After five years of consideration and debate, on April 16 Lakeway City Council unanimously approved a hotel occupancy tax, or HOT.
The HOT that will be levied on guests of hotels, motels, and bed and breakfasts within Lakeway city limits will go into effect July 1. The HOT, which will be in addition to the 6 percent tax levied on hotels by the state, will be 3 percent the first year, 5 percent the second year and 7 percent the third and following years.
The HOT is expected to generate hundreds of thousands of dollars. Under state law, the money generated by the HOT must be spent on either the construction of a convention center or on projects that enhance and promote tourism to the city.
"We are really glad this is finally coming to the forefront," said Steve Zbranek, Lake Travis Chamber of Commerce chairman-elect.
Councilman Dennis Wallace said while he would have preferred the HOT to increase more gradually, he thinks the tax has become necessary for the growing city.
"Things are changing whether I like it or not, and we have to adapt," he said.
The money generated from the HOT will let Lakeway control its brand, Mayor Dave DeOme said. He said the money will provide a way to let people around Texas and across the country know what Lakeway is about.
"I'm all in favor of this, and I'm excited about this," he said.
The HOT tax faced opposition from the Lakeway Resort and Spa and other members of Lakeway's hotel industry.
In February, Lakeway Resort and Spa Manager Troy Mathews said a HOT could negatively impact the resort's corporate and group clientele, which makes up more than half of the resort's business. He said a HOT could cause the resort to either lose out on the competitive group business market or force the resort to absorb the additional tax to compete with nearby hotels.
Neither Mathews nor anyone else opposing the HOT appeared at the April 16 meeting. Mathews did not immediately respond to a request for comment on the passage of the tax.
A commission consisting of involved stakeholders will manage where the money generated by the HOT is spent. City Council postponed an ordinance establishing the commission until May.
Councilman Alan Tye, who has been a proponent of a HOT since the idea was proposed five years ago, said the city is focused on getting the right people on the commission to make sure the money is properly spent.
"This has been a long time coming for me," he said of the passage of the HOT.