By Linda Taaffe

Los Altos

Los Altos’ new hotel tax increase won’t be as high as initially anticipated. The Los Altos City Council last week voted against raising the city’s 8 percent transient occupancy tax to 11 percent, due to the recent economic downturn. Hotel guests will pay a more conservative tax rate of 10 percent, which is on par with neighboring cities, council members decided.

The 1 percent difference means guests will pay $1.50 less per room per night - a large enough savings to keep Los Altos hotels competitive with those in Mountain View and Palo Alto, according to council members. The 1 percent decrease will also mean the city could potentially lose as much as $100,000 in revenues each year.

Business travelers look at tax rates when choosing a place to stay, Councilman John Moss said.

“I don’t want to contribute to making our hotels look less desirable. We will get less (money) if the occupancy drops,” Moss said.

Voters approved Measure A last November, authorizing the council, annually, to set the Transient Occupancy Tax at a rate not to exceed 11 percent. Los Altos charged the lowest rate on the Peninsula prior to last week’s tax increase. Cupertino, Palo Alto and Mountain View have their occupancy taxes set at 10 percent. Sunnyvale imposes an 8.5 percent tax on guests.

The tax increase is intended potentially to bring hundreds of thousands of dollars in additional income to the city for services such as street maintenance and public safety.

Los Altos’ only hotel was scheduled to open along El Camino Real this month.

Another is under construction and a third is in the planning stages.