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Mobile hotel owner questions need for $1 occupancy fee

The builder of three hotels in downtown Mobile said during a Mobile City Council meeting on Tuesday that a $1 fee for occupancy in hotels needs to be revisited.

The TID, short for Tourism Improvement District, is a $1 nightly assessment for hotel rooms designed to provide a massive boost in sales and marketing efforts. Spearheaded by Visit Mobile and operated by the Mobile Area Lodging Association, the TID program is the first of its kind in the state.

But Mike Cowart of Birmingham, who has been in the hotel business for 45 years, with the last 20 as a market consultant, said the leisure and convention demand in Mobile has never been tapped to its fullest potential and questioned the need for the TID. 

“I built those three hotels when other people weren’t taking chances in downtown Mobile,” he said. “My message here is that the tourism industry here is not doing well and it can do better.”

Cowart provided a chart showing a 10-year market comparison of Mobile, Birmingham, Huntsville, and Montgomery to councilmembers. He said for years, the markets in all four cities were similar, but around 2020, the year COVID hit, things changed.

“There was something that we call ‘revenge travel,’” he said. “People wanted to get out; they had stimulus money, and leisure demand not only exploded in Mobile but in every city across the country for a year or so. It ended when the stimulus money ran out.”

Cowart said while other cities in Alabama showed increases in hotel stays, Mobile flatlined. He said with the TID, there needs to be accountability for the money raised, and suggested it should be revisited or else even eliminated.

“Money is not going to solve this problem,” he said. “We started the TID, which was not popular with hotel owners then, and it’s less popular now. It’s a failed idea, and we need to re-examine the way we do tourism. We need to examine while every other major city (in Alabama) is increasing and we’re flatlining.”

Two councilmembers — Ben Reynolds and William Carroll — questioned why Cowart proposed getting rid of the TID.

“Are you suggesting that ridding ourselves of the TID would improve Mobile’s position?” Reynolds asked.

“It’s a wasted idea,” Cowart said. “You should talk to some of our desk clerks and see what some of our customers are saying about it. We need to look at the way we approach tourism. Do we need to spend this money when we’re not getting results?”

“I’m blown away by the position you’ve taken today based on everything you’ve done with your businesses,” Carroll said. “You say that it’s broken here, but you have three businesses here that are doing well.”

Carroll went on to say the TID should be continued, saying that it provides additional revenue. Cowart, however, said that there was no way the TID should continue especially when Mobile’s occupancy growth percentage was behind other major cities in the state.

Meanwhile, Visit Mobile President & CEO David Clark said the TID was an innovative idea, and disagreed with Cowart’s assessment that it should be abolished. He said the Mobile Area Lodging Association also approved a plan to renew the assessment. The renewal is scheduled to go before the city council in the fall.

Contrary to what Cowart said, Clark said lodging revenue is growing.

“Right now, in terms of revenue increases, we’re seeing a six-and-a-half percent growth in lodging revenue,” he said. “That’s better than any major city in the state of Alabama. That’s better than Savannah, Georgia, New Orleans, or Charleston, South Carolina.”

Clark said the occupancy in hotels in downtown Mobile is about 60 percent, and that the TID program has been adopted in other Alabama cities.

“I can assure you that things would be a lot worse without the program,” he said. “Mobile is bouncing back and has a really bright future. I’m proud of our hoteliers, because Montgomery just passed one and Florence just passed one.”

This story originally appeared in Call News

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