Minneapolis City Council members look to increase tourism with 2% charge on hotel stays

The ordinance states that "the lodging business paying the service charge may, at its discretion, pass the transaction charge on to its customers."

consent decree
Minneapolis City Hall (Hayley Feland/Alpha News)

A group of Minneapolis City Council members are proposing a new charge on hotels and other lodging businesses that operate in the city.

Introduced earlier this month, the pending ordinance would charge a 2% fee on the gross revenue of every room rental. The fee would be paid by the lodging businesses and would apply to any hotel, motel, resort, bed and breakfast or similar establishment that has 50 or more rooms.

However, the language of the ordinance explicitly states that “the lodging business paying the service charge may, at its discretion, pass the transaction charge on to its customers.”

Should a hotel pass the charge on to the customer, the 2% fee would be identified separately on the room receipt. The proceeds from those charges would go to the Minneapolis Tourism Improvement District (MTID), an entity that is created under the same proposed ordinance.

According to the ordinance, the MTID would encompass the entire city, exist for an initial five-year term, and engage in activities that “benefit lodging businesses in the MTID.”

Those activities include marketing and public relations, special projects, sales, administration, workforce development, and training. The MTID would be managed by a committee of nine lodging business owners or their representatives who pay the 2% charge.

Authored by City Council Members Katie Cashman, Robin Wonsley, and Michael Rainville, the ordinance is scheduled to be discussed at the City Council’s Business, Housing & Zoning Committee next week.

Alpha News reached out to the authors with questions about their ordinance and how the MTID would work. None of the City Council members responded.

Documents accompanying the ordinance indicate that there are 48 lodging businesses in Minneapolis that would be subject to the 2% charge. Of those businesses, “73% affirmed the MTID.” Additionally, the MTID is expected to bring in $6-7 million of annual revenue.

 

Luke Sprinkel

Luke Sprinkel previously worked as a Legislative Assistant at the Minnesota House of Representatives. He grew up as a Missionary Kid (MK) living in England, Thailand, Tanzania, and the Middle East. Luke graduated from Regent University in 2018.