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Hotels, critics square off at City Council

Threat of lawsuits grows over marketing assessment

The San Diego City Council chambers and two overflow chambers were filled to capacity on Monday as nearly 300 hoteliers, business owners, community leaders, labor activists and hotel workers squared off over how $30 million in revenues from the city’s Tourism Marketing District should be spent.

At stake is the fate of an agreement that allows local hotels to levy a surcharge on customers to fund a marketing campaign to promote San Diego.

Although the issue won’t be decided until after a behind-closed-doors meeting slated for Tuesday, it seemed clear at the end of the meeting that the council was poised to uphold the agreement -- despite Mayor Bob Filner's personal battle against it.

"To shoot ourselves in the foot by not marketing our city as a destination, only adds to our economic troubles," said City Council President Todd Gloria.

Although the surcharge has been around for five years, Filner has refused to sign a agreement to release its funds until the hotels agree to pay their workers higher wages, adding that the city should be able to use money from the surcharge to cover infrastructure improvements and other projects.

“I wasn't elected to fight for the interests of a small band of wealthy hoteliers,” Filner said last Friday. “I was elected to fight for the taxpayers of San Diego.”

But the Tourism Marketing District has sued the city, charging that it has no right to hold the $30 million generated last year by the surcharge.

“We do this reluctantly, but given the proposed alternatives, which we believe would be severely detrimental to the many thousands of people employed or who work in the tourism and hospitality economy, we feel we have no choice but to move forward in the courts,” said Tony Brown, who chairs the district.

At Monday’s meeting, the battle lines were largely drawn between hotel and business leaders who argued that the marketing money was necessary to help San Diego compete as a tourist destination, and labor unions, community organizations and hotel workers who said the money could be better used for other purposes and that local hotels should be required to pay their workers higher wages.

“It’s not right to give away millions of dollars to the rich and powerful,” said Brigette Browning, representing the hotel workers union. “If the San Diego hotel industry wants to pay lower wages, it shouldn’t have its hands out to the city [which helps it collect the tax].”

Browning called the structure of the agreement illegal and said if it remains intact in its current form, the union may sue. Several hotel workers spoke of the hardships they faced, with little insurance coverage and with wages of less than $9 per hour.

But Tom Voss, president of Manchester Grand Resorts, said the critics were mistaken if they believed the $30 million comes from taxpayers.

“The city does not spend a dime on marketing San Diego tourism. The hotel industry does,” he said. “At a time when San Diego’s economy is still recovering, why should the new mayor interrupt a program to bring in more tourists?”

A wide variety of other businesses -- not just hoteliers -- also spoke in favor of keeping the agreement intact. Anthony Palmeri, head of Yellow Radio Service, talked about how his cab drivers depend on continuing growth for the tourism industry. Ray Ashley, president and CEO of the San Diego Maritime Museum, said marketing is necessary to help tourist sites survive. And a representative of the local restaurant association chimed in.

“The decision by the mayor’s office has already caused many people to lose their jobs,” said Carl Winston, who heads the school of hospitality and tourism management at San Diego State University. Winston argued that there will be fewer tourism jobs in San Diego this summer because the San Diego Tourism Authority has already missed a key deadline for placing ads to attract tourists.

“This weekend I went to a conference where I found at least five mayors supporting (Filner’s) position -- the mayors of San Francisco, Los Angeles, Anaheim, Las Vegas and Phoenix,” Winston said, implying that if San Diego discontinues its marketing program, those five cities would benefit.

As the meeting drew to a close, several councilmembers spoke in favor of keeping the agreement as is.

“Promoting our city is essential to keeping the kinds of jobs that we’ve been talking about today,” said Kevin Faulconer. “That’s how I’ve looked at this issue since the very beginning. I don’t support delay, inaction and the unfortunate reaction of lawsuits that lead more often to more lawsuits.”

Councilmember Scott Sherman, drawing on his experiences as a businessman, said “during a down economy, the worst thing you can do is pull back on advertising. You need to reach a different demographic. If you don’t, you’re just stagnating. Flat-lining does not create more jobs.”

He added that there is no impact on shareholders because the surcharge is a self-assessment by the hoteliers.

“I’m sure many of the union people who are here today assess their members to benefit their members,” he said.

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