One of the unintended consequences of the evacuee housing benefit offered by FEMA is the impact to hotel tax revenues for the city of New Orleans. Municipalities cannot impose taxes on hotel stays of longer than 30 days. As you can imagine, this is an important revenue source for New Orleans, so they were already taking a big hit. Now that FEMA has again extended the funding of hotel stays, this tax hit is going to be exacerbated. Mardi Gras is a season of very high hotel rates and occupancy, so good tax revenues. Nagin is working hard to assure the world that Mardi Gras is still on for 2006. But where will they stay?

Here is my company's notice on the issue:

• ATLANTA – January 23, 2006 – Some of InterContinental Hotels Group brand hotels in the New Orleans area continue to house a large number of Hurricane Katrina evacuees who have lost their homes. As a result of the FEMA evacuee housing extension to March 1, 2006, some of our New Orleans hotels may be overbooked during the Mardi Gras season and unable to accommodate incoming guests with confirmed reservations. Guests traveling to New Orleans for Mardi Gras with reservations at IHG brand hotels are strongly urged to contact IHG’s dedicated travel advisory line at 1-800-334-3598, or call the hotel directly, to ensure that rooms are still available prior to travel. It is our intent to put evacuees as our top priority, and we have encouraged IHG hotels to give evacuees precedence in fulfilling room requests. It is our hope that guests who have previously booked rooms with those IHG hotels will understand our commitment to provide shelter to those evacuees with nowhere else to go. We will work with guests affected by this situation to help them find alternative accommodations.

BTW, most hotel franchisees are not paying royalties on the housing revenues they receive from FEMA. This means that the franchisors, already facing depleted inventory in their properties, have less incentive to promote the destinations in their own marketing initiatives. Another unintended consequence.