City moves to encourage hotel development

Lack of rooms costs county dollars

The Fairfield Inn and Suites by Marriott off Gateway Drive in Hollister.

Despite the completion of the Fairfield Inn and Suites by Marriott off Gateway Drive, the Hollister City Council voted 3-1 to include the new hotel in the Economic Development Subsidy, a program that is designed to encourage the development of additional hotels in an underserved San Benito County market.

“I think it’s good and we need more hotels in town,” said Juli Vieira, CEO of the San Benito County Chamber of Commerce. “We had a baseball team come to town that was looking for 15 to 20 rooms and we just didn’t have that at the time.”

The Economic Development Subsidy will provide an annual 70 percent rebate on transient occupancy tax, a tax collected on hotel rooms. The rebate will be in effect for 10 years and will be capped at $2 million. When the 10-year term of the deal is up, the city will have the option to extend the deal for another five years with a rebate of 33 percent.

The transient occupancy tax rebate will only be available for hotels that reach a three-diamond rating, which is described by AAA to meet expectations that include: distinguished, multifaceted with enhanced physical attributes, amenities and guest comforts.

Today, the only hotel in Hollister that achieves a three-diamond rating is Fairfield Inn and Suites by Marriott. The city’s smaller lodges will not benefit from the incentive program.

San Benito County’s loss is Gilroy’s gain for available hotel rooms. For large events such as the Hollister Independence Rally, the city’s annual downtown motorcycle event, a lack of available hotel rooms has adverse effects on other businesses in town that would benefit from the influx of visitors.

“When you have an event like that, if they ride for hours to get here and can’t stay the night in town, they just might go home,” Vieira said. “That means that they are likely to spend money elsewhere, instead of here. We have a lot of weddings in Hollister and often they are staying in Gilroy.”

Councilmember Karson Klauer was the lone dissenting vote and was skeptical of the agreement at the Jan. 16 city council meeting, citing the $2 million cap along with previous agreements with contractors he believed were not beneficial to the city’s interests.

“A million dollars in transient occupancy tax is a million dollars of general fund money that can go towards police, fire, parks, and recreation,” Klauer said.

While Vieira is happy to welcome the Fairfield Inn, she hopes that the city will add another hotel and an expansion of available conference room space.

“The Fairfield Inn’s conference room seats about 40 people comfortably, so I think we will need more room for larger conferences,” Vieira said in regards to Hollister’s hotel needs.

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