage the debts, derive financial securities from commercial real estate, and deal with legal issues that surround international investment in hospitality. They are headquartered in L.A., though with plenty of cool crash pads overseas, and are worth $37.6 billion.

One of the first things Kryzanek writes about is the property taxes that hotels pay to the city, replete with big hundreds of thousands of dollar numbers. While it is true that they pay property taxes on the value of the land and their buildings, these aren’t mom-and-pop shops: we’re talking about regional and multi-national real estate and hospitality companies here.

He compares their property tax burden, based on increasing value, to that of homeowners in the region, whose assessed home value has gone down, and thus the amount of property taxes. I feel like it needs to pointed out here that the country, rather than the stock market and corporate profits, is not really recovering from the Great Recession, caused in no small part by property speculation. This comparison between workaday Mary’s house and the relatively light tax burden on massive multinational corporations in the light of the overall economic situation in America is tone-deaf at best, insulting at worst. Notably, Kryzanek also picks the whole county — including areas hit harder by the recession — rather than Asheville itself, where property values did far better, making his comparison deceptive as well as insulting.

He then goes on to say that a “reasonable” analysis would praise the hotel occupancy tax for increasing Asheville’s profile as a leisure destination leading to greater sales and property taxes for the area. Nobody should ever let anyone get away with claiming that farming sales taxes, the cost of which is passed onto the citizen, is anything but regressive taxation, hitting those with the least the hardest. But there’s also the (perhaps) unintended consequence of Asheville’s rising profile, that all that extra value is pushing out people who aren’t valued for much in this society. The people that clean the rooms in these hotels, pick up our garbage, teach our kids. No comment on that either.

Kryzanek goes on to talk about the numbers of people who work in leisure and hospitality in the broader region and how they use services, increasing sales taxes again, and provide jobs through growth. Now sometimes it’s beneficial for things to develop and grow, but we shouldn’t let corporate talking heads or politicians tell us that we’ll get progressive economics through economic growth. Capitalism — greed, more simply — doesn’t work like that.

Growth, absent any popular pressure from below, accrues wealth into fewer and fewer hands, because as the adage goes: “It takes money to make money.” Those with the advantage of position, benefit. Those without, fall farther behind. Indeed, that’s what Asheville’s seeing right now, with wages in many areas staying stagnant or even declining.

Far from being a bastion of upward mobility, the international hospitality industry fosters low wages and many times, invisible work environments that discriminate along gender and immigration status, unless their workers organize to fight. It speculates on valuable land and is in the very business of creating gilded vacation cages for the jet set, not just here but in foreign countries suffering from poverty, violence, and authoritarianism. One shouldn’t have be reminded that upward mobility in America, let alone WNC, is largely a myth rather than a possibility for hard working people. There’s a rental housing crunch, a utopia for landlords, also squeezing Asheville’s working people, while the average asking price for a home is north of half a million. Every “upper-upscale” hotel that goes up makes all of that worse.

Kryzanek then tries to make the case that the hospitality industry is scapegoated for the lack of heavy industry and distribution hubs that scatter the S.C. upstate. Every time we see a dilapidated photo of Baltimore, Detroit, or myriad other cities abandoned by production, we should look at where they are going. Car plants shutting up north, move overseas or to the non-unionized south. Textile moving from the Northeast, to the South, to Bangladesh. The story of the movement and development of industries in our area and country is way bigger than is being alluded to here in this article. While all of this is not the fault of hotels obviously, we shouldn’t let them point at other massive businesses to divert attention from real problems with their own practices. Until he wants to talk about the other stuff too, let’s see through this cheap show.

He takes pains to point out that the tax is “self-imposed.” So? Many cities and municipalities have higher taxes on luxuries like food and beverage taxes and occupancy taxes than we do, and, often that money is directed to public funds. Then, at least possibly, it could be used in the public’s interest. But he thinks they are used best to market the city and pad the ad budgets and costs of tourism related companies in the area. Thus the tax is properly assessed in full to an appointed board of industry representatives. That’s not an argument, it’s a statement: This is our money.

I don’t have anything against vacation. Hell, I’d like a vacation, and there’s nothing wrong with people taking a break from working themselves to death, like most Americans do. But there’s little that’s fair in Kryzanek’s “entire story.” Little indeed, except the fact this state of affairs makes his employers a more-than-fair amount of money. People in Asheville aren’t scape-goating hotels, rather they are justifiably angry at an industry with real problems and real effects in our community.

It’s notable here that the hotel tax fiasco shows the failure of our city’s current conciliation approach. For a stronger local government an immediate step would be freezing the funding of related Chamber of Commerce projects and turning an extremely strict eye to any hotel permitting and construction. Instead, Council (by a narrow majority) just gave the Chamber-run Economic Development Coalition more money than last year. That’ll show ‘em.

Asheville is not insulated from the larger pressures that I’ve laid out above. On the ground level it looks like hotel construction contributing to the closing of Smokey’s. It looks like hotel reps pushing local government to shove DHHS out of downtown — away from “the most expensive real estate in Western North Carolina” — because the presence of low-income and working class citizens receiving services is a disincentive to hotel construction. It looks like $9.25 an hour, if you’re lucky. It looks like corporate messaging, with all the politics artfully removed, published in the papers, comparing our city to Pepsi and Coke. Now there is the end run lobby around to the legislature, to potentially cut off a larger increase in the occupancy tax and any change in who gets to say what to do with the proceeds. Tourism and luxury taxes going to the public is a mild, absolutely common sense proposal, but it’s a bridge too far for the TDA.

I don’t think this is acceptable. Nor is the “be nice no matter what” approach working. Alternatively, we could, for once, strong arm them right back. Kryzanek and his ilk will have to be forced to act like members of a society rather than parasites. Until then their damaging industry isn’t welcome here, and the building of any new hotels in Asheville should be banned.

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Martin Ramsey is a left political activist, a media maker, writer and a service industry worker. He lives in Asheville.

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