Hotelier balks at visitor bureau mandate

TRAVERSE CITY — A Cedar man contends a tourism bureau's ability to charge his customers and market his hotels violates his First Amendment rights.

David Gersenson on Wednesday filed a complaint against the Sleeping Bear Dunes Visitor Bureau and Steve Arwood, President of the Michigan Strategic Fund, in the Michigan Court of Claims. He argued the state mandate to join the bureau and pay for it to advertise the Glen Arbor area is an unconstitutional form of compelled speech.

"I want to be let go, and anybody who is part of a convention and visitors bureau I would like to see have that option," he said. "Essentially have it be voluntary."

State law allows owners of hotels with 10 or more rooms to set up regional assessment districts. Hoteliers in the districts charge customers an assessment — between 2 and 5 percent of room prices — and funnel those payments to visitor bureaus that use the money to advertise the region to tourists.

The law is supposed to benefit hotel owners, travelers and regional economies, said Travel Michigan Vice President Dave Lorenz.

"It's not a penny of the hoteliers' dollars that go into this," he said. "It's the guest who goes into that hotel and stays in that hotel (who pays the assessment)."

The Sleeping Bear Dunes Visitor Bureau covers hoteliers the Glen Arbor area. It received $150,035 in revenue in 2015, according to an audit report. Bureau representative Jamie Jewell did not return requests for comment.

Gerenson said he didn't know about the bureau's requirement he charge guests a 2 percent assessment when he purchased the Sylvan Inn Bed & Breakfast and Lakeshore Inn in Glen Arbor in 2015.

He contacted attorneys at the Mackinac Center for Public Policy, the Midland nonprofit representing him and promoting his case, after in January receiving a letter from bureau chair Robert Kuras. Kuras in his letter outlined two options for Gersenson, who failed to make assessment payments in 2015.

"I ask you to understand that the Bureau has but two choices," Kuras wrote. "One is to ask you to become active in the Bureau, and, as a part of that, work out a plan to pay the assessments that have not been paid. The other is to take action to compel. The Board wants you to know that we are much in favor of the former approach."

Gersenson in his complaint asked the court to declare he doesn't owe the past-due assessments.

His Mackinac Center attorney Derk Wilcox said the case could lead to statewide change and release hoteliers from charging the required assessments. The Mackinac Center filed a similar lawsuit last year on behalf of an Indian River hotelier, but dismissed the suit when the man sold his business.

"We'd like to see the court declare that you can't compel a business to pay for advertising they don't want," Wilcox said. "That this is a violation of their free speech rights."

Wilcox likened the endeavor to Right to Work efforts, which eased measures that once required some employees to join unions. Union advocates argued the Right to Work law weakened organized labor and allowed employees to benefit from union negotiations without paying dues.

Traverse City Area Convention and Tourism Bureau President Trevor Tkach said visitor bureaus are nonprofits that aim to benefit hoteliers and the regional economy. He said it would be unfair for only some hoteliers to have to charge their customers for advertising that benefits their unsupportive neighboring businesses.

"When you tinker with these types of systems you threaten the economic structure of our state," he said. "We as a community, as a statewide community, depend on these systems to be successful."

But Gersenson argued the Sleeping Bear bureau didn't drive business to his hotels — he claimed Sleeping Bear bureau advertisements included mistakes about his properties and cost him winter revenue.

"I think it has hurt me by the way it has advertised me," he said.