The SouthWest Metro Chamber of Commerce is studying a lodging tax to fund tourism promotion in Chaska.

The newly merged chamber, which includes Chaska, Carver, Chanhassen and Victoria, is in the “final stages” of a proposal, said Deb McMillan, chamber president. The chamber is still studying the benefits of a lodging tax she said.

The chamber will present its idea to the Chaska City Council at its Feb. 23 meeting, McMillan said.

A lodging tax is usually 3 percent, McMillan said, which would be charged on top of the state’s 6.5 percent sales tax. The city would collect the tax, and then distribute it to the chamber after taking 5 percent as an administrative fee, McMillan said.

The money raised would fund promotion such as Web sites and advertising, promoting Chaska as a tourist destination and a place to stay, McMillan said.

She notes other nearby cities with a lodging tax, such as Shakopee, Waconia, Bloomington and Lakeville.

The Chanhassen Area Chamber of Commerce lobbied the Chanhassen City Council for a lodging tax. However the proposal died in a July 2007 work session, after receiving negative response from three of its five councilors. “I’m not totally against it. But I’d like to hear a compelling reason why [the hotels] can’t do it themselves. Ideally, I would prefer that the hotels do this independently and keep government out of it,” said then-councilor Craig Peterson.

McMillan said she’s received positive feedback from Chaska hoteliers. There are four businesses that would be impacted by a lodging tax: The Peacock Inn Bed & Breakfast, Super 8 Motel, Best Western Chaska River Inn & Suites and Oak Ridge Hotel & Conference Center.

“We’ve let them know this is what the intention is. That’s really an enormous benefit for us – for them to be supportive of it. They’ll be involved in how that marketing money gets spent,” she said.

“It’s got an enormous economic impact. Tourism is a very lucrative industry,” McMillan said. “We think there’s a great benefit to the city to do that in this economy. It’s a great time to hop on board and talk about all the great things we have for visitors.”

Mit Shah, who owns Best Western Chaska River Inn & Suites and the adjoining restaurant Spice Up! with his wife Hina, gives a lukewarm response to the proposal. He said he likes the idea, but feels the chamber needs to do more “homework.”

Shah said the chamber has shown him projected statistics based on a Chanhassen hotel lodging tax. Funds raised in the Chanhassen scenario amount to $200,000 annually, Shah said. However, Chanhassen has a more robust hotel scene, he said. “They have to work on actual numbers on Chaska, instead of based on Chanhassen numbers,” he said.

Shah said he’s also concerned if the 3 percent increase would scare away large groups who book rooms, or those who book rooms for extended stays.

Carl Blanz, general manager of Oak Ridge, said that most of the metro areas the hotel/conference center competes with already have the tax. When it comes to group bookings, “we would still be a very competitive hotel,” he said.

“I’m supportive of it, provided it is used what the law states it is used for,” Blanz said. “I think it would help this area in general, and I think it would be good for Oak Ridge as well. Anything that drives people to our area is obviously going to be good for business.”

“My sense is, it’s pretty early in the game,” he said of the proposal.