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Perham enacts lodging tax, Ottertail may follow suit

PERHAM -- "Tax," as a word, has a negative ring to it.

"Assessment" has a softer tone; and that's how Nick Theroux prefers to describe the new lodging tax that went into effect with the new year.

"It's not a lodging tax," said Theroux at the Perham Area Chamber of Commerce "Power Hour" meeting Jan. 12, "it's an assessment fee."

Two Perham hotels, the Crossing Inn and Suites and Super 8, will collect 3 percent on every room rental. That money, in turn, will be pooled and spent on advertising and marketing of Perham and the East Otter Tail lake country.

Ottertail may also be considering a lodging tax, in collaboration with the Perham Chamber and Perham city.

A meeting this week with the Ottertail Business Association outlined the lodging tax. Chamber officials are also scheduling a meeting with the Ottertail City Council, on Jan. 21, to explain the tax to Ottertail city officials.

With at least two lodging facilities within Ottertail's city limits of about six square miles-Thumper Pond resort and The Otter hotel-the 3 percent tax could generate a substantial sum for tourism marketing. If successful, the Ottertail and Perham lodging tax would be administered under a joint agreement.

Townships, particularly those with resorts and lodging businesses, can also vote to implement a lodging tax-though it is unlikely townships would get on board until the success of the Perham city tax is measured, noted Dan Schroeder, Perham Chamber executive director.

One of the key marketing avenues will be the State Department of Tourism's "Explore Minnesota" website, noted Theroux. The site generates more than 2 million visitors a year-most of them searching specifically for vacation information. There are also billboard programs that the state will match the costs up to 40 percent, said Theroux.

"In the past, we haven't had the cash reserves to go after some of these programs," explained Theroux. Local and regional advertising and promotion will also be purchased through lodging tax revenue, he added.

Based on annual volume at Perham's two hotels, the tax should generate about $30,000 a year. If Ottertail voted for a lodging tax, revenue could be comparable.

A local "Tourism Bureau" would make decisions and recommendations as to how the money is invested.

"Our goal is ensure that the fees are primarily used for marketing and promotion," said Theroux. "We don't want to see money being burned up by administrative costs."

In Detroit Lakes, for example, nearly 34 percent is spent for advertising agency services and administrative salaries, said Theroux

The city of Perham will charge as little as $500 as an administrative fee.

With the implementation of the lodging tax, the Chamber is also restructuring. Schroeder has promoted Sherry Bormann to assistant director of the Chamber, and her duties will include more direct involvement with programs and events. This will enable Schroeder to concentrate more on member services.